Groundfloor Yield LLC Form 1-A/A Filed 2021-04-29

SECURITIES AND EXCHANGE COMMISSION

FORM 1-A/A Offering statement under Regulation A [amend]

Filing Date: 2021-04-29 SEC Accession No. 0001104659-21-057690

(HTML Version on secdatabase.com)

FILER Groundfloor Yield LLC Mailing Address Business Address 600 PEACHTREE STREET 600 PEACHTREE STREET CIK:1810007| IRS No.: 463414189 | State of Incorp.:GA | Fiscal Year End: 1231 NE STE. 810 NE STE. 810 Type: 1-A/A | Act: 33 | File No.: 024-11411 | Film No.: 21871381 ATLANTA GA 30308 ATLANTA GA 30308 SIC: 6500 Real estate 404-594-7857

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The information in this preliminary Offering Circular is not complete and may be changed. These securities may not be sold until the offering statement filed with the Securities and Exchange Commission is qualified. This preliminary Offering Circular is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED APRIL 29, 2021

PRELIMINARY OFFERING CIRCULAR

GROUNDFLOOR YIELD LLC

Promissory Notes

MAXIMUM OFFERING: $75,000,000

MINIMUM OFFERING: $0

Groundfloor Yield LLC, a Georgia limited liability company, (the “Company” or “we”) intends to offer and sell on a continuous basis, its Promissory Notes described in this offering circular (the “Offering Circular”). Such Promissory Notes shall be made available for investment on an online investment platform (the “Groundfloor Yield Platform” or the “Platform”) available through a smartphone application (the “Mobile App”) owned and operated by the Company, a facsimile of which also exists on the Groundfloor Platform owned and operated by Groundfloor Finance Inc., a Georgia corporation (“Groundfloor Finance”), the Company’s sole member and manager. The proceeds of this offering will be used primarily to purchase commercial real estate loans from Groundfloor Holdings, LLC (“GFH”), a Georgia limited liability company and wholly owned subsidiary of Groundfloor Finance and for general corporate purposes of the Company, including the cost of this offering.

The Company will offer and sell on a continuous basis the Promissory Notes described in this Offering Circular. This Offering Circular describes some of the general terms that may apply to the Promissory Notes and the general manner in which they may be offered and follows the disclosure format of Part II of Form 1-A pursuant to the general instructions of Part II(a)(1)(i) of Form 1-A.

The Promissory Notes will:

· Be priced at $0.01 each;

· Represent a full and unconditional obligation of the Company;

Bear interest at 4.0% per annum as set forth in the applicable Promissory Note, as such interest rate may be modified from time to time, but not · more frequently than twice per month, by the Company in its sole discretion as described in this Offering Circular; such modifications to reflect an interest rate per annum of 2.0%-6.0% in 0.25% increments;

Have a three (3) year term and will (i) contain a redemption feature that is exercisable by the holder every five (5) business days from the date of · issuance; and (ii) be callable, redeemable, and prepayable at any time by the Company;

Be secured by a first priority security interest in the assets (and related property and rights) of the Company, which assets will principally consist of · commercial real estate loans held by the Company; and

Not be payment dependent on any individual underlying real estate loan or loans held by the Company, including without limitation, any loans · issued on Groundfloor Finance’s online lending platform.

The Company reserves the right to modify the applicable interest rate on the Promissory Notes from time to time, but not more frequently than twice per month, in its sole discretion. All updates to the applicable interest rate will be communicated to Investors through the Mobile App no less than seven (7) calendar days prior to the effective date of such updated interest rate, and will also be reflected in an offering circular supplement to be filed with the Securities and Exchange Commission no later than five (5) business days after the effective date of such updated interest rate. All updates to the applicable interest rate shall apply to all outstanding Promissory Notes held by such Investor as of the effective date of the interest rate change. For the avoidance of doubt, no terms of the Promissory Notes (including the term, price, or other non-interest rate features of the Promissory Notes) other than the applicable interest rate may be modified in the sole discretion of the Company.

For more information on the Promissory Notes being offered, please see the section entitled “Promissory Notes” beginning on page 10 of this Offering Circular. The aggregate initial offering price of the Promissory Notes will not exceed $75,000,000 in any 12-month period, and there will be no minimum offering.

We intend to offer the Promissory Notes in $0.01 increments on a continuous basis directly through the Mobile App. At the present time, we do not anticipate using any underwriters to offer our securities.

This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sales of the Promissory Notes in any states where such offer, solicitation would be unlawful, prior to registration or qualification under the laws of any such state.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We were formed in Georgia in April 2020 by our sole member and manager, Groundfloor Finance Inc. and our principal address is 600 Peachtree Street, Suite 810, Atlanta, GA 30308. Our phone number is (404) 850-9225. Our website is located at https://www.groundfloor.us/.

Investing in our securities involves a high degree of risk, including the risk that you could lose all of your investment. Please read the section entitled “Risk Factors” beginning on page 11 of this Offering Circular about the risks you should consider before investing.

Underwriting Proceeds to Proceeds to Price to the Public discount and issuer other persons commissions Promissory Notes $ 0.01 $ 0 $ 75,000,000 $ 0 Total Minimum - - - - Total Maximum $ 0.01 $ 0 $ 75,000,000 $ 0

The approximate date of the proposed sale to the public is as soon as practicable after the offering is qualified.

IMPORTANT NOTICES TO INVESTORS

THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION DOES NOT PASS UPON THE MERITS OF OR GIVE ITS APPROVAL TO ANY SECURITIES OFFERED OR THE TERMS OF THE OFFERING, NOR DOES IT PASS UPON THE ACCURACY OR COMPLETENESS OF ANY OFFERING CIRCULAR OR OTHER SELLING LITERATURE. THESE SECURITIES ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION WITH THE COMMISSION; HOWEVER, THE COMMISSION HAS NOT MADE AN INDEPENDENT DETERMINATION THAT THE SECURITIES OFFERED HEREUNDER ARE EXEMPT FROM REGISTRATION.

Generally, no sale may be made to you in this offering if the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(C) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.

The date of this preliminary Offering Circular is April 29, 2021.

Table of Contents

IMPORTANT NOTICES TO INVESTORS 2

OFFERING CIRCULAR SUMMARY 4

RISK FACTORS 11

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 16

USE OF PROCEEDS 17

ABOUT THE GROUNDFLOOR PLATFORM 18

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23

MANAGEMENT 25

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS 28

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS 29

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS 29

GROUNDFLOOR YIELD PLATFORM 29

PLAN OF DISTRIBUTION 34

LEGAL MATTERS 35

EXPERTS 35

FINANCIAL STATEMENTS

OFFERING CIRCULAR SUMMARY

This summary highlights information contained in this Offering Circular and does not contain all of the information that you should consider in making your investment decision. Before investing in our securities, you should carefully read this entire Offering Circular, including our consolidated financial statements and the related notes thereto and the information in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Unless the context otherwise requires, we use the terms “Company,” “we,” “us” and “our” in this Offering Circular to refer to Groundfloor Yield LLC.

Business Overview

We are a wholly-owned subsidiary of Groundfloor Finance Inc. (“Groundfloor Finance”), an early-stage company making secured real estate loans that range from $15,000 to $500,000 through an online platform (the “Groundfloor Platform”). Through the Groundfloor Platform, Groundfloor Finance offers a marketplace for developers of residential and small commercial real estate (“Developers” or “Borrowers”) who wish to obtain funding in order to acquire or renovate residential and small commercial real estate projects or refinance existing indebtedness in connection with such projects (each, a “Project” and collectively, the “Projects”). Groundfloor Finance currently offers term loans with terms that range between six months to five years (the “Loans”). These terms are subject to change as market needs dictate, and it anticipates offering additional products in the future. Groundfloor Finance uses technology, data analytics, and its proprietary credit scoring model to assess the creditworthiness of each prospective borrower. If the applicant meets the Groundfloor Finance criteria, Groundfloor Finance sets the initial interest rate according to its credit and financial models.

Groundfloor Platform and Mobile App

Groundfloor Finance currently operates a web-based platform (the “Groundfloor Platform”), which is described in further detail below. The Promissory Notes will be offered on the Platform through the Mobile App, which is owned and operated by the Company, a facsimile of which also exists on the Groundfloor Platform. Prospective investors in the Promissory Notes will create a username and password, and indicate agreement to our terms and conditions and privacy policy on the Mobile App.

The following features are available to participants in the Promissory Notes program through the Mobile App:

· Available Online Directly from us. You can purchase Promissory Notes directly from us through the Mobile App.

No Purchase Fees Charged. We will not charge you any commission or fees to purchase Promissory Notes through our platform. · However, other financial intermediaries, if engaged, may charge you commissions or fees.

· Invest as Little as $0.01. You will be able to purchase Promissory Notes in amounts as low as $0.01.

Flexible, Secure Payment Options. You may purchase Promissory Notes with funds electronically withdrawn from your checking · account or by wire transfer.

Manage Your Portfolio Online. You can view your investments, returns and transaction history online, as well as receive tax · information and other portfolio reports.

Proceeds from the Promissory Notes contemplated in this offering will be used by the Company to purchase loans originated by Groundfloor Holdings, LLC (“GFH”), and for general corporate purposes of the Company, including the cost of this offering, but Promissory Notes are not dependent upon any particular loan originated by GFH and remain at all times the general obligations of the Company. Final decisions on use of proceeds allocations will be made by Groundfloor Finance, as manager of the Company. Please refer to “About the Groundfloor Platform” starting on page 18 for more information relating to Groundfloor Finance and its subsidiaries.

We believe we benefit from the following competitive strengths compared to traditional lenders:

· Reduced product origination and financing request costs; · Lower interest rates for financing of real estate projects; · Attractive returns for investors · The opportunity to promote community redevelopment by investing in local real estate projects; and Growing acceptance of the Internet, including the use of mobile applications as an efficient and convenient forum for investment · transactions.

Groundfloor Platform

Groundfloor Finance is the sole member of both the Company and GFH. Each of the Company and GFH is managed by Groundfloor Finance and Nick Bhargava, who is also the Co-Founder, Acting Chief Financial Officer, Secretary, and Executive Vice President (Legal and Regulatory) of Groundfloor Finance. The business operations of Groundfloor Finance are managed by a team of executive officers which includes (i) Brian Dally, President and CEO, (ii) Nick Bhargava, in the capacities mentioned above, (iii) Rhonda Hills, Senior Vice President (Marketing and Sales), (iv) Richard Pulido, Senior Vice President (Head of Lending and Risk Management) and (v) Chris Schmitt, Vice President (Software), and by its board of directors, which includes two independent directors.

Groundfloor Finance operates an online investment platform (the “Groundfloor Platform”) designed to source financing for real estate development projects. Through the Groundfloor Platform, investors can choose between multiple real estate development investment opportunities (each, a “Project”) and developers of the Projects (each, a “Developer”) can obtain financing. The Platform focuses on the commercial lending market for developers of residential and small commercial real estate projects that are not owned and occupied by the Developer. Proceeds from the loans are generally applied toward the Project’s acquisition and/or renovation or construction costs. In connection with the issuance of Promissory Notes by the Company, the Company owns and operates the Mobile App. The Groundfloor Platform operated by Groundfloor Finance facilitates due diligence and underwriting reviews, coordinates payment to and from investors and developers, manages loan advances, and administers, services and collects on the loans originated by GFH which are subsequently acquired by the Company. All intellectual property relating to the Groundfloor Platform and the GFY Mobile App is owned by each of Groundfloor Finance and the Company, respectively.

In connection with the Groundfloor Platform, Groundfloor Finance operates several subsidiaries with distinct functions. Subsidiaries help us isolate credit risks, legal risks, and other operational risks. This protects our investors, customers, and employees. Below is a list of our primary operating entities, including management structure, and function.

Groundfloor Finance Inc. (“Groundfloor Finance”). Groundfloor Finance is a Georgia corporation and is our main operating entity. It is managed by an executive team and governed by a board of directors (see "Management" section starting on page 25. Groundfloor Finance develops, owns, and operates the Groundfloor Platform, and associated technology IP. Groundfloor Finance may also identify and select Loans for acquisition from · GFY, and once such Loans have been identified and selected, Groundfloor Finance will sell securities to investors which correspond to the identified Loan. Groundfloor Finance will use the proceeds from the sales of such securities to acquire and service the Loan for the duration of the Loan. As of the date of this Offering Circular, GFY has not commenced full operations, and Groundfloor Finance has been acquiring Loans directly from GFH.

Groundfloor Holdings, LLC (“GFH”). GFH is a single member Georgia limited liability company. It is managed by Groundfloor Finance. Its sole purpose is to originate loans identified by Groundfloor Finance. It will use the proceeds of the sale of loans to Groundfloor Yield, LLC (“GFY”) · to fund the loans that it originates. GFH intends to use the proceeds of the sale of loans to GFY to fund the origination of Loans in lieu of, and as a replacement for its existing credit facility with ACM Alamosa DA LLC. Loans typically stay on its balance sheet for up to 30 days before being sold to GFY.

Groundfloor Yield, LLC (“GFY”). GFY is a single member Georgia limited liability company. It is managed by Groundfloor Finance and Nick Bhargava, Executive Vice President, Secretary, and Acting Chief Financial Officer of Groundfloor Finance. Its sole purpose is to acquire Loans from GFH through the proceeds raised from the sale of Promissory Notes as described in this Offering Circular, such Loans to be held for a limited · period of time until they are sold to three affiliated companies, Groundfloor Finance, Groundfloor Real Estate 1, LLC and Groundfloor Real Estate 2, LLC, as further described below. Loans typically stay on the balance sheet of GFY for five (5) days, but in any event for no more than thirty (30) days, before being sold to such affiliated companies. As of the date of this Offering Circular, GFY has not commenced full operations.

Groundfloor Real Estate 1, LLC (“GRE1”). GRE1 is a single member Georgia limited liability company. It is managed by Groundfloor Finance · and Nick Bhargava, Executive Vice President, Secretary, and Acting Chief Financial Officer of Groundfloor Finance. Its purpose is to select and acquire Loans from GFY. Once Loans have been identified for acquisition, GRE1 will sell Limited Recourse Obligations (LROs) to investors which

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document correspond to the identified Loan. It will use these funds to acquire and service the Loan for the duration of the Loan. As of the date of this Offering Circular, GFY has not commenced full operations, and GRE1 has been acquiring Loans directly from GFH.

Groundfloor Real Estate 2, LLC (“GRE2”). GRE2 is a single member Georgia limited liability company. It is managed by Groundfloor Finance. Its purpose is to select and acquire Loans from GFY. Once loans have been identified for acquisition, GRE2 will sell securities to institutional · purchasers which correspond to the identified Loan. It will use these funds to acquire and service the Loan for the duration of the loan. As of the date of this Offering Circular, GFY has not commenced full operations, and GRE2 has been acquiring Loans directly from GFH.

Groundfloor Properties GA, LLC (“GFGA”). GFGA is a single member Georgia limited liability company. It is managed by Groundfloor Finance. · Its purpose is to manage distressed assets that have been acquired by affiliated companies in the course of exercising creditor rights. It conducts the majority of foreclosures that may be required by either GRE1 or GRE2.

GFH does not finance owner-occupied residential projects, nor does it make Loans for any personal, family, or household purpose. All of the loans originated by GFH are commercial in nature. Although GFH only provides Loans to legal entities (i.e., the Developer), due to the nature of the real estate development business and the smaller market segment they service, GFH nevertheless factors into its due diligence and underwriting process the background and experience of the individual(s) who own and operate the borrowing entity (i.e., the “Principal(s)”).

The scope of GFH’s due diligence and underwriting process is not limited only to information about the borrowing entity, which may be very limited in nature. In addition to considering the specific information with respect to the borrower under the Loan, GFH also considers the creditworthiness (through a review of FICO scores) and broader experience of the Principal.

Once GFH has identified the Projects that pass the preliminary assessment and thus meet our basic qualifications and financing requirements, GFH undertakes an assessment of each Project and the proposed terms of the underlying Loan to finalize the pricing terms (interest rate, maturity, repayment schedule, etc.) that it will accept.

GFH uses a proprietary Grading Algorithm to assign one of seven letter grades, from A to G, to each Project. The letter grade generally reflects the overall risk of the Loan.

The Grading Algorithm, which was developed by the Groundfloor Finance management team in consultation with outside advisors with respect to the general type of residential real estate projects GFH currently finances, involves application of a two-step proprietary mathematical formula. Generally, GFH assigns a scale to each factor. The higher a Project rates with respect to a particular factor, the better the Loan scores. The higher the score, the lower the interest rate GFH will offer on the Loan.

Representing a quantifiable assessment of the risk profile of a given Project, the Grading Algorithm allows GFH to compare the relative risk profiles of various properties through the analysis of specific quantifiable characteristics, including (i) the valuation and strength of a particular Project and (ii) the experience and risk profile of the Developer. GFH uses the Grading Algorithm to determine a proposed base-line interest rate which reflects the given risk profile of a Project when it is underwritten. The lower the risk profile, the lower the interest rate GFH will agree to with respect to a particular Loan.

Promissory Notes

Promissory Notes, the subject of this Offering Circular, are available to retail investors for purchase through the Mobile App. Funds from the sale of Promissory Notes are invested into Loans at the discretion of the Company. Investors in Promissory Notes do not directly invest in Loans held by the Company that were acquired from GFH; rather, the Promissory Notes are general obligations of the Company, and the proceeds thereof will be used primarily to fund the acquisition by the Company of Loans originated by GFH to continually expand and replenish the portfolio of Loans owned by the Company, which Loans are intended to be subsequently sold to Groundfloor Finance, GRE1 or GRE 2, typically within five (5) business days, but in any event no more than thirty (30) business days, following the acquisition thereof by the Company. The Promissory Notes will be secured by a first priority security interest in the assets (and related property and rights) of the Company which will principally consist of commercial real estate loans that the Company has acquired from GFH. Such security interest will rank ahead of any unsecured debt of the Company. Given that the security interest is a blanket lien on the assets of the Company and is not against specifically identified assets of the Company, as of the date of this Offering Circular, there is no unbonded property available for use against the issuance of Promissory Notes and the Promissory Notes are not being issued against any unbonded property of the Company, the deposit of cash by the Company, or otherwise.

The offering of Promissory Notes is being conducted as a continuous offering pursuant to Rule 251(d)(3) of the Securities Act of 1933 (“Securities Act”). Continuous offerings allow for a sale of securities to be made over time, with no specific offering periods or windows in which securities are available. Sales of securities may happen sporadically over the term of the continuous offering, and are not required to be made on any preset cadence. The active acceptance of new investors in Promissory Notes, whether via the Mobile App or otherwise, may at times be briefly paused, or the ability to subscribe may be periodically restricted to certain individuals to allow the Company time to effectively and accurately process and settle subscriptions that have been received. The Company may discontinue this offering at any time.

Interest Rate of Promissory Notes

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Initially, the Promissory Notes will bear interest at a rate of 4.0% per annum, calculated on the basis of a three hundred and sixty (360) day year consisting of twelve thirty (30) day months, as set forth in the applicable Promissory Note. The interest payable by the Company in respect of the Promissory Notes will be calculated as a summation of the interest payable on each day during the term of the Promissory Notes. For reference, an example of the calculation of interest on an investment in Promissory Notes follows below.

The Company reserves the right to modify the applicable interest rate on the Promissory Notes from time to time in its sole discretion, but not more than twice per month. All such modifications to the interest rate will reflect an interest rate per annum between 2.0% and 6.0% in 0.25% increments. All updates to the applicable interest rate will be communicated to Investors through the Mobile App no later than seven (7) business days prior to the effective date of such updated interest rate, and will also be reflected in an offering circular supplement to be filed with the Securities and Exchange Commission no later than five (5) business days after the effective date of such updated interest rate, which may be obtained from the SEC EDGAR filing website as https://www.sec.gov. All updates to the applicable interest rate shall apply to all outstanding Promissory Notes held by such Investor as of the effective date of the interest rate change and the Company will issue an amended and restated Promissory Note to all existing holders of Promissory Notes that reflect such updated interest rate. Additionally, Investors may elect to purchase additional Notes bearing the updated interest rate through the Groundfloor Yield Mobile App, exercise their put right with respect to their outstanding Promissory Notes at any time prior to the applicable maturity date (including at any time prior to the effective date of any interest rate change), or rollover all proceeds of an existing Promissory Note on the applicable maturity into a new Promissory Note bearing the updated interest rate. No other terms of the Promissory Notes will be subject to change in the sole discretion of the Company.

Investor Put Right

From and after the issuance date of the Promissory Notes and prior to the applicable maturity date of the Promissory Notes, an Investor may require the Company to redeem such Investor’s Promissory Note every five (5) business days from the applicable issuance date by exercising such Investor’s put right. The Investor may exercise such Investor’s put right with respect to an outstanding Promissory Note by providing notice to the Company through the Mobile App up to and on the applicable Put Date (as defined herein). The Investor may exercise such Investor’s put right with respect to the Promissory Notes every five (5) business days from the applicable issuance date of the Promissory Notes (each, a “Put Date” and collectively, the “Put Dates”). For example, if a Promissory Note is issued on Thursday, January 1, assuming that the Investor provides notice of such Investor’s intention to exercise such Investor’s put right, the Put Date will be the following Thursday, January 8. In the event an Investor exercises such Investor’s put right with respect to a given Promissory Note on the Put Date, the Company will remit to the Investor’s GFY Account the accrued and outstanding interest and outstanding principal balance as of the Put Date within five (5) business days of such Put Date. In the event the Investor holds the Promissory Note until the applicable maturity date, the Company will remit to the investor’s GFY Account the accrued and outstanding interest and outstanding principal balance as of the maturity date within five (5) business days of such maturity date. Except as described herein, there are no limitations on Investors’ ability to exercise their put rights.

Rollovers of Promissory Notes

On the applicable maturity date of the Promissory Notes, Investors may elect to roll over all payments received in respect of the outstanding principal balance and all accrued interest into a new Promissory Note at the current and effective interest rate as of the issuance date, to be issued by the Company to such Investors on such applicable maturity date (the “Rollover”). If an Investor wishes to elect to rollover such proceeds, such Investor must provide written notice to the Company through the Groundfloor Yield Mobile App no later than on the applicable maturity date of the Promissory Note. The Company will treat all rollovers as sales chargeable against the aggregate total of offered securities pursuant to the Offering Statement and to include such sales when calculating the $75 million cap in offering proceeds raised under any qualified offering statement within a 12 month period in accordance with Rule 251(a).

Groundfloor Yield Auto-Invest Program

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Investors may elect to participate in the Groundfloor Yield Auto-Invest Program (the “GFY AIP”), which is an optional program that allows an Investor to automatically invest in additional Promissory Notes on a recurring basis subject to certain parameters designated by such Investor. In order to affirmatively elect to participate in the GFY AIP, Investors are asked to complete a Groundfloor Yield Auto-Invest Program Election Form (the “GFY AIP Election Form”), which is an exhibit to the form of Note Purchase Agreement. All investors are required to review and complete the Note Purchase Agreement prior to any investments in any Promissory Notes issued by the Company. Any investor that does not complete a GFY AIP Election Form shall be deemed to have opted out of participation in the GFY AIP. The GFY AIP Election Form provides investors with the option to select the amount of automatic investment, day of the month for each automatic investment in Promissory Notes, along with the frequency of the automatic investment in Promissory Notes, which may be on a quarterly basis or a custom schedule (with a minimum of at least two calendar months selected by the investor). If desired, investors may also designate a stop date for automatic investments. Investors may revise or change the elections set forth in the GFY AIP Election Form or cancel their participation in the GFY AIP at any time by submitting a new GFY AIP Election Form to Groundfloor Yield with three (3) business days’ notice in the event of a revision or change in election, or in the event that such investor wishes to cancel its participation in the GFY AIP.

All automatic investments in Promissory Notes will earn interest at the then-effective interest rate applicable to all Promissory Notes. Upon the consummation of each auto-investment in Promissory Notes, the Company will send a confirmatory communication to the investor denoting the amount invested, the interest rate applicable to such Promissory Notes, and a Promissory Note issued by the Company. Investors who acquire Promissory Notes through the GFY AIP (i) will be notified of any pending change in the applicable interest rate thereon in the same manner as described in the section titled Interest Rate of Promissory Notes, and (ii) will have a put right with respect to each such Promissory Note as described in the section titled Investor Put Right.

The Company has not yet deployed the GFY AIP for Promissory Notes and, as a result, 0% of investors in Promissory Notes participate in the GFY AIP. The Company anticipates deploying the GFY AIP for Promissory Notes within two calendar days after the qualification date of this Offering Circular. The Company will treat sales of Promissory Notes under the GFY AIP as sales chargeable against the aggregate total of offered securities pursuant to the Offering Statement and to include such sales when calculating the $75 million cap in offering proceeds raised under any qualified offering statement within a 12 month period in accordance with Rule 251(a).

Proceeds from the sales of Promissory Notes may be used for any purpose, including, but not limited to, funding the acquisition of loans originated by GFH, balance sheet support for institutional credit facilities, or used for general corporate purposes. The Company retains final discretion over the use proceeds.

Risks Affecting Us

Our business is subject to numerous risks and uncertainties, including those highlighted in the section titled “Risk Factors” beginning on page 11. These risks include, but are not limited to the following:

· Because real estate development projects are inherently risky, our business may be negatively impacted by changes.

We have no operating history and Groundfloor Finance has a limited operating history in an evolving industry, which makes it difficult to · evaluate our future prospects and may increase the risk that we will not be successful.

We will need to raise substantial additional capital to fund our operations, and if we fail to obtain such funding, we may be unable to grow · and remain in business.

· The Groundfloor entities may not be able to identify and increase the number of Projects that are financed on the Groundfloor Platform.

· We rely on data centers and outside service providers.

· Holders of Promissory Notes are exposed to the credit risk of the Company.

· There has been no public market for Promissory Notes, and none is expected to develop.

Our Company

We were formed as a Georgia limited liability company on April 10, 2020 by Groundfloor Finance Inc., our sole member and manager. Our principal offices are located at 600 Peachtree Street, Suite 810, Atlanta, GA 30308. The phone number for these offices is (404) 850-9225. Our mailing address is 600 Peachtree Street, Suite 810, Atlanta, GA 30308.

The Offering

Securities offered by us Promissory Notes, offered by the Company on a best-efforts basis.

The Promissory Notes will: Promissory Notes

· Represent a full and unconditional obligation of the Company;

· Bear interest at 4.0% per annum as set forth in the applicable Promissory Note, as such interest rate may be modified from time to time, but not more than twice per month, by the Company in its sole discretion, upon seven (7) days prior written notice to Investors; such modifications to reflect an interest rate per annum of 2.0%-6.0% in 0.25% increments;

· Have a three (3) year term and will (i) contain a redemption feature that is exercisable by the holder every five (5) business days from the date of issuance; and (ii) be callable, redeemable, and prepayable at any time by the Company;

· be secured by a first priority security interest in the assets (and related property and rights) of the Company, which assets will principally consist of commercial real estate loans held by the Company;

· Not be payment dependent on any individual underlying real estate loan or loans held by the Company, including without limitation, any loans issued on the Groundfloor Platform; and

· Allow investors to participate in the GFY AIP, which allows automatic investment in additional Promissory Notes on a regular basis in an amount and preset cadence designated by the investor.

We will not issue securities hereby having gross proceeds in excess of $75 Principal Amount of Promissory Notes million during any 12-month period. The securities we offer hereby will be offered on a continuous basis.

Regulation A Tier Tier 2

Accredited investors pursuant to Rule 501 and non-accredited investors. Pursuant to Rule 251(d)(2)(C), non-accredited investors who are natural persons may only invest the greater of 10% of their annual income or net Promissory Notes Purchasers worth. Non-natural non-accredited persons may invest up to 10% of the greater of their net assets or revenues for the most recently completed fiscal year.

Manner of offering See section titled “Plan of Distribution” beginning on page 34.

Directly via the Groundfloor Platform and a smartphone application (the How to invest “Mobile App”).

If we sell $75 million of gross proceeds from the sale of our securities under this Offering Circular, we estimate our net proceeds, after deducting estimated commissions and expenses, will be approximately $74,889,500, Use of proceeds assuming our offering expenses are $110,500. We intend to use the proceeds from this offering to purchase loans originated by GFH and for general corporate purposes of the Company, including the cost of this offering. See "Use of Proceeds".

See the section titled “Risk Factors” beginning on page 11 of this offering Risk factors statement for a discussion of factors that you should read and consider before investing in our securities.

RISK FACTORS

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Investing in our securities involves a high degree of risk. Before deciding whether to invest, you should consider carefully the risks and uncertainties described below, our consolidated financial statements and related notes and all of the other information in this Offering Circular. If any of the following risks actually occurs, our business, financial condition, results of operations and prospects could be adversely affected. As a result, the value of our securities could decline and you could lose part or all of your investment.

Risks Related to Investing in Promissory Notes

Holders of Promissory Notes are exposed to the credit risk of the Company.

Promissory Notes are the full and unconditional obligations of the Company and are fully recourse to the Company’s assets. You will have a first priority security interest in all assets of the Company. However, the Promissory Notes may still be subject to non-payment by the Company in the event of our bankruptcy or insolvency. In an insolvency proceeding, there can be no assurances that you will recover the full amount of your investment in the Promissory Notes.

There has been no public market for Promissory Notes, and none is expected to develop.

Promissory Notes are newly issued securities. Although under Regulation A the securities are not restricted, Promissory Notes are still highly illiquid securities. No public market has developed nor is expected to develop for Promissory Notes, and we do not intend to list Promissory Notes on a national securities exchange or interdealer quotational system. You should be prepared to hold your Promissory Notes through their maturity dates as Promissory Notes are expected to be highly illiquid investments.

The Company may not be able to generate sufficient cash to service its obligations under the Promissory Notes.

The Company’s ability to make payments on the outstanding Promissory Notes will depend on the performance of the portfolio of real estate loans that the Company holds, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond the Company’s control. The Company may be unable to maintain a level of cash flows from its portfolio of real estate loans sufficient to permit the Company to pay principal and interest on the Promissory Notes. The Promissory Notes are secured by solely the assets of the Company and no other party is obligated to make any payments to Investors on the Notes, nor does any party guarantee payments from the real estate loans. Further, the Promissory Notes are not insured or guaranteed by the United States or any governmental entity. Payments on any Promissory Notes will depend solely on the amount and timing of payments and other collections in respect of the real estate loans owned by the Company. There is no guarantee that such amounts received by the Company are sufficient to make full and timely payments on the Notes. If delinquencies and losses create shortfalls, you may experience delays in payments due under the Notes you hold and you could suffer a loss.

The Promissory Note Purchase Agreement limits your rights in some important respects.

When you make an investment through the Groundfloor Platform and Mobile App, you are required to agree to the terms of our standard Promissory Note Purchase Agreement, which sets forth your principal rights and obligations as an investor in the Promissory Notes we issue, and to agree to the terms of a Promissory Note, which sets forth the specific terms of the Promissory Notes you are committing to purchase. Under the Promissory Note Purchase Agreement, we may require that any claims against us, including without limitation, claims alleging violations of federal securities laws by us or any of our officers or directors and claims other than in connection with this offering, be resolved through binding arbitration rather than in the courts. Notwithstanding the foregoing sentence, you may elect to opt out of the arbitration provision for all purposes by sending an arbitration opt out notice to the Company in accordance with the terms and conditions set forth in Section 24(b) of the Note Purchase Agreement. If you do not opt out of binding arbitration, Section 24(a) of the Note Purchase Agreement, provides, among other things, that (i) arbitration is final and binding on the parties; (ii) the parties are waiving their right to seek remedies in courts, including the right to jury trial; (iii) pre-arbitration discovery is generally more limited and potentially differs in form and scope from court proceedings; (iv) an award by an arbitrator is not required to include factual findings or legal reasoning, and your right to appeal or to seek modification of a ruling by the arbitrator is strictly limited; and (v) the arbitrator (or three arbitrator panel, if applicable) may include a minority of persons engaged in the securities industry. As a result, the arbitration process may be less favorable to investors than court proceedings and may limit your right to engage in discovery proceedings or to appeal an adverse decision. These provisions may have the effect of discouraging lawsuits against us and our directors and officers. Your agreement to the arbitration provisions in the Promissory Note Purchase Agreement will not waive the Company’s compliance with the federal securities laws and the rules and regulations promulgated thereunder.

The Company believes that the arbitration provisions in the Agreements are enforceable under federal and state law. The Federal Arbitration Act (“FAA”) is an act of Congress that provides for judicial facilitation of dispute resolution through arbitration and embodies a national policy favoring arbitration, providing that a written contractual provision evidencing a transaction involving interstate commerce to arbitrate a controversy “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” Further, the United States Supreme Court has interpreted the FAA as creating a uniform body of federal substantive law regulating the enforceability of agreements to arbitrate that applies to all contracts involving interstate commerce in both state and federal court. The arbitration provision in the Promissory Note Purchase Agreement specifically states that it is made pursuant to a transaction involving interstate commerce and shall be governed by and enforceable under the FAA.

In the event that enforceability issues arise under state law, the Company maintains its belief that the arbitration clause will be upheld. In AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011), the United State Supreme Court recognized that in order to accomplish the general purpose of the FAA to promote efficient streamlined procedures for resolving disputes, federal law has developed a preference for enforcing arbitration agreements according

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document to their terms. Consistent with this preference, the Court has held that state laws discriminating against arbitration are preempted by the FAA because such rules stand as an obstacle to the FAA’s objectives. Further, the FAA is presumed to preempt the state law selected in a general choice-of-law clause unless the contract expressly evidences the parties’ intent that state arbitration law applies in place of or in addition to the FAA. As cited above, the arbitration provision in the Promissory Note Purchase Agreement clearly sets forth the parties’ intent that the FAA should apply rather than state law.

You also waive your right to a jury trial under the Promissory Note Purchase Agreement. Purchasers of the Promissory Notes in any secondary transactions are subject to the terms of the Promissory Note Purchase Agreement, and are deemed to have waived their right to a jury trial as well. Accordingly, if you bring a claim against the Company in connection with matters arising under the Promissory Note Purchase Agreement, including claims under federal securities laws, you may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us and our directors and officers. If a lawsuit is brought against us under the Promissory Note Purchase Agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action. It is advisable that you consult legal counsel regarding the jury waiver provision before entering into the Promissory Note Purchase Agreement.

While the Company believes that a contractual pre-dispute jury trial waiver is generally enforceable, the enforceability of the jury trial waiver is not free from doubt. To the Company’s knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. With respect to enforceability under Georgia state law, the Company acknowledges that the state courts of Georgia, which have jurisdiction over state law matters arising under the Promissory Note Purchase Agreement, have upheld the minority position that contractual pre-dispute jury trial waivers are not enforceable. If the Company opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the Promissory Note Purchase Agreement.

Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the Promissory Note Purchase Agreement with a jury trial if you have not elected to opt out with respect to binding arbitration as set forth in Section 24 of the Promissory Note Purchase Agreement. No condition, stipulation or provision of the Promissory Note Purchase Agreement or the Promissory Note Purchase Agreement serves as a waiver by any Investor of the Company’s compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder.

Additionally, by entering into the Promissory Note Purchase Agreement, the investor expressly waives and releases, as a condition of and as part of the consideration for the issuance of the Promissory Note, any recourse under or upon any obligation, covenant or agreement contained in the Promissory Note Purchase Agreement, or because of any obligations evidenced therein, against any incorporator, or against any past, present or future shareholder, officer or director, as such, of the Company, either directly or through the Company, under any rule of law, statute (other than applicable federal securities laws) or constitutional provision or by the enforcement of any assessment or penalty or otherwise. This provision has the effect of limiting the available parties against which an investor may seek recourse in connection with the Company’s obligations under the Promissory Note Purchase Agreement.

Pursuant to Section 25 of the Promissory Note Purchase Agreement, in connection with your purchase of the Notes, to the extent permitted by law, you waive your right to a jury trial in any litigation relating to the Agreements, including the purchase of the Notes.

When you purchase the Promissory Notes, you are required to agree to the terms of the Promissory Note Purchase Agreement. Among other things, both agreements provide that you waive your right to a jury trial in any litigation relating to each agreement and your purchase of the Notes, including claims under the federal securities laws. You will have the right to litigate claims, including claims under the federal securities laws through a court before a judge, but you will not have that right if any party elects arbitration pursuant to the terms of the Agreements unless you opt out as provided in Section 24(b) of the Promissory Note Purchase Agreement. Neither your waiver of jury trial nor your agreement to the arbitration provision shall be deemed to waive the Company’s compliance with the federal securities laws and the rules and regulations promulgated thereunder. Please refer to the risk factor “The Promissory Note Purchase Agreement limits your rights in some important respects” for more information regarding the jury trial waiver provision contained in the Promissory Note Purchase Agreement and the Promissory Note Purchase Agreement.

Pursuant to Section 2(b) of the Promissory Notes, the interest rate payable in respect of the Note may be changed in the sole discretion of the Company.

Upon the initial issuance of Promissory Notes in this Offering, the Promissory Notes will bear interest at a rate of 4.0% per annum. However, pursuant to Section 2(b) of the Promissory Notes, the interest rate applicable to the Promissory Notes may be modified from time to time, but not more than twice per month, by the Company in its sole discretion, upon seven (7) days prior written notice to Investors; such modifications to reflect an interest rate per annum of 2.0%-6.0% in 0.25% increments. Investors should be advised that the interest rate applicable to the Promissory Notes may be decreased, from the interest rate applicable upon the date of their initial investment, which would reduce the rate of return on the Promissory Notes held by such investors. Any modification to the interest rate applicable to the Promissory Notes will be applicable to all then-outstanding Promissory Notes, and any newly issued Promissory Notes will be issued at the then-applicable interest rate. In the event that an Investor does not wish to participate in the Offering at any proposed new interest rate, such Investor may exercise their put right pursuant to Section 3 of the Promissory Notes to redeem their Promissory Notes prior to the effective date of the interest rate modification.

Risks Related to the Company

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We have no operating history, and our parent company has a limited operating history. As companies in the early stages of development, we face increased risks, uncertainties, expenses and difficulties.

Groundfloor Finance (with its affiliates) has a limited operating history and the Company has no operating history. Groundfloor Finance owns and operates the Groundfloor Platform. For our business to be successful, the number of real estate development projects originated by GFH will need to increase, which will require Groundfloor Finance to increase its facilities, personnel and infrastructure to accommodate the greater servicing obligations and demands on the Groundfloor Platform. Groundfloor Finance must constantly update its software and website, expand its customer support services and retain an appropriate number of employees to maintain the operations of the Groundfloor Platform, as well as to satisfy our servicing obligations on the Loans and make payments on the Promissory Notes. If Groundfloor Finance is unable to increase the capacity of the Groundfloor Platform and maintain the necessary infrastructure, you may experience delays in receipt of payments on the Promissory Notes and periodic downtime of our systems.

If the information provided by customers to GFH is incorrect or fraudulent, those entities may misjudge a customer’s qualification to receive a loan, and our operating results may be harmed.

The lending decisions of GFH are based partly on information provided to them by loan applicants. To the extent that these applicants provide information in a manner that GFH is unable to verify, they may not be able to accurately assess the associated risk. In addition, data provided by third-party sources is a significant component of GFH’s underwriting process, and this data may contain inaccuracies. Inaccurate analysis of credit data that could result from false loan application information could harm the performance of loans originated by GFH, which may harm its reputation, business, and operating results, and in turn, harm the reputation, business, and operating results of the Company which acquires loans originated by GFH.

In addition, GFH performs fraud checks and authenticates customer identity by analyzing data provided by external databases. GFH cannot ensure that these checks will catch all fraud, and there is a risk that these checks could fail and fraud may occur. We may not be able to recoup funds in respect of underlying loans acquired by the Company from GFH which were made in connection with inaccurate statements, omissions of fact, or fraud, in which case our revenue, operating results, and profitability will be harmed. Fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negatively impact our operating results, brand and reputation, and require us to take steps to reduce fraud risk, which could increase our costs.

GFH’s risk management efforts may not be effective.

We could incur substantial losses, and our business operations could be disrupted if (i) GFH is unable to effectively identify, manage, monitor, and mitigate financial risks, such as credit risk, interest rate risk, liquidity risk, and other market-related risk in respect of loans which are subsequently acquired by the Company, or (ii) if we are unable to effectively manage, monitor and mitigate operational risks related to our business, assets, and liabilities. To the extent GFH’s model used to assess the creditworthiness of potential customers does not adequately identify potential risks, the risk profile of such customers could be higher than anticipated. GFH’s risk management policies, procedures, and techniques may not be sufficient to identify all of the risks that the loans it originates are exposed to, mitigate the risks that it has identified, or identify concentrations of risk or additional risks to which the Company may become subject in the future as holder of such loans.

GFH’s businesses may not be able to adequately scale its loan product distribution.

GFH competes against larger companies in marketplace lending, small business divisions of commercial banks, and community banks and credit unions. Their competitors, especially banks, have substantially more resources and spend millions of dollars on marketing. If GFH is unable to attract borrowers, or repeat borrowers, its results of operations will be adversely affected, which may in turn affect the pool of loans available for acquisition by the Company.

GFH originates relatively small-dollar loans which means they need to originate more loans to make as much money as competitors that originate larger-dollar loans.

Presently, GFH is focused on loans up to $500,000. Some of its lending peers who offer larger-dollar loan products need to originate fewer loans than GFH does in order to reach the same amount of dollars lent. GFH’s loan product requires human interaction before it can be approved, which may limit the number of loans they can originate and impact their ability to scale their business. If the GFH’s per-loan origination costs are too high, its results of operations will be adversely impacted, which may in turn affect the pool of loans available for acquisition by the Company.

GFH relies on external capital to grow loan volume and their business.

GFH is in the business of lending money. To demonstrate its commitment to their borrowers and its confidence in its underwriting criteria, GFH funds a portion of most of the loans that it originates. As GFH’s business scales and loan volume increases, it will require increasing amounts of capital to fund its loans as well as build out its operations. GFH has to carefully manage capital as it is not yet profitable. As GFH’s business grows, it will require increasing levels of new capital to fund its lending and operational needs. Similarly, the Company will require increasing amounts of capital to fund its operational needs.

A portion of the funding for GFH (through the acquisition by the Company of loans originated by GFH) and for the Company, including for payments of principal and interest on the Promissory Notes and for placing funds in reserve to guard against losses, is anticipated to come from investment

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document in the Promissory Notes. This need for capital will require the Company to find additional investors. The Company’s inability to attract sufficient capital at all or on favorable terms will impact our ability and the ability of GFH to grow and remain in business

If we or Groundfloor Finance were to cease operations or enter into bankruptcy proceedings, the servicing of the Promissory Notes would be interrupted or may halt altogether.

If we were to become subject to bankruptcy or similar proceedings or if we ceased operations, the Company, or a bankruptcy trustee on our behalf, might be required to find other ways to service the Promissory Notes. Such alternatives could result in delays in the disbursement of payments on the Promissory Notes or could require payment of significant fees to another company to service the Promissory Notes. Since we have not entered into any back- up servicing agreements, if we were to cease operations or otherwise become unable to service the Promissory Notes without transferring such Promissory Notes to another entity, the operation of the Mobile App and the servicing of the Promissory Notes would be interrupted and may halt altogether unless another way to service the Promissory Notes on behalf of investors was secured. In the event that we were to cease operations or enter into bankruptcy proceedings, recovery by a holder of a Promissory Note may be substantially delayed while back-up servicing is secured, if practicable, or such services halted altogether, and such recovery may be substantially less than the amounts due and to become due on such Promissory Note.

Security breaches of investors’ or customers’ confidential information that may harm our or GFH’s reputation and expose us or GFH to liability.

We store our investors’ bank information, credit information, and other sensitive data, and GFH stores its customers’ bank information, credit information, and other sensitive data. Any accidental or willful security breaches or other unauthorized access could cause the theft and criminal use of this data. Security breaches or unauthorized access to confidential information could also expose us or GFH, as applicable, to liability related to the loss of the information, time-consuming and expensive litigation, and negative publicity. If security measures are breached because of employee or third-party error, malfeasance, or otherwise, or if design flaws in the Mobile App or Groundfloor Platform are exposed and exploited, and, as a result, a third party obtains unauthorized access to any of our customers’ data, our relationships with our investors or GFH’s relationships with its customers may be severely damaged, and we or GFH, as applicable could incur significant liability. To the extent that GFH incurs any such liability, its business operations may be adversely affected, which may in turn adversely affect the pool of loans available for acquisition by the Company.

Because techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until they are launched against a target, we, the Originating Affiliates and our third-party hosting facilities may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, many states have enacted laws requiring companies to notify individuals of data security breaches involving their personal data. These mandatory disclosures regarding a security breach are costly to implement and often lead to widespread negative publicity, which may cause our investors or GFH’s customers to lose confidence in the effectiveness of our data security measures. Any security breach, whether actual or perceived, could harm our reputation and cause us to lose investors or GFH to lose customers.

The collection, processing, storage, use, and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, or differing views of personal privacy rights.

We and GFH receive, collect, process, transmit, store, and use a large volume of personally identifiable information and other sensitive data from customers and potential customers. There are federal, state, and foreign laws regarding privacy, recording telephone calls, and the storing, sharing, use, disclosure, and protection of personally identifiable information and sensitive data. Specifically, personally identifiable information is increasingly subject to legislation and regulations to protect the privacy of personal information that is collected, processed, and transmitted. Any violations of these laws and regulations may require us or GFH to change our business practices or operational structure, address legal claims, and sustain monetary penalties, or other harms to our respective businesses. To the extent that the business operations of GFH are adversely affected, the pool of loans available for acquisition by the Company may in turn be adversely affected as well.

Events beyond our control or the control of GFH may damage our or its ability to maintain adequate records, maintain the Mobile App or the Groundfloor Platform, perform its origination activities or perform our servicing obligations.

If a catastrophic event resulted in an outage of the Mobile App or the Groundfloor Platform or physical data loss, our ability to perform our servicing obligations or the ability of GFH to originate loans, as applicable, would be materially and adversely affected. Similar events impacting third-party service providers that our operations depend on, such as Groundfloor Finance’s hosting provider or payment vendor(s), could materially and adversely affect its (and our) operations. Such events could include, but are not limited to, fires, earthquakes, terrorist attacks, natural disasters, pandemics, computer viruses and telecommunications failures. Groundfloor Finance stores back-up records in offsite facilities located in third-party, off-site locations. If Groundfloor Finance’s electronic data storage and back-up storage system or those of its third-party service providers are affected by such events, we cannot guarantee that you would be able to recoup your investment in the Promissory Notes.

Economic, social and other disruptions caused by outbreaks of viruses or other diseases may adversely affect the business and operations of the Company and GFH, which may adversely affect your investment in the Promissory Notes.

The business and operations of the Company and GFH could be materially and adversely affected by the outbreak of health epidemics, including the spread of the novel coronavirus COVID-19, particularly if occurring in areas where Developers derive a significant amount of revenue or profit. While the impact of such an outbreak on the global economy is uncertain, such an event could significantly impact the real estate and fintech lending industries and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document severely disrupt the operations of the Company and GFH. Such event may also have a material adverse effect on the business, financial condition and results of operations of the Company and GFH, which could adversely affect your investment in the Promissory Notes.

Risks Related to Compliance and Regulation

The requirements of complying on an ongoing basis with Tier 2 of Regulation A of the Securities Act may strain our resources and divert management’s attention.

Because we are conducting an offering pursuant to Tier 2 of Regulation A of the Securities Act, we will be subject to certain ongoing reporting requirements. Compliance with these rules and regulations will require legal and financial compliance costs, which may impose strain on our operating budget and divert management’s time and attention from operational activities. Moreover, as a result of the disclosure of information in this Offering Circular and in other public filings we make, our business operations, operating results and financial condition will become more visible, including to competitors and other third parties.

GFH’s loan origination activities and our servicing activities are subject to extensive federal, state and local regulation that could adversely impact operations.

Changes in laws or regulations or the regulatory application or judicial interpretation of the laws and regulations applicable to GFH or to us could adversely affect the ability of GFH or our ability to operate in the manner in which it or we currently conduct business or make it more difficult or costly for GFH to originate or otherwise make additional loans, or for us to collect payments on loans by subjecting them or us to additional licensing, registration, and other regulatory requirements in the future or otherwise. A material failure to comply with any such laws or regulations could result in regulatory actions, lawsuits, and damage to their or our reputations, which could have a material adverse effect on their or our businesses and financial conditions, their ability to originate loans, our ability to service loans and our ability to perform our obligations to investors and other constituents.

The initiation of a proceeding relating to one or more allegations or findings of any violation of such laws could result in modifications in GFH’s or our methods of doing business that could impair our ability to collect payments on our loans or to acquire additional loans or could result in the requirement that we pay damages and/or cancel the balance or other amounts owing under loans associated with such violation. We cannot assure you that such claims will not be asserted against us in the future. To the extent it is determined that the loans we make to our customers were not originated in accordance with all applicable laws, we might be obligated to repurchase any portion of the loan we had sold to a third party. We may not have adequate resources to make such repurchases.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Offering Circular contains forward-looking statements that are based on our beliefs and assumptions and on information currently available to us. The forward-looking statements are contained principally in “Offering Circular Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “About the Groundfloor Platform.” Forward-looking statements include information concerning our possible or assumed future results of operations and expenses, business strategies and plans, competitive position, business environment, and potential growth opportunities. Forward-looking statements include all statements that are not historical facts. In some cases, forward-looking statements can be identified by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would,” or similar expressions and the negatives of those terms.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Those risks include those described in “Risk Factors” and elsewhere in this Offering Circular. Given these uncertainties, you should not place undue reliance on any forward-looking statements in this Offering Circular. Also, forward-looking statements represent our beliefs and assumptions only as of the date of this Offering Circular. You should read this Offering Circular and the documents that we have filed as exhibits to the Form 1-A of which this Offering Circular is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Any forward-looking statement made by us in this Offering Circular speaks only as of the date on which it is made. Except as required by law, we disclaim any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward- looking statements, even if new information becomes available in the future. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements.

USE OF PROCEEDS

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If we sell $75,000,000 of gross proceeds from the sale of our securities under this Offering Circular, we estimate our net proceeds, after deducting estimated commissions and expenses, will be approximately $74,889,500, assuming our expenses are $110,500 for such offerings. We currently intend to use the net proceeds of this offering in order to purchase loans originated by GFH, and for general corporate expenses, including the cost of this offering, but we reserve the right to change the use of proceeds as business demands dictate.

Our management team will determine the allocation of proceeds among loan investments and general corporate purposes. Proceeds may be used to fund or supplement investments in loans on our platform by us or by our affiliates.

We may also use the proceeds of the sale of Promissory Notes for general corporate purposes. General corporate purposes might be, but are not limited to, the costs of this offering, including our outside legal and accounting expenses, rent and real estate expenses, utilities, computer hardware and software and promotion and marketing. Our management has sole discretion regarding the use of proceeds from the sale of Promissory Notes.

ABOUT THE GROUNDFLOOR PLATFORM

Overview and Groundfloor Platform

Groundfloor Finance Inc. (“Groundfloor Finance”) is the sole member of both the Company and Groundfloor Holdings, LLC (“GFH”). GFH is managed by Groundfloor Finance. The Company is managed by Groundfloor Finance and Nick Bhargava, who is also the Co-Founder, Acting Chief Financial Officer, Secretary, and Executive Vice President (Legal and Regulatory) of Groundfloor Finance. The business operations of Groundfloor Finance are managed by a team of executive officers which includes (i) Brian Dally, President and CEO, (ii) Nick Bhargava, in the capacities mentioned above, (iii) Rhonda Hills, Senior Vice President (Marketing and Sales), (iv) Richard Pulido, Senior Vice President (Head of Lending and Risk Management) and (v) Chris Schmitt, Vice President (Software), and by its board of directors, which includes two independent directors.

Groundfloor Finance operates an online investment platform (the “Groundfloor Platform”) designed to source financing for real estate development projects. Through the Groundfloor Platform, investors can choose between multiple real estate development investment opportunities (each, a “Project”) and developers of the Projects (each, a “Developer”) can obtain financing. The Platform focuses on the commercial lending market for developers of residential and small commercial real estate projects that are not owned and occupied by the Developer. Proceeds from the loans are generally applied toward the Project’s acquisition and/or renovation or construction costs. In connection with the issuance of Promissory Notes by the Company, the Company owns and operates the Mobile App. The Groundfloor Platform operated by Groundfloor Finance facilitates due diligence and underwriting reviews, coordinates payment to and from investors and developers, manages loan advances, and administers, services and collects on loans originated by GFH which are subsequently acquired by the Company. All intellectual property relating to the Groundfloor Platform and the GFY Mobile App is owned by Groundfloor Finance and the Company, respectively.

GFH does not finance owner-occupied residential projects, nor does it make loans for any personal, family, or household purpose. All of its loans are commercial in nature. Although GFH only provides loans to legal entities (i.e., Developers), due to the nature of the real estate development business and the smaller market segment it services, GFH nevertheless factors into its due diligence and underwriting process the background and experience of the individual(s) who own and operate the borrowing entity (i.e., the “Principal(s)”).

The scope of GFH’s due diligence and underwriting process is not limited only to information about the borrowing entity, which may be very limited in nature. In addition to considering the specific information with respect to the borrower under the loan, it also considers the creditworthiness (through a review of FICO scores) and broader experience of the Principal.

Credit Risk and Valuation Assessment

Once GFH has identified Projects that pass the preliminary assessment and thus meet its basic qualifications and financing requirements, it undertakes an assessment of each Project and the proposed terms of the underlying Loan to finalize the pricing terms (interest rate, maturity, repayment schedule, etc.) that it will accept.

GFH uses its proprietary Grading Algorithm to assign one of seven letter grades, from A to G, to each Project. The letter grade generally reflects the overall risk of the Loan. In general:

The Grading Algorithm, which was developed by Groundfloor Finance’s management team in consultation with outside advisors with respect to the general type of residential real estate projects GFH currently finances, involves application of a two-step proprietary mathematical formula. Generally, GFH assigns a scale to each factor. The higher a Project rates with respect to a particular factor, the better the Loan scores. The higher the score, the lower the interest rate GFH will offer on the Loan.

(a) Lending Products

Through the Groundfloor Platform, GFH offers commercial loans to real estate developers as described above under “Overview and Groundfloor Platform”. The loans are generally applied toward the Project’s acquisition and/or renovation or construction costs. GFH lends to qualified commercial real estate developers who meet GFH’s business and credit qualifications and are approved through the underwriting platform. GFH utilizes the Grading Algorithm in order to determine the interest rate that it will offer to the prospective commercial borrower.

(b) Investing Products

Promissory Notes

General

Promissory Notes, the subject of this Offering Circular, are available to retail investors through the Mobile App. Funds from the sale of Promissory Notes are used by the Company, at the sole discretion of the Company, to purchase Loans originated by GFH. Investors in Promissory Notes do not directly invest in Loans held by the Company that were acquired from GFH; rather, the Promissory Notes are general obligations of the Company, and the proceeds thereof will be used primarily to fund the acquisition of Loans originated by GFH to continually expand and replenish the portfolio of Loans owned by the Company, which loans are subsequently sold to Groundfloor Finance, GRE1 or GRE 2, typically within five (5) business days, but in any event no more than thirty (30) business days, following the acquisition thereof by the Company. The Promissory Notes will be secured by a first priority security interest in the assets (and related property and rights) of the Company which will principally consist of commercial real estate loans that the Company has acquired from GFH. Such security interest will rank ahead of any unsecured debt of the Company. Given that the security interest is a blanket lien on the assets of the Company and is not against specifically identified assets of the Company, as of the date of this Offering Circular, there is no unbonded property available for use against the issuance of Promissory Notes and the Promissory Notes are not being issued against any unbonded property of the Company, the deposit of cash by the Company, or otherwise.

The offering of Promissory Notes is being conducted as a continuous offering pursuant to Rule 251(d)(3) of the Securities Act of 1933 (the “Securities Act”). Continuous offerings allow for a sale of securities to be made over time, with no specific offering periods or windows in which securities are available. Sales of securities may happen sporadically over the term of the continuous offering, and are not required to be made on any preset cadence. The active acceptance of new investors in Promissory Notes, whether via the Platform, the Mobile App, or otherwise, may at times be briefly paused, or the ability to subscribe may be periodically restricted to certain individuals to allow the Company time to effectively and accurately process and settle subscriptions that have been received. The Company may discontinue this offering at any time.

Interest Rate of Promissory Notes

The Company reserves the right to modify the applicable interest rate on the Promissory Notes from time to time, but not more frequently than twice per month, in its sole discretion. All such modifications to the interest rate will reflect an interest rate per annum between 2.0% and 6.0% in 0.25% increments. All updates to the applicable interest rate will be communicated to Investors through the Mobile App no less than seven (7) days prior to the effective date of such updated interest rate, and will also be reflected in an offering circular supplement to be filed with the Securities and Exchange Commission no later than five (5) business days after the effective date of such updated interest rate, which may be obtained from the SEC EDGAR filing website as https://www.sec.gov. All updates to the applicable interest rate shall apply to all outstanding Promissory Notes held by such Investor as of the effective date of the interest rate change and the Company will issue an amended and restated Promissory Note to all existing holders of Promissory Notes that reflect such updated interest rate. Additionally, Investors may elect to purchase additional Notes bearing the updated interest rate through the Groundfloor Yield Mobile App, exercise their put right with respect to their outstanding Promissory Notes prior to the applicable maturity date, or rollover all proceeds of an existing Promissory Note on the applicable maturity into a new Promissory Note bearing the updated interest rate. For the avoidance of doubt, no terms of the Promissory Notes (including the term, price, or other non-interest rate features of the Promissory Notes) other than the applicable interest rate may be modified in the sole discretion of the Company.

Investor Put Right

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document date, the Company will remit to the investor’s GFY Account the accrued and outstanding interest and outstanding principal balance as of the maturity date within five (5) business days of such maturity date. Except as described herein, there are no limitations on Investors’ ability to exercise their put rights.

Rollovers of Promissory Notes

Groundfloor Yield Auto-Invest Program

Investors may elect to participate in the Groundfloor Yield Auto-Invest Program (the “GFY AIP”), which is an optional program that allows an Investor to automatically invest in additional Promissory Notes on a recurring basis subject to certain parameters designated by such Investor. In order to affirmatively elect to participate in the GFY AIP, Investors are asked to complete a Groundfloor Yield Auto-Invest Program Election Form (the “GFY AIP Election Form”), which is an exhibit to the form of Note Purchase Agreement. All investors are required to review and complete the Note Purchase Agreement prior to any investments in any Promissory Notes issued by the Company. Any investor that does not complete a GFY AIP Election Form shall be deemed to have opted out of participation in the GFY AIP. The GFY AIP Election Form provides investors with the option to select the amount of automatic investment, day of the month for each automatic investment in Promissory Notes, along with the frequency of the automatic investment in Promissory Notes, which may be on a quarterly basis or a custom schedule (with a minimum of at least two calendar months selected by the investor). If desired, investors may also designate a stop date for automatic investments. Investors may revise or change the elections set forth in the GFY AIP Election Form or cancel their participation in the GFY AIP at any time by submitting a new GFY AIP Election Form to Groundfloor Yield with three (3) business days’ notice in the event of a revision or change in election, or in the event that such investor wishes to cancel its participation in the GFY AIP.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus. Some of the information contained in this discussion and analysis, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

Groundfloor Finance maintains and operates the Groundfloor Platform for use by Groundfloor Finance and its subsidiaries, including the Company, to provide real estate development investment opportunities to the public. Proceeds from the Promissory Notes contemplated in this offering will be used to purchase loans originated by GFH, and for general corporate purposes of the Company, including the cost of this offering, but Promissory Notes are not dependent upon any particular loan originated by GFH or otherwise held by the Company and remain at all times the general obligations of the Company. Final decisions on use of proceeds allocations will be made by Groundfloor Finance management.

Operating Results

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company was formed on April 10, 2020 and, as of the date of this Offering Circular, we have not commenced operations. Having not commenced active operations, our management is not aware of any material trends or uncertainties, favorable or unfavorable, other than economic conditions affecting the commercial and residential real estate industry and real estate generally, including but not limited to the novel coronavirus COVID-19 pandemic, which may be reasonably anticipated to have a material impact on the capital resources and the revenue or income to be derived from the operation of our assets. To the extent that the effects of the pandemic, including any restrictions imposed by federal, state or local governments, affect the commercial and residential real estate industry generally, the Company’s ability to collect on the loans that it acquires from GFH may be adversely affected. Additionally, to the extent that directors, officers, employees, representatives, or agents of the Company or GFH, or any third parties on which the Company or GFH rely, are affected by the pandemic, the operations and financial results of the Company and GFH may be adversely affected.

The audited financial statements included in this Offering Circular have been prepared assuming that the Company will continue as a going concern. The audited financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

Liquidity and Capital Resources

As of the date of this Offering Circular, Groundfloor Yield LLC does not have any external sources of liquidity outside of its sole member and manager, Groundfloor Finance.

Trends and Key Factors Affecting Our Performance

We have not yet commenced operations. As such, there are no trends or key factors affecting our performance.

Plan of Operation

Prior to September 2015, Groundfloor Finance’s operations were limited to issuing nonrecourse promissory notes solely in Georgia to Georgia residents (the “Georgia Notes”) pursuant to an intrastate crowdfunding exemption from registration under the Securities Act and qualification under Georgia law. On September 7, 2015, the SEC qualified Groundfloor Finance’s first offering statement on Form 1-A covering seven separate series of limited recourse obligations (“LROs”) corresponding to the same number of real estate development projects in eight states and the District of Columbia. Subsequently, Groundfloor Finance has not issued, and does not intend to issue in the future, any additional Georgia Notes. Since that time, Groundfloor Finance has qualified two additional offering statements on Form 1-A in addition to an offering statement on Form 1-A qualified for GRE 1, in each case under Tier 1 of Regulation A. In January 2018, Groundfloor Finance’s offering statement relating to the offer and sale of LROs (the “LRO Offering Circular”) was qualified by the SEC under Tier 2 of Regulation A, raising the annual aggregate amount of LROs which Groundfloor Finance may offer and sell to $50 million, less any other securities sold by Groundfloor Finance under Regulation A. Groundfloor Finance has filed, and intends to continue to file, post-qualification amendments to the LRO Offering Circular on a regular basis to include additional series of LROs. Following the qualification of this Offering Circular, the Company plans to offer, on a continuous basis, Promissory Notes with the terms described herein. With this increased lending capital we expect that the number of borrowers and corresponding investors, and the volume of loans originated through the Mobile App, will increase and generate increased revenue from borrower origination and servicing fees.

As the volume of our loans and corresponding offerings increases, Groundfloor Finance plans to continue the current strategy of raising equity and, in limited circumstances, debt financing to finance the Company’s operations until the Company reaches profitability and becomes cash-flow positive, which we do not expect to occur before 2021. Future equity or debt offerings by Groundfloor Finance will be necessary to fund the significant investments in website development, security, investor sourcing, loan processing and marketing necessary to reach profitability. Groundfloor Finance expects to hire more staff to support the Company’s expected growth in operations and to invest heavily in marketing throughout the next year.

Off-Balance Sheet Arrangements

The Company does not engage in any off-balance sheet financing activities. We do not have any interest in entities referred to as variable interest entities, which include special purpose entities and other structured finance entities.

MANAGEMENT

The executive officers, directors, significant employees and their respective ages of Groundfloor Finance, the sole member and a manager of the Company are as follows:

Name Position Age Term of Office Executive Officers:

Executive Vice President, Legal and Regulatory, Acting Chief Financial Officer and Nick Bhargava 36 January 2013 Secretary Directors: Bruce Boehm Director (Independent) 66 December 2014 Nick Bhargava Director of Groundfloor Finance and Manager of the Company 36 January 2013 Brian Dally Director 48 January 2013 Lucas Timberlake Director 33 November 2019 Michael Olander, Jr. Director 37 December 2014 Richard Tuley, Jr. Director (Independent) 50 December 2014 Significant Employees: Rhonda Hills Senior Vice President, Marketing and Sales 49 February 2018 Richard Pulido Senior Vice President and Head of Lending and Risk Management 59 December 2016 Chris Schmitt Vice President of Software 46 February 2014

Business Experience

Nick Bhargava, Executive Vice President, Legal and Regulatory, Acting Chief Financial Officer and Secretary of Groundfloor Finance and Manager of the Company

Nick Bhargava is a co-founder of Groundfloor Finance, has served on the Groundfloor Finance Board of Directors (the “Board of Directors”) and as our Secretary since our inception. Mr. Bhargava was also named Executive Vice President, Legal and Regulatory in July 2014. Mr. Bhargava completed a Practicum with SciQuest Inc. from January 2012 to May 2012 where he was responsible for reviewing and editing the company’s federal securities filings and sales contracts. Previous to that, he served as a Regulatory Analyst for the Financial Services Roundtable from May 2011 to August 2011, where he reviewed and analyzed legislation and regulation, particularly the Dodd-Frank Wall Street Reform and Consumer Protection Act rulemakings. From May 2010 to August 2010, Mr. Bhargava served as an Honors Intern in Trading and Markets with the SEC, at which he was tasked with researching and analyzing the May 6, 2010 Flash Crash in addition to reviewing proposed rules, comments on proposed rules and SRO filings. As an Enforcement Intern with the Financial Industry Regulatory Authority from May 2009 to August 2009, Mr. Bhargava was responsible for developing enforcement actions against broker- dealers. Prior to these positions, Mr. Bhargava worked as a Trader for TD Waterhouse Inc. from September 2006 to February 2008 and had responsibility for taking and executing trade orders for equities and equity options for high value accounts. Mr. Bhargava received his LLM from Duke University School of Law in 2012, a JD from American University in 2011, and a BS in Biological Sciences and Business from University of Alberta in 2006.

Bruce Boehm, Director (Independent)

Bruce Boehm has served on the Board of Directors since December 2014. Mr. Boehm is an active angel investor in the Raleigh-Durham area and advisor to several specialty investment funds. During his career, he has been a director for more than 35 publicly and privately held companies. From 1992 to 1996, he created and directed the Masters of Engineering Management Project at the University of Canterbury in Christchurch, New Zealand. Prior to 1992, he was a General Partner of U.S. Venture Partners in Menlo Park, California, with responsibility for a portfolio of approximately 20 healthcare and technology investments. Prior to 1982, he was employed by several Silicon Valley and Route 128 companies as an engineer and project manager. Mr. Boehm received a BS from MIT in 1975 and a MS and MBA from Stanford University in 1982. Mr. Boehm qualifies as an independent director under the NASAA Statement of Policy Regarding Corporate Securities Definitions.

Brian Dally, President and CEO, and Director

Brian Dally is a co-founder of the Company, has served on the Board of Directors and as Groundfloor Finance’s President and Chief Executive Officer since its inception. Prior to forming Groundfloor Finance, he served as the Chief Instigator of Fomentum Consulting, LLC beginning in September 2012, responsible for consulting for technology companies in the area of marketing, customer acquisition, and product development. As the Senior Vice President and General Manager of Republic Wireless, a division of Bandwidth.com, from January 2010 to September 2012, Mr. Dally led the successful formation and launch of the company’s mobile division, including managing over 60 individuals and achieving a $60 million revenue run-rate before the end of the first year of operation. From May 2008 to January 2009, Mr. Dally served as the Principal at Peripatetic Ventures Corp., a management consulting firm for high-growth technology company clients, where he assisted clients to develop partnerships to execute new product strategies and cultivate potential customer relationships in addition to conducting buyer needs research, analyzing competition, and crafting positioning and messaging. Mr. Dally has also held officer-level positions with Cecure Gaming LTD, a consumer poker and casino games service for mobile phones, and Motricity Inc., a mobile platform for entertainment and applications. Mr. Dally received a JD from Harvard Law School in June 1999, a MBA from Harvard Business School in 1999, and a BA in Political & Social Thought from the University of Virginia in 1993.

Rhonda Hills, Senior Vice President of Marketing and Sales

Rhonda Hills has served as Senior Vice President of Sales and Marketing since February 2018. She is responsible for driving engagement and revenue growth for the Company. Ms. Hills has spent her career building internet-based supply and demand marketplaces. Most recently Ms. Hills was Chief

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Marketing Officer for Dinova, a proprietary marketplace that exclusively connects business diners with preferred restaurants nationwide. Prior to joining Dinova, Ms. Hills was Executive Vice President for BLiNQ Media, an award-winning social media advertising company whose technology connected ready- to-buy consumers with relevant local merchants and offers. As Chief Marketing Officer for Kudzu.com, Ms. Hills led the national expansion of an online marketplace that connected homeowners with top-rated home contractors in their neighborhood. Ms. Hills also led marketing strategy for Cox Interactive Media’s network of city websites and was a Founding Father of AOL’s Digital City in the 1990’s. Ms. Hills is a summa cum laude graduate of the University of Maryland, receiving two Bachelor of Arts, in Radio, TV & Film, and in Music.

Lucas Timberlake, Director

Lucas Timberlake has served on our Board of Directors since November 2019. Mr. Timberlake has over 10 years of financial services experience in a variety of capacities, including venture capital, private equity, and investment banking. Currently, Mr. Timberlake is a Partner with Fintech Ventures Fund, a financial technology-focused investment firm, since 2015. Since assuming his current role, Mr. Timberlake has held several board director positions with technology-enabled lending companies in the small business and real estate lending sectors, and currently serves on the board of directors for IOU Financial. Previously, Mr. Timberlake was part of the investment team with Antarctica Capital, an international private equity firm focusing on real assets and insurance opportunities. Mr. Timberlake began his career as an investment banking analyst with Bank of America Merrill Lynch. Mr. Timberlake holds a Bachelor of Arts in Economics and Political Science from Columbia College of Columbia University.

Michael Olander Jr., Director

Michael Olander Jr. has served on the Board of Directors since December 2014. Since its inception in 2005, Mr. Olander has served as CEO, in addition to being the sole member and manager, of MDO Holdings, LLC, a diversified holding company that operates three core subsidiaries: MDO2 Fitness, LLC owns and operates 28 health clubs under the names O2 Fitness and East Shore Athletic Clubs; MOREI, LLC and its affiliates own in excess of 250,000 square feet of commercial real estate; and MDO Ventures JS, LLC is an investment company with over a dozen companies currently funded. Mr. Olander sits on the board of five companies funded by MDO Ventures and serves as an advisor to two more. He earned his Bachelor of Arts in Business Administration from the College of Charleston in 2004.

Richard Pulido, Senior Vice President, Lending and Risk Management

Richard Pulido has served as Groundfloor Finance’s Senior Vice President and Head of Lending and Risk Management since December of 2016. Prior to joining the Company, he had a 27 year career with Prudential Financial in commercial real estate investment spanning asset management, development, portfolio management and capital markets assignments. Mr. Pulido’s last assignment was building a Secondary Market unit to address demand for floating rate mortgage product. Starting the group in 2013, he built an approximately $1 billion book by December 2015. Between 1996 and 2012, Mr. Pulido was in the Debt Asset Management team, including 12 years as National Head of Special Servicing. Mr. Pulido successfully led the team through the credit cycle, at one point tripling head count and office count to properly address portfolio issues. During this period, he also expanded the group’s scope beyond life company assets to include CMBS, Agency and third party accounts. Concurrent with his special servicing responsibilities, for several years Mr. Pulido also led the Portfolio Management team responsible for quality rating and valuing the commercial mortgage portfolio. Additional achievements included implementing the engagement of an offshore vendor to provide supporting analytical work and defending the proprietary credit rating model to regulators, auditors and rating agencies. Mr. Pulido had previous assignments in equity asset management and development in Los Angeles and Chicago, where he began his Prudential career. Prior to his real estate career, Mr. Pulido was a Systems Engineer with Northrop Corp. in California. Mr. Pulido received his MBA from The University of Chicago Booth School of Business in 1988 and his BS in System Science and Mathematics from the University of California, Los Angeles in 1983.

Chris Schmitt, Vice President of Software

Chris Schmitt has served as Groundfloor Finance’s Vice President of Software since February of 2014, previously serving as its lead developer on a contract basis. Prior to joining Groundfloor Finance, he served as Senior Program Manager for Bandwidth.com beginning in January 2012, where he led multiple teams in efforts to coordinate the release of products, created and implemented a new Beta program to improve product quality, and worked with senior management to define tasks and priorities for his teams. Mr. Schmitt served as the IT Manager of Bandwidth.com from September 2011 to January 2012, and in this role, he managed a group of five developers on day-to-day operations of building and maintaining the website and back office and launch night of republic wireless including a massive scaling effort on Amazon’s EC2 services to handle peak web traffic. As Senior Developer for Bandwidth.com from October 2010 to September 2011, Mr. Schmitt’s responsibilities included organizing and acting as the team lead for the Broadband division. Also in this role, he took the division from an excel-based back office to an online back office through multiple integration, rebuilt the online customer portal with many enhanced features and reconstructed the back end to make it more scalable to meet future demand, and built a distributed ping-based product leveraging Amazon EC2 services from multiple regions to compete with other industry participants. Mr. Schmitt served as Senior Database Administrator for Credit Suisse from August 2009 to October 2010, where he acted as a primary database administrator for over 100 servers and worked with support groups to help improve communication and processes. Mr. Schmitt also operated his own consulting firm, TreadPath Software, LLC, from August 2007 to October 2010. Mr. Schmitt received a BA in Computer Information Systems from Roger Williams University in 1997.

Richard (“Rick”) Tuley Jr., Director (Independent)

Richard (“Rick”) Tuley Jr. has served on the Board of Directors since December 2014. Mr. Tuley is an experienced real estate entrepreneur and business operator. He currently serves as the managing broker of Richard Tuley Realty, Inc., a real estate brokerage firm specializing in residential and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document commercial investment sales and property management which was founded in 1982. Mr. Tuley has been a licensed broker since 1992 and assumed full firm management in 2009. In addition, Mr. Tuley serves as President of Destiny Development Corporation, a Georgia-based general contracting firm founded in 2001. Destiny specializes in upscale custom and speculative residential construction and remodeling. Mr. Tuley is responsible for firm strategy, securing mortgage capital and making investment decisions. He is a third generation home builder, whose father founded two home building companies in Atlanta, Georgia. Mr. Tuley has over 25 years of experience in new home construction, lot and land development for multiple Fortune 500 companies, retail development, residential redevelopment, property management and long-term investing. Mr. Tuley is also an angel investor. He previously worked for the real estate team within Ernst & Young's entrepreneurial services group. He was also a senior associate in Leveraged Finance and the Financial Sponsors Coverage groups at UBS and a principal with Katalyst Venture Partners in New York. Between real estate and Wall Street, Mr. Tuley has been involved in well over $1 billion in transactions during his career. Mr. Tuley earned his undergraduate degree from Georgia Tech in 1992 and his MBA from Harvard Business School in 1999. Mr. Tuley qualifies as an independent director under the NASAA Statement of Policy Regarding Corporate Securities Definitions (collectively with Mr. Boehm, the “Independent Directors”).

Involvement in Certain Legal Proceedings

Groundfloor Yield LLC is not a party to any litigation.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

Compensation of the Groundfloor Finance executive officers for the 2020 fiscal year was as follows:

Cash Other Total Name compensation compensation compensation Brian Dally $ 166,605 N/A $ 166,605 Nick Bhargava $ 100,000 N/A $ 100,000

As of the date of this Offering Circular, Groundfloor Finance has not compensated its outside directors for their service on the Board of Directors. Notwithstanding the foregoing sentence, Bruce Boehm and Richard Tuley, Jr. were each granted options to purchase 8,000 shares of Groundfloor Finance common stock as compensation for their service on the Board of Directors during 2015. If exercised, such options will not represent five or more percent of any class of securities. The option grants to Bruce Boehm and Richard Tuley, Jr. solely serve as service compensation and is customary for companies in our industry in order to attract and retain qualified directors. In the future, Groundfloor Finance may implement an outside director compensation program that includes grants of cash and/or equity-based awards.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS

Groundfloor Finance is the sole member and a manager of Groundfloor Yield LLC.

INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

None.

GROUNDFLOOR YIELD PLATFORM

Groundfloor Yield Platform

Promissory Note investors are provided with a Promissory Note directly from the Company. All Promissory Notes earn the designated interest rate, subject to change in the sole discretion of the Company as described therein, and are callable, redeemable, and prepayable at any time by us. That is, we may repurchase a Promissory Note from the Promissory Note investor at the par value of outstanding principal plus the interest accrued through the repurchase date. The Promissory Notes are also subject to a put right on the part of investors, as further described in “Securities Being Offered – Investor Put Right”.

Promissory Notes are held on the Platform in electronic form and are not listed on any securities exchange. Selling of Promissory Notes to third parties is prohibited unless expressly permitted by us. Promissory Notes can be viewed at any time by accessing the investor’s account on the Platform through the Mobile App or through a facsimile on the Groundfloor Platform. Promissory Notes are only accessible by the individual investor and cannot be accessed unless the investor enters login credentials. All Promissory Notes must be held by Promissory Notes investor members.

Loan Servicing

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Groundfloor Platform manages investor servicing in-house and handles payments on the Promissory Notes to Investors. Heavy transaction volume into and out of the various accounts it maintains could increase the risk of bookkeeping and recordkeeping errors. Because payments flow through various financial intermediaries, there is an auditable trail of money movement, and, in the case of a bookkeeping error, we believe Groundfloor Finance will be able to recreate transaction histories in order to correct the error. Groundfloor Finance maintains a sub-ledger with respect to each of our accounts that records all movements of funds into and out of each account, which is periodically reconciled with records of bank transaction history, as well as records on the Groundfloor Platform. Groundfloor performs nightly backups of its entire system.

Fees

The Company does not charge a servicing fee for the Promissory Notes, but investors may be charged a transaction fee if their method of investment requires the Company to incur an expense.

Use of Proceeds

We will use the proceeds of this offering primarily to purchase Loans originated by GFH through the Groundfloor Platform and for general corporate purposes, including the costs of this offering. Promissory Notes are not dependent upon any particular loan originated by GFH or otherwise held by the Company and remain at all times the general obligations of the Company.

Establishing an Account

The first step to being able to purchase Promissory Notes on the Groundfloor Yield Platform is for you to set up an account (a “Promissory Notes Account”). In order to set up a Promissory Notes Account, you need to do the following:

If you are a natural person, you must be at least 18 years of age and a U.S. resident. You must provide your name, address, email address and social · security number. You may establish a separate account to make investments from a self-directed IRA or 401(k) account.

If you are an entity, you must provide the entity, its address, and the name and email address of a contact person and the taxpayer identification · number.

In either case, you must agree to the Groundfloor Platform terms of service (the “Terms of Service”), including consent to receipt of disclosures · electronically, and the Groundfloor Platform privacy policy (the “Privacy Policy”).

You must also agree to the rules, limitations, processes and procedures for purchasing Promissory Notes through the Groundfloor Platform via the Mobile App. These provisions are collectively contained in the Promissory Note Purchase Agreement and the terms and conditions attached thereto (the “Terms and Conditions”), the Terms of Service and the Privacy Policy. We refer to the Promissory Note Purchase Agreement, including without limitation, all exhibits and schedules attached thereto, the Terms and Conditions, the Terms of Service, and the Privacy Policy as the “Investment Documents.” We advise each Investor to read the Offering Circular and all of the applicable Investment Documents before purchasing any Promissory Notes.

In addition, in connection with purchasing Promissory Notes, you must represent that you reside in a state where the Promissory Notes are registered or qualified, you satisfy applicable investor suitability requirements, and you have received the Offering Circular, which includes a discussion of the risks associated with the investment in the Promissory Notes under the “Risk Factors” section.

How to Purchase Promissory Notes

The Promissory Notes will be offered on the Groundfloor Yield Platform through the Mobile App. Prospective investors in the Promissory Notes will create a username and password, and indicate agreement to our terms and conditions and privacy policy on the Mobile App.

The following features are available to participants in the Promissory Notes program through the Mobile App:

· Available Online Directly from us. You can purchase Promissory Notes directly from us through the Mobile App.

No Purchase Fees Charged. We will not charge you any commission or fees to purchase Promissory Notes through our platform. However, other · financial intermediaries, if engaged, may charge you commissions or fees.

· Invest as Little as $0.01. You will be able to purchase Promissory Notes in amounts as low as $0.01.

Flexible, Secure Payment Options. You may purchase Promissory Notes with funds electronically withdrawn from your checking account or by · wire transfer.

Manage Your Portfolio Online. You can view your investments, returns and transaction history online, as well as receive tax information and other · portfolio reports.

Orders are typically processed on the business day following the order. You may not withdraw the amount of your purchase order, unless the listing is withdrawn or cancelled. Once a purchase order is accepted and processed, it is irrevocable. See “Groundfloor Yield Platform—Structure of Investor Accounts and Treatment of Your Balances” below for more information.

Prior to submitting a purchase order, you will be required to acknowledge receipt of the offering documents for the Promissory Notes that you wish to purchase. In the case of an entity investor, the prospective investor will be required to make representations regarding the authority of the signatory to enter into the agreement and make representations on behalf of the entity.

Currently, the minimum purchase order that you may submit for any particular offering of Promissory Notes is $0.01, and there is no maximum purchase order that may be submitted, except for non-accredited investors, whose purchases will be subject to the following limits pursuant to SEC Rule 251(d)(2)(C):

· natural non-accredited persons may only invest the greater of 10% of their annual income or net worth; and

· non-natural non-accredited persons may invest up to 10% of the greater of their net assets or revenues for the most recently completed fiscal year.

Structure of Investor Accounts and Treatment of Your Balances

We maintain and act as the recordkeeper of a pooled account at the FBO Servicer to hold the funds for your and other investors’ benefit. This account is referred to as the “Investor FBO Account.” In order to submit purchase orders on any Promissory Note offerings, you must have sufficient funds in the FBO account. Bank account host and Groundfloor Yield LLC‘s relationship with the FBO Servicer may change at any time. All payments to fund purchases of Promissory Notes are made by deposit or authorized ACH or wire transfer into the Investor FBO Account.

We will maintain records for you detailing the amount of funds that are available to you for the purchase or Promissory Notes or for withdrawal in your Promissory Notes Account. These Promissory Notes Accounts allow us to track and report for each prospective investor the funds the prospective investor has transferred into and out of the FBO account, the funds the prospective investor has committed to purchase Promissory Notes, and the interest and principal payments that the prospective investor has received on outstanding Promissory Notes that it owns. You have no direct relationship with the FBO Servicer holding the Investor FBO Account by virtue of having a Promissory Note account or purchasing Promissory Notes on our platform.

Tax Treatment

Promissory Notes will receive interest income. At the end of the calendar year, investors with over $10 of realized interest will receive a form 1099-INT. These will need to be filed in accordance with the United States Tax Code. Investor’s tax situations will likely vary greatly and all tax and accounting questions should be directed towards a certified public accountant.

SECURITIES BEING OFFERED

Following is a summary of the terms of the Promissory Notes which will be offered by the Company on the Groundfloor Yield Platform through the Mobile App.

General. We may offer Promissory Notes, with a total value of up to $75 million on a continuous basis, under this Offering Circular. We will not issue more than $75 million of securities pursuant to this Offering Circular in any 12-month period.

The Promissory Notes will:

· be priced at $0.01 each;

· represent a full and unconditional obligation of the Company;

bear interest at 4.0% per annum as set forth in the applicable Promissory Note, as such interest rate may be modified from time to time, but not · more frequently than twice per month, by the Company in its sole discretion as described in this Offering Circular; such modifications to reflect an interest rate per annum of 2.0%-6.0% in 0.25% increments;

have a three (3) year term and will (i) contain a redemption feature that is exercisable by the holder every five (5) business days from the date of · issuance; and (ii) be callable, redeemable, and prepayable at any time by the Company;

be secured by a first priority security interest in the assets (and related property and rights) of the Company, which assets will principally consist of · commercial real estate loans held by the Company;

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document not be payment dependent on any individual underlying real estate loan or loans held by the Company, including without limitation, any loans issued · on Groundfloor Finance’s online lending platform; and

investors may participate in the GFY AIP, which allows automatic investment in additional Promissory Notes on a regular basis in an amount and · preset cadence designated by the investor.

Ranking. The Promissory Notes will be secured by a first priority security interest in the assets (and related property and rights) of the Company which will principally consist of commercial real estate loans that the Company has acquired from GFH. Such security interest will rank ahead of any unsecured debt of the Company. Given that the security interest is a blanket lien on the assets of the Company and is not against specifically identified assets of the Company, as of the date of this Offering Circular, there is no unbonded property available for use against the issuance of Promissory Notes and the Promissory Notes are not being issued against any unbonded property of the Company, the deposit of cash by the Company, or otherwise. The Promissory Notes are not being issued against the assets of the Company, the deposit of cash by the Company, or otherwise.

Form and Custody. Promissory Notes will be issued by computer-generated program on our website and electronically signed by the Company in favor of the investor. The Promissory Notes will be stored by the Company and will remain in the Company’s custody for ease of administration. Except during periodic system maintenance, investors may view their Promissory Notes through their online dashboard on the Platform through the Mobile App or on the Groundfloor Platform.

Prepayment. Promissory Notes will be callable, redeemable, and prepayable at any time by the Company at par value plus any accrued but unpaid interest.

Conversion or Exchange Rights. We do not expect the Promissory Notes to be convertible or exchangeable into any other securities.

Events of Default. The following will be events of default under the Promissory Notes:

· if we fail to pay interest when due and our failure continues for sixty (60) days and the time for payment has not been extended or deferred;

· if we fail to pay the principal, or premium, if any, when due whether by maturity or called for redemption; and

if we cease operations, file, or have an involuntary case filed against us, for bankruptcy, are insolvent or make a general assignment in favor of our · creditors.

The occurrence of an event of default of Promissory Notes may constitute an event of default under any bank credit agreements we may have in existence from time to time. In addition, the occurrence of certain events of default may constitute an event of default under certain of our other indebtedness outstanding from time to time.

Governing Law. Promissory Notes will be governed and construed in accordance with the laws of the State of Georgia.

No Personal Liability of Directors, Officers, Employees and Stockholders. No incorporator, stockholder, employee, agent, officer, director or subsidiary of ours will have any liability for any obligations of ours due to the issuance of any Promissory Notes.

Interest Rate of Promissory Notes. The Company reserves the right to modify the applicable interest rate on the Promissory Notes from time to time, but not more frequently than twice per month, in its sole discretion. All such modifications to the interest rate will reflect an interest rate per annum between 2.0% and 6.0% in 0.25% increments. All updates to the applicable interest rate will be communicated to Investors through the Mobile App no later than seven (7) business days prior to the effective date of such updated interest rate, and will also be reflected in an offering circular supplement to be filed with the Securities and Exchange Commission no later than five (5) business days after the effective date of such updated interest rate, which may be obtained from the SEC EDGAR filing website as https://www.sec.gov. All updates to the applicable interest rate shall apply to all outstanding Promissory Notes held by such Investor as of the effective date of the interest rate change and the Company will issue an amended and restated Promissory Note to all existing holders of Promissory Notes that reflect such updated interest rate. Additionally, Investors may elect to purchase additional Notes bearing the updated interest rate through the Groundfloor Yield Mobile App, exercise their put right with respect to their outstanding Promissory Notes at any time prior to the applicable maturity date (including at any time prior to the effective date of any interest rate change), or rollover all proceeds of an existing Promissory Note on the applicable maturity into a new Promissory Note bearing the updated interest rate. No other terms of the Promissory Notes will be subject to change in the sole discretion of the Company.

Investor Put Right. From and after the issuance date of the Promissory Notes and prior to the applicable maturity date of the Promissory Notes, an Investor may require the Company to redeem such Investor’s Promissory Note every five (5) business days from the applicable issuance date by exercising such Investor’s put right. The Investor may exercise such Investor’s put right with respect to an outstanding Promissory Note by providing notice to the Company through the Mobile App up to and on the applicable Put Date (as defined herein). The Investor may exercise such Investor’s put right with respect to the Promissory Notes every five (5) business days from the applicable issuance date of the Promissory Notes (each, a “Put Date” and collectively, the “Put Dates”). For example, if a Promissory Note is issued on Thursday, January 1, assuming that the Investor provides notice of such Investor’s intention to exercise such Investor’s put right, the Put Date will be the following Thursday, January 8. In the event an Investor exercises such Investor’s put right with respect to a given Promissory Note on the Put Date, the Company will remit to the Investor’s GFY Account the accrued and outstanding interest and

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document outstanding principal balance as of the Put Date within five (5) business days of such Put Date. In the event the Investor holds the Promissory Note until the applicable maturity date, the Company will remit to the investor’s GFY Account the accrued and outstanding interest and outstanding principal balance as of the maturity date within five (5) business days of such maturity date. Except as described herein, there are no limitations on Investors’ ability to exercise their put rights.

Rollovers of Promissory Notes. On the applicable maturity date of the Promissory Notes, Investors may elect to roll over all payments received in respect of the outstanding principal balance and all accrued interest into a new Promissory Note at the current and effective interest rate as of the issuance date, to be issued by the Company to such Investors on such applicable maturity date (the “Rollover”). If an Investor wishes to elect to rollover such proceeds, such Investor must provide written notice to the Company through the Groundfloor Yield Mobile App no later than on the applicable maturity date of the Promissory Note. The Company will treat all rollovers as sales chargeable against the aggregate total of offered securities pursuant to the Offering Statement and to include such sales when calculating the $75 million cap in offering proceeds raised under any qualified offering statement within a 12 month period in accordance with Rule 251(a).

Groundfloor Yield Auto-Invest Program. Investors may elect to participate in the Groundfloor Yield Auto-Invest Program (the “GFY AIP”), which is an optional program that allows an Investor to automatically invest in additional Promissory Notes on a recurring basis subject to certain parameters designated by such Investor. In order to affirmatively elect to participate in the GFY AIP, Investors are asked to complete a Groundfloor Yield Auto-Invest Program Election Form (the “GFY AIP Election Form”), which is an exhibit to the form of Note Purchase Agreement. All investors are required to review and complete the Note Purchase Agreement prior to any investments in any Promissory Notes issued by the Company. Any investor that does not complete a GFY AIP Election Form shall be deemed to have opted out of participation in the GFY AIP. The GFY AIP Election Form provides investors with the option to select the amount of automatic investment, day of the month for each automatic investment in Promissory Notes, along with the frequency of the automatic investment in Promissory Notes, which may be on a quarterly basis or a custom schedule (with a minimum of at least two calendar months selected by the investor). If desired, investors may also designate a stop date for automatic investments. Investors may revise or change the elections set forth in the GFY AIP Election Form or cancel their participation in the GFY AIP at any time by submitting a new GFY AIP Election Form to Groundfloor Yield with three (3) business days’ notice in the event of a revision or change in election, or in the event that such investor wishes to cancel its participation in the GFY AIP.

Investors will have access to current information regarding their Promissory Notes by viewing their account on the Groundfloor Yield Platform, with a facsimile on the Groundfloor Platform. The Groundfloor Yield Platform and Groundfloor Platform will include any information regarding changes in interest rates and the filing of periodic and current reports by the Company. The Company also intends to include any changes to interest rates in a supplement or post-qualification amendment, as applicable, to this Offering Statement.

The Company intends to treat any sales of new Promissory Notes as sales chargeable against the aggregate total of offered securities pursuant to the Offering Circular and to include such sales when calculating the $75 million cap in offering proceeds raised under any qualified offering statement within a 12 month period in accordance with SEC Rule 251(a).

PLAN OF DISTRIBUTION

Subscribing for Promissory Notes

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We are offering up to $75,000,000 in our Promissory Notes pursuant to this Offering Circular. Promissory Notes being offered hereby will be only be offered through the Mobile App, a facsimile of which also exists on the Groundfloor Platform at www.groundfloor.us. This Offering Circular will be furnished to prospective investors via electronic PDF format before or at the time of all written offers and will be available for viewing and download on the Groundfloor Finance website, as well as on the SEC’s website at www.sec.gov.

In order to subscribe to purchase Promissory Notes, a prospective investor must electronically complete, sign and deliver to the Company the Investment Documents and provide funds for the purchase price in accordance with the instructions provided therein.

State Law Exemption and Offerings to “Qualified Purchasers”

Our Promissory Notes are being offered and sold only to “qualified purchasers” (as defined in Regulation A under the Securities Act of 1933). As a Tier 2 offering pursuant to Regulation A under the Securities Act, this offering will be exempt from state “Blue Sky” law review, subject to certain state filing requirements and anti- fraud provisions, to the extent that our Notes offered hereby are offered and sold only to “qualified purchasers” or at a time when our Promissory Notes are listed on a national securities exchange. “Qualified purchasers” include: (i) “accredited investors” under Rule 501(a) of Regulation D and (ii) all other investors so long as their investment in our Promissory Notes does not represent more than 10% of the greater of their annual income or net worth (for natural persons), or 10% of the greater of annual revenue or net assets at fiscal year-end (for non- natural persons). Accordingly, we reserve the right to reject any investor’s subscription in whole or in part for any reason, including if we determine in our sole and absolute discretion that such investor is not a “qualified purchaser” for purposes of Regulation A.

Physical Notes Will Not be Issued

We will not issue Promissory Notes in physical or paper form. Instead, our Promissory Notes will be recorded and maintained on the Groundfloor Yield Platform in electronic form, with a facsimile on the Groundfloor Platform.

Advertising, Sales and other Promotional Materials

In addition to this Offering Circular, subject to limitations imposed by applicable securities laws, we may use additional advertising, sales and other promotional materials in connection with this offering to better understand possible demand for the Promissory Notes product. These “test-the- waters” materials may include information relating to our Company, this offering, the past performance of our loan transactions, articles and publications concerning small business lending, or public advertisements and audio-visual materials, in each case only as authorized by us. All such materials will contain disclaimers required by, and be disseminated in a fashion permitted by, Regulation A. Although these materials will not contain information in conflict with the information provided by this Offering Circular and will be prepared with a view to presenting a balanced discussion of risk and reward with respect to our Promissory Notes, these materials will not give a complete understanding of this offering, us or our Promissory Notes and are not to be considered part of this Offering Circular. This offering is made only by means of this Offering Circular and prospective investors must read and rely on the information provided in this Offering Circular in connection with their decision to invest in our Promissory Notes. To be clear, all investors will be furnished with a copy of a current Offering Circular before or at the time of all written offers.

LEGAL MATTERS

Certain legal matters regarding the securities being offered by this Offering Circular will be passed upon for us by Manatt, Phelps & Phillips, LLP, New York, New York. Groundfloor Yield LLC has received an opinion from Robbins Ross Alloy Belinfante Littlefield LLC, Atlanta, Georgia regarding the validity of the Promissory Notes to be offered pursuant to Georgia law.

EXPERTS

Our audited financial statements as of and for the period beginning on April 10, 2020 (date of inception) and ending December 31, 2020 have been included herein in reliance upon the reports of Cherry Bekaert LLP, an independent auditor registered public account firm, as set forth in their report thereon, included therein, and incorporated herein by reference in reliance upon such report given on the authority such firm as an expert in accounting and auditing.

FINANCIAL STATEMENTS

The following audited financial statement for the period from April 10, 2020 (date of inception) to December 31, 2020 and notes thereto:

To the Board of Directors Groundfloor Yield, LLC Atlanta, Georgia

We have audited the accompanying financial statements of Groundfloor Yield, LLC (the “Company”), which comprise the balance sheet as of December 31, 2020 and the related statements of operations, members’ deficit, and cash flows for the period from April 10, 2020 (date of inception) to December 31, 2020, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the period from April 10, 2020 (date of inception) through December 31, 2020 in accordance with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has incurred losses and cash outflows from operations since its inception which result in substantial doubt about the ability of the Company to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding those matters also are described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.

Atlanta, Georgia, April 26, 2021

Financial Statements

December 31, 2020

GROUNDFLOOR YIELD LLC

Table of Contents

December 31, 2020

Independent Auditors’ Report 1

Financial Statements

Balance Sheet F-2

Statement of Operations F-3

Statement of Member’s Deficit F-4

Statement of Cash Flows F-5

Notes to Financial Statements F-6

F-1

Groundfloor Yield LLC

Balance Sheet

As of December 31, 2020

Assets Current assets: Cash $ - Total current assets $ - Liabilities and Member’s Deficit Current liabilities: Related party payable - Total current liabilities - Member’s deficit: Member’s contribution 100 Member’s deficit (100) Member’s deficit 0 Total liabilities and member’s deficit $ -

See accompanying notes to financial statements

F-2

Groundfloor Yield LLC

Statement of Operations

Operating expenses: General and administrative $ 100 Total operating expenses 100 Loss from operations (100) Net loss $ (100)

See accompanying notes to financial statements

F-3

Groundfloor Yield LLC

Statement of Member’s Deficit

For the Period from April 10, 2020 (Inception) Through December 31, 2020

Total Member’s Net Member’s Contribution Loss Deficit Balance as of April 10, 2020 (Inception) $ - $ - $ - Member contributions 100 - 100 Net loss - (100) (100) Member’s deficit as of December 31, 2020 $ 100 $ (100) $ -

See accompanying notes to financial statements

F-4

Groundfloor Yield LLC

Statements of Cash Flows

For the Period from April 10, 2020 (Inception) Through December 31, 2020

Cash flows from operating activities Net loss $ (100) Adjustments to reconcile net loss to net cash flows from operating activities: Changes in operating assets and liabilities: Related party payable - Net cash flows from operating activities (100) Cash flows from financing activities: Member’s contribution 100 Net cash flows from financing activities 100 Net increase in cash - Cash as of beginning of the period - Cash as of end of the period $ -

See accompanying notes to financial statements

F-5

Notes to the Financial Statements

December 31, 2020

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Liquidity

Our financial statements include Groundfloor Yield LLC (the “Company”), a Georgia limited liability company formed on April 10, 2020. It is a wholly- owned subsidiary of Groundfloor Finance Inc. (“Groundfloor”), a Georgia Corporation.

Description of Business

Groundfloor has developed an online investment platform designed to crowdsource financing for real estate development projects (the “Projects”), which the Company utilizes to provide investment opportunities to investors. With this online investment platform (the “Platform”), public investors (the “Investors”) are able to choose between multiple real estate development investment opportunities, and real estate developers (the “Developers”) of the Projects are able to obtain financing. Groundfloor’s financing model replaces traditional sources of financing for Projects with the aggregation of capital from small investors using the internet. Groundfloor believes this method of financing real estate has many advantages including reduced project origination and financing costs, lower interest rates for real estate development financing, and attractive returns for investors. Groundfloor will identify which loans it seeks to originate and will sell limited recourse obligations (“LROs”) which correspond to those loans. Groundfloor’s primary business is the sale of LROs and the origination of loans which correspond to those LROs, as well as the servicing of said loans.

Notes will be offered on the Platform through a smartphone application (the “Mobile App”), which is owned and operated by the Company, a facsimile of which also exists on the Platform. Funds from the sale of these notes are invested into loans and other products at the discretion of the Company, and the proceeds thereof will be used primarily to fund the acquisition of loans originated by Groundfloor and its subsidiaries to continually expand and replenish the portfolio of loans owned by the Company. These notes will be secured by a first-priority security interest in the assets of the Company, which consists principally of the portfolio of real estate loans originated by Groundfloor and its subsidiaries and subsequently acquired and held by the Company.

Basis of Presentation and Liquidity

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.

Operations since inception have consisted primarily of organizing the Company. The accompanying financial statements have been prepared on a basis which assumes that the Company will continue as a going concern. The Company has not earned any revenue since its inception. The ultimate success of the Company is dependent on management’s ability to develop and market its products and services at levels sufficient to generate operating revenues in excess of expenses.

Management evaluated the condition of the Company and has determined that until such sales levels can be achieved, management will need to secure additional capital to continue growing working capital and fund product development and operations. There is substantial doubt that the Company will continue as a going concern for at least one year following the date these financial statements were issued without additional financing.

Management intends to fund operations by capital obtained from Groundfloor. However, there are no assurances that the Company can be successful in obtaining the additional capital or such financing will be on terms favorable or acceptable to the Company or Groundfloor.

The financial statements do not include any adjustments that might result from the outcome of the uncertainties described in the financial statements. In addition, the financial statements do not include any adjustments relating to the recoverability and classification of assets nor the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

F-6

Groundfloor Yield LLC

Notes to the Financial Statements

December 31, 2020

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (concluded)

Use of Estimates

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The preparation of financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and 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.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturity of three months or less to be cash equivalents. The Company has no cash or cash equivalents as of December 31, 2020. From time to time, the Company could maintain cash deposits in excess of federally insured limits. The Company believes credit risk related to its cash and cash equivalents to be minimal.

Member’s Deficit

Groundfloor (“Member”) is the sole member of the Company. Groundfloor contributed cash of $100 to the Company but has no further obligations to make any further capital contributions to the Company.

The business of the Company shall be managed by a manager who shall be appointed from time to time by the Member. The initial manager of the Company is Groundfloor. Liability to the Company by the manager is limited to those items provided for in the Georgia Limited Liability Company Act.

Income Taxes

Under current United States (“U.S.”) income tax laws, the taxable income or loss of a limited liability company is reported in the income tax returns of the members. Accordingly, no provision for U.S. federal or state income taxes is reflected in the accompanying financial statements.

The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the Financial Statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Related Party Transactions

The Company intends to finance its operations through funds received from Groundfloor. During the period from April 10, 2020 (Inception) through December 31, 2020, Groundfloor paid $100 to register the Company with the State of Georgia, which was recorded as general and administrative expenses in the Company’s statement of operations.

NOTE 2: SUBSEQUENT EVENTS

Management has evaluated subsequent events through April 21, 2021, the date the financial statements were available to be issued, and determined that, there were no events which have occurred, that would require adjustment to or disclosure in these financial statements.

F-7

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Consolidated Financial Statements

December 31, 2020 and 2019

F-1

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Table of Contents

December 31, 2020 and 2019

Independent Auditors’ Report F-3

Consolidated Financial Statements

Consolidated Statements of Operations F-5

Consolidated Statements of Stockholders’ Deficit F-6

Consolidated Statements of Cash Flows F-7

Notes to Consolidated Financial Statements F-9

F-2

Independent Auditor’s Report

To the Board of Directors Groundfloor Finance, Inc. and Subsidiaries Atlanta, Georgia

We have audited the accompanying consolidated financial statements of Groundfloor Finance, Inc. and Subsidiaries (the “Company”), which comprise the consolidated balance sheets as of December 31, 2020 and 2019 and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred losses and cash outflows from operations since its inception which result in substantial doubt about the ability of the Company to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding those matters also are described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.

/s/ Cherry Bekaert LLP

Atlanta, Georgia, March 15, 2021

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 2019 Assets Current assets: Cash $ 1,429,172 $ 1,699,196 Loans to developers, net 63,215,374 73,851,996 Interest receivable on loans to developers 3,545,454 2,867,914 Other current assets 2,631,801 937,645 Total current assets 70,821,801 79,356,751 Property, equipment, software, website, and intangible assets, net 1,056,577 971,607 Other assets 71,302 42,603 Total assets $ 71,949,680 $ 80,370,961 Liabilities and Stockholders’ Deficit Current liabilities: Accounts payable and accrued expenses $ 2,189,807 $ 4,602,116 Accrued interest on limited recourse obligations 2,831,984 2,251,926 Limited recourse obligations, net 45,926,226 53,124,759 Revolving credit facility - 10,460,752 Convertible notes, net of discount of $126,352 and $368,526 2,661,774 3,238,474 Short-term notes payable 19,806,920 8,085,257 Total current liabilities 73,416,711 81,763,284 Other liabilities 138,680 136,819 Total liabilities 73,555,391 81,900,103 Commitments and contingencies (See Note 12) Stockholders’ deficit: Common stock, no par, 5,000,000 shares authorized, 2,165,923 and 2,102,720 issued and outstanding 11,596,087 10,564,771 Series A convertible preferred stock, no par, 747,385 shares designated, 747,373 shares issued and 4,962,435 4,962,435 outstanding (liquidation preference of $4,999,925) Series Seed convertible preferred stock, no par, 575,000 shares designated, 568,796 shares issued and 2,609,091 2,609,091 outstanding (liquidation preference of $2,721,091) Series B convertible preferred stock, no par, 548,546 shares designated, 188,036 and 0 shares issued and 3,145,092 - outstanding (liquidation preference of $3,427,896 and $0) Additional paid-in capital 2,336,551 1,802,895 Accumulated deficit (26,254,407) (21,467,774) Stock subscription receivable (560) (560) Total stockholders’ deficit (1,605,711) (1,529,142) Total liabilities and stockholders’ deficit $ 71,949,680 $ 80,370,961

See accompanying notes to consolidated financial statements

F-4

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Consolidated Statements of Operations

Year Ended December 31, 2020 2019 Non-interest revenue: Origination fees $ 2,548,305 $ 2,748,150 Loan servicing revenue 1,348,332 1,964,284

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Total non-interest revenue 3,896,637 4,712,434 Net interest income: Interest income 7,597,436 6,323,801 Interest expense (6,042,535) (4,633,122) Net interest income 1,554,901 1,690,679 Revenue 5,451,538 6,403,113 Cost of revenue (611,436) (779,756) Gross profit 4,840,102 5,623,357 Operating expenses: General and administrative 3,006,854 2,514,202 Sales and customer support 2,457,720 2,939,149 Development 1,205,399 1,125,071 Regulatory 353,103 208,874 Marketing and promotions 1,453,840 1,515,558 Total operating expenses 8,476,916 8,302,854 Loss from operations (3,636,814) (2,679,497) Interest expense on corporate debt instruments 1,149,819 1,157,769 Net loss $ (4,786,633) $ (3,837,266)

See accompanying notes to consolidated financial statements

F-5

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Deficit

Series A Series Seed Series B Convertible Convertible Convertible Additional Stock Total Preferred Stock Preferred Stock Preferred Stock Common Stock Paid-in Accumulated Subscription Stockholders’ Shares Amount Shares Amount Shares Amount Shares Amount Capital Deficit Receivable Equity Stockholders’ equity as of 747,373 4,962,435 568,796 2,609,091 - - 1,732,585 6,125,264 1,083,572 (17,630,508) (560) (2,850,706) December 31, 2018 2019 Crowdfunded equity raise, ------207,735 3,073,307 - - - 3,073,307 net of offering costs Issuance of 6,800 - - - bonus shares Exercise of 7,937 17,379 - 17,379 stock options Conversion of 147,663 1,348,821 - 1,348,821 convertible note Share-based compensation ------318,545 - 318,545 expense Beneficial conversion 400,778 400,778 feature Net loss ------(3,837,266) - (3,837,266) Stockholders’ equity as of 747,373 4,962,435 568,796 2,609,091 - - 2,102,720 10,564,771 1,802,895 (21,467,774) (560) (1,529,142) December 31, 2019 2020 Crowdfunded ------30,794 538,720 - - - 538,720 equity raise,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document net of offering costs Issuance of Series B preferred 159,748 2,679,234 - - - 2,679,234 shares, net of offering costs Conversion of 28,288 465,858 30,841 488,707 - 954,565 convertible notes Exercise of 1,568 3,889 - 3,889 stock options Share-based compensation ------533,656 - 533,656 expense Net loss ------(4,786,633) - (4,786,633) Stockholders’ equity as of 747,373 4,962,435 568,796 2,609,091 188,036 3,145,092 2,165,923 11,596,087 2,336,551 (26,254,407) (560) (1,605,711) December 31, 2020

See accompanying notes to consolidated financial statements

F-6

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Year Ended December 31, 2020 2019 Cash flows from operating activities Net loss $ (4,786,633) $ (3,837,266) Adjustments to reconcile net loss to net cash flows from operating activities: Depreciation and amortization 527,862 481,533 Share-based compensation 533,656 401,930 Noncash interest expense 274,674 85,089 Loss on sale of real estate owned 16,816 - Origination of loans held for sale (1,060,410) (13,659,207) Proceeds from sales of loans held for sale 1,968,800 15,320,281 Debt conversion inducement expense 41,633 - Changes in operating assets and liabilities: Other assets 8,406 (133,042) Interest receivable on loans to developers (677,540) (1,085,699) Accounts payable and accrued expenses (2,316,392) 2,308,919 Accrued interest on limited recourse obligations 580,059 887,310 Net cash flows from operating activities (4,889,069) 769,848 Cash flows from investing activities Loan payments to developers (66,314,737) (87,710,983) Repayments of loans from developers 69,503,979 46,214,398 Proceeds from sale of properties held for sale 1,715,352 2,018,836 Purchases of computer equipment and furniture and fixtures (53,499) (50,373) Payments of software and website development costs (559,332) (569,749) Other investing activities (80,000) - Net cash flows from investing activities 4,211,763 (40,097,871) Cash flows from financing activities Proceeds from limited recourse obligations 62,279,248 72,042,001 Repayments of limited recourse obligations (66,610,220) (47,889,960) Borrowings from the revolving credit facility 3,069,028 58,820,632 Repayments on the revolving credit facility (13,562,280) (53,827,652) Proceeds from issuance of short-term notes payable 68,950,380 24,070,230 Repayments of short-term notes payable (58,057,817) (17,260,860)

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Proceeds from issuance of convertible notes 288,000 3,174,000 Proceeds from loan under Paycheck Protection Program 829,100 - Proceeds from issuance of Series B convertible preferred stock, net of offering costs 2,679,234 - Proceeds from issuance of common stock, net of offering costs 538,720 3,073,307 Repayments of convertible notes - (450,000) Repayment of 2017 Note - (1,750,000) Payment of deferred financing costs - (61,250) Exercise of stock options 3,889 17,379 Net cash flows from financing activities 407,282 39,957,827 Net increase (decrease) in cash (270,024) 629,804 Cash as of beginning of the year 1,699,196 1,069,392 Cash as of end of the year $ 1,429,172 $ 1,699,196 Supplemental cash flow disclosures: Cash paid for interest $ 1,260,238 $ 1,218,759

F-7

GROUNDFLOOR FINANCE INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

Year Ended December 31, 2020 2019 Supplemental disclosure of noncash investing and financing activities: Loans to developers transferred to other real estate owned $ 4,911,985 $ 2,015,376 Write-down of loans to developers, net and limited recourse obligations, net 308,676 484,282 Write-down of interest receivable on loans to developers and accrued interest on limited recourse obligations 3,002,041 224,106 Conversion of convertible notes payable and accrued interest into common stock or Series B convertible 912,933 1,348,821 preferred stock Increase in allowance for loan to developers and limited recourse obligations 640,000 - Issued warrants in connection with notes payable - 139,896 Issued advance agreements for convertible notes payable - 288,000

See accompanying notes to consolidated financial statements

F-8

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

The terms "we," "our," “GROUNDFLOOR,” or the "Company" refer to Groundfloor Finance Inc. and its subsidiaries. The Company was originally organized as a North Carolina limited liability company under the name of Fomentum Labs LLC on January 28, 2013. Fomentum Labs LLC changed its name to Groundfloor LLC on April 26, 2013, and converted into a North Carolina corporation on July 26, 2013. In connection with this conversion, all equity interests in Groundfloor LLC were converted into shares of GROUNDFLOOR Inc.’s common stock. In August 2014, GROUNDFLOOR Inc. converted into a Georgia corporation and changed its name to Groundfloor Finance Inc. The accounting effects of these conversions were reflected retrospectively in the Consolidated Financial Statements. Groundfloor Holdings GA, LLC is the holder of the Revolver, as defined in Note 7. Groundfloor Properties GA LLC was created for the purpose of financing real estate in Georgia. Groundfloor Real Estate 1 LLC, Groundfloor Real Estate 2 LLC, and Groundfloor Yield LLC were created for the purpose of financing real estate in any state. Groundfloor Real Estate, LLC is currently inactive and management does not have plans to use this entity in the near future.

The Company has developed an online investment platform designed to crowdsource financing for real estate development projects (the “Projects”). With this online investment platform (the “Platform”), public investors (the “Investors”) are able to choose between multiple Projects, and real estate developers (the “Developers”) of the Projects are able to obtain financing. GROUNDFLOOR’s financing model replaces traditional sources of financing for Projects with the aggregation of capital from Investors using the internet.

Basis of Presentation and Liquidity

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company’s Consolidated Financial Statements include Groundfloor Finance Inc. and its wholly owned subsidiaries, Groundfloor Properties GA LLC; Groundfloor Real Estate, LLC; Groundfloor Holdings GA, LLC; Groundfloor Real Estate 1 LLC; Groundfloor Real Estate 2, LLC; and Groundfloor Yield LLC (collectively the “Company” or “GROUNDFLOOR”). Intercompany transactions and balances have been eliminated upon consolidation.

The Company’s Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.

Operations since inception have consisted primarily of organizing the Company, developing the technology, and securing financing. The accompanying Consolidated Financial Statements have been prepared on a basis which assumes that the Company will continue as a going concern. The Company has incurred losses and cash outflows from operations since its inception. The ultimate success of the Company is dependent on management’s ability to develop and market its products and services at levels sufficient to generate operating revenues in excess of expenses.

Management intends to raise additional debt or equity financing to grow working capital and fund operations. Management believes the Company will obtain additional funding from current and new Investors in order to sustain operations. However, there are no assurances that the Company can be successful in obtaining the additional capital or that such financing will be on terms favorable or acceptable to the Company.

There is substantial doubt that the Company will continue as a going concern for at least 12 months following the date these Consolidated Financial Statements are issued, without additional financing based on the Company’s limited operating history and recurring operating losses.

F-9

The Consolidated Financial Statements do not include any adjustments that might result from the outcome of the uncertainties described in the Consolidated Financial Statements. In addition, the Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of assets nor the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

Use of Estimates

The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America 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 Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue primarily results from fees earned on the loans to the Developers (the “Loans”). Fees include “Origination fees” and “Loan servicing revenue” which are paid by the Developers.

Effective for 2019, the Company adopted Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (“Topic 606”). Topic 606 supersedes the revenue requirements in ASC Topic 605, Revenue Recognition. The Company has evaluated the impact of this accounting standard on its Consolidated Financial Statements and concluded that the Company’s contracts with customers continue to fall within the scope of existing guidance. Servicing fees, origination fees, net interest income, and gains and losses on sales of loans remain within the scope of ASC topic 310—Receivables or ASC topic 860—Transfers and Servicing. Consequently, there was no transition adjustment required on the accompanying financial statements for adopting Topic 606.

Origination Fees

“Origination fees” are paid by the Developers for the work performed to facilitate the Loans. The amount to be charged is a percentage based upon the terms of the Loan, including grade, rate, term, and other factors. Origination fees range from 1.0% to 5.0% of the principal amount of a Loan. The origination fee is paid when the Loan is issued to the Developer and deducted from the gross proceeds distributed. A Loan is considered issued when formal closing has occurred and funds have transferred to the Developer’s account, which occurs through an Electronic Funds Transfer (“EFT”).

The origination fees are recognized as revenue ratably over the term of the Loan, while direct costs to originate Loans are recorded as expenses as incurred.

Loan Servicing Revenue

Loan servicing revenue is recognized by the Company, upon recovery, for costs incurred in servicing the Developer’s Loan, including managing payments to and from Developers and payments to Investors. The Company records loan servicing revenue as a component of revenue when collected. Direct costs to service Loans are recorded as expenses as incurred.

Whole Loan Sales

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Under loan sale agreements, the Company sells all of its rights, title, and interest in certain loans. At the time of such sales, the Company may simultaneously enter into loan servicing agreements under which it acquires the right to service the loans. The Company calculates a gain or loss on a whole loan sale based on the net proceeds from the whole loan sale, less the carrying value of the loans sold. All unamortized origination fees incurred in the origination process are recognized directly to Consolidated Statements of Operations and recorded to “Origination fees”. For sold loans for which the Company retains servicing rights, the Company compares the expected contractual benefits of servicing to the expected costs of servicing to determine whether a servicing asset or servicing liability arises from the transaction. No servicing rights assets or liabilities have been identified for the years ended December 31, 2020 and 2019.

F-10

Interest Income on Loans to Developers and Interest Expense on Limited Recourse Obligations

The Company recognizes “Interest income” on Loans and “Interest expense” on the corresponding Investor Georgia Notes (if issued by Groundfloor GA) or LROs (if issued by Groundfloor Finance Inc.) using the accrual method based on the stated interest rate to the extent the Company believes it to be collectable. For the purposes of these Consolidated Financial Statements, “Limited recourse obligations, net” refers to both Georgia Notes and LROs. Georgia Notes are securities that the Company has issued through its previously registered Georgia-exclusive securities offering, which has since been terminated. LROs are the Company’s currently registered securities. Both Georgia Notes and LROs represent similar obligations of the Company.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents as of December 31, 2020 and 2019. From time to time, the Company could maintain cash deposits in excess of federally insured limits. The Company believes credit risk related to its cash and cash equivalents to be minimal.

Each investor’s escrow account receives Federal Deposit Insurance Corporation (“FDIC”) insurance coverage on cash balances subject to normal FDIC coverage rules. Investor funds, whether committed through a LRO or held in escrow, are not included as a part of the Company’s cash balance.

Loans to Developers and Limited Recourse Obligations

“Loans to developers, net” are originally recorded at outstanding principal, then subsequently increased as additional draws are disbursed to developers. “Limited recourse obligation, net” are originally recorded at the original principal amount committed by investors, net of funds not yet to be disbursed to developers on the underlying loans, then subsequently increased as those funds are disbursed to developers. Funds committed by investors in LROs but not yet disbursed to developers on the underlying Loans were approximately $20,868,000 and $8,218,000, as of December 31, 2020 and 2019, respectively. These funds are netted against gross balances of approximately $66,794,000 and $61,343,000 as of December 31, 2020 and 2019, respectively, on the accompanying Consolidated Balance Sheets.

The interest rate associated with a Loan is the same as the interest rate associated with the corresponding Georgia Notes or LROs.

The Company’s obligation to pay principal and interest on a Georgia Note or LRO is equal to the pro rata portion of the total principal and interest payments collected from the corresponding Loan. The Company obtains a lien against the property being financed and attempts reasonable collection efforts upon the default of a Loan. The Company is not responsible for repaying “Limited recourse obligations, net” associated with uncollectable “Loans to developers, net.” Amounts collected related to a defaulted Loan are returned to the Investors based on their pro rata portion of the corresponding Georgia Notes or LROs, if applicable, less collection costs incurred by the Company.

The Investors may remit funds through the Company’s online portal prior to the actual Loan being closed. These funds are held in an escrow account controlled by a major bank and are not recognized as an LRO until the Loan is closed and funds are transferred to the Developer, which occurs through an EFT transaction. Each Investor escrow account receives FDIC insurance coverage on cash balances subject to normal FDIC coverage rules.

The Loan and corresponding LROs are recorded on the Company’s Consolidated Balance Sheets to “Loans to developers, net” and “Limited recourse obligations, net”, respectively, once the Loan has closed and funds have been disbursed to borrowers. Loans are considered closed after the promissory note for that Loan has been signed and the security interest has been perfected.

F-11

Nonaccrual and Past Due Loans

Accrual of interest on “Loans to developers, net” and corresponding “Limited recourse obligations, net” is discontinued when, in management’s opinion, the collection of the interest income appears doubtful. “Interest income” and “Interest expense” on the “Loans to developers, net” and the corresponding “Limited recourse obligations, net” are discontinued and placed on nonaccrual status at the time the Loan is 90 days delinquent unless the Loan is well secured and in process of collection. A Loan may also be placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document doubtful based on the status of the underlying development project, even if the Loan is not yet 90 days delinquent. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The “Loans to developers, net” and corresponding “Limited recourse obligations, net” are charged off to the extent principal or interest is deemed uncollectible. All interest accrued but later charged off for “Loans to developers, net” and “Limited recourse obligations, net” is reversed against “Interest income” and the corresponding LROs recorded “Interest expense”.

Impaired Loans

Loans are considered impaired when, based on current information and events, it is probable the Company will be unable to collect all amounts due in accordance with the original contractual terms of the loan agreements. Impaired loans include Loans on nonaccrual status. When determining if the Company will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement, the Company considers the borrower’s capacity to pay, which includes such factors as the borrower’s current financial position, an analysis of global cash flow sufficient to pay all debt obligations and an evaluation of secondary sources of repayment, such as collateral value and guarantor support. The Company individually assesses for impairment all nonaccrual Loans and all Loans in fundamental default. If a Loan is deemed impaired, a specific valuation allowance is allocated, if necessary, so that the Loan is reported net, at the present value of estimated future cash flows using the Loan’s existing rate or at the fair value of collateral if repayment is expected solely from the collateral. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis.

Allowance for Uncollectable Loans and Undeliverable Limited Recourse Obligations

Payments to holders of Georgia Notes or LROs, as applicable, depend on the payments received on the corresponding Loans; a reduction or increase of the expected future payments on Loans will decrease or increase the reserve for the associated Georgia Notes or LROs. The Company recognizes a reserve for uncollectable Loans and corresponding reserve for undeliverable Georgia Notes or LROs in an amount equal to the estimated probable losses net of recoveries. The allowance is based on management’s estimates and analysis of historical bad debt experience, existing economic conditions, current loan aging schedules, and expected future write-offs, as well as an assessment of specific, identifiable Developer accounts considered at risk or uncollectible. Expected losses and actual charge-offs on Loans are offset to the extent that the Loans are financed by Georgia Notes or LROs, as applicable, that effectively absorb the related Loan losses.

“Loans to developers, net” are presented net of a reserve for doubtful accounts of approximately $3,360,000 and $2,720,000 as of December 31, 2020 and 2019, respectively. “Limited recourse obligations, net” are presented net of a reserve for doubtful accounts of approximately $4,304,000 and $2,720,000 as of December 31, 2020 and 2019, respectively.

Other Real Estate Owned

Foreclosed assets acquired through or in lieu of loan foreclosure are held for sale and are initially recorded at fair value less estimated selling costs. Any write-down to fair value at the time of transfer to foreclosed assets is charged to the allowance for loan losses. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Costs of improvements are capitalized up to the fair value of the property, whereas costs relating to holding foreclosed assets and subsequent adjustments to the value are charged to operations.

F-12

Software Development Costs

Software development costs primarily include internal and external labor expenses incurred to develop the software that powers the Company’s website. Certain costs incurred during the application development stage are capitalized based on specific activities tracked, while costs incurred during the preliminary project stage and post-implementation and operation stages are expensed as incurred. Capitalized software development costs are amortized over the estimated useful life of the related software. The Company recognized approximately $448,000 and $415,000 in expense related to amortization of software development costs for the years ended December 31, 2020 and 2019, respectively.

Property and Equipment

Property and equipment consists of computer equipment, furniture and fixtures, leasehold improvements, and office equipment. Property and equipment is stated at historical cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are depreciated over the shorter of the life of the lease or the useful life of the improvements. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to income. Repairs and maintenance costs are expensed as incurred.

Depreciation is computed using the following estimated useful lives:

Computer equipment 3 years Software and website development costs 3 years Office equipment 5 years

Impairment of Long-Lived Assets

Long-lived assets, such as computer equipment, office equipment, furniture and fixtures, intangible assets, and software and website development costs, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized for an amount by which the carrying amount of the asset exceeds the fair value of the asset.

Intangible Assets

Intangible assets consist of Company’s domain names. Intangible assets are being amortized over a 15-year period, their estimated useful lives, on a straight- line basis. The Company recognized approximately $2,000 in amortization expense during the years ended December 31, 2020 and 2019.

Equity Offering Costs

The Company accounts for offering costs in accordance with Accounting Standard Codification (“ASC”), ASC 340, Other Assets and Deferred Costs. Prior to the completion of an offering, offering costs will be capitalized as deferred offering costs on the balance sheet. The deferred offering costs will be charged to stockholders’ equity upon the completion of an offering or to expense if the offering is not completed.

F-13

For the year ended December 31, 2019, offering costs of approximately $41,000 incurred in connection with the 2019 Common Stock Offering were deferred and charged against the gross proceeds of the offering in stockholders’ equity.

For the year ended December 31, 2020, offering costs of approximately $233,000 incurred in connection with the issuance of Series B preferred stock were deferred and charged against the gross proceeds of the offering in stockholders’ equity. Offering costs incurred in connection with the 2020 Common Stock Offering were not material and were expensed as incurred.

Deferred Revenue

Deferred revenue consists of origination fee payments received in advance of revenue recognized.

Advertising Costs

The cost of advertising is expensed as incurred and presented within “Marketing and promotions” expenses in the Consolidated Statements of Operations. The Company incurred approximately $607,000 and $274,000 in advertising costs during the years ended December 31, 2020 and 2019, respectively.

Rent Expense

The Company recognizes rent expense on a straight-line basis over the term of the lease. The difference between rent expense and rent paid is recorded as deferred rent in the Consolidated Balance Sheets as a component of “Other liabilities”. Rent expense is presented within “General and administrative” expenses in the Consolidated Statements of Operations. The Company incurred approximately $309,000 and $248,000 in rent expense for office facilities during the years ended December 31, 2020 and 2019, respectively.

Share-Based Compensation

The Company recognizes as expense non-cash compensation for all stock-based awards for which vesting is considered probable. Such stock-based awards include stock options and warrants issued as compensation to employees and nonemployees. Non-cash compensation is measured at fair value on the grant date and expensed ratably over the vesting term. The fair value of each stock option and warrant is estimated using the Black-Scholes option pricing model.

Income Taxes

Deferred tax assets and liabilities are determined based on the temporary differences between the Consolidated Financial Statements carrying amounts and the tax basis of assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. In estimating future tax consequences, all expected future events are considered other than enactment of changes in the tax law or rates.

The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the Consolidated Financial Statements from such a position should be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The determination of recording or releasing income tax valuation allowance is made, in part, pursuant to an assessment performed by management regarding the likelihood that the Company will generate future taxable income against which benefits of its deferred tax assets may or may not be realized. This assessment requires management to exercise significant judgment and make estimates with respect to its ability to generate taxable income in future periods.

NOTE 2: RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”), which requires lessees to recognize most leases on the balance sheet as a lease liability and corresponding right-of-use asset. Further clarification of this guidance was subsequently provided by FASB through the issuance of ASU 2018-10, Codification Improvements to Topic 842, Leases (“ASU 2018-10”), in July 2018 and the issuance of ASU 2018-11, Leases (Topic 842): Targeted Improvements (“ASU 2018-11”), in July 2018. While the guidance in these pronouncements was originally scheduled to take effect for the Company for the year ending December 31, 2020, the FASB subsequently issued ASU 2020-05 in June 2020 deferring the effective date. The guidance in these pronouncements will therefore be effective for the Company for the year ending December 31, 2022. The Company is currently evaluating the effect of this guidance on the Company’s Consolidated Financial Statements.

F-14

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The FASB subsequently issued a number of pronouncements amending or clarifying ASU 2016-13, including the following: in November 2018, Accounting Standards Update 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses (“ASU 2018-19”); in May 2019, Accounting Standards Update 2019-05, Financial Instruments—Credit Losses (Topic 326): Targeted Transition Relief (“ASU 2019-05”); in November 2019, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates (“ASU 2019-10”); and in November 2019, Codification Improvements to Topic 326, Financial Instruments—Credit Losses (“ASU 2019-11”). ASU 2016-13 and the subsequent related pronouncements significantly change how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The standard will replace the current incurred loss approach with an expected loss model, referred to as the current expected credit loss (“CECL”) model. The new standard will apply to financial assets subject to credit losses and measured at amortized cost and certain off-balance-sheet credit exposures, which include, but are not limited to, loans, leases, held-to-maturity securities, loan commitments and financial guarantees. ASU 2016-13 simplifies the accounting for purchased credit-impaired debt securities and loans and expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. In addition, entities will need to disclose the amortized cost balance for each class of financial asset by credit quality indicator, disaggregated by the year of origination. For public business entities that meet the definition of an SEC filer, ASU 2016-13 is effective for interim and annual reporting periods beginning after December 15, 2019; for all other public business entities, the guidance is effective for fiscal years beginning after December 15, 2020; for all other entities (private companies, not-for-profit organizations, and employee benefit plans), the guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Upon adoption, ASU 2016-13 provides for a modified retrospective transition by means of a cumulative- effect adjustment to equity as of the beginning of the period in which the guidance is effective. The Company is currently evaluating the impact this standard will have on the Company’s Consolidated Financial Statements.

In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). The amendments in this update simplify the accounting for income taxes by removing certain exceptions in Topic 740 and introducing other changes intended to clarify and improve existing guidance. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2020; for all other entities, the amendments are effective for fiscal years beginning after December 15, 2021. The Company is currently evaluating the impact that the implementation of this standard will have on the Company’s Consolidated Financial Statements.

In August 2020, the FASB issued Accounting Standards Update 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). The amendments in this update simplify the accounting for convertible interest by removing the requirement to separately account for an embedded conversion feature from the host contract in certain instances. The guidance are effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is evaluating the impact that the implementation of this standard will have on the Company’s Consolidated Financial Statements.

F-15

NOTE 3: LOANS TO DEVELOPERS, NET

The Company provides financing to borrowers for real estate-related loans. Real estate loans include loans for unoccupied single family or multifamily renovations and new constructions costing between $30,000 and $2,000,000 over six months to a year.

The following table presents the carrying amount of “Loans to developers, net” by letter grade and performance state as of December 31, 2020 and 2019, respectively:

Fundamental Current Workout Total Default

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Loan grades: A $ 2,553,516 $ 87,500 $ 612,546 $ 3,253,562 B 6,340,810 1,344,234 5,103,005 12,788,049 C 23,559,735 6,183,234 7,548,514 37,291,483 D 9,226,680 1,656,123 1,403,046 12,285,849 E 77,895 686,525 192,011 956,431 F - - - - G - - - - Gross amount as of December 31, 2020 $ 41,758,636 $ 9,957,616 $ 14,859,122 $ 66,575,374 Less: Allowance for loan losses (3,360,000) Carrying amount as of December 31, 2020 $ 63,215,374

Fundamental Current Workout Total Default Loan grades: A $ 5,356,177 $ 115,256 $ 350,000 $ 5,821,433 B 15,610,763 1,992,394 528,367 18,131,524 C 33,204,844 2,147,561 3,879,901 39,232,306 D 10,624,400 314,319 1,717,097 12,655,816 E 640,916 - 90,000 730,916 F - - - - G - - - - Gross amount as of December 31, 2019 $ 65,437,100 $ 4,569,530 $ 6,565,365 $ 76,571,996 Less: Allowance for loan losses (2,720,000) Carrying amount as of December 31, 2019 $ 73,851,996

F-16

Nonaccrual and Past Due Loans

A Loan is placed on nonaccrual status when, in management’s judgment, the collection of the interest income appears doubtful. Loans placed in nonaccrual status stop accruing interest and, if collectability of interest is sufficiently doubtful, “Interest receivable on loans to developers” that has been accrued and is subsequently determined to have doubtful collectability is charged to “Interest income” and the corresponding “Accrued interest on limited recourse obligations” that has been accrued and is subsequently determined to have doubtful collectability is charged to “Interest expense.” Interest income on Loans that are classified as nonaccrual is subsequently applied to principal until the Loans are returned to accrual status. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. As of December 31, 2020, the Company placed Loans of approximately $14,859,122 recorded to “Loans to developers, net” on nonaccrual status.

The following table presents an analysis of past due Loans as of December 31, 2020 and 2019:

Loans to Carrying Allowance for Developers, Amount Loan Losses net Aging schedule: Current $ 35,134,514 350,000 34,784,514 Less than 90 days past due 10,994,226 270,000 10,724,226 More than 90 days past due 20,446,634 2,740,000 17,706,634 Total as of December 31, 2020 $ 66,575,374 3,360,000 63,215,374

Loans to Carrying Allowance for Developers, Amount Loan Losses net Aging schedule: Current $ 65,884,046 $ 730,000 $ 65,154,046 Less than 90 days past due 5,792,759 240,000 5,552,759 More than 90 days past due 4,895,191 1,750,000 3,145,996 Total as of December 31, 2019 $ 76,571,996 $ 2,720,000 $ 73,851,996

Impaired Loans

The following is a summary of information pertaining to impaired loans as of December 31, 2020:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Balance Nonaccrual loans $ 14,859,122 Fundamental default not included above - Total impaired loans 14,859,122

Interest income recognized on impaired loans $ 1,251,441

The following table presents an analysis of information pertaining to impaired loans as of December 31, 2020:

Balance Principal loan balance $ 22,328,583

Related allowance $ 2,908,000 Average recorded investment $ 174,000

F-17

The following is a summary of information pertaining to impaired loans as of December 31, 2019:

Balance Nonaccrual loans $ 6,565,365 Fundamental default not included above - Total impaired loans 6,565,365

Interest income recognized on impaired loans $ 173,000

The following table presents an analysis of information pertaining to impaired loans as of December 31, 2019:

Balance Principal loan balance $ 6,565,365

Related allowance $ 2,020,000 Average recorded investment $ 205,000

Credit Quality Monitoring

The Company uses three performance states to better monitor the credit quality of outstanding loans. Outstanding loans are characterized as follows:

Current - This status indicates that no events of default have occurred, all payment obligations have been met or none are yet triggered.

Workout - This status indicates there has been one or more payment defaults on the Loan and the Company has negotiated a modification of the original terms that does not amount to a fundamental default.

Fundamental Default - This status indicates a Loan has defaulted and there is a chance the Company will not be able to collect 100% of the principal amount of the Loan by the extended payment date of the corresponding Georgia Notes or LROs.

The following table presents “Loans to developers, net” by performance state as of December 31, 2020 and 2019:

Allowance Loans to Carrying for Loan Developers, Amount Losses Net Performance states: Current $ 41,758,636 420,000 41,338,636 Workout 9,957,616 220,000 9,737,616 Fundamental default 14,859,122 2,720,000 12,139,122 Total as of December 31, 2020 $ 66,575,374 3,360,000 63,215,374

Allowance Loans to Carrying for Loan Developers, Amount Losses Net Performance states:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Current $ 65,437,101 $ 630,000 $ 64,807,101 Workout 4,569,530 70,000 4,499,530 Fundamental default 6,565,365 2,020,000 4,545,365 Total as of December 31, 2019 $ 76,571,996 $ 2,720,000 $ 73,851,996

F-18

Allowance for Loan Losses

The following table details activity in the allowance for loan losses for the years ended December 31, 2020 and 2019:

Balance Balance, December 31, 2019 $ 2,720,000 Allowance for loan loss 948,676 Loans charged off (308,676) Outstanding as of December 31, 2020 $ 3,360,000 Period-end amount allocated to: Loans evaluated individually for impairment $ 2,240,000 Loans evaluated collectively for impairment 560,000 General population of loans, other than those specifically identified 560,000 Balance, December 31, 2020 $ 3,360,000 Loans: Loans evaluated individually for impairment $ 3,814,468 Loans evaluated collectively for impairment 11,205,286 General population of loans, other than those specifically identified 51,555,620 Balance, December 31, 2020 $ 66,575,374

Balance Balance, December 31, 2018 $ 500,000 Allowance for loan loss 2,750,000 Loans charged off (530,000) Outstanding as of December 31, 2019 $ 2,720,000 Period-end amount allocated to: Loans evaluated individually for impairment 1,860,000 Loans evaluated collectively for impairment 160,000 General population of loans, other than those specifically identified 700,000 Balance, December 31, 2019 $ 2,720,000 Loans: Loans evaluated individually for impairment 3,456,044 Loans evaluated collectively for impairment 3,109,321 General population of loans, other than those specifically identified 70,006,631 Balance, December 31, 2019 $ 76,571,996

F-19

NOTE 4: OTHER CURRENT ASSETS

“Other current assets” at December 31, 2020 and 2019, consists of the following:

2020 2019 Other real estate owned (1) $ 2,154,477 $ 210,962 Due from related party (2) 434,784 417,381 Rent deposit, current portion 21,302 21,302 Advance agreements (3) - 288,000 Other 21,239 - Other current assets $ 2,631,801 $ 937,645

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document During the year ended December 31, 2020 the Company transferred $4,912,985 from “Loans to developers, net” to “Other current assets”. Other real estate owned met the held for sale criteria and have been recorded at the lower of carrying amount or fair value less cost to sell. There was no impact (1) to the Company’s Consolidated Statements of Operations from this transfer. The Company recorded a decrease of approximately $944,442 to “Loans to developers, net” and an offsetting decrease to “Limited recourse obligations, net”.

(2) Loan and accrued interest receivable from related parties. Refer to Note 11 – Related Party Transactions.

(3) Advance agreements for the purchase of 2019 Subordinated Convertible Notes. Refer to Note 7 – Debt.

NOTE 5: PROPERTY, EQUIPMENT, SOFTWARE, WEBSITE AND INTANGIBLE ASSETS, NET

“Property, equipment, software, website development costs, and intangible assets, net” at December 31, 2020 and 2019, consists of the following:

2020 2019 Software and website development costs $ 2,434,075 $ 1,874,742 Computer equipment 137,514 118,476 Leasehold improvements 9,838 22,367 Furniture and fixtures 206,290 171,828 Office equipment 46,405 46,405 Domain names 30,000 30,000 Total property, equipment, software, website and intangible assets 2,864,122 2,263,818 Less: accumulated depreciation and amortization (1,807,545) (1,292,211) Property, equipment, software, website and intangible assets, net $ 1,056,577 $ 971,607

Depreciation and amortization expense on “Property, equipment, intangible assets, software, and website development costs, net” for the years ended December 31, 2020 and 2019 was approximately $524,000 and $482,000, respectively. Amortization of software and website development costs is included as a component of “Development” and depreciation of property, equipment, and intangible assets is included as a component of “General and administrative” in the Consolidated Statements of Operations.

F-20

NOTE 6: ACCOUNTS PAYABLE AND ACCRUED EXPENSES

“Accounts payable and accrued expenses” at December 31, 2020 and 2019, consists of the following:

2020 2019 Deferred loan origination fees $ 1,115,067 $ 1,441,471 Trade accounts payable 478,712 509,443 Accrued interest expense (1) 333,900 302,490 Funded loans-in-process (2) 147,100 2,097,512 Accrued employee compensation 104,551 87,949 Other 10,477 163,251 Accounts payable and accrued expenses $ 2,189,807 $ 4,602,116

(1) “Accrued interest expense” includes interest related to corporate debt instruments as described in Note 7.

Certain whole loans originated by the Company in 2019 and subsequently sold to institutional buyers were purchased at the contractual loan amount, which comprises both the principal amount disbursed to borrowers prior to the loan sale and any loan-in-process principal yet to be disbursed. “Funded (2) loans in process” represents the obligation of the Company to disburse loan-in-process funds received from institutional buyers to borrowers for the underlying loans as draws are requested and approved.

NOTE 7: DEBT

Revolving Credit Facility

On November 1, 2016, the Company’s wholly owned subsidiary, Groundfloor Holdings GA, LLC, as borrower, entered into a revolving credit facility (the “Revolver”) with Revolver Capital, LLC. The credit agreement initially provided for revolving loans up to a maximum aggregate principal amount of $1,500,000, proceeds to be used for bridge funding of underlying loans pending approval from the United States Securities and Exchange Commission. Subsequent amendments to the credit agreement in 2016 and 2017 increased the aggregate commitments under the credit facility to $4,500,000.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document On April 4, 2018, the Credit Agreement dated as of November 1, 2016, as amended by the First Amendment as of November 11, 2016, the Second Amendment dated as of February 22, 2017 and the Third Amendment dated as of April 7, 2017, was assigned to ACM Alamosa DA LLC. The Company and the lender agreed to amend and restate the Original Credit Agreement in its entirety. The other terms of the credit facility remain unchanged.

On September 18, 2018, the Company increased the Revolving Credit Commitments thereunder from $4,500,000 to $5,500,000. In connection with the increase the Company paid a $10,000 commitment fee, which was capitalized and amortized over a twelve-month period. The other terms of the credit facility remain unchanged.

On August 8, 2019, the Company increased the Revolving Credit Commitments thereunder from $5,500,000 to $8,500,000. In connection with the increase the Company paid a $30,000 commitment fee, which is capitalized and amortized over a twelve-month period. The other terms of the credit facility remain unchanged.

On October 1, 2019, the Company increased the Revolving Credit Commitments thereunder from $8,500,000 to $10,500,000. In connection with the increase the Company paid a $20,000 commitment fee, which is capitalized and amortized over a twelve-month period. The other terms of the credit facility remain unchanged.

The Revolver maturity date was November 2, 2020. The Company had the option to request and the lender may, in its sole discretion, elect to extend the maturity date. The base contractual interest rate applicable throughout the years ended December 31, 2020 and 2019, was the greater of 10.0 percent per annum and the weighted average underlying loan rate with respect to all underlying borrower loans funded under the Revolver. In the event that a loan funded using proceeds from the Revolver is not repaid in full on or before the repayment date for that loan, the contractual interest rate increases to the greater of 15.0 percent per annum or the underlying loan rate plus 3.0 percent.

F-21

In March 2020, in connection with the novel coronavirus pandemic and the related tightening of credit markets, GROUNDFLOOR’s creditor informed the Company that it would cease funding of draws on the Revolver for an undefined period of time and replace the lost financing by expanding on other existing sources of lending capital, most importantly the GROUNDFLOOR Notes program. In response, the Company developed a plan to repay the outstanding principal and accrued interest on the Revolver. The outstanding principal and accrued interest on the Revolver were repaid in full in June 2020. and no outstanding balance remains as of December 31, 2020.

As of December 31, 2020 and 2019, respectively, the Company had approximately $0 and $7,000 of available borrowings, and $0 and $10,493,000 outstanding under the Revolver as presented within Revolving credit facility on the Consolidated Balance Sheets. As of December 31, 2020 and 2019, respectively the Company reflected approximately $0 and $33,000 of deferred financing costs related to the Revolver as a reduction to the Revolving credit facility in the Consolidated Balance Sheets. Amortization of these costs was approximately $33,000 and $24,000 for the years ended December 31, 2020 and 2019, respectively, presented as a component of “Interest expense” in the Consolidated Statements of Operations. Accrued interest on the Revolver, presented within “Accounts payable and accrued expenses” in the Company’s Consolidated Balance Sheets, was approximately $0 and $112,000 at December 31, 2020 and 2019, respectively.

2019 Subordinated Convertible Notes

From September 2019 to December 2019, the Company issued subordinated convertible notes (the “2019 Subordinated Convertible Notes”) to Investors for total proceeds of $3,607,000. The 2019 Subordinated Convertible Notes bear interest at the rate of 10% per annum. The outstanding principal and all accrued but unpaid interest is due and payable on the earlier of August 30, 2021, or the consummation of a sale of the Company by consolidation, merger, change of majority ownership, or sale or other disposition of all or substantially all of the assets of the Company (the “Maturity Date”). In the event of a closing of a preferred stock financing with gross proceeds of at least $8,000,000 (“Qualified Preferred Financing”) prior to the Maturity Date, the outstanding principal and all accrued but unpaid interest may be converted into shares of preferred stock issued in the financing at a price per share equal to 90% of the offering price per share in the Qualified Preferred Financing. At any time after six months after the issuance of a 2019 Subordinated Convertible Note, the investor may convert all or a portion of the outstanding principal and accrued interest into shares of common stock at 90% of the per share price of common stock at the time of conversion, as reasonably determined by the Board. The indebtedness represented by the 2019 Subordinated Convertible Notes is subordinated in all respects to the principal of (and premium, if any), unpaid interest on and amounts reimbursable, fees, expenses, costs of enforcement, and other amounts due in connection with the Revolver.

Because of the contractual right of noteholders to convert their holdings to common stock at a discount to fair value, the Company determined that the 2019 Subordinated Convertible Notes contain a beneficial conversion feature. The Company recognized this beneficial conversion feature as a debt discount and component of additional paid-in capital at the in-the-money amount of approximately $401,000 at the time of issuance. The discount is being amortized to interest expense until the earlier of maturity or exercise of the conversion option. For the years ended December 31, 2020 and 2019, respectively, approximately $242,000 and $32,000 was amortized to interest expense in the Consolidated Statements of Operations.

Certain investors in 2019 Subordinated Convertible Notes purchased their shares through the issuance of advance agreements to the Company (“Advances”). The Advances accrue interest at a rate of 10% per annum and are payable to the Company within an initial term of 30 days, with an investor option to extend the term by 30 days, after which the Advances begin accruing interest at a rate of 14% per annum. The funds advanced to the investors are subject to recourse by the Company against the investors. The Advances, with principal sum of $288,000 as of December 31, 2019, are recorded as a component of “Other current assets” in the Company’s Consolidated Balance Sheets. The Advances were paid in full during the year ended December 31, 2020.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In 2020, certain holders of 2019 Subordinated Convertible Notes converted their holdings into common stock or Series B preferred stock, at the discretion of the Noteholders. Additionally, as an incentive to convert, the Company granted all Noteholders a time-limited option to convert their holdings on more favorable terms than those specified in the contractual agreement. Pursuant to these terms, Noteholders converted $408,000 in principal and approximately $48,000 in accrued interest into 30,841 shares of common stock at a conversion price of $14.88, a 15% discount to the per share price of common stock at the time of conversion. Noteholders also converted $411,000 in principal and approximately $47,000 in accrued interest into 22,760 shares of Series B preferred stock at a conversion price of $16.41, a 10% discount to the offering price in the 2020 Series B Preferred Stock Offering, and into 5,528 shares of Series B preferred stock at a conversion price of $14.58, a 20% discount to the offering price in the 2020 Series B Preferred Stock Offering. Because these Noteholders converted their debt instruments to equity securities of the Company pursuant to an inducement offer, the Company also recognized an expense equal to the fair value of the securities transferred in the conversion in excess of the fair value of the securities issuable pursuant to the original conversion terms. Conversion inducement expense of approximately $42,000 is recognized in the Consolidated Statements of Operations as a component of “General and administrative”.

Principal of $2,788,000 and $3,607,000 on the 2019 Subordinated Convertible Notes, net of an unamortized discount of approximately $126,000 and $369,000, was outstanding as of December 31, 2020 and December 31, 2019, respectively. Accrued interest on the 2019 Subordinated Convertible Notes, presented within “Accounts payable and accrued expenses” in the Company’s Consolidated Balance Sheets, was approximately $334,000 and $69,000 as of December 31, 2020 and December 31, 2019.

F-22

GROUNDFLOOR Notes

During the years ended December 31, 2020 and 2019, the Company entered into various secured promissory notes, (the “GROUNDFLOOR Notes”), with accredited Investors. The GROUNDFLOOR Notes are used for the purpose of the Company to originate, buy, and service loans for the purpose of building, buying, or rehabilitating single family and multifamily structures, or buying land, for commercial purposes. The GROUNDFLOOR Notes are issued and secured by the assets of Groundfloor Real Estate 1 LLC, a wholly owned subsidiary of Groundfloor Finance, Inc. As collateral security for GROUNDFLOOR Notes, the Company granted first priority security interest in all the loan assets of its wholly owned subsidiary, Groundfloor Real Estate 1 LLC, subject to certain exceptions.

During the year ended December 31, 2019, there were 105 notes entered into with stated interest rates ranging from 3.0% to 8.0% and with terms ranging from 30 days to 12 months. During the year ended December 31, 2020, there were 116 notes entered into with stated interest rates ranging from 2.0% to 10.0% and with terms ranging from 30 days to 12 months. The principal sum of $18,978,000 and $6,840,000 remains outstanding as of December 31, 2020 and 2019, respectively, and is presented in “Short-term notes payable” on the Company’s Consolidated Balance Sheets.

Accrued interest on the GROUNDFLOOR Notes, presented within “Accounts payable and accrued expenses” in the Company’s Consolidated Balance Sheets, was approximately $326,000 and $114,000 at December 31, 2020 and 2019, respectively.

Other Short-term Notes Payable

On November 8, 2019, the Company entered into a short-term note agreement with an investor for a principal sum of $500,000. The note bears simple interest at a stated rate of 6.0% per annum. The outstanding principal and accrued interest were due and payable on February 6, 2020, 90 days from the date of issuance. As part of the issuance, the investor also received 500 detachable warrants for the purchase of common stock. The Company has allocated the proceeds of the note issuance between the debt instrument and the detachable warrants based on their relative fair values. The amount allocated to the warrants was classified as a component of stockholders’ equity and recorded as a debt discount in the Consolidated Balance Sheets, which will be amortized to interest expense over the term of the note. As of December 31, 2019, the outstanding principal of $500,000, net of an unamortized discount of approximately $2,000, are presented in “Short-term notes payable” on the Company’s Consolidated Balance Sheets. Accrued interest on the note, approximately $5,000 as of December 31, 2019, is presented in “Accounts payable and accrued expenses” in the Consolidated Balance Sheets. This note and accrued interest thereon was repaid in full in the year ended December 31, 2020.

F-23

On December 19, 2019, the Company entered into a short-term note agreement with an investor for a principal sum of $500,000. The note bears simple interest at a stated rate of 13.5% per annum. The outstanding principal and accrued interest were due and payable on March 18, 2020, 90 days from the date of issuance. As of December 31, 2019, the outstanding principal of $500,000, net of an unamortized discount of approximately $1,000 related to debt issuance costs, are presented in “Short-term notes payable” on the Company’s Consolidated Balance Sheets. Accrued interest on the note, $2,000 as of December 31, 2019, is presented in “Accounts payable and accrued expenses” in the Consolidated Balance Sheets. This note and accrued interest thereon was repaid in full in the year ended December 31, 2020.

On December 20, 2019, the Company entered into a short-term note agreement with an investor for a principal sum of $250,000. The note bears simple interest at a stated annual rate of 6.0% per annum. The outstanding principal and accrued interest are due and payable on March 19, 2020, 90 days from the date of issuance. As part of the issuance, the investor also received 250 detachable warrants for the purchase of common stock. The Company has allocated

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the proceeds of the note issuance between the debt instrument and the detachable warrants based on their relative fair values. The amount allocated to the warrants was classified as a component of stockholders’ equity and recorded as a debt discount in the Consolidated Balance Sheets, which will be amortized to interest expense over the term of the note. As of December 31, 2019, the outstanding principal of $250,000, net of an unamortized discount of approximately $2,000, are presented in “Short-term notes payable” on the Company’s Consolidated Balance Sheets. Accrued interest on the note, approximately $500 as of December 31, 2019, is presented in “Accounts payable and accrued expenses” in the Consolidated Balance Sheets. This note and accrued interest thereon was repaid in full in the year ended December 31, 2020.

Paycheck Protection Program

In April 2020, the Company received a loan from Suntrust Bank in the amount of $829,100 under the Paycheck Protection Program (“PPP”), established by the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The PPP is sponsored by the U.S. Small Business Administration (“SBA”), and is providing small businesses – sole proprietors, independent contractors, and, with certain industry exceptions, businesses with fewer than 500 employees – the opportunity to apply for a loan of up to $10 million to cover up to eight weeks of payroll costs, including benefits. Funds may also be used to cover interest on mortgage obligations, leases, and utilities incurred or in place before February 15, 2020. Based on current SBA guidance, PPP loans can be forgiven as long as (i) loan proceeds are used for covered expenses, (ii) full-time employee headcount is maintained during the eight-week period covered by the PPP loan, (iii) compensation for employees who earned less than $100,000 on an annualized basis in 2019 is not reduced by more than 25% during the covered period and (iv) not more than 40% of the amount forgiven may be for non-payroll costs. The Company has used the PPP Loan proceeds to cover payroll costs, rent and utilities in accordance with the relevant terms and conditions of the CARES Act.

NOTE 8: STOCKHOLDERS’ DEFICIT

Capital Structure

Authorized Shares - As of December 31, 2020, the Company is authorized to issue 5,000,000 shares of no par value common stock and 1,316,181 shares of no par value preferred stock. The preferred stock has been designated as Series A Preferred Stock (the “Series A”), consisting of 747,385 shares, and Series Seed Preferred Stock (the “Series Seed”), consisting of 568,796 shares (collectively, “Preferred Stock”).

Common Stock Transactions

In February 2018, the Company launched an offering of its common stock under Tier 2 of Regulation A pursuant to an offering statement on Form 1-A qualified by the SEC (the “2018 Common Stock Offering”). The Company offered up to 500,000 shares of common stock at $10 per share, with a minimum investment of $100, or ten shares of common stock. The aggregate initial offering price of the common stock will not exceed $5,000,000 in any 12-month period, and there is no minimum offering amount. The Company may issue up to 30,000 additional bonus shares. The 2018 Common Stock Offering closed on July 31, 2018. During the 2018 Common Stock Offering, the Company issued 437,917 shares of common stock for gross proceeds of $4,228,700. The Company incurred offering costs of approximately $125,000 related to the 2018 Common Stock Offering.

F-24

In conjunction with the 2018 Common Stock Offering, certain holders of Restated Subordinated Convertible Notes converted their outstanding principal and accrued interest into common stock at a contractually agreed upon 10% discount to the offered price. In 2018, approximately $278,000 in notes principal and accrued interest were converted into 30,847 shares of common stock. In 2019, approximately $1,289,000 in notes principal and accrued interest were converted into 143,223 shares of common stock.

In October 2018, the Company entered into a common stock purchase agreement for private placement of 125,000 shares of the Company’s common stock for gross proceeds of $1,500,000.

In January 2019, the Company launched an offering of its common stock under Tier 2 of Regulation A pursuant to an offering statement on Form 1-A qualified by the SEC (the “2019 Common Stock Offering”). The Company offered up to 900,000 shares of common stock at $15.00 per share, with a minimum investment of $150, or 10 shares of common stock. According to the terms of the offering statement, the aggregate initial offering price of the common stock will not exceed $13,500,000 in any 12-month period, and there is no minimum offering amount. The Company may issue up to 30,000 additional bonus shares through an incentive program available to investors who had provided a previous indication of interest in investing in the Company.

The 2019 Common Stock Offering closed on a rolling basis from January 2019 to July 2019. As a result of the offering, the Company received gross proceeds of approximately $3,115,000 in exchange for the issuance of 214,535 shares of common stock, including 6,800 bonus shares issued through the incentive program described above. The proceeds are presented in the Consolidated Balance Sheets as a component of stockholders’ equity, net of direct offering costs of approximately $42,000 incurred.

In conjunction with the 2019 Common Stock Offering, certain holders of Restated Subordinated Convertible Notes converted their outstanding principal and accrued interest into common stock at a contractually agreed upon 10% discount to the offered price. In 2019, approximately $60,000 in notes principal and accrued interest were converted into 4,440 shares of common stock.

In February 2020, the Company launched an offering of its common stock under Tier 2 of Regulation A pursuant to an offering statement on Form 1-A qualified by the SEC (the “2020 Common Stock Offering”). Participation in the 2020 Common Stock Offering was limited to existing shareholders. The Company offered shares of common stock at $17.50 per share, with a minimum investment of $175, or 10 shares of common stock. According to the terms of the offering statement, the aggregate initial offering price of the common stock will not exceed $5,000,000 in any 12-month period, and there is no minimum

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document offering amount. As a result of the offering, the Company received gross proceeds of approximately $539,000 in exchange for the issuance of 30,794 shares of common stock.

Preferred Stock Transactions

Series A

During 2015, the Company issued 709,812 shares of Series A to Investors for total proceeds of $4,748,705. In conjunction with the equity issuance, the Company converted all outstanding promissory notes payable and accrued interest totaling $251,295 into 37,561 shares of Series A.

Series Seed

During 2015 and 2014, the Company issued 201,146 and 91,259 shares, respectively, to Investors for total proceeds of $1,047,000 and $475,000. In conjunction with the equity issuance in 2014, the Company converted all outstanding convertible notes payable and accrued interest totaling $1,098,388 into 276,391 shares of Series Seed.

Series B

In July 2020, the Company launched an offering of 548,546 shares of Series B Preferred Stock at $18.23 per share (“Series B Preferred Stock Offering”). According to the terms of the offering statement, the aggregate initial offering price of the Series B Stock will not exceed $10,000,000 in any 12-month period, and the Company will not execute sales of any securities under Regulation A that aggregate more than $50,000,000 in any twelve-month period.

Since the launch of the offering, the Company has offered its Series B Stock on a continuous basis directly through the Company website, and also on the online platform utilized by SI Securities, LLC located at www.seedinvest.com, to both accredited and non-accredited investors.

As a result of the offering, the Company has as of December 31, 2020 received gross proceeds of approximately $2,912,000 in exchange for the issuance of 159,748 shares of Series B preferred stock, presented net of offering costs of $233,000 in the Consolidated Balance Sheets as a component of stockholders’ equity. Pursuant to the offering, certain holders of 2019 Subordinated Convertible Notes converted their holdings into Series B Preferred Stock as discussed in Note 7.

Voting - The holders of Preferred Stock are entitled to one vote for each share of common stock into which the preferred shares are convertible.

Liquidation - Upon any liquidation, dissolution, or winding up of the Company, the holders of Series A shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment shall be made to the holders of common stock or Series Seed, an amount per share equal to the greater of: i) the Series A original issue price of $6.69 per share, plus any dividends declared but unpaid, and ii) such amount per share as would have been payable had all shares of Series A been converted into common stock immediately prior to such liquidation, dissolution, or winding up. If the available assets are insufficient to pay the holders of shares of Series A the full amount to which they shall be entitled, then all of the available assets shall be distributed to the holders of the Series A pro rata in accordance with their ownership thereof.

After payment in full of the Series A preference amount, the Series Seed stockholders are entitled to a liquidation preference equal to the greater of: i) the Series Seed original issue price of $5.205 per share, plus any dividends declared but unpaid, or ii) such amount per share as would have been payable had all shares of Series Seed been converted into common stock immediately prior to such liquidation, dissolution, or winding up. If the available assets are insufficient to pay the holders of shares of Series Seed the full amount to which they shall be entitled, then all of the available assets shall be distributed to the holders of the Series Seed pro rata in accordance with their ownership thereof. Any assets remaining after such preferential distribution shall be distributed to holders of the common stock.

After payment in full of the Series Seed preference amount, the Series B stockholders are entitled to a liquidation preference equal to the greater of: i) the Series B original issue price of $18.23 per share, plus any dividends declared but unpaid, or ii) such amount per share as would have been payable had all shares of Series Seed been converted into common stock immediately prior to such liquidation, dissolution, or winding up. If the available assets are insufficient to pay the holders of shares of Series Seed the full amount to which they shall be entitled, then all of the available assets shall be distributed to the holders of the Series Seed pro rata in accordance with their ownership thereof.

Any assets remaining after such preferential distribution shall be distributed to holders of the common stock.

F-25

Conversion - Shares of Preferred Stock are convertible into shares of common stock at the option of the holder at any time. The number of common stock shares for Preferred Stock can be determined by dividing the original issue price by the then-effective conversion price.

Mandatory Conversion - All outstanding shares of Preferred Stock shall automatically be converted into shares of common stock upon the closing of the sales of shares of common stock to the public, with gross proceeds to the Company of at least $20,000,000. All outstanding shares of Series A, Series Seed, and Series B Stock shall automatically be converted into shares of common stock by the date and time, or the occurrence of an event, specified by vote or written consent of the holders of at least a majority of the then outstanding shares of Series A, Series Seed, and Series B Stock, respectively, each voting as a single class.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Dividends - All dividends shall be declared pro rata on the common stock and Preferred Stock on a pari passu basis according to the numbers of common stock held by such holders on an as converted basis.

NOTE 9: STOCK OPTIONS AND WARRANTS

Stock Options

In August 2013, the Company adopted the 2013 Stock Option Plan (the “Plan”). The Plan provides incentives to eligible employees, officers, and directors in the form of incentive stock options, non-qualified stock options, and restricted stock awards. The Company has reserved a total of Plan of 400,000 shares of common stock for issuance under the Plan. Of these shares, 29,821 shares are available for future stock option grants as of December 31, 2020.

The Board of Directors has the authority to administer the Plan and determine, among other things, the interpretation of any provisions of the Plan, the eligible employees who are granted options, the number of options that may be granted, vesting schedules, and option exercise prices. The Company’s stock options have a contractual life not to exceed ten years. The Company issues new shares of common stock upon exercise of stock options.

Due to limited historical data, the Company estimates stock price volatility based on the actual volatility of comparable publicly traded companies over the expected life of the option. The expected term represents the average time that options that vest are expected to be outstanding. The expected term for options granted to non-employees is the contractual life. The risk-free rate is based on the United States Treasury yield curve for the expected life of the option.

Management used the Black-Scholes-Merton option pricing model to determine the fair value of options issued during the years ended December 31, 2020 and 2019.

The assumptions used to calculate the fair value of stock options granted are as follows:

Non- For the Year Ended December 31, 2020 Employees Employees Estimated dividend yield -% -% Expected stock price volatility 55.0 50.0% Risk-free interest rate 1.52% 0.34 - 1.40% Expected life of options (in years) 10.0 6.25 Weighted-average fair value per share $ 11.28 $ 8.35

F-26

Non- For the Year Ended December 31, 2019 Employees Employees Estimated dividend yield -% -% Expected stock price volatility 55.0% 50.0% Risk-free interest rate 1.9% 2.1% Expected life of options (in years) 10.0 6.25 Weighted-average fair value per share $ 9.77 $ 7.54

The following summarizes the stock option activity for the years ended December 31, 2020 and 2019:

Weighted- Weighted- Average Aggregate Average Shares Remaining Intrinsic Exercise Contractual Value Price Term Outstanding as of December 31, 2018 319,925 $ 4.40 Exercised (7,937) 2.19 Terminated (50,030) 5.52 Granted 62,250 15.00 Outstanding as of December 31, 2019 324,208 $ 6.25 Exercised (1,568) 2.48 Terminated (53,608) 11.70 Granted 101,147 17.50 Outstanding as of December 31, 2020 370,179 8.55 6.9 3,312,000 Exercisable as of December 31, 2020 237,811 5.26 5.8 2,910,000 Expected to vest after December 31, 2020 132,368 14.46 8.8 402,000

The following table summarizes certain information about all stock options outstanding as of December 31, 2020:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Weighted-Average Number of Options Remaining Number of Options Exercise Price Outstanding Contractual Life (In Exercisable Years) $ 0.67 64,000 3.0 64,000 1.87 36,000 4.6 36,000 2.40 69,692 6.3 64,487 3.99 10,000 3.8 10,000 10.00 28,725 7.5 13,420 12.00 33,501 8.0 9,695 15.00 34,073 8.6 2,983 17.50 94,188 9.8 37,226 370,179 237,811

As of December 31, 2020, there was approximately $723,000 of total unrecognized compensation cost related to stock option arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 2.9 years. The total intrinsic value of stock option awards exercised was approximately $24,000 during the fiscal year ended December 31, 2020.

The Company recorded approximately $59,000 and $3,000 in non-employee and $475,000 and $176,000 in employee share-based compensation expense during 2020 and 2019, respectively.

F-27

Warrants

The Company issued 10,550 warrants during the year ended December 31, 2019, for the purchase of common stock. The warrants are exercisable immediately at $2.40 or $15.00 with a contractual term of ten years. The estimated fair value of the warrants was approximately $140,000 when issued. The fair value was calculated using the Black-Scholes-Morton pricing model with the following weighted-average assumptions: risk-free interest rate of 2.5%, expected life of ten years, dividend yields of 0%, and volatility factor of 55.0%. These assumptions yielded a weighted average fair value of $13.27 per warrant.

During the years ended December 31, 2020 and 2019, respectively, 0 and 9,800 warrants were issued in connection with the 2017 Note. These warrants were measured at fair value and recorded as a discount to “Long-term notes payable,” with a corresponding increase to “Additional paid-in capital.” The discount will be amortized to expense over the remaining term of the 2017 Note. Upon full repayment and retirement of the 2017 Note in 2019, any unamortized discount at the time of repayment was amortized. The Company recognized expense of approximately $223,000 related to amortization of the 2017 Note warrant discount for the year ended December 31, 2019, as a component of “General and administrative” in the Consolidated Statements of Operations.

The remaining 750 warrants issued in 2019 were issued were issued in conjunction with the issuance of short-term notes payable in November and December 2019. These warrants have been measured at fair value and recorded as a discount to “Short-term notes payable,” with a corresponding increase to “Additional paid-in capital.” The discount will be amortized to interest expense over the remaining term of the corresponding notes. The Company recognized expense of approximately $4,000 related to amortization of these warrant discounts for the year ended December 31, 2020.

None of the outstanding warrants have been exercised as of December 31, 2020.

NOTE 10: INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred income tax assets and liabilities as of December 31, 2020 and 2019, are as follows:

2020 2019 Deferred income tax assets and liabilities: Net operating loss carryforwards $ 6,156,000 $ 5,141,000 Accrued expenses 27,000 23,000 Share-based compensation 142,000 141,000 Accrued interest 130,000 203,000 Research and development credit 152,000 25,000 Depreciation and amortization 31,000 (37,000) Valuation allowance (6,638,000) (5,496,000) $ - $ -

The Company has established a valuation allowance against its deferred tax assets due to the uncertainty surrounding the realization of such asset. The valuation allowance increased by approximately $1,142,000 and $832,000, respectively, during the years ended December 31, 2020 and 2019.

As of December 31, 2020, the Company has federal and state net operating loss carryforwards of approximately $24,480,000 available to offset future federal and state taxable income, which begin to expire in 2033 and 2028. In general, a corporation’s ability to utilize its NOL and research and development credit carryforwards may be substantially limited due to the ownership change limitations as required by Section 382 and 383 of the Internal Revenue Code of 1986, as amended (Code), as well as similar state provisions. The federal and state Section 382 and 383 limitations may limit the use of a portion of the Company’s domestic NOL and tax credit carryforwards. Further, a portion of the carryforwards may expire before being applied to reduce future income tax liabilities.

Income taxes computed at the statutory federal income tax rate are reconciled to the provision for income tax expense for 2020 and 2019 as follows:

2020 2019 % of Pre-Tax % of Pre-Tax Amount Amount Earnings Earnings Income tax expense (benefit) at statutory rate $ (1,005,000) (21.0)% $ (806,000) (21.0)% State taxes (net of federal benefit) (222,000) (4.6)% (161,000) (4.6)% Non-deductible expenses 497,000 10.4% 135,000 (0.6)% True-up adjustment for deferred items (412,000) (6.6)% - -% Change in valuation allowance 958,000 21.8% 832,000 26.2% Provision for income tax expense $ - 0.0% $ - 0.0%

The Company recognizes interest and penalties related to uncertain tax positions in the provision for income taxes. As of December 31, 2020 and 2019, the Company had no accrual related to uncertain tax positions.

NOTE 11: RELATED PARTY TRANSACTIONS

ISB Development Corp.

The Company issued a short-term note in November 2019 to ISB Development Corp., an entity owned and operated by a director of the Company, for a principal sum of $500,000. The short-term note and accrued interest thereon were repaid in full in 2020. See Note 7, under the heading “Other short-term notes payable,” for further discussion and disclosure related to the related party note.

Moma Walnut, LLC

In June 2019, the Company extended a fully collateralized loan to Moma Walnut, LLC, an entity that is owned and operated by a director of the Company. The loan has a principal amount of $400,000, bears interest at a stated rate of 5% per annum, and was initially due within 30 days. Terms were subsequently modified in August 2019 to increase the interest rate to 13% per annum and extend the maturity date to August 11, 2020. In September 2020, the terms were again amended to retroactively change the interest rate to 10% per annum and to require monthly interest payments. As of December 31, 2020 and 2019, the related party loan receivable and accrued interest thereon are presented in the Consolidated Balance Sheets as a component of “Other current assets” in the amount of $404,000 and $417,000, respectively.

Employee Loan

In November 2020, an employee of the Company was extended a loan in the amount of $30,000, bearing interest at a rate of 1% per annum. The loan matures on October 31, 2021. As of December 31, 2020, the related party loan receivable and accrued interest thereon are presented in the Consolidated Balance Sheets as a component of “Other current assets” in the amount of approximately $30,000.

NOTE 12: COMMITMENTS AND CONTINGENCIES

The Company has a noncancelable operating lease agreement for office space. The lease contains a renewal option within 67 months of the commencement date of September 2018. Additionally, the company amended the lease to acquire approximately 4,000 sq ft of new office space within the current building. Rent expense for operating leases, which has escalating rents over the term of the lease, is recorded on a straight-line basis over the minimum lease terms. Rent expense under the operating lease was approximately $309,000 and $248,000 as a component of “General and administrative” in the Consolidated Statements of Operations for the years ended December 31, 2020 and 2019, respectively.

F-29

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document As of December 31, 2020, the approximate amounts of the annual future minimum lease payments under noncancelable operating leases obligations are as follows:

Balance Years ending December 31, 2021 $ 387,505 2022 432,710 2023 445,679 2024 151,754 2025 - $ 1,417,648

The Company is subject to legal proceedings which arise in the ordinary course of business. In the opinion of the Company, the resolution of these matters will not have a material adverse impact on the Company’s consolidated financial position or results of operations.

NOTE 13: SUBSEQUENT EVENTS

In January 2021, the Company submitted an application for 100% loan forgiveness related to the loan received in 2020 through the Paycheck Protection Program. The application is pending as of the date of issuance of these financial statements.

As discussed in Note 7, in July 2020 the Company commenced an offering of Series B Stock on an online platform utilized by SI Securities, LLC, located at www.seedinvest.com, to both accredited and non-accredited investors. That offering extended into 2021 and continues to accept new investments as of the issuance date of these financial statements. Pursuant to that offering, from January 1, 2021 through the issuance date of these financial statements, the Company has received gross proceeds of approximately $701,000, net of issuance costs of approximately $56,000, in exchange for the issuance of 38,429 shares of Series B Stock.

F-30

PART III – EXHIBITS

Index to Exhibits

Exhibit Exhibit Description Filed Form File No Exhibit Filing Date Number (hyperlink) Herewith 2.1 Groundfloor Yield LLC Articles of Organization DOS/A 367-00241 Exhibit 2.1 August 21, 2020 2.2 Groundfloor Yield LLC Limited Liability Company Operating Agreement DOS/A 367-00241 Exhibit 2.2 August 21, 2020 3.1 Form ofPromissory Note X 4.1 Form of Promissory Note Purchase Agreement X 11.1 Form of Consent of Cherry Bekaert LLP 12.1 Opinion of Robbins Ross Alloy Belinfante Littlefield LLC X 15.1 Correspondence submitted by Manatt, Phelps & Phillips, LLP on behalf of Groundfloor Yield LLC and addressed to the U.S. Securities and Exchange Commission, dated August 20, 2020 X 15.2 Correspondence submitted by Manatt, Phelps & Phillips, LLP on behalf of Groundfloor Yield LLC and addressed to the U.S. Securities and Exchange Commission, dated October 30, 2020 X 15.3 Correspondence submitted by Manatt, Phelps & Phillips, LLP on behalf of Groundfloor Yield LLC and addressed to the U.S. Securities and Exchange Commission, dated January 14, 2020 X

* To be filed by amendment.

SIGNATURES

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Pursuant to the requirements of Regulation A, the issuer certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form 1-A and has duly caused this offering statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on April 29, 2021.

GROUNDFLOOR YIELD LLC

By: Groundfloor Finance, Inc., its sole member

By: /s/ Nick Bhargava Name: Nick Bhargava Executive Vice President, Secretary, and Acting Chief Title: Financial Officer

This offering statement has been signed by the following persons, in the capacities, and on the dates indicated.

Name and Signature Title Date

/s/ Brian Dally President, Chief Executive Officer of Groundfloor Finance Inc. April 29, 2021 Brian Dally (Principal Executive Officer)

Executive Vice President, Secretary, and Acting Chief /s/ Nick Bhargava April 29, 2021 Financial Officer of Groundfloor Finance Inc. Nick Bhargava Principal Financial Officer and Principal Accounting Officer)

* Lucas Timberlake Director April 29, 2021

* Bruce Boehm Director April 29, 2021

* Michael Olander Jr. Director April 29, 2021

* Richard Tuley Jr. Director April 29, 2021

* By: /s/ Nick Bhargava Attorney-in-fact

FORM OF PROMISSORY NOTE

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR REGISTERED NOR QUALIFIED UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS REGISTERED AND QUALIFIED UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED.

Total Investment Amount: $ ______

Fixed Interest Rate: _____%

Date: ______, _____

FOR VALUE RECEIVED, the undersigned, Groundfloor Yield LLC, a Georgia limited liability company, (the “Company”), PROMISES TO PAY to the order of ______(together with its successors and assigns, the “Investor”) the principal sum of ______($______), together with interest at the rate specified below.

1. Principal and Term. The full term (the “Term”) of this Promissory Note (the “Note”) shall commence as of the date of this Note set forth above until ______(the “Maturity Date”). Subject to Section 2, the Outstanding Principal Balance (as defined herein) shall be due and payable in full on the Maturity Date. For clarity, the Company and the Investor agree that if the Investor purchases Notes on multiple dates, the applicable Term of each Note shall begin on the date of purchase of such Note and be governed by the terms of the applicable Note. For purposes of this Note, “Outstanding Principal Balance” means, as of any date of determination, the principal amount of this Note that remains unpaid.

2. Interest.

(a) Calculation. Interest shall accrue on the Outstanding Principal Balance at the Fixed Interest Rate set forth above per annum (subject to Section 2(b) below) until the earliest to occur of the following: (i) the Note is either prepaid, redeemed or called by the Company; (ii) the Note is called by the Investor pursuant to the Note Purchase Agreement by and among the Investor and the Company, as may be amended, restated, supplemented or otherwise modified from time to time (the “Note Purchase Agreement”) or (iii) the Maturity Date. Interest shall be computed on the basis of a 360-day year consisting of twelve 30-day months.

(b) Interest Rate Change. The Fixed Interest Rate applicable to this Note is subject to change by the Company from time to time. Any updates to the applicable Fixed Interest Rate shall apply to all outstanding Notes held by such Investor as of the effective date of the Fixed Interest Rate change and the Company shall issue an amended and restated Note to the Investor that reflects the current Fixed Interest Rate as of the effective date of any such updates to the Fixed Interest Rate.

(c) Payments. All payments of interest by the Company under this Note shall accrue during the Term and shall be paid to the Investor on the Maturity Date. Payments will be made by transfer of funds by the Company to the Investor’s Promissory Notes Account established on a smartphone application owned and operated by the Company (the “Mobile App”).

(d) Prepayment. This Note shall be callable, redeemable, and prepayable at any time by the Company, in its sole discretion, at par value plus any accrued but unpaid interest up to, but not including the date of prepayment. The Investor understands that if Notes are prepaid or called by the Company or the Investor, as applicable, before the Notes’ Maturity Date and the Investor wishes to withdraw funds from the Investor’s Promissory Notes Account, the Investor must initiate such withdrawal through the Mobile App. The Investor acknowledges and agrees that Company will not automatically disburse funds to the Investor outside of the Investor’s Promissory Notes Account.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 3. Liquidity and Redemption Rights. This Note is subject to the Investor’s redemption rights as set forth in the Note Purchase Agreement. This Note is callable by the Investor every five (5) business days from the applicable issuance date of the Notes (each, a “Call Date” and collectively, the “Call Dates”). In the event an Investor calls a Note, on the Call Date, the Company will credit the Investor’s GFY Account with the accrued and outstanding interest and outstanding principal balance within five (5) business days of the Call Date.

4. Rollover of Note Proceeds. Subject to the terms of the Note Purchase Agreement, on the Maturity Date, the Investor may elect to roll over all payments in respect of the Outstanding Principal Balance and accrued interest into a new Note to be issued by the Company on the Maturity Date by providing written notice to the Company through the Mobile App no later than on the Maturity Date.

5. Recourse. Notwithstanding anything to the contrary contained herein, the principal of and accrued interest on this Note shall be payable by the Company to the Investor and shall represent a full and unconditional obligation of the Company, and the Investor shall have a first priority security interest in all of the assets of the Company.

6. Events of Default. If any one of the following events shall occur and be continuing (each, an “Event of Default”): (i) the Company shall fail to pay as and when due in accordance with the terms hereof any principal on this Note, or premium, if any; (ii) the Company shall fail to pay as and when due in accordance with the terms hereof any interest on this Note, and such failure shall continue for sixty (60) days after the date when such payment is due and the time for payment has not been extended or deferred; or (iii) the Company shall cease its business operations, or file a petition for relief or commence a proceeding under any bankruptcy, insolvency, reorganization or similar law (or its governing board shall authorize any such filing or the commencement of any such proceeding) or have any such petition filed against it, have any liquidator, administrator, trustee or custodian appointed with respect to it or any substantial portion of its business or assets, make a general assignment for the benefit of creditors or generally admit its inability to pay its debts as they come due; then in any such event the Investor may, by notice to the Company, declare the entire Outstanding Principal Balance together with all interest accrued and unpaid thereon to be immediately due and payable, whereupon this Note and all such accrued interest shall become and be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company. Notwithstanding the foregoing, if any event described in clause (iii) above shall occur, the entire Outstanding Principal Balance together with all interest accrued and unpaid thereon shall automatically become due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company.

7. Binding Effect; Assignment. This Note shall be binding upon the Company and its successors and inure to the benefit of the Investor and its permitted successors and assigns. The obligations of the Company under this Note may not be delegated to or assumed by any other party, and any such purported delegation or assumption shall be null and void.

8. Miscellaneous.

(a) Payment. Both principal and interest are payable in lawful money of the United States of America to the Investor by credit to the Investor’s Promissory Notes Account, from which the Investor may then collect funds via any method provided in the Mobile App.

(b) No Waiver. No delay on the part of the Investor in exercising any option, power or right hereunder, shall constitute a waiver thereof, nor shall the Investor be estopped from enforcing the same or any other provision at any later time or in any other instance.

(c) Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the State of Georgia, without giving effect to principles of conflict of laws.

(d) Notice of Dispute Resolution by Binding Arbitration. Either party may, at its sole election, require that the sole and exclusive forum and remedy for resolution of any claim or dispute relating to this Note be final and binding arbitration pursuant to the terms and conditions set forth in Section 24 of the Note Purchase Agreement between the Company and the Investor (the “Arbitration Provision”), which is incorporated herein by reference. The Investor may opt out of the Arbitration Provision for all purposes by sending an arbitration opt out notice to Groundfloor Yield, LLC, c/o Groundfloor Finance Inc., 600 Peachtree Street,

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Suite 810, Atlanta Georgia, 30308, Attention: Investor Support that is received within thirty (30) days of the date of the Investor’s first electronic acceptance of the terms of this Note. The opt out notice must clearly state that the Investor is rejecting arbitration; identify the agreement to which it applies by date; provide the Investor’s name, address, and social security or TIN-number; and be signed by the Investor. No other methods can be used to opt out of the Arbitration Provision. If the opt out notice is sent on the Investor’s behalf by a third party, such third party must include evidence of his or her authority to submit the opt out notice on the Investor’s behalf. This Section 6(d) does not waive the compliance by the Company with the federal securities laws and the rules and regulations promulgated thereunder.

(e) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE COMPANY AND THE INVESTOR WAIVE A TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS NOTE. NOTWITHSTANDING THE FOREGOING SENTENCE, BY AGREEING TO THIS SECTION 6(E), THE INVESTOR IS NOT DEEMED TO HAVE WAIVED THE COMPANY’S COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS THEREUNDER.

(f) Caption Headings. Caption or section headings in this Note are for convenience purposes only and are not to be used to interpret or define the provisions of the Note.

(g) Electronic Signatures. The Company and the Investor each agree that the Electronic Signature (defined below), whether digital or encrypted, of the Company and the Investor are intended to authenticate this writing and to have the same force and effect as manual signatures to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000 (15 USC §§ 7001, et seq.), the Georgia Uniform Electronic Transactions Act, O.C.G.A. § 10-12, et seq., or any other similar state laws based on the Uniform Electronic Transactions Act. “Electronic Signature” means any electronic sound, symbol or process attached to or logically associated with a record and executed and adopted by a party with the intent to sign such record.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the date first above written.

GROUNDFLOOR YIELD LLC, a Georgia limited liability company

By: Name: Title:

FORM OF PROMISSORY NOTE PURCHASE AGREEMENT

This Note Purchase Agreement (the “Agreement”) is entered into by the undersigned investor (“Investor” or “You”) in connection with such Investor’s purchase of Promissory Notes (each, a “Note” and collectively, the “Notes”) issued by Groundfloor Yield LLC, a Georgia limited liability company (“Groundfloor Yield” or the “Company”) in accordance with the terms herein. Investor understands that the offer and sale of Notes by the Company has not been registered under the Securities Act of 1933, as amended (the “Securities Act”) and is being offered pursuant to that certain offering statement under Form 1-A (together with all exhibits, supplements, and post-qualification amendments, the “Offering Statement”) qualified by the Securities and Exchange Commission (“SEC”), which may be obtained from the SEC EDGAR filing website at https://www.sec.gov. No decision to invest in the Notes should be made without reading the Offering Statement and the other Note Purchase Documents (as such term is defined herein).

1. Subscription. Subject to the terms and conditions hereof, Investor hereby irrevocably subscribes for Notes in the amount set forth on the signature page hereto, which is payable as described in the applicable Note and subject to Section 2 of this Agreement. Investor acknowledges that the Notes will be subject to the terms and conditions, including without limitation, restrictions on transfer, as set forth in this Agreement, the Notes, the Securities Act, the Offering Statement, the Terms of Service (“Terms of Service”) of the online investment platform available through a smartphone application owned and operated by the Company (the “Mobile App”) and the Privacy Policy (“Privacy Policy”) of the Mobile App (collectively, the “Note Purchase Documents”). Investor further agrees that the Note Purchase Documents are subject to change from time to time at the sole discretion of the Company and agrees to read the Note Purchase Documents in their entirety to fully understand the terms therein prior to any purchase of the Notes.

2. Acceptance of Subscription and Issuance of Notes. The Company shall have the sole right, at its sole and absolute discretion, to accept or reject this subscription, in whole or in part, for any reason.

(a) Investor will not be deemed to have purchased any Notes unless and until such time as all of the following conditions have occurred at the sole discretion of the Company: (A) this Agreement and such other documentation as may be requested by the Company has been duly and validly executed by Investor, delivered to the Company and accepted by the Company and (B) the Company is in receipt of the purchase price for the Notes.

(b) Notwithstanding anything in this Agreement to the contrary, the Company shall not offer, and shall have no obligation to issue any of the Notes to any person who is a resident of a jurisdiction in which any such offering or the issuance of Notes to such person would constitute a violation of any applicable law, including without limitation, a violation of the securities, “blue sky” or other similar laws of such jurisdiction. Investor agrees to pay to the Company the aggregate purchase price for the Notes in the amount set forth on the signature page attached hereto by establishing an account (the “GFY Account”) on the Mobile App and using the Mobile App to initiate a purchase of the amount of Notes that Investor wishes to purchase. The Notes will be electronically signed and stored by the Company and will remain in the Company’s custody. Investors may view the Notes by accessing their account on the Mobile App.

3. Terms of the Notes and Investor Acknowledgments. Investor hereby acknowledges and agrees that:

(a) EACH NOTE SHALL HAVE THE TERMS AND CONDITIONS SET FORTH IN THE APPLICABLE NOTE ISSUED BY THE COMPANY, WHICH IS AVAILABLE FOR THE INVESTOR’S REVIEW ON THE MOBILE APP PRIOR TO PURCHASE.

(b) The Notes have not been registered under the United States Securities Act of 1933, or under the securities act of any other jurisdiction, nor is any such registration contemplated. The Notes will be offered and sold under the exemption provided by Regulation A of the Securities Act of 1933 pursuant to the Offering Circular, available on the SEC’s EDGAR filing database at https://www.sec.gov, and other exemptions of similar import in the laws of the states and other jurisdictions where the offering will be made. Neither the SEC nor any state securities commission has passed upon the merits of or given its approval of any securities offered or the terms of the offering nor passed upon the accuracy or completeness of any Offering Circular or other selling literature. Any

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document representation to the contrary is a criminal offense. The Notes are being offered pursuant to an exemption from registration with the SEC. However, the SEC has not made an independent determination that the securities offered thereunder are exempt from registration.

(c) INVESTMENT IN THE NOTES IS HIGHLY RISKY AND THE INVESTOR MAY LOSE ALL OF SUCH INVESTOR’S INVESTMENT. THE NOTES ARE HIGHLY SPECULATIVE SECURITIES. THE INVESTOR SHOULD PURCHASE THESE SECURITIES ONLY IF SUCH INVESTOR CAN AFFORD A COMPLETE LOSS OF SUCH INVESTOR’S INVESTMENT. BEFORE PURCHASING ANY NOTE OFFERED BY THE COMPANY, THE INVESTOR HAS REVIEWED THE RISK DISCLOSURES AND OTHER TERMS OF THE PROMISSORY NOTE OFFERING AVAILABLE IN THE OFFERING STATEMENT AND THE OTHER NOTE PURCHASE DOCUMENTS.

(d) THE NOTES DO NOT REPRESENT AN OWNERSHIP INTEREST IN ANY LOANS OWNED BY THE COMPANY, THEIR PROCEEDS, OR ANY OTHER ASSETS OF THE COMPANY. THE NOTES ARE OBLIGATIONS OF GROUNDFLOOR YIELD ONLY AND NOT OF THE SOLE MEMBER OF THE COMPANY OR ANY AFFILIATE OR SUBSIDIARY THEREOF OR OF ANY PAYMENT OBLIGORS UNDER THE LOANS OWNED BY THE COMPANY.

(e) ALL AGREEMENTS AND OBLIGATIONS RELATING TO THE NOTES ARE BETWEEN THE INVESTOR AND GROUNDFLOOR YIELD AND NOT WITH ANY THIRD PARTY. THE INVESTOR IS SOLELY RESPONSIBLE FOR SUCH INVESTOR’S INTERACTIONS WITH OTHER USERS BOTH WITHIN THE MOBILE APP AND OUTSIDE OF THE MOBILE APP. IT IS PROHIBITED FOR INVESTORS TO CONTACT EACH OTHER OUTSIDE OF THE MOBILE APP FOR PURPOSES RELATED TO ACTIVITIES ON THE MOBILE APP. CONSISTENT WITH THIS PROHIBITION, GROUNDFLOOR YIELD EXPRESSLY DISCLAIMS ANY RESPONSIBILITY FOR INTERACTIONS BETWEEN INVESTORS OUTSIDE OF THE MOBILE APP.

(f) GROUNDFLOOR YIELD HAS A LIMITED OPERATING HISTORY, AND, AS AN ONLINE COMPANY, FACES INCREASED RISKS, UNCERTAINTIES, EXPENSES, AND DIFFICULTIES, WHICH COULD IMPACT YOUR INVESTMENT IN THE NOTES.

(g) GROUNDFLOOR YIELD WILL ISSUE THE NOTES ONLY IN ELECTRONIC FORM AND HOLD THE NOTES ON THE MOBILE APP.

(h) SUCH INVESTOR WILL NOT RECEIVE ANY PAYMENTS AFTER THE APPLICABLE MATURITY DATE OF EACH NOTE. EACH NOTE WILL MATURE ON THE MATURITY DATE, UNLESS GROUNDFLOOR YIELD EXERCISES ITS OPTION TO CALL, REDEEM OR PREPAY THE NOTE PRIOR TO ITS MATURITY DATE.

4. Abandonment and Withdrawn Offerings. We may abandon or withdraw an offering of a particular series of Notes at any time prior to issuance. We will notify You by email if we abandon an offering of one or more series of Notes to which You have made a commitment. In the event we do so, we will promptly (but under no circumstances more than 48 hours following our determination to abandon the offering) release all funds (without interest) committed to purchase that series; after which, You may elect to transfer such funds to your bank account or make a commitment to purchase a different series of Notes.

5. Making Commitments through the GFY Account.

(a) You fund commitments to purchase Notes through your GFY Account. You fund your GFY Account by linking your bank account and transferring money to your GFY Account via ACH transfer. For example, when You register for an account and then elect to purchase a Note, You will first be prompted to link your bank account and transfer funds to your GFY Account in order to complete the purchase. Groundfloor may allow you, to the extent permitted by applicable law, to fund your GFY Account through other means, such as PayPal, BitPay, Google Wallet, or other online payment systems. If a funds transfer is required before completion of a commitment, the commitment will be completed as one action if there are sufficient funds in the linked bank account. We are not responsible for any fees You may be charged by your banking institution as a result of any transaction involving your GFY Account, including without limitation, any insufficient funds fees assessed to You in the event there are insufficient funds available in your bank account to complete the transaction.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) Once You confirm the purchase order for a particular series of Notes, the funds allocated for such investment are set aside in your GFY Account and are irrevocable when authorized and may not be withdrawn. If You have insufficient funds in your funding account when making a commitment, You will be prompted to fund your GFY Account with the difference via ACH transfer. Irrevocably committed funds may not be withdrawn from your GFY Account or committed to other investment offerings of Groundfloor Yield or its affiliates, unless we abandon or withdraw the offering of the series of Notes (or terminate or suspend our offering generally), each as described above.

6. Interest Rate of Notes. From time to time, Groundfloor Yield may update the interest applicable to the issuance of new Notes. All updates to interest rates will be communicated by Groundfloor Yield through the Mobile App and through the filing of a supplement or post-qualification amendment to the Offering Statement with the SEC, which may be obtained from the SEC EDGAR filing website as https://www.sec.gov. Investor acknowledges and agrees that any updates to the applicable interest rate shall apply to all outstanding Notes held by such Investor as of the effective date of the interest rate change. Additionally, Investors may elect to purchase additional Notes bearing the updated interest rate through the Mobile App pursuant to the terms of this Agreement, call their outstanding Notes prior to the applicable Maturity Date as set forth in Section 7 below, or rollover all proceeds of an existing Note on such Note’s applicable Maturity Date as set forth in Section 8 below into such new Notes bearing the updated interest rate.

7. Investor Call Right. From and after the issuance date of the Notes and prior to the applicable Maturity Date of the Notes, the Notes may be callable at any time by the Investor. The Investor may call an outstanding Note prior to the applicable Maturity Date by providing written notice to the Company up to and on the applicable Call Date through the Mobile App through the Mobile App. The Notes are callable by the Investor every five (5) business days from the applicable issuance date of the Notes (each, a “Call Date” and collectively, the “Call Dates”). For example, if a Note is issued on Thursday, January 1, the initial Call Date will be the following Thursday, January 8. In the event an Investor calls a Note, on the Call Date, the Company will remit to the Investor’s GFY Account the accrued and outstanding interest and outstanding principal balance within five (5) business days of the applicable Call Date.

8. Rollovers of Notes. On the applicable Maturity Date of the Notes, You may elect to roll over all payments received by You in respect of the Outstanding Principal Balance (as such term is defined in the Notes) and all accrued interest into a new Note to be issued by the Company to You on such applicable Maturity Date (the “Rollover”). If you wish to elect to rollover such proceeds, You must provide written notice to the Company through the Mobile App no later than on the Maturity Date of the Note.

9. Groundfloor Yield Auto-Invest Program. The Groundfloor Yield Auto-Invest Program (the “GFY AIP”) provides Investors with the option to automatically invest in additional Notes offered by the Company on a recurring basis subject to certain parameters designated by Investor as set forth and agreed to by Investor on Exhibit A of this Agreement. Under the GFY AIP, the Company will automatically place orders for Notes on behalf of participating Investors that match the investment parameters specified by each such Investor. The purchase price payable by Investors for Notes purchased under the AIP will deducted by the Company from Investor’s GFY Account. Investors may elect to modify or terminate their participation in the AIP at any time by providing three (3) business days’ prior written notice to the Company through the Mobile App.

10. Representations, Warranties, and Covenants of Investor. On the date hereof, and as of the date of any rollover of the Notes or purchase of additional Notes, Investor hereby represents and warrants to the Company that:

(a) Investor is either: (i) an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Act”); or (ii) if not an “accredited investor” as defined in subclause (i), such Investor will not invest more than 10% of such Investor’s annual income or net worth (whichever is greater) as those terms are defined in Rule 251(d)(2)(i)(C) of Regulation A. Investor further represents and warrants that he or she: (i) satisfies any additional minimum financial suitability standards applicable to the state in which such Investor resides; and (ii) agrees to provide any additional documentation reasonably requested by the Company, as may be required by the securities administrators or regulators of the federal government or of any state.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) As of the date of this Agreement and as of any date that Investor commits to purchase Notes, (i) Investor has the power to enter into and perform Investor’s obligations under the Note Purchase Documents; (ii) the Agreement has been duly authorized, executed and delivered by such Investor; and (iii) in connection with this Agreement and such Investor’s purchase of Notes, Investor has complied in all respects with applicable federal, state and local laws.

(c) Investor is aware of the applicable limitations under the Securities Act relating to the Notes and that the Notes have not been registered under the Securities Act, and that such securities cannot be sold unless they are subsequently registered under the Securities Act or an exemption from such registration is available.

(d) Investor will not sell, transfer, pledge, donate, assign, mortgage, hypothecate or otherwise encumber the Notes (each such transaction, a “Transfer”) unless (i) the Notes are registered under the Securities Act or Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a description of the proposed disposition, and, unless waived by the Company in writing, the Company is given an opinion of counsel reasonably acceptable to the Company, that such registration is not required under the Securities Act, and (ii) any buyer, transferee, pledgee, donee or assignee, respectively, shall agree in writing to be bound by the terms hereof prior to any such Transfer. Any such recipient of the Notes is referred to herein as a “Transferee”, and the Transferee shall be entitled to the benefits of this Agreement and to enforce this Agreement against the Company as if the Transferee were Investor.

(e) Investor acknowledges that there is no public market for the Notes and that no market may ever develop for them. Investor further acknowledges that neither the SEC nor any state securities regulator has passed upon or endorsed the merits of any investment decision in the Notes.

(f) Investor has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the acquisition of the Notes.

(g) In connection with the purchase of the Notes, Investor has consulted its legal, accounting, regulatory, and tax advisors to the extent such Investor has deemed appropriate.

(h) Investor recognizes that: (i) an investment in the Notes involves a high degree of risk and (ii) no assurance or guarantee has or can be given that an investor in the Company will receive a return of such Investor’s capital or realize a profit on such Investor’s investment.

(i) Investor has received, read, and fully understands the Offering Statement. Further, Investor has received and reviewed all information that he, she or it considers necessary or appropriate for deciding whether to purchase the Notes. Investor has further had the opportunity to obtain all information regarding such Investor’s investment in the Notes which Investor deems necessary or appropriate.

(j) Investor understands that the Company may, at its sole discretion (but is not required to) call, redeem or prepay the Notes at any time. Investor understands that if Notes are prepaid or called by the Company before the applicable Maturity Date (as such term is defined in the applicable Notes) and the Investor wishes to withdraw funds from such Investor’s GFY Account, Investor must initiate such withdrawal through the Mobile App. Investor acknowledges and agrees that Company will not automatically disburse funds to the Investor outside of such Investor’s GFY Account.

(k) Investor has not relied on any information or representations with respect to the Company or the offering of Notes, other than as expressly set forth herein or in the Offering Statement.

(l) Investor has determined that he, she or it can afford to bear the risk of the investment in the Notes, including loss of Investor’s entire investment in the Notes, and he, she or it will not experience personal hardship if such a loss occurs.

(m) Investor is purchasing the Notes solely for such Investor’s own account for investment, not for the account of any other person, not with a view to, or for, any resale, distribution or other transfer thereof, and not for any illegal activity, fraud or other purposes that would violate the general laws of the United States of America and/or any state or local laws.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (n) Investor’s exact legal name, physical address, date of birth, and taxpayer identification number are accurately set forth in such Investor’s GFY Account, and Investor will promptly update the Company if any of the information stated herein or on the Mobile App changes.

(o) Investor has been advised that the Notes will be issued electronically and held on the Mobile App by the Company, and that the Notes can be viewed by Investor by accessing its account on the Mobile App.

11. Representations and Warranties of the Company. The Company hereby represents and warrants to Investor as of the date of this Agreement and as of any date that You commit to purchase Notes, that: (a) it is duly organized and is validly existing as a corporation in good standing under the laws of Georgia and has corporate power to enter into and perform its obligations under this Agreement; (b) this Agreement has been duly authorized, executed (by electronic execution), and delivered by the Company; (c) the Notes as reflected in the applicable Note Agreement have been duly authorized and, following payment of the purchase price by You and electronic execution, authentication and delivery to You of the Note Agreement, will constitute valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency or similar laws or general principles of equity; and (d) it has complied in all material respects with applicable federal, state and local laws in connection with the offer and sale of the Notes. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, THE NOTE AGREEMENT, OR THE OFFERING STATEMENT, NEITHER THE COMPANY NOR ANY OTHER PERSON HAS MADE OR MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY, EITHER WRITTEN OR ORAL, ON BEHALF OF THE COMPANY WITH RESPECT TO THE SUBJECT MATTER HEREOF.

12. Termination. We may, in our sole discretion, with or without cause, terminate this Agreement by giving You written notice. In addition, upon our reasonable determination that You committed fraud or made a material misrepresentation in connection with a commitment to purchase a Note, performed any prohibited activity, or otherwise failed to abide by the terms of any of the Note Purchase Documents, including each Note to which You are a party, we may, in our sole discretion, immediately and without notice, take one or more of the following actions: (a) terminate or suspend your right to purchase Notes; or (b) terminate this Agreement and your registration with the Company. Upon termination of this Agreement and your registration with the Company, any Note purchase commitments You have made shall be terminated and any funds You may have committed towards such purchase commitments shall be returned to you. Any Notes You purchase prior to the effective date of termination shall remain in full force and effect in accordance with their terms.

13. Investments and Investor Withdrawals. Investor acknowledges and agrees that:

(a) Payments made by Investor in respect of a purchase of Notes may be held for up to five (5) business days before the corresponding Notes are issued. Notwithstanding the foregoing, the Company reserves the right to delay the issuance of Notes at its sole discretion for any reason as necessary to ensure that funds have properly been deposited with Groundfloor Yield including, but not limited to, issues with electronic transfer delays, bank settlement timing, etc.

(b) All Investor withdrawals from an Investor’s GFY Account may take up to five (5) business days from the date of receipt of the funds to be remitted back to Investor. Notwithstanding the foregoing, Groundfloor Yield reserves the right to shorten or delay the time frame for remitting funds back to Investor for any reason in its sole discretion, including, but not limited to, ensuring that any investment in the Notes has been correctly processed and cleared;

(c) (i) This product is not a deposit product, that Groundfloor Yield is not a bank, and that certain funds availability expectations do not apply to this investment; (ii) neither the Company nor the Notes are governed by banking deposit rules, including without limitation, Regulation CC, and (iii) Investor has no expectation that funds will be available on demand; and

(d) Larger withdrawals may be also be subject to additional conditions at the sole discretion of Groundfloor Yield. Investor acknowledges that should Investor withdraw an aggregate amount of funds from their account in an amount greater than $50,000.00 in any thirty (30) day period, Groundfloor Yield may take up to thirty (30) days to process the payment and remit the funds back to Investor’s account.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 14. Security Interest. Groundfloor Yield hereby grants to Investor a present and continuing security interest in all assets of the Company, including the real estate loans owned by the Company and any proceeds of such loans.

15. Miscellaneous.

(a) No Advisory Relationship. Each of Investor and the Company acknowledges and agrees that the purchase and sale of the Notes pursuant to this Agreement is an arms-length transaction between the Investor and Groundfloor Yield. In connection with the purchase and sale of the Notes, Groundfloor Yield is not acting as the Investor’s agent or fiduciary. Groundfloor Yield assumes no advisory or fiduciary responsibility in the Investor’s favor in connection with the purchase and sale of the Notes. Groundfloor Yield has not provided the Investor with any legal, accounting, regulatory, or tax advice with respect to the Notes.

(b) LIMITATION ON DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOST PROFITS OR SPECIAL, EXEMPLARY, CONSEQUENTIAL, OR PUNITIVE DAMAGES, EVEN IF INFORMED OF THE POSSIBILITY OF SUCH DAMAGES. FURTHERMORE, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE OTHER REGARDING THE EFFECT THAT THIS AGREEMENT MAY HAVE UPON THE FOREIGN, FEDERAL, STATE, OR LOCAL TAX LIABILITY OF THE OTHER.

(c) Further Assurances. The parties agree to execute and deliver such further documents and information as may be reasonably required in order to effectuate the purposes of this Agreement.

(d) Survival. All representations, warranties and covenants contained in this Agreement shall survive the acceptance of the subscription by the Company and the consummation of the subscription.

(e) Waiver. Neither this Agreement nor any provisions hereof shall be amended or waived except with the written consent of the Company. Any waiver of a breach of any provision of this Agreement will not be a waiver of any subsequent breach. Failure or delay by Groundfloor Yield to enforce any term or condition of this Agreement will not constitute a waiver of such term or condition.

(f) Amendment. The Company reserves the right to make changes to this Agreement from time to time, and the Company will send or post electronic notice of such changes by email or via the Mobile App.

(g) Successors and Assigns. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective heirs, legal representatives, successors and permitted assigns.

(h) Governing Law. This Agreement is to be construed in accordance with and governed by the internal laws of the State of Georgia without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Georgia to the rights and duties of the parties.

(i) Entire Agreement. This Agreement and the Notes constitute the entire agreement between the parties regarding the subject matter contained herein and supersedes all prior or contemporaneous agreements, representations and understandings of the parties.

(j) Electronic Signature and Delivery. This Agreement, the Notes, and all signatures and disclosures related to Investor’s purchase of the Notes (collectively, the “Disclosures”) are provided only by electronic means through the Mobile App or via electronic mail. Each of the Company and the Investor hereby consent to electronic signature and delivery of all documents related to the purchase of the Notes by Investor by such electronic means.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (k) Notices. All notices, requests, demands, required Disclosures, and other communications to You from Groundfloor Yield will be transmitted to You only by email to the email address You have registered on the Mobile App or will be posted on the Mobile App, and shall be deemed to have been duly given and effective upon transmission or posting. If your registered email address changes, You must notify Groundfloor Yield promptly. You also agree to promptly update your registered residence/mailing address on the Mobile App if You change your residence. You shall send all notices or other communications required to be given hereunder to Groundfloor Yield via email at [email protected] or in writing to Groundfloor Yield LLC, c/o Groundfloor Finance Inc., 600 Peachtree St., Suite 810, Atlanta, GA 30308, Attention: Investor Support.

(l) Agreement Term. The terms of this Agreement shall survive until the Maturity Date of the last outstanding Note purchased by You. The parties stipulate that there are no third-party beneficiaries to this Agreement.

(m) Assignment. You may not assign, transfer, sublicense, or otherwise delegate your rights or responsibilities under this Agreement to any person without prior written consent from Groundfloor Yield. Any such assignment, transfer, sublicense, or delegation in violation of this Section 12(m) shall be null and void.

(n) Severability. If at any time subsequent to the date hereof, any of the provisions of this Agreement shall be held by any court of competent jurisdiction to be illegal, void, or unenforceable, such provision shall be of no force and effect, but the illegality and unenforceability of such provision shall have no effect upon and shall not impair the enforceability of any other provisions of this Agreement.

(o) Headings. The headings in this Agreement are for reference purposes only and shall not affect the interpretation of this Agreement in any way.

16. Indemnification. In addition to any indemnification obligations set forth in the Terms of Service, You agree to indemnify, defend, protect and hold harmless the Company, any of our affiliates, any of our subsidiaries and our and their respective officers, directors, managers, members, shareholders, employees and agents (the “Groundfloor Parties”) against all claims, liabilities, actions, costs, damages, losses, demands and expenses of every kind, known or unknown, contingent or otherwise (including, but not limited to, any and all expenses incurred in investigating, preparing or defending against any litigation commenced or threatened) (collectively, the “Losses”), based upon or arising out of (a) any material breach of any obligation You undertake in this Agreement or in any other Note Purchase Document, including but not limited to your obligation to comply with applicable laws; or (b) your acts and omissions, and your representations (and those of your employees, agents or representatives) relating to the Groundfloor Parties. You do not have any liability at any time in excess of an amount equal to the aggregate payments due and outstanding under any Notes You hold; provided, however, that the foregoing limitation shall not apply to recovery for Losses based upon or arising out of any inaccuracy in or breach of your representations and warranties set forth in this Agreement. We may, among other remedies available to us, collect against Losses by off-setting amounts owed to You as Note Payments. Your obligation to indemnify the Groundfloor Parties shall survive termination of this Agreement, regardless of the reason for termination.

17. Consenting to Do Business Electronically. Before You decide to do business electronically with us, You should consider whether You have the required hardware and software capabilities described below.

18. Hardware and Software Requirements. In order to access and retain Disclosures electronically, You must satisfy the following computer hardware and software requirements: access to the Internet; an email account and related software capable of receiving email through the Internet; a web browser which is SSL-compliant and supports secure sessions, such as Internet Explorer 5.0 or above and Netscape Navigator 6.0 or above, or the equivalent software; and hardware capable of running this software. You must also have software which permits You to receive and access Portable Document Format or “PDF” files, such as Adobe Acrobat Reader® version 8.0 and above (available for download at http://www.adobe.com/products/acrobat/readstep2.html).

19. TCPA Consent. You expressly consent to receiving calls and messages, including auto-dialed and pre-recorded message calls, and SMS messages (including text messages) from us, our affiliates, marketing partners, agents and others calling at their request or on their behalf, at any telephone numbers that You have provided or may provide in the future (including any cellular telephone numbers). Your cellular or mobile telephone provider will charge You according to the type of plan You carry.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 20. Additional Mobile Technology Requirements. If You are accessing the Mobile App and the Disclosures electronically via a mobile device (such as a smart phone, tablet, and the like), in addition to the above requirements You must make sure that You have software on your mobile device that allows You to print and save the Disclosures presented to You during the application process. These applications can be found for most mobile devices in each such device’s respective “app store”. If You do not have these capabilities on your mobile device, please access the Mobile App through a device that provides these capabilities.

21. Withdrawing Consent. You may withdraw your consent to receive Disclosures electronically by contacting us at the address identified in the Offering Statement (as it may be supplemented or amended from time to time). If You are investor on the Mobile App and You withdraw your consent to receive Disclosures electronically, You may continue to contribute funds to requests on the Mobile App. If You have already purchased one or more Notes, all previously agreed to terms and conditions will remain in effect, and we will send Disclosures to your verified home address provided during registration. If You withdraw your consent to receive IRS Forms 1099 electronically, we will confirm your withdrawal and its effective date in writing by email.

22. How to Contact Us Regarding Electronic Disclosures. You can contact us (for technical assistance, to request a paper copy of a document, or otherwise) via email and the address set forth in Section 20 below. You agree to keep us informed of any change in your email or home mailing address so that You can continue to receive all Disclosures in a timely fashion. If your registered email address changes, You must notify us of the change by sending an email to [email protected] or by calling 404-850-9223. You also agree to update your registered residence address and telephone number on the web site if they change. You will print a copy of this Agreement for your records, and You agree and acknowledge that You can access, receive and retain all Disclosures electronically sent via email or posted on the Mobile App.

23. Notices. All notices, requests, demands, required Disclosures and other communications from the Company to You will be transmitted to You only by email to the email address You have registered on the Mobile App or will be posted on the Mobile App and shall be deemed to have been duly given and effective upon transmission or posting. You shall send all notices or other communications required to be given hereunder to the Company via email at [email protected] or by writing to: Groundfloor Yield LLC, c/o Groundfloor Finance Inc., 600 Peachtree Street, Suite 810, Atlanta, Georgia, 30308, Attention: Investor Support or at the address identified in the Offering Statement (as it may be supplemented or amended from time to time). You may call the Company at (404) 850-9225 or the phone number identified in the Offering Statement (as it may be supplemented or amended from time to time), but calling may not satisfy your obligation to provide notice hereunder or otherwise preserve your rights.

24. Notice of Dispute Resolution by Binding Arbitration.

(a) Unless You opt out as provided pursuant to Section 24(b) below, either party to this Agreement may, at its sole election, require that the sole and exclusive forum and remedy for resolution of a Claim be final and binding arbitration pursuant to this Section 24 (the “Arbitration Provision”). Notwithstanding the foregoing sentence, by agreeing to this Arbitration Provision, You are not deemed to have waived the Company’s compliance with the federal securities laws and the rules and regulations thereunder. Unless otherwise agreed to in writing by the Company, the arbitration shall be conducted in Atlanta, Georgia. “Claim” shall include any past, present, or future claim, dispute, or controversy involving You (or persons claiming through or connected with you), on the one hand, and the Company (or persons claiming through or connected with the Company), on the other hand, relating to or arising out of this Agreement, any Note, the Mobile App, and/or the activities or relationships that involve, lead to, or result from any of the foregoing, including (except to the extent provided otherwise in the last sentence of Section 24(f) below) the validity or enforceability of this Arbitration Provision, any part thereof, or the entire Agreement. Claims are subject to arbitration regardless of whether they arise from contract; tort (intentional or otherwise); a constitution, statute, common law, or principles of equity; or otherwise. Claims include matters arising as initial claims, counter-claims, cross-claims, third- party claims, or otherwise. The scope of this Arbitration Provision is to be given the broadest possible interpretation that is enforceable.

(b) You may opt out of this Arbitration Provision for all purposes by sending an arbitration opt out notice to Groundfloor Yield LLC, c/o Groundfloor Finance Inc., 600 Peachtree Street, Suite 810, Atlanta, Georgia, 30308, Attention: Investor Support or at the address identified in the Offering Statement (as it may be supplemented or amended from time to time) that is received at the specified address within 30 days of the date of your first electronic acceptance of the terms of this Agreement. The opt out notice must clearly state that You are rejecting arbitration; identify the agreement to which it applies by date; provide your name, address, and social security or TIN-number; and be signed by you. You may send the opt out notice in any manner You see fit as long as it is received at the specified address within the specified time. No other methods can be used to opt out of this Arbitration Provision. If the opt out

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document notice is sent on your behalf by a third party, such third party must include evidence of their authority to submit the opt out notice on your behalf.

(c) The party initiating arbitration shall do so with the American Arbitration Association (the “AAA”) or JAMS. The arbitration shall be conducted according to, and the location of the arbitration shall be determined in accordance with, the rules and policies of the administrator selected, except to the extent the rules conflict with this Arbitration Provision or any countervailing law. In the case of a conflict between the rules and policies of the administrator and this Arbitration Provision, this Arbitration Provision shall control, subject to countervailing law, unless all parties to the arbitration consent to have the rules and policies of the administrator apply.

(d) If we elect arbitration, we shall pay all of the administrator’s filing costs and administrative fees (other than hearing fees). If You elect arbitration, filing costs and administrative fees (other than hearing fees) shall be paid in accordance with the rules of the administrator selected, or in accordance with countervailing law if contrary to the administrator’s rules. We shall pay the administrator’s hearing fees for one full day of arbitration hearings. Fees for hearings that exceed one day will be paid by the party requesting the hearing, unless the administrator’s rules or applicable law require otherwise, or You request that we pay them and we agree to do so. Each party shall bear the expense of its own attorneys’ fees, except as otherwise provided by law. If a statute gives You the right to recover any of these fees, these statutory rights shall apply in the arbitration notwithstanding anything to the contrary herein.

(e) Within 30 days of a final award by the arbitrator, any party may appeal the award for reconsideration by a three-arbitrator panel selected according to the rules of the arbitrator administrator. In the event of such an appeal, any opposing party may cross-appeal within 30 days after notice of the appeal. The panel will reconsider de novo all aspects of the initial award that are appealed. Costs and conduct of any appeal shall be governed by this Arbitration Provision and the administrator’s rules, in the same way as the initial arbitration proceeding. Any award by the individual arbitrator that is not subject to appeal, and any panel award on appeal, shall be final and binding, except for any appeal right under the Federal Arbitration Act (FAA), and may be entered as a judgment in any court of competent jurisdiction.

(f) We agree not to invoke our right to arbitrate an individual Claim You may bring in Small Claims Court or an equivalent court, if any, so long as the Claim is pending only in that court. NO ARBITRATION SHALL PROCEED ON A CLASS, REPRESENTATIVE, OR COLLECTIVE BASIS (INCLUDING AS PRIVATE ATTORNEY GENERAL ON BEHALF OF OTHERS), EVEN IF THE CLAIM OR CLAIMS THAT ARE THE SUBJECT OF THE ARBITRATION HAD PREVIOUSLY BEEN ASSERTED (OR COULD HAVE BEEN ASSERTED) IN A COURT AS CLASS REPRESENTATIVE, OR COLLECTIVE ACTIONS IN A COURT. Unless consented to in writing by all parties to the arbitration, no party to the arbitration may join, consolidate, or otherwise bring claims for or on behalf of two or more individuals or unrelated corporate entities in the same arbitration unless those persons are parties to a single transaction. Unless consented to in writing by all parties to the arbitration, an award in arbitration shall determine the rights and obligations of the named parties only, and only with respect to the claims in arbitration, and shall not (i) determine the rights, obligations, or interests of anyone other than a named party, or resolve any Claim of anyone other than a named party; nor (ii) make an award for the benefit of, or against, anyone other than a named party. No administrator or arbitrator shall have the power or authority to waive, modify, or fail to enforce this Section 24(f), and any attempt to do so, whether by rule, policy, arbitration decision or otherwise, shall be invalid and unenforceable. Any challenge to the validity of this Section 24(f) shall be determined exclusively by a court and not by the administrator or any arbitrator.

(g) This Arbitration Provision is made pursuant to a transaction involving interstate commerce and shall be governed by and enforceable under the FAA. The arbitrator will apply substantive law consistent with the FAA and applicable statutes of limitations. The arbitrator may award damages or other types of relief permitted by applicable substantive law, subject to the limitations set forth in this Arbitration Provision. The arbitrator will not be bound by judicial rules of procedure and evidence that would apply in a court. The arbitrator shall take steps to reasonably protect confidential information.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (h) This Arbitration Provision shall survive: (i) suspension, termination, revocation, closure, or amendments to this Agreement and the relationship of the parties; (ii) the bankruptcy or insolvency of any party or other person; and (iii) any transfer of any loan or Note or any other promissory note(s) which You own, or any amounts owed on such loans Note or notes, to any other person or entity. If any portion of this Arbitration Provision other than Section 24(f) is deemed invalid or unenforceable, the remaining portions of this Arbitration Provision shall nevertheless remain valid and in force. If an arbitration is brought on a class, representative, or collective basis, and the limitations on such proceedings in Section 24(f) are finally adjudicated pursuant to the last sentence of Section 24(f) to be unenforceable, then no arbitration shall be had. In no event shall any invalidation be deemed to authorize an arbitrator to determine Claims or make awards beyond those authorized in this Arbitration Provision.

(i) THE PARTIES ACKNOWLEDGE THAT THEY HAVE A RIGHT TO LITIGATE CLAIMS THROUGH A COURT BEFORE A JUDGE, BUT WILL NOT HAVE THAT RIGHT IF ANY PARTY ELECTS ARBITRATION PURSUANT TO THIS ARBITRATION PROVISION. THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY WAIVE THEIR RIGHTS TO LITIGATE SUCH CLAIMS IN A COURT UPON ELECTION OF ARBITRATION BY ANY PARTY.

25. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE COMPANY AND THE INVESTOR WAIVE A TRIAL BY JURY IN ANY LITIGATION RELATING TO THIS NOTE. NOTWITHSTANDING THE FOREGOING SENTENCE, BY AGREEING TO THIS SECTION 22, THE INVESTOR IS NOT DEEMED TO HAVE WAIVED THE COMPANY’S COMPLIANCE WITH THE FEDERAL SECURITIES LAWS AND THE RULES AND REGULATIONS THEREUNDER.

26. Caption Headings. Caption or section headings in this Note are for convenience purposes only and are not to be used to interpret or define the provisions of the Note.

27. Electronic Signatures. The Company and the Investor each agree that the Electronic Signature (defined below), whether digital or encrypted, of the Company and Investor are intended to authenticate this writing and to have the same force and effect as manual signatures to the extent and as provided for under applicable law, including the Electronic Signatures in Global and National Commerce Act of 2000 (15 USC §§ 7001, et seq.), the Georgia Uniform Electronic Transactions Act, O.C.G.A. § 10-12, et seq., or any other similar state laws based on the Uniform Electronic Transactions Act. “Electronic Signature” means any electronic sound, symbol or process attached to or logically associated with a record and executed and adopted by a party with the intent to sign such record.

[Signatures on Following Page]

IN WITNESS WHEREOF, Investor has executed this Agreement this ______day of ______, ____.

INVESTOR:

Name:

Address:

Dollar amount of Notes subscribed for: $______

SUBSCRIPTION ACKNOWLEDGED AND ACCEPTED:

Name: Title:

Address: c/o Groundfloor Finance Inc. 600 Peachtree Street, Suite 810 Atlanta, Georgia 30308

EXHIBIT A Groundfloor Yield Auto-Invest Program Election Form

To opt into the GFY AIP, please complete the information below. To opt out of the GFY AIP at any time, please update your preferences in your GFY Account, contact the Company at [email protected], or in writing to Groundfloor Yield LLC, c/o Groundfloor Finance Inc., 600 Peachtree St., Suite 810, Atlanta, GA 30308, Attention: Investor Support.

I. Financial Institution Account and GFY Account Information

Transfer From: Financial Institution Name: ______Financial Institution Account: ______Financial Institution Routing Number: ______

Transfer To: GFY Account: ______Amount of Auto-Investment $______

II. Investment Schedule and Frequency of Auto-Investments

Investment Schedule: Please allow at least two (2) business days before your first automatic investment. Day of Month: [1-31]*

* If the investment date falls on a weekend, holiday, or beyond the end of the month (29th, 30th, 31st), your purchase will occur on the next business day.

Frequency: Monthly

¨ Quarterly – 1st Month (January, April, July, October)

¨ Quarterly – 2nd Month (February, May, August, November)

¨ Quarterly – 3rd Month (March, June, September, December)

¨ Create a custom schedule

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Select boxes to create schedule. Investments will be made automatically for months with checked boxes. At least two months · must be selected.

¨ January ¨ July ¨ February ¨ August ¨ March ¨ September ¨ April ¨ October ¨ May ¨ November ¨ June ¨ December

III. Stop Date of GFY AIP

Stop date:

¨ No stop date (Automatic investments will be made on an ongoing basis unless you cancel schedule.)

¨ Stop automatic investments after: [mm/dd/yyyy]

IV. Investor Acknowledgement of GFY AIP

You acknowledge and agree that You must maintain an adequate balance in your GFY Account. If the cash needed to fund your automatic investment is not available in your GFY Account, your scheduled auto-investment will be skipped. When the (a) automatic investment is skipped for a second consecutive time due to lack of available cash in your GFY Account, the GFY AIP will be canceled by the Company.

The Investor hereby authorizes Groundfloor Yield in accordance with the instructions provided above to secure payments of amounts to be invested by such Investor, by initiating debit entries to the Financial Institution Account indicated above. You authorize and request the Financial Institution indicated on this request to accept such entries from Groundfloor Yield, and to debit, as indicated, the Financial Institution Account in accordance with these entries. The Investor hereby ratifies any (b) telephone instructions given pursuant to this authorization and acknowledges and agrees that none of Groundfloor Yield, any of its affiliates, subsidiaries or their respective officers, directors, managers, members, shareholders, employees and agents, will be liable for any loss, liability, cost, or expense for acting upon such instructions. The Investor further acknowledge that this authorization may only be revoked by providing notice or revocation to Groundfloor Yield, in such time and manner as to afford Groundfloor Yield and the Financial Institution a reasonable opportunity to act upon it.

By signing the signature page to the Agreement, the Investor acknowledges and agrees (i) that such Investor has read and understands this Groundfloor Yield Auto-Invest Program Election Form, the Offering Statement, and the Agreement and understands and accepts the actions such Investor has taken with the execution of this Groundfloor Yield Auto-Invest Program (c) Election Form; (ii) Investor may (A) revise or change the Election set forth herein by submitting a new Groundfloor Yield Auto- Invest Program Election Form; or (B) terminate participation in the Groundfloor Yield Auto-Invest Program, as applicable, with three (3) business days’ notice to Groundfloor Yield, provided that, any Notes issued to such Investor prior to the receipt of such notice by Groundfloor Yield pursuant to the Investor’s election set forth herein may not be revoked or changed by the Investor.

Consent of Independent Registered Public Accounting Firm

We hereby consent to the inclusion of our reports (i) dated April 26, 2021, with respect to the balance sheet of Groundfloor Yield, LLC as of December 31, 2020 and the related statements of operations, changes in member’s (deficit) equity, and cash flows for the period from April 10, 2020 (date of inception) to December 31, 2020, and (ii) dated March 15, 2021 with respect to the consolidated balance sheets as of Groundfloor Finance Inc. and its subsidiaries as of December 31, 2020 and 2019 and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended, each of which appears in the accompanying Form 1-A/A of Groundfloor Yield, LLC. Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern. We also consent to the reference under the heading “Experts” appearing therein.

Atlanta, Georgia April 26, 2021

VINCENT R. RUSSO DIRECT LINE: 404-856-3260 Email: [email protected]

April 28, 2021

VIA ELECTRONIC MAIL

Groundfloor Yield, LLC 600 Peachtree St. NE Suite 810 Atlanta, GA 30308 [email protected]

Re: Regulation A Offering Statement on Form 1-A

Ladies and Gentlemen:

At your request, we have examined Offering Statement on Form 1-A of Groundfloor Yield, LLC (the “Company”), filed with the Securities and Exchange Commission (the “Commission”) on April 26, 2021 pursuant to Regulation A under the Securities Act of 1933 (the “Securities Act”), in connection with the Company’s offer and sale of up to $75,000,000 aggregate principal amount of Promissory Notes (the “Securities”). The Securities will be purchased and sold pursuant to a Form of Groundfloor Yield Note (the “Note”) and a Form of Groundfloor Yield Note Purchase Agreement (the “Note Purchase Agreement”) as set forth in Part III of the Offering Statement, and as entered into between the Company and each purchaser of the Securities (“Purchasers”).

In rendering this opinion, we have examined such records and documents as we have deemed necessary in order to render the opinion set forth herein, including the following:

The Offering Statement, the Offering Circular included as Part II of the Offering Statement, and the exhibits filed as (1) Part III thereof or incorporated therein by reference;

The Articles of Organization of the Company filed with the Georgia Secretary of State on April 10, 2020 (included as (2) Exhibit 2.1 to the Offering Statement);

The Operating Agreement of the Company (the “Operating Agreement”) (filed as Exhibit 2.2 to the Offering (3) Statement);

(4) Action of the sole member-manager of the Company authorizing the offering covered by the Offering Statement; and

Robbins ♦ Ross ♦ Alloy ♦ Belinfante ♦ Littlefield llc 500 14th Street, NW · Atlanta, GA 30318 · www.robbinsfirm.com

Groundfloor Yield, LLC April 28, 2021 Page 2

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Certificate of Organization issued by the Georgia Secretary of State, dated April 21, 2020, and public records of the (5) Georgia Secretary of State indicating that the Company is active and in good standing pursuant to the Georgia Limited Liability Company Act.

In reviewing documents for this opinion, we have assumed and express no opinion as to the authenticity and completeness of all documents submitted to us, including the conformity of all copies to the originals, and the legal capacity of all persons or entities executing the documents. Additionally, in rendering the opinions set forth below, we have assumed that: (i) each Purchaser has the legal capacity or power, corporate or other, to enter into and perform all such obligations under the Note and Note Purchase Agreement; (ii) any and all representations of the Company are correct as to questions of fact; (iii) unless otherwise exempt, the Securities will be properly qualified as necessary in each state in which the Securities are to be offered or sold in accordance with the laws and regulations of those states; (iv) the Company will promptly file any supplements to the Offering Circular and post-qualification amendments in accordance with all applicable laws and regulations in effect from time to time; and (v) the public offer and sale of the Securities shall be exempt from registration pursuant to Section 3(b) of the Securities Act.

This opinion is qualified by and subject to, and we render no opinion with respect to, the following limitations and exceptions to the enforceability of the Securities:

The effect of the laws of bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, and (a) other similar laws now or hereafter in effect relating to or affecting the rights and remedies of creditors;

The effect of general principles of equity and similar principles, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, public policy and unconscionability, and the possible unavailability of (b) specific performance, injunctive relief, or other equitable remedies, regardless of whether in a proceeding in equity or at law;

(c) The effect of laws relating to banking, usury or permissible rates of interest for loans, forbearances or the use of money;

The effect of provisions relating to indemnification, exculpation or contribution, to the extent such provisions may be (d) held unenforceable as contrary to federal or state securities laws; and

(e) The financial condition of the Company.

The opinions expressed herein are limited to the laws of the State of Georgia, as currently in effect and without regard to principles or laws regarding choice of law or conflict of laws, and whether the Securities are the valid and binding obligations of the Company. No opinion is expressed with respect to any other laws or any effect that such other laws may have on the opinions expressed herein.

Robbins ♦ Ross ♦ Alloy ♦ Belinfante ♦ Littlefield llc 500 14th Street, NW · Atlanta, GA 30318 · www.robbinsfirm.com

Groundfloor Yield, LLC April 28, 2021 Page 3

This opinion is based on our understanding that prior to issuing any Securities, the Company will advise us in writing of the terms thereof and other information material thereto, and will file such supplement or amendment to this opinion (if any) as we may reasonably consider necessary or appropriate with respect to such Securities. We also assume the Company will timely file any and all supplements or amendments to the Offering Statement or the Offering Circular as are necessary to comply with applicable laws in effect from time to time; however, we undertake no responsibility to monitor the Company’s future compliance with applicable laws, rules or regulations of the Commission or any other governmental body.

Based upon the foregoing, we are of the following opinion that:

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (1) The Company is a limited liability company validly existing, in good standing, under the laws of the State of Georgia;

The Company has the power to create the obligation covered by the Offering Statement, and has taken the required (2) steps to authorize entering into the obligations covered by the Offering Circular;

(3) The Securities have been duly authorized by the Company; and

The Securities, when paid for by and delivered to the Purchasers in accordance with the terms of the Note and the Note (4) Purchase Agreement, will be valid, binding obligations of the Company in accordance with the terms therein.

This opinion is intended solely for use in connection with the issuance and sale of the Securities subject to the Offering Circular and is not to be relied upon for any other purpose. This opinion is based on facts and law existing as of the first date written above and rendered as of such date. Specifically, and without implied limitation, we assume no obligation to advise the Company of any fact, circumstance, event or change in the law subsequent to the date of effectiveness of the Offering Circular, compliance with any continuing disclosure requirements that may be applicable, or of any facts that may thereafter be brought to our attention whether or not such occurrence would affect or modify any of the opinions expressed herein.

We hereby consent to the filing of this opinion as Exhibit 12.1 to the Amendment and to the reference to our firm under the caption “Legal Matters” in the Offering Circular constituting a part of the Amendment. In giving such consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission promulgated thereunder.

Sincerely yours,

/s/ Vincent R. Russo On behalf of Robbins Ross Alloy Belinfante Littlefield LLC

Robbins ♦ Ross ♦ Alloy ♦ Belinfante ♦ Littlefield llc 500 14th Street, NW · Atlanta, GA 30318 · www.robbinsfirm.com

Brian S. Korn Manatt, Phelps & Phillips, LLP manatt Direct Dial: (212) 790-4510 manatt | phelps | phillips E-mail: [email protected]

August 21, 2020

VIA EMAIL

U.S. Securities and Exchange Commission Division of Corporation Finance Mail Stop 3233 Washington, DC 20549

Attention: Mr. Ruairi Regan and Mr. James Lopez Office of Real Estate and Construction

Groundfloor Yield LLC Amended Draft Offering Statement on Form 1-A Re: Confidentially submitted June 29, 2020 CIK No. 0001810007

Dear Messrs. Regan and Lopez:

We are submitting this letter on behalf of our client, Groundfloor Yield LLC (the “Company”), in response to the written comments of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “SEC”) contained in your letter dated July 21, 2020 (the “Comment Letter”) in connection with the Company’s draft Offering Statement on Form 1-A (the “Offering Statement”), as confidentially submitted on June 29, 2020. Concurrent with this letter, we are filing the Offering Statement with the SEC.

For your convenience, our responses are set forth below, with the headings and numbered items of this letter corresponding to the headings and numbered items contained in the Comment Letter. Each of the comments from the Comment Letter is restated in bold and italics prior to the Company’s response. Capitalized terms used but not defined in this letter shall have the respective meanings given to such terms in the Offering Statement. All page number references in the Company’s responses are to page numbers in the Offering Statement.

1. We note your response to comment 2. We are still considering your response and may have further comment.

Response: The Company acknowledges the Staff’s comment above.

We note your response to comments 1 and 3. Please advise us why you believe your notes offering should not be aggregated 2. under Rule 251(a)(2) with offerings by GFI or with GRE1. In your response, please address the extent to which:

the management team and personnel cited in response to comment 1 will conduct your operations concurrently with the · operations of GFI and GRE1;

proceeds from the notes could be used alongside proceeds from offerings by Groundfloor Finance and affiliates to fund the origination of loans. You state that proceeds of the notes will be provided to GFI and GRE1, which will then originate loans using the proceeds. It appears your affiliates currently use proceeds of LRO, equity and other offerings for the same · purpose. We also note the statement on page 4 that funds from this offering "may be added to funds from Groundfloor Finance’s direct lending account, GRE 1’s direct lending account and funds from institutional and individual investors to collectively fund the loans”;

· proceeds from the notes could be used for general corporate purposes of GFI and GRE1;

· proceeds from GFI and GRE1 offerings could be used to assist you in commencing your operations; and

· this offering is a distinct investment opportunity from both GFI’s and GRE1’s offerings.

Response: The notes (the “GFY Notes”) offered for sale by the Company should not be aggregated for purposes of Rule 251(a)(2) with offerings by Groundfloor Finance Inc. (“GFI”) or Groundfloor Real Estate 1 LLC (“GRE 1”) because the transactions fail the “five-factor test” established for consideration of the integration of offerings by the SEC in its Final Rule: Nonpublic Offering Exemption, Release No. 33-4552, dated November 6, 1962.

The five-factors to be considered in determining whether offerings should be integrated are: (i) whether the different offerings are part of a single plan of financing, (ii) whether the offerings involve issuance of the same class of security, (iii) whether the offerings are made at or about the same time, (iv) whether the same type of consideration is to be received, and (v) whether the offerings are made for the same general purpose.

A revised description of the anticipated structure of the offering of the GFY Notes follows (and is described in more detail in the Offering Statement): (i) Groundfloor Holdings, LLC (“GFH”), a whole owned subsidiary of GFI, will originate loans using its own capital (the “Loans”), (ii) the Loans will be purchased by the Company using the proceeds of the GFY Notes, (iii) the Loans acquired by the Company will be held by the Company for up to thirty (30) days and the Company will be entitled to any payments of principal and interest made by the underlying borrowers during such time period, (iv) the Loans are sold by the Company to each of GFI, GRE 1 or Groundfloor Real Estate 2, LLC (“GRE 2” and collectively with GFI and GRE 1, the “Purchasing Entities”) and the Company receives the purchase price for such Loans from the Purchasing Entities, which may be from the sale proceeds of LROs and other securities issued by the Purchasing Entities, or from balance sheet capital with respect to GFI.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The GFY Notes and the offerings by GFI, GRE 1 and GRE 2 are not part of a single plan of financing and are not made for the same general purpose. The sale of the GFY Notes by the Company is intended solely to finance the acquisition of Loans by the Company from GFH. The GFY Notes are general obligations of the Company, with a short-term anticipated maturity of no more than thirty days (although the actual maturity of the GFY Notes is anticipated to be five (5) days) secured by a lien on all assets of the Company, which consist of the perpetually changing pool of Loans acquired by the Company from GFH and proceeds of the sales thereof to the Purchasing Entities. The LROs and securities issued by the Purchasing Entities are limited recourse obligations corresponding to a specific Loan or Loans acquired by such Purchasing Entity, and the anticipated maturity of the LROs and securities will correspond to the life of the applicable Loan or Loans. While the offerings of the GFY Notes and the offerings by the Purchasing Entities are all anticipated to be continuous, the offerings of the Purchasing Entities predate the offering of the GFY Notes by as much as nearly three years.

With respect to the specific points for which you requested additional clarification in the Comment Letter, please see the responses below.

Please address the extent to which the management team and personnel cited in response to comment 1 will conduct your operations concurrently with the operations of GFI and GRE1

The same personnel are expected to conduct the operations of the Company concurrently with the operations of GFI and GRE 1. Nonetheless, each company will have distinct operations, purposes, financial statements and operations.

Please address the extent to which proceeds from the notes could be used alongside proceeds from offerings by Groundfloor Finance and affiliates to fund the origination of loans. You state that proceeds of the notes will be provided to GFI and GRE1, which will then originate loans using the proceeds. It appears your affiliates currently use proceeds of LRO, equity and other offerings for the same purpose. We also note the statement on page 4 that funds from this offering "may be added to funds from Groundfloor Finance’s direct lending account, GRE 1’s direct lending account and funds from institutional and individual investors to collectively fund the loans”

The proceeds of the offerings by the Purchasing Entities will not be used alongside proceeds of the offering of GFY Notes by the Company to fund the origination of Loans. The proceeds of the offering of GFY Notes will be used to fund the acquisition of Loans by the Company from GFH, which originates Loans using its own capital, and the proceeds of the offering of GFY Notes will not be provided to any of the Purchasing Entities.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Please address the extent to which proceeds from the notes could be used for general corporate purposes of GFI and GRE1

Proceeds from the GFY Notes may be used for any purpose of the Company, and the Company retains final discretion over the use of proceeds from the sale of GFY Notes. However, the Company does not anticipate using proceeds from the sale of GFY Notes for general corporate purposes of the Purchasing Entities. Each of the Purchasing Entities have independent sources of funding for their general corporate purposes.

Please address the extent to which proceeds from GFI and GRE1 offerings could be used to assist you in commencing your operations

The proceeds of the GFI, GRE 1 and GRE 2 offerings will not be used to finance the operations of the Company on an ongoing basis. However, the Company will receive an initial capital contribution from its sole member, GFI, which may be funded in whole or in part with proceeds of the offering by GFI.

Please address the extent to which this offering is a distinct investment opportunity from both GFI’s and GRE1’s offerings

The GFY Notes are short-term notes payable by the Company and secured by all assets thereof. The GFI offering of common stock is an offering of equity in GFI, and the GRE 1 LROs and GRE 2 securities are limited recourse obligations of GRE 1 and GRE 2, respectively, corresponding to specific identified loans. Investor returns on investments in the GFY Notes are dependent upon the overall performance of the constantly changing pool of assets owned by the Company, whereas investor returns on investments in common stock of GFI are dependent upon the performance of GFI and shareholders’ rights under the agreements to which they are party and investor returns on the GRE 1 LROs and GRE 2 securities are dependent upon the performance of the specific loan corresponding to each LRO or security.

Investors in GFI common stock, LROs issued by GRE 1, securities issued by GRE 2 and the GFY Notes are each investing in different types of instruments with different risk profiles, and different payment conditions. Consequently, the offerings of the Company, GFI, GRE 1 and GRE 2 are distinct investment opportunities.

Groundfloor Yield Notes, page 6

We have considered your response to comment 7. We note your statement that GFY Notes will occur on a continuous basis and will not be tied to the origination of any specific loan or loans by GFI or any other originator. However, given the interdependence of your business process as described within disclosures on pages 16 and 17, it appears the quality of investments in your GFY Notes and potential for return on such investments are indirectly tied to the characteristics of the loans to be funded by such proceeds. Given this apparent interdependence, please elaborate on why you believe summary 3. information of characteristics underlying loan portfolios earmarked for funding by Groundfloor Yield Notes would not be necessary for investors to make an initial investment decision. In your response, please clarify whether any potential loan portfolios have been specifically identified for funding by the Groundfloor Yield Notes and to the extent known trends or demands related to such loan portfolios impact your operations, please tell us how you considered revising your disclosure to provide summary characteristics of such loan portfolios and pro forma financial information to reflect the funding of such identified loans and/or portfolios of loans.

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Response: No potential loan portfolios have been specifically identified for funding by the GFY Notes at this time. The GFY Notes are general obligations of the Company, and are secured by a lien on all assets of the Company. The assets owned by the Company will consist of the pool of loans acquired by the Company from GFH and the proceeds of the sales thereof. Although the performance of the loans owned by the Company is relevant, in the aggregate, to the ability of the Company to satisfy its payment obligations to investors in the GFY Notes, each individual loan is anticipated to be held for a very short period by the Company (the anticipated period is five (5) days, but in any event no more than thirty (30) days). Because each loan will be owned by the Company only for a short period prior to being sold to a Purchasing Entity, and because payments on the GFY Notes are not dependent upon the performance of any specific loan, the characteristics of each loan are not sufficiently relevant to investors in the GFY Notes to warrant the disclosure of the characteristics of each loan held by the Company. Additionally, as the pool of loans comprising the assets of the Company will be subject to continuous change and turnover, information regarding the characteristics of loans held by the Company will be of limited value to Investors.

Please provide us, and revise your disclosure to include, a more detailed discussion of your loan funding processes. In your response, please address the fact that disclosures on page 18 indicate that GRE1 and GRE2 acquire loans from GFH, while you indicate on page 17 that GRE1 and GRE2 receive loans from GFY. In addition, given the five day term of the GFY notes and 4. the potential holding periods of up to 30 days by both you and GFH before being sold to you or assigned by you, respectively, please clarify and/or reconcile how you will manage repayment of the initial maturity on the first round of GFY notes sold. To the extent repayment will be funded by sources other than proceeds from GFH, please identify such sources of liquidity.

Response: A revised description of the anticipated structure of the offering of the GFY Notes follows (and is described in more detail in the Offering Statement): (i) Groundfloor Holdings, LLC (“GFH”), a whole owned subsidiary of GFI, will originate loans using its own capital (the “Loans”), (ii) the Loans will be purchased by the Company using the proceeds of the GFY Notes, (iii) the Loans acquired by the Company will be held by the Company for up to thirty (30) days and the Company will be entitled to any payments of principal and interest made by the underlying borrowers during such time period, (iv) the Loans are sold by the Company to each of GFI, GRE 1 or Groundfloor Real Estate 2, LLC (“GRE 2” and collectively with GFI and GRE 1, the “Purchasing Entities”) and the Company receives the purchase price for such Loans from the Purchasing Entities, which may be from the sale proceeds of LROs and other securities issued by the Purchasing Entities, or from balance sheet capital in certain instances with respect to GFI. To manage repayment of the initial maturity of the GFY Notes, the Company will be adequately capitalized by an equity contribution from GFI, its sole member, to make payments on the GFY Notes until such time as the proceeds from the sale of loans to the Purchasing Entities are sufficient to fund payments on the GFY Notes.

We have considered your response to comment 10. We note your statement that GFY will be financially independent from GFI and therefore audited financial statements or other financial information with respect to GFI should not be included. However, given the interdependence of your business process, as described within disclosures on pages 16 and 17, with other Groundfloor 5. entities and the short five day term of your GFY notes, although there is no explicit financial support, it remains unclear how your financial viability is not implicitly tied to Groundfloor Finance, Inc. Given such facts and circumstances, please further clarify why inclusion of audited financial statements, or some other financial information, of Groundfloor Finance, Inc. within your Offering Statement are not necessary.

Response: The Company does not believe that audited financial statements or other financial information of GFI should be included in the Offering Statement. The general instructions of Part F/S of Form 1-A provide that the audited financial statements of the issuer are required to be filed as part of the offering statement and included in the offering circular. In certain circumstances, financial statements of other entities are required in the case of: (i) guarantors and issuers of guaranteed securities; (ii) affiliates whose securities collateralize an issuance; and (iii) businesses acquired or to be acquired by the issuer. The audited financial statements of GFI do not fall into any of the categories set forth above that would require the inclusion of such financial statements in the Company’s Offering Statement. Additionally, other Regulation A issuers such as Fundrise East Coast Opportunistic REIT, LLC and affiliates with offerings similar to the Company have not included the audited financial statements of their manager or parent company in their respective offering statements.

Independent Auditors’ Report, page F-1

We note your response to comment 11 and proposal to include audit report in a subsequent filing. Please confirm that an auditor 6. has been engaged and an audit of your financial statements have been performed. Please revise your filing accordingly to include such audit report.

Response: The Company has engaged an auditor, and is waiting for comments on the draft offering circular to be resolved prior to proceeding with the audit. As the Company has no operating history and currently owns no assets, no issues are expected when the audit is performed.

****************

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document We thank you for your prompt attention to this letter responding to the previously submitted Offering Statement and Comment Letter. Should the Staff have additional questions or comments regarding the foregoing, please do not hesitate to contact the undersigned at (212) 790-4510.

Sincerely,

/s/ Brian S. Korn Brian S. Korn cc: Brian Dally, Chief Executive Officer Nick Bhargava, Acting Chief Financial Officer Groundfloor Finance Inc.

Brian S. Korn manatt Manatt, Phelps & Phillips, LLP manatt | phelps | phillips Direct Dial: (212) 790-4510 E-mail: [email protected]

November 2, 2020

VIA EDGAR

U.S. Securities and Exchange Commission Division of Corporation Finance Mail Stop 3233 Washington, DC 20549

Attention: Mr. Ruairi Regan and Mr. James Lopez Office of Real Estate and Construction

Groundfloor Yield LLC Amended Draft Offering Statement on Form 1-A Re: Confidentially Submitted August 21, 2020 CIK No. 0001810007

Dear Messrs. Regan and Lopez:

We are submitting this letter on behalf of our client, Groundfloor Yield LLC (the “Company”), in response to the written comments of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “SEC”) contained in your letter dated September 18, 2020 (the “Comment Letter”) in connection with the Company’s draft offering statement on Form 1-A (the “Offering Statement”), as confidentially submitted on August 21, 2020. Concurrent with this letter, we are filing on a confidential basis, a further amended Offering Statement with the SEC.

General

We note your response to prior comment 2 in our letter dated May 19, 2020. We do not agree that Section 3(a)(9) is available for the rollover of GFY Notes being offered in this offering circular. With respect to the availability of Regulation A for this 1. offering, we note GFY's discretion to make significant changes to the interest rate and other terms of the offering at each 5 day rollover. Please provide a detailed analysis of why you believe the discretion to make such changes after qualification falls under one of the permissible continuous or delayed offerings in Rule 251(d)(3).

Response: The Company has updated the proposed structure of the Groundfloor Yield Notes to remove the short five (5) day maturity date and replace such maturity date with a significantly longer three (3) year term. As a result, the Company is no longer planning to reissue or exchange new Groundfloor Yield Notes every five days. Instead, the Groundfloor Yield Notes will contain a redemption feature that investors may exercise every five (5) business days with notice to the Company. The Company is no longer proposing to rely on the exemption set forth in Section 3(a)(9) of the Securities Act of 1933. Every issuance of Groundfloor Yield Notes will be included for calculating how much of the Company’s $50,000,000 offering has been sold under Rule 251(a)(2).

With respect to the rollover feature, on the applicable maturity date of a Groundfloor Yield Note, the holder will have the option to rollover all principal and interest proceeds into a new Groundfloor Yield Note, which the Company will treat as sales chargeable against the aggregate total of offered securities pursuant to the Offering Statement and to include such sales when calculating the $50 million cap in offering proceeds raised under any qualified offering statement within a 12 month period in accordance with Rule 251(a).

Your revised disclosure and graphic on page 18 present GFY as the sole funding source for GFH. Please revise to clarify the current and intended activities of GFY as they relate to the other Groundfloor entities. For example, it is unclear if GFY is meant to replace the "warehouse credit facility provided by ACM Alamosa DA LLC" as disclosed by affiliates. Please revise to clarify your current funding source(s) as well as the intended timeline and approximate, minimum GFY offering proceeds 2. necessary to be the sole source of GFH's financing needs. Similarly, we note you state that proceeds will be used "primarily" to purchase loans from GFH or loans and "other products at the discretion of the Company." Please reconcile with the revised disclosure on page 8 that the proceeds will be used to purchase loans originated "by Groundfloor Finance and GRE 1" and clarify what "other products" you intend to acquire.

Response: The Company has revised the disclosure to clarify the current and intended activities of GFY as they relate to the other Groundfloor entities. The Company has also revised the disclosure on page 8 that the proceeds will be used to purchase commercial real estate loans originated by Groundfloor Holdings, LLC.

We note the revised disclosure that the actual interest rate will be "set forth in the applicable Groundfloor Yield Note." Please revise to clarify your anticipated timing for setting the interest rate and filing a supplement with the actual interest rate. You state that the notes will be secured by assets of affiliated companies, including loans held by GFH. Please revise here, page 6 3. and where appropriate to clarify what assets or operations investors should look to for assessing the value of the notes. For example, it is unclear if the interest rate is meant to reflect a weighted average interest rate GFH has received from all loans to developers as of a certain time period; or if the return on the note is meant to reflect other assets or operations held by some or all Groundfloor affiliates.

Response: The Company has revised the disclosure to provide that while the initial interest rate is 4% per annum, the Company may modify the interest rate from time to time in its sole discretion, and that all modifications to the interest rate applicable to the Groundfloor Yield Notes will be communicated to investors through the Mobile App and through an offering circular supplement filed with the Commission in connection therewith. The Company has also revised the disclosure to provide that all updates to the interest rate will reflect an interest rate between 2.0% and 6.0% per annum in increments of 0.25%. The Company has revised the disclosure to provide that the Groundfloor Yield Notes will be secured by the assets of the Company, which will principally consist of commercial real estate loans held by the Company.

We note the revised disclosure that you are following the format of Part II of Form 1-A and the statement that the notes are secured by assets of the company. Please revise to disclose any provisions with respect to the kind and priority of any lien 4. securing the issue and clarify (i) the approximate amount of unbonded property available for use against the issuance of the notes, as of the most recent practicable date, and (ii) whether the securities being issued are to be issued against such property, against the deposit of cash, or otherwise. See Instruction to Item 14(b) of Form 1-A.

Response: The Company has revised the disclosure to provide that the Groundfloor Yield Notes are secured by a first priority security interest in the assets (and related property and rights) of the Company which will principally consist of commercial real estate loans held by the Company and that such security interest will rank ahead of any unsecured debt of the Company. Given that the security interest is a blanket lien on the assets of the Company and is not against specifically identified assets of the Company, the Company has revised the disclosure to provide that as of the date of the Offering Statement, there is no unbonded property available for use against the issuance of Groundfloor Yield Notes and the Groundfloor Yield Notes are not being issued against any unbonded property of the Company, the deposit of cash by the Company, or otherwise.

We note your revised disclosure on page 7 that you intend to "include any changes to interest rates in a supplement or post- qualification amendment, as applicable." Please revise to clarify what factors will determine whether interest rate changes will be 5. made by post-qualification amendment or supplement. Please also clarify what other changes, for example changes to the price or term of the notes, will be made by post-qualification amendment or supplement.

Response: The Company has revised the disclosure to provide that all updates to interest rates will be communicated by the Company through the Groundfloor Yield Mobile App and through the filing of an offering circular supplement with the SEC no later than five (5) days of the effective date of such interest rate update. Additionally, the Company has revised the disclosure to provide that all updates to the term and pricing of the Groundfloor Yield Notes will be communicated by the Company through the Groundfloor Yield Mobile App and through the filing of an offering circular supplement with the SEC, unless the updated pricing dictates that a post-qualification amendment is to be filed with the Securities and Exchange Commission prior to being effective. Where the change in pricing exceeds 20% of the maximum aggregate offering price under the Offering Circular, the Company will file a post-qualification amendment with the Securities and Exchange Commission and once such post-qualification amendment is qualified by the Securities and Exchange Commission, the updated pricing will be effective for the issuance of Groundfloor Yield Notes.

Please revise here and where appropriate to clarify on what dates interest will accrue and become payable and how payments will be made. Clarify whether principal and interest will be paid at the end of 5 days, and clarify the expected timing of such 6. payments. Consider including illustrative examples based on a small purchase amount and depending on whether the investor elects to receive principal and interest or join the auto reinvest program.

Response: The Company has updated the proposed structure of the Groundfloor Yield Notes to provide for a three (3) year term. Each Groundfloor Yield Note contains a put right by the holder to require the Company to redeem such Groundfloor Yield Note every five (5) business days (each, a “Put Date” and collectively, the “Put Dates”) to the Company through the Mobile App. An investor may provide notice of its intention to exercise its put right up to and on the applicable Put Date through the Groundfloor Mobile App. For example, if a Groundfloor Yield Note is issued on Thursday, January 1, the Put Date will be the following Thursday, January 8. In the event an investor exercises the put right with respect to such investor’s Groundfloor Yield Note on a given Put Date, the Company will remit to the investor’s GFY Account the accrued and outstanding interest and outstanding principal balance within 5 business days of the applicable Put Date. In the event the investor holds the Groundfloor Yield Note until the applicable maturity date, the Company will remit to the investor’s GFY Account the accrued and outstanding interest and outstanding principal balance within 5 business days of such maturity date.

With respect to the auto reinvest program described on page 7, please revise to clarify the time period, if any, during which investors who select "on" are able to subsequently choose not to join the auto reinvestment program. Please also clarify the time 7. periods when you may provide "notification to the investor of the change" in interest rates and the time period the investor has "the option to cancel such auto-investment.".

Response: The Company has revised the disclosure to provide that investors may modify or cancel their participation in the Groundfloor Yield Auto-Invest Program (the “GFY AIP”) by submitting a new GFY AIP Election Form to the Company with 3 business days’ notice in the event of a revision or change in election or in the event that such investor wishes to cancel its participation in the GFY AIP. With respect to updates to interest rates, as set forth in the Company’s response to comment 5 above, all updates to interest rates will be communicated by the Company through the Groundfloor Yield Mobile App and through the filing of an offering circular supplement with the SEC no later than five (5) days of the effective date of such interest rate update.

8. We continue to consider your responses to comments 3, 4, and 5. Please be advised that we may have further comments.

Response: The Company acknowledges the Staff’s comment.

Independent Auditors’ Report, page F-1

We note your response to comment 6. We will review the audited financial statements when available and may have further 9. comments.

Response: The Company has appended the audited financial statements to the Offering Statement.

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Sincerely,

/s/ Brian S. Korn

Brian S. Korn cc: Brian Dally, Chief Executive Officer Nick Bhargava, Acting Chief Financial Officer Groundfloor Finance Inc.

Brian S. Korn manatt Manatt, Phelps & Phillips, LLP manatt | phelps | phillips Direct Dial: (212) 790-4510 E-mail: [email protected]

January 14, 2021

VIA EDGAR

U.S. Securities and Exchange Commission Division of Corporation Finance Mail Stop 3233 Washington, DC 20549

Attention: Mr. Ruairi Regan and Mr. James Lopez Office of Real Estate and Construction

Groundfloor Yield LLC Amended Draft Offering Statement on Form 1-A Re: Confidentially Submitted November 2, 2020 CIK No. 0001810007

Dear Messrs. Regan and Lopez:

We are submitting this letter on behalf of our client, Groundfloor Yield LLC (the “Company”), in response to the written comments of the staff (the “Staff”) of the United States Securities and Exchange Commission (the “SEC”) contained in your letter dated December 14, 2020 (the “Comment Letter”) in connection with the Company’s draft offering statement on Form 1-A (the “Offering Statement”), as confidentially submitted on November 2, 2020. Concurrent with this letter, we are filing a further amended Offering Statement with the SEC.

Amended Draft Offering Statement on Form 1-A

General

We note your response to comments 1 and 5, changes to the maturity of the notes, and the addition of a quarter point limit to interest rate changes. We note, however, that you reserve the right to modify the applicable interest rate on the notes from time to time in your sole discretion. Please provide an analysis showing how you determined that the broad discretion with respect 1. to the frequency of changes to the interest rate would not constitute the issuance of a new security. In addition, please provide an analysis showing how you determined that your ability to change the term, price, and other non-interest features of the Groundfloor Yield Notes does not constitute a delayed offering of those) securities in violation of Rule 251(d)(3)(i)(F).

Copyright © 2021 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Response: Pursuant to Section 2(b) of the Form of Groundfloor Yield LLC Note attached as Exhibit 3.1 to the Offering Statement, the interest rate applicable to the notes issued by Groundfloor Yield LLC (the “GFY Notes”) may be changed from time to time in the Company’s sole discretion. The Company does not believe that a change in the interest rate of the GFY Notes constitutes the issuance of a new security for the following reasons; (i) although the Company has broad discretion with respect to when changes to the interest rate occur, the Company does not anticipate changing the interest rate more frequently than twice per month, (ii) the interest rate may only be changed to a rate within the range specified in the GFY Notes to investors upon their initial investment, and (iii) no other terms of the GFY Notes or characteristics of the investment will change in connection with the change in the interest rate. All offering circular supplements will be filed in accordance with the rules set forth at 17 C.F.R. § 230.253(g).

As is reflected in the revised Offering Statement filed concurrently herewith, the Company does not anticipate changing the term, price, or any other non-interest rate features of the GFY Notes.

Please clarify when you intend to provide investors with an offering circular supplement and the minimum number of days investors will have to consider a put right each time you change the interest rate. Additionally, clarify how the “applicable maturity date” applies to individual note issuances and provide illustrative examples to explain how principal and interest will 2. be calculated and paid on small investment amounts. For example, it is unclear if interest will be calculated based on business days, a 360 day year, and whether amounts may be rounded up or down. It is also unclear how automatic interest rate changes on an investor’s outstanding notes will impact principal and interest calculations. Your examples should clarify the minimum time a small amount of notes would need to be held in order to be paid interest assuming a certain interest rate.

Response: The Company will communicate any change to the interest rate to investors in the GFY Notes no less than seven (7) calendar days prior to the applicable effective date of such change. An offering circular supplement reflecting any such change in the interest rate of the GFY Notes will be filed with the SEC no later than five (5) business days following the effective date of such interest rate change.

Pursuant to Section 2(a) of the Form of Groundfloor Yield LLC Note attached as Exhibit 3.1 to the Offering Statement, interest on the GFY Notes will be calculated on the basis of a 360-day year consisting of twelve 30-day months. Changes in the interest rate will not affect the outstanding principal amount of the GFY Notes. The interest payable to investors in the GFY Notes will be calculated as a summation of the interest payable on each day during the term of the GFY Notes. As a result, there is no minimum amount of time that an investor would need to hold a GFY Note in order to be paid interest on that GFY Note at the then-applicable interest rate.

Groundfloor Yield Notes, page 6

Please revise your diagrams on pages 18 and 19 to be consistent with the description provided related to the anticipated 3. structure of the offering of the GFY Notes as outlined within your response to comment 4 in your response letter dated August 21, 2020.

Response: The specified diagrams have been updated in pages 19 and 20 of the revised Offering Statement filed concurrently herewith.

We have considered your response to our prior comment 5 in your letter dated August 21, 2020 and the disclosure in your filing. You state that your sole purpose is to acquire loans from Groundfloor Holdings through the proceeds raised from the sale of the Notes, and the funds are meant to replace Groundfloor Holdings’ existing credit facility. You also state that Groundfloor Finance and Groundfloor Real Estate 1 & 2 will purchase these loans from you using proceeds they raise from the sale of LROs and securities to investors. Given the business purpose of your company, the related activities and interests with Groundfloor 4. Finance and its subsidiaries and the economic interdependence of the entities, we believe your business and repayment of the Notes are dependent on Groundfloor Finance and its subsidiaries. As such, please include the audited consolidated financial statements of Groundfloor Finance in your filing because these financial statements are material information necessary to make the required statements within your offering statement not misleading pursuant to paragraph 230.252(a) of Regulation A.

Response: The Company has included both the unaudited consolidated financial statements of Groundfloor Finance Inc. dated as of June 30, 2020 and the audited consolidated financial statements of Groundfloor Finance Inc. dated as of December 31, 2019 in the Offering Statement filed concurrently herewith.

We note your response to comment 7 and revised disclosure regarding the auto-invest program and other terms of the offering. Your offering anticipates periodic investor purchases triggering rolling 5 business day investor put rights and an automatic reset of the interest rate on outstanding notes when you change interest rates. Please revise to clearly explain the mechanics of 5. interest rate changes and their impact on the ability of auto-invest participants to cancel. Given the complexity of the offering and auto-invest program, please provide an illustrative example to clarify the administration and timing of the auto-invest program, in particular the amount of time a participant will have to cancel after notice of an interest rate change.

Response: The Groundfloor Yield Auto-Invest Program (the “GFY AIP”) is an optional program which permits investors to set up automatic purchases of additional GFY Notes subject to certain parameters selected by the investor (e.g., purchase amount, frequency of automatic purchases). Investors may terminate their participation in the GFY AIP at any time, irrespective of any proposed or actual changes in the interest rate applicable to the GFY Notes.

Purchases of GFY Notes through the GFY AIP do not trigger any put rights, nor do they cause an automatic reset of the interest rate on outstanding GFY Notes. New GFY Notes purchased under the GFY AIP will accrue interest at the interest rate applicable as of the date of purchase thereof, subject to change according to the same procedure described in our response to comment 2 above. Investors may exercise their put right with respect to GFY Notes purchased through the GFY AIP on the same terms as the other GFY Notes, five (5) business days from the purchase date of the GFY Note, and every five (5) business days thereafter.

An investor who purchases a GFY Note on January 1, 2021 through the GFY AIP shall have a put right in respect of such GFY Note which is first exercisable on January 8, 2021, and every five (5) business days thereafter. In the event of a change in the interest rate applicable to the GFY Notes, the Company will notify investors of the proposed change no less than seven (7) calendar days in advance of the effective date of such change. Investors who do not wish to participate at the new interest rate may redeem their investment prior to such change by exercising their put right prior to the effective date of the interest rate change.

Investor Put Right, page 8

Please clarify whether there are any restrictions or limitations on the ability of the investors to exercise their put rights, including, 6. for example, the amount of such puts, both at the individual investor level and in the aggregate across all investors, and describe those clearly in your offering circular.

Response: There are no limitations on the ability of investors to exercise their put rights other than the limitation that investors may exercise their put right with respect to each Note only every five (5) business days from the applicable issuance date thereof.

Risk Factors, page 10

We note revised disclosure stating that changes to the “interest rate shall apply to all outstanding” notes. Please provide risk 7. factor disclosure addressing your sole discretion to lower the interest rate on a purchaser’s investment.

Response: This risk factor has been added to page 13 of the revised Offering Statement filed concurrently herewith.

Independent Auditors’ Report, page F-1

Please amend your filing to include an audit opinion with a conformed EDGAR signature. Reference is made to Rule 302 of 8. Regulation S-T.

Response: The Company has included an audit opinion with a confirmed EDGAR signature in the Offering Statement filed concurrently herewith.

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We thank you for your prompt attention to this letter responding to the previously submitted Offering Statement and Comment Letter. Should the Staff have additional questions or comments regarding the foregoing, please do not hesitate to contact the undersigned at (212) 790-4510.

Sincerely,

/s/ Brian S. Korn

Brian S. Korn cc: Brian Dally, Chief Executive Officer Nick Bhargava, Acting Chief Financial Officer Groundfloor Finance Inc.