Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________to____________ Commission file number: 001-40814 MODIV INC. (Exact name of registrant as specified in its charter) Maryland 47-41 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ________________________________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-40814 ____________________________________________________ ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________to____________ Commission file number: 001-40814 MODIV INC. (Exact name of registrant as specified in its charter) Maryland 4 ...

PART I - FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Modiv Inc.'s unaudited financial statements for June 2021 reflect decreased total assets and a significantly improved net loss compared to the prior year [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet shows total assets decreased by June 2021, primarily due to reduced real estate investments, with corresponding shifts in liabilities and equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total real estate investments | $344,456 | $364,045 | | Cash and cash equivalents | $7,866 | $8,248 | | **Total assets** | **$389,555** | **$407,433** | | Total mortgage notes payable, net | $185,958 | $185,014 | | **Total liabilities** | **$211,100** | **$217,181** | | **Total equity** | **$168,041** | **$182,887** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The statement of operations shows a significant reduction in net loss for H1 2021, primarily due to the absence of prior-year impairment charges, despite a decrease in rental income Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Rental income | $9,173 | $9,277 | $18,214 | $20,331 | | Total expenses | $10,250 | $11,608 | $21,093 | $71,511 | | Impairment of goodwill and intangible assets | $0 | $0 | $0 | $34,572 | | **Net loss** | **($1,002)** | **($2,210)** | **($1,905)** | **($51,033)** | | **Net loss per share** | **($0.13)** | **($0.28)** | **($0.25)** | **($6.39)** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow from operations remained stable, while investing activities significantly shifted to a cash source due to property sales, and financing activities primarily funded share repurchases and debt repayments Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,083 | $3,383 | | Net cash provided by (used in) investing activities | $14,624 | ($3,694) | | Net cash used in financing activities | ($15,711) | ($2,547) | | **Net increase (decrease) in cash** | **$1,997** | **($2,858)** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail business organization, accounting policies, and financial activities, including a 1:3 reverse stock split, property sales, PPP loan forgiveness, and subsequent portfolio changes - The company effected a **1:3 reverse stock split** of its Class C and Class S common stock on February 1, 2021[33](index=33&type=chunk)[57](index=57&type=chunk) - The company terminated its public Follow-on Offering on January 27, 2021, and commenced a private offering for accredited investors on February 1, 2021, which was subsequently terminated on August 12, 2021[47](index=47&type=chunk) - As of June 30, 2021, the portfolio comprised **38 properties** (12 retail, 14 office, 12 industrial) totaling approximately **2.3 million square feet**[36](index=36&type=chunk) - In Q1 2021, the company sold three retail properties for total proceeds of **$13.7 million**, resulting in a gain of **$289,642**[116](index=116&type=chunk) - A **$517,000** Paycheck Protection Program (PPP) loan was forgiven in February 2021 and recorded as other income[163](index=163&type=chunk) - Subsequent to quarter-end, the company sold its Cedar Park, Texas property for **$10 million** and acquired a restaurant property in San Antonio, Texas for **$3.6 million**[207](index=207&type=chunk)[209](index=209&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses performance, noting decreased rental income but a significantly narrowed net loss due to the absence of prior-year impairment charges, while focusing on liquidity through property sales and debt management [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is driven by property sales, debt, and equity offerings, with H1 2021 seeing increased share repurchases, a new credit facility, and a leverage ratio of **49%** - The company's leverage ratio was **49%** as of June 30, 2021, against a maximum policy of **55%** of tangible assets[253](index=253&type=chunk) - A new **$22 million** credit facility was established with Banc of California on March 29, 2021, replacing a prior facility[256](index=256&type=chunk) - During H1 2021, the company sold three retail properties for net proceeds of **$10.7 million** and refinanced six mortgage notes[259](index=259&type=chunk)[260](index=260&type=chunk) - Share repurchases increased to approximately **$13.0 million** in H1 2021 from **$10.0 million** in H1 2020, while capital raised from offerings decreased by **67%** to **$4.6 million**[263](index=263&type=chunk) [Funds from Operations and Adjusted Funds from Operations](index=54&type=section&id=Funds%20from%20Operations%20and%20Adjusted%20Funds%20from%20Operations) FFO significantly recovered to **$5.4 million** in H1 2021 from a prior-year loss, while AFFO was **$5.2 million**, reflecting improved operational performance FFO and AFFO (in thousands, except per share data) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net loss | ($1,905) | ($51,033) | | **FFO** | **$5,351** | **($42,449)** | | **AFFO** | **$5,234** | **$6,408** | | FFO Per Share, Fully Diluted | $0.60 | ($4.62) | | AFFO Per Share, Basic | $0.69 | $0.80 | [Results of Operations](index=56&type=section&id=Results%20of%20Operations) Operational results show a **10%** decrease in rental income due to property sales, a **25%** increase in G&A expenses, and a **40%** decrease in interest expense, alongside impairment reversals and gains from property sales and PPP loan forgiveness Key Operational Changes - H1 2021 vs H1 2020 (in thousands) | Item | H1 2021 | H1 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Rental Income | $18,214 | $20,331 | (10%) | | General & Administrative | $6,159 | $4,924 | 25% | | Interest Expense | $3,880 | $6,464 | (40%) | | Impairment of Real Estate | ($401) | $9,507 | N/A | | Impairment of Goodwill/Intangibles | $0 | $34,572 | (100%) | [Distributions](index=60&type=section&id=Distributions) Total distributions of **$4.0 million** were declared in H1 2021, fully funded by net rental income, with the daily distribution rate increased effective October 1, 2021 Distributions Declared (in thousands) | Period | Total Distributions Declared | Cash Paid | Reinvested | | :--- | :--- | :--- | :--- | | Q1 2021 | $1,992 | $891 | $1,131 | | Q2 2021 | $1,977 | $835 | $1,131 | - All distributions declared in 2021 and 2020 were funded from net rental income received, with no use of offering proceeds[310](index=310&type=chunk) - The daily distribution rate was increased to **$0.00315070** effective October 1, 2021[310](index=310&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - The company is a smaller reporting company and is not required to provide this disclosure[333](index=333&type=chunk) [Controls and Procedures](index=65&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2021[335](index=335&type=chunk) - No material changes to internal control over financial reporting occurred during the three months ended June 30, 2021[336](index=336&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=66&type=section&id=Item%201.%20Legal%20Proceedings) Legal proceedings information is incorporated by reference, detailing a lawsuit against the company's former advisor, to which the company is not a party, now compelled to arbitration - A lawsuit was filed against the company's former advisor by a former employee; the company is not a party, and the matter has been compelled to arbitration[190](index=190&type=chunk)[337](index=337&type=chunk) [Risk Factors](index=66&type=section&id=Item%201A.%20Risk%20Factors) A new material risk factor concerns the transition away from LIBOR, which could adversely affect financial instruments and increase hedging difficulty - A key risk is the uncertainty surrounding the replacement of LIBOR, which is scheduled to be discontinued, potentially affecting financial obligations and creating operational and hedging risks[338](index=338&type=chunk)[339](index=339&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Q2 2021 saw unregistered sales of Class C and S common stock, including **28,724** shares for **$671,673** via a private offering, alongside the repurchase of **115,552** shares for approximately **$2.8 million** - In Q2 2021, the company sold **28,724** shares of Class C common stock for **$671,673** through its private offering to accredited investors[344](index=344&type=chunk) Share Repurchases - Q2 2021 | Month | Total Shares Repurchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2021 | 39,079 | $22.96 | | May 2021 | 35,533 | $24.56 | | June 2021 | 40,940 | $24.56 | | **Total** | **115,552** | | [Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section indexes all exhibits filed with or incorporated by reference into the Quarterly Report on Form 10-Q, including corporate governance documents and officer certifications - The report includes various exhibits, such as Articles of Amendment, Amended and Restated Bylaws, Distribution Reinvestment Plans, Share Repurchase Programs, and Sarbanes-Oxley Act certifications[357](index=357&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________to____________ Commission file number: 000-55776 MODIV INC. (Exact name of registrant as specified in its charter) Maryland 47-41 ...

Part I [Business](index=5&type=section&id=ITEM%201.%20BUSINESS) The company is a self-managed REIT with a diversified commercial real estate portfolio and a focus on fintech/proptech investments - Modiv became a **self-managed REIT** on December 31, 2019, after merging with REIT I and acquiring its former sponsor, BrixInvest[17](index=17&type=chunk)[26](index=26&type=chunk)[52](index=52&type=chunk) - As of December 31, 2020, the portfolio comprised **40 commercial properties** totaling over 2.3 million square feet of leasable space[17](index=17&type=chunk) - In 2021, the company sponsored a Special Purpose Acquisition Company (SPAC), Modiv Acquisition Corp (MACS), to acquire a business in the **fintech and proptech sectors**[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk) - A **1:3 reverse stock split** was effected on February 1, 2021, with all share and per-share data adjusted accordingly[27](index=27&type=chunk) - The Follow-on Offering was terminated on January 27, 2021, after selling 6.6 million Class C shares for **$197.5 million** and 63,711 Class S shares for **$1.9 million**[37](index=37&type=chunk)[42](index=42&type=chunk) [Completion of the Merger and the Self-Management Transaction](index=9&type=section&id=Completion%20of%20the%20Merger%20and%20the%20Self-Management%20Transaction) The company became a self-managed REIT on December 31, 2019, through a merger with REIT I and the acquisition of its sponsor - On December 31, 2019, the company merged with REIT I, issuing **2,680,740.5 shares** of Class C common stock to REIT I shareholders[46](index=46&type=chunk)[47](index=47&type=chunk) - Concurrently, the company acquired its former sponsor, BrixInvest, by issuing **657,949.5 Class M OP Units**, completing its self-management transition[26](index=26&type=chunk)[49](index=49&type=chunk)[52](index=52&type=chunk) Class M OP Unit Conversion Ratio Hurdles | Fiscal Year | AUM Target | AFFO Per Share Target ($) | Class M Conversion Ratio (to Class C OP Units) | | :--- | :--- | :--- | :--- | | Initial | N/A | N/A | 1:1.6667 | | 2021 | $860,000,000 | $1.770 | 1:1.9167 | | 2022 | $1,175,000,000 | $1.950 | 1:2.5000 | | 2023 | $1,551,000,000 | $2.100 | 1:3.0000 | [Investment Objectives and Strategies](index=11&type=section&id=Investment%20Objectives%20and%20Strategies) The company's primary objectives are providing cash distributions, preserving capital, and achieving NAV appreciation - The company's primary investment objectives include providing **attractive cash distributions**, preserving stockholder capital, and realizing appreciation in Net Asset Value (NAV)[63](index=63&type=chunk)[68](index=68&type=chunk) - The investment strategy focuses on a diversified portfolio of income-generating commercial real estate and potential acquisitions of other non-listed REITs[62](index=62&type=chunk)[65](index=65&type=chunk)[67](index=67&type=chunk) - A key strategic focus is on **real estate-related fintech and proptech companies** that are disrupting capital markets and investment management[69](index=69&type=chunk)[71](index=71&type=chunk) [General Acquisition and Investment Policies](index=12&type=section&id=General%20Acquisition%20and%20Investment%20Policies) The company employs a discretionary acquisition approach guided by its board, focusing on tenant quality and long-term net leases - The company's charter limits total borrowing to 300% of net assets, but internal policy targets leverage **not to exceed 55% of tangible asset value**[86](index=86&type=chunk) - The company primarily acquires single-tenant properties with existing **triple-net or double-net leases**, typically with remaining lease terms of 5 to 15 years[83](index=83&type=chunk) - Due to the COVID-19 pandemic, the company **did not acquire any operating properties in 2020**, instead selling five properties for gross proceeds of $31.1 million to enhance liquidity[98](index=98&type=chunk)[101](index=101&type=chunk) [Risk Factors](index=18&type=section&id=ITEM%201A.%20RISK%20FACTORS) The company faces risks from its limited operating history, lack of a public market, and the impacts of the COVID-19 pandemic - The company has a limited operating history and is a **"blind pool,"** creating reliance on management's discretion for future investments[117](index=117&type=chunk)[120](index=120&type=chunk)[125](index=125&type=chunk) - **Risks related to the COVID-19 pandemic are significant**, including adverse effects on tenants' financial conditions and business operations[119](index=119&type=chunk)[190](index=190&type=chunk)[266](index=266&type=chunk) - **No public market exists for the company's stock**, and liquidity depends on a share repurchase program with significant limitations[119](index=119&type=chunk)[170](index=170&type=chunk) - **Failure to maintain REIT qualification** would result in corporate income tax, reducing cash available for distributions[119](index=119&type=chunk)[126](index=126&type=chunk)[231](index=231&type=chunk) - The company faces risks from its sponsorship of a SPAC (MACS), including the **potential loss of its entire investment** if a business combination fails[120](index=120&type=chunk)[155](index=155&type=chunk) - The company's reliance on tenants for revenue creates risk from **tenant bankruptcies or lease defaults**, particularly for single-tenant properties[119](index=119&type=chunk)[196](index=196&type=chunk)[209](index=209&type=chunk) [Unresolved Staff Comments](index=47&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company has no unresolved staff comments from the Securities and Exchange Commission - There are **no unresolved staff comments**[272](index=272&type=chunk) [Properties](index=48&type=section&id=ITEM%202.%20PROPERTIES) As of December 31, 2020, the company owned a diversified portfolio of 36 operating properties across 14 states Property Portfolio Summary (as of Dec 31, 2020) | Property Type | Number of Properties | Rentable Square Feet | % of Total Leased Square Feet | | :--- | :--- | :--- | :--- | | Retail | 11 | 220,553 | 10.4% | | Office | 14 | 853,963 | 40.1% | | Industrial | 11 | 1,053,779 | 49.5% | | **Total** | **36** | **2,128,295** | **100.0%** | Lease Expiration Schedule by Annualized Base Rent (as of Dec 31, 2020) | Year of Expiration | % of Annualized Base Rent Expiring | | :--- | :--- | | 2021 | 3.1% | | 2022 | 12.2% | | 2023 | 10.9% | | 2024 | 3.8% | | 2025 | 24.8% | | Thereafter | 45.2% | - In addition to the main portfolio, the company holds an approximate **72.7% Tenant-in-Common (TIC) interest** in a 91,740 sq ft office property in Santa Clara, CA[279](index=279&type=chunk) [Legal Proceedings](index=50&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) The company is not a party to a lawsuit filed against its Former Advisor by a former employee - A lawsuit was filed against the company's Former Advisor, BrixInvest, by a former employee alleging retaliatory termination; **the company is not a party to this lawsuit**[819](index=819&type=chunk) [Mine Safety Disclosures](index=50&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company - Not applicable[281](index=281&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=51&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) No public market exists for the company's stock, with liquidity provided through a limited Share Repurchase Program - **No public market exists** for the company's common stock; liquidity is primarily available through the Share Repurchase Program (SRP)[285](index=285&type=chunk)[170](index=170&type=chunk) - The company plans to pay a potential **13th distribution** for the year ending December 31, 2021, if AFFO exceeds regular distributions[300](index=300&type=chunk)[402](index=402&type=chunk) Historical Estimated NAV per Share (Adjusted for 1:3 split) | Effective Date of Valuation | Estimated NAV per Share (Unaudited) | | :--- | :--- | | December 31, 2020 | $23.03 | | April 30, 2020 | $21.01 | | December 31, 2019 | $30.81 | | December 31, 2018 | $30.48 | Sources of Distribution Payments | Period | Total Distributions Declared | % from Net Rental Income | % from Offering Proceeds | | :--- | :--- | :--- | :--- | | **2020** | $11,701,828 | 100% | 0% | | **2019** | $10,585,519 | 100% | 0% | Share Repurchases (Q4 2020) | Month | Value of Repurchase Requests Received | Value of Shares Repurchased | | :--- | :--- | :--- | | October 2020 | $5,907,195 | $1,537,198 | | November 2020 | $6,169,549 | $1,491,664 | | December 2020 | $4,304,962 | $2,980,560 | [Selected Financial Data](index=59&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA) This section provides a five-year summary of key financial data, reflecting the 2019 merger and 2020 pandemic-related impairments - The significant increase in net loss in 2020 was primarily due to **impairment charges of $44.9 million** on real estate, goodwill, and intangible assets[335](index=335&type=chunk)[336](index=336&type=chunk) Selected Balance Sheet Data (in thousands) | As of December 31, | 2020 | 2019 | | :--- | :--- | :--- | | Real estate investments, net | $339,459 | $413,924 | | Total assets | $407,433 | $490,917 | | Total liabilities | $217,181 | $236,675 | | Total equity | $182,887 | $240,173 | Selected Operating Data (in thousands, except per share data) | For the Year Ended December 31, | 2020 | 2019 | | :--- | :--- | :--- | | Total revenues | $38,903 | $24,545 | | Net loss | $(49,142) | $(4,416) | | Net loss per common share | $(6.14) | $(0.88) | | Cash flows from operations | $5,577 | $4,749 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the transition to a self-managed REIT and the significant financial impact of the COVID-19 pandemic in 2020 - The company became self-managed on December 31, 2019, and its 2020 results reflect the full-year impact of this change and the REIT I merger[346](index=346&type=chunk)[410](index=410&type=chunk) - The COVID-19 pandemic led to **impairment charges of $44.9 million** on real estate, goodwill, and intangible assets during 2020[420](index=420&type=chunk)[421](index=421&type=chunk) - To manage liquidity, the company sold five properties for **net proceeds of $13.5 million** and refinanced three mortgages for **net proceeds of $6.9 million**[381](index=381&type=chunk)[383](index=383&type=chunk) - In March 2021, the company entered into a **new $22 million credit facility** with Banc of California, increasing its credit line by $10 million[360](index=360&type=chunk)[375](index=375&type=chunk) FFO and AFFO Reconciliation (Year Ended Dec 31, 2020) | Metric | Amount (in millions) | Per Share (Basic/Diluted) | | :--- | :--- | :--- | | Net Loss | $(49.1) | $(6.14) | | FFO | $8.1 | $0.88 (Diluted) | | AFFO | $10.1 | $1.26 (Basic) | [Results of Operations](index=71&type=section&id=Results%20of%20Operations) Rental income grew due to the 2019 merger, but a net loss was driven by self-management costs and significant impairment charges - The increase in rental income was primarily due to the full-year contribution of 20 properties acquired through the **merger with REIT I**[412](index=412&type=chunk) - The company recorded **impairment charges totaling $44.8 million** in 2020 due to the negative impacts of the COVID-19 pandemic[420](index=420&type=chunk)[421](index=421&type=chunk) - A **net gain of $4.1 million** was recognized from the sale of five properties during 2020 to support liquidity[410](index=410&type=chunk)[425](index=425&type=chunk) Comparison of Operations (Years Ended Dec 31) | Item | 2020 | 2019 | Change (%) | | :--- | :--- | :--- | :--- | | Rental Income | $38,903,430 | $24,544,958 | +58.5% | | General & Administrative | $10,399,194 | $2,711,573 | +283.5% | | Depreciation & Amortization | $17,592,253 | $9,848,130 | +78.6% | | Interest Expense | $11,460,747 | $7,382,610 | +55.2% | | Impairment Charges | $44,840,028 | $0 | N/A | | **Net Loss** | **$(49,141,910)** | **$(4,415,992)** | **+1012.8%** | [Liquidity and Capital Resources](index=63&type=section&id=Liquidity%20and%20Capital%20Resources) The company managed liquidity through asset sales and debt refinancing, securing a new $22 million credit facility in March 2021 - In March 2021, the company entered into a **new $22 million credit facility** with Banc of California, replacing its previous $12 million facility[360](index=360&type=chunk)[375](index=375&type=chunk) - During 2020, the company sold five properties for **net proceeds of $13.5 million** and refinanced three mortgages for **net proceeds of $6.9 million**[381](index=381&type=chunk)[383](index=383&type=chunk) - The company's subsidiary received a **$517,000 PPP loan** in April 2020, which was fully forgiven in February 2021[377](index=377&type=chunk)[378](index=378&type=chunk) - The company's leverage ratio was **47%** as of December 31, 2020, within its board-approved maximum of 55%[365](index=365&type=chunk) [Critical Accounting Policies](index=77&type=section&id=Critical%20Accounting%20Policies) Key policies include revenue recognition, valuation of real estate, impairment testing, and fair value measurement of derivatives - The company adopted Topic 842 (Leases) and uses a practical expedient to **combine lease and non-lease components** for revenue recognition[459](index=459&type=chunk)[460](index=460&type=chunk) - Real estate acquisitions are valued at fair value, with the purchase price allocated to tangible and intangible assets based on **significant management assumptions**[477](index=477&type=chunk)[478](index=478&type=chunk)[483](index=483&type=chunk) - The company monitors for impairment indicators, which in 2020 led to **significant impairment charges** due to the COVID-19 pandemic[485](index=485&type=chunk)[487](index=487&type=chunk) - The company uses **derivative instruments (interest rate swaps)** to hedge interest rate risk, which are recorded at fair value[637](index=637&type=chunk)[782](index=782&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=82&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This item is not applicable as the company is a smaller reporting company - Not applicable as the Company is a **smaller reporting company**[495](index=495&type=chunk) [Financial Statements and Supplementary Data](index=82&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section directs the reader to the complete financial statements located at page F-1 of the report - The full financial statements and supplementary data are available starting at **page F-1** of the report[496](index=496&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=82&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) This item is not applicable to the company for the reporting period - Not applicable[497](index=497&type=chunk) [Controls and Procedures](index=82&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of year-end 2020 - Management concluded that the company's **disclosure controls and procedures were effective** as of December 31, 2020[500](index=500&type=chunk) - Based on the COSO 2013 framework, management concluded that the company's **internal control over financial reporting was effective**[502](index=502&type=chunk) - As an emerging growth company, the report **does not include an auditor attestation** on internal control over financial reporting[503](index=503&type=chunk) [Other Information](index=84&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) The company entered into a new $22 million credit facility with Banc of California in March 2021 - On March 29, 2021, the company secured a **new $22 million credit facility** with Banc of California, maturing on March 30, 2023[507](index=507&type=chunk) - The new facility provides a **$17 million revolving line** for real estate acquisitions and a **$5 million line** for working capital[507](index=507&type=chunk) - The interest rate is variable at prime + 1.00% with a **floor of 4.75%**, and the facility is secured by substantially all company assets[507](index=507&type=chunk)[508](index=508&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=85&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information is incorporated by reference from the company's definitive proxy statement - Information is **incorporated by reference** to the definitive proxy statement for the 2021 annual meeting of stockholders[511](index=511&type=chunk) [Executive Compensation](index=85&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) Information is incorporated by reference from the company's definitive proxy statement - Information is **incorporated by reference** to the definitive proxy statement for the 2021 annual meeting of stockholders[512](index=512&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=85&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information is incorporated by reference from the company's definitive proxy statement - Information is **incorporated by reference** to the definitive proxy statement for the 2021 annual meeting of stockholders[513](index=513&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=85&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%20AND%20DIRECTOR%20INDEPENDENCE) Information is incorporated by reference from the company's definitive proxy statement - Information is **incorporated by reference** to the definitive proxy statement for the 2021 annual meeting of stockholders[514](index=514&type=chunk) [Principal Accounting Fees and Services](index=85&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) Information is incorporated by reference from the company's definitive proxy statement - Information is **incorporated by reference** to the definitive proxy statement for the 2021 annual meeting of stockholders[515](index=515&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=86&type=section&id=ITEM%2015.%20EXHIBITS%2C%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists all exhibits filed with the report, including key corporate and financial agreements - This section lists all exhibits filed with the report, including key agreements such as the **Merger Agreement and Contribution Agreement**[524](index=524&type=chunk)[526](index=526&type=chunk) - **Financial Statement Schedule III** - Real Estate Assets and Accumulated Depreciation and Amortization is included in the report[519](index=519&type=chunk) [Form 10-K Summary](index=88&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item is not applicable to the company - None[529](index=529&type=chunk) [Consolidated Financial Statements](index=89&type=section&id=INDEX%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Report of Independent Registered Public Accounting Firm](index=90&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor issued an unqualified opinion on the 2020 and 2019 consolidated financial statements - Baker Tilly US, LLP issued an **unqualified opinion** on the consolidated financial statements, stating they are presented fairly in conformity with U.S. GAAP[536](index=536&type=chunk) - The company is not required to have an audit of its internal control over financial reporting, and the **auditors expressed no opinion on its effectiveness**[538](index=538&type=chunk) [Consolidated Financial Statements](index=91&type=section&id=Consolidated%20Financial%20Statements) The financial statements show a decrease in assets and a significant net loss in 2020 driven by large impairment charges Consolidated Balance Sheet Highlights (as of Dec 31) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Total Real Estate Investments, Net | $364.0 | $413.9 | | Goodwill, Net | $17.3 | $50.6 | | Total Assets | $407.4 | $490.9 | | Total Mortgage Notes Payable, Net | $185.0 | $194.0 | | Total Liabilities | $217.2 | $236.7 | | Total Equity | $182.9 | $240.2 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Rental Income | $38.9 | $24.5 | | Total Expenses | $91.5 | $29.6 | | Impairment Charges (included in expenses) | $44.8 | $0.0 | | Gain on Real Estate Investments, Net | $4.1 | $0.0 | | **Net Loss** | **$(49.1)** | **$(4.4)** | Consolidated Cash Flow Summary (Year Ended Dec 31) | (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $5.6 | $4.7 | | Net Cash from (used in) Investing Activities | $24.8 | $(29.6) | | Net Cash (used in) from Financing Activities | $(28.9) | $23.0 | [Notes to Consolidated Financial Statements](index=97&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [Note 3: Merger and Self-Management Transaction](index=113&type=section&id=NOTE%203.%20MERGER%20AND%20SELF-MANAGEMENT%20TRANSACTION) This note details the accounting for the 2019 merger and self-management transaction, including subsequent goodwill impairment - The merger with REIT I was accounted for as an asset acquisition with a total purchase price of **$81.7 million**[672](index=672&type=chunk)[676](index=676&type=chunk) - The Self-Management Transaction was a business combination resulting in the recognition of **$50.6 million in goodwill** and **$7.7 million in intangible assets**[691](index=691&type=chunk)[692](index=692&type=chunk)[695](index=695&type=chunk) - Due to the COVID-19 pandemic, the company recorded impairment charges in Q1 2020, reducing goodwill by **$33.3 million** and intangible assets by **$1.3 million**[697](index=697&type=chunk)[703](index=703&type=chunk) [Note 4: Real Estate Investments](index=119&type=section&id=NOTE%204.%20REAL%20ESTATE%20INVESTMENTS) This note details the real estate portfolio, including $10.3 million in 2020 impairment charges and $31.1 million in property sales - In 2020, the company sold five properties for a total contract price of **$31.1 million**, realizing a net gain of $4.1 million[720](index=720&type=chunk) - As of December 31, 2020, **four retail properties** were classified as held for sale[741](index=741&type=chunk) - Future minimum contractual rent payments due under noncancelable operating leases total **$151.3 million** as of December 31, 2020[733](index=733&type=chunk) Real Estate Impairment Charges (Year Ended Dec 31, 2020) | Property | Location | Impairment Charge | | :--- | :--- | :--- | | 24 Hour Fitness | Las Vegas, NV | $5,664,517 | | Dana | Cedar Park, TX | $2,184,395 | | Dinan Cars | Morgan Hill, CA | $1,308,156 | | Other (3 properties) | Various | $1,110,557 | | **Total** | | **$10,267,625** | [Note 7: Debt](index=129&type=section&id=NOTE%207.%20DEBT) As of year-end 2020, the company had total debt of $182.9 million and was in compliance with all debt covenants - In August 2020, the company amended its unsecured credit facility, extending the maturity of the remaining **$6.0 million balance** to October 2021[760](index=760&type=chunk) - The company was in **compliance with all financial loan covenants** as of December 31, 2020[772](index=772&type=chunk) - In March 2021, the company entered into a **new $22 million credit facility**, which was used to repay and replace the existing $6 million facility[765](index=765&type=chunk) Debt Summary (as of Dec 31, 2020) | Debt Instrument | Principal Balance | | :--- | :--- | | Mortgage Notes Payable | $176,948,438 | | Unsecured Credit Facility | $6,000,000 | | Economic Relief Note Payable (PPP) | $517,000 | | **Total Principal** | **$183,465,438** | [Note 11: Subsequent Events](index=142&type=section&id=NOTE%2011.%20SUBSEQUENT%20EVENTS) The company reported numerous significant events post-year-end, including asset sales, refinancing, and sponsoring a SPAC - In Q1 2021, the company sold three properties held for sale for total **net proceeds of $10.6 million**[833](index=833&type=chunk)[834](index=834&type=chunk)[835](index=835&type=chunk) - On March 5, 2021, the company refinanced four mortgage notes with an aggregate principal of $10.1 million, replacing them with **new loans totaling $12.1 million**[836](index=836&type=chunk) - The company is sponsoring a SPAC (MACS) and deposited **$4.5 million in escrow** to purchase warrants upon the SPAC's IPO[847](index=847&type=chunk)[848](index=848&type=chunk) - On January 25, 2021, the company granted **360,000 Class R OP Units** to employees as incentive compensation, which vest in March 2024[845](index=845&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________to____________ Commission file number: 000-55776 RW HOLDINGS NNN REIT, INC. (Exact name of registrant as specified in its cha ...

PART I - FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=5&type=section&id=Item%201%2E%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the six months ended June 30, 2020, detail the company's financial position, operations, equity, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2020, shows a decrease in total assets to $437.1 million, primarily driven by a significant impairment of goodwill Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total real estate investments | $396,564 | $413,924 | | Cash and cash equivalents | $3,820 | $6,824 | | Goodwill, net | $17,321 | $50,588 | | **Total assets** | **$437,059** | **$490,917** | | Total mortgage notes payable, net | $196,227 | $194,039 | | **Total liabilities** | **$238,471** | **$236,675** | | **Total equity** | **$189,663** | **$240,173** | - Goodwill decreased from **$50.6 million to $17.3 million** due to impairment charges recorded during the first quarter of 2020[16](index=16&type=chunk)[81](index=81&type=chunk) - The company classified four properties with a net value of **$17.9 million** as 'Real estate investments held for sale' as of June 30, 2020[16](index=16&type=chunk)[45](index=45&type=chunk) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the six months ended June 30, 2020, the company reported a net loss of $51.0 million, driven by non-cash impairment charges totaling $44.1 million Statement of Operations Highlights (in thousands) | Metric | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Rental income | $20,331 | $11,782 | | Impairment of real estate | $9,507 | $0 | | Impairment of goodwill & intangibles | $34,572 | $0 | | **Net loss** | **($51,033)** | **($2,053)** | | **Net loss per share** | **($2.13)** | **($0.14)** | - The significant increase in net loss was primarily due to impairment charges on real estate investment properties (**$9.5M**), goodwill and intangible assets (**$34.6M**), and a reserve for a loan guarantee (**$3.1M**)[20](index=20&type=chunk) - Rental income for the six months ended June 30, 2020, **increased by 73%** compared to the prior year period, mainly due to properties acquired in the Merger with REIT I[20](index=20&type=chunk)[302](index=302&type=chunk)[314](index=314&type=chunk) [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) Total equity decreased from $240.2 million to $189.7 million as of June 30, 2020, primarily due to a net loss of $51.0 million Changes in Equity - Six Months Ended June 30, 2020 (in thousands) | Description | Amount | | :--- | :--- | | **Beginning Equity (Dec 31, 2019)** | **$240,173** | | Issuance of common stock | $14,092 | | Repurchase of common stock | ($9,988) | | Distributions declared | ($7,459) | | Net loss | ($51,033) | | Other changes | $3,878 | | **Ending Equity (June 30, 2020)** | **$189,663** | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, net cash from operations was $3.4 million, while financing activities used $2.5 million Cash Flow Summary - Six Months Ended June 30 (in thousands) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | $3,383 | $2,886 | | Net cash used in investing activities | ($3,694) | ($3,488) | | Net cash (used in) provided by financing activities | ($2,547) | $2,637 | | **Net (decrease) increase in cash** | **($2,858)** | **$2,035** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail the 2019 merger, significant impairment charges of $44.1 million in H1 2020, and other key disclosures on debt and subsequent events - On December 31, 2019, the company completed a merger with REIT I and a Self-Management Transaction, becoming self-managed and acquiring 20 properties[36](index=36&type=chunk)[98](index=98&type=chunk)[104](index=104&type=chunk) - Due to the COVID-19 pandemic, the company recorded significant impairment charges in H1 2020: **$9.5 million** on real estate properties, **$33.3 million** on goodwill, and **$1.3 million** on intangible assets[81](index=81&type=chunk)[82](index=82&type=chunk)[143](index=143&type=chunk) - In response to COVID-19's economic impact, the company's board suspended its primary offerings, updated its **NAV per share from $10.27 to $7.00**, and then resumed offerings at the lower price[43](index=43&type=chunk) - Subsequent to the quarter end, the company sold one property for **$7.25 million** and refinanced three mortgage notes, generating net proceeds of **$6.9 million**[243](index=243&type=chunk)[246](index=246&type=chunk)[247](index=247&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant impact of the COVID-19 pandemic on operations, liquidity, and capital resources, resulting in a $51.0 million net loss - The COVID-19 pandemic has severely impacted the company, leading to tenant rent deferral requests, the bankruptcy of tenant **24 Hour Fitness**, and a slowdown in capital raising[267](index=267&type=chunk)[288](index=288&type=chunk) - In response to the pandemic's impact, the company updated its **NAV per share from $10.27 to $7.00** and temporarily suspended its primary offerings[268](index=268&type=chunk)[269](index=269&type=chunk) Comparison of Results - Six Months Ended June 30 | Metric (in millions) | 2020 | 2019 | | :--- | :--- | :--- | | Rental Income | $20.3 | $11.8 | | General & Administrative | $4.9 | $1.4 | | Impairment Charges (Total) | $44.1 | $0 | | Net Loss | ($51.0) | ($2.1) | - To improve liquidity, the company is selling properties, including one sold for **$7.25 million**, and has increased its maximum leverage limit to **55%** of tangible assets[277](index=277&type=chunk)[283](index=283&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=69&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - The company is a smaller reporting company and is therefore **not required to provide this disclosure**[359](index=359&type=chunk) [Controls and Procedures](index=69&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2020 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2020[361](index=361&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter, despite the shift to remote work due to COVID-19[362](index=362&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=69&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is not a party to a lawsuit filed against its Former Advisor by a former employee - A lawsuit was filed against the company's Former Advisor by a former employee in September 2019; the company is **not a party** to this litigation[239](index=239&type=chunk)[363](index=363&type=chunk) [Risk Factors](index=69&type=section&id=Item%201A%2E%20Risk%20Factors) The COVID-19 pandemic presents material and adverse risks to the business, including tenant financial instability and potential property value declines - The COVID-19 outbreak has **adversely affected** and may continue to affect the business, operations, and the financial condition of its tenants[365](index=365&type=chunk) - The pandemic could negatively impact the company's financial condition through tenant defaults, difficulty accessing capital, and potential **debt covenant non-compliance**[370](index=370&type=chunk) - The widespread adoption of remote work could negatively impact the long-term demand for **office space**, a significant portion of the company's portfolio[370](index=370&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details unregistered stock issuances, use of proceeds, and significant unmet demand for its share repurchase program - In Q2 2020, the company issued **6,816 Class C shares** to directors and **1,945 Class S shares** via its DRP, both exempt from registration[373](index=373&type=chunk)[374](index=374&type=chunk) - Through June 30, 2020, the company has raised aggregate gross proceeds of **$193.8 million** from its registered offerings of Class C common stock[376](index=376&type=chunk) - The company received share repurchase requests for over **$26 million** but only honored a fraction due to liquidity constraints and offering suspension[383](index=383&type=chunk) [Exhibits](index=73&type=section&id=Item%206%2E%20Exhibits) This section provides an index of all exhibits filed, including agreements, corporate documents, and required Sarbanes-Oxley Act certifications - An amendment to the Loan Agreement with Pacific Mercantile Bank, dated August 13, 2020, is filed as **Exhibit 10.1**[393](index=393&type=chunk) - The report includes required certifications from the Principal Executive Officer and Principal Financial Officer pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[393](index=393&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from____________to____________ Commission file number: 000-55776 RW HOLDINGS NNN REIT, INC. (Exact name of registrant as specified in its charter ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ________________________________________________________ FORM 10-K ________________________________________________________ (Mark One) ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-5 ...