RWDMU 10-K & 10-Q changes, risk factors and insider trading

We are engaged in the business of lending and, as such, are subject to the risk that borrowers may be unable to repay the loans in accordance with the terms of the loan agreement as we currently experience and have experienced onin occasion.the past. Mortgage loans are secured by commercial and residential real property and are subject to risks of delinquency, foreclosure and loss.

Owning real estate following foreclosure will subjectsubjects us to additional risks.

If a borrower is unable to pay our loan or refinance it when it is due, it may be in our best interest to institute foreclosure proceedings against the borrower, and to own the property for a period of time. WeWhen willwe beforeclose on a loan, we are subject to certain economic and liability risks attendant to property ownership which may affect our profitability and cash flow. The risks of ownership include the following:

Section 1026.3232 of Regulation ZZ, implementing the Home Ownership and Equity Protection Act of 1994 (“HOEPA”), defines a “high-cost mortgage” as any consumer loan secured by athe primaryconsumer’s residenceprincipal dwelling unit where either (i) the annual percentage rate (“APR”), measured as of the date the rate is set, exceeds the average prime offer rate (“APOR”), a benchmark rate released weekly by the CFPB, for a comparable transaction on that date by more than 6.5% on a first mortgage, 8.5% on a subordinate-lien mortgage or 8.5% on a juniorfirst-lien mortgagetransaction if the dwelling is personal property and the loan is less than $50,000; or (ii) the total points and fees payable by the consumer exceed 5% for a loan of more than or equal to $20$27,592 thousand,(amount adjusted annually for inflation), or 8.5% or $1$1,380 thousand(amount adjusted annually for inflation) (whichever is less) on a loan of less than $20$27,592: thousand.or (iii) the lender can charge a prepayment penalty, as defined in Regulation Z, more than 36 months after consummation (or account opening on an open-end loan), or prepayment penalties that can exceed, in total, more than 2 percent of the amount prepaid.

TheWhile it is unlikely that we would make many high-cost loans, the failure to comply with the extensive prohibitions and requirements of Regulation Z’s high-cost mortgage regulations, even if the failure was unintended, willmay render the loan rescindable for up to three years.years Iffrom the loanconsummation, isand, if rescinded, requires the borrower to receive back all interest and fees paidand byreturn the borrowerprincipal must be refunded byof the lender.loan to the loan holder. The lender could also be held liable for money damages, attorneys’ fees, and for material failures, the total amount of finance charges and fees paid by the borrower andin certainconnection otherwith moneythe damages.loan.

Members will have no control over our operations, including the loans we make or sell; members must rely on the judgment of our manager in making loans.

In addition, our management is responsible for establishing and maintaining adequate internal control over financial reporting and is required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and rules and regulations of the SEC thereunder and to evaluate and disclose on a quarterly and annual basis changes in our internal control over financial reporting. During the course of testing, material weaknesses or deficiencies in the design or operating effectiveness of internal control over financial reporting may be identified. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis. As previously disclosed, for the quarter ended December 31, 2023, we identified a material weakness in our internal control over financial reporting which consisted of the following: management had not engaged professional staff sufficient to timely obtain refreshed collateral and did not appropriately develop accounting policies and design and implement internal controls at a sufficient level of precision around our estimate of current expected future credit losses. This material weakness had nothas been remediated as of December 31, 2024.2025. While this material weakness did not result in any misstatement of our financial statements for any period presented, any future material weakness could result in a misstatement of account balances or disclosures that could result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

We have in the past experienced cyber security incidents which have not materially adversely impacted our business and/or operations. ThereWhile arewe ongoinghave taken measures undertaken to enhance protection against cybersecuritycyber incidents.security While we have taken such measuresincidents and may engage in other actions from time to time to reduce our exposure resulting fromto cyber security risks both to our internal systems and from outsourcing, these measures may not be sufficient to prevent future threats which may result in unauthorized access, loss, exposure or destruction of data, or other cybersecurity incidents, with increased costs and other consequences, including those described above. Privacy and information security laws and regulation changes, and compliance with those changes, may also result in cost increases due to system changes and the development of new administrative processes.

Tax-exempt investors (such as an employee pension benefit plan or an IRA) may be subject to tax to the extent that income from the units is treated as unrelated business taxable income, or UBTI. WeFunds we borrow funds on a limited basis, which causescause a portion of income to be treated as UBTI. Investors that are tax-exempt entities are urged to consult their own tax advisors regarding the suitability of an investment in units. In particular, an investment in units may not be suitable for charitable remainder trusts.

The state in which a member resides may impose an income tax upon the member’s share of our taxable income. Furthermore, states such as California, in which we will own property, generally impose income tax upon a member’s share of the company’s taxable income considered allocable to such states, whether or not a member resides in that state. As a result, a nonresident member may be required to file a tax return in California. Members are urged to consult with their own tax advisers with respect to state and local tax consequences of an investment in our units.

As of January 1, 2023, the company adopted Accounting Standards Codification 326, Financial Instruments – Credit Losses (ASC 326) using the modified retrospective approach, which requiredrequires a lifetime, current expected credit loss (CECL) measurement objective for the recognition of credit losses at the time a loan is originated or acquired. The allowance for credit losses is adjusted each period for changes in expected lifetime credit losses for loans and accrued interest.

The determination of the amount of the allowance for credit losses considers historical loss experience, current fair value of collateral and the resultant LTV, current real estate and financial markets, as well as reasonable and supportable forecasts about future economic scenarios. The forward-looking estimates consider the likelihood that any combination of events would adversely impact economic conditions and real estate markets in California such that the substantial protective equity existing(measured fornet theof loanssenior debt and claims) would no longer be sufficient to collect the recorded amounts of principal, advances and accrued interest due on the loan.

The fair value of real property (as to loan collateral and REO, if any) is determined by exercise of judgment based on RMC’s management’s experience informed by appraisals (by licensed appraisers), brokers’ opinion of values, and publicly available information on in-market transactions. Three methods are utilized: 1) market-comparables or sales approach; 2) cost to replace; and 3) capitalized cash flows or income approach. These approaches may or may not result in a common, single value. The market-comparables approach and income approach may yield different values depending on certain basic assumptions, including comparables sales, market capitalization rates and certain components of net operating income as well as the consideration of adjustments made for any attributes specific to the real estate. The application of these methods – and the assumptions utilized – could result in materially different amounts being reported in the financial statements, as the amount of credit losses, if any, recognized may vary based on the estimates and assumptions used.

Eligible redemption requests at December 31, 20242025 of approximately $24.3$25.8 million are carried forward to subsequent quarters until paid. See Note 3 (ScheduledManager and Other Related Parties) to the financial statements included in Part II, Item 8 of this report for a detailed discussion of redemptions of members’members' capital were $12.0 million as of December 31, 2023).capital.

The LTVs use the fair value at origination of the loans (OLTV). See table below for LTVs based on updated collateral fair market values and loan balances.

Interest rate of Line of Credit, weighted daily average (annualized). See Note 5 (Line of Credit) to the financial statements included in Part 1,II, Item 18 of this report for a presentation of the activity and discussion of the terms and conditions of the loan agreement.

In 2023 and 2024, RMC – at its sole discretion – collected less than the maximum allowable reimbursement of qualifying costs attributable to RMI IX (Costs from RMC on the Statements of Income), which increased the net income, cash available for distribution, and the net-distribution rate. See Note 3 (Manager and Other Related Parties) to the financial statements included in Part 1,II, Item 18 of this report for a detailed discussion of fees and cost reimbursements to which the manager is entitled.

The Operating Agreement provides for a unit redemption program, whereby a member may redeem all or part of their units, subject to certain limitations. TheFor pricemore paidinformation for redeemed units is based onabout the lesserunit redemption program, see Item 1- Business – “Liquidity and unit redemption program” of thethis purchase price paid by the redeeming member or the member’s capital account balance as of the date of each redemption payment. The maximum redemption per quarter per individual member is the greater of (i) 100 thousand units, or (ii) 25% of the member’s total outstanding units.report.

Eligible members’ capital redemption requests at December 31, 20242025 approximated $24.3$25.8 million, of which $22.2$24.3 million were scheduled but unpaid redemption requests received in 2024 at or prior to September 30, 20242025; and $2.1$1.5 million were new redemption requests received in the quarter ended December 31, 20242025 thatand will be eligible for redemption at March 31, 2025.2026.

Eligible members’ capital redemption requests at December 31, 20232024 approximated $12.0$24.3 million, of which $7.1$22.2 million were scheduled but unpaid redemption requests received in 2023 at or prior to September 30, 20232024; and $4.9$2.1 million were new redemption requests received in the quarter ended December 31, 20232024 thatand became eligible for redemption at March 31, 2024.2025.

LTVs presented in the following tables (and the supplemental information following them) have been updated for changes in fair values of the collateral as indicated by appraisals, broker opinion of value, or other external market evidence received by the manager after the origination of the loan, if any.any, and for the loan balance (the sum of principal, advances and interest unpaid) at December 31, 2025.

Percent of secured loans principal,principal endat ofDecember period31, balance.2025.

The $11.2$21.5 million of secured loans (loan balance) with payments in arrearsarrears, including loans past maturity, is comprised of the following sixeleven loans:

In San Bruno, San Mateo County (LTV 120%, principal $955 thousand), a commercial propertybuilding operated as an owner/user restaurant.restaurant (first lien deed of trust) – The borrower is currentlydelinquent delinquent,on monthly payments (180 days or more), has forced place insurance and is delinquent on property taxes. In January 2026, the collateral was acquired by foreclosure sale (and possession of the property was taken).

In Napa,San Francisco (LTV 98%, principal $990 thousand), a single-familythree-unit homemixed secureduse bybuilding a 1st(first lien deed of trust.trust) – The loan matured in December 2024,2025, and the borrower is not180 makingdays or more delinquent on monthly payments.

Net income available to members as a percent of members’ capital, gross – average daily balance was 4.9%2.8% and 5.3%4.9% for the year ended December 31, 20242025 and 2023,2024, respectively. Net income decreased by approximately $420$1.6 thousandmillion in 20242025 as compared to 20232024 due to a decrease in net interest income of approximately $1.2 million, an increase in provision for credit losses of approximately $245 thousand and an increase in operations expenses of approximately $385$199 thousand, partially offset by an increase in netlate interest incomefees of approximately $41 thousand and an increase in gain on sale of loans of approximately $15$49 thousand. The portfolio interest rate on secured loans has increased by 0.450.7 percentage points to 9.4%10.1% since December 31, 20232024; the effective yield rate increased by 0.700.3 percentage points to 10.2%. The effective yield rate increase is greater than the increase in the portfolio interest rate as a result of changes in the foregone interest on secured loans in non-accrual status and the collection of default and/or post-maturity interest.10.5%.

Net interest income increaseddecreased approximately $41$1.2 thousandmillion (0.7%18.8%) in 20242025 compared to 2023.2024. The increase in net interestInterest income is due to an increase in interest income ofdecreased approximately $42$1.8 thousand (0.6%26.0%) resulting from ana increasedecrease in effective yield rate of 0.6 percent (6.8%) compared to 2023, although the average daily balance of secured loans decreasedprincipal of approximately $4.1$18.8 million (5.8%28.0%). In 20242025 and 20232024 the company collected post-maturity and default interest of $552$205 thousand and $250$552 thousand, respectively, with respect to multiple loans, which amounts were above the interest rates on the related notes.

Interest expensesexpense on the line of credit decreased approximately $44$587 thousand (6.1%96.9%) in 20242025 compared to 20232024 due to a decrease in the line of credit – average daily balance of approximately $803$6.7 thousandmillion (10.4%96.5%). The decrease in interestInterest expense on the line of credit is offset by an increase in the amortized debt issuance costs of $4 thousand (14.3%) and an increase of interest expenses on intercompany promissory notes and intercompany unsecured borrowings ofdecreased approximately $38 thousand (100%). See Key performance indicators table included above in Part II, Item 7 of this report for details on the average interest rate on the line of credit.

The decrease in asset management fees ofwere approximatelyabout $39the thousandsame in 20242025 comparedand to 2023 was due to a decrease in the members’ capital base used to compute the asset management fee.2024. The asset management fee is computed using the prior year end member’s capital base which is the then fair value of the company’s loans plus working capital reserves less outstanding debt.

RMC is entitled to request reimbursement for operations expense incurred on behalf of RMI IX, including without limitation, RMC's personnel and non-personnel costs incurred for qualifying business activities, including investor services, accounting, tax and data processing, postage and out-of-pocket general and administration expenses. In 2024, RMC – at its sole discretion – collected less than the maximum allowable reimbursement of qualifying costs attributable to RMI IX (Costs from RMC on the Statements of Income).

The amount of qualifying costs attributable to RMI IX incurred by RMC was approximately $545$592 thousand and $787$545 thousand in 20242025 and 2023,2024, respectively. The reimbursement of costs from RMC waived was approximately $149 thousand and $427 thousand in 2024 and 2023, respectively.2024. In October 2024 , RMC, at its sole discretion,RMC began collecting the full amount of the qualifying costs attributable to RMI IX to which it was entitled.

The increase in professional services of approximately $391$11 thousand in 20242025 compared to 20232024 was due to increased fees to independent contractors, an increase in audit fees, partially offset by a decrease in legal fees due to expandedreduced legal services,services an increase in audit fees due to expanded audit services, partially offset byand a decrease due to timing differences of services rendered. Costs for these professional services have been increasing – and are expected to continue to increase – as the demands (and complexity) of regulatory, accounting and tax compliance increase and the rate at which firms charge for their services increases.

Earnings distributedDistributions to members

The following discussion and analysis should be read in conjunction with the unaudited financial statements and notes thereto, which are included in Item 1 of this report on Form 10-Q, as well as the audited financial statements and the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the company’s Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), filed with the U.S. Securities and Exchange Commission (or SEC). The results of operations for the three and six months ended MarchJune 31,30, 2026 are not necessarily indicative of the operations results to be expected for the full year.

The following discussion describes our results of operations for the three and six months ended MarchJune 31,30, 2026.

Key performance indicators as of and for the threesix months ended MarchJune 31,30, 2026 and 2025 are presented in the following tabletables ($ in thousands).

Redemption requests at MarchJune 31,30, 2026 were approximately $26.7$29.5 million and are carried forward to subsequent quarters until paid. See Note 3 (Manager and Other Related Parties) to the financial statements included in Part I, Item 1 of this report for a detailed discussion of redemptions of members’ capital.

The LTVs use the fair value at origination of the loans (OLTV). See table below for LTVs based on updated collateral fair market values and loan balances (3) Stated note interest rate, weighted daily average (annualized).

InterestStated ratenote ofinterest Line of Credit, weighted daily average (annualized).rate. See Note 56 (Line of Credit) to the financial statements included in Part 1, Item 1 of this report for a presentation of the activity and discussion of the terms and conditions of the loan agreement.

Redemptions of members'members’ capital received by the manager and unpaid at MarchJune 31,30, 2026 approximated $26.7$29.5 million, of which, $24.9$26.6 million were received at or prior to DecemberMarch 31, 20252026; and $1.7$2.9 million were received in the quarter ended MarchJune 31,30, 2026 (and will be eligible at JuneSeptember 30, 2026).

Loan origination for threethe six months ended MarchJune 31,30, 2026 increaseddecreased by approximately $2.6$4.0 million compared to the same period in 2025. ThisThe increasedecrease is primarily due to utilizationthe timing of payoffs during the quarter and the limitation of new draws on the line of credit.credit until the company’s loan payment delinquency rate is compliant with the covenants of the credit agreement.

Secured loans, principal by LTV and lien position at MarchJune 31,30, 2026 are presented in the following table ($ in thousands).

LTV classifications in the table above are based on the sum of principal, advances and interest unpaid at MarchJune 31,30, 2026.

Secured loans (loan balance), with payments in arrears, by LTV and lien position at MarchJune 31,30, 2026 are presented in the following table ($ in thousands).

LTV classifications in the table above are based on the sum of principal, advances and interest unpaid at MarchJune 31,30, 2026.

The $18.3$19.5 million of loans with payments in arrears is comprised of the following nine loans:loans.

In San Francisco (LTV 106%,110%, principal $990 thousand), a three-unit mixed use building (first lien deed of trust) – The loan matured in December 2025, and the borrower is 180 days or more delinquent on monthly payments. The property was acquired by the company via foreclosure in July 2026.

In Los Angeles (LTV 83%,87%, principal $625$600 thousand), a multi-family building (second lien deed of trust) – The loan matured in AugustApril 2025 and the borrower continuesis making90 days delinquent on monthly payments. The loanfirst paidlien offholder infiled Aprilan 2026.NOD (May 2026) and RMI IX filed a NOD (June 2026). In June 2026, RMI IX received court approval to appoint a receiver.

In Palo Alto, Santa Clara County (LTV 78%,79%, principal $4.7 million), an office building with approved plans for a senior living housing facility (first lien deed of trust) – The loan matured in October 2023. On March 31, 2026, theThe borrower anddefaulted theon companya payment agreement entered into an agreement (the “2026 agreement”), pursuant to which the borrower agreed to a payment plan consisting of ten (10) weekly payments of $20 thousand (commencing March 31, 2026 to June 2, 2026) and payment in full of the note balance on or before June 17, 2026.

In Livermore, Alameda County (LTV 65%,66%, principal $1.2 million), a commercial condominium (first lien deed of trust) – The loan matured in October 2025.2025 and the borrower was 90 days delinquent on monthly payments. In July 2026, the borrower signed an agreement and made a payment of $154 thousand to bring the monthly payments current. The borrower agreed to pay the loan in full prior to August 31, 2026.

In San Diego (LTV 62%,63%, principal $7.4 million), an industrial building (first lien deed of trust) – The borrower is 90-179180 or more days delinquent on monthly payments. The loan matured in March 2026.

In San Francisco (LTV 75%, principal $858 thousand), a warehouse building (first lien deed of trust) – The loan matured in January 2026, and the borrower continues making monthly payments. Pursuant to an agreement dated August 3, 2026, the loan will mature in June 2027.

Payments in arrears for secured loans (i.e., principal and interest payments past due 30 or more days) for the above nine secured loans at MarchJune 31,30, 2026 totaled approximately $18.8$18.4 million of which approximately $18.3$17.6 million was principal and approximately $514$810 thousand was accrued interest. As noted above, a loan with principal of $4.7 million has an agreement dated March 2026, that provided for ten (10) weekly payments of $20 thousand (commencing March 31, 2026 to June 2, 2026) and final payment in full of the note balance on or before June 17, 2026.

Net income available to members as a percent of members’ capital, gross – average daily balance (annualized) was 4.2% and 1.3%1.5% for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively.2025. Net income increased approximately $438$1.0 thousandmillion (166.4%) for the threesix months ended MarchJune 31,30, 2026 as compared to the same period in 2025,2025 primarily due to an increase in interest income of approximately $325$644 thousand (30.1%) and a decrease in operations expenses of approximately $128 thousand,thousand (8.4%), offset partially offset by an increase in interest expense of approximately $10$45 thousand.thousand The(128.6%) portfolioand interestan rate on secured loans has increased by 0.4 percentage points to 10.2% since March 31, 2025. The effective rate increased by 0.60 percentage points to 9.5% due to a decreaseincrease in foregoneprovision interest.for credit losses of $20 thousand (18.2%).

Analysis and discussion of income from operations 2026 v. 2025 (threesix months ended)

Significant changes to net income for the threesix months ended MarchJune 31,30, 2026 and 2025 are summarized in the following table ($ in thousands).

Net interest income increased by approximately $315$599 thousand (29.9%28.5%) for the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025. The increase in net interest income is due to an increase in interest income of approximately $325$644 thousand (30.1%) due to an increase in the average daily balance – secured loans of approximately $10.2$9.9 million (20.9%21.1%) and an increase in the collection of post-maturity and foregone interest of approximately $82 thousand (136.7%), partially offset by an increase in interest expense due to utilizing the line of credit. See Key performance indicators table included above in Item 2 of this report for specific details of average interest rate on the line of credit.

Significant changes to operations expense for the threesix months ended MarchJune 31,30, 2026 and 2025 are summarized in the following table ($ in thousands).

The increase in mortgage servicing fees of approximately $4$10 thousand for the threesix months ended MarchJune 31,30, 2026 as compared to the same period in 2025 was due to an increase in the average daily balance – secured loans of approximately $10.2$9.9 million at the annual mortgage servicing fee to RMC of 0.25%.

The decrease in asset management fees of approximately $8$16 thousand was due to a decrease in the members’ capital base at year-end December 31, 2025 compared to year-end December 31, 2024. The decrease in the members’ capital base is due to quarterly redemptions made. Members’ capital is expected to continue to decrease as pending redemptions are paid out. See Redemptions in members’ capital above for detail on redemption requests received but unpaid as of MarchJune 31,30, 2026. The asset management fee is computed using the prior year end member’s capital base which is the then fair value of the company’s loans plus working capital reserves less outstanding debt.

The decrease in professional services of approximately $136$193 thousand for the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025 was because audit fees decreased approximately $225 thousand due to reduced legal services and timingchange of thevendor auditand services,legal fees decreased approximately $21 thousand due to less activities, partially offset by an increase in fees to independent contractors.contractors of approximately $25 thousand due to increased activities.