PART II

INFORMATION TO BE INCLUDED IN REPORT

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains forward-looking statements. All statements other than statements of historical facts contained in this document, including statements regarding our future results of operations and financial position, business strategy, and likelihood of success and other plans and objectives of management for future operations, and future results of current and anticipated products are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important 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.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “aim,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this document are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this document and are subject to a number of risks, uncertainties and assumptions (“Risk Factors”) no matter whether these Risk Factors are described in this document or not. Forward-looking statements are subject to inherent risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, new risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties that we may face. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Item 1. Business

Overview

UC Asset LP is a limited partnership formed on February 10, 2016, under the laws of the State of Delaware. Our principal office address is 537 Peachtree Street, NE, Atlanta, GA, 30308. We have an executive office at the address of 7408 Apply Valley Rd, Edmond, OK, 73034.

The business purpose of our Partnership is to invest in real estate for capital appreciation, primarily from the appreciation of property value, with cash rental income as supplementary revenue to increase our capital return.

Our business strategy is to invest in properties that are considerably undervalued or have considerable potential to appreciate in the near future. This often involves innovative investment models, under which we will invest in emerging industries where the property value is expected to experience dramatic increases, due to the emergence of new technologies, new economic factors, and/or new regulations.

Prior to the year 2023, the Company had invested in residential properties, a piece of farmland, and a historic landmark building. As of and by date of this Offering Circular, the majority of the Company’s portfolio consists of these investments.

Starting from the year 2023, the Company has shifted its primary business focus to investing in “cannabis properties” or “cannabis real estate”, which, by our definition, refers to real estate properties used to cultivate cannabis plants with intention of producing legalized medical or recreational cannabis flower products. Generally, the term “cannabis real estate” also includes other real estate properties such as retail spaces for cannabis dispensaries, industrial facilities for processing and purifying cannabinoids, and manufacturing spaces for producing cannabinoids-containing products. However, we do not, and have no intention to, invest in any other kinds of cannabis real estate besides properties for cultivation.

In this Annual Report, the term “cannabis properties” or “cannabis real estate” will specifically refer to cannabis cultivation facilities, unless otherwise stated.

Our partnership is managed by our general partner, UCF Asset LLC, under the terms of our Partnership Agreement. Except for limited conditions defined in our limited partnership agreement, UCF Asset LLC as general partner has authority to exercise full management of our partnership. Limited partners are passive investors and have limited power over our partnership and our general partner. 

General Partner

UCF Asset LLC is a limited liability company formed on January 26, 2016, under the law of the State of Georgia. The principal office of our general partner is the same as that of our partnership.

The individuals who, directly or indirectly, own and control our general partner are “Larry” Xianghong Wu with a 90% interest and Jason Cunningham with a 10% interest. Larry Wu is the managing member of our general partner.

UCF Asset LLC does not engage in any business activities other than managing our partnership.

The general partner may be removed, upon consent of the limited partners representing at least sixty-six and two-thirds percent (66 2/3%) of the outstanding common units voting as a single class, where (i) the general partner has been convicted of fraud, embezzlement, or a similar felony by a court of competent jurisdiction in a final judgement, or (ii) the general partner materially and willfully breaches our limited partnership agreement.

The general partner may, at any time, assign all or a portion of its partnership interest to any persons and, in the general partner’s sole discretion, admit the persons as an additional or substitute general partner.

Narrative description of business

The business purpose of our Partnership is to invest in real estate for capital appreciation, primarily from the appreciation of property value, with cash rental income as supplementary revenue to increase our capital return.

Our business strategy is to invest in properties that are considerably undervalued or have considerable potential to appreciate in the near future. This often involves innovative investment models, under which we will invest in emerging industries where the property value is expected to experience dramatic increases, due to the emergence of new technologies, new economic factors, and/or new regulations.

Cannabis Property Investment

As of and by December 31, 2024, our major business focus is to investing primarily in cannabis properties. To our knowledge, we are one of only four SEC (“Security and Exchange Commission”)-reporting public companies investing in cannabis properties. The other three are Innovative Industrial Properties, Inc (NYSE: IIPR), Power REIT (NYSE/American: PW), and NewLake Capital Partners, Inc (OTCQX: NCLP).

Our First Cannabis Property: Apple Valley

In May 2023, we made our first cannabis property investment by acquiring 50% ownership of Apple Valley Property, paying $1.0 million in cash and $600,000 in Series B Preferred Units. Subsequently, we acquired the rest 50% ownership of this property in March 2025, paying $500,000 in cash and $1.0 million in Series B Preferred Units. As a result, we have paid a total amount of $1.5 million in cash and $1.6 million in Series B Preferred Units for this property.

This property is a 100% indoor growing facility, equipped with fully computerized control of critical environment factors, including light exposure, temperature, humidity, carbon dioxide level, irrigation and fertilization. It has approximately 16,550 square feet of growing space, plus a detached office building of 1,550 square feet. Located in Edmond, a suburban town in the metro Oklahoma City area, this property is 20 miles from downtown Oklahoma City and 30 miles from its primary airport.

Since April 2024 and for the rest of the year, we received $12,000 in net cash income from this portfolio each month, realizing an annualized cash-by-cash ROI is 14.4%. Our monthly net rent from this property will increase to $13,000, after the acquisition of its 100% ownership in March 2025. Monthly rent will increase to $16,000 since January 2026, according to our lease with the current tenant. From then on, monthly rent will increase by 5% every 24 months.

Planned Expansion of Our Cannabis Property

We plan to launch a secondary public offering (“SPO”) through Reg A in the coming weeks. We plan to raise up to $10 million from the SPO, through issuing Series C Preferred Units, which will be entitled to an 8% per annum preferred dividend (subject to profitability) , and will be eligible to convert into common units at the conversion price of the lower of i) $1.00 per unit; or ii) the most recent audited net book value per unit.

Please refer to our offering circular, which will be filed within a few weeks, for more information about our SPO and Series C Preferred Units.

The majority of the capital raised from the SPO will be used to acquire or build more cannabis properties. In March 2025, we have entered into an MOU to acquire two compounds of cannabis properties located in Edmond, OK, totaling about 38,000 square feet.

Other Real Estate Investments

Other Real Estate Property Investments

Prior to the year 2023, the Company had invested in residential properties, farmlands, and historic landmark buildings. As part of our business plan to shift our focus to cannabis real estate, we have been exiting our non-cannabis investments since 2023. We sold a piece of farmland for $1.9 million in January 2023, and sold a residential lot for $340,000 in July 2024.

As of and by the date of this filing, we still hold one residential property of a historical value of approximately $981,000. We plan to sell this property when the market condition improves.

Historic Landmark: The Rufus Rose House

In the third quarter of 2021, the Company, through its wholly owned subsidiary Atlanta Landsight LLC (“ALS”), acquired the historic Rufus Rose House in Atlanta, GA. The property is a federally registered historic building as it is the oldest residential property and the only standing Victoria-style mansion in downtown Atlanta. After acquisition, ALS partially renovated the interior of the building, which includes replacing and reinforcing a significant part of its wooden framework. The original concept was to renovate it into a boutique office building.

In January 2024, ALS entered into a joint-venture agreement with Vaycaychella Inc (“VAYK”), to develop this property into a boutique Airbnb. Under the joint-venture agreement, ALS spun off the management of the renovation, as well as the daily operation of the Rufus Rose House, to VAYK. ALS still holds the title of the property, but VAYK is entitled to receive 20% of net proceeds generated from either the continuous operation of the property, or from the sale of the property. VAYK may receive additional revenue from the project, if it invests capital into the joint venture. The additional percentage of VAYK’s profit allocation will be calculated proportionally according to the amount of capital VAYK invests, if any.

According to a news release by VAYK, “Rufus Rose House is a unique historic treasure and has unrivaled value as a short-term rental. Not only its stunning and aged beauty, both interior and exterior, will appeal to tourists and vacationists who appreciate its antique value, but also its location is ideal for short-rental business. It sits on one of the busiest streets in downtown Atlanta, only one block from the tallest downtown building (the Bank of American Tower), and within walk distance of a numerous local attractions, including the historic Fox Theater. In the year 2023, downtown Atlanta received 71.3 million visitors. Tourism to Atlanta is expected to explode as the city hosts the FIFA world cup in 2026.

In addition, the city of Atlanta has started a grand project with $157 million of federal funds, called “the Stitch”, which is only two blocks from Rufus Rose House. The Stitch (https://thestitchatl.com/) is a transformational civic infrastructure investment committed to reconnect Downtown and Midtown Atlanta. The North boarder of the Stitch project is only two blocks from the Rufus Rose House. According to the official website of the Stitch, it is expected to stimulate $2-3 billion in private real estate investments in surrounding neighborhoods. We believe that such improvements could enhance the value of the Rufus Rose House.

Investment in Other Real Estate Companies

The Company also holds two convertible notes of a total principle amount of approximately $564,000 in a real estate management company, Vaycaychella Inc. (OTC: VAYK). These include a note in the principal amount of $414,000, carrying a 12% annual interest rate and maturing on July 31, 2025, and another note in the principal amount of $150,000, carrying a 10% annual interest rate and maturing on July 05, 2025. VAYK is a real estate management company specializing in developing and managing short-term rental properties.

Non-Real Estate Investments

The Company may from time to time invest less than 10% of its net assets in non-real estate investment products. Currently, the Company holds a $200,000 promissory note from Curative Technology Inc (OTC: CURA). The Note matures on September 30, 2025. The management of Curative, including its CEO, CFO and a board member has provided personal guarantees for the collection of the monthly payment on this note.

As of and by the end of December 2023, we have received payments in the aggregate amount of $45,000 including monthly interests and penalties. Starting from January 2024, we have set aside all monthly interests received from this Note as an impairment reserve against the principal of the Note. As of and by the end of December 2024, we have set aside $36,000 of impairment reserve from interests received.

Competitive Position in the Industry and Methods of Competition

The following analysis is based on our knowledge of our own business as well as publicly available information. Our knowledge of our own business may be biased, and the public available information we rely on may contain mistakes, or we may have misinterpreted them. Investors shall not rely on our analysis below to make any investment decisions.

 ROI of Our Cannabis Portfolio, in Comparison to Our Peers

By the end of year 2024, we had invested $1.0 million into our cannabis portfolio. Since April 2024 and for the rest of the year, we received $12,000 in net cash income from this portfolio each month, realizing an annualized cash-by-cash ROI is 14.4%.

At this moment, our non-cash investments in cannabis properties, in the form of Series B preferred shares issued for acquisition, have no impact on the ROI allocated to our common shareholders, because holders of the Series B preferred shares will not be allocated any profit or loss. In the future, these preferred shares may be eligible for conversion into common shares. The terms of conversion are designed to ensure that our expected net cash income from related cannabis properties will increase proportionally, so that ROI allocated to our common shareholders, after the conversion, will remain the same.

For the reason above, we believe cash-by-cash ROI can be used as an effective measurement of our total ROI allocated to common shareholders, as far as our cannabis portfolio is concerned.

Based on publicly available information, we believe that our cannabis portfolio ROI was significantly higher than industry average. For example, Players Club Capital stated in January 2025 that “Cap rates for (cannabis cultivation) properties typically range from 7-10%” (https://www.playersclub.capital/blog/cannabis-properties-offer-investors-higher-cap-rates). We also believe that our ROI is higher than the ROI of similar portfolios held by any other public companies during the year 2024, based on our interpretation of their SEC filings. To our knowledge, there other currently three other SEC reporting public companies investing in cannabis properties. However, we may have misinterpreted their filings, so we strongly recommend investors to conduct their own research on this matter. Further, even if our portfolio did outperform our peers, there is no assurance that we will continue doing so.

However, our past performance does not constitute assurance that our portfolio will continue to perform at the same or similar level, or that our portfolio will continue to outperform portfolios held by other companies.

For the year 2025, we expect our cash-by-cash ROI from cannabis portfolio will decrease to 12.1% due to a rental credit applied to the tenant. Based on our executed lease with the tenant, we expect the ROI returning to 14.4% for the fiscal year 2026, and will increase to 15.1% in 2027 and 15.9% in 2029.

Our Cannabis Investment Strategy, and Its Competitive Advantage

We believe we have developed an investment strategy which is distinguishable from those of most cannabis property investors, public or private. We believe our strategy has proven to be successful, and will continue to produce satisfying results, although there is no assurance of this.

Members of our management team has been following the development of legal cannabis industry from as early as 2013. Yet when our Company was founded in 2016, we decided that cannabis industry was in a “wild west” phase, and, despite the potential for higher gains, investors would be exposed to higher risk of uncertainty, which outweighed the benefits for smaller investors like us. In 2020, we observed that the industry was maturing. However, after further research, we determined that cannabis properties were overpriced in most regions and held back our investments. This action helped us dodge the sharp drop in cannabis property prices during 2021-22.

In the year 2023, we concluded that cannabis property prices had possibly reached their periodical low. Meanwhile, the industry reached a stage of maturity where the risk of uncertainty was more acceptable. We made our first investment in May 2023 and increased our investment in March 2025.

We believe the next 12-18 months may present periodic low entry points to cannabis property investors.

We have observed that, in the earlier stage of US cannabis industry, when the profit margin of cannabis products was much higher, investors intended to build “low-tech” growing facilities, which required less capital and less time to complete, enabling investors to get their products to the market faster and cheaper. For investors who wanted to maximize their short-term returns, this appeared to be a reasonable strategy.

In contrast, we chose to invest in “premium” properties, i.e., cultivation facilities designed to achieve comprehensive control of environment, including light exposure, temperature, humidity, carbon dioxide level, irrigation, and fertilization. The environmental control is computerized and can be programmed to accommodate different cannabis strains for higher yields and better quality. “Premium” properties usually require higher initial investments per square foot to construct.

The primary drawback of “low-tech” growing facilities, in our opinion, is their inefficiency in cultivating. This inefficiency results in their marginal costs for continuous operation being significantly higher compared to those of “premium” properties. When cultivating top-shelf and high-quality cannabis strains, the comparative advantage in marginal operation cost of “premium” properties is more remarkable, based on our own case studies.

Average cannabis product prices, over the past few years, have experienced continuous decline. Consequently, growers with higher marginal operating costs found it difficult to stay profitable, and many of them were compelled to exit the market. Meanwhile, growers operating out of “premium” properties have been gaining market shares, thanks to their ability to maintain lower marginal costs. This will potentially increase the demand for “premium” properties and may subsequently increase the return of investment in “premium” properties.

Another potential benefit from investing in “premium” properties is rooted in the shift of consumer preference. Recent data shows that consumers have increasingly favored flower products, including dried flowers and pre-rolls. The shift to follower products (dried flowers and pre-rolls) may further increase the demand for “premium” properties. Non-flower products can usually be made from cannabinoids extracted from low-grade cannabis strains, but flower products, especially high-quality ones, can only be cultivated cost-efficiently from “premium” properties.

“Diversification” is a widely-recognized principle for investing. We believe, however, it should not be applied to cannabis property investments in the current evolving stage of the industry.

When an industry has a high failure rate, investors who diversified their investments must make exorbitant profits from a few successful ventures, in order to offset their losses from the majority of failed ones. However, property investors do not receive extra profit when a tenant/grower becomes highly successful, as the rent is usually in a fixed amount and not linked to the tenant’s profit. Meanwhile, if a tenant fails, the property owner may lose all the rental income. Based on the above argument, the strategy of diversification, mathematically, does not work for property investors in an emerging industry.

The above argument suggests that a more effective strategy than diversification is to be selective and invest only in properties with tenants who are likely to be among the top 3% of growers that will ultimately succeed. This is the strategy we have followed, and will continue to follow.

In the 12 months prior to making our first cannabis property investment, we made phone calls to about 500 growers and interviewed dozens of them, and engaged in detailed discussion with a selected group, before we finally chose our current tenant partner, Fire Ranch Farms.

Fire Ranch Farms claims that it has “a vision to be the number one indoor cannabis grower and supplier in the state (of Oklahoma)”. With a focus on exotic, craft grown, hand trimmed, and genetically superior strains, they have developed “an innovative indoor growing process” to cultivate “only top shelf flower from the best genetics using (their) own proprietary pheno types” (Source: Fire Ranch website: https://www.fireranchok.com/about).

As a critical part of forming long-term partnerships with tenants, we used financial engineering to form creative deal structures, under which our tenants will be motivated to align their interests with ours for the long run.

This structure stemmed from our observation of a notable drawback of the popular “sale-leaseback” model in cannabis property investment. Under the traditional “sale-leaseback” model, investors pay a lump-sum to buy out a property from a grower, and then lease it back to the grower. However, growers sometimes lose interest in continuous operations if they have realized significant profits from selling their property.

To motivate tenants/growers to commit to the desired long-term partnership, we create deal structures under which growers who sell properties to us will only realize profit from the continuous success of our business. One option is to acquire properties not with cash, but with securities that will realize more value for growers when they succeed in continuous operation.

We have applied this model to our first acquisition of the Apple Valley Property. The property, according to two different and independent licensed appraisers, had a fair market value of $3.2 million and a replacement cost value of $3.4 million by March 2025, when we acquired complete ownership of the property from the current tenant, for a total consideration of $3.1 million. Not only were we able to acquire the property at a price lower than its appraised fair market value, but we also paid only $1.5 million in cash, with the remaining $1.6 million paid by issuing Series B preferred shares in our company. The value of Series B shares is linked to our long-term business performance, which is attributed in part to rental income from and value appreciation of our cannabis property portfolio.

We believe it is reasonable to expect full-scale or partial-scale legalization of medical and/or recreational cannabis use at the federal level in the next few years. There is no assurance that this will occur, but if it does, most cannabis properties will be operating in a (fully or partially) federal legalized market, for the rest of their life cycle which may be several decades. Therefore, when assessing the potential for value appreciation of cannabis properties, we should consider their potential competitiveness in a federally legalized, nationwide market.

For this reason, we choose to invest in regions where cannabis growers may have competitive advantages, if they will compete on a nationwide market.

According to our research, cost of property construction, electricity and labor are three major costs in cannabis cultivation. We researched into data of average costs across the states regarding these three major categories. Based on the research results and other factors, we have chosen the State of Oklahoma as our first geographic focus to build our cannabis property portfolio. We may choose to expand into one or two other states if we believe these states also present great potential for cannabis growers to achieve long-term competitiveness.

Number of Employees

As of December 31, 2023, the Company has two full-time employees, who are the two members of our General Partner, UCF Asset LLC. The Company has one part-time employees namely an accountant.

Reports to Security Holders

The Company files regular reports, i.e., 1-Ks and 1-SAs, under Regulation A - Conditional Small Issues Exemption from the Securities Act of 1933(the “Securities Act”) on the EDGAR platform.

The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The address of that site is http://www.sec.gov

Specifically, our reports can be found at:

https://www.sec.gov/edgar/browse/?CIK=1723517

Item 2.

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 financial statements and the related notes and other financial information included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We have been profitable for most years since our incorporation in the year 2016. We have been profitable consecutively for the most recent two years, with net profits of $0.03 and $0.02 per share for the year 2024 and 2023, respectively.

In general, the whole real estate industry has slowed down over the past two years, due to higher interest rates and other factors. According to the National Association of Realtors, 2023 was the weakest year for existing U.S. home sales since 1995, and 2024 home sales was only slightly higher than in 2023 but still at a historically low level. This has negatively impacted our overall return on investment.

Meanwhile, our investment in cannabis property performed well in the year 2024. We received an annualized distribution of 14.4% from our cannabis investment, since April 2024. Based on what we have learnt from the filings of other US public companies, our investment in cannabis property has likely the best performance among any cannabis property portfolios held by a US public company.

We intend to expand our investments in cannabis properties and intend to raise capital for this business purpose.

Material Changes in Financial Statements: 12-month period by December 31, from 2023 to 2024

Our business model is to invest in real estate for capital appreciation. We are not a builder or developer and are under no pressure to sell any property in our portfolio (inventory) unless we desire to. Usually, we will only sell a portfolio property to realize our investment gain when we believe it has reached its desired level of value appreciation. Otherwise, we will hold on to our portfolio properties in expectation of further appreciation. Since the real estate market was slow in 2024, we decided that it would be better to hold on to our portfolio properties and did not actively pursue selling most of them.

For both the year 2023 and 2024, we continued committing us to reduce our operating expenses, and had successfully cut our expenses across the board. We reduced our operating expenses by another 35%, from approximately $368,000 to approximately $238,000. This was on top of a 38% reduction from $609,000 in the year 2022. Overall, we have cut our operating costs by 61% in the past two years.

We believe that this reflects the efficiency of our management in cost control.

In particular, our management team reduced their management fee by approximately 46%, from approximately $188,000 in the year 2022, to approximately $112,000 in 2023, and then to approximately $102,000 in 2024.

Change of Profit Per Unit

For the fiscal years of 2023 and 2024, our gross profit is approximately $594,000 million and $161,435 respectively. Despite that our gross profit was significant lower, our net income for the year 2024 is slightly higher. This is primarily because we took an impairment reserve of $120,000 on our long-lived-asset in 2023. However, we turned things around and sold that long-lived-asset, and therefore not only reclaimed the impaired amount but posted a net gain in marketable securities of $130,000.

Other Material Changes in Financial Statements

None for the reporting period.

Liquidity and Capital Resources

Cash Flows

As an investor, we usually do not manage the daily operation of any of our portfolio property. Except for some insignificant and non-material operative activities, we intend to form partnerships with third party operators or managers to conduct our daily business. We usually require the third party to bear related operating costs.

Meanwhile we are applying a disciplined investment strategy, under which we will usually make new investments only when we have cash available.

Under such a business model, we don’t usually have a significant amount of cash commitments, except for 1) management fees and professional fees, which are usually stable and predictable period-to-period; and 2) due amount of our debt financing.

Despite the limited amount of cash commitments, we believe that the cash reserve of the Company had dropped to a concerning level of $3,131, by the end of the year 2023. Management made several attempts to increase our cash position, including to borrow short-term loans. By the end of the year 2024, our cash position improved to $9,984. This is still a concerning level of cash reserve, in the opinion of our management. Management has continued and will continue to work and improve our cash position in the year 2025.

12-month period changes from 2023 to 2024

Net Cash (Used in) Provided in Operating Activities

Net cash provided by (used in) operating activities changed from $208,727 to $(13,606), mostly reflecting the decrease in our operating revenue, which resulted in a decrease in operating profit.

Net Cash (Used in) Provided by Investing Activities

Our net cash provided by investing activities is primarily the result of cash received from divesting our existing portfolio assets (including properties and loans), reduced by cash used for investing in new portfolio assets. In the year 2024, we received less cash from divesting our portfolio assets than in the year 2023, and we also invested less cash into portfolio assets, which resulted in a net cash flow of $14,002 in the year 2024, in comparison to the net cash flow of $(65,679) in the year of 2023.

Net Cash Provided by Financing Activities

For the fiscal year 2023, net cash provided by financing activities was primarily the result of paying off a construction loan of $400,000, plus borrowing a private loan of $50,000.

For the fiscal year 2024, net cash provided by financing activities reflected primarily the payment on interests of private loans we borrowed during the period.

Commitments and Contingencies

We pay quarterly management fees to our general partner, UCF Asset LLC. Management fees are calculated at 2.0% of assets under management (AUM) as of the last day of our preceding fiscal year. The value of AUM was determined using fair market value (FMV) accounting, according to the bylaw (limited partnership agreement) of the Company.

Starting from the year 2023, we have changed the method of calculating AUM to historical cost, with the intention to reduce management fees. As a result, management fees were reduced by approximately 40%, from approximately $188,000 in the year 2022, to approximately $112,000 in the year 2023. It is further reduced to approximately $102,000 in the year 2024, due to the fact that the Company held 10% of management interest itself and was reimbursed 10% of the management fee.

In February 2023, we paid off a construction loan of $400,000 and became debt free. In November 2023, we borrowed a private loan of $50,000, which was paid off in March 2024. We also borrowed and paid off a short-term loan of $120,000 during the fiscal year.

As of and by December 31, 2024, the Company has only one outstanding debt, which is a promissory note issued to Barry Ginsberg, of a principal amount of $60,000 and bearing an interest rate of 12%.

Capital Resources

Since our inception, we have funded our operations primarily through the sale of limited partner interests sold in private placements, including through three rounds of private placement prior to our public offering. Our Initial Public Offering pursuant to the requirements of Regulation A plus was closed on October 12, 2018. The net proceeds of capital raised in the offering was approximately $1.15 million.

Since March 2020, we have not raised any capital. The Company bought back shares from a number of investors for a total amount of approximately $90,000, in the year 2021. The Company also redeemed $300,000 series-A preferred shares in July 2022. We made a $544,000 distribution in the year 2022. Altogether, our available capital has decreased by $934,000 since the year 2021.

In 2023 and subsequently in 2025, the Company issued a total amount of $1.6 million preferred shares to acquire a piece of property. From the perspective of capital formation, the seller made in-kind capital contribution of $1.6 million into our Company.

The Company is currently filing this circular with the intention of raising capital through a public offering of its partnership interests. Prior to or after the planned public offering, the company may raise more capital through private offerings of its partnership interests. There are no guarantees, however, that the Company will be able to do either the public offering or any private offerings.

Debt financing

As of and by December 31, 2024, the Company has only one outstanding debt, which is a promissory note issued to Barry Ginsberg, of a principal amount of $60,000 and bearing an interest rate of 12%.

Trend information

The following discussion covers some significant trends or uncertainties affecting our business during the reporting period, in our industry, or to the macro economy, which had impacts on our continuing operations, particularly on our portfolio investments.

Interest Rate May Remain at Relatively High Level

The Federal Reserve has raised interest rate multiple times since the year 2021. High interest rates have slowed down the real estate market. According to a report published in January 2024, by the National Association of Realtors, existing U.S. home sales totaled $4.09 million in 2023, an 18.7% decline from 2022. That is the weakest year for home sales since 1995 and the biggest annual decline since 2007, which was the start of the housing slump of the late 2000s. In September 2024, the Federal Reserve has cut the interest by 50 points, followed by two more interest cuts of 25 points each in November and December 2024, respectively. However, interest rate still remains at relatively high level, and may continue so in the foreseeable future.

Unit Pricing for Regulated Cannabis Products

Many states continue to experience significant declines in unit pricing for regulated cannabis products, with that decline more pronounced in certain states than in others, which compresses operating margins for operators. As a result, certain regulated cannabis operators have been consolidating operations or shuttering certain operations to reduce costs, which if prolonged, could have a material negative impact on operators’ demand for cannabis properties.

Prospects of Cannabis legalization under Trump Administration

For the past two decades, the U.S. federal government, including its legislative and executive branches, have been advocating measures to legalize certain activities pursuant to the cultivation, transportation, transaction and consumption of cannabis products. In addition to other moves, under the leadership of former President Joe Biden, the Department of Justice published a notice of proposed rulemaking (NPRM) on May 21, 2024, to transfer marijuana from schedule I of the Controlled Substances Act (CSA) to schedule III of the CSA. However, this rule change was not finalized under Biden presidency.

During his 2024 campaign, President Trump expressed support for cannabis legalization. In addition to moving marijuana from schedule I to schedule III of CSA, he also advocated for recreational legalization in Florida, and for allowing more bank services to be provided to cannabis businesses. Although it may not be one of his top policy priorities, we believe that President Trump will take actions toward partial legalization before the end of his first year.

Critical accounting estimates

We have no critical accounting estimates for the foreseeable future.

Item 3. Directors and Officers

The operation of our partnership is managed by our general partner. As of and by March 31, 2025, we do not have any other directors, officers, or significant employees. The following are all members of our general partner and their respective ages and positions as of March 31, 2025.

Dr. “Larry” Xianghong Wu has been the member of majority interest of UCF Asset LLC since its formation in January 2016. Between 2012 and 2016, he was the founder and chief executive officer of Shanghai Heqing Asset Management LP, a limited partnership based in Shanghai, China, focused on Chinese investments in the U.S., particularly real estate. Between 2011 and 2012, he was chief executive officer of EHE Capital, a Chinese PE fund managing a portfolio of approximately $1 billion, mostly in real estate. Between 2009 and 2011, he worked at Cisco Systems, Inc. as a vice president in charge of Cisco’s strategic business transformation in China. Dr. Wu has served as policy advisor and counselor to the Chinese government and officials. He also served as a Board Member of Finance and Investment of the Capital Club in China from 2009 to 2013. 

Jason D. Cunningham has 30+ years of management expertise in medical and real estate industry, and currently oversees our operation of cannabis properties. Prior to becoming a member of our general partner, he managed our operation of medical cannabis properties in metropolitan Oklahoma City area. He is the founder of Fire Ranch, a multi-site collective of over two dozen indoor commercial medical cannabis properties, as well as the founder of Fire Ranch Farmacy, a retail outlet for Medical Grade Cannabis and Cannabis products. Jason graduated from the University of Oklahoma (1994) with Degrees in Zoology and Chemistry, and spent 22 years with Bristol Myers Squibb/Celgene in Hematological Oncology, specializing in B cell Malignancies.

Previous Members of Management Team

Gregory Bankston served as managing member of UCF Asset LLC since its formation in January 2016 till December 2023. He is a seasoned real estate broker and property manager. In April 2023, Mr. Bankston quit his position as a managing member for personal reasons, but he remains a member of UCF Asset LLC. In April 2023, Mr. Armstrong was hired as manager of UCF Asset LLC. In December 2023, Mr. Bankston transferred his membership interest in UCF Asset LLC to Mr. Armstrong, and ceased being a member of our general partner.   

Jason Armstrong served as managing member of UCF Asset LLC between December 2023 to December 2024. He had previously worked as a contracted project director for UC Asset since the year 2021. He is the founder and manager of EES Contracting, which he started in 2004 as a site development company, and expanded into a licensed new construction and high-end remodeling business in the year 2008. Mr. Armstrong also worked as a project management consultant to multiple real estate investment groups between 2012 and 2018.

Audit Committee

Our Company is a limited partnership and is not required to establish a board of directors. However, we were still required by the rules of OTCQX, on which we used to be quoted, to set up an Audit Committee. In February 2019, the Company resolved to establish an Audit Committee. Starting from July 01, 2019, we have admitted two Audit Committee members who both are independent.

Starting from the beginning of 2022, the Company changed its quoting platform from OTCQX to OTCQB. As a result, the Company was no longer required to have an Audit Committee. In September 2022, we dissolved and terminated our Audit Committee. 

Compensation of Directors and Executive Officers 

The operation of our partnership is managed by our general partner, UCF Asset LLC. Our partnership does not have any other directors or officers who receive compensation.

We pay management fees quarterly to our general partner. Management fees are calculated at 2.0% of the fair market value of assets under management as of the last day of our preceding fiscal year. The fee is paid quarterly. Management fees for the fiscal year 2023 and 2024 were approximately $112,000 and $102,000, respectively. In addition, the General Partner will receive 20% of all distributions the Company makes above a “hurdle rate”. See “Distributions”.

In addition to the management fee, we reimburse the general partner for standard expenses it may incur in managing the Company in accordance with our limited partnership agreement. These reimbursable expenses include: organizational expenses; fees for accountants, attorneys, auditors, and other professionals; expenses associated with partnership taxation reporting; operational expenses including insurance, valuation reports, and real estate brokerage commissions; and government filing fees and costs.

Item 4. Security Ownership of Management and Certain Security holders

As of and by the date of March 31, 2025, there were no other unit holders to our knowledge that beneficially owns more than 5% of our common units except for one investor who owned approximately 5.52%. The managing member of UCF Asset, LLC, “Larry” Xianghong Wu, beneficially owns 195,603 of our common units (3.57%). The other member of UCF Asset LLC, Jason D. Cunningham, beneficially owns 500,000 of our series B preferred units.

The general partner is entitled to 20% of all distribution to be made by the Company after the common unit holders receive a return equal to the Company audited book value. See “Distribution”.

As of the by the date of March 31,2025, the security ownership of certain beneficial owners and management of our company is listed as below:

On April 01, 2025, Jason Cunningham was issued an extra 833,334 shares of Series B Preferred Units, bring his total ownership of Series B Preferred Units to 1,333,334, which represents 100% of issued Series B preferred shares.

Item 5. Interest of Management and Others in Certain Transactions

Transactions with Jason Cunningham

In December 2024, Jason Cunningham acquired 10% of membership interest in UCF Asset LLC, which is our general partner. Subsequently, Cunningham become a member of our general partner on January 01, 2025.

Fire Ranch LLC, of which Jason Cunningham owns 50%, is a licensed cannabis grower in the State of Oklahoma. Prior to Cunningham becoming a member of our general partner, Fire Ranch LLC had entered into a lease on the Apple Valley property from AZO Properties LLC. The rental payment from Fire Ranch LLC to AZO Properties LLC is the source of the $12,000 monthly dividend we are receiving from AZO Properties LLC. After Cunningham became a member of our general partner, this lease remained effective until March 31, 2025.

On March 16, 2025, we issued 833,334 shares of Series B preferred units, with a face value of $1.0 million, to Jason Cummingham, and paid $500,000 cash, for 50% ownership of AZO Properties LLC. After this transaction, AZO Properties LLC became a wholly owned subsidiary of UC Asset.

On April 01, 2025, Fire Ranch LLC entered into a new lease with AZO Properties LLC, to rent and operate the Apple Valley property. The lease is a double-net lease, with a monthly rental rate of $13,000 until the end of 2025, and a monthly rental rate of $16,000 from January 2026 till March 2027. Starting from April 2027, the monthly rent will increase by 5% every 24 months. The lease is a five-year lease but will automatically renew year by year beyond the term, until terminated.

Transactions with Jason Armstrong

On April 25, 2023, Mr. Jason Armstrong was hired as manager of UCF Asset LLC. On December 2023, Jason Armstrong became a 10% member of UCF Asset LLC.

Before Mr. Armstrong joined UCF Asset LLC, his company, EES Engineering LLC, had worked as a contractor to UC Asset LP. For the period starting from April 26,2023 till December 31, 2023, EES Engineering LLC continued working with UC Asset LP, and received a total amount of $144,047 under contracts with UC Asset LP, out of which $75,717 was to fulfil the contracts signed before Mr. Armstrong became the manager of UCF Asset LLC, while a total amount of $68,330 was received under contracts signed after Mr. Armstrong served as the manager of UCF Asset LLC.

For the fiscal year of 2024, EES Engineering was contracted and compensated by UC Asset LP for a total amount of $5,882. Mr. Armstrong resigned his position as a member of our general partner in December 2024.

Item 6. Other information

Issuance of 1,333,334 Series B Preferred Units

In connection with the acquisition of our fifty percent ownership in an Oklahoma City cannabis property, we issued 500,000 shares of our series B preferred units (“Series B”) to the seller as part of the purchase price. Each Series B share carries a face value of $1.20, and therefore the Series B shares issued to the seller have a total face value of $600,000. Each share of Series B may be converted into one share of common units, subject to certain terms and conditions. The certificate of series B preferred units, which contains the terms and conditions of conversion among other matters, is filed along with our Form 1-SA dated August 21, 2023, as Exhibit 3.4 to that report, of which the link is provided as Exhibit 3.4 to this report.

In March 2025, we acquired the rest fifty percent ownership of said property, and, in connection with the transaction, issued 833,334 shares of Series B to the same person.

Settlement of Regulatory Action against the Company by the State of Washington

On February 27, 2023, the Department of Financial Institutions (“DFI”), State of Washington issued a Statement of Charges and Notice of Intent to Enter Order of Cease and Desist, to Impose Fines and to Charge Costs (the “Statement of Charges”) against the Company and Mr. Xianghong Wu. In the Statement of Charges, DFI stated that, during our Initial Public Offering (“IPO) , which was conducted under Regulation A plus (“Reg A+”) and was qualified at the federal government level by the Security and Exchange Commission (“SEC”) , and which occurred in the year 2018, our Company failed to register the IPO with the State of Washington and made one sale in the State of Washington, and hence violated the statue RCW.21.20.140 of the State of Washington.

On November 03, 2023, DFI of State of Washington, the Company and Mr. Xianghong Wu reached a Consent Order, which settled all the matters in the Statement of Charges, on a “neither admit nor deny” basis, in exchange for the Company and Mr. Xianghong Wu to pay a fine of $5,000 each. Further, the Consent Order states that, except in any action by the Securities Division of the Washington State DFI, the Consent Order is not intended to be used as an admission of or evidence of any fault, omission or liability of either UC Asset LP, Xianghong Wu, or any of their agents and employees, in any civil, criminal, arbitration, or administrative proceeding.

Item 7. Financial Statements

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS