UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 1-U

CURRENT REPORT PURSUANT TO REGULATION A

Date of Report (Date of earliest event reported): for the first fiscal quarter of 2020

2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341

(Full mailing address of principal executive offices)

470-475-1035

(Issuer’s telephone number, including area code)

Title of each class of securities issued pursuant to Regulation A: Common Units

INFORMATION TO BE INCLUDED IN THE REPORT

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make statements in this Form 1-U that are forward-looking statements within the meaning of the federal securities laws. The words “believe,” “estimate,” “expect,” “anticipate,” “intend,” “plan,” “seek,” “may,” and similar expressions or statements regarding future periods are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any predictions of future results, performance or achievements that we express or imply in this Form 1-U or in the information incorporated by reference into this Form 1-U.

The forward-looking statements included in this Form 1-U are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Actual results and performance could differ materially from those set forth in the forward-looking statements. You are cautioned not to place undue reliance on any forward-looking statements included in this Form 1-U. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this Form 1-U, whether as a result of new information, future events, changed circumstances or any other reason. The inclusion of such forward-looking statements in this Form 1-U should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Form 1-U will be achieved. 

On June 02, 2020, UC Asset released its unaudited financial statement for the 1^st fiscal quarter of the year 2020. Here are the report and our management discussion on the report.

Overview

We are a limited partnership engaged in the redevelopment and development of real estate properties in metropolitan Atlanta and Dallas. Our general partner is UCF Asset LLC.

Since its incorporation, the Company has grown its net equity from $2.25 million as of the date of March 01, 2016, to $8.1 million (unaudited) as of March 31, 2020.

Net equity per common unit has grown from $1.156/per unit as of March 01, 2016, to $1.377/per unit as of March 31, 2020, after a $0.050 dividend distribution in the year of 2018. It may rise up to $1.429 after fully diluted/anti-diluted. The following table shows the change of net equity per share during this period:

Table I: Net equity per common unit of UC Asset LP, between March 01, 2016 to March 31, 2020.

After factoring in the distribution of $.0.050/unit, our net equity per unit has grown 39% from our inception to December 31, 2019, which equals to 8.58% year over year compound growth.

At March 31, 2020, our unaudited net decrease in net assets was ($0.177) per common unit. If our Preferred Series A units had converted to 187,500 common units at the beginning of the period, then our unaudited net decrease in net assets per common unit would have been ($0.172). Our net assets per common unit increased $0.052 as a result of our financing activities.

On January 02, 2020, our shares (common units) started to trade on OTCQX, the Best Market of OTC markets. Unlike most other real estate investment firms on public markets, which are overwhelmingly organized as real estate investment trusts (REITs), our business is structured as a publicly traded limited partnership (Master Limited Partnership or MLP) rather than a REIT in order to appeal to investors looking for long-term growth. We are among the very few number of real estate MLPs on any US public markets, and are the only one on OTCQX.

Operating Results

During the first quarter ended March 31, 2020, we have recorded a net loss of $0.18 per share, in terms of net equity of the Company. Our performance was mostly the result of the deep impact of COVID-19 pandemic.

COVID-19 pandemic has had huge impact on real estate market. In the two metropolitan areas we conducted our business, the City of Atlanta had been under lock-down since March 17, followed by a lockdown of the whole state of Georgia since April 01, and the State of Texas had been under lockdown since March 19. These lockdown orders had put most business on halt and would definitely hurt the economy and, eventually, the real estate market.

Under the impact of COVID-19 pandemic, the Company would choose to liquidate two properties, and reduce listing prices of more properties. Although most actions as such would be taken in April, the Company has decided, following the practices of GAAP accounting rules, to reflect the reduction of net equity in this quarterly financial reports, by adjusting down the book value of all the concerned properties accordingly. The Company also adjusted the book value of some other properties that will likely be impacted. Our net loss in the first quarter reflects these adjustments.

Below we discuss in more details the negative impact of the pandemic and our counter measures.

Commercial properties are taking a huge dive in metro Atlanta area. According to a report released April 20 by Atlanta consulting firm Bleakly Advisory Group, the corona virus pandemic may push retail vacancy across metro Atlanta to at least 40%, creating an unprecedented challenge for mall owners and other landlords. Socially-driven businesses, such as restaurants, lounges and clubs, also have experienced a record-breaking economic loss, which in turn will hurt the landlords of commercial properties hosting those businesses.

The price of residential properties, however, had managed to hold on for now. But the number of sales has decreased to very low level. The reason, according to data of several independent sources, was that supply dropped even faster than demand. This led to a temporary balance of supply and demand. We believed that this balance is not sustainable unless buyers return soon, and prices would eventually drop and probably would not recover for a longer period.

The drop of sales had severe negative impact on our business operation. We had had two properties under contract earlier this quarter, for a total contract size of approximately $2 MM. Under normal circumstance, a buyer would very likely close the transaction on time once he/she went under contract, and it would be extremely unlikely that two buyers of two different properties would both get out of their contracts. But that was what happened to those two contracts. We did have a back-up buyer of one of the properties, and he went under contract with us after the first buyer defaulted, and then he also terminated the contract. In the end, we had three cases of buyer withdrawal in a few weeks, which would be almost impossible were not for the impact of COVID-19.

By and as of the end of first quarter, our cash reserve had dropped to an unexpected level, and the Company issued two one-month notes of a total amount of $115,000 to cover a temporary gap of cash required to maintain our operations. These two notes were both paid off before their maturity. Total amount of interests by their maturity were insignificant. However, those short-term notes would carry heavy punitive interests if we had not paid off them by their maturity.

On April 20, 2020, we closed two transactions liquidating two properties to cash buyers, at prices substantially lower than their current book values. The Partnership made this decision based on management’s best-effort projection of real estate market in US generally and in Atlanta specifically, under the impact of the pandemic of COVID-19.

Management believes that it served the best interest of the Partnership and its shareholders to liquidate these properties now, because 1) the Partnership had entered into a drought of sales due to COVID-19 pandemic and its cash reserve had decreased to a risky level; 2) management believes that real estate market will enter into a bearish period due to COVID-19 pandemic, and the Partnership may not be able to liquidate those properties at better prices in foreseeable future; 3) the Partnership has other investments and investment opportunities that are believed to be more promising than those liquidated properties; and 4) the Partnership has formulated a business plan to capitalize opportunities in a projected bearish real estate market, and it needs cash to execute on its business plan.

As further measures to counter the impact of the pandemic, the Company put some properties for rent to general cash inflow. We had also rented out one property in the first quarter. By and as of the end of first quarter, we had three properties generating stable monthly rent incomes.

On March 02, 2020, the Company closed a private placement, under which the company issued 166,667 shares of Series A Preferred Units to raise capital of $300,000, at a price of $1.80/unit, from a domestic investor.

The Series A Preferred Units were sold with premium, in sense that the price for the preferred shares to be converted into common units is considerably higher than the current net equity per unit of the company (In fact, our by-laws prohibit us from issuing shares at a discount of net equity per share.). The issuance of Series A Preferred Units, therefore, will likely increase the company’s net equity per unit.

The Series A Preferred Unit may be converted into common units at the holder’s option, after 12 months from the initial issuance date. The conversion price may range between $1.60 - $1.80 per unit, depending on the trading price of common shares upon the time of conversion.

A copy of the Subscription Agreement (including Certificate) of Series A Preferred Units is attached to this Form 1-U as Exhibit 4.2.

Net Cash Used in Investing Activities

For the three months ended March 31, 2019, net cash used in investing activities was primarily the result of $0.8 million in investments in Atlanta Landsight LLC and UCF Development LLC, reduced by $1.3 million in repayments due to those portfolio properties and $0.3 invested in portfolio loans..

For the three months ended March 31, 2020, net cash used in investing activities was primarily the result of $0.02 million in investments in Atlanta Landsight LLC, and $0.4 million in new loans to unrelated third parties, reduced by $0.04 million in repayments due to those portfolio properties

Net Cash Provided by Financing Activities

For the three months ended March 31, 2019, net cash provided by financing activities was solely due to a refund of back-up withholding to the U.S. Internal Revenue Service on behalf of our limited partners.

For the three months ended March 31, 2020, net cash provided by financing activities was solely due to $0.3 million new capital raised from issuance of 166,667 shares of Series A Preferred Units.

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 as of the last day of our preceding fiscal year. Management fees for the periods ended December 31, 2018 and 2019 was $155,221 and $164,488, respectively. Management fees for the first quarter ended March 31, 2020 was $46,927.

In addition, we lease space from an unaffiliated third party at 2299 Perimeter Park Drive, Suite 120 in Atlanta. Rent is paid monthly at $2,096 through November 01, 2020. Pursuant to the terms of the lease, we have provided a deposit of $2,189 to the lessor.

Trend information

The following discussion covers some significant trends happened in our industry or to the macro economy, since the last fiscal year, which had impacts on our operation. It also covers known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on our operation for the current fiscal year of 2020.

Impact of COVID-19 on local markets in Metro Atlanta

COVID-19 pandemic has had huge impact on real estate market. In the two metropolitan areas we conduct our business, the City of Atlanta had been under lock-down since March 17, followed by a lockdown of the whole state of Georgia since April 01, and the State of Texas had been under lockdown since March 19. These lockdown orders had put most business on halt and would definitely hurt the economy and, eventually, the real estate market.

The commercial properties got hit first. Commercial properties are taking a huge hit in metro Atlanta area. According to a report released April 20 by Atlanta consulting firm Bleakly Advisory Group, the corona virus pandemic may push retail vacancy across metro Atlanta to at least 40%, creating an unprecedented challenge for mall owners and other landlords. Socially-driven businesses, such as restaurants, lounges and clubs, also have experienced a record-breaking economic loss, which in turn will hurt the landlords of commercial properties hosting those businesses.

The price of residential properties, however, has managed to remain at the same level. But the number of sales has decreased remarkably. The reason, according to data of several independent sources, was that supply dropped even faster than demand. This led to a temporary balance of supply and demand at the same price level.

We believe that this balance is not sustainable, because economic impact of COVID-19 is not temporary and hence the buyers will not return soon. The market will adjust, and we probably will see its lowest point in the next 6 to 18 months.

Management carefully reviewed our current portfolio, and concluded that the overwhelmingly majority of our portfolio investments would not be subject to a risk of significant depreciation over the long run.

On April 30, 2020, a research report issued by Zacks Small-cap Research (https://finance.yahoo.com/news/ucasu-thinking-past-uncertainty-invest-090000970.html) praised our company, concluding that “UC Asset combines an experienced management team with an attractive investment track record, backed by a stable base of long-term investors is well positioned to both manage through the slowdown and leverage opportunities on the other side.”

Trends of “trade war” between the U.S. and China

We had reported negative impacts on our business from the “trade war” between U.S. and China, in our previous reports, including annual and semi-annual reports. There were two major impacts on us: 1) Overwhelmingly our investors were Chinese nationals or Chinese immigrants, and the tension between U.S. and China had made it harder for us to raise more capital from Chinese investors; and 2) the tariffs imposed on imports from China had increased the prices of many building materials.

On January 15, 2020, the U.S. and China reached a Phase I deal, which did not end the trade conflict, and yet stopped it from getting more intense. The deal stabilized the overall trade relations between the two economies and thereby stabilized the market of building materials.

On the other hand, the Company had started to diversify our sources of investors, in an effort to end our reliance on capitals from Chinese nationals. On March 02, 2020, the Company closed a private placement, under which the company issued 166,667 shares of Series A Preferred Units to raise capital of $300,000, at a price of $1.80/unit, from an undisclosed domestic source. This was a big step because this Series A investor was a U.S. investor with no known material connection to China. Management is confident that we will be able to raise more capital from sources other than Chinese nationals.

In consideration of the above developments, we believe that the trade conflicts between U.S. and China will no longer be a significant factor to our business operation, and we will stop including it as “trend information” into our reports following this one.

The accompanying notes are an integral part of the condensed financial statements

The accompanying notes are an integral part of the condensed financial statements

The accompanying notes are an integral part of the condensed financial statements

The accompanying notes are an integral part of the condensed financial statements

UC ASSET, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Information as to the three months ended March 31, 2020 is unaudited)

NOTE 1 - ORGANIZATION AND NATURE OF OPERATIONS

UC Asset, LP (the “Partnership”) is a Delaware Limited Partnership formed for the purpose of making capital investments in limited liability companies with a focus on growth-equity investments and real estate. The Partnership was formed on February 1, 2016.

The Partnership is managed by its General Partner, UCF Asset, LLC.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting

The Partnership prepares its financial statements on the accrual basis in accordance with accounting principles generally accepted in the United States. Purchases and sales of investments are recorded upon the closing of the transaction. Investments are recorded at fair value with unrealized gains and losses reflected in the statement of changes in net assets.

The accompanying unaudited condensed interim financial statements have been prepared in accordance with Generally Accepted Accounting Principles ("GAAP") in the United States of America ("U.S.") as promulgated by the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and with the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). In our opinion, the accompanying unaudited interim financial statements contain all adjustments (which are of a normal recurring nature) necessary for a fair presentation. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

(b) Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclose contingent assets and liabilities at the date of the financial statements and report amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(c) Fair value measurements

The Partnership records and carries its investments at fair value, defined as the price the Partnership would receive to sell the asset in an orderly transaction with a market participant at the balance sheet date. In the absence of active markets for the identical assets, such measurements involve the development of assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the balance sheet date.

UC ASSET, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued

(c) Fair value measurements, continued

Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect managements market assumptions. Preference is given to observable inputs. These two types of inputs create the following fair value hierarchy:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model derived valuations whose inputs are observable or whose significant value drivers are observable

Level 3: Significant inputs to the valuation model are unobservable

The General Partner maintains policies and procedures to value instruments using the best and most relevant data available. In addition, The General partner reviews valuations, including independent price validation for certain instruments. Further, in other instances, independent pricing vendors are obtained to assist in valuing certain instruments.

(d) Cash and equivalents

The Partnership considers all highly liquid debt instruments with original maturities of three (3) months or less to be cash equivalents.

(e) Investments

The Partnership’s core activity is to make investments in real estate limited liability companies. Excess funds are held in financial institutions.

Investments in short term loans are recorded at fair value, which are their stated amount due to their short-term maturity and modest interest rates. Portfolio investments are recorded at their estimated fair value, as determined in good faith by the General Partner of the Partnership. Unrealized gains and losses are recognized in earnings.

The estimated fair value of investments in limited liability companies as determined by the General Partner, (“GP”), was $7,347,546 and $8,267,749 representing 95.67% and 94.41% of partner’s capital at March 31, 2020 and December 31, 2019, respectively, whose values have been estimated by the General Partner in the absence of readily ascertainable market values. Due to the inherent uncertainty of valuation, the General Partners determination of values may differ significantly from values that would have been realized had a ready market for the investments existed, and the differences could be material. See Note 3.

UC ASSET, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(f) Federal Income taxes

As a limited partnership, the Partnership is not a taxpaying entity for federal or state income tax purposes; accordingly, a provision for income taxes has not been recorded in the accompanying financial statements. Partnership income or losses are reflected in the partners= individual or corporate tax returns in accordance with their ownership percentages.

As defined by Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 740, Income Taxes, no provision or liability for materially uncertain tax positions was deemed necessary by management. Therefore, no provision or liability for uncertain tax positions has been included in these financial statements. Generally, the Partnerships tax returns remain open for three years for federal income tax examination.

(g) Income

Interest income from portfolio investments is recorded as interest is accrued.

(h) Recent Accounting Pronouncements

Partnership management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS

(a) Cash and Cash Equivalents

The fair value of financial instruments that are short-term and that have little or no risk are considered to have a fair value equal to book value.

(b) Unsecured Loan Investments

The fair value of short-term unsecured loans are considered to have a fair value equal to book value due to the short-term nature and market rate of interest commensurate with the level of credit risk.

(c) Portfolio Investments

The portfolio investments consist of member equity interests which are not publicly traded. The GP uses the investee entity=s real estate valuation reports as a basis for valuation when there is limited, or no, relevant market activity for a specific instrument or for other instruments that share similar characteristics. Portfolio investments priced by reference to valuation reports are included in Level 3. The GP conducts internal reviews of pricing to ensure reasonableness of valuations used. Based on the information available, management believes that the fair values provided are representative of prices that would be received to sell the individual assets at the measurement date (exit prices).

UC ASSET, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS, continued

(c) Portfolio Investments, continued

The fair values of the investee entity assets are determined in part by placing reliance on third-party valuations of the properties and/or third party approved internally prepared analyses of recent offers or prices on comparable properties in the proximate vicinity. The third-party valuations and internally developed analyses are significantly impacted by the local market economy, market supply and demand, competitive conditions and prices on comparable properties, adjusted for anticipated date of sale, location, property size, and other factors.

Each property is unique and is analyzed in the context of the particular market where the property is located. In order to establish the significant assumptions for a particular property, the GP analyzes historical trends, including trends achieved by the GP's operations, if applicable, and current trends in the market and economy impacting the property. These methods use unobservable inputs to develop fair value for the GP=s properties. Due to the volume and variance of unobservable inputs, resulting from the uniqueness of each of the GP's properties, the GP does not use a standard range of unobservable inputs with respect to its evaluation of properties.

Changes in economic factors, consumer demand and market conditions, among other things, could materially impact estimates used in the third-party valuations and/or internally prepared analyses of recent offers or prices on comparable properties. Thus, estimates can differ significantly from the amounts ultimately realized by the investee segment from disposition of these assets.

The following tables present the fair values of assets and liabilities measured on a recurring basis:

The fair value measurements are subjective in nature, involve uncertainties and matters of significant judgment; therefore, the results cannot be determined with precision, substantiated by comparison to independent markets and may not be realized in an actual sale or immediate settlement of the instruments.

There may be inherent weaknesses in any calculation technique, and changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results. For all of these reasons, the aggregation of the fair value calculations presented herein do not represent, and should not be construed to represent, the underlying value of the Partnership.

Generally, the fair value of the Atlanta investee properties is not sensitive to changes in unobservable inputs since generally the properties are held for less than six months. Generally, such changes in unobservable inputs take longer than six months to have an appreciable effect of more than 1% to 2% on these properties fair value. The Dallas investee property is more sensitive to changes in unobservable inputs because this property was acquired with a longer time horizon due to the nature of its size and undeveloped status. However, the Dallas investee is very cognizant of changes in the unobservable inputs that affect the fair value of this property and intends to consider any and all such changes as it develops it plan for the development of this property.

UC ASSET, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS, continued

(c) Portfolio Investments, continued

The following table presents the changes in Level 3 instruments measured on a recurring basis:

NOTE 4 - CONCENTRATIONS OF CREDIT RISK

a) Cash

Funds held by the Partnership are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. The Partnership’s cash balance (inclusive of restricted cash) was not in excess of FDIC insured limits at March 31, 2020 and December 31, 2019, respectively.

UC ASSET, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 5 B CAPITAL

The Partnership’s capital structure consists of one General Partner and 81 limited partners. The Partnership’s total contributed capital was $8,077,540 and $7,777,540 at March 31, 2020 and December 31, 2019, respectively. The limited partner common units are 5,635,306 at March 31, 2020 and December 31, 2019. The limited partner preferred Series A units are 166,667 and 0 at March 31, 2020 and December 31, 2019, respectively.

The Preferred Units carry the following rights and privileges:

- annual dividend of $0.09 per unit, not to exceed the audited annual net increase to net assets from operations

- carry no voting rights

- preference for dividends and in liquidation

- 12 months post issuance, redeemable at $0.50 per unit, if the market price of the common units falls

below $0.50 per unit for 20 consecutive trading days

- 12 months post issuance, convertible into common units on a variable conversion ratio 1.0:1.0 (if the lowest closing price of the common units is $1.80 or more for the 5 trading days prior to conversion), up to 1.125:1.0 (if the lowest closing price of the common units is $1.60 or less for the 5 trading days prior to conversion)

- conversion and redemption price shall not be lower than the book value per common unit based on the last audited book value per unit

In the first quarter 2020 the partnership issued 166,667 Series A preferred units in exchange for $300,000 in cash.

a) Distributions

Distributions from the Partnership are made to partners in accordance with the Partnerships limited partnership agreement.

During 2019, the partnership was refunded $48,271 of the previously distributed backup withholding from the U.S. Internal Revenue Service.

b) Allocations of Profits and Losses

The net profit of the Partnership is allocated to the Limited Partners in proportion to each partner=s respective capital contribution on all liquidated portfolio investments made by the Partnership. Losses are allocated to all partners in proportion to each partner=s respective capital contribution, provided that, to the extent profits had been previously allocated in a manner other than in proportion to capital contributions, losses are allocated in the reverse order as such profits were previously allocated.

The GP participates in the profits of the Partnership at a rate of 20% above a 10% annualized return to the Limited Partners; increasing to 40% of the profits above an 18% annualized return to the Limited Partners.

UC ASSET, LP

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 6 - RELATED PARTIES

a) Management Fees

The Partnership pays annual management fees to UCF Asset LLC. Management fees are calculated at 2.0% of assets under management on the first day of the fiscal year, payable quarterly. Management fees were $46,927 and $41,758 for the three months ended March 31, 2020 and 2019, respectively.

A - Comprised of a 100% membership interest. The carrying amount is based on the general partner=s estimate.

B - Comprised of a 100% membership interest. The carrying amount is based on the general partner=s estimate.

C - Comprised of three unsecured loans, $100,000 due June 10, 2021; $300,000 due March 31, 2022; $400,000 due March 4, 2023.

A - Comprised of a 100% membership interest. The carrying amount is based on the general partner=s estimate.

B - Comprised of a 75% membership interest and a loan of approximately $35,600. The carrying amount is based on the general partner=s estimate.

C - Comprised of two short-term unsecured loans, with monthly interest at 1.4%, which have been repaid except for $100,000 due June 10, 2021; $300,000 due March 31, 2022.

SIGNATURES

Pursuant to the requirements of Regulation A, the issuer has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date 06/09/2020

8

Exhibit 4.2

UC ASSET LP

SUBSCRIPTION AGREEMENT

For Series A Preferred Units

This Subscription Agreement (the “Agreement”) is to be completed by each person that desires to subscribe (each, a “Subscriber”) for Series A Preferred Units (“Series A Preferred Units”) in UC Asset LP, a Delaware limited partnership (the "Company"). The offering of Interests is being made pursuant to the terms and conditions of the Limited Company Agreement (the “LPA”) which is attached to this Agreement as Exhibit A, and the Certificate of Designation of Series A Preferred Units (the “Certificate”) which is attached to this Agreement as Exhibit B. Subscribers are strongly encouraged to carefully read this Agreement, the LPA, and the Certificate, before deciding to subscribe for Series A Preferred Units. Capitalized terms used in this Agreement and not otherwise defined in this this Agreement shall have the meanings assigned to them in the LPA.

The information that Subscriber will provide in this Agreement will assist UCF Asset LLC (the “General Partner”) to determine whether Subscriber meet certain required standards for participation in the Company. Subscribers are advised that all subscriptions are subject to approval and acceptance by the General Partner. All information required to be provided herein will be kept strictly confidential at all times. However, Subscriber hereby agrees that the General Partner may present this Agreement to such parties as it deems appropriate in order to assure themselves that the offer and sale of the Series A Preferred Units will not result in violations of U.S. federal or state securities laws.

The General Partner hereby represents that all documents pertaining to this offering that are readily available to the Company have been made available for inspection by Subscriber, and the books and records of the Company will be available, upon reasonable notice, for inspection by Subscriber for purposes reasonably related to Subscriber’s investment in the Company during reasonable business hours at the Company’s principal place of business.

1. GENERAL

A. Subscriber hereby irrevocably subscribes for Series A Preferred Units as set forth in the Certificate.

B. Subscriber agrees that as of the date of acceptance of this subscription by the General Partner, Subscriber shall become a Limited Partner and hereby agrees to each and every term of the LPA as if Subscriber’s signature were ascribed to the LPA.

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

2. CERTAIN ACKNOWLEDGMENTS AND AGREEMENTS OF SUBSCRIBER.

Subscriber agrees, understands and acknowledges that:

A. The subscription for the Series A Preferred Units contained herein may be accepted or rejected, in whole or in part, by the General Partner in its sole and absolute discretion. No subscription shall be deemed accepted and Subscriber shall not become a Limited Partner until the subscription has been accepted in writing.

B. Except as provided under applicable state securities laws, this subscription is and shall be irrevocable, except that Subscriber shall have no obligation hereunder if this Agreement is for any reason rejected or this offering is for any reason canceled.

C. No federal or state authority has made any finding or determination as to the fairness of an investment in the Series A Preferred Units and no federal or state authority has recommended or endorsed or will recommend or endorse this offering.

D. Other than as set forth in this Agreement, Subscriber is not relying upon any other information, representation or warranty by the Company.

E. Except as permitted by the LPA and the Certificate, Subscriber understands and acknowledges that the Series A Preferred Units cannot be sold or transferred without the prior written consent of the General Partner.

F. Subscriber agrees to provide any additional documents and information regarding itself that the Company and/or the General Partner reasonably request from time to time information relevant to verify the accuracy of Subscriber’s representations and warranties contained herein or to comply with any law, rule or regulation to which the Company or General Partner may be subject, including, without limitation, Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986..

G. Notwithstanding anything expressed or implied to the contrary in this Agreement, the Certificate, the LPA and any other Company documents, each Subscriber and prospective Subscriber (and each representative or other agent of each such Subscriber and prospective Subscriber) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement, the Certificate, the LPA and the agreements referred to therein, and all materials of any kind that are provided to any such persons relating to such tax treatment and tax structure (as such terms are defined in U.S. Treasury Regulation Section 1.6011-4). This authorization of tax disclosure is retroactively effective to the commencement of discussions with prospective Subscribers.

3. REPRESENTATIONS AND WARRANTIES

Subscriber represents, warrants and covenants to the General Partner and the Company as follows:

A. Subscriber is a U.S. citizen, is at least 21 years old and is legally competent.

B. Subscriber has received, read carefully and understands the Certificate, the LPA and/or has consulted its own attorney, accountant and/or investment advisor with respect to the investment contemplated hereby and its suitability for Subscriber. ANY SPECIFIC ACKNOWLEDGMENT SET FORTH BELOW WITH RESPECT TO ANY STATEMENT CONTAINED IN THE CERTIFICATE OR THE LPA SHALL NOT BE DEEMED TO LIMIT THE GENERALITY OF THIS REPRESENTATION AND WARRANTY.

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

C. Subscriber understands and recognizes that the Company is a speculative investment and involves a significant degree of financial risk.

D. Subscriber can bear the economic risk of this investment and can afford a complete loss of its investment. The aggregate amount of the investments of Subscriber in, and its commitments to, all similar investments that are illiquid is reasonable in relation to its net worth, and Subscriber has no need for immediate liquidity in Subscriber’s investment in the Interests.

E. The Company has made available to Subscriber, during the course of this transaction and prior to the purchase of any of the Interests, the opportunity to ask questions of and receive answers from the Company concerning the terms and conditions of the offering described in the Certificate and the LPA and to obtain any additional information necessary to verify the information contained in the Certificate and the LPA or otherwise relative to the financial data and business of the Company, to the extent that the Company possesses such information or can acquire it without unreasonable effort or expense, and all such questions, if asked, have been answered satisfactorily and all such documents, if examined, have been found to be satisfactory.

F. Subscriber is aware and acknowledges that (i) the Company has limited operating history; (ii) the Series A Preferred Units involve a substantial degree of risk of loss of Subscriber’s investment and there is no assurance of any income from such investment; (iii) any national, federal and/or state income tax benefits which may be available to Subscriber may be lost through the adoption of new laws or regulations or changes to existing laws and regulations or differing interpretations of existing laws and regulations, in certain circumstances with retroactive effect; and (iv) because there are substantial restrictions on the transferability of the Series A Preferred Units, and because there may not be ready demands for the Company’s Common Units on the public markets where these Common Units are quoted, it may not be possible for Subscriber to liquidate Subscriber’s investment readily in any event, including in case of an emergency, whether BEFORE OR AFTER the conversion of Subscriber’s investments into Common Units.

G. Any information which Subscriber has heretofore furnished to the Company or any agent of the Company with respect to Subscriber is correct as of the date of this Agreement and if there should be any material change in such information prior to its purchase of the Series A Preferred Units, Subscriber will immediately furnish such revised or corrected information to the Company.

H. Subscriber confirms that Subscriber is acquiring the Series A Preferred Units subscribed for herein solely for Subscriber's own account, for investment purposes, and not with a view to the distribution or resale of such Series A Preferred Units.

I. Subscriber recognizes that the securities laws and regulations of certain states, including the state of which Subscriber is a resident, may impose additional requirements relating to this offering and Subscriber's purchase of the Series A Preferred Units. Subscriber hereby agrees to execute and to comply with the terms of any supplements or amendments to this Agreement which are required by the General Partner.

J. Subscriber acknowledges that neither the General Partner nor any person acting on behalf of the General Partner offered to sell, or sold to Subscriber, the Series A Preferred Units by means of any form of general solicitation or general advertising.

K. Subscriber acknowledges that it shall be fully responsible for its tax matters on its proportionate share of dividend and certain interest income associated with the Interests, if any such dividend or interest income will be subject to any tax within or outside of the territory of United States. Subscriber hereby recognizes that the Company has no obligation to withhold tax for the Subscriber unless there are federal or state laws require the Company doing so.

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

L. The agreements and representations herein set forth shall become effective and binding upon Subscriber, Subscriber's legal representatives, heirs, successors and assigns, upon the General Partner's acceptance of Subscriber’s subscription.

M. In order for the Company to comply with certain anti-money laundering regulations, including the USA Patriot Act, Subscriber must initial the following statements.

4. INVESTMENT EVALUATION

Please initial the following statements:

5. ACCREDITED INVESTOR

Please initial any of those conditions that apply:

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

6. PRIVACY NOTICE

A. The General Partner collects nonpublic personal information about Subscriber from the following sources:

B. The General Partner does not disclose any nonpublic personal information about Subscriber, the Partners, or its other customers or former customers, to anyone, except as permitted by law. Specifically, the General Partner does not share information with third parties, other than with the General Partner’s and/or the Company’s administrator, accountants, attorneys and auditors, and for the purposes of processing business transactions and servicing investor relationships.

C. The General Partner restricts access to nonpublic personal information about Subscriber to those employees who need to know that information to provide products or services to the Company and Subscriber. The General Partner maintains physical, electronic, and procedural safeguards that comply with standards to guard Subscriber’s nonpublic personal information.

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UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

IN WITNESS WHEREOF, Subscriber has set Subscriber's hand and seal agreeing to the above on the date set forth below.

Accepted by:

UCF Asset LLC, 

a Georgia limited liability company and General Partner of UC Asset LP

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

6

Exhibit 4.2a

CERTIFICATE OF DESIGNATION

OF

SERIES A
PREFERRED UNITS

OF

UC ASSET, LP

__________ Shares

Date: 03/02/2020

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

UC Asset, LP (the “Company”), a limited partnership organized and existing under and by virtue of the provisions of Delaware law (the “Delaware Law”),

DOES HEREBY CERTIFY:

Pursuant to the authority granted to the General Partner in Section 4.01(a) of the limited partnership of the Company, the General Partner, does hereby issue One Hundred Sixty-six Thousand Six Hundred Sixty-Seven shares of Series A Preferred Units of the Company(hereinafter referred to as the “Series A Preferred Units”), and designate the rights, preferences, powers, privileges, restrictions, qualifications and limitations of the Series A Preferred Units as follows:

Section 1. Preferred Dividends.

a. For each and every accounting year of the Company, the holders of the Preferred Units (each, a “Holder” and collectively, the “Holders”) shall be entitled to receive annual dividends (“Dividends”) at nine cents per share ($0.09/unit) for all his Preferred Units, payable in order of Rank of such Preferred Units. Dividends shall be payable on the tenth (10^th) business day after the Company’s Annual Financial Report is audited (“Dividend Date”) for the accounting year preceding the Dividend Date (“Dividend Period”).

b. For any a Dividend Period that is not a whole calendar year, Dividends on the Preferred Units shall commence accruing on the Initial Issuance Date, till the date of Conversion or the date of Redemption or the date of cancellation, and shall be computed on the basis of a 365-day year and actual days elapsed.

c. Regardless of the above Section 1.a and 1.b, the maximum amount of total Preferred Dividend payable to all the Holders of all Preferred Units, for any given year, shall not exceed the audited annual gain of net equity of the Company in the same year(“Dividend Cap”). In case the Dividend Cap is reached in any given year, the Company shall be deemed as having paid off all preferred dividends to all Holders of all Preferred Units for this Dividend Period, and shall bear no further obligation to pay any dividends to any Holders of any Preferred Units for this Dividend Period.

d. Except for Preferred Dividends defined as above, Series A Preferred Units shall not be entitled to receive any dividends attributed to any other classes of units of the Company, including Common Units.

Section 2. Voting Rights.

The Series A Preferred Units shall be entitled to no voting rights on any business matters of the Company.

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

Section 3. Ranking

All shares of Common Units shall be of junior rank to all Preferred Units with respect to the preferences as to dividends or distributions, and payments upon liquidation event. The rights of the shares of Common Units shall be subject to the preferences and relative rights of the Preferred Units.

All share of other series of Preferred Units shall be of junior rank to Series A Preferred Units with respect to the preferences as to dividends or distributions, and payments upon liquidation event. The rights of the shares of other series of Preferred Units shall be subject to the preferences and relative rights of the Series A Preferred Units.

Section 4. Redemption at the Option of the Holder.

a. Option. If at any time more than twelve (12) months after the Initial Issuance Date, the closing price of the Common Unit on its principal listed market (“Closing Sale Price”) falls under fifty cents ($0.50) per share, consecutively for a minimum of twenty (20) trading days, the Holder, at his sole discretion, may redeem any amount of his holdings of Series A Preferred Units;

b. Redemption Price and Payment. The Preferred Units to be redeemed on the Company pursuant to this Section 4 shall be redeemed by the Company by paying for each such Preferred Units cash, out of any assets of the Company legally available therefor, in an amount equal to fifty cents ($0.50) per share (the “Redemption Price”).

Section 5. Conversion

Preferred Units shall be convertible into shares of Common Units on the terms and conditions set forth in this Section 5 and the following Section 6 and 7.

a. Holder’s Conversion Rights. At any time or times on or after twelve(12) months of the Initial Issuance Date, any Holder shall be entitled to convert any number of Preferred Units, into fully paid and nonassessable shares of Common Units in accordance with following Section 5(b) , 5(c) and 5(d) at the Conversion Rate.

b. Conversion Rate. The number of shares of Common Units issuable upon conversion of each Preferred Unit pursuant to Section 5(a) (the “Conversion Rate”) shall be determined according to the following formula:

The Conversion Rate shall equal to the amount of one dollar and eighty cents divided by the Conversion Price (Conversion Rate = $1.80/Conversion Price).

c. Conversion Price. The Conversion Price shall be determined according to the following formula: 1) One dollar and eighty cents ($1.80), when the lowest closing price of the Common Unit during the 5 trading days preceding the Conversion Date (“Lowest Closing Price”) equals to or is above one dollar and eighty cents ($1.80); 2) The same as the Lowest Closing Price, when the Lowest Closing Price of the Common Unit is below one dollar and eighty cents ($1.80) AND is above one dollar and sixty cents ($1.60) ; OR 3) One dollar and sixty cents ($1.60), when the Lowest Closing Price of the Common Unit equals to or is below one dollar and sixty cents ($1.60).

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

d. No fractional shares of Common Unit are to be issued upon the conversion of any Preferred Unit, but rather the number of shares of Common Unit to be issued shall be rounded to the nearest whole number.

Section 6. Mechanics of Conversion.

The conversion of Preferred Units shall be conducted in the following manner:

a. Holder’s Delivery Requirements. To convert Preferred Units into shares of Common Units on a date (a “Conversion Date”), the Holder shall 1) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York City Time, on such date, a copy of a properly completed notice of conversion executed by the registered Holder of the Preferred Units subject to such conversion in the form attached hereto as Schedule I (the “Conversion Notice”) to the Company and the Company’s designated transfer agent (the “Transfer Agent”) and 2) surrender to the Company as soon as practicable following such date the original certificates representing the Preferred Units being converted (the “Preferred Unit Certificates”).

b. Company’s Response. Upon receipt by the Company of a Conversion Notice, the Company shall 1) as soon as practicable, but in any event within ten (10) Trading Day (the “Share Delivery Date”), send, via facsimile (or otherwise deliver), a confirmation of receipt of such Conversion Notice to such Holder and the Transfer Agent, which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the terms herein; and 2) if the number of Preferred Units represented by the Preferred Unit Certificate(s) submitted for conversion is greater than the number of Preferred Units being converted, then the Company shall, as soon as practicable, after receipt of the Preferred Unit Certificate(s) (the “Preferred Unit Delivery Date”) and at its own expense, issue and deliver to the Holder a new Preferred Unit Certificate representing the number of Preferred Units not converted.

c. Record Holder. The Person or Persons entitled to receive the shares of Common Unit issuable upon a conversion of Preferred Units shall be treated for all purposes as the record holder or holders of such shares of Common Unit on the Conversion Date.

d. Damages. If within ten (10) Trading Days after the Company’s receipt of the delivered copy of a Conversion Notice the Company shall fail to instruct the Transfer Agent to process such Conversion Notice, then the Company shall pay cash damages (“Damages”)to such Holder, for each day after the Share Delivery Date that such conversion is not timely effected, in an amount equal to one percent (1.0%) of the product of (i) the sum of the number of shares of Common Units to which such Holder is entitled as set forth in the applicable Conversion Notice and (ii) the Closing Sale Price of the Common Unit on the Share Delivery Date. Such cash damages described above shall become due immediately and will automatically accrue and be added to the total due amount.

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

e. Limit to Remedy. The Holder’s right to pursue monetary remedies, with respect to the Company’s failure to timely fulfill its obligations defined under Section 6(b) hereinabove, shall be limited to the Damages defined as in above Section 6(d).

Section 7. Other terms regarding Conversion

a. Authorization of Common Units. The Company shall, at or prior to the time of any conversion, take any and all actions necessary to increase its authorized, but unissued Common Units and to reserve and keep available out of its authorized, but unissued Common Units, such number of shares of Common Units as shall, from time to time, be sufficient to effect conversion of the Series A Units.

b. Book-Entry. The Holder and the Company shall maintain records showing the number of Preferred Units so converted and the dates of such conversions. In the event of any dispute or discrepancy, such records of the Company establishing the number of Preferred Units to which the record Holder is entitled shall be controlling and determinative in the absence of manifest error.

Section 8. Limitation on Sale Price.

In accordance with Section 4.01(a) of the Limited Partnership Agreement, the Series A Preferred Units shall not be offered, and any conversion units shall not be set lower than the book value per common unit based on the last audited financial statement immediately preceding the offering of such Series A Preferred Units. This Section shall supersede any other sections of this Certificate of Designation and shall supersede any Subscription Agreement of Series A Preferred Units.

Section 9. Other Matters.

Any other matters regarding the Series A Preferred Units that are not defined herein shall be guided by the Limited Partnership Agreement. 

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UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

IN WITNESS WHEREOF, this Certificate of Designation of Series A Preferred Units has been executed by a duly authorized officer of this Company on this 2nd day of March 2020 (“Initial Issuance Date”).

UC ASSET, LP

General Partner

Gregory Charles Bankston, Managing Member

AND

Larry Xianghong Wu, Majority Member

UC Asset Limited Partnership.     Address: 2299 Perimeter Park Drive, Suite 120, Atlanta, GA 30341, USA;      Website: www.ucasset.com

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