CWS Investments: $3.59M Half-Year Profit Rests on $4.95M Foreclosed-Property Gains, Revenue $2.66M (2026)

What CWS Investments is, and which security you may hold

CWS Investments Inc. is a Virginia corporation formed on February 22, 2022. Its filing describes the business as buying “performing and non-performing promissory notes, lines of credit, and land installment contracts secured by real property” across the United States, originating business-purpose loans (DSCR and bridge loans), and owning single-family and small multi-family homes. Its offering circular lists the web address www.7einvestments.com, and the sponsor's own brand is 7e Investments.

There are two different securities, and the name search results blur them.

• Series A redeemable preferred stock. Sold at $10 a share, first under a Regulation A offering qualified July 13, 2022 and later, to accredited investors, in Classes B, C and D under Rule 506(c). The Regulation A preferred offering ended in November 2025. At June 30, 2026 there were 5,018,299 shares outstanding carried at a redemption value of $48,127,940.
• Series B bonds. Unsecured debt at $1,000 a bond. Classes A1, A4, B4 and B7 are sold under a Regulation A Tier 2 offering of up to $75,000,000 that the SEC qualified on February 13, 2026. Classes D5 and E5 are sold privately under Rule 506(c), also up to $75,000,000.

The 1-SA is a half-year report. The company's 2025 annual statements were audited by Grant Thornton LLP, whose report dated April 30, 2026 gives an unmodified opinion and contains no going concern paragraph. The June 30, 2026 statements have no auditor involvement at all.

Where the $3.59M came from

Inside revenue, loan interest was $1,505,372 on 36 loans, lender fees $682,693 (up from $182,708, mostly one contingent deferred fee collected when a loan was paid off), rental revenue $206,306 and other revenue $160,121. Of the interest, $339,460 came from the prepayment of six loans, three of them non-performing, which the filing identifies separately.

Expenses grew faster in the property lines. Real estate property expenses were $872,658, up from $84,080, which is 4.2 times the $206,306 of rental revenue (our arithmetic). The filing lists property taxes of $278,526 and insurance of $192,665 in that figure. Interest on the Series B bonds was $574,752, up from $149,014. Income tax expense of $1,259,946 is booked at an estimated 26% annual rate and $1,293,811 of tax payable sits on the balance sheet, so little of that tax has left the company yet.

What “gain on transfer from loan to OREO” means

The company's accounting policy, in the 1-SA, is that OREO “is initially recorded at fair value less estimated costs to sell on the date of acquisition.” If that value “exceeds the outstanding loan balance at the date of transfer,” the difference is recorded as a gain. In plain terms: the company buys a defaulted loan at a discount, takes the property by foreclosure or deed in lieu, and a fair value estimate above what it carried the loan at becomes income on the day it takes title, before any sale. The cash flow statement subtracts the gain again in the operating section, because no cash arrived.

This is not a finding that the values are wrong. The gain is a normal accounting result of fair value and the interim figures are unaudited, so the point for a holder is narrower: the number that makes the quarter look profitable depends on property valuations that the 1-SA does not support in detail. We searched the document for a delinquency aging table, a loan-to-value table, a list of the 34 properties and a separate OREO note and found none. The year-end audit will test the values.

The 1-SA also records that OREO is “carried at the lower of the initial recorded amount or fair value less estimated costs to sell,” so later appraisals can only reduce it below the starting value. The 2025 statements show that this happens: an OREO write-down of $170,000 and a real estate impairment of $68,100 were expensed that year.

Cash: what paid the dividends and the bond interest

Reading it plainly, the operating section lost $2.06 million, the loan book was shrunk to pay for the rest, and a large part of the cash that came in went out again to pay off senior liens on the foreclosed buildings. The MD&A says the company acquired properties with senior liens that had a fair value of $3,936,775 at foreclosure, and paid off all of them in the half year, with no senior lien debt left on June 30, 2026. Loans held for investment fell from $28,857,776 to $19,878,298 of unpaid principal, 31.1% (our arithmetic), and the 1-SA does not say how much of that is the transfer of loans to OREO and how much is repayment.

The company states that it expects “to continue paying interest on bonds and dividends on Series A preferred shares and bonus shares on a monthly basis in the near term from operating income, offering proceeds and other sources.” In 2025 the whole year's operating cash flow was $635,602, against preferred dividends of $3,471,250 and $596,590 of bond interest.

Who gets paid before whom

The preferred stock is counted outside liabilities because holders can redeem it, and the redeemable stock plus liabilities of $63,307,381 exceed assets by the $8,390,431 deficit (our arithmetic). The deficit was $9,927,842 at December 31, 2025 and $8,152,504 at December 31, 2024, because preferred dividends of $3,471,250 and $2,236,493 exceeded net income of $2,139,824 and $554,133 in those years. It narrowed in the first half of 2026 only because the OREO gain lifted net income above the $2,055,956 of dividends, leaving $1,530,046 for the common stockholder. The preferred stock has a lock-up of four years for Class A and three years for Classes B, C and D, and early redemptions carry a penalty.

The Regulation A circular says the bonds “will rank pari-passu to any issued or unissued Preferred Stock or other Series B Bonds” and that the bonds rank above common stock. The 2025 annual report adds that the Regulation D bonds are “structurally subordinated to any secured credit facilities or warehouse lines.” So a bondholder is a general unsecured creditor who shares with $48.1 million of preferred, and who stands behind the $7.5 million line and the $1,983,000 term loan, which are secured by the company's loans and properties (our reading of the order of claims).

The bond classes and what they cost the company

At those coupons the bonds cost about $1,357,040 a year in interest, an average of 9.8%, and the preferred dividends of $2,055,956 for six months annualize to about $4,111,912, together about $5,468,952 a year (our arithmetic). Total revenues for six months were $2,661,279. Certain Class D5 bonds also carry a profit-sharing feature worth 10% of excess distributable cash otherwise allocable to common stockholders, payable only if the board declares a distribution.

The bond balance rose from $9,967,000 of Class D5 and E5 bonds at December 31, 2025 to $13,812,000, up 38.6% (our arithmetic), and the 1-SA says the board approved a plan on April 15, 2026 to discontinue correspondent lending and closed the warehouse line that funded it. The Regulation A circular allows a bondholder to leave early only in hardship cases, at a price of $800 per $1,000 bond, or on death or disability at $1,000 plus accrued interest, and it says a holder “shall be required to hold their Bond until maturity.” Redemption of preferred and bonds is also limited by a 10% quarterly cap in the circular.

The property book that now carries the company

Held-for-use buildings and land rose from $9.5 million to $22.9 million in six months. Depreciation of $184,447 started this year. Those are properties the company plans to operate, not just flip, and the filing says OREO is not depreciated because it is held for sale.

The market commentary in the 1-SA is candid about the other side: “we have seen a clear uptick in defaults among business-purpose non-performing loans in our portfolio” and capital raising across private credit has slowed, “and we have felt some of that same headwind in our own capital raising.” It adds that “continued deterioration in any of these areas” could affect the ability to make monthly distributions.

Events after the balance sheet date

• Borrower claim. Supplement No. 2 to the offering circular, dated September 17, 2026, says the company settled a borrower claim on August 24, 2026 for approximately $1,875,000, including $285,000 paid by insurance, over a loan of more than $6 million, without admission of liability, and the suit was dismissed with prejudice. Net of insurance that is $1,590,000 (our arithmetic), or 25.6% of the June 30 cash (our arithmetic).
• Term loan. Secured by 13 properties, $1,983,000 at a fixed 7.06%, maturing September 9, 2031, to fund more loans or properties.
• Revolving line. $7,500,000 signed May 28, 2026 at the lender's prime rate plus 0.500% with a floor of 6.750%, secured by individual loans or properties. No advance had been requested at June 30, 2026. The exhibit list names the lender as Time Bank; the MD&A text refers to the Bank of America published prime rate as the index.

What a reader can do with this

• Identify your security. Series A preferred, Regulation A Class A1 to B7 bond or private Class D5 or E5 bond: they have different coupons, minimums, lock-ups and, for the private ones, no registration. The class is on your subscription agreement.
• Read the cash flow statement before the income statement. Profit here is mostly a valuation. The cash lines are Net cash used in operating activities and the loan principal repayments that funded the payouts.
• Track the fair-value risk. The gain depends on values at the date of transfer. Look for OREO write-downs in the next Form 1-K, which for fiscal 2026 would be due by April 30, 2027.
• Compare with other note and bond issuers. For how this structure sits beside other Regulation A debt, see our Regulation A real estate offerings tracker, real estate bonds guide, real estate notes guide and the Bequest Bonds I page, another non-performing-loan bond issuer.
• Ask someone who sees your whole position. How much of a portfolio sits in one unsecured, illiquid issuer, and what a loss would do to your taxes, is not something a filing can answer.

FAQ

Sources: CWS Investments Inc. (CIK 1920508) Form 1-SA for the period ended June 30, 2026, accession 0001213900-26-104622, filed September 29, 2026; Form 1-K for 2025, 0001213900-26-050467, filed May 1, 2026; Form 1-A/A offering circular dated February 11, 2026, 0001213900-26-014979; Rule 253(g)(2) Supplement No. 2, 0001213900-26-100666, September 17, 2026; SEC EDGAR filing index for the qualification date. Percentages, differences, annualized figures and the share calculations are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.