Advanced Flower Capital Inc. 10-Q

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Unregistered Sales of Equity Securities There were no unregistered sales of equity securities during the three months ended March 31, 2021. Use of Proceeds On March 18, 2021, the SEC declared effective our registration statement on Form S-11 (Registration No. 333-251762) (the “Registration Statement”) with respect to our IPO. On March 23, 2021, we completed our IPO of 6,250,000 shares of our common stock at a price of $19.00 per share, raising $118.8 million in gross proceeds. JMP Securities, Ladenburg Thalmann and Seaport Global Securities served as joint book-running managers and Lake Street served as co-manager. The underwriters also exercised their over-allotment option to purchase up to an additional 937,500 shares of common stock at a price of $19.00 per share, which was completed on March 26, 2021, raising $17.8 million in additional gross proceeds. The offering commenced on March 19, 2021 and did not terminate before all of the securities registered in the Registration Statement were sold. We received net proceeds of approximately $123.9 million from our IPO, including through the exercise of the over-allotment by the underwriters. The underwriting commissions were $8.3 million and $1.2 million, from the closing of the IPO and the over-allotment, respectively. We incurred approximately $3.1 million of expenses in connection with the IPO. All of the underwriting discounts and other expenses were direct or indirect payments to persons other than: (i) our directors, officers or any of their associates; (ii) persons owning ten percent (10%) or more of our common stock; or (iii) our affiliates. As of the date of the quarterly report we have used $52.1 million of the net proceeds to fund loans related to new commitments since the IPO and $3.9 million of the net proceeds to fund previously unfunded commitments. We intend to use the balance of the net proceeds (i) to fund loans related to unfunded commitments to existing borrowers, (ii) to originate and participate in commercial loans to companies operating in the cannabis industry that are consistent with our investment strategy and (iii) for working capital and other general corporate purposes. Until appropriate investments can be identified, we may invest this balance in interest-bearing, short-term investments, including money market accounts or funds, commercial mortgage-backed securities and corporate bonds, which are consistent with the Company’s intention to qualify as a REIT and to maintain our exclusion from registration under the Investment Company Act. None of the proceeds were used to make payments to: (i) our directors, officers or any of their associates; (ii) persons owning ten percent (10%) or more of our common stock; or (iii) our affiliates. There has been no material change in the use of proceeds as described in the Final Prospectus. Repurchases of Common Stock There were no issuer repurchases of common stock during the quarter ended March 31, 2021. 35 Table of Contents Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable.