What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-05-11 · 548 added, 389 removed, 256 unchanged (79% of the section changed)

2 unchanged sentences

BALANCE SHEETS

March 31, 2021

June 30, 2021

December 31, 2020

Loans held for investment at fair value (cost of $48,833,111 and $46,994,711 at March 31, 2021 and December 31, 2020, respectively, net)

Loans held for investment at fair value (cost of $ 43,916,537 and $ 46,994,711 at June 30, 2021 and December 31, 2020, respectively, net)

Loans held for investment at carrying value

7 unchanged sentences

Current expected credit loss reserve

Accrued management fees

Accrued management and incentive fees

Accrued direct administrative expenses

3 unchanged sentences

Stockholders' Equity

Preferred stock, par value $0.01 per share, 10,000 shares authorized at March 31, 2021 and December 31, 2020 and 125 shares issued and outstanding at March 31, 2021 and December 31, 2020

Common stock, par value $0.01 per share, 25,000,000 and 15,000,000 shares authorized at March 31, 2021 and December 31, 2020, respectively, and 13,366,877 and 6,179,392 shares issued and

outstanding at March 31, 2021 and December 31, 2020, respectively

Preferred stock, par value $ 0.01 per share, 10,000 shares authorized at June 30, 2021 and December 31, 2020 and 125 shares issued and outstanding at June 30, 2021 and December 31, 2020

Common stock, par value $ 0.01 per share, 25,000,000 and 15,000,000

shares authorized at June 30, 2021 and December 31, 2020, respectively, and 16,116,877 and 6,179,392 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in-capital

4 unchanged sentences

AFC GAMMA, INC.

STATEMENT OF OPERATIONS

STATEMENTS OF OPERATIONS

For the three

March 31, 2021

Interest Income

Total revenue

Management and incentive fees, net (less rebate of $237,743)

General and administrative expense

Management and incentive fees, net (less rebate of $ 182,707 and $ 420,450 , respectively)

General and administrative expenses

Stock-based compensation

13 unchanged sentences

AFC GAMMA, INC.

STATEMENT OF STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2021

STATEMENTS OF STOCKHOLDERS’ EQUITY

Three months ended June 30, 2021

Additional Paid-

Stockholders'

Balance at March 31, 2021

Issuance of common stock, net of offering cost

Stock-based compensation

Dividends declared and paid on common shares ($ 0.38 per share)

Dividends declared and paid on preferred shares ($ 60 per share)

Balance at June 30 , 2021

months ended June 30, 2021

Additional Paid-

Stockholders'

Balance at December 31, 2020

2 unchanged sentences

Dividends declared and paid on common shares ($ 0.74 per share)

Balance at March 31, 2021 (unaudited)

Dividends declared and paid on preferred shares ($ 60 per share)

Balance at June 30 , 2021

(See accompanying notes to the Financial Statements)

1 unchanged sentence

STATEMENT OF CASH FLOWS

For the three

March 31, 2021

June 30, 2021

Operating activities:

27 unchanged sentences

Interest reserve withheld from funding of loan

Sale of Assigned Rights

Supplemental information:

4 unchanged sentences

NOTES TO FINANCIAL STATEMENTS

As of March 31, 2021

As of June 30, 2021

AFC Gamma, Inc.

(the “Company” or “AFCG”) is a commercial real estate (“CRE”) finance company primarily engaged in originating, structuring, and underwriting senior secured loans and other

types of loans.

(the “Company” or

“AFCG”) is a commercial real estate (“CRE”) finance company primarily engaged in originating, structuring, and underwriting senior secured loans and other types of loans.

The Company was formed and commenced operations on July 31, 2020.

The Company is a Maryland corporation and completed its initial public offering (the “IPO”) in March 2021.

The Company is externally managed by AFC Management,

LLC (“AFC Management” or the Company’s “Manager”), a Delaware limited liability company, pursuant to the terms of a management agreement (as amended, the “Management Agreement”).

The Company operates as one operating segment and is primarily focused on financing senior secured loans and other types of loans for established cannabis industry operators in states where

medical and /or adult use cannabis is legal.

These loans are generally held for investment and are secured, directly or indirectly, by real estate, equipment, licenses and/or other assets of borrowers depending on the applicable laws and

regulations governing such borrowers.

The Company intends to elect to be taxed as a real estate investment trust (“REIT”) for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with

its taxable year ended December 31, 2020.

The Company generally will not be subject to United States federal income taxes on its REIT taxable income as long as it annually distributes all of its REIT taxable income prior to the deduction for

dividends paid to stockholders and complies with various other requirements as a REIT.

Company is a Maryland corporation and completed its initial public offering (the “IPO”) in March 2021.

The Company is externally managed by AFC Management, LLC (“AFC Management” or the Company’s “Manager”), a Delaware limited liability

company, pursuant to the terms of a management agreement (as amended, the “Management Agreement”).

The Company operates as one operating segment and is primarily focused on financing senior secured loans and other types of loans for established cannabis industry

operators in states where medical and/or adult use cannabis is legal.

These loans are generally held for investment and are secured, directly or indirectly, by real estate, equipment, licenses and/or other assets of borrowers depending on the

applicable laws and regulations governing such borrowers.

The Company intends to elect to be taxed as a real estate

investment trust (“REIT”) for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2020.

The Company generally will not be subject to

United States federal income taxes on its REIT taxable income as long as it annually distributes all of its REIT taxable income prior to the deduction for dividends paid to stockholders and complies with various other requirements as a REIT.

SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim financial statements should be read in conjunction with the audited financial statements and the related management's discussion and analysis of financial condition and results of

operations included in the Company's final prospectus relating to our IPO filed with the Securities and Exchange Commission (“SEC”) in accordance with Rule 424(b) of the Securities Act of 1933, as amended (the “Securities Act”) on March 19, 2021

(the “Final Prospectus”).

Refer to Note 2 to the Company’s financial statements in the Final Prospectus for a description of the Company’s significant accounting policies.

The Company has included disclosure below

regarding basis of presentation and other accounting policies that (i) are required to be disclosed quarterly, (ii) have material changes or (ii) the Company views as critical as of the date of this report.

The accompanying unaudited interim financial statements

should be read in conjunction with the audited financial statements and the related management's discussion and analysis of financial condition and results of operations included in the Company's final prospectus relating to our follow-on

public offering filed with the Securities and Exchange Commission (“SEC”) in accordance with Rule 424(b) of the Securities Act of 1933, as amended (the “Securities Act”) on June 24, 2021 (the “Final Prospectus”).

Refer to Note 2 to the Company’s financial

statements in the Final Prospectus for a description of the Company’s significant accounting policies.

The Company has included disclosure below regarding basis of presentation and other accounting policies that (i) are required to be disclosed

quarterly, (ii) have material changes or (ii) the Company views as critical as of the date of this report.

Basis of Presentation

The accompanying unaudited interim financial statements and related notes have been prepared on the accrual basis of accounting in conformity with United States generally accepted accounting principles (“GAAP”) and

in conformity with the rules and regulations of the SEC applicable to interim financial information.

These unaudited interim financial statements reflect all adjustments and reclassifications that, in the opinion of management, are considered

necessary for a fair statement of the balance sheets, statement of operations, statement of stockholders’ equity, and statement of cash flows for the periods presented.

The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2021.

The accompanying unaudited interim financial statements and related notes have

been prepared on the accrual basis of accounting in conformity with United States generally accepted accounting principles (“GAAP”) and in conformity with the rules and regulations of the SEC applicable to interim financial information.

unaudited interim financial statements reflect all adjustments and reclassifications that, in the opinion of management, are considered necessary for a fair statement of the balance sheets, statements of operations, statements of stockholders’

equity, and statement of cash flows for the periods presented.

The current period’s results of operations will not

necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2021.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures.

Actual results could

differ from those estimates.

Significant estimates include the valuation of investments.

The spread of a novel strain of coronavirus (“COVID-19”) has caused significant business disruptions in the United States beginning in the first quarter of 2020 and has resulted in governmental authorities

implementing numerous measures to try to contain the virus, such as quarantines, shelter-in-place or total lock-down orders and business imitations and shutdowns (subject to exceptions for certain “essential” operations and businesses).

course of the COVID-19 pandemic, medical cannabis companies have been deemed “essential” by 29 states administering shelter-in-place orders and adult use cannabis has been deemed “essential” in eight of those states.

Consequently, the impact of the

COVID-19 pandemic and the related regulatory and private sector response on our financial and operating results for the period ended March 31, 2021 was somewhat mitigated as all of our borrowers were permitted to continue to operate during this

The preparation of financial statements in conformity with GAAP requires management to make

estimates and assumptions that affect certain reported amounts and disclosures.

Actual results could differ from those estimates.

Significant estimates include the valuation of loans held for investment at fair value.

The spread of a novel strain of coronavirus (“COVID-19”) has caused significant business disruptions

in the United States beginning in the first quarter of 2020 and has resulted in governmental authorities implementing numerous measures to try to contain the virus, such as quarantines, shelter-in-place or total lock-down orders and business

limitations and shutdowns (subject to exceptions for certain “essential” operations and businesses).

Over the course of the COVID-19 pandemic, medical cannabis companies have been deemed “essential” by almost all states with legalized cannabis

and stay-at-home orders.

Consequently, the impact of the COVID-19 pandemic and the related regulatory and private sector response on our financial and operating results for the period ended June 30, 2021 was somewhat mitigated as all of our

borrowers were permitted to continue to operate during this pandemic.

Regardless, the full extent of the economic impact of the business disruptions caused by COVID-19 is uncertain.

The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative

pressure in financial markets.

The global impact of the outbreak has been rapidly evolving, and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel.

a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including the regulated cannabis industry.

Although some of these measures have been lifted or scaled back, a recent resurgence of COVID-19 in

certain parts of the world, including the United States, may lead to more restrictions to reduce the spread of COVID-19.

The extent of any effect that these disruptions may have on the operations and financial performance of the Company will depend

on future developments, including possible impacts on the performance of the Company’s loans, general business activity, and ability to generate revenue, which cannot be determined.

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated (“ASU”) No.

The outbreak of COVID-19 has severely impacted global economic

activity and caused significant volatility and negative pressure in financial markets.

The global impact of the outbreak has been rapidly evolving, and many countries, including the United States, have reacted by instituting quarantines,

mandating business and school closures and restricting travel.

As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including the regulated cannabis industry.

Although some of these measures

have been lifted or scaled back, a recent resurgence of COVID-19 in certain parts of the world, including the United States, has resulted in the re-imposition of certain restrictions and may lead to more restrictions to reduce the spread of

The extent of any effect that these disruptions may have on the operations and financial performance of the Company will depend on future developments, including possible impacts on the performance of the Company’s loans, general

business activity, and ability to generate revenue, which cannot be determined.

Recent Accounting

Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued

Accounting Standards Updated (“ASU”) No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on

Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to

contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

2020-04 is effective for all

entities as of March 12, 2020 through December 31, 2022.

The Company is currently evaluating the impact of adopting this ASU on its financial statements.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts,

hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate

(“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company is currently evaluating the impact of

adopting this ASU on its financial statements.

In January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic

Scope, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge

accounting apply to derivatives that are affected by the discounting transition.

2021-01is effective immediately for all entities.

An entity may elect to apply the amendments on a full retrospective basis as of any date from the

beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update,

up to the date that financial statements are available to be issued.

If an entity elects to apply any of the amendments for an eligible hedging relationship, any adjustments as a result of those elections must be reflected as of the date the

entity applies the election.

The amendments do not apply to contract modifications made after December 31, 2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in

periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship (including periods

after December 31, 2022).

The Company is currently evaluating the impact, if any, of this ASU on its financial statements.

Scope, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

2021-01 is effective

immediately for all entities.

An entity may elect to apply the amendments on a full retrospective basis as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or on a prospective basis to new

modifications from any date within an interim period that includes or is subsequent to the date of the issuance of a final update, up to the date that financial statements are available to be issued.

If an entity elects to apply any of the

amendments for an eligible hedging relationship, any adjustments as a result of those elections must be reflected as of the date the entity applies the election.

The amendments do not apply to contract modifications made after December 31,

2022, new hedging relationships entered into after December 31, 2022, and existing hedging relationships evaluated for effectiveness in periods after December 31, 2022, except for hedging relationships existing as of December 31, 2022, that

apply certain optional expedients in which the accounting effects are recorded through the end of the hedging relationship (including periods after December 31, 2022).

The Company is currently evaluating the impact, if any, of this ASU on its

financial statements.

In October 2020, the FASB issued ASU No.

2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs, which is an update to clarify that an entity should reevaluate whether

a callable debt security is within the scope of 310-20-35-33 for each reporting period.

2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs, which is an update to clarify that an entity should reevaluate whether a callable debt security is within the scope of 310-20-35-33 for each

reporting period.

2020-08 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

Early application is not permitted.

For all other entities, the amendments in ASU No.

For all other entities, the

amendments in ASU No.

2020-08 are effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.

Early application is permitted for all other entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

All entities should apply the amendments in this update on a prospective basis as of the

beginning of the period of adoption for existing or newly purchased callable debt securities.

Early application is permitted for all other entities for fiscal years,

and interim periods within those fiscal years, beginning after December 15, 2020.

All entities should apply the amendments in this update on a prospective basis as of the beginning of the period of adoption for existing or newly purchased

callable debt securities.

The Company has adopted this new standard on January 1, 2021.

The adoption of this standard did not have a material impact on the Company’s financial

The adoption of this standard did not have a material impact on the Company’s financial statements.

LOANS HELD FOR INVESTMENT AT FAIR VALUE

As of March 31, 2021 and December 31, 2020, the Company’s portfolio included four loans held at fair value.

The aggregate originated commitment under these loans was approximately $62.4 million and $59.9 million,

respectively, and outstanding principal was approximately $52.2 million and $50.8 million, respectively, as of March 31, 2021 and December 31, 2020.

For the three months ended March 31, 2021, the Company funded approximately $1.0 million of

outstanding principal.

As of March 31, 2021 and December 31, 2020, approximately 0% and 6.0%, respectively, of the Company’s loans held at fair value have floating interest rates.

As of December 31, 2020, these floating rates were subject to LIBOR

floors, with a weighted average floor of 2.5%, calculated based on loans with LIBOR floors.

As of June 30, 2021 and December 31, 2020,

the Company’s portfolio included three and four loans held at fair value, respectively.

The aggregate originated commitment under these loans was approximately $ 47.4 million and $ 59.9 million, respectively, and outstanding principal was

approximately $ 46.7 million and $ 50.8

million, respectively, as of June 30, 2021 and December 31, 2020.

For the six months ended June 30, 2021, the Company funded approximately $ 7.7

million of outstanding principal and had repayments of approximately $ 12.6 million.

As of June 30, 2021 and December 31, 2020,

approximately 0 % and 6.0 %,

respectively, of the Company’s loans held at fair value have floating interest rates.

As of December 31, 2020, these floating rates were subject to LIBOR floors, with a weighted average floor of 2.5 %, calculated based on loans with LIBOR floors.

References to LIBOR or “L” are to 30 -day LIBOR (unless otherwise specifically stated).

The following tables summarize the Company’s loans held at fair value as of March 31, 2021 and December 31, 2020:

As of March 31, 2021

The following tables

summarize the Company’s loans held at fair value as of June 30, 2021 and December 31, 2020:

As of June 30, 2021

Fair Value (2)

13 unchanged sentences

Total loans held at fair value

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted purchase discount, deferred loan fees and loan origination costs.

Refer to Footnote 14.

Weighted average remaining life is calculated based on the fair value of the loans as of March 31, 2021 and December 31, 2020.

The following table presents changes in loans held at fair value as of and for the three months ended March 31, 2021:

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted

purchase discount, deferred loan fees and loan origination costs.

Refer to Footnote 14 to our unaudited financial statements.

Weighted average remaining life is calculated based on the fair value of the loans as of June 30, 2021 and December 31,

The following table presents changes in loans held at fair value as of and for

the six months ended June 30, 2021 :

Original Issue

2 unchanged sentences

Change in unrealized gains / (losses) on loans at fair value, net

Loan repayments

Loan amortization payments

Accretion of original issue discount

Total loans held at fair value at March 31, 2021

A more detailed listing of the Company’s loans held at fair value portfolio based on information available as of March 31, 2021 is as follows:

Total loans held at fair value at June 30, 2021

A more detailed listing of the Company’s

loans held at fair value portfolio based on information available as of June 30, 2021 is as follows:

Collateral Location

3 unchanged sentences

AZ, MI, MD, MA

Of Public Co.

A - Real Estate Loan

Total loans held at fair value

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount (“OID”) and loan origination costs.

Refer to Footnote 14.

Certain loans are subject to contractual extension options and may be subject to performance based or other conditions as stipulated in the loan agreement.

Actual maturities may differ from contractual maturities stated herein as certain

borrowers may have the right to prepay with or without paying a prepayment penalty.

The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

The difference between the Carrying Value and the Outstanding Principal amount

of the loans consists of unaccreted original issue discount (“OID”) and loan origination costs.

Refer to Footnote 14 to our unaudited financial statements.

Certain loans are subject to contractual extension options and may be subject to performance based or other conditions as

stipulated in the loan agreement.

Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty.

The Company may also extend

contractual maturities and amend other terms of the loans in connection with loan modifications.

I/O = interest only, P/I = principal and interest.

P/I loans may include interest only periods for a portion of the loan term.

P/I loans may include interest only periods for a

portion of the loan term.

Base interest rate of 13 % and payment-in-kind (“PIK”) interest rate of 4 %.

1 unchanged sentence

Base interest rate of 12 % and PIK interest rate of 2 %.

Loan to Subsidiary of Public Company C is a $15,000,000 aggregate loan commitment with an initial funding of $3,000,000 at a base interest rate of 13.5% and PIK interest rate of 3% and subsequent advances of $9,000,000 at a base interest

The weighted average interest rate is 18.0% at March 31, 2021.

C = Cultivation Facilities, D = Dispensaries.

LOANS HELD FOR INVESTMENT AT CARRYING VALUE

As of March 31, 2021 and December 31, 2020, the Company’s portfolio included four and three loans, respectively, held at carrying value.

The aggregate originated commitment under these loans was approximately $65

million and $44 million, respectively, and outstanding principal was approximately $42.9 million and $33.9 million, respectively, as of March 31, 2021 and December 31, 2020.

During the three months ended March 31, 2021, the Company funded

approximately $8.9 million of outstanding principal.

As of March 31, 2021 and December 31, 2020, approximately 49% and 35%, respectively, of the Company’s loans held at carrying value have floating interest rates.

These floating rates are subject

to LIBOR floors, with a weighted average floor of 1% and 1%, respectively, calculated based on loans with LIBOR floors.

As of June 30, 2021

and December 31, 2020, the Company’s portfolio included ten and three loans, respectively, held at carrying value.

The aggregate originated commitment under these loans was approximately $ 136.3 million and $ 44.0 million, respectively, and outstanding principal was

approximately $ 114.4 million and $ 33.9

million, respectively, as of June 30, 2021 and December 31, 2020.

For the six months ended June 30, 2021, the Company funded approximately $ 79.9

million of outstanding principal.

As of June 30, 2021 and December 31, 2020, approximately 44 % and 35 %, respectively, of the Company’s loans held at carrying value have floating interest rates.

These floating rates are subject to LIBOR floors, with

a weighted average floor of 1 %, calculated based on loans with LIBOR floors.

References to LIBOR or “L” are to 30 -day LIBOR (unless otherwise specifically stated).

The following tables summarize the Company’s loans held at carrying value as of March 31, 2021 and December 31, 2020:

As of March 31, 2021

The following tables

summarize the Company’s loans held at carrying value as of June 30, 2021 and December 31, 2020:

As of June 30, 2021

Principal (1)

Original Issue

Weighted Average

4 unchanged sentences

Principal (1)

Original Issue

Weighted Average

2 unchanged sentences

Total loans held at carrying value

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount and loan origination costs.

Weighted average remaining life is calculated based on the carrying value of the loans as of March 31, 2021 and December 31, 2020.

The following table presents changes in loans held at carrying value as of and for the three months ended March 31, 2021:

The difference between the Carrying Value and the Outstanding Principal amount of the loans

consists of unaccreted original issue discount and loan origination costs.

Weighted average remaining life is calculated based on the carrying value of the loans as of June

30, 2021 and December 31, 2020.

The following table

presents changes in loans held at carrying value as of and for the six months ended June 30, 2021:

Original Issue

2 unchanged sentences

Accretion of original issue discount

Total loans held at carrying value at March 31, 2021

A more detailed listing of the Company’s loans held at carrying value portfolio based on information available as of March 31, 2021 is as follows:

Total loans held at carrying value at June 30, 2021

A more detailed listing of the Company’s

loans held at carrying value portfolio based on information available as of June 30, 2021 is as follows:

Collateral Location

3 unchanged sentences

of Public Co.

of Private Co.

OH, MA, MI, MD,

of Private Co.

Total loans held at carry value

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted purchase discount, deferred loan fees and loan origination costs.

Certain loans are subject to contractual extension options and may be subject to performance based or other conditions as stipulated in the loan agreement.

Actual maturities may differ from contractual maturities stated herein as certain

borrowers may have the right to prepay with or without paying a prepayment penalty.

The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

The difference between the Carrying Value and the Outstanding Principal amount of the loans

consists of unaccreted purchase discount, deferred loan fees and loan origination costs.

Certain loans are subject to contractual extension options and may be subject to performance based

or other conditions as stipulated in the loan agreement.

Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty.

The Company may

also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

I/O = interest only, P/I = principal and interest.

P/I loans may include interest only periods for a portion of the loan term.

Base interest rate of 12% plus LIBOR (LIBOR floor of 1%) and PIK interest rate of 4%.

Base interest rate of 13% and PIK interest rate of 2%.

P/I loans may include interest only periods for a portion of the loan

C = Cultivation Facilities,

D = Dispensaries.

Base interest rate of 12 %

Base interest rate of 12% plus LIBOR (LIBOR floor of 1%) and PIK interest rate of 4%.

C = Cultivation Facilities, D = Dispensaries

plus LIBOR (LIBOR floor of 1 %) and PIK interest rate of 4 %.

Base interest rate of 13 %

and PIK interest rate of 2 %.

Base interest rate of 12.9 %.

Base interest rate of 12 %

plus LIBOR (LIBOR floor of 1 %) and PIK interest rate of 4 %.

interest rate of 13 % and PIK interest rate of 4 %.

interest rate of 13 %.

interest rate of 12 % plus LIBOR (LIBOR floor of 1 %) and PIK interest rate of 4 %.

interest rate of 9.8 %.

interest rate of 15 %.

interest rate of 13 %.

LOAN RECEIVABLE AT CARRYING VALUE

As of March 31, 2021 and December 31, 2020, the Company’s portfolio included one loan receivable at carrying value.

The originated commitment under this loan was approximately $4 million and outstanding principal was

approximately $3.2 million and $3.4 million as of March 31, 2021 and December 31, 2020, respectively.

During the three months ended March 31, 2021, the Company received repayments of $0.1 million of outstanding principal.

The following table presents changes in loans receivable as of and for the three months ended March 31, 2021:

As of June 30, 2021 and December 31, 2020,

the Company’s portfolio included one loan receivable at carrying value.

The originated commitment under this loan was

approximately $ 4.0 million and outstanding principal was approximately $ 3.0 million and $ 3.4 million as of June 30, 2021 and December

31, 2020, respectively.

During the six months ended June 30, 2021, the Company received repayments of $ 337,741 of outstanding

The following table presents changes in

loans receivable as of and for the six months ended June 30, 2021:

Original Issue

Carrying Value

Total loans receivable at carrying value at December 31, 2020

1 unchanged sentence

Accretion of original issue discount

Total loans receivable at carrying value at March 31, 2021

Total loans receivable at carrying value at June 30 ,

CURRENT EXPECTED CREDIT LOSSES

The Company estimates its current expected credit losses (“CECL”) on both the outstanding balances and unfunded commitments on loans held for investment and requires consideration of a broader

range of historical experience adjusted for current conditions and reasonable and supportable forecast information to inform credit loss estimates (the “CECL Reserve”) using a model that considers multiple datapoints and methodologies that may

include the likelihood of default and expected loss given default for each individual loan, discounted cash flows (“DCF”), and other inputs which may include the risk rating of the loan, how recently the loan was originated compared to the

measurement date, and expected prepayment if applicable.

Calculation of the CECL Reserve requires loan specific data, which includes fixed charge coverage ratio, loan-to-value, property type and geographic location.

Estimating the CECL Reserve

also requires significant judgment with respect to various factors, including (i) the appropriate historical loan loss reference data, (ii) the expected timing of loan repayments, (iii) calibration of the likelihood of default to reflect the risk

characteristics of the Company’s loan portfolio and (iv) the Company’s current and future view of the macroeconomic environment.

The Company may consider loan-specific qualitative factors on certain loans to estimate its CECL Reserve, which may

include (i) whether cash from the borrower’s operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan and (iii) the liquidation value of collateral.

loans where we have deemed the borrower/sponsor to be experiencing financial difficulty, we may elect to apply a practical expedient in which the fair value of the underlying collateral is compared to the amortized cost of the loan in determining

a Specific CECL Allowance.

In order to estimate the future expected loan losses relevant to the Company’s portfolio, the Company may consider historical market loan loss data provided by a third-party data service.

The third party’s loan database

includes historical loss data for commercial mortgage-backed securities, or CMBS which the Company believes is a reasonably comparable and available data set to its type of loans.

The Company utilized macroeconomic data that reflects a current

however, the short and long-term economic implications of the COVID-19 pandemic and its financial impact on the Company are highly uncertain.

The CECL Reserve takes into consideration the macroeconomic impact of the COVID-19 pandemic

on CRE properties and is not specific to any loan losses or impairments on the Company’s loans held for investment.

As of March 31, 2021 and December 31, 2020, the Company’s CECL Reserve for its loans held at carrying value and loans receivable at carrying value is $531,497 and $465,397, respectively, or 125

and 132 basis points, respectively, of the Company’s total loans held at carrying value and loans receivable at carrying value of $42,393,791 and $35,185,294, respectively, and is bifurcated between the current expected credit loss reserve

(contra-asset) related to outstanding balances on loans held at carrying value and loans receivable at carrying value of $248,317 and $404,860, respectively, and a liability for unfunded commitments of $283,180 and $60,537, respectively.

liability was based on the unfunded portion of the loan commitment over the full contractual period over which the Company is exposed to credit risk through a current obligation to extend credit.

Management considered the likelihood that funding

will occur, and if funded, the expected credit loss on the funded portion.

Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loans receivable at carrying value as of and for the three

months ended March 31, 2021 was as follows:

The Company estimates its current

expected credit losses (“CECL”) on both the outstanding balances and unfunded commitments on loans held for investment and requires consideration of a broader range of historical experience adjusted for current conditions and reasonable and

supportable forecast information to inform credit loss estimates (the “CECL Reserve”) using a model that considers multiple datapoints and methodologies that may include the likelihood of default and expected loss given default for each

individual loan, discounted cash flows (“DCF”), and other inputs which may include the risk rating of the loan, how recently the loan was originated compared to the measurement date, and expected prepayment if applicable.

Calculation of the

CECL Reserve requires loan specific data, which includes fixed charge coverage ratio, loan-to-value, property type and geographic location.

Estimating the CECL Reserve also requires significant judgment with respect to various factors,

including (i) the appropriate historical loan loss reference data, (ii) the expected timing of loan repayments, (iii) calibration of the likelihood of default to reflect the risk characteristics of the Company’s loan portfolio and (iv) the

Company’s current and future view of the macroeconomic environment.

The Company may consider loan-specific qualitative factors on certain loans to estimate its CECL Reserve, which may include (i) whether cash from the borrower’s operations is

sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan and (iii) the liquidation value of collateral.

For loans where we have deemed the borrower/sponsor to be

experiencing financial difficulty, we may elect to apply a practical expedient in which the fair value of the underlying collateral is compared to the amortized cost of the loan in determining a Specific CECL Allowance.

In order to estimate the

future expected loan losses relevant to the Company’s portfolio, the Company may consider historical market loan loss data provided by a third-party data service.

The third party’s loan database includes historical loss data for commercial

mortgage-backed securities, or CMBS which the Company believes is a reasonably comparable and available data set to its type of loans.

The Company utilized macroeconomic data that reflects a current recession;

however, the short and long-term

economic implications of the COVID-19 pandemic and its financial impact on the Company are highly uncertain.

The CECL Reserve takes into consideration the macroeconomic impact of the COVID-19 pandemic on CRE properties and is not specific to

any loan losses or impairments on the Company’s loans held for investment.

As of June 30, 2021 and December 31, 2020,

the Company’s CECL Reserve for its loans held at carrying value and loans receivable at carrying value is $ 1,177,283 and $ 465,397 , respectively, or 109 and 132 basis points, respectively, of the Company’s total loans held at carrying value and loans receivable at carrying value of $ 108,415,325 and $ 35,185,294 ,

respectively, and is bifurcated between the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value and loans receivable at carrying value of $ 701,143 and $ 404,860 , respectively, and a liability for

unfunded commitments of $ 476,140 and $ 60,537 ,

respectively.

The liability was based on the unfunded portion of the loan commitment over the full contractual period over which the Company is exposed to credit risk through a current obligation to extend credit.

Management considered the

likelihood that funding will occur, and if funded, the expected credit loss on the funded portion.

Activity related to

the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loans receivable at carrying value as of and for the three and six months ended June 30, 2021 was as follows:

Outstanding (1)

Balance at March 31, 2021

Provision for current expected credit losses

Balance at June 30, 2021

Outstanding (1)

Balance at December 31, 2020

Provision for current expected credit losses

Balance at March 31, 2021

As of March 31, 2021 and December 31, 2020, the CECL Reserve related to outstanding balances on loans at carrying value and loans receivable at carrying value is recorded within current expected credit

loss reserve in the Company's balance sheets.

As of March 31, 2021 and December 31, 2020, the CECL Reserve related to unfunded commitments on loans held at carrying value is recorded within other liabilities in the Company's balance sheets.

The Company continuously evaluates the credit quality of each loan by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors.

Risk factors include

property type, geographic and local market dynamics, physical condition, projected cash flow, loan structure and exit plan, loan-to-value ratio, fixed charge coverage ratio, project sponsorship, and other factors deemed necessary.

5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:

Balance at June 30, 2021

As of June 30, 2021 and December 31, 2020, the CECL Reserve related to outstanding balances on loans at

carrying value and loans receivable at carrying value is recorded within current expected credit loss reserve in the Company's balance sheets.

As of June 30, 2021 and December 31, 2020, the CECL Reserve related to unfunded commitments on loans

held at carrying value is recorded within other liabilities in the Company's balance sheets.

The Company continuously evaluates the credit quality of

each loan by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors.

Risk factors include property type, geographic and local market dynamics, physical condition, projected cash flow, loan structure and

exit plan, loan-to-value ratio, fixed charge coverage ratio, project sponsorship, and other factors deemed necessary.

Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are

defined as follows:

Very Low Risk

1 unchanged sentence

Impaired/Loss Likely

The risk ratings are primarily based on historical data as well as taking into account future economic conditions.

As of March 31, 2021, the carrying value, excluding the CECL Reserve, of the Company’s loans held at carrying value and loans receivable at carrying value within each risk rating by year of

origination is as follows:

The risk ratings are primarily based on historical data as

well as taking into account future economic conditions.

As of June 30, 2021, the carrying value, excluding the CECL

Reserve, of the Company’s loans held at carrying value and loans receivable at carrying value within each risk rating by year of origination is as follows:

INTEREST RECEIVABLE

The following tables summarize the interest receivable by the Company as of March 31, 2021 and December 31, 2020:

March 31, 2021

The following table summarize the interest

receivable by the Company as of June 30, 2021 and December 31, 2020:

June 30, 2021

December 31, 2020

1 unchanged sentence

PIK receivable

Unused fees receivable

Total interest receivable

INTEREST RESERVE

At March 31, 2021 and December 31, 2020, the Company had two and one loans, respectively, that included a loan funded interest reserve.

For the three months ended March 31, 2021, approximately $82 thousand of

interest income was earned and disbursed from the interest reserve.

The following table presents changes in interest reserve as of and for the three months ended March 31, 2021:

At June 30, 2021 and December 31, 2020, the Company had four and one loans, respectively,

that included a loan funded interest reserve.

For the three and six months ended June 30, 2021, $ 620,621 and $ 702,887 , respectively, of interest income was earned and disbursed from the interest reserve.

The following table

presents changes in interest reserve as of and for the three and six months ended June 30, 2021:

Three months ended

March 31, 2021

Initial reserves

June 30, 2021

Six months ended

June 30, 2021

Beginning reserves

Reserves disbursed

Total Interest reserve

The Company obtained a secured revolving credit loan (the “Revolving Loan”) from AFC Finance, LLC, an affiliate of the Company’s management.

The Revolving Loan has a loan commitment of $40,000,000 and bears

interest of 8% per annum, payable in cash in arrears.

The Company did not incur any fees or cost related to the origination of the Revolving Loan and the Revolving Loan does not have any unused fees.

The maturity date of the Revolving Loan is

the earlier of (i) July 31, 2021 and (ii) the date of the closing of any Refinancing Credit Facility (as defined below) in accordance with terms in the Revolving Loan agreement.

The Revolving Loan is secured by the assets of the Company.

three months ended March 31, 2021, the Company did not utilize its Revolving Loan and therefore no interest expense was incurred.

The Revolving Loan was amended in May 2021, see Note 17.

Subsequent Events.

Ending reserves

In July 2020, the Company obtained a secured revolving credit

loan (the “Revolving Loan”) from AFC Finance, LLC, an affiliate of the Company’s management.

The Revolving Loan had a loan commitment of $ 40,000,000

and had an interest rate of 8 % per annum, payable in cash in arrears.

The Company did not incur any fees or cost related to the

origination of the Revolving Loan and the Revolving Loan did not have any unused fees.

The maturity date of the Revolving Loan was the earlier of (i) July 31, 2021 and (ii) the date of the closing of any credit facility where the proceeds are incurred to refund, refinance or replace the Revolving Credit Agreement

(as defined below) with an aggregate principal amount equal to or greater than $ 50.0 million (any such financing, a “ Refinancing

Credit Facility ”) in accordance with terms of the credit agreement governing the Revolving Loan (the “Revolving Credit Agreement”) .

The Revolving Loan was secured by the assets of the Company.

On May 7, 2021, the Company amended the Revolving Credit Agreement from AFC Finance, LLC, an affiliate of

the Company’s management.

The amendment to the Revolving Credit Agreement increased the loan commitment from $ 40,000,000 to $ 50,000,000 , decreased the interest rate from 8 %

per annum to 6 % per annum, removed Gamma Lending Holdco LLC as a lender and extended the maturity date from July 31, 2021 to the earlier of (i) December 31, 2021

or (ii) the date of the closing of any Refinancing Credit Facility.

The Company did not incur any fees or cost related to the amendment of the Revolving Loan and the Revolving Loan does not have any unused fees.

For the three and six months

ended June 30, 2021, the Company has no t drawn on the Revolving Loan or incurred any fees or interest expense related to the

Revolving Loan.

COMMITMENTS AND CONTINGENCIES

As of March 31, 2021 and December 31, 2020, the Company had the following commitments to fund various senior term loans, equipment loans and bridge loans.

As of March 31, 2021

As of June 30, 2021 and

December 31, 2020, the Company had the following commitments to fund various senior term loans, equipment loans and bridge loans.

As of June 30, 2021

As of December 31, 2020

1 unchanged sentence

drawn commitments

( 163,721,408

Total undrawn commitments

The Company from time to time may be a party to litigation in the normal course of business.

As of March 31, 2021, the Company is not aware of any legal claims that could materially impact its business, financial

condition or results of operations.

We provide loans to established companies operating in the cannabis industry which involves significant risks, including the risk of strict enforcement of federal laws regarding the federal illegality of cannabis,

and lack liquidity, and we could lose all or part of any of our investments.

Our ability to grow or maintain our business depends on state laws pertaining to the cannabis industry.

New laws that are adverse to our portfolio companies may be enacted, and current favorable state or national

laws or enforcement guidelines relating to cultivation, production and distribution of cannabis may be modified or eliminated in the future, which would impede our ability to grow and could materially adversely affect our business.

Management’s plan to mitigate risks include monitoring the legal landscape as deemed appropriate.

Also, should a loan default or otherwise be seized, the Company may be prohibited from owning cannabis assets and

thus could not take possession of collateral, in which case the Company would look to sell the loan, which could result in the Company realizing a loss on the transaction.

The Company from time

to time may be a party to litigation in the normal course of business.

As of June 30, 2021, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.

The Company provides

loans to established companies operating in the cannabis industry which involves significant risks, including the risk of strict enforcement against the Company’s borrowers of the federal illegality of cannabis, the Company’s borrowers’ inability to renew or otherwise maintain

their licenses or other requisite authorizations for their cannabis operations, and such loans lack of

liquidity, and the Company could lose all or part of any of the Company’s loans .

The Company’s ability

to grow or maintain our business depends on state laws pertaining to the cannabis industry.

New laws that are adverse to the Company’s borrowers may be enacted, and current favorable state or national laws or enforcement guidelines relating to

cultivation, production and distribution of cannabis may be modified or eliminated in the future, which would impede the Company’s ability to grow and could materially adversely affect the Company’s business.

Management’s plan to

mitigate risks include monitoring the legal landscape as deemed appropriate.

Also, should a loan default or otherwise be seized, the Company may be prohibited from owning cannabis assets and thus could not take possession of collateral, in which

case the Company would look to sell the loan, which could result in the Company realizing a loss on the transaction.

STOCKHOLDERS’ EQUITY

Series A Preferred Stock

As of March 31, 2021 and December 31, 2020, the Company has authorized 10,000 preferred shares and issued 125 of the preferred shares designated as 12.0% Series A Cumulative Non-Voting Preferred Stock, par value

$0.01 per share (the “Series A Preferred Stock”).

The Series A Preferred Stock entitles the holders thereof to receive cumulative cash dividends at a rate per annum of 12.0% of the liquidation preference of $1,000 per share plus all accumulated and unpaid

dividends thereon.

The Company generally may not declare or pay, or set apart for payment, any dividend or other distribution on any shares of the Company’s stock ranking junior to the Series A Preferred Stock as to dividends, including the

Company’s common stock, or redeem, repurchase or otherwise make payments on any such shares, unless full, cumulative dividends on all outstanding shares of Series A Preferred Stock have been declared and paid or set apart for payment for all

past dividend periods.

The holders of the Series A Preferred Stock generally have no voting rights except in limited circumstances, including certain amendments to the Company’s charter and the authorization or issuance of equity securities

senior to or on parity with the Series A Preferred Stock.

The Series A Preferred Stock is not convertible into shares of any other class or series of our stock.

The Series A Preferred Stock is senior to all other classes and series of shares of

the Company’s stock as to dividend and redemption rights and rights upon the Company’s liquidation, dissolution and winding up.

Upon written notice to each record holder of the Series A Preferred Stock as to the effective date of redemption, the Company may redeem the shares of the outstanding Series A Preferred Stock at the Company’s

option, in whole or in part, at any time for cash at a redemption price equal to $1,000 per share, for a total of $125,000 for the 125 shares outstanding, plus all accrued and unpaid dividends thereon to and including the date fixed

As of June 30, 2021 and December 31, 2020, the Company has authorized 10,000 preferred shares and issued 125

of the preferred shares designated as 12.0 % Series A Cumulative Non-Voting Preferred Stock, par value $ 0.01 per share (the “Series A Preferred Stock”).

The Series A Preferred Stock entitles the holders thereof to receive

cumulative cash dividends at a rate per annum of 12.0 % of the liquidation preference of $ 1,000 per share plus all accumulated and unpaid dividends thereon.

The Company generally may not declare or pay, or set apart for payment,

any dividend or other distribution on any shares of the Company’s stock ranking junior to the Series A Preferred Stock as to dividends, including the Company’s common stock, or redeem, repurchase or otherwise make payments on any such

shares, unless full, cumulative dividends on all outstanding shares of Series A Preferred Stock have been declared and paid or set apart for payment for all past dividend periods.

The holders of the Series A Preferred Stock generally have

no voting rights except in limited circumstances, including certain amendments to the Company’s charter and the authorization or issuance of equity securities senior to or on parity with the Series A Preferred Stock.

Preferred Stock is not convertible into shares of any other class or series of our stock.

The Series A Preferred Stock is senior to all other classes and series of shares of the Company’s stock as to dividend and redemption rights and

rights upon the Company’s liquidation, dissolution and winding up.

Upon written notice to each record holder of the Series A Preferred

Stock as to the effective date of redemption, the Company may redeem the shares of the outstanding Series A Preferred Stock at the Company’s option, in whole or in part, at any time for cash at a redemption price equal to $ 1,000 per share, for a total of $ 125,000

for the 125 shares outstanding, plus all accrued and unpaid dividends thereon to and including the date fixed

for redemption, plus a redemption premium of $ 50 per share if the shares are redeemed on or before December 31, 2021.

Shares of the Series A Preferred Stock that are redeemed shall no longer be deemed outstanding shares of the Company and all

rights of the holders of such shares will terminate.

Shares of the Series A Preferred Stock that are redeemed shall no longer be deemed outstanding shares of the Company and all rights of the holders of such shares will terminate.

The Board of Directors of the Company (the “Board”) approved a seven -for-one stock split of the Company's common stock effective on January 25, 2021.

All common shares, stock options, and per

share information presented in the financial statements have been adjusted to reflect the stock split on a retroactive basis for all periods presented, including reclassifying an amount equal to the increase in par value of common stock from

additional paid-in capital.

All common shares, stock options, and per share information

presented in the financial statements have been adjusted to reflect the stock split on a retroactive basis for all periods presented, including reclassifying an amount equal to the increase in par value of common stock from additional paid-in

There was no change in the par value of the Company's common stock.

Upon consummation of the Company’s IPO, any stockholder that held fractional shares received cash in lieu of such fractional shares based on the public

offering price of the shares of the Company’s common stock at IPO.

Upon consummation of the Company’s IPO, any stockholder that held fractional shares received cash in lieu of such fractional shares based on the public offering

price of the shares of the Company’s common stock at IPO.

This resulted in the reduction of 15 shares issued and outstanding.

On March 23, 2021, the Company completed its IPO of 6,250,000 shares of its common stock at a price of $ 19.00 per share, raising $ 118,750,000 in gross proceeds.

The underwriters also exercised

their over-allotment option to purchase up to an additional 937,500 shares of the Company’s common stock at a price of $19.00 per share, which was completed on March 26, 2021, raising $17,812,500 in additional gross proceeds.

The underwriting

commissions of $8,312,500 and $1,246,875, respectively, are reflected as a reduction of additional paid-in capital on the statement of stockholders’ equity.

The Company incurred approximately $3,093,836 of expenses in connection with the IPO,

which is reflected as a reduction in additional paid-in capital.

underwriters also exercised their over-allotment option to purchase up to an additional 937,500 shares of the Company’s common

stock at a price of $ 19.00 per share, which was completed on March 26, 2021, raising $ 17,812,500 in additional gross proceeds.

The underwriting commissions of $ 8,312,500 and $ 1,246,875 , respectively, are reflected as a reduction

of additional paid-in capital on the statement of stockholders’ equity.

The Company incurred approximately $ 3,093,836 of

expenses in connection with the IPO, which is reflected as a reduction in additional paid-in capital.

The net proceeds to the Company totaled approximately $ 123,909,289 .

The Company intends to use the net proceeds of the IPO (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 the Company’s investment strategy and (iii) for working capital and other general corporate

Until appropriate investments can be identified, the Company 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 of 1940, as amended.

On June 28, 2021, the Company completed an offering of 2,750,000 shares of its common stock at a price of $ 20.50

per share, raising $ 56,375,000 in gross proceeds.

The underwriting commissions of $ 3,100,625 are reflected as a reduction of additional paid-in capital on the statement of stockholders’ equity.

The Company incurred approximately $ 701,989 of expenses in connection with the offering, which is reflected as a reduction in additional paid-in capital.

The net proceeds to

the Company totaled approximately $ 52,572,386 .

to the period ended June 30, 2021, the underwriters partially exercised their

over-allotment option to purchase 269,650 shares of the Company’s common stock at a price of $ 20.50 per share, which was completed on July 6, 2021, raising $ 5,527,825 in additional gross proceeds or $ 5,223,795 in net

proceeds after underwriting commissions of $ 304,030 , which is reflected as a reduction of additional paid-in capital on the

statement of stockholders’ equity.

The Company intends to use the net proceeds of the IPO and

additional offering (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 the Company’s

investment strategy and (iii) for working capital and other general corporate purposes.

Until appropriate investments can be identified, the Company 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

of 1940, as amended.

Equity Incentive Plan

The Company has established an equity incentive compensation plan (the “Plan”).

The Company’s Board authorized the adoption of the Plan (the “2020 Plan”) and approved stock option grants of 1,616,098 shares of common

stock as of March 31, 2021.

The Board or one or more committees appointed by the Board will administer the 2020 Plan.

The Plan authorizes stock options, stock appreciation rights, restricted stock, stock bonuses, stock units and other forms of

awards granted or denominated in the Company’s common stock or units of common stock.

The Company has established an equity incentive compensation plan (the

The Company’s Board authorized the adoption of the Plan (as amended, the “2020 Plan”) and approved stock option grants of 1,616,098

shares of common stock as of June 30, 2021.

The Board or one or more committees appointed by the Board administers the 2020 Plan.

The 2020 Plan authorizes stock options, stock appreciation rights, restricted stock, stock bonuses, stock units

and other forms of awards granted or denominated in the Company’s common stock or units of common stock.

The 2020 Plan retains flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances.

Any award may be structured to be

paid or settled in cash.

may be structured to be paid or settled in cash.

The Company currently intends to grant stock options to participants in the 2020 Plan, but it may also grant any other type of award available under the 2020 Plan in the future.

Persons eligible to receive awards under the

2020 Plan include officers or employees of the Company or any of its subsidiaries, directors of the Company, employees of the Manager and certain directors and consultants and other service providers to the Company or any of its subsidiaries.

The current maximum number of shares of the Company common stock that may be delivered pursuant to awards under the 2020 Plan (the “Share Limit”) equals 2,100,000 shares.

Shares that are subject to or underlie awards

that expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2020 Plan will not be counted against the Share Limit and will again be available for subsequent

awards under the 2020 Plan.

Shares that are exchanged by a participant or withheld by the Company as full or partial payment in connection with any award granted under the 2020 Plan, as well as any shares exchanged by a participant or withheld by

us to satisfy tax withholding obligations related to any award granted under the 2020 Plan, will not be counted against the Share Limit and will again be available for subsequent awards under the 2020 Plan.

To the extent that an award is settled in

cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the Share Limit and will again be available for subsequent awards under the 2020 Plan.

The exercise price of any options granted under the 2020 Plan will be at net asset value or greater;

provided, however, the exercise price will be at least equal to the market price of the underlying shares on the

The options granted under the 2020 Plan have an ordinary term of up to ten years.

eligible to receive awards under the 2020 Plan include officers or employees of the Company or any of its subsidiaries, directors of the Company, employees of the Manager and certain directors and consultants and other service providers to

the Company or any of its subsidiaries.

As of June 30, 2021, the maximum number of shares of the Company common stock that may be delivered pursuant to awards under the 2020 Plan (the “Share Limit”) equals 2,375,000 shares, which is an increase of 275,000 shares compared to

March 31, 2021 under the evergreen provision in the 2020 Plan in connection with the public offering of common stock by the Company in June 2021.

Subsequent to the period ended June 30, 2021, the Company issued an additional 269,650 shares of common stock to the underwriters in connection with their partial exercise of an over-allotment option, which increased the

Share Limit of the 2020 Plan by 26,965 under the evergreen provision in the 2020 Plan, for a total maximum Share Limit of 2,401,965 .

Shares that are subject to or underlie awards that expire or for any reason are cancelled or terminated, are forfeited, fail to vest,

or for any other reason are not paid or delivered under the 2020 Plan will not be counted against the Share Limit and will again be available for subsequent awards under the 2020 Plan.

Shares that are exchanged by a participant or withheld

by the Company as full or partial payment in connection with any award granted under the 2020 Plan, as well as any shares exchanged by a participant or withheld by us to satisfy tax withholding obligations related to any award granted under

the 2020 Plan, will not be counted against the Share Limit and will again be available for subsequent awards under the 2020 Plan.

To the extent that an award is settled in cash or a form other than shares, the shares that would have been

delivered had there been no such cash or other settlement will not be counted against the Share Limit and will again be available for subsequent awards under the 2020 Plan.

The exercise price of any options granted under the

2020 Plan will be at net asset value or greater;

provided, however, the exercise price will be at least equal to the market price of the underlying shares on the grant date.

The options granted under the 2020 Plan have an ordinary term of up

to ten years .

An option may either be an incentive stock option or a nonqualified stock option.

Options generally may not be transferred to third parties for value and

do not include dividend equivalent rights.

The following table summarizes the (i) non-vested options granted, (ii) vested options granted and (iii) forfeited options granted for the Company’s directors and officers and employees of the Manager as of March 31, 2021 and December 31, 2020:

March 31, 2021

Options generally may not be

transferred to third parties for value and do not include dividend equivalent rights.

The following table summarizes the (i) non-vested

options granted, (ii) vested options granted and (iii) forfeited options granted for the Company’s directors and officers and employees of the Manager as of June 30, 2021 and December 31, 2020:

June 30, 2021

December 31, 2020

The Company uses the Black-Scholes option pricing model to value stock options in determining the share-based compensation expense.

The Company uses the Black-Scholes option pricing model

to value stock options in determining the share-based compensation expense.

Forfeitures are recognized as they occur.

The risk-free interest rate is based on

The risk-free interest rate is based on the U.S.

Treasury yield curve in effect at the date of grant.

The expected dividend yield was based on the Company’s expected dividend yield at grant date.

Expected volatility is based on the estimated average volatility of similar companies due to

the lack of historical volatilities of the Company’s common stock.

The share-based compensation expense for the Company was approximately $1,599,115 for the three months ended March 31, 2021.

The following table presents the assumptions used in the option pricing model of options granted under the 2020 Plan:

The expected dividend

yield was based on the Company’s expected dividend yield at grant date.

Expected volatility is based on the estimated average volatility of similar companies due to the lack of historical volatilities of the Company’s common stock.

share-based compensation expense for the Company was approximately $ 11,457 and $ 1,610,572 for the three and six months ended June 30, 2021, respectively.

The following table presents the assumptions used in

the option pricing model of options granted under the 2020 Plan:

Expected volatility

2 unchanged sentences

Expected forfeiture rate

The following table summarizes stock option activity during the three months ended March 31, 2021:

The following tables summarizes stock option activity

during the three and six months ended June 30, 2021:

Three months ended

March 31, 2021

June 30, 2021

Weighted-Average

1 unchanged sentence

Value Per Option

Balance as of December 31, 2020

Balance as of March 31, 2021

Balance as of June 30, 2021

Six months ended

June 30, 2021

Weighted-Average

Grant Date Fair

Value Per Option

Balance as of December 31, 2020

Balance as of June 30, 2021

EARNINGS PER SHARE

The following information sets forth the computations of basic weighted average earnings per common share for the three months ended March 31, 2021:

T he following information sets forth the computations of basic weighted average earnings per common share for the three and six months ended June 30, 2021:

Three months ended

March 31, 2021

June 30, 2021

Six months ended

June 30, 2021

Net income / (loss) attributable to common stockholders

3 unchanged sentences

Diluted weighted average earnings per common share

The income tax provisions for the Company was $0 for the three months ended March 31, 2021.

For the three months ended March 31, 2021, the Company incurred no expense for United Stated federal excise tax.

Excise tax represents a 4% tax on the sum of a portion of the Company’s ordinary income and net capital

gains not distributed during the period.

If it is determined that an excise tax liability exists for the current period, the Company will accrue excise tax on estimated excess taxable income as such taxable income is earned.

The expense is

calculated in accordance with applicable tax regulations.

The Company does not have any unrecognized tax benefits and the Company does not expect that to change in the next 12 months.

The Company’s loans are typically valued using a yield analysis, which is typically performed for non-credit impaired loans to portfolio companies where the Company does not own a controlling equity position.

determine fair value using a yield analysis, a current price is imputed for the loan based upon an assessment of the expected market yield for a similarly structured loan with a similar level of risk.

In the yield analysis, the Company considers

the current contractual interest rate, the maturity and other terms of the loan relative to risk of the company and the specific loan.

A key determinant of risk, among other things, is the leverage through the loan relative to the enterprise value

of the portfolio company.

As loans held by the Company are substantially illiquid with no active loan market, the Company depends on primary market data, including newly funded loans, as well as secondary market data with respect to high yield debt

instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.

The following tables summarize the significant unobservable inputs the Company used to value the loans categorized within Level 3 as of March 31, 2021 and December 31, 2020.

The tables are not intended to be

all-inclusive, but instead capture the significant unobservable inputs relevant to the Company’s determination of fair values.

As of March 31, 2021

The income tax provision for the Company

was $ 0 for the six months ended June 30, 2021.

For the three and six months ended June

30, 2021, the Company incurred no expense for United States federal excise tax.

Excise tax represents a 4 % tax on the sum of a portion of the Company’s ordinary income and net capital gains not distributed during the period.

If it is determined that

an excise tax liability exists for the current period, the Company will accrue excise tax on estimated excess taxable income as such taxable income is earned.

The expense is calculated in accordance with applicable tax regulations.

The Company does no t have any unrecognized tax benefits and the Company does not expect that to change in the next 12 months.

The Company’s loans are typically valued

using a yield analysis, which is typically performed for non-credit impaired loans to borrowers where the Company does not own a controlling equity position.

To determine fair value using a yield analysis, a current price is imputed for the loan

based upon an assessment of the expected market yield for a similarly structured loan with a similar level of risk.

In the yield analysis, the Company considers the current contractual interest rate, the maturity and other terms of the loan

relative to risk of the company and the specific loan.

A key determinant of risk, among other things, is the leverage through the loan relative to the enterprise value of the borrower.

As loans held by the Company are substantially illiquid with

no active loan market, the Company depends on primary market data, including newly funded loans, as well as secondary market data with respect to high yield debt instruments and syndicated loans, as inputs in determining the appropriate market

yield, as applicable.

The following tables

summarize the significant unobservable inputs the Company used to value the loans categorized within Level 3 as of June 30, 2021 and December 31, 2020.

The tables are not intended to be all-inclusive, but instead capture the significant

unobservable inputs relevant to the Company’s determination of fair values.

As of June 30, 2021

Unobservable Input

13 unchanged sentences

Total Investments

Changes in market yields may change the fair value of certain of the Company’s loans.

Changes in market

yields may change the fair value of certain of the Company’s loans.

Generally, an increase in market yields may result in a decrease in the fair value of certain of the Company’s loans.

Due to the inherent uncertainty of determining the fair value of loans that do not have a readily available market value, the fair value of the Company’s loans may fluctuate from period to period.

Additionally, the

fair value of the Company’s loans may differ significantly from the values that would have been used had a ready market existed for such loans and may differ materially from the values that the Company may ultimately realize.

Further, such loans

are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities.

If the Company was required to liquidate a loan in a forced or liquidation sale, it could realize significantly less than

the value at which the Company has recorded it.

In addition, changes in the market environment and other events that may occur over the life of the loans may cause the gains or losses ultimately realized on these loans to be different than the unrealized gains or

losses reflected in the valuations currently assigned.

The following table presents fair value measurements of loans held at fair value as of March 31, 2021 and December 31, 2020:

Fair Value Measurement Using as of March 31, 2021

Additionally, the fair value of the Company’s loans

may differ significantly from the values that would have been used had a ready market existed for such loans and may differ materially from the values that the Company may ultimately realize.

Further, such loans are generally subject to legal and

other restrictions on resale or otherwise are less liquid than publicly traded securities.

If the Company was required to liquidate a loan in a forced or liquidation sale, it could realize significantly less than the value at which the Company has

In addition, changes

in the market environment and other events that may occur over the life of the loans may cause the gains or losses ultimately realized on these loans to be different than the unrealized gains or losses reflected in the valuations currently

The following tables present fair value measurements of

loans held at fair value as of June 30, 2021 and December 31, 2020:

Fair Value Measurement Using as of June 30, 2021

Loans held at fair value

1 unchanged sentence

Loans held at fair value

The following table presents changes in loans that use Level 3 inputs as of and for the three months ended March 31, 2021:

Three months ended

March 31, 2021

The following table presents changes in

loans that use Level 3 inputs as of and for the six months ended June 30, 2021:

Six months ended

June 30, 2021

Total loans using Level 3 inputs at December 31 , 2020

2 unchanged sentences

Original issue discount and other discounts, net of costs

Loan repayments

Loan amortization payments

Accretion of original issue discount

Total loans using Level 3 inputs at March 31, 2021

Fair Value of Financial Instruments

GAAP requires disclosure of fair value information about financial instruments, whether or not recognized at fair value in the balance sheet, for which it is practicable to estimate that value.

The following table details the book value and fair value of the Company’s financial instruments not recognized at fair value in the balance sheet:

As of March 31, 2021

Total loans using Level 3 inputs at June 30 , 2021

Fair Value of

Financial Instruments

GAAP requires disclosure of fair value

information about financial instruments, whether or not recognized at fair value in the balance sheet, for which it is practicable to estimate that value.

The following table details the book value and fair value of the Company’s

financial instruments not recognized at fair value in the balance sheet:

As of June 30, 2021

Financial assets

2 unchanged sentences

Loan receivable at carrying value

Estimates of fair value for cash and cash equivalents are measured using observable, quoted market prices, or Level 1 inputs.

All other fair value significant estimates are measured using unobservable inputs, or

Level 3 inputs.

Estimates of fair value for cash and cash

equivalents are measured using observable, quoted market prices, or Level 1 inputs.

All other fair value significant estimates are measured using unobservable inputs, or Level 3 inputs.

RELATED PARTY TRANSACTIONS

Management Agreement

Pursuant to the Management Agreement, the Manager manages the loans and day-to-day operations of the Company, subject at all times to the further terms and conditions set forth in the Management Agreement and such

further limitations or parameters as may be imposed from time to time by the Company’s Board.

The Manager will receive base management fees (the “Base Management Fee”) that are calculated and payable quarterly in arrears, in an amount equal to 0.375% of the Company’s Equity

(as defined below), subject to certain adjustments, less 50% of the aggregate amount of any other fees (“Outside Fees”), including any agency fees relating to our loans, but excluding the Incentive Compensation (as defined below) and any

diligence fees paid to and earned by the Manager and paid by third parties in connection with the Manager's due diligence of potential loans .

Prior to the IPO, the quarterly base management fee was equal to 0.4375% of the Company’s Equity, subject to certain adjustments, less 100% of the aggregate amount of any Outside

Fees, including any agency fees relating to our loans, but excluding the Incentive Compensation and any diligence fees paid to and earned by the Manager and paid by third parties in connection with the Manager's due diligence of potential loans .

In addition to the Base Management Fee, the Manager is entitled to receive incentive compensation (the “Incentive Compensation” or “Incentive Fees”) under the Management Agreement.

Management Agreement, the Company will pay Incentive Fees to the Manager based upon the Company’s achievement of targeted levels of Core Earnings.

“Core Earnings” is defined in the Management Agreement as, for a given period means the net income

(loss) for such period, computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) the Incentive Compensation, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other non-cash items that are

included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income and (v) one-time events pursuant to changes in GAAP and certain non-cash charges, in

each case after discussions between the Manager and the Company’s independent directors and approved by a majority of the independent directors.

The Incentive Compensation for the three months ended March 31, 2021 was approximately $662,730.

The Company shall pay all of its costs and expenses and shall reimburse the Manager or its affiliates for expenses of the Manager and its affiliates paid or incurred on behalf of the Company,

excepting only those expenses that are specifically the responsibility of the Manager pursuant to the Management Agreement.

The following table summarizes the related party costs incurred by the Company for the three months ended March 31, 2021.

Pursuant to the Management Agreement, the Manager manages the loans and

day-to-day operations of the Company, subject at all times to the further terms and conditions set forth in the Management Agreement and such further limitations or parameters as may be imposed from time to time by the Company’s Board.

The Manager will receive base management fees (the “Base Management Fee”) that

are calculated and payable quarterly in arrears, in an amount equal to 0.375 % of the Company’s Equity (as defined below), subject to certain adjustments, less 50 % of the aggregate amount of any other fees (“Outside Fees”), including any agency fees relating to our loans, but excluding the Incentive Compensation (as defined below) and any diligence fees paid to and

earned by the Manager and paid by third parties in connection with the Manager's due diligence of potential loans.

Prior to the IPO, the quarterly base management fee was equal to 0.4375 % of the Company’s Equity, subject to certain adjustments, less 100 % of the aggregate amount of any Outside Fees, including any agency fees relating to our loans, but excluding the Incentive Compensation and any diligence fees paid to

and earned by the Manager and paid by third parties in connection with the Manager's due diligence of potential loans.

In addition to the Base Management Fee, the Manager is entitled to receive

incentive compensation (the “Incentive Compensation” or “Incentive Fees”) under the Management Agreement.

Under the Management Agreement, the Company will pay Incentive Fees to the Manager based upon the Company’s achievement of targeted levels

of Core Earnings.

“Core Earnings” is defined in the Management Agreement as, for a given period means the net income (loss) for such period, computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) the

Incentive Compensation, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other

comprehensive income or loss, or in net income and (v) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between the Manager and the Company’s independent directors and approved by a

majority of the independent directors.

The Incentive Compensation for the three and six months ended June 30, 2021 was approximately $ 1,442,047

and $ 2,104,777 , respectively.

The Company shall pay all of its costs and expenses and shall reimburse the

Manager or its affiliates for expenses of the Manager and its affiliates paid or incurred on behalf of the Company, excepting only those expenses that are specifically the responsibility of the Manager pursuant to the Management Agreement.

The following table summarizes the related party costs incurred by the Company

for the three and six months ended June 30, 2021:

Three months ended

March 31, 2021

Affiliate Payments

June 30, 2021

Six months ended

June 30, 2021

Affiliate Costs

Management fees

2 unchanged sentences

General and administrative expenses reimbursable to Manager

Amounts payable to the Company’s Manager as of March 31, 2021 and December 31, 2020 were $1,242,229 and $728,298, respectively.

Amounts payable to the Company’s Manager as of June 30, 2021 and December 31,

2020 were $ 2,609,810 and $ 728,298 ,

respectively.

Investments in Loans

From time to time, the Company may co-invest with other investment vehicles managed by the Company’s Manager or its affiliates, including the Manager, and their portfolio companies, including by means of splitting

loans, participating in loans or other means of syndicating loans.

The Company is not obligated to provide, nor has it provided, any financial support to the other managed investment vehicles.

As such, the Company’s risk is limited to the carrying

value of its investment in any such loan.

As of and for the three months ended March 31, 2021, there were no co-investments held by the Company.

In connection with investments in loans, the Company may receive the option to assign the right (the “Assigned Right”) to acquire warrants and/or equity of the borrower.

The Company may sell the Assigned Right, and

the sale may be to an affiliate of the Company.

For the three months ended March 31, 2021, the Company sold approximately $1,208,216 of Assigned Rights to an affiliate which are accounted for as additional original issue discount and accreted over

the life of the loans.

As of March 31, 2021, the Company had a receivable from an affiliate related to the Assigned Rights sold during the three months ended March 31, 2021 in the amount of approximately $1,104,914 which is included on the balance

sheet in the prepaid expense and other assets line.

From time to time, the Company may co-invest with other investment vehicles

managed by the Company’s Manager or its affiliates, including the Manager, and their portfolio companies, including by means of splitting loans, participating in loans or other means of syndicating loans.

The Company is not obligated to

provide, nor has it provided, any financial support to the other managed investment vehicles.

As such, the Company’s risk is limited to the carrying value of its investment in any such loan.

As of and for the six months ended June 30, 2021,

there were no co-investments held by the Company.

In connection

with investments in loans, the Company may receive the option to assign the right (the “Assigned Right”) to acquire warrants and/or equity of the borrower.

The Company may sell the Assigned Right, and the sale may be to an affiliate of the

For the three and six months ended June 30, 2021, the Company sold

approximately $ 1,104,914 and $ 2,313,130 ,

respectively, of Assigned Rights to an affiliate which are accounted for as additional original issue discount and accreted over the life of the loans.

Secured Revolving Credit From Affiliate

The Company has a secured revolving credit loan (the “Revolving Loan”) from AFC Finance, LLC, an affiliate of the Company’s management.

Refer to footnote 9 for more information.

The Company has the Revolving Loan from AFC Finance, LLC, an affiliate of the

Company’s management.

Refer to footnote 9 to our unaudited financial statements for more information.

DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared and paid during the three months ended March 31, 2021:

The following table

summarizes the Company’s dividends declared and paid during the six months ended June 30, 2021:

Regular cash dividend

Total cash dividend

SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date the financial statements were available to be issued.

There were no material subsequent events, other than that described below, that required disclosure

in these financial statements.

In April 2021, Sub.

Of Public Co.

C repaid their loan in full.

The loan had an original maturity date of February 2025 and the outstanding principal on the date of repayment was approximately $12.1 million.

Company received an exit fee of $750,000 and a prepayment premium of $750,000 upon repayment of the loan.

In April 2021, the Company entered into a commitment for a $13 million senior term loan and funded $5.25 million at closing.

The loan has an interest rate of 13% and PIK interest of 4% with a step down to 2% once

certain criteria are met as defined in the loan agreement.

The loan has a maturity date of May 2026, an unused fee of 3%, an exit fee of 15% and OID of 15.5%.

In April 2021, the Company entered into a commitment for a $15 million senior term loan and funded $15 million at closing.

The loan has an interest rate of 13%.

The loan has a maturity date of April 2025 and OID of

In April 2021, the Company entered into a commitment for a $22 million senior term loan and funded $22 million at closing, including a $2 million interest reserve.

The loan has an interest rate of 12% plus LIBOR,

with a 1% LIBOR floor, and PIK interest of 4% with step downs to 2% and 1.5% once certain criteria are met as defined in the loan agreement.

The loan has a maturity date of May 2026, an exit fee of 10%, provided that if certain criteria are met as

defined in the loan agreement the exit fee is 2%, and OID of 4%.

On May 7, 2021, the Company amended its secured revolving credit loan (the “Revolving Loan”) from AFC Finance, LLC, an affiliate of the Company’s management.

The amendment to the Revolving

Loan increased the loan commitment from $40,000,000 to $50,000,000, decreased the interest rate from 8% per annum to 6% per annum, removed Gamma Lending Holdco LLC as a lender and extended the maturity date from July 31, 2021 to the earlier of

(i) December 31, 2021 or (ii) the date of the closing of any credit facility where the proceeds are incurred to refund, refinance or replace the Revolving Credit Agreement with an aggregate principal amount equal to or greater than $50 million.

The Company did not incur any fees or cost related to the amendment of the Revolving Loan and the Revolving Loan does not have any unused fees.

As of the date of these financial statements, the Company has not drawn on the Revolving Loan or

incurred any fees or interest expense related to the Revolving Loan.

The Company has evaluated subsequent

events through the date the financial statements were available to be issued.

There were no material subsequent events, other than that described below, that required disclosure in these financial statements.

Subsequent to quarter end, the underwriters partially

exercised their over-allotment option under the Company’s follow-on public offering to purchase 269,650 shares of the Company’s common stock at a price of $ 20.50 per share, which was completed on July 6, 2021.

Refer to footnote 11 to our unaudited financial statements for more information.

In July 2021, the Company entered into a commitment to fund

a $ 19.75 million senior secured term loan which is contingent on the borrower raising additional equity as required by the loan

Until the borrower meets the required criteria in the loan agreement, the commitment has a ticking fee based on the aggregate commitment amount as follows:

(a) 6.0 % from the date of closing through July 26, 2021 and (b) 6.5 %

from and after July 27, 2021 through August 9, 2021 or the initial funding date, whichever is earlier.

Once funded, the loan will have a per annum interest rate of 12.0 % plus LIBOR with a LIBOR floor of 1.0 %.

The loan will have a maturity date of August 3, 2026 , an unused fee of 3.0 %,

an exit fee of 3.0 %, OID of 4.0 %

and an interest reserve of $ 0.75 million.

In July 2021,

Private Company I refinanced their bridge loan which had a maturity date of July 9, 2021 which had an interest rate of 13.0 % and OID of 4.0 %.

senior secured loan of $ 15.5 million was syndicated by the Company’s Manager between the Company and A BDC Warehouse, LLC (“ABW”), an

affiliate of the Company that is wholly-owned by Mr.

Tannenbaum, with ABW holding approximately one-third of the principal amount .

The Company committed and funded approximately $ 10.1 million of the new loan which has a per annum interest rate of 12.0 % plus LIBOR, with a LIBOR

floor of 1.0 %, and PIK interest rate of 2.5 %.

The loan has a maturity date of August 1, 2026 , an exit fee of 3.0 % and OID of 4.0 %.

As part of the

refinancing agreement, the exit fee on the bridge loan was waived and the borrower was credited for a portion of the original OID on the bridge loan.

In July 2021, the Company entered into a commitment to

fund a $ 3.0 million bridge loan and funded $ 3.0 million at closing.

The loan has an interest rate of 13.0 %, a maturity date of August 31, 2021 , an exit fee of 10.0 %

which is reduced to 2.0 % upon refinancing the loan with a senior secured loan with the Company, and OID of 4.0 %.

In July 2021, Flower Loan Holdco, LLC, an affiliated entity in which Mr.

Tannenbaum is the majority ultimate beneficial owner (“FLH”),

purchased approximately $ 8.5 million of the senior secured credit facility with Private Company A from a third-party lender, and

the Company has a 30 -day option to purchase such amount from FLH.

The Company and the Company’s Manager, as agent, subsequently

amended and restated the senior secured credit facility with Private Company A to, among other things, increase the loan amount by $ 10.0

million, which the agent syndicated to ABW.

The amendment also allows for the borrower to draw up to an additional $ 20 million from

a designee of the agent, subject to the agent’s satisfaction that certain conditions have been met.

Separately, FLH entered into a new credit facility with Private Company A under which the borrower may draw up to $ 40.0 million (the “Bridge Loan”), which is secured by collateral separate from collateral securing the Company’s credit facility.

In connection

with the Bridge Loan and a related equity raise by Private Company A (the “Equity Raise”), the Manager or its designees are entitled to (i) appoint three of the seven members of Private Company A’s board of directors and (ii) receive a number

of warrants to purchase common stock of Private Company A.

In connection with the Equity Raise, an investment vehicle controlled by Jonathan Kalikow, one of the Company’s directors and executive officers, acquired approximately 8.8 % of the equity interest of Private Company A on a fully-diluted basis.

Following the transactions described above, Mr.

Kalikow beneficially

held or controlled through investment vehicles a total of approximately 10.1 % of Private Company A’s equity interest on a

fully-diluted basis.

As of the date of these transactions, Mr.

Tannenbaum beneficially held approximately 16.7 % of Private Company

A’s equity interest on a fully-diluted basis through investment vehicles, which amount reflects two acquisitions of additional equity of Private Company A from third-party stockholders during the three months ended June 30, 2021.

the transactions described above, Mr.

Tannenbaum beneficially held approximately 21.8 % of Private Company A’s equity interest on a

fully-diluted basis through investment vehicles.

Tannenbaum’s equity ownership, each of the transactions with Private Company A described above were reviewed and approved by the Company’s Audit & Valuation Committee of the Board

in accordance with the Company’s Amended and Restated Code of Business Conduct and Ethics and its Related-Persons Transaction Policy.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements