Advanced Flower Capital Inc. 10-K

Item 9A. Controls and Procedures 86 Table of Contents Evaluation of Disclosure Controls and Procedures The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, and summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is timely recorded, processed, summarized and reported and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Management’s Report on Internal Control over Financial Reporting This Annual Report does not include a report of management’s assessment regarding internal controls over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the SEC for newly public companies. Item 9B. Other Information On March 10 , 2022, we entered into an amendment to our Management Agreement between us and our Manager (the “Management Agreement Amendment”). Our Manager is a wholly owned subsidiary of the Parent Manager, which is an entity that is over 70%, 10% and 5% beneficially owned by Mr. Tannenbaum, Mrs. Tannenbaum and Mr. Kalikow, respectively. Pursuant to the amendment, the Management Agreement was amended to, among other things, (i) update the investment guidelines to allow for (x) investments in, among other things, debt securities (including seller notes) with characteristics similar to our Target Investments and (y) until appropriate investments in Target Investments are identified, short-term investments in, among other things, equity interests of real estate investment trusts and (ii) update the payment process for the Base Management Fee and Incentive Fee payable to our Manager to allow for a preliminary payment of such fees equal to 80-90% of the estimated quarterly installment prior to the final calculation and payment of such quarterly installments. A copy of the Management Agreement Amendment is filed as Exhibit 10.1A to this Annual Report on Form 10-K and incorporated herein reference. On March 10 , 2022, our Board of Directors approved Articles of Amendment (the “Charter Amendment”) to our Articles of Amendment and Restatement (the “Charter”) to increase the number of authorized shares of our common stock from 25,000,000 to 50,000,000. The Charter Amendment also increases the total number of authorized shares of our stock from 25,010,000 to 50,010,000. Pursuant to Maryland General Corporation Law and Article VI, Section 6.1 of our Charter, the Charter Amendment was approved by our Board of Directors and did not require any action by our stockholders. The Charter Amendment was effective on March 10 , 2022. A copy of the Charter Amendment is filed as Exhibit 3.1A to this Annual Report on Form 10-K and incorporated herein reference. PART III Item 10. Directors, Executive Officers and Corporate Governance Except as set forth below, the other information required by this item will be contained in the Company’s definitive Proxy Statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference. Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics for our directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees. A current copy of the code is posted under “Corporate Governance” on our website at https://investors.afcgamma.com/ . To the extent required by rules adopted by the Securities and Exchange Commission and Nasdaq, we intend to promptly disclose future amendments to certain provisions of the Code of Business Conduct and Ethics, or waivers of such provisions granted to executive officers and directors on our website at https://investors.afcgamma.com/ . Item 11. Executive Compensation The information required by this item will be contained in the Company’s definitive proxy statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this item will be contained in the Company’s definitive proxy statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference. Item 13. Certain Relationships and Related Party Transactions, and Director Independence The information required by this item will be contained in the Company’s definitive proxy statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services The information required by this item will be contained in the Company’s definitive proxy statement for its 2022 Annual Stockholder Meeting, to be filed with the SEC within 120 days after December 31, 2021, and is incorporated herein by reference. PART IV Item 15. Exhibits and Financial Statement Schedules (a) (1) Financial Statements—See the Index to Consolidated Financial Statements, together with the report thereon of CohnReznick LLP dated March 10, 2022, beginning on Page F-1. (a) (2) Financial Statement Schedules—None. We have omitted financial statement schedules because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes to the consolidated financial statements. 87 Table of Contents (a) (3) Exhibits. Exhibit No. ​ Document 3.1 ​ Articles of Amendment and Restatement of AFC Gamma, Inc. (filed as Exhibit 3.2 to the Company’s Registration Statement on Form S-11 on January 22, 2021 and incorporated herein by reference). 3. 1A* ​ Articles of Amendment, dated March 10, 2022. 3.4 ​ Amended and Restated Bylaws of AFC Gamma, Inc. (filed as Exhibit 3.4 to the Company’s Registration Statement on Form S-11 on January 22, 2021 and incorporated herein by reference). 4.1 * ​ Description of Capital Stock. 4.2 ​ Indenture, dated as of November 3, 2021, between the Company and TMI Trust Company, as trustee (filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K on November 3, 2021 and incorporated herein by reference). 4.3 ​ Form of 5.750% Senior Notes due 2027 (included in Exhibit 4.2). 10.1 ​ Amended and Restated Management Agreement, dated January 14, 2021 by and between AFC Gamma, Inc. and AFC Management, LLC (filed as Exhibit 10.1 to the Company's Current Report on Form 8-K on March 23, 2021 and incorporated herein by reference). 10.1A* First Amendment to Amended and Restated Management Agreement, dated March 10, 2022 by and between AFC Gamma, Inc. and AFC Management, LLC. 10.2 ​ Form of Indemnification Agreement between the Registrant and each of its directors and officers (filed as Exhibit 10.2 to the Company’s Registration Statement on Form S-11 on January 22, 2021 and incorporated herein by reference). 10.3 ​ Form of Indemnification Agreement between Registrant and each of the Investment Committee members (filed as Exhibit 10.3 to the Company’s Registration Statement on Form S-11 on January 22, 2021 and incorporated herein by reference). 10.4 ​ Form of Registration Rights Agreement, by and among AFC Gamma, Inc. and the holders thereto (filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-11 on December 28, 2020 and incorporated herein by reference). 10.5 § ​ 2020 Stock Incentive Plan (filed as Exhibit 10.5 to the Company’s Registration Statement on Form S-11 on January 22, 2021 and incorporated herein by reference). 10.6 ​ Secured Revolving Credit Agreement, dated August 18, 2020, by and among AFC Gamma, Inc., as borrower, AFC Finance, LLC, as agent, and AFC Finance, LLC and Gamma Lending Holdco LLC, as lenders (filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-11 on December 28, 2020 and incorporated herein by reference). 10.6A ​ Amendment to Revolving Credit Agreement, dated as of May 7, 2021, by and among AFC Gamma, Inc., as borrower, AFC Finance, LLC, as agent, and AFC Finance, LLC and Gamma Lending Holdco LLC, as lenders (filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q on May 11, 2021 and incorporated herein by reference). 10.6B ​ Second Amendment to Revolving Credit Agreement, dated as of November 3, 2021, by and among AFC Gamma, Inc., as borrower, and AFC Finance, LLC, as and lender (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on November 3, 2021 and incorporated herein by reference). 10.10§ ​ Employment Agreement, dated as of August 2, 2021 , between AFC Management, LLC and Brett Kaufman (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on August 5, 2021 and incorporated herein by reference). 88 Table of Contents 21.1 * ​ List of Subsidiaries of the Registrant . 23.1 * ​ Consent of CohnReznick LLP, independent registered public accounting firm. 31.1** Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2** Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). § Management contract or compensatory plan or arrangement * Furnished herewith † The registrant has omitted portions of the referenced exhibit pursuant to Item 601(b) of Regulation S-K because such portions are both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed. ** Filed herewith Item 16. Form 10-K Summary None. 89 Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm CohnReznick LLP (PCAOB ID 596 ), Chicago, Illinois F-2 Consolidated Balance Sheets as of December 31, 2021 and 2020 F-3 Consolidated Statements of Operations for the year ended December 31, 2021, and from July 31, 2020 (commencement of operations) to December 31, 2020 F-4 Consolidated Statement of Comprehensive Income for the year ended December 31, 2021, and from July 31, 2020 (commencement of operations) to December 31, 2020 F-5 Consolidated Statements of Stockholders’ Equity for the year ended December 31, 2021, and from July 31, 2020 (commencement of operations) to December 31, 2020 F-6 Consolidated Statements of Cash Flows for the year ended December 31, 2021, and from July 31, 2020 (commencement of operations) to December 31, 2020 F-7 Notes to Consolidated Financial Statements F-8 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders AFC Gamma, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of AFC Gamma, Inc. and Subsidiary as of December 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income, stockholder’s equity, and cash flows for the year ended December 31, 2021 and for the period July 31, 2020 (date of commencement of operations) to December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of AFC Gamma, Inc. and Subsidiary as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the year ended December 31, 2021 and for the period July 31, 2020 (date of commencement of operations) to December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the entity’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to AFC Gamma, Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. AFC Gamma, Inc. is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Emphasis of Matter As further described in Note 10, AFC Gamma, Inc. is subject to significant risks and uncertainties due to originating, structuring, underwriting and managing senior secured loans and other types of loans for established cannabis industry operators. /s/ CohnReznick LLP We have served as AFC Gamma Inc.’s auditor since 2020. Chicago, Illinois March 10, 2022 F-2 Table of Contents AFC GAMMA, INC. CONSOLIDATED BALANCE SHEETS As of December 31, 2021 2020 Assets: Loans held for investment at fair value (cost of $ 74,913,157 and $ 46,994,711 at December 31, 2021 and 2020, respectively, net) $ 77,096,319 $ 48,558,051 Debt securities available for sale held at fair value (cost of $ 16,050,000 and $ 0 at December 31, 2021 and 2020, respectively) 15,881,250 — Loans held for investment at carrying value, net 257,163,496 31,837,031 Loan receivable at carrying value, net 2,530,588 3,348,263 Current expected credit loss reserve ( 2,431,558 ) ( 404,860 ) Loans held for investment at carrying value and loan receivable at carrying value, net of current expected credit loss reserve 257,262,526 34,780,434 Cash and cash equivalents 109,246,048 9,623,820 Interest receivable 4,412,938 927,292 Prepaid expenses and other assets 949,279 72,095 Total assets $ 464,848,360 $ 93,961,692 Liabilities and Stockholders’ Equity: Interest reserve $ 4,782,271 $ 1,325,750 Accrued interest 991,840 — Dividends payable 8,221,406 — Current expected credit loss reserve 683,177 60,537 Accrued management and incentive fees 2,823,044 222,127 Accrued direct administrative expenses 1,324,457 550,671 Accounts payable and other liabilities 1,528,980 154,895 Senior notes payable, net 96,572,656 — Line of credit payable to affiliate, net 74,845,355 — Total liabilities 191,773,186 2,313,980 Commitments and contingencies (Note 10) Stockholders’ Equity Preferred stock, par value $ 0.01 per share, 10,000 shares authorized at December 31, 2021 and 2020 and 125 shares issued and outstanding at December 31, 2021 and 2020 , respectively 1 1 Common stock, par value $ 0.01 per share, 25,000,000 and 15,000,000 shares authorized at December 31, 2021 and 2020 , respectively, and 16,442,812 and 6,179,392 shares issued and outstanding at December 31, 2021 and 2020 , respectively 163,866 61,794 Additional paid-in-capital 274,172,934 91,068,197 Accumulated other comprehensive (loss) income ( 168,750 ) — Accumulated (deficit) earnings ( 1,092,877 ) 517,720 Total stockholders’ equity 273,075,174 91,647,712 Total liabilities and stockholders’ equity $ 464,848,360 $ 93,961,692 (See accompanying notes to the consolidated financial statements) F-3 Table of Contents AFC GAMMA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the year ended Period from July 31, 2020 to December 31, 2021 December 31, 2020 Revenue Interest income $ 38,140,487 $ 5,250,108 Interest expense 1,126,846 — Net interest income 37,013,641 5,250,108 Expenses Management and incentive fees, net (less rebate of $ 1,029,315 and $ 259,167 , respectively) 8,321,512 364,194 General and administrative expenses 3,212,785 785,016 Organizational expenses — 616,190 Stock-based compensation 1,745,872 — Professional fees 1,118,291 614,019 Total expenses 14,398,460 2,379,419 Provision for current expected credit losses ( 2,649,338 ) ( 465,397 ) Realized gains (losses) on loans at fair value, net 450,000 345,000 Change in unrealized gains (losses) on loans at fair value, net 619,821 1,563,340 Net income before income taxes 21,035,664 4,313,632 Income tax expense 35,167 — Net income $ 21,000,497 $ 4,313,632 Earnings per common share: Basic earnings per common share (in dollars per share) $ 1.57 $ 0.76 Diluted earnings per common share (in dollars per share) $ 1.52 $ 0.76 Weighted average number of common shares outstanding: Basic weighted average shares of common stock outstanding (in shares) 13,373,778 5,694,475 Diluted weighted average shares of common stock outstanding (in shares) 13,808,845 5,694,475 (See accompanying notes to the consolidated financial statements) F-4 Table of Contents AFC GAMMA, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the year ended For the period from July 31, 2020 to December 31, 2021 December 31, 2020 Net income $ 21,000,497 $ 4,313,632 Other comprehensive (loss) income: Unrealized (losses) gains on debt securities available for sale held at fair value ( 168,750 ) — Total other comprehensive (loss) income ( 168,750 ) — Total comprehensive income $ 20,831,747 $ 4,313,632 (See accompanying notes to the consolidated financial statements) F-5 Table of Contents AFC GAMMA, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Year ended December 31, 2021 Preferred Common Stock Additional Paid-In- Accumulated Other Comprehensive Accumulated Total Stockholders’ Stock Shares Amount Capital Income (Loss) Earnings (Deficit) Equity Balance at December 31, 2020 $ 1 6,179,392 $ 61,794 $ 91,068,197 $ — $ 517,720 $ 91,647,712 Issuance of common stock, net of offering cost — 10,207,135 102,072 181,358,865 — — 181,460,937 Stock-based compensation — 56,285 — 1,745,872 — — 1,745,872 Dividends declared on common shares ($ 1.67 per share) — — — — — ( 22,596,094 ) ( 22,596,094 ) Dividends declared on preferred shares ($ 120 per share) — — — — — ( 15,000 ) ( 15,000 ) Other comprehensive income (loss) — — — — ( 168,750 ) — ( 168,750 ) Net income — — — — — 21,000,497 21,000,497 Balance at December 31, 2021 $ 1 16,442,812 $ 163,866 $ 274,172,934 $ ( 168,750 ) $ ( 1,092,877 ) $ 273,075,174 Period from July 31, 2020 (date of commencement of operations) to December 31, 2020 Preferred Common Stock Additional Paid-In- Accumulated Total Stockholders’ Stock Shares Amount Capital Earnings (Deficit) Equity Balance at July 31, 2020 $ — — $ — $ — $ — $ — Issuance of common stock, net of offering cost — 6,179,392 61,794 90,967,139 — 91,028,933 Issuance of preferred stock, net of offering cost 1 — — 101,058 — 101,059 Dividends declared and paid on common shares ($ 0.61 per share) — — — — ( 3,795,912 ) ( 3,795,912 ) Net income — — — — 4,313,632 4,313,632 Balance at December 31, 2020 $ 1 6,179,392 $ 61,794 $ 91,068,197 $ 517,720 $ 91,647,712 (See accompanying notes to the consolidated financial statements) F-6 Table of Contents AFC GAMMA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended Period from July 31, 2020 to December 31, 2021 December 31, 2020 Operating activities: Net income $ 21,000,497 $ 4,313,632 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Provision for current expected credit losses 2,649,338 465,397 Realized gain on sale of loans, net ( 450,000 ) ( 345,000 ) Change in unrealized (gains) losses on loans carried at fair value, net ( 619,821 ) ( 1,563,340 ) Accretion of deferred loan original issue discount and other discounts ( 5,584,311 ) ( 783,481 ) Amortization of deferred financing costs - revolving credit facility 32,855 — Amortization of offering costs - senior notes 102,151 — Stock-based compensation 1,745,872 — PIK interest ( 4,534,370 ) ( 422,408 ) Changes in operating assets and liabilities Interest reserve ( 5,993,947 ) ( 74,250 ) Interest receivable ( 3,485,646 ) ( 927,292 ) Prepaid expenses and other assets ( 877,184 ) ( 72,095 ) Accrued interest 991,840 — Accrued management and incentive fees, net 2,600,917 222,127 Accrued direct administrative expenses 773,786 550,671 Accounts payable and other liabilities 1,186,585 154,895 Net cash provided by (used in) operating activities 9,538,562 1,518,856 Cash flows from investing activities: Issuance of and fundings on loans ( 272,583,787 ) ( 46,769,285 ) Proceeds from sales of Assigned Rights 2,313,130 1,649,468 Principal repayment of loans 22,412,569 5,348,542 Proceeds from sales of loans 15,450,000 7,345,000 Purchase of available-for-sale debt securities ( 16,050,000 ) — Net cash provided by (used in) investing activities ( 248,458,088 ) ( 32,426,275 ) Cash flows from financing activities: Proceeds from sale of common stock 185,501,294 44,226,092 Payment of offering costs - equity offering ( 4,040,357 ) — Payment of financing costs - senior notes ( 3,529,495 ) — Issuance of senior notes 100,000,000 — Borrowings on the revolving credit facility 75,000,000 — Dividends paid to common and preferred stockholders ( 14,389,688 ) ( 3,694,853 ) Net cash provided by (used in) financing activities 338,541,754 40,531,239 Net increase (decrease) in cash and cash equivalents 99,622,228 9,623,820 Cash and cash equivalents, beginning of period 9,623,820 — Cash and cash equivalents, end of period $ 109,246,048 $ 9,623,820 Supplemental disclosure of non-cash activity Loans acquired for issuance of shares of common stock $ — $ 46,802,841 Interest reserve withheld from funding of loans $ 9,450,468 $ 1,400,000 OID withheld from funding of loans $ 15,021,624 $ 320,000 Change in other comprehensive income (loss) during the period $ ( 168,750 ) $ — Dividends declared and not yet paid $ 8,221,406 $ — Supplemental information: Interest paid during the period $ — $ — Income taxes paid during the period $ 35,167 $ — (See accompanying notes to the consolidated financial statements) F-7 Table of Contents AFC GAMMA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2021 1. ORGANIZATION AFC Gamma, Inc. (the “Company” or “AFCG”) is a commercial real estate 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 (the Company’s “Manager”), a Delaware limited liability company, pursuant to the terms of a management agreement (as amended, the “Management Agreement”). The Company’s wholly owned subsidiary, AFCG TRS1, LLC (“TRS”), was formed under the laws of the State of Delaware on December 31, 2020, and operates as a taxable real estate investment trust (“REIT”) subsidiary. TRS began operating in July 2021, and the financial statements of TRS have been consolidated within the Company’s consolidated financial statements beginning with the quarter ended September 30, 2021. 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, the value associated with licenses and/or other assets of borrowers depending on the applicable laws and regulations governing such borrowers. The Company has elected to be taxed as a 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. 2. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with United States generally accepted accounting principles (“GAAP”). The financial statements reflect all adjustments that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents include funds on deposit with financial institutions, including demand deposits with financial institutions. Cash and short-term investments with an original maturity of three months or less when acquired are considered cash and cash equivalents for the purpose of the consolidated balance sheets and consolidated statements of cash flows. Restricted cash includes deposits required under certain Secured Funding Agreements. As of the balance sheet date, the Company did no t have any restricted cash. Concentration of Credit Risks Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, loans and interest receivable. The Company places its cash and cash equivalents with financial institutions, and, at times, cash held exceeds the Federal Deposit Insurance Corporation insured limit. The Company and the Company’s Manager seek to manage this credit risk by monitoring the financial institutions and their ability to continue in business for the foreseeable future. The Company has exposure to credit risk on its loans and interest receivable. The Company and the Company’s Manager seek to manage credit risk by performing due diligence prior to origination or acquisition and through the use of non-recourse financing, when and where available and appropriate. Investments in Loans The Company originates commercial real estate (“CRE”) debt and related instruments generally to be held for investment. The Company accretes or amortizes any discounts or premiums on loans held for investment over the life of the related loan held for investment utilizing the effective interest method. F-8 Table of Contents Loans are generally collateralized by real estate, equipment, licenses and/or other assets of borrowers. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its portfolio of loans held for investment under the following methodology: (1) borrower review, which analyzes the borrower’s ability to execute on its original business plan, reviews its financial condition, assesses pending litigation and considers its general level of responsiveness and cooperation; (2) economic review, which considers underlying collateral (i.e., leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Loans are generally placed on non-accrual status when principal or interest payments are past due 30 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding the borrower’s ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when past due principal and interest are paid and, in management’s judgment, are likely to remain current. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection. The Company may make modifications to loans, including loans that are in default. Loan terms that may be modified include interest rates, required prepayments, maturity dates, covenants, principal amounts and other loan terms. The terms and conditions of each modification vary based on individual circumstances and will be determined on a case-by-case basis. The Company’s Manager monitors and evaluates each of the Company’s loans held for investment and has maintained regular communications with borrowers regarding the potential impacts of the COVID-19 pandemic on the Company’s loans. Loans Held at Fair Value Investments in loans at fair value are carried at fair value in the Company’s consolidated balance sheets, with changes in fair value recorded through earnings. Refer to Note 14 for more information on the valuations of the investments. Although the Company generally holds its target investments as long-term investments, the Company may occasionally classify some of its loans as held for sale. Investments held for sale are carried at fair value, with changes in fair value recorded through earnings. Investment transactions are recorded on the trade date at cost, net of any original issue discounts. Realized gains or losses are measured by the difference between the net proceeds from the repayment or sale and the amortized and/or accreted cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments charged off during the period, net of recoveries. An unrealized gain arises when the value of the loan portfolio exceeds its cost and an unrealized loss arises when the value of the loan portfolio is less than its cost. The change in unrealized gains or losses primarily reflect the change in loan values, including the reversal of previously recorded unrealized gains or losses when gains or losses are realized. Loans Held at Carrying Value Investments in loans held at amortized cost are carried at cost, net of unamortized loan original issue discount and origination costs and other original issue discounts (the “carrying value”) in the Company’s consolidated balance sheets. The Company follows Accounting Standards Codification (“ASC”) 842 for certain loans which are considered financial assets not eligible to elect the fair value option due to the structure of the loans. These loans are carried at cost, net of unamortized loan original issue discount and origination costs and other original issue discounts (the “carrying value”) in the Company’s consolidated balance sheets. Investment in Marketable Securities Investment in marketable securities of $ 15.9 million and $ 0.0 million at December 31, 2021 and 2020, respectively, consists of debt securities that are designated as available - for - sale . Marketable debt securities are recorded at fair value and unrealized holding gains or losses are excluded from net income on the consolidated income statement and reported as a component of accumulated other comprehensive income within shareholders’ equity. F-9 Table of Contents Fair Value Measurements The Company follows ASC 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASC 825-10”), which provides companies the option to report selected financial assets and liabilities at fair value. ASC 825-10 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities and to more easily understand the effect of the company’s choice to use fair value on its earnings. ASC 825-10 also requires entities to display the fair value of the selected assets and liabilities on the face of the balance sheet. The Company has elected the ASC 825-10 option to report selected financial assets and liabilities at fair value. With the exception of the line items entitled “prepaid expenses and other assets,” “loans receivable” and “interest reserve”, which are reported at amortized cost, all assets and liabilities approximate fair value on the consolidated balance sheets. The carrying value of the lines titled “interest receivable,” “accrued management fees,” “accrued direct administrative expenses” and “accounts payable and other liabilities” approximate fair value due to their short maturity. The Company also follows ASC 820-10, Fair Value Measurements Overall (“ASC 820-10”), which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with GAAP and expands disclosure of fair value measurements. ASC 820-10 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires the Company to assume that the transaction is sold in its principal market to market participants or, in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820-10, the Company has considered its principal market as the market in which the Company exits its loans with the greatest volume and level of activity. ASC 820-10 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820-10, these inputs are summarized in the three broad levels listed below: ● Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. ● Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. ● Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement. If inputs used to measure fair value fall into different levels of the fair value hierarchy, a loan’s level is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the loan. This includes loans that are valued using “bid” and “ask” prices obtained from independent third-party pricing services or directly from brokers. Financial instruments with readily available quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment inherent in measuring fair value. As such, the Company obtains and analyzes readily available market quotations provided by pricing vendors and brokers for all of the Company’s loans for which quotations are available. In determining the fair value of a particular loan, pricing vendors and brokers use observable market information, including both binding and non-binding indicative quotations. GAAP requires disclosure of fair value information about financial and nonfinancial assets and liabilities, whether or not recognized in the financial statements, for which it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows using market yields, or other valuation methodologies. Any changes to the valuation methodology will be reviewed by the Company’s management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company anticipates that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial and nonfinancial assets and liabilities could result in a different estimate of fair value at the reporting date. The Company uses inputs that are current as of the measurement date, which may fall within periods of market dislocation, during which price transparency may be reduced. Current Expected Credit Losses In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard replaced the incurred loss impairment methodology pursuant to GAAP with a methodology that reflects 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”). ASU No. 2016-13 was adopted by the Company on as of July 31, 2020, commencement of operations. Subsequent period increases and decreases to expected credit losses impact earnings and are recorded within provision for current expected credit losses in the Company’s consolidated statements of operations. The CECL Reserve related to outstanding balances on loans held for investment required under ASU No. 2016-13 is a valuation account that is deducted from the amortized cost basis of the Company’s loans held at carrying value and loans receivable at carrying value in the Company’s consolidated balance sheets. The CECL Reserve related to unfunded commitments on loans held at carrying value is recorded within the current expected credit loss reserve financial statement line in the Company’s balance sheet. See Note 6 included in these consolidated financial statements for CECL related disclosures. F-10 Table of Contents Equity-Based Compensation The Company accounts for equity-based compensation issued to employees and the Board of Directors pursuant to the Amended and Restated Stock Incentive Plan (the “Stock Incentive Plan”) under the fair value method. This method measures compensation cost at the date of grant based on the value of the award and recognizes the cost over the service period, which is usually the vesting period. The fair value of equity-based compensation awards is based on the estimated fair value of the Company’s common stock, as determined by management using a valuation model and approved by the Board of Directors. Fair values of award grants also recognize any ongoing restrictions on the sale of securities. Debt Issuance Costs Debt issuance costs under the Company’s indebtedness are capitalized and amortized over the term of the respective debt instrument. Unamortized debt issuance costs are expensed when the associated debt is repaid prior to maturity. Amortization of debt issuance costs is included within interest expense in the Company’s consolidated statements of operations. The unamortized balance for both the senior notes and the line of credit are included within Senior Notes Payable and Line of Credit Payable, respectively, in these consolidated financial statements. See Note 9 included in these consolidated financial statements for further consideration. Payment-in-Kind Interest The Company has loans in its portfolio that contain payment-in-kind (“PIK”) provisions. The PIK interest computed at the contractual rate specified in each applicable agreement, is accrued and added to the principal balance of the loan monthly in arrears and recorded as interest income. The PIK income added to the principal balance is generally collected upon repayment of the outstanding principal. To maintain the Company’s status as a REIT, this non-cash source of income must be paid out to stockholders in the form of dividends for the year earned, even though the Company has not yet collected the cash. Revenue Recognition Interest income from loans is accrued based on the outstanding principal amount and the contractual terms of each loan. For loans, origination fees, direct loan origination costs, and other discounts (in aggregate the “Original Issue Discount” or “OID”) are also recognized in interest income from loans over the initial loan term as a yield adjustment using the effective interest method. Delayed draw loans earn interest or unused fees on the undrawn portion of the loan, which is recognized as interest income in the period earned. Other fees, including prepayment fees and exit fees, are recognized as interest income when received. Interest reserves The Company utilizes interest reserves on certain loans to fund the interest payments. Such reserves are established at the time of loan origination. The interest reserve represents a deposit received from the borrower for future loan interest payments. It is recorded as a liability as it represents unearned interest revenue. The interest reserve is relieved when the interest on the loan is earned and interest income is recorded in the period when the interest is earned in accordance with the credit agreement. The interest payment is deducted from the interest reserve deposit balance when the interest payment is due. The decision to establish a loan-funded interest reserve is made during the underwriting process and considers the feasibility of the project, the creditworthiness and expertise of the borrower, and the debt coverage provided by the real estate and other pledged collateral. It is the Company’s policy to recognize income for this interest component as long as the borrower is progressing as originally projected and if there has been no deterioration in the financial standing of the borrower or the underlying project. The Company’s standard policies for interest income recognition are applied to all loans, including those with interest reserves. Income Taxes The Company is a Maryland corporation and will elect to be taxed as a REIT under the Code, commencing with its taxable year ending December 31, 2020. The Company believes that its proposed method of operation will enable it to qualify as a REIT. However, no assurances can be given that the Company’s beliefs or expectations will be fulfilled, since qualification as a REIT depends on the Company satisfying numerous asset, income and distribution tests which depends, in part, on the Company’s operating results. F-11 Table of Contents To qualify as a REIT, the Company must meet a number of organizational and operational requirements. Those qualification tests involve the percentage of income that the Company earns from specified sources, the percentage of the Company’s assets that fall within specified categories, the diversity of the ownership of the Company’s shares, and the percentage of the Company’s taxable income that the Company distributes. The Company is required to distribute annually to its stockholders at least 90% of the Company’s REIT taxable income prior to the deduction for dividends paid. To the extent that the Company distributes less than 100% of its REIT taxable income in any tax year (taking into account any distributions made in a subsequent tax year under Sections 857(b)(9) or 858 of the Code), the Company will pay tax at regular corporate rates on that undistributed portion. Furthermore, the Company will be subject to a 4% nondeductible excise tax on any amount by which distributions the Company pays with respect to any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year) are less than the sum of (1) 85% of our ordinary income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. The annual expense is calculated in accordance with applicable tax regulations. Excise tax expense is included in the financial statement line item income tax expense . FASB ASC Topic 740, Income Taxes (“ASC 740”), prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported as of December 31, 2021. B ased on the Company’s evaluation, there is no reserve for any uncertain income tax positions. Accrued interest and penalties, if any, are included within other liabilities in the consolidated balance sheets. Earnings per Share The Company calculates basic earnings (loss) per share by dividing net income (loss) allocable to common stockholders for the period by the weighted average shares of common stock outstanding for that period after consideration of the earnings (loss) allocated to the Company’s restricted stock, which are participating securities as defined in GAAP. Diluted earnings (loss) per share takes into effect any dilutive instruments, such as stock options, restricted stock, restricted stock units (“RSUs”) and convertible debt, except when doing so would be anti-dilutive. As of December 31, 2021, there were dilutive instruments relating to stock options and restricted shares. See Note 11 included in these financial statements for the earnings per share calculations. 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 loans held for investment at fair value. Over the course of the coronavirus (“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 year ended December 31, 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. As a result, the COVID-19 pandemic is negatively impacting almost every industry directly or indirectly, including the regulated cannabis industry. Although most of these measures have been lifted or scaled back, surges of COVID-19 in certain parts of the world, including the United States, have resulted and may in the future result in the re-imposition of certain restrictions and may lead to more restrictions to reduce the spread of COVID-19. The full 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 FASB issued 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. ASU No. 2020-04 is effective for all entities as of March 12, 2020 through December 31, 2022. The Company does not believe the adoption of this ASU will have a material impact on its financial statements. F-12 Table of Contents In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): 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. ASU No. 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 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. 3. LOANS HELD FOR INVESTMENT AT FAIR VALUE As of December 31, 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 $ 75.9 million and $ 59.9 million, respectively, and outstanding principal was approximately $ 77.6 million and $ 50.8 million, as of December 31, 2021 and 2020, respectively . For the year ended December 31, 2021, the Company funded approximately $ 37.7 million of outstanding principal and had repayments of approximately $ 13.1 million. As of December 31, 2021 and 2020, 0.0 % and approximately 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 a verage 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 December 31, 2021 and 2020: As of December 31, 2021 Fair Value (2) Carrying Value (1) Outstanding Principal (1) Weighted Average Remaining Life (Years) (3) Senior Term Loans $ 77,096,319 $ 74,913,157 $ 77,630,742 2.2 Total loans held at fair value $ 77,096,319 $ 74,913,157 $ 77,630,742 2.2 As of December 31, 2020 Fair Value (2) Carrying Value (1) Outstanding Principal (1) Weighted Average Remaining Life (Years) (3) Senior Term Loans $ 48,558,051 $ 46,994,711 $ 50,831,235 3.3 Total loans held at fair value $ 48,558,051 $ 46,994,711 $ 50,831,235 3.3 (1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of OID, PIK and loan origination costs. (2) Refer to Note 14 in these annual consolidated financial statements. (3) Weighted average remaining life is calculated based on the fair value of the loans as of December 31, 2021 and December 31, 2020. The following table presents changes in loans held at fair value as of and for the year ended December 31, 2021: Principal Original Issue Discount Unrealized Gains (Losses) Fair Value Total loans held at fair value at December 31, 2020 $ 50,831,235 $ ( 3,836,524 ) $ 1,563,340 $ 48,558,051 Change in unrealized gains (losses) on loans at fair value, net — — 619,821 619,821 New fundings 37,701,104 ( 1,130,623 ) — 36,570,481 Loan repayments ( 12,000,000 ) — — ( 12,000,000 ) Loan amortization payments ( 1,093,659 ) — — ( 1,093,659 ) Accretion of original issue discount — 2,249,563 — 2,249,563 PIK interest 2,192,062 — — 2,192,062 Total loans held at fair value at December 31, 2021 $ 77,630,742 $ ( 2,717,584 ) $ 2,183,161 $ 77,096,319 F-13 Table of Contents The following table presents changes in loans held at fair value as of and for the period from July 31, 2020 (commencement of operations) to December 31, 2020: Principal Original Issue Discount Fair Value Loans acquired at July 31, 2020 $ 46,080,605 $ ( 2,974,054 ) $ 43,106,551 Realized gains (losses) on loans at fair value, net 345,000 — 345,000 Change in unrealized gains (losses) on loans at fair value, net — — 1,563,340 New fundings 16,360,000 ( 1,595,199 ) 14,764,801 Loan repayments ( 5,000,000 ) — ( 5,000,000 ) Sale of loans ( 7,345,000 ) — ( 7,345,000 ) Accretion of original issue discount — 732,729 732,729 PIK interest 390,630 — 390,630 Total loans held at fair value at Decembe r 31, 2020 $ 50,831,235 $ ( 3,836,524 ) $ 48,558,051 A more detailed listing of the Company’s loans held at fair value portfolio based on information available as o f December 31, 2021 i s as follows: Collateral Location Collateral Type (8) Fair Value (2) Carrying Value (1) Outstanding Principal (1) Interest Rate Maturity Date (3) Payment Terms (4) Private Co. A AZ, MI, MD, MA C ,D $ 63,523,503 $ 61,629,048 $ 63,918,855 16.4 % (5) 5/8/2024 P/I Public Co. A NV C 2,919,420 2,940,000 2,940,000 14.0 % (6) 1/26/2023 I/O Private Co. B MI C 10,653,396 10,344,109 10,771,887 17.0 % (7) 9/1/2023 P/I Total loans held at fair value $ 77,096,319 $ 74,913,157 $ 77,630,742 (1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of OID, PIK and loan origination costs. (2) Refer to Note 14 in these annual consolidated financial statements. (3) 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. (4) I/O = interest-only, P/I = principal and interest. P/I loans may include interest-only periods for a portion of the loan term. (5) Base interest rate of 13 % and payment-in-kind (“PIK”) interest rate of 3.4 %. (6) Base interest rate of 12 % and PIK interest rate of 2 %. (7) Base interest rate of 13 % and PIK interest rate of 4 %. (8) C = Cultivation Facilities, D = Dispensaries. F-14 Table of Contents 4. LOANS HELD FOR INVESTMENT AT CARRYING VALUE As o f December 31, 2021 and 2020, the Company’s portfolio included twelve and three loans, respectively, held at carrying value. The aggregate originated commitment under these loans was approximately $ 324.3 million and $ 44.0 million, respectively, and outstanding principal was approximately $ 270.8 million and $ 33.9 million, respectively, as of December 31, 2021 and 2020. For the year ended December 31, 2021, the Company funded approximately $ 249.6 million of outstanding principal. As of December 31, 2021 and 2020 , approximately 48 % 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 1.0 %, calculated based on loans with LIBOR floo rs. 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 December 31, 2021 and 2020: As of December 31, 2021 Outstanding Principal (1) Original Issue Discount Carrying Value (1) Weighted Average Remaining Life (Years) (2) Senior Term Loans $ 270,841,715 $ ( 13,678,219 ) $ 257,163,496 3.4 Total loans held at carrying value $ 270,841,715 $ ( 13,678,219 ) $ 257,163,496 3.4 As of December 31, 2020 Outstanding Principal (1) Original Issue Discount Carrying Value (1) Weighted Average Remaining Life (Years) (2) Senior Term Loans $ 33,907,763 $ ( 2,070,732 ) $ 31,837,031 4.7 Total loans held at carrying value $ 33,907,763 $ ( 2,070,732 ) $ 31,837,031 4.7 (1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted OID, PIK and loan origination costs. (2) Weighted average remaining life is calculated based on the carrying value of the loans as of December 31, 2021 and December 31, 2020. The following table presents changes in loans held at carrying value as of and for the year ended December 31, 2021: Principal Original Issue Discount Carrying Value Total loans held at carrying value at December 31, 2020 $ 33,907,763 $ ( 2,070,732 ) $ 31,837,031 New fundings 249,591,644 ( 14,941,001 ) 234,650,643 Accretion of original issue discount — 3,333,514 3,333,514 Realized gain on sale of loans 450,000 — 450,000 Sale of loans ( 15,450,000 ) — ( 15,450,000 ) PIK interest 2,342,308 — 2,342,308 Total loans held at carrying value at December 31, 2021 $ 270,841,715 $ ( 13,678,219 ) $ 257,163,496 The following table presents changes in loans held at carrying value as of and for the period from July 31, 2020 (commencement of operations) to December 31, 2020: Principal Original Issue Discount Carrying Value Loans at July 31, 2020 $ — $ — $ — New fundings 33,875,985 ( 2,120,969 ) 31,755,016 Accretion of original issue discount — 50,237 50,237 PIK interest 31,778 — 31,778 Total loans held at carrying value at Decembe r 31, 2020 $ 33,907,763 $ ( 2,070,732 ) $ 31,837,031 F-15 Table of Contents A more detailed listing of the Company’s loans held at carrying value portfolio based on information available as o f December 31, 2021 is as fo llows: Collateral Location Collateral Type (4) Outstanding Principal (1) Original Issue Discount Carrying Value (1) Interest Rate Maturity Date (2) Payment Terms (3) Private Co. C PA C ,D $ 21,676,514 $ ( 754,767 ) $ 20,921,747 17.0 % (5) 12/1/2025 P/I Sub. of Public Co. D PA C 10,000,000 ( 137,755 ) 9,862,245 12.9 % (6) 12/18/2024 I/O Private Co. D OH, AR D 12,230,666 ( 825,217 ) 11,405,449 15.0 % (7) 1/1/2026 P/I Private Co. E OH C ,D 19,871,580 ( 2,627,738 ) 17,243,842 17.0 % (8) 4/1/2026 P/I Private Co. F MO C ,D 11,545,234 ( 1,717,705 ) 9,827,529 17.0 % (9) 5/1/2026 P/I Sub of Private Co. G NJ C ,D 46,717,825 ( 2,362,164 ) 44,355,661 14.3 % (10) 5/1/2026 P/I Public Co. F IL, FL, NV, OH, MA, MI, MD, AR, NV, AZ C ,D 60,000,000 ( 1,136,000 ) 58,864,000 8.7 % (11) 5/30/2023 I/O Sub of Private Co. H IL C 5,781,250 ( 106,771 ) 5,674,479 15.0 % (12) 5/11/2023 I/O Private Co. K MA C ,D 7,000,000 ( 724,167 ) 6,275,833 13.0 % (13) 8/3/2026 P/I Private Co. I MD C ,D 10,425,205 ( 213,332 ) 10,211,873 15.5 % (14) 8/1/2026 P/I Private Co. J MO C 23,093,441 ( 721,583 ) 22,371,858 15.0 % (15) 9/1/2025 P/I Sub. of Public Co. H IA, IL, MI, NJ, PA C ,D 42,500,000 ( 2,351,020 ) 40,148,980 9.8 % (16) 1/1/2026 I/O Total loans held at carrying value $ 270,841,715 $ ( 13,678,219 ) $ 257,163,496 (1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted OID, PIK and loan origination costs. (2) 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. (3) I/O = interest-only, P/I = principal and interest. P/I loans may include interest-only periods for a portion of the loan term. (4) C = Cultivation Facilities, D = Dispensaries. (5) Base interest rate of 12.0 % plus LIBOR (LIBOR floor of 1.0 %) and PIK interest rate of 4.0 %. (6) Base interest rate of 12.9 %. (7) Base interest rate of 13.0 % and PIK interest rate of 2.0 %. (8) Base interest rate of 12.0 % plus LIBOR (LIBOR floor of 1.0 %) and PIK interest rate of 4.0 %. (9) Base interest rate of 13.0 % and PIK interest rate of 4.0 %. (10) Base interest rate of 11.5 % plus LIBOR (LIBOR floor of 1.0 %) and PIK interest rate of 1.8 %. (11) Base interest rate of 8.7 %. (12) Base interest rate of 15.0 %. (13) Base interest rate of 12.0 % plus LIBOR (LIBOR floor of 1.0 %) (14) Base interest rate of 12.0 % plus LIBOR (LIBOR floor of 1.0 %) and PIK interest rate of 2.5 %. (15) Base interest rate of 12.0 % plus LIBOR (LIBOR floor of 1.0 %) and PIK interest rate of 2.0 %. (16) Base interest rate of 9.8 % . F-16 Table of Contents 5. LOAN RECEIVABLE AT CARRYING VALUE As of December 31, 2021 and 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 $ 2.5 million and $ 3.4 million as of December 31, 2021 and 2020, respectively. During the year ended December 31, 2021, the Company received repayments of approximately $ 0.8 million of outstanding principal. The following table presents changes in loans receivable as of and for the year ended December 31, 2021 : Principal Original Issue Discount Carrying Value Total loans receivable at carrying value at December 31, 2020 $ 3,352,176 $ ( 3,913 ) $ 3,348,263 Principal repayment of loans ( 818,910 ) — ( 818,910 ) Accretion of original issue discount — 1,235 1,235 Total loans receivable at carrying value at December 31, 2021 $ 2,533,266 $ ( 2,678 ) $ 2,530,588 6. 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. 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 commercial real estate properties and is not specific to any loan losses or impairments on the Company’s loans held for investment. As of December 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 approximately $ 3.1 million and $ 0.5 million, respectively, or 120 and 132 basis points, respectively, of the Company’s total loans held at carrying value and loans receivable at carrying value of approximately $ 259.7 million and $ 35.2 million, 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 approximately $ 2.4 million and $ 0.4 million, respectively, and a liability for unfunded commitments of approximately $ 0.7 million and $ 0.1 million, 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. F-17 Table of Contents 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 year end ed December 31, 2021 wa s as follows: Outstanding (1) Unfunded (2) Total Balance at December 31, 2020 $ 404,860 $ 60,537 $ 465,397 Provision for current expected credit losses 2,026,698 622,640 2,649,338 Write-offs — — — Recoveries — — — Balance at December 31, 2021 $ 2,431,558 $ 683,177 $ 3,114,735 (1) As of December 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 consolidated balance sheets. (2) As of December 31, 2021 and December 31, 2020, the CECL Reserve related to unfunded commitments on loans held at carrying value is recorded within current expected credit loss reserve as a liability in the Company’s consolidated balance sheets. 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 for the period from July 31, 2020 (commencement of operations) to December 31, 2020 was as follows: Outstanding (1) Unfunded (2) Total Balance at July 31, 2020 $ — $ — $ — Provision for current expected credit losses 404,860 60,537 465,397 Write-offs — — — Recoveries — — — Balance at December 31, 2020 $ 404,860 $ 60,537 $ 465,397 (1) As of 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 consolidated balance sheets. (2) As of 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 consolidated 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: Rating Definition 1 Very Low Risk — Materially exceeds performance metrics included in original or current credit underwriting and business plan 2 Low Risk — Collateral and business performance exceeds substantially all performance metrics included in original or current credit underwriting and business plan 3 Medium Risk — Collateral and business performance meets, or is on track to meet underwriting expectations; business plan is met or can reasonably be achieved 4 High Risk/ Potential for Loss — Collateral performance falls short of underwriting, material differences from business plans, defaults may exist, or may soon exist absent material improvement. Risk of recovery of interest exists 5 Impaired/Loss Likely — Performance is significantly worse than underwriting with major variances from business plan observed. Loan covenants or financial milestones have been breached; exit from loan or refinancing is uncertain. Full recovery of principal is unlikely The risk ratings are primarily based on historical data as well as taking into account future economic conditions. As of December 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: Risk Rating: 2021 2020 Total 1 $ — $ — $ — 2 58,864,000 — 58,864,000 3 145,898,184 44,720,028 190,618,212 4 10,211,872 — 10,211,872 5 — — — Total $ 214,974,056 $ 44,720,028 $ 259,694,084 F-18 Table of Contents 7. INTEREST RECEIVABLE The following table summarizes the interest receivable by the Company as o f December 31, 2021 and 2020: As of December 31, 2021 As of December 31, 2020 Interest receivable $ 3,562,566 $ 675,795 PIK receivable 554,357 177,183 Unused fees receivable 296,015 74,314 Total interest receivable $ 4,412,938 $ 927,292 8. INTEREST RESERVE At December 31, 2021 and December 31, 2020, the Company had seven and one loans, respectively, that included a loan funded interest reserve. For the year ended December 31, 2021, approximately $ 6.0 million o f interest income was earned and disbursed from the interest reserve. The following table presents changes in interest reserve as of and for the year ended December 31, 2021 and for the period from July 31, 2020 to December 31, 2020: For the year ended December 31, 2021 Period from July 31, 2020 to December 31, 2020 Beginning reserves $ 1,325,750 $ — New reserves 9,450,468 1,400,000 Reserves disbursed ( 5,993,947 ) ( 74,250 ) Ending reserves $ 4,782,271 $ 1,325,750 9. DEBT Revolving Credit Facility In July 2020, the Company obtained a secured revolving credit loan (the “Revolving Credit Facility”) from AFC Finance, LLC, an affiliate of the Company’s management. The Revolving Credit Facility 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 Credit Facility and the Revolving Credit Facility did not have any unused fees. The maturity date of the Revolving Credit Facility 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 Credit Facility (the “Revolving Credit Agreement”). The Revolving Credit Facility was secured by the assets of the Company. On May 7, 2021, the Company amended the Revolving Credit Agreement with AFC Finance, LLC (the “First Amendment”). The First Amendment 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. On November 3, 2021, the Company entered into the Second Amendment to the Revolving Credit Agreement with AFC Finance, LLC (the “Second Amendment”). Under the Second Amendment, payments to AFC Finance, LLC for interest, commitment fees and unused fees (net applicable taxes) are required to be paid directly or indirectly through AFC Finance, LLC to charitable organizations designated by AFC Finance, LLC. The Second Amendment (i) increased the loan commitment from $ 50,000,000 to $ 75,000,000 ; (ii) decreased the interest rate from 6 % per annum to 4.75 % per annum; (iii) introduced a one-time commitment fee of 0.25 %, to be paid in three equal quarterly installments, and an unused line fee of 0.25 % per annum, to be paid quarterly in arrears; (iv) provided an optional buyout provision for the holders of the Company’s 2027 Senior Notes (as defined above) upon an event of default under the Revolving Credit Agreement; (v) extended the fixed element of the maturity date from December 31, 2021 to September 30, 2022 and (vi) provided that a Refinancing Credit Facility (as defined below) may be any credit facility where the proceeds are incurred to refund, refinance or replace the Revolving Credit Agreement. Pursuant to the Second Amendment, the Company incurred a one-time commitment fee expense of $ 187,500 in November 2021, payable in three quarterly installments beginning in the first quarter of 2022, which is amortized over the life of the lo an. As of December 30, 2021, the Company drew on the full amount of the Revolving Credit Facility, resulting in $ 75.0 million outstanding and $ 0.0 million available for borrowing and incurred interest expense of $ 19,792 . All outstanding borrowings were subsequently repaid in full on January 3, 2022. F-19 Table of Contents 2027 Senior Notes On November 3, 2021, the Company issued $ 100 million in aggregate principal amount of senior unsecured notes due in 2027 (the “2027 Senior Notes”). The 2027 Senior Notes accrue interest at a rate of 5.75 % per annum. Interest on the 2027 Senior Notes is due semi-annually on May 1 and November 1 of each year, beginning on May 1, 2022. The net proceeds from the Offering were approximately $ 97 million, after deducting the initial purchasers’ discounts and commissions and estimated offering fees and expenses payable by the Company. The Company intends to use the proceeds from the issuance of the 2027 Senior Notes (i) to fund loans related to unfunded commitments to existing borrowers, (ii) to originate and participate in commercial loans to companies operating in the cannabis industry that are consistent with our investment strategy and (iii) for working capital and other general corporate purposes. The terms of the 2027 Senior Notes are governed by an indenture, dated November 3, 2021, among us, as issuer, and TMI Trust Company, as trustee (the “Indenture”). Under the Indenture governing the 2027 Senior Notes, we are required to cause all of our existing and future subsidiaries to guarantee the 2027 Senior Notes, other than certain immaterial subsidiaries as set forth in the Indenture. The 2027 Senior Notes are currently not guaranteed by any of our subsidiaries. Prior to February 1, 2027, we may redeem the 2027 Senior Notes in whole or in part at a price equal to the greater of 100 % of the principal amount of the 2027 Senior Notes being redeemed or a make-whole premium set forth in the Indenture, plus accrued and unpaid interest thereon to, but excluding, the applicable redemption date. On or after February 1, 2027, we may redeem the 2027 Senior Notes in whole or in part at a price equal to 100 % of the principal amount of the 2027 Senior Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. The Indenture also requires us to offer to purchase all of the 2027 Senior Notes at a purchase price equal to 101 % of the principal amount of the 2027 Senior Notes, plus accrued and unpaid interest if a ‘‘change of control triggering event’’ (as defined in the Indenture) occurs. The Indenture governing the 2027 Senior Notes contains customary terms and restrictions, subject to a number of exceptions and qualifications, including restrictions on the Company’s ability to (1) incur additional indebtedness unless the Annual Debt Service Charge (as defined in the Indenture) is no less than 1.5 to 1.0, (2) incur or maintain total debt in an aggregate principal amount greater than 60 % of the Company’s consolidated Total Assets (as defined in the Indenture), (3) incur or maintain secured debt in an aggregate principal amount greater than 25 % of the Company’s consolidated Total Assets (as defined in the Indenture); and (4) merge, consolidate or sell substantially all of the Company’s assets. In addition, the Indenture also provides for customary events of default. If any event of default occurs, any amount then outstanding under the Indenture may immediately become due and payable. These events of default are subject to a number of important exceptions and qualifications set forth in the Indenture. The 2027 Senior Notes are due on May 1, 2027 . Scheduled principal payments on the senior unsecured notes as of December 31, 2021 are as follows: Senior Unsecured Notes Year ending December 31, 2022 $ — 2023 — 2024 — 2025 — 2026 — Thereafter 100,000,000 Total principal $ 100,000,000 The following table reflects a summary of interest expense incurred during the year ended December 31, 2021. Note, no interest expense was incurred as of December 31, 2020. As of December 31, 2021 Senior Unsecured Notes Line of Credit Total Borrowings Interest expense $ 942,361 $ 19,792 $ 962,153 Unused fee expense — 29,687 29,687 Amortization of deferred financing costs 102,151 32,855 135,006 Total interest expense $ 1,044,512 $ 82,334 $ 1,126,846 F-20 Table of Contents 10. COMMITMENTS AND CONTINGENCIES As o f December 31, 2021 and 2020, the Compa ny had the following commitments to fund various senior term loans, investment in debt securities, equipment loans and bridge loans: As of December 31, 2021 As of December 31, 2020 Total original loan commitments $ 419,198,125 $ 107,292,176 Less: drawn commitments ( 363,659,505 ) ( 87,467,057 ) Total undrawn commitments $ 55,538,620 $ 19,825,119 The Company from time to time may be a party to litigation in the normal course of business. As o f December 31, 2021, t he 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. 11. STOCKHOLDERS’ EQUITY Series A Preferred Stock As o f December 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 for redemption . Shar es 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. Common Stock 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 consolidated 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. 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. This resulted in the reduction of 15 shares issued and outstanding. F-21 Table of Contents 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 consolidated statements 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 . 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 consolidated statements 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 . On July 6, 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 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 consolidated statements of stockholders’ equity. On January 10, 2022, the Company completed an underwritten offering of 3,000,000 shares of our common stock, at a price to the public of $ 20.50 per share. The gross proceeds to the Company from the offering were $ 61.5 million, before deducting underwriting discounts and commissions, a structuring fee and offering expenses payable by the Company. In connection with the offering, the underwriters were granted an over-allotment option to purchase up to an additional 450,000 shares of the Company’s common stock. On January 14, 2022, the underwriters partially exercised the over-allotment option with respect to 291,832 shares of common stock, which was completed on January 19, 2022. The underwriting commissions of approximately $ 3.5 million will be reflected as a reduction of additional paid-in capital in the first quarter of fiscal year 2022. The Company incurred approximately $ 1.0 million of expenses in connection with the offering. After giving effect to the partial exercise of the over-allotment option, the total number of shares sold by the Company in the public offering was 3,291,832 shares and total gross proceeds, before deducting underwriting discounts and commissions, a structuring fee and other offering expenses payable by the Company, were approximately $ 67.5 million. Equity Incentive Plan The Company has established an equity incentive compensation plan (the “Plan”). The Company’s Board authorized the adoption of the Plan (as amended, the “2020 Plan”) and approved stock option grants of 1,632,632 shares of common stock and 56,285 shares of restricted stock as of December 31, 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. The Company has, and currently intends to continue 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. As of December 31, 2021, th e maximum number of shares of the Company common stock that may be delivered pursuant to awards under the 2020 Plan (the “Share Limit”) equals 2,401,965 shares, which is an increase of 301,965 shares compared to December 31, 2020 under the evergreen provision in the 2020 Plan in connection with the public offering of an additional 2,750,000 shares of common stock by the Company in June 2021 and 269,650 shares of common stock issued by the Company to the underwriters in connection with their partial exercise of an over-allotment option in July 2021. 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. F-22 Table of Contents 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 10 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) n on-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 December 31, 2021 and 2020: As of December 31, 2021 As of December 31, 2020 Non-vested 183,114 142,814 Vested 1,449,518 800,618 Forfeited ( 28,396 ) ( 16,534 ) Balance 1,604,236 926,898 The following table summarizes the (i) non-vested restricted stock granted, (ii) vested restricted stock granted and (iii) forfeited restricted stock granted for the Company’s directors and officers and employees of the Manager as of December 31, 2021 and 2020: As of December 31, 2021 As of December 31, 2020 Non-vested 56,285 — Vested — — Forfeited — — Balance 56,285 — 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 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. Restricted stock grant expense is based on the Company’s stock price at the time of the grant and amortized over the vesting period. The share-based compensation expense for the Company was approximately $ 1,745,872 for the year ended December 31, 2021, and no expense was booked during the period from July 31, 2020 to December 31, 2020. The following table presents the assumptions used in the option pricing model of options granted under the 2020 Plan: Assumptions Range Expected volatility 40 % - 50 % Expected dividend yield 10 % - 20 % Risk-free interest rate 0.5 % - 1.5 % Expected forfeiture rate 0 % The following tables summarize stock option activity during the year ended December 31, 2021 and for the period from July 31, 2020 to December 31, 2020: Year ended December 31, 2021 Weighted- Average Grant Date Fair Value Per Option Balance as of December 31, 2020 926,898 $ 0.91 Granted 689,200 1.31 Exercised — — Forfeited ( 11,862 ) 1.01 Balance as of December 31, 2021 1,604,236 $ 1.08 Period ended December 31, 2020 Weighted- Average Grant Date Fair Value Per Option Balance as of July 31, 2020 — $ — Granted 943,432 0.91 Exercised — — Forfeited ( 16,534 ) 0.90 Balance as of December 31, 2020 926,898 $ 0.91 F-23 Table of Contents 12. EARNINGS PER SHARE The following information sets fort h the computations of basic weighted average earnings per common share for the year ended December 31, 2021 and for the period from July 31, 2020 to December 31, 2020: Year ended December 31, 2021 Period from July 31, 2020 to December 31, 2020 Net income (loss) attributable to common stockholders $ 21,000,497 $ 4,313,632 Divided by: Basic weighted average shares of common stock outstanding 13,373,778 5,694,475 Diluted weighted average shares of common stock outstanding 13,808,845 5,694,475 Basic weighted average earnings per common share $ 1.57 $ 0.76 Diluted weighted average earnings per common share $ 1.52 $ 0.76 13. INCOME TAX A TRS is an entity taxed as a corporation that has not elected to be taxed as a REIT, in which a REIT directly or indirectly holds equity, and that has made a joint election with such REIT to be treated as a TRS. A TRS generally may engage in any business, including investing in assets and engaging in activities that could not be held or conducted directly by the Company without jeopardizing its qualification as a REIT. A TRS is subject to applicable United States federal, state and local income tax on its taxable income. In addition, as a REIT, the Company also may be subject to a 100 % excise tax on certain transactions between it and its TRS that are not conducted on an arm’s-length basis. The income tax provision is included in the line item income tax expense, including excise tax in the consolidated statements of operations included in this Annual Report on Form 10-K. The income tax provision for the Company was $ 35,167 for the year ended December 31, 2021 and $ 0 for the period ended December 31, 2020. The income tax expense for the Company relates to various state and local taxes and activities of the Company’s taxable REIT subsidiary of approximately $ 10,167 and $ 25,000 , respectively. For the year ended December 31, 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. 14. FAIR VALUE Loans Held for Investment 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 present fair value measurements of loans held at fair value as of December 31, 2021 and 2020: Fair Value Measurement Using as of December 31, 2021 Total Level 1 Level 2 Level 3 Loans held at fair value $ 77,096,319 $ — $ — $ 77,096,319 Total $ 77,096,319 $ — $ — $ 77,096,319 Fair Value Measurement Using as of December 31, 2020 Total Level 1 Level 2 Level 3 Loans held at fair value $ 48,558,051 $ — $ — $ 48,558,051 Total $ 48,558,051 $ — $ — $ 48,558,051 F-24 Table of Contents The following table presents changes in loans that use Level 3 inputs as of and for the year ended December 31, 2021: For the year ended December 31, 2021 Total loans using Level 3 inputs at December 31, 2020 $ 48,558,051 Change in unrealized gains (losses) on loans at fair value, net 619,821 Additional funding 37,701,104 Original issue discount and other discounts, net of costs ( 1,130,623 ) Loan repayments ( 12,000,000 ) Loan amortization payments ( 1,093,659 ) Accretion of original issue discount 2,249,563 PIK interest 2,192,062 Total loans using Level 3 inputs at December 31, 2021 $ 77,096,319 The change in unrealized appreciation included in the consolidated statement of operations attributable to loans held at fair value, categorized as Level 3, still held at December 31, 2021 is $ 1,402,411 . The following tables summarize the significant unobservable inputs the Company used to value the loans categorized within Level 3 as of December 31, 2021 and 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 December 31, 2021 Unobservable Input Fair Value Primary Valuation Techniques Input Estimated Range Weighted Average Senior Term Loans $ 77,096,319 Yield analysis Market Yield 17.71 % - 20.96 % 18.22 % Total Investments $ 77,096,319 As of December 31, 2020 Unobservable Input Fair Value Primary Valuation Techniques Input Estimated Range Weighted Average Senior Term Loans $ 48,558,051 Yield analysis Market Yield 15.79 % - 20.75 % 20.20 % Total Investments $ 48,558,051 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. Investment in Marketable Securities As of December 31, 2021, the Company’s portfolio included one investment in debt securities held at fair value. As of December 31, 2020, the Company’s portfolio did no t include any debt securities. F-25 Table of Contents The following tables summarize the Company’s debt securities held at fair value as of December 31, 2021: As of December 31, 2021 Fair Value Carrying Value (1) Outstanding Principal (1) Weighted Average Remaining Life (Years) (2) Debt securities $ 15,881,250 $ 16,050,000 $ 15,000,000 2.9 Total debt securities held at fair value $ 15,881,250 $ 16,050,000 $ 15,000,000 2.9 (1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted purchase premium and loan origination costs. (2) Weighted average remaining life is calculated based on the fair value of the loans as of December 31, 2021. The following table presents changes in loans held at fair value as of and for the year ended December 31, 2021: Principal Original Issue Discount Unrealized Gains (Losses) Fair Value Total debt securities held at fair value at December 31, 2020 $ — $ — $ — $ — Change in unrealized gains / (losses) on securities at fair value, net — — ( 168,750 ) ( 168,750 ) New fundings 15,000,000 1,050,000 — 16,050,000 Loan repayments — — — — Total debt securities held at fair value at December 31, 2021 $ 15,000,000 $ 1,050,000 $ ( 168,750 ) $ 15,881,250 The following table presents fair value measurements of debt securities held at fair value as of December 31, 2021. Note, the Company did no t hold any investments in debt securities as of December 31, 2020. Fair Value Measurement Using as of December 31, 2021 Total Level 1 Level 2 Level 3 Debt securities held at fair value $ 15,881,250 $ — $ 15,881,250 $ — Total $ 15,881,250 $ — $ 15,881,250 $ — 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 consolidated balance sheets: As of December 31, 2021 Carrying Value Fair Value Financial assets Cash and cash equivalents $ 109,246,048 $ 109,246,048 Loans held for investment at carrying value $ 257,163,496 $ 260,930,143 Loan receivable at carrying value $ 2,530,588 $ 2,475,001 Estimates of fair value for cash and cash equivalents are measured using observable, quoted market prices, or Level 1 inputs. The Company’s loans held for investment are measured using unobservable inputs, or Level 3 inputs. The Company’s investment in debt securities are measured using readily available quoted prices for similar assets, or Level 2 inputs. F-26 Table of Contents 15. 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. 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 in come 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 year ended December 31, 2021 was approximately $ 6,010,704 . For the period from July 31, 2020 to December 31, 2020, the Manager agreed to waive the incentive compensation. 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 year ended December 31, 2021 and for the period from July 31, 2020 to December 31, 2020: Year ended December 31, 2021 Period from July 31, 2020 to December 31, 2020 Affiliate Costs Management fees earned $ 3,340,123 $ 623,361 Less outside fees earned ( 1,029,315 ) ( 259,167 ) Base management fees, net 2,310,808 364,194 Incentive fees earned 6,010,704 — General and administrative expenses reimbursable to Manager 2,319,074 671,605 Total $ 10,640,586 $ 1,035,799 Amounts payable to the Company’s Manager as of December 31, 2021 and 2020 wer e $ 4,147,501 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 o f December 31, 2021, th ere were four co-invested loans held by the Company and an affiliate of the Company. In September 2021, we entered into the September Commitment Assignment with our Manager, pursuant to which our Manager assigned to us its commitment to make loans to Private Company A in a principal amount of up to $ 20.0 million, which was funded in September 2021. The loans were purchased at accreted cost plus accrued PIK interest. We did not pay any fees or premium to our Manager for our acquisition of our Manager’s loan commitments under the Credit Agreement with Private Company A pursuant to the September Commitment Assignment. In September 2021, we entered into a September Loan Assignment with FLH, Private Company A, as borrower, and our Manager, as the agent, pursuant to which we acquired FLH’s interest in the $ 8.5 million portion of the loan to Private Company A, for a purchase price of approximately $ 8.5 million (which equaled the outstanding principal amount of the loan plus any accrued and unpaid interest and less any unaccreted original issue discount). In connection with investments in loans, the Company may receive th e 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 year ended December 31, 2021, the Company sold approximately $ 2.3 million of Assigned Rights to an affiliate which are accounted for as additional original issue discount and accreted over the life of the loans. For the period ended December 31, 2020, the Company sold approximately $ 1.6 million of Assigned Rights to an affiliate which are accounted for as additional original issue discount and accreted over the life of the loans. F-27 Table of Contents Secured Revolving Credit Facility From Affiliate The Company has the Revolving Credit Facility from AFC Finance, LLC, an affiliate of the Company. Refer to Note 9 to our consolidated financial statements for more information. 16. DIVIDENDS AND DISTRIBUTIONS The following table summarizes the Company’s dividends dec lared during the year end ed December 31, 2021 : Record Date Payment Date Common Share Distribution Amount Taxable Ordinary Income Return of Capital Section 199A Dividends Regular cash dividend 3/15/2021 3/31/2021 $ 0.36 $ 0.36 $ — $ 0.36 Regular cash dividend 6/15/2021 6/30/2021 0.38 0.38 — 0.38 Regular cash dividend 9/30/2021 10/15/2021 0.43 0.43 — 0.43 Regular cash dividend 12/31/2021 1/14/2022 0.50 0.50 — 0.50 Total cash dividend $ 1.67 $ 1.67 $ — $ 1.67 17. 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 those described below, that required disclosure in these financial statements. Subsequent to the end of the fourth quarter, the Company increased commitments to three current borrowers in the amount of approximately $ 46.9 million and funded approximately $ 49.4 million of principal amount of new and unfunded commitments. Additionally, the Company sold one investment in debt securities of $ 15.0 million and was repaid by Private Company E of approximately $ 20.0 million. On January 10, 2022, the Company completed an underwritten offering of 3,000,000 shares of its common stock, at a price to the public of $ 20.50 per share. The Company’s gross proceeds from the offering were $ 61.5 million, before deducting underwriting discounts and commissions, a structuring fee and offering expenses. In connection with the offering, the underwriters were granted an over-allotment option to purchase up to an additional 450,000 shares of our common stock. On January 14, 2022, the underwriters partially exercised the over-allotment option with respect to 291,832 shares of common stock, which was completed on January 19, 2022. The underwriting commissions of approximately $ 3.5 million will be reflected as a reduction of additional paid-in capital in the first quarter of fiscal year 2022. The Company incurred approximately $ 1.0 million of expenses in connection with the offering. After giving effect to the partial exercise of the over-allotment option, the total number of shares sold in the public offering was 3,291,832 shares and total gross proceeds, before deducting underwriting discounts and commissions, a structuring fee and other offering expenses, were approximately $ 67.5 million. On December 30, 2021, the Company drew $ 75.0 million on our Revolving Credit Facility. All outstanding borrowings were subsequently repaid in full on January 3, 2022. In February 2022, Private Company E repaid its loan in full. The loan had an original maturity date of April 2026 and the outstanding principal on the date of repayment was approximately $ 20.0 million. The Company received a prepayment premium of $ 1.3 million upon repayment of the loan. In February 2022, the Company committed an additional $ 15.3 million under the expansion to the Private Company A Credit Facility, and now hold $ 77.8 million in total of the expanded credit facility, and an additional $ 1.0 million of the expansion was syndicated . In February 2022, the Company sold our $ 15.0 million investment in the Public Company G debt securities for 106 % of face value, resulting in a loss of approximately $ 0.2 million. This investment was classified as available-for-sale as of December 31, 2021. In March 2022, the Company entered into the fourth amendment of the Amended and Restated Credit Agreement with Public Company F to, among other things, increase the total loan commitments by $ 100 million, with approximately (i) $ 26.6 million of the new loan commitments allocated to us; (ii) $ 15.0 million of the new loan commitments allocated to FLH; and (iii) the remaining loan commitments allocated to third-party lenders by the third-party agent. In March 2022, the Company committed an additional $ 5.0 million under the Private Company B credit facility. Following the expansion, the Company now holds $ 15.5 million in total principal amount. In March 2022, we declared a regular cash dividend of $ 0.55 per share of our common stock, relating to the first quarter of 2022, which will be paid on April 15, 2022 to stockholders of record as of March 31, 2022 . The estimated aggregate amount of the regular cash dividend payment is approximately $ 10.9 million. F-28 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: March 10, 2022 AFC GAMMA, INC. By: /s/ Leonard M. Tannenbaum Leonard M. Tannenbaum Chief Executive Officer, Chairman and Director (Principal Executive Officer) By: /s/ Brett Kaufman Brett Kaufman Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) By: /s/ Jonathan Kalikow Jonathan Kalikow Director and Head of Real Estate By: /s/ Jodi Hanson Bond Jodi Hanson Bond Director By: /s/ Alexander Frank Alexander Frank Director By: /s/ Thomas Harrison Thomas Harrison Director By: /s/ Robert Levy Robert Levy Director By: /s/ Marnie Sudnow Marnie Sudnow Director By: /s/ Tomer Tzur Tomer Tzur Director 90