What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-10 compared with 2021-11-04 · 645 added, 504 removed, 385 unchanged (75% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30, 2021

March 31, 2022

December 31, 2021

Loans held for investment at fair value (cost of $ 73,934,116 and $ 46,994,711 at September 30, 2021 and December 31, 2020, respectively, net)

Loans held for investment at carrying value

Loan receivable at carrying value

Loans held for investment at fair value (cost of $ 92,808,827 and $ 74,913,157 at March 31, 2022 and December 31, 2021, respectively, net)

Debt securities available for sale held at fair value (cost of $ 0

and $ 16,050,000 at March 31, 2022 and December 31, 2021, respectively)

Loans held for investment at carrying value, net

Loan receivable at carrying value, net

Current expected credit loss reserve

1 unchanged sentence

Cash and cash equivalents

Receivable for loans and securities sold

Interest receivable

1 unchanged sentence

Interest reserve

Accrued interest

Due to affiliate

4 unchanged sentences

Accounts payable and other liabilities

Senior notes payable, net

Line of credit payable to affiliate, net

Total liabilities

1 unchanged sentence

Stockholders’ Equity

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

Preferred stock, par value $ 0.01 per share, 10,000 shares authorized at March 31, 2022 and December 31, 2021 and 125 shares issued and outstanding at March 31, 2022 and December 31, 2021

Common stock, par value $ 0.01 per share, 50,000,000 and 25,000,000

shares authorized at September 30, 2021 and December 31, 2020, respectively, and 16,442,812 and 6,179,392 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

shares authorized at March 31, 2022 and December 31, 2021, respectively, and 19,742,940 and 16,442,812 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in-capital

Accumulated earnings

Accumulated other comprehensive income (loss)

Accumulated (deficit) earnings

Total stockholders’ equity

3 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

For the three

September 30,

July 31, 2020 to

September 30,

July 31, 2020 to

September 30,

Three months ended

Interest income

Total revenue

Management and incentive fees, net (less rebate of $ 256,989 ,

$ 84,167 , $ 677,439

and $ 84,167 , respectively)

Interest expense

Net interest income

Management and incentive fees, net (less rebate of $ 387,493 and $ 237,743 , respectively)

General and administrative expenses

Organizational expenses

Stock-based compensation

2 unchanged sentences

Provision for current expected credit losses

Realized gains / (losses) on loans at fair value, net

Realized gains (losses) on sales of investments, net

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

9 unchanged sentences

AFC GAMMA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three months ended September 30, 2021

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

Other comprehensive income (loss):

Reversal of unrealized loss to recognized loss on debt securities available for sale held at fair value

Total other comprehensive income (loss)

Total comprehensive income

(See accompanying notes to the consolidated

financial statements )

AFC GAMMA, INC.

CONSOLIDATED STATEMENTS OF

STOCKHOLDERS’ EQUITY

Three months ended March 31, 2022

Accumulated Other Comprehensive

Stockholders’

Balance at June 30, 2021

Income (Loss)

Balance at December 31, 2021

Issuance of common stock, net of offering cost

1 unchanged sentence

Dividends declared on common shares ($ 0.55 per share)

Dividends declared on preferred shares ($ 60 per share)

Balance at September 30 , 2021

Period from July 31, 2020 (date of commencement of operations) to September 30, 2020

Stockholders’

Balance at July 31, 2020

Issuance of common stock

Balance at September 30 , 2020

(See accompanying notes to the consolidated financial statements)

AFC GAMMA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

months ended September 30, 2021

Other comprehensive income (loss)

Balance at March 31, 2022

Three months ended March 31, 2021

Other Comprehensive

Stockholders’

Income (Loss)

Balance at December 31, 2020

2 unchanged sentences

Dividends declared on common shares ($ 0.36 per share)

Dividends declared on preferred shares ($ 60 per share)

Balance at September 30 , 2021

Period from July 31, 2020 (date of commencement of operations) to September 30, 2020

Stockholders’

Balance at July 31, 2020

Issuance of common stock

Balance at September 30 , 2020

Balance at March 31, 2021

(See accompanying notes to the consolidated financial statements )

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

September 30, 2021

July 31, 2020 to

September 30, 2020

Three months ended

Operating activities:

1 unchanged sentence

Provision for current expected credit losses

Realized gain on sale of loans

Realized (gains) losses on sales of investments, net

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

Accretion of deferred loan original issue discount and other discounts

Amortization of deferred financing costs - revolving credit facility

Amortization of offering costs - senior notes

Stock-based compensation

Payment-in-kind interest

Changes in operating assets and liabilities

2 unchanged sentences

Prepaid expenses and other assets

Accrued interest

Accrued management and incentive fees, net

4 unchanged sentences

Issuance of and fundings on loans

( 156,345,116

Proceeds from sales of Assigned Rights

Proceeds from sales of loans

Principal repayment of loans

Net cash used in investing activities

( 121,463,591

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from sale of common stock

Payment of offering costs

Dividends paid

Net cash provided by financing activities

Change in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

Cash, cash equivalents and restricted cash, end of period

Supplemental disclosure of non-cash financing and investing activity

Loans acquired for issuance of shares of common stock

Payment of offering costs - equity offering

Dividends paid to common stockholders

Repayments on the line of credit

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosure of non-cash activity:

Interest reserve withheld from funding of loans

OID withheld from funding of loans

Loans funded from amounts due to affiliate

Sale of Assigned Rights

Change in other comprehensive income (loss) during the period

Dividends declared and not yet paid

Receivable in connection with sale of loan

Receivable in connection with sale of securities

Supplemental information:

4 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2021

As of March 31, 2022

AFC Gamma, Inc.

4 unchanged sentences

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

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

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

The Company’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,

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 (“TRS1”), 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 (a “TRS”), TRS1 began operating in July 2021, and the financial statements of TRS1 have been consolidated within the Company’s consolidated financial statements beginning with the quarter ended September 30,

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

2 unchanged sentences

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.

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.

SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim consolidated financial

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

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

Refer to Note 2 to the Company’s financial

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

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

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

The accompanying unaudited interim consolidated financial statements should be read in conjunction

with the audited financial statements and the related management’s discussion and analysis of financial condition and results of operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed

with the Securities and Exchange Commission (“SEC”).

Refer to Note 2 to the Company’s Annual Report on Form 10-K for a description of the Company’s

significant accounting policies.

The Company has included disclosures below regarding basis of presentation and other accounting policies that (i) are required to be disclosed quarterly, (ii) have material changes or (iii) the Company views as

critical as of the date of this report.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements and related

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

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

operations, statements of stockholders’ equity, and statement of cash flows for the periods presented.

The current period’s results of operations will not

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

The accompanying unaudited interim consolidated financial statements and related notes have been prepared on the

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

These unaudited

interim consolidated financial statements reflect all adjustments that, in the opinion of management, are considered necessary for a fair statement of the Company’s results of operations and financial condition as of and for the periods

The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved

for the year ending December 31, 2022.

Investment in Marketable Securities

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 stockholders’ equity.

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.

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

period ended September 30, 2021 was somewhat mitigated as all of our borrowers were permitted to continue to operate during this pandemic.

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

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 Financial Accounting Standards Board

(“FASB”) issued Accounting Standards Updated (“ASU”) No.

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 period ended March 31, 2022

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.

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.

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.

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

The Company is currently

evaluating the impact of adopting this ASU on its financial statements.

The Company does not believe the adoption of this ASU will have a material impact on its consolidated financial statements.

In January 2021, the FASB issued ASU No.

2021-01, Reference

Rate Reform (Topic 848):

2021-01, Reference Rate Reform (Topic

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

is effective immediately for all entities.

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

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

If an entity elects to apply

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

The amendments do not apply to contract modifications made after

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

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

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

ASU on its financial statements.

In October 2020,

the FASB issued ASU No.

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

of 310-20-35-33 for each reporting period.

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

Early application is not permitted.

all other entities, the amendments in ASU No.

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

Early application is permitted for all other

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

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

existing or newly purchased callable debt securities.

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

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

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.

They 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 consolidated

financial statements.

LOANS HELD FOR INVESTMENT AT FAIR VALUE

As of September 30, 2021 and December 31,

2020, the Company’s portfolio included three and four loans held at fair value, respectively.

The aggregate originated commitment under these loans was approximately $ 75.9 million and $ 59.9 million, respectively, and outstanding principal was

As of March 31, 2022 and December 31,

2021, the Company’s portfolio included three loans held at fair value.

The aggregate originated commitment under these loans was

approximately $ 96.2 million and $ 75.9

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

For the nine months ended September 30, 2021, the Company funded approximately $ 37.7

million of outstanding principal and had repayments of approximately $ 13.1 million.

As of September 30, 2021 and December 31, 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 average floor of 2.5 %, calculated based on loans with LIBOR floors.

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

million, respectively, and outstanding principal was approximately $ 95.6 million and $ 77.6 million, as of March 31, 2022 and December 31, 2021, respectively.

For the three months ended March 31, 2022, the Company funded approximately $ 17.3 million of additional principal and had no

As of March 31, 2022 and December 31, 2021, none of the Company’s loans held at fair value had floating interest

The following tables

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

As of September 30, 2021

summarize the Company’s loans held at fair value as of March 31, 2022 and December 31, 2021:

As of March 31, 2022

Fair Value (1)

13 unchanged sentences

Total loans held at fair value

Refer to Note 14 to the Company’s unaudited consolidated financial statements.

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

purchase discount, deferred loan fees and loan origination costs.

Refer to Note 14 to our unaudited consolidated financial statements.

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

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

the nine months ended September 30, 2021 :

original issue discount (“OID”) and loan origination costs

Weighted average remaining life is calculated based on the fair value of the loans as of March 31, 2022 and December 31,

The following table presents changes in loans held at fair

value as of and for the three months ended March 31, 2022:

Original Issue

2 unchanged sentences

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

Loan repayments

Loan amortization payments

Accretion of original issue discount

Total loans held at fair value at September 30, 2021

Total loans held at fair value at March 31, 2022

A more detailed listing of the Company’s

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

loans held at fair value portfolio based on information available as of March 31, 2022 is as follows:

Collateral Location

3 unchanged sentences

Total loans held at fair value

The difference between the Carrying Value and the Outstanding Principal amount

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

Refer to Note 14 to our unaudited consolidated financial statements.

C = Cultivation Facilities, D = Dispensaries.

Refer to Note 14 to the Company’s unaudited consolidated financial statements.

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

origination costs.

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

4 unchanged sentences

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

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

Base interest rate of 13 % and payment-in-kind (“PIK”) interest rate of 3.4 % .

P/I loans may include interest-only periods for a

portion of the loan term.

Base interest rate of 12.8 %

and payment-in-kind (“PIK”) interest rate of 2.7 %.

Base interest rate of 10 %

and PIK interest rate of 4 %.

1 unchanged sentence

and PIK interest rate of 4 %.

C = Cultivation Facilities, D = Dispensaries.

LOANS HELD FOR INVESTMENT AT CARRYING VALUE

As of September 30,

2021 and December 31, 2020, the Company’s portfolio included 12 and three loans, respectively, held at carrying value.

As of March 31, 2022

and December 31, 2021, the Company’s portfolio included ten and twelve loans, respectively, held at carrying value.

The aggregate originated commitment under these loans was approximately $ 319.9 million and $ 324.3 million, respectively, and outstanding principal was

approximately $ 275.8 million and $ 270.8

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

For the nine months ended September 30, 2021, the Company funded approximately $ 139.2

million of outstanding principal.

As of September 30, 2021 and December 31, 2020, approximately 68 % and 35 %, respectively, of the Company’s loans held at carrying value have floating interest rates.

million, respectively, as of March 31, 2022 and December 31, 2021.

For the three months ended March 31, 2022, the Company funded approximately $ 34.2

million of additional principal.

As of March 31, 2022 and December 31, 2021, approximately 42 % and 48 %, respectively, of the Company’s loans held at carrying value have floating interest rates.

These floating rates are subject to LIBOR floors, with

2 unchanged sentences

The following tables

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

As of September 30, 2021

summarize the Company’s loans held at carrying value as of March 31, 2022 and December 31, 2021:

As of March 31, 2022

Principal (1)

7 unchanged sentences

Total loans held at carrying value

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

original issue discount and loan origination costs.

Weighted average remaining life is calculated based on the carrying value of the loans as of September 30, 2021 and

December 31, 2020.

The following table

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

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

loan origination costs.

Weighted average remaining life is calculated based on the carrying value of the loans as of March 31, 2022 and December

The following table presents changes in loans held at

carrying value as of and for the three months ended March 31, 2022:

Original Issue

2 unchanged sentences

Accretion of original issue discount

Realized gain on sale of loans

Loan repayments

Sale of loans

Total loans held at carrying value at September 30, 2021

Loan amortization payments

Total loans held at carrying value at March 31, 2022

March 31, 2022, the Company had a receivable related to the sale of the Subsidiary of Public Company D that was sold during the three months ended March 31, 2022 in the amount of $ 10.6 million, which is recorded within receivable for loans and securities sold in the Company’s consolidated balance sheets.

A more detailed listing of the Company’s

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

loans held at carrying value portfolio based on information available as of March 31, 2022 is as follows:

Collateral Location

Principal (2)

of Public Co.

Original Issue

of Private Co.

of Public Co.

IA, IL, MI, NJ, PA

Total loans held at carrying value

C = Cultivation Facilities, D = Dispensaries.

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

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

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

or other conditions as stipulated in the loan agreement.

consists of unaccreted OID and loan origination costs.

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

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

The Company may

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

The Company may also extend contractual maturities and

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

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

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

C = Cultivation Facilities,

D = Dispensaries.

P/I loans may include interest-only periods for a

portion of the loan term.

Base interest rate of 12.0 %

1 unchanged sentence

Base interest rate of 13.0 %

Base interest rate of 13.0 % and PIK interest rate of 2.0 % .

and PIK interest rate of 2.0 %.

Base interest rate of 13.0 %

and PIK interest rate of 4.0 %.

Base interest rate of 11.5 %

plus LIBOR (LIBOR floor of 1.0 %) and PIK interest rate of 1.8 %.

Base interest rate of 13.0 % and PIK interest rate of 4.0 %.

Base interest rate of 8.6 %.

Base interest rate of 15.0 %.

Base interest rate of 12.0 % plus LIBOR (LIBOR floor of 1.0 %).

Base interest rate of 12.0 % plus LIBOR (LIBOR floor of 1.0 %)

and PIK interest rate of 2.5 %.

Base interest rate of 9.8 %.

Base interest rate of 15.0 %.

Base interest rate of 12.0 % plus LIBOR (LIBOR floor of 1.0 %)

and PIK interest rate of 2.0 %.

Base interest rate

of 12.0 % plus LIBOR (LIBOR floor of 1.0 % )

Base interest rate of 12.0 % plus LIBOR (LIBOR floor of 1.0 %) and PIK

interest rate of 2.5 %.

Base interest rate of 12.0 %

plus LIBOR (LIBOR floor of 1.0 %) and PIK interest rate of 2.0 %.

LOAN RECEIVABLE AT CARRYING VALUE

As of September 30, 2021 and December 31,

As of March 31, 2022 and December 31,

2021, 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 $ 2.8 million and $ 3.4 million as of September 30, 2021 and

December 31, 2020, respectively.

During the nine months ended September 30, 2021, the Company received repayments of approximately $ 0.6

million of outstanding principal.

approximately $ 4.0 million and outstanding principal was approximately $ 2.3 million and $ 2.5 million as of March 31, 2022 and December

31, 2021, respectively.

During the three months ended March 31, 2022, the Company received repayments of approximately $ 0.3 million of

outstanding principal.

The following table presents changes in

loans receivable as of and for the nine months ended September 30, 2021:

loans receivable as of and for the three months ended March 31, 2022:

Original Issue

2 unchanged sentences

Accretion of original issue discount

Total loans receivable at carrying value at September 30 ,

Total loans receivable at carrying value at March 31 ,

CURRENT EXPECTED CREDIT LOSSES

10 unchanged sentences

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 September 30, 2021 and December 31,

2020, the Company’s CECL Reserve for its loans held at carrying value and loans receivable at carrying value is $ 1,837,895 and $ 465,397 , respectively, or 118 and 132 basis points, respectively, of the Company’s total loans held at carrying value and loans receivable at carrying value of $ 155,936,236 and $ 35,185,294 ,

respectively, and is bifurcated between the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value and loans receivable at carrying value of $ 1,145,629 and $ 404,860 , respectively, and a liability for

unfunded commitments of $ 692,266 and $ 60,537 ,

respectively.

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

Management considered the

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

For loans where the Company has deemed the borrower/sponsor

to be experiencing financial difficulty, the Company 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.

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 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 March 31, 2022 and December 31,

2021, the Company’s CECL Reserve for its loans held at carrying value and loans receivable at carrying value is approximately $ 4.0

million and $ 3.1 million, respectively, or 150 and 120 basis points, respectively, of the Company’s total loans held at carrying value and

loans receivable at carrying value of approximately $ 267.4 million and $ 259.7 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 $ 3.4 million and $ 2.4 million, respectively, and a liability for unfunded commitments of approximately $ 0.6 million and $ 0.7 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.

Activity related to

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

Outstanding (1)

Balance at June 30, 2021

Provision for current expected credit losses

Balance at September 30, 2021

the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loans receivable at carrying value as of and for the three months ended March 31, 2022 was as follows:

Outstanding (1)

1 unchanged sentence

Provision for current expected credit losses

Balance at September 30, 2021

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

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

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

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

Balance at March 31, 2022

As of March 31, 2022 and December 31, 2021, 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.

As of March 31 , 2022 and December 31, 2021, 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.

The Company continuously evaluates the credit quality of

4 unchanged sentences

defined as follows:

Very Low Risk

High Risk/ Potential for Loss

Impaired/Loss Likely

Very Low Risk — Materially exceeds performance metrics included in original or current credit underwriting and business plan

Low Risk — Collateral and business performance exceeds substantially all performance metrics included in original or current credit underwriting and business plan

Medium Risk — Collateral and business performance meets, or is on track to meet underwriting expectations;

business plan is met or can reasonably be achieved

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.

recovery of interest exists

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 September 30, 2021, the carrying value, excluding the

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

As of March 31, 2022 the carrying value, excluding the CECL

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

INTEREST RECEIVABLE

The following table summarizes the

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

September 30, 2021

interest receivable by the Company as of March 31, 2022 and December 31, 2021:

March 31, 2022

December 31, 2021

4 unchanged sentences

INTEREST RESERVE

At September 30, 2021 and December 31, 2020, the Company had

eight and one loans,

respectively, that included a loan funded interest reserve.

For the three and nine months ended September 30, 2021, approximately $ 1.8

million and $ 2.5 million, respectively, of interest income was earned and disbursed from the interest reserve.

At March 31, 2022

and December 31, 2021, the Company had four and seven loans, respectively, that included a loan funded interest reserve.

For the three months ended March 31, 2022, approximately $ 4.2 million of interest income was earned and disbursed from the interest reserve.

The following table

presents changes in interest reserve as of and for the three and nine months ended September 30, 2021 and for the period from July 31, 2020 to September 30, 2020:

For the three

September 30, 2021

July 31, 2020 to

September 30, 2020

September 30, 2021

July 31, 2020 to

September 30, 2020

presents changes in interest reserve as of and for the three months ended March 31, 2022:

Three months ended

March 31, 2022

Beginning reserves

2 unchanged sentences

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 April 29, 2022,

the Company entered into the Loan and Security Agreement (the “Revolving Credit Agreement”) by and among the Company, the other loan parties from time to time party thereto, the lenders party thereto, and the Lead Arranger, Bookrunner and Agent

party thereto, pursuant to which, the Company obtained a $ 60.0 million senior-secured revolving credit facility (the “Revolving Credit

The Revolving Credit

Facility contains aggregate commitments of $ 60.0 million from two FDIC-insured banking institutions, which may be increased to up to $ 100.0

million in aggregate (subject to available borrowing base and additional commitments), and contains a maturity date of April 29, 2025 ,

which may be borrowed, repaid and redrawn, subject to a borrowing base based on eligible loan obligations held by the Company and subject to the satisfaction of other conditions provided under the Revolving Credit Facility.

Interest is payable on

the Revolving Credit Facility at the greater of (1) the applicable base rate plus 0.50 % and (2) 4.50 %, as provided in the Revolving Credit Agreement, payable in cash in arrears.

The Company incurred a one-time commitment fee expense of

approximately $ 0.4 million, which will be amortized over the life of the facility.

Commencing on the six-month anniversary of the

closing date, the Revolving Credit Facility has an unused line fee of 0.25 % per annum, to be paid semi-annually in arrears, which will be included within interest expense in the Company’s consolidated statements of operations.

The obligations of

the Company under the Revolving Credit Facility are secured by certain assets of the Company comprising of or relating to loan obligations designated for inclusion in the borrowing base.

In addition, the Company is subject to various financial

and other covenants, including:

(1) liquidity of at least $ 5.0 million, (2) annual debt service coverage of at least 1.50 to 1.0 and (3) secured debt not to exceed 25 %

of total consolidated assets of the Company and its subsidiaries.

Termination of AFC

Finance Credit Facility with Affiliate

In July 2020, the Company obtained a

secured revolving credit loan (the “AFCF Revolving Credit Facility”) from AFC Finance, LLC, an affiliate of the Company’s management secured by the assets of the Company.

The AFCF Revolving Credit Facility had a loan commitment of $ 40.0 million at an interest rate of 8 %

per annum, payable in cash in arrears.

The maturity date of the AFCF 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 AFCF 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 AFCF Revolving

Credit Facility (the “AFCF Revolving Credit Agreement”).

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

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 ;

Company amended the AFCF Revolving Credit Agreement (the “First Amendment”).

The First Amendment (i) increased the loan commitment from $ 40.0

million to $ 50.0 , million (ii) decreased the interest rate from 8 % per annum to 6 % per annum, (iii) removed Gamma Lending Holdco LLC as

a lender and (iv) extended the maturity date from July 31, 2021 to the earlier of (A) December 31, 2021 or (B) the date of the closing of any Refinancing Credit Facility.

On November 3, 2021, the Company entered into the Second Amendment to the AFCF

Revolving Credit Agreement (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 $ 50.0

million to $ 75.0 million;

(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

(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 will be amortized over the life of the loan.

For the three and nine

months ended September 30, 2021 and through November 3, 2021, the Company has no t drawn on the Revolving Credit Facility

or incurred any interest expense related to the Revolving Credit Facility.

(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 AFCF 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 in the Second Amendment) may be any credit facility where the

proceeds are incurred to refund, refinance or replace the AFCF 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 that began in the first quarter of 2022, which is amortized over the life of the loan.

As of March 31, 2022 and December

31, 2021, the outstanding loan balance under the AFCF Revolving Credit Facility was $ 0.0 million and $ 75.0 million, respectively.

All borrowings that were previously outstanding as of December 31, 2021 were repaid in full on January 3, 2022.

The Company incurred interest expense on the AFCF Revolving Credit Facility of $ 19,792 and $ 0 for the three months ended March 31, 2022 and 2021, respectively.

29, 2022, upon the Company’s entry into the Revolving Credit Facility, the Company terminated the AFCF Revolving Credit Agreement.

2027 Senior Notes

On November 3, 2021, the Company issued $ 100.0 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.

The 2027 Senior Notes accrue interest at a rate of 5.75 %

Interest on the 2027 Senior Notes is due semi-annually on May 1 and November 1 of each year, beginning on May 1,

The net proceeds

from the offering were approximately $ 97.0 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.

As of March 31, 2022, the 2027 Senior Notes are 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,

2 unchanged sentences

Company’s assets.

On or after February 1, 2027, the Company may redeem the 2027 Senior Notes in whole or in part at a price equal to 100 %

of the principal amount of the notes being redeemed, plus a make-whole premium and accrued and unpaid interest thereon to, but excluding, the applicable redemption date.

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 March 31, 2022 are as follows:

Senior Unsecured Notes

2022 (remaining)

Total principal

The following table reflects a summary of interest expense incurred during the three months ended March 31, 2022 .

There was no interest expense incurred during the three months ended

March 31, 2021.

Three months ended March 31, 2022

Interest expense

Unused fee expense

Amortization of deferred financing costs

Total interest expense

COMMITMENTS AND CONTINGENCIES

As of September 30, 2021 and December 31, 2020, the Company had the following

commitments to fund various senior term loans, equipment loans and bridge loans:

September 30, 2021

As of March 31, 2022 and December 31, 2021, the Company had the following

commitments to fund various senior term loans, investment in debt securities, equipment loans and bridge loans:

March 31, 2022

December 31, 2021

2 unchanged sentences

( 370,645,105

( 363,659,505

Total undrawn commitments

1 unchanged sentence

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

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

As of March 31, 2022, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.

The Company provides

7 unchanged sentences

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.

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

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

STOCKHOLDERS’ EQUITY

Series A Preferred Stock

As of September 30, 2021 and December 31, 2020, the Company has

authorized 10,000 preferred shares and issued 125 of the preferred shares designated as 12.0 %

Series A Cumulative Non-Voting Preferred Stock, par value $ 0.01 per share (the “Series A Preferred Stock”).

As of March 31, 2022 and December 31, 2021, 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

11 unchanged sentences

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

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

for redemption.

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

8 unchanged sentences

shares issued and outstanding.

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

The underwriters also exercised

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

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

capital on the 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 .

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’

The Company incurred approximately $ 701,989 of expenses in connection with the offering, which is reflected as a

reduction in additional paid-in capital.

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 approximately $ 118.8 million in gross

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 approximately $ 17.8 million in additional gross proceeds.

The underwriting commissions of approximately $ 8.3 million and $ 1.25 million, respectively, are

reflected as a reduction of additional paid-in capital on the consolidated statements of stockholders’ equity.

The Company incurred approximately $ 3.1 million 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 $ 123.9 million.

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 approximately $ 56.4

million in gross proceeds.

The underwriting commissions of approximately $ 3.1 million are reflected as a reduction of

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

The Company incurred approximately $ 0.7

million 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 $ 52.6 million.

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 approximately $ 5.5 million in additional gross proceeds or approximately $ 5.2

million in net proceeds after underwriting commissions of approximately $ 0.3 million, 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 are 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.

The net proceeds to the Company totaled approximately

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.

$ 63.0 million.

Pursuant to the Articles of Amendment, dated March 10, 2022, the

Company increased the number of authorized shares of common stock to 50,000,000 shares at $ 0.01 par value per share.

Shelf Registration

On April 5, 2022, the Company filed a shelf registration statement on Form S-3

333-264144) (the “Shelf Registration Statement”).

Under the Shelf Registration Statement, the Company may, from time to time, issue and sell up to $ 1.0 billion of the Company’s common stock, preferred stock, debt securities, warrants and rights (including as part of a unit) to purchase shares of the Company’s common stock

or preferred stock.

The Shelf Registration Statement was declared effective by the SEC on April 18, 2022.

As of May 9, 2022, no

offerings have been initiated under the Shelf Registration Statement.

At-the-Market Stock Offering Program (“ATM”)

April 5, 2022, the Company entered into an Open Market Sale Agreement (the “Sales Agreement”) with Jefferies LLC and JMP Securities LLC, as Sales Agents, under which the Company may, from time to time, offer and sell shares of common

stock, par value $ 0.01 per share, having an aggregate offering price of up to $ 75.0 million.

Under the terms of the Sales Agreement, the Company has agreed to pay the Sales Agents a commission of up to 3.0 % of the gross proceeds from each sale of common stock sold through the Sales Agents under the Sales Agreement.

Sales of common stock, if any, may be made in

transactions that are deemed to be “at the market” offerings, as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

As of May 9, 2022, the Company has no t issued or sold any shares of common stock under the Sales Agreement.

Equity Incentive Plan

The Company has established an equity incentive compensation plan (the

The Company’s Board authorized the adoption of the Plan (as amended, the “2020 Plan”) and approved stock option grants of 1,632,632

shares of common stock and 56,285 shares of restricted stock as of September 30, 2021.

The Board or one or more committees

appointed by the Board administers the 2020 Plan.

The 2020 Plan authorizes stock options, stock appreciation rights, restricted stock, stock bonuses, stock units and other forms of awards granted or denominated in the Company’s common stock

or units of common stock.

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

“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.

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 September 30, 2021, the maximum number of shares of the Company common stock that may be delivered pursuant to awards under the 2020 Plan (the “Share Limit”) equals 2,401,965 shares, which is an increase of 26,965

shares compared to June 30, 2021 under the evergreen provision in the 2020 Plan in connection with the issuance of an additional 269,650

shares of common stock 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.

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.

During the quarter ended March 31, 2022, the Company’s Board of

Directors approved grants of restricted stock and stock options to the Company’s directors and officers, as well as employees of the Manager.

As of March 31, 2022, there were 2,380,687 shares of common stock outstanding under the 2020 Plan, underlying 2,316,106 options and 64,581 shares of restricted stock.

On January 11,

2022, the Company granted an aggregate of 8,296 shares of restricted stock and 737,000 stock options to certain of our officers and other eligible persons.

The restricted stock granted under the 2020 Stock Incentive Plan vest over a four-year period with approximately 33 %

vesting on each of the second, third and fourth anniversaries of the vesting commencement date.

The stock options granted under the 2020 Stock Incentive Plan vest over various periods from immediately upon issuance to a four-year period.

As of March 31, 2022, the maximum number of shares of the Company common stock that may be delivered pursuant to awards under the 2020 Plan (the

“Share Limit”) equals 2,731,148 shares, which is an increase of 329,183 shares compared to December 31, 2021 under the evergreen provision in the 2020 Plan in connection with the public offering of an additional 3,000,000 shares of common stock by the Company in January 2022 and an additional 291,832 shares of common stock issued by the Company to the underwriters in connection with their partial exercise of an over-allotment

option in January 2022 .

Shares that are subject to or underlie awards that expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2020 Plan

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

Shares that are exchanged by a participant or withheld by the Company as full or partial payment in connection with any

award granted under the 2020 Plan, as well as any shares exchanged by a participant or withheld by us to satisfy tax withholding obligations related to any award granted under the 2020 Plan, will not be counted against the Share Limit and

will again be available for subsequent awards under the 2020 Plan.

To the extent that an award is settled in cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will

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

The exercise price of any options granted under the

7 unchanged sentences

The following table summarizes the (i) non-vested

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

September 30, 2021

December 31, 2020

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 September 30, 2021 and December 31, 2020:

September 30, 2021

options granted, (ii) vested options granted and (iii) forfeited options granted for the Company’s directors and officers and employees of the Manager as of March 31, 2022 and December 31, 2021:

March 31, 2022

December 31, 2021

8 unchanged sentences

The share-based compensation expense for the Company was approximately $ 990,023 and $ 1,599,115 for the

three and nine months ended September 30, 2021, respectively, and no expense was booked during the period from July 31, 2020 to

September 30, 2020.

three months ended March 31, 2022 and 2021, respectively.

The following table presents the assumptions used in

4 unchanged sentences

Expected forfeiture rate

The following tables summarize stock option activity during the three and nine months ended September 30, 2021 and for

the period from July 31, 2020 to September 30, 2020:

The following tables summarize the stock option activity during the three months ended March 31, 2022 and 2021:

Three months ended

September 30, 2021

Weighted-Average

Grant Date Fair

Value Per Option

Balance as of June 30, 2021

Balance as of September 30 , 2021

July 31, 2020 to

September 30, 2020

March 31, 2022

Weighted-Average

1 unchanged sentence

Value Per Option

Balance as of July 31, 2020

Balance as of September 30 , 2020

Nine months ended

September 30, 2021

Balance as of December 31, 2021

Balance as of March 31 , 2022

Three months ended

March 31, 2021

Weighted-Average

2 unchanged sentences

Balance as of December 31, 2020

Balance as of September 30, 2021

Balance as of March 31, 2021

The following table summarizes the (i) non-vested

March 31, 2022

December 31, 2021

value of the Company’s restricted stock awards is based on the Company’s stock price on the date of grant.

The following tables summarize the restricted stock activity during the three months ended March 31, 2022 and 2021:

Three months ended

March 31, 2022

Balance as of December 31, 2021

Balance as of March 31, 2022

Three months ended

March 31, 2021

Balance as of December 31, 2020

Balance as of March 31, 2021

EARNINGS PER SHARE

The following

information sets forth the computations of basic weighted average earnings per common share for the three and nine months ended September 30, 2021 and for the period from July 31, 2020 to September 30, 2020:

For the three

September 30, 2021

July 31, 2020 to

September 30, 2020

September 30, 2021

July 31, 2020 to

September 30 , 2020

Net income attributable to common stockholders

information sets forth the computations of basic weighted average earnings per common share for the three months ended March 31, 2022 and 2021:

Three months ended

Net income (loss) attributable to common stockholders

Basic weighted average shares of common stock outstanding

2 unchanged sentences

Diluted weighted average earnings per common share

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 these

unaudited interim consolidated financial statements.

The income tax provision for the Company

was $ 0 for the nine months ended September 30, 2021.

For the three and nine months ended

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

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

If it is determined that

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

The expense is calculated in accordance with applicable tax regulations.

was $ 18,284 and $ 0 for

the three months ended March 31, 2022 and 2021, respectively.

For the three months ended March 31, 2022 , the Company incurred no expense for United States federal 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

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

Loans Held for Investment

The Company’s loans are typically valued

8 unchanged sentences

yield, as applicable.

The following tables present fair value measurements of

loans held at fair value as of March 31, 2022 and December 31, 2021:

Fair Value Measurement as of March 31, 2022

Loans held at fair value

Fair Value Measurement as of December 31, 2021

Loans held at fair value

The following table presents changes in loans that use Level 3 inputs as of and for

the three months ended March 31, 2022:

Three months ended

March 31, 2022

Total loans using Level 3 inputs at December 31 , 2021

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

Additional fundings

Original issue discount and other discounts, net of costs

Accretion of original issue discount

Total loans using Level 3 inputs at March 31 , 2022

The change in

unrealized appreciation included in the unaudited interim consolidated statement of operations attributable to loans held at fair value, categorized as Level 3, held at March 31, 2022 is $ 80,843 .

The following tables

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

summarize the significant unobservable inputs the Company used to value the loans categorized within Level 3 as of March 31, 2022 and December 31, 2021.

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 September 30, 2021

As of March 31, 2022

Unobservable Input

16 unchanged sentences

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.

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

The following tables present fair value measurements of

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

Fair Value Measurement Using as of September 30, 2021

Loans held at fair value

Fair Value Measurement Using as of December 31, 2020

Loans held at fair value

The following table presents changes in

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

September 30, 2021

Total loans using Level 3 inputs at December 31 , 2020

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

Additional funding

Original issue discount and other discounts, net of costs

Loan repayments

Loan amortization payments

Accretion of original issue discount

Total loans using Level 3 inputs at September 30 , 2021

Investment in Marketable Securities

As of March 31,

2022, the Company’s portfolio did no t include any debt securities.

As of December 31, 2021, the Company’s portfolio included one investment in debt securities held at fair value of approximately $ 15.9 million.

The Company sold the investment in debt securities during the quarter ended March 31, 2022, which was previously designated as available-for-sale as of

December 31, 2021.

For the period ended March 31, 2022, the realized loss on the sale of debt securities was approximately $ 0.2

of March 31, 2022, the Company had a receivable related to the sale of Public Company G that was sold during the three months ended March 31, 2022 in the amount of approximately $ 15.9 million, which is recorded within receivable for loans and securities sold in the Company’s consolidated balance sheets.

The following table presents changes in debt securities held

at fair value as of and for the three months ended March 31, 2022:

Total debt securities held at fair value at December 31, 2021

Realized gains (losses) on securities at fair value, net

Change in accumulated other comprehensive income

Sale of securities

Total debt securities held at fair value at March 31, 2022

The following table

presents fair value measurements of debt securities held at fair value as of March 31, 2022 and December 31, 2021.

Fair Value Measurement as of March 31, 2022

Debt securities held at fair value

Fair Value Measurement as of December 31, 2021

Debt securities held at fair value

Fair Value of

3 unchanged sentences

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

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

As of September 30, 2021

financial instruments not recognized at fair value in the consolidated balance sheets:

As of March 31, 2022

Financial assets

2 unchanged sentences

Loan receivable at carrying value

Estimates of fair value for cash and cash

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

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

Estimates of fair

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

The Company’s loans held for investment are measured using unobservable inputs, or Level 3 inputs.

The Company’s investments in debt

securities are measured using readily available quoted prices for similar assets, or Level 2 inputs.

RELATED PARTY TRANSACTIONS

Management Agreement

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

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

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

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

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

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

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

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

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

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

of Core Earnings.

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

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

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

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.

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

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

majority of the independent directors.

The Incentive Compensation for the three and nine months ended September 30, 2021 was approximately $ 1,769,207

and $ 3,873,984 , respectively.

For the period from July 31, 2020 to September 30, 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 three and nine months ended September 30, 2021 and for the period from July 31, 2020 to September 30, 2020:

For the three

September 30, 2021

July 31, 2020 to

September 30, 2020

September 30, 2021

July 31, 2020 to

September 30, 2020

The Incentive Compensation for the three months ended March 31, 2022 and 2021 was approximately $ 3.0

million and $ 0.7 million, respectively.

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

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

The following table summarizes the related party costs

incurred by the Company for the three months ended March 31, 2022 and 2021:

Three months ended

Affiliate Costs

1 unchanged sentence

Less outside fees earned

Base management fees

Incentive fees earned

General and administrative expenses reimbursable to Manager

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

31, 2020 were $ 3,389,646 and $ 728,298 ,

respectively.

Amounts payable to

the Company’s Manager as of March 31, 2022 and December 31, 2021 were $ 4,753,930 and $ 4,147,501 , respectively.

Due to Affiliate

Amounts due to an affiliate of the Company as of September 30, 2021 and

December 31, 2020 were $ 9,550,625 and $ 0 ,

respectively.

The amount due to the affiliate, AFC Management, is related to the funding of the loan to Subsidiary of Private Co.

G and was subsequently paid to AFC Management on October 1, 2021.

Amounts due to an

affiliate of the Company as of March 31, 2022 and December 31, 2021 were $ 23,122 and $ 0 , 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.

From time to time,

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

syndicating loans.

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

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

As of September 30, 2021, there were three co-invested loans held by the Company and an affiliate of the Company.

of March 31, 2022, there were five co-invested loans held by the Company and an affiliate of the Company.

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 Flower Loan Holdco LLC, an affiliated entity in which Leonard Tannenbaum, our Chief Executive Officer and Chairman of our Board, is the majority ultimate beneficial owner ;

and (iii) the remaining loan commitments allocated to third-party lenders by the third-party agent.

In connection

1 unchanged sentence

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

During the three months ended September 30, 2021, the Company neither received no r sold any Assigned Right.

For the nine months ended September 30, 2021, t he 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 from July 31, 2020 to September 30, 2020, the Company did not have any Assigned Rights which were assigned or sold.

During the three months ended March 31, 2022, the Company neither received no r sold any Assigned Right.

For the three

months ended March 31, 2021, the Company sold approximately $ 1.2 million of Assigned Rights to an affiliate which are accounted for

as additional original issue discount and accreted over the life of the loans.

Secured Revolving Credit 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 unaudited consolidated financial statements for more information.

In April 2022,

the Company terminated the AFCF Revolving Credit Facility.

Refer to Note 9 to the Company’s unaudited consolidated financial statements for more information.

DIVIDENDS AND DISTRIBUTIONS

The following table

summarizes the Company’s dividends declared during the nine months ended September 30, 2021:

Regular cash dividend

summarizes the Company’s dividends declared during the three months ended March 31, 2022 and 2021:

Regular cash dividend

Total cash dividend

SUBSEQUENT EVENTS

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

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

Subsequent to the end of the third quarter, the Company closed one loan, had new commitments of $ 50.0 million, and funded

approximately $ 52.3 million of principal.

In October 2021, the Company sold its investment in the loan to Public Company E to a third party in a private

The Company received approximately $ 5.1 million in net proceeds from the sale.

In October 2021, the Company entered into an additional

commitment for a $ 50 million senior term loan with Public Company F, as part of a $ 120 million third tranche under Public Company F’s senior secured credit facility and funded $ 50.0 million of principal less OID of $ 1.2 million for net

funding of $ 48.8 million at closing.

Following the expansion, the Company’s total loan commitments to Public Company F increased to an aggregate principal amount of $ 60 million, including $ 10 million of the second tranche

funded in May 2021.

On November 3, 2021, the Company issued 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 net proceeds from the issuance of the 2027 Senior Notes to (i) 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.

terms of the 2027 Senior Notes are governed by 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.

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.

On or after February 1, the Company may redeem the 2027 Senior Notes in whole or in part at a price equal to 100 % of the principal amount of the notes being redeemed, plus a make-whole premium and accrued and unpaid interest thereon to, but excluding, the applicable redemption date.

On November 3, 2021, the Company entered

into the Second Amendment to the Revolving Credit Agreement with AFC Finance, LLC.

Under the Second Amendment, the terms of the Revolving Credit Facility were amended to, among other things:

(i) decrease the interest rate to 4.75 % per annum;

(ii) extend the maturity date to the earlier of September 30, 2022 and the closing date of any credit facility where the proceeds are incurred to refund, refinance or replace such Revolving Credit Agreement;

(iii) add an unused fee of 0.25 % per annum on the undrawn amount of the revolving loan commitments;

(iv) add a one-time commitment fee of 0.25 % of the total revolving loan commitments, payable in three

quarterly installments, beginning in the first quarter of 2022;

(v) increase the aggregate revolving credit commitments to $ 75.0 million;

(vi) provided an optional buyout provision for the holders of the Company’s 2027 Senior Notes upon certain events of default under the

Revolving Credit Agreement;

and (vii) require all payments of interest, the commitment fee and unused fee to be paid, directly or indirectly, to a charitable organization to be designated by AFC Finance, LLC in its sole discretion, net of any

See Note 9 to the Company’s consolidated financial statements in this quarterly report for more information.

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

Subsequent to the end of the first quarter, the Company closed two loans with new commitments of approximately $ 107.3 million,

and funded approximately $ 79.9 million of principal amount of new and existing commitments.

In April 2022, each of the loans to Private Company D and Private Company F were repaid in full in connection with the

Company’s new loan to Private Company L, an affiliate of Private Company D and Private Company F.

The loans to Private Company D and Private Company F had original maturity dates of January 2026 and May 2026 , respectively.

The outstanding

principal of Private Company D and Private Company F on the date of repayment was approximately $ 12.1 million and $ 12.9 million, respectively.

In addition to the repayment of the outstanding principal amounts of the loans to Private Company D and Private Company F,

the Company received approximately $ 0.2 million and $ 2.0 million related to exit fees and other fees upon repayment of the loans, respectively.

In April 2022, the

loan to Private Company K was repaid in connection with the Company’s refinancing and restructuring the loan under a new credit facility with Private Company K.

Under the new credit facility with Private Company K, the Company increased its

total loan commitment to approximately $ 24.8 million, from $ 19.8 million, and restructured the construction obligations of the borrowers, among other things.

As restructured, the Private Company K loan accrues interest at a floating

rate, with a floor of 13 %, and matures in May 2027 .

Following the repayment of Private Company K loan, five of the Company’s loans have been

repaid prior to maturity since March 2021.

In April 2022, the Company filed its shelf

registration statement on Form S-3 with the SEC registering up to $ 1.0 billion of securities, including shares of common stock,

preferred stock, debt securities, warrants, rights, as well as units that include any of these securities (the “Shelf Registration Statement”).

The Shelf Registration Statement included a prospectus for an at-the-market offering program to sell

up to an aggregate of $ 75.0 million of shares of common stock that may be issued and sold from time to time under the Sales Agreement

with Jefferies LLC and JMP Securities LLC, as Sales Agents.

No securities were issued under the Shelf Registration Statement through the date of this filing.

Please refer to Note 11 to the Company’s unaudited consolidated financial statements

for more information .

On April 1, 2022, the

Company’s investment in the senior secured loan to Private Company I was transferred to TRS1, the Company’s wholly-owned subsidiary.

On April 29, 2022,

the Company entered into the Revolving Credit Facility.

The Revolving Credit Facility contains aggregate commitments of $ 60.0 million

from two FDIC-insured banking institutions, with a maturity date of April 29, 2025 , which may be borrowed, repaid and redrawn (subject to a borrowing base based on eligible loan obligations held by the Company and subject to the satisfaction

of other conditions provided under the Revolving Credit Facility).

Interest is payable on the Revolving Credit Facility at the greater of (1) the applicable base rate plus 0.50 % and (2) 4.50 %, as provided in the Revolving Credit

Agreement, payable in cash in arrears.

In connection with entering into the Revolving Credit Facility, the Company incurred a one-time commitment fee expense of approximately $ 0.4 million.

Commencing on the six-month anniversary of the closing date, the Revolving Credit Facility has an unused line fee of 0.25 % per annum, which will be included within interest expense in the Company’s consolidated statements of operations.

Upon the Company’s entry into the Revolving Credit

Facility, the Company terminated the AFCF Revolving Credit Agreement.

The amount of total

commitments under the Revolving Credit Facility may be increased to up to $ 100.0 million in aggregate, subject to available borrowing

base and lenders’ willingness to provide additional commitments.

The obligations of the Company under the Revolving Credit Facility are secured by certain assets of the Company comprising of or relating to loan obligations designated for

inclusion in the borrowing base.

In addition, the Company is subject to various financial and other covenants, including:

(1) liquidity of at least $ 5.0

million, (2) annual debt service coverage of at least 1.50 to 1.0 and (3) secured debt not to exceed 25 % of total consolidated assets of the Company and its subsidiaries.

Please refer to Note 9 to the Company’s unaudited consolidated financial

statements for more information.

Statement Regarding Forward-Looking Information

Some of the statements contained in this quarterly report other than statements of current or historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of

1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we intend such statements to be covered by the safe harbor provisions contained therein.

These forward-looking

statements are based on our current intent, belief, expectations and views of future events of AFC Gamma, Inc.

(the “Company” or “AFCG”).

You can identify these forward-looking statements often, but not always, by words or phrases such as “can,”

“could,” “continuing,” “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “ongoing,” “plan,” “predict,” “potential,” “project,” “should,” “seeks,” “believe,” “likely to” and similar words, phrases or expressions.

These statements are only predictions and involve estimates, known and unknown risks, assumptions, uncertainties and other factors that could cause our actual results, performance or achievements to be materially

different from those expressed or implied by such forward-looking statements.

Our actual results could differ materially from those anticipated in such forward-looking statements as a result of the factors discussed in Item 1A.

Risk Factors and elsewhere in this report.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our

financial condition, results of operations, business strategy and financial needs.

These forward-looking statements include, but are not limited to, statements about:

our business and investment strategy;

the impact of COVID-19 on our business and the global economy;

the ability of our Manager to locate suitable loan opportunities for us, monitor and actively manage our portfolio and implement our investment strategy;

our expected ranges of originations and repayments;

the allocation of loan opportunities to us by our Manager;

our projected operating results;

actions and initiatives of the U.S.

or state governments and changes to government policies and the execution and impact of these actions, initiatives and policies, including the fact

that cannabis remains illegal under federal law and certain state laws;

the estimated growth in and evolving market dynamics of the cannabis market;

the demand for cannabis cultivation and processing facilities;

shifts in public opinion regarding cannabis;

the state of the U.S.

economy generally or in specific geographic regions;

economic trends and economic recoveries;

the amount, collectability and timing of our cash flows, if any, from our loans;

our ability to obtain and maintain financing arrangements;

our expected leverage;

changes in the value of our loans;

our expected portfolio of loans;

our expected investment and underwriting process;

the rates of default or recovery rates on our loans;

the degree to which our hedging strategies may or may not protect us from interest rate volatility;

changes in interest rates and impacts of such changes on our results of operations, cash flows and the market value of our loans;

interest rate mismatches between our loans and our borrowings used to fund such loans;

the departure of any of the executive officers or key personnel supporting and assisting us from our Manager or its affiliates;

impact of and changes in governmental regulations, tax law and rates, accounting guidance and similar matters;

our ability to maintain our exemption from registration under the Investment Company Act;

our ability to qualify and maintain our qualification as a REIT for U.S.

federal income tax purposes;

estimates relating to our ability to make distributions to our stockholders in the future;

our understanding of our competition;

market trends in our industry, interest rates, real estate values, the securities markets or the general economy.

New risk factors and uncertainties emerge from time to time, and it is not possible for us to predict all the risk factors and uncertainties, nor can we assess the impact of all factors on our

business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

The forward-looking statements made in this Quarterly Report relate only

to events or information available to us as of the date of they are made.

Except as required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or

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

What changed 10-Q

Item 1. Financial Statements