What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-12 compared with 2025-08-14 · 174 added, 191 removed, 321 unchanged (53% of the section changed)

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This discussion and analysis contains forward-looking statements that involve risks and uncertainties which could cause our actual results to differ materially from those anticipated in these forward-looking statements, including, but not limited to, risks and uncertainties discussed under the heading “Cautionary Note Regarding Forward-Looking Statements,” in this Form 10-Q, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 and Item 1A.

“Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

“Risk Factors” in our subsequently filed Quarterly Reports on Form 10-Q.

Advanced Flower Capital Inc.

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Our objective is to provide attractive risk-adjusted returns over time through cash distributions and capital appreciation primarily by providing loans to state law compliant cannabis companies.

The loans we originate are primarily structured as senior loans typically secured by real estate, equipment, cash flows and the value associated with licenses (where applicable) and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing

such loan parties.

Some of our cannabis-related borrowers have their equity securities listed for public trading on the Canadian Securities Exchange (“CSE”) in Canada and/or over-the-counter (“OTC”) in the United States.

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Due to the current capital constrained cannabis market, which does not typically have access to traditional bank financing, we believe we continue to be well positioned to act as a prudent financing source to cannabis industry operators given our stringent underwriting criteria, size and scale of operations and institutional infrastructure.

At the August Meeting, the Board approved the Sixth Amendment, which expands our investment strategy.

Accordingly, under the Sixth Amendment, we expanded our investment strategy and intend to additionally originate, structure, underwrite, invest in and manage senior secured mortgage loans and other types of loans and debt securities to companies ancillary to the cannabis industry as well as companies outside of the cannabis industry.

Businesses ancillary to the cannabis industry may include, but are not limited to, brand developers, business services providers, and equipment and consumables providers.

We believe there are also attractive lending opportunities in companies ancillary to and outside of the cannabis industry that could generate attractive risk-adjusted returns.

The investment team has over 30 years of experience in direct lending outside of the cannabis industry across $10 billion of transactions.

By expanding the investment mandate, we expect to be able to diversify its exposure across industries and credit risk profiles while maintaining deal selectivity.

We are a Maryland corporation and externally managed by AFC Management, LLC, a Delaware limited liability company (our “Manager”), pursuant to the terms of the Amended and Restated Management Agreement, dated January 14, 2021, by and between the Company and AFC Management, LLC (as amended from time to time, the “Management Agreement”).

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The financial statements of TRS1 are consolidated within our consolidated financial statements.

At the August Meeting, the Board, including a majority of the Independent Directors, unanimously approved, subject to the approval of our shareholders, a new Investment Advisory Agreement between us and the Manager.

If approved by our shareholders, the new Investment Advisory Agreement would enable us to operate as a BDC under the 1940 Act.

We believe that the Conversion would enable us to pursue a broader array of investment opportunities, as further discussed above.

The Company expects, in the coming days, to file a preliminary proxy statement with the SEC and, subsequently, to mail definitive proxy statements to its shareholders seeking their approval of (1) the new Investment Advisory Agreement and (2) in connection with its anticipated operation as a BDC, a reduction in the asset coverage ratio applicable to the us (enabling us to utilize a greater degree of leverage than would otherwise be permitted), all of which will be more fully described in the proxy statement.

In addition, in the coming months, the Board will consider other matters necessary to effect our conversion to a BDC.

There can be no assurance that the Board or our shareholders will approve the matters necessary for us to convert to a BDC.

We are pursuing the Conversion, which, subject to shareholder approval, will result in the Company ceasing to operate as a mortgage REIT and electing to be regulated as a BDC under the 1940 Act.

Following the Conversion, we would be able to invest in a much broader universe of assets, including both real estate- and non-real estate-related assets.

At the August Meeting, the Board approved the Sixth Amendment, which expands our investment strategy.

Businesses ancillary to the cannabis industry may include, but are not limited to, brand developers, business services providers, and equipment and consumables providers.

We believe there are also attractive lending opportunities in companies ancillary to and outside of the cannabis industry that could generate attractive risk-adjusted returns.

By expanding the investment mandate, we expect to be able to diversify its exposure across industries and credit risk profiles while maintaining deal selectivity.

At the August Meeting, the Board also unanimously approved a series of matters intended to facilitate the conversion (the “Conversion”) of the Company from a REIT to a business development company (“BDC”).

Among other things, the Board, including a majority of the directors who are not “interested persons” of the Company (as that term is defined under the 1940 Act) (the “Independent Directors”), approved a new, 1940 Act-compliant investment advisory agreement by and between the Company and the Manager, subject to the approval of the Company’s shareholders (the “Investment Advisory Agreement”).

On September 16, 2025, the Company filed a definitive proxy statement with the U.S.

Securities and Exchange Commission (“SEC”) in connection with a special meeting of shareholders (the “Special Meeting”) held on November 6, 2025 for the purpose of seeking shareholder approval of certain proposals required to effect the Conversion, namely shareholder approvals of (i) the Investment Advisory Agreement between the Company and the Manager and (ii) the application of reduced asset coverage requirements pursuant to Section 61(a) of the 1940 Act (enabling the Company to utilize a greater degree of leverage than would otherwise be permitted) (the “Proposals”).

Subsequent to the end of the reporting period, on November 6, 2025, at the Special Meeting, the Company’s shareholders approved the Investment Advisory Agreement, which was necessary for the Company to be able to operate as a BDC under the 1940 Act.

In the coming months, the Board will consider other matters required to effect the Conversion.

We are pursuing the Conversion, which, subject to Board approval, will result in the Company ceasing to operate as a mortgage REIT and electing to be regulated as a BDC under the 1940 Act.

Following the Conversion, we would be able to invest in a much broader universe of assets, including both real estate and non-real estate related assets, as the BDC structure would provide access to a broader range of investment opportunities, including in private and public middle-market companies that may not have sufficient real property collateral coverage to satisfy the REIT regulatory requirements.

This expanded mandate is expected to enhance portfolio diversification, increase investment flexibility, and support the pursuit of attractive risk-adjusted returns.

We have historically targeted lending to vertically integrated cannabis companies with significant real estate holdings.

Given the capital-intensive nature of the cannabis industry, combined with the high cost of capital, many operators do not own real estate, which significantly limits the universe of cannabis operators to which we can lend as a mortgage REIT.

The Conversion would allow us to invest in non-real estate covered vertically integrated operators.

Given the capital-intensive nature of the cannabis industry, combined with the high cost of capital, many operators do not

own real estate, which significantly limits the universe of cannabis operators to which we can lend as a mortgage REIT.

The Conversion would allow us to invest in non-real estate covered vertically integrated operators subject to the requirements of the 1940 Act applicable to BDCs.

In addition, following the Conversion, we intend to continue investing in businesses ancillary to the cannabis industry, as contemplated under the Sixth Amendment.

Ancillary cannabis businesses can have high growth potential, but often do not

own real property and have limited access to debt capital.

If completed, the transition to a BDC will enable us to significantly expand its investment universe by increasing its ability to lend to ancillary cannabis businesses as well as non-real estate covered vertically integrated operators.

Ancillary cannabis businesses can have high growth potential, but often do not own real property and have limited access to debt capital.

If completed, the Conversion will enable us to significantly expand our investment universe by increasing our ability to lend to ancillary cannabis businesses as well as non-real estate covered vertically integrated operators.

On February 22, 2024, we announced a plan to separate into two independent, publicly traded companies.

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Unless otherwise noted, all amounts, percentages and discussion below reflect only the results of operations and financial condition from our continuing operations.

Developments During the Second Quarter June 30, 2025:

Updates to Our Loan Portfolio During the Second Quarter June 30, 2025

In April 2025, we received a voluntary prepayment from Private Company L of approximately $2.0 million, which was applied to our outstanding principal balance, recognizing $48.8 thousand in exit fees.

In April 2025, we entered into a $14.0 million senior secured credit facility with Subsidiaries of Private Company V.

The loan was originated at a discount of 3.0% and matures April 1, 2029.

The loan bears cash interest at 12.5% and 1.5% interest paid-in kind.

At closing, approximately $10.5 million was drawn and the remainder is available to be drawn within one year of closing.

In May 2025, we were fully repaid on our loan with Private Company T at par plus accrued interest.

The outstanding principal of the senior secured term loan on the date of repayment was approximately $7.7 million.

In May 2025, we were fully repaid on our loan with Subsidiary of Public Company M at par plus accrued interest.

The outstanding principal of our investment on the date of repayment was approximately $2.8 million.

In June 2025, we deemed our equipment loan receivable with Public Company A uncollectible and wrote off the remaining balance.

At the time of write-off, the equipment loan with Public Company A had an outstanding principal balance of approximately $1.8 million and amortized cost of approximately $1.8 million.

Prior to the write-off, the loan receivable had a CECL Reserve that was fully reserved for.

In the second quarter of 2025, we wrote off $1.8 million, which was equal to the carrying value of the loan receivable, excluding the CECL Reserve at the time the loan was written off.

In April 2025, we and AFC Agent (collectively, the “AFC Parties”) commenced separate legal actions against (i) two shareholders of the parent of Subsidiary of Private Company G in the United States District Court for the Southern District of New York asserting claims for violations of the Racketeer Influenced and Corrupt Organizations Act, breach of a shareholder guaranty, tortious interference with contract, fraud, aiding and abetting fraud, and conversion and (ii) the parent of Subsidiary of Private Company G in New York state court asserting a claim for breach of contract arising from its failure to satisfy its obligations under a guaranty agreement related to the Company’s credit facility with Subsidiary of Private Company G.

In June 2025, the AFC Parties filed an amended complaint against two shareholders of the parent of Subsidiary of Private Company G, asserting claims for breach of contract, tortious interference with contract, fraud, aiding and abetting fraud, and conversion.

In April 2025, two Subsidiary of Private Company G-affiliated cannabis companies (the “Plaintiffs”) that are borrowers the Company’s credit facility with Subsidiary of Private Company G filed a complaint in the United States District Court for the District of New Jersey alleging, among other things, breach of contract, breach of the implied covenant of good faith and fair dealing, and violations of the New York Uniform Commercial Code in connection with the Company’s termination of a forbearance agreement between the parties.

On May 9, 2025, the court granted Plaintiffs’ request for a preliminary injunction, enjoining the Company from seizing any of Plaintiffs’ assets or

cash or seeking any remedy for Subsidiary of Private Company G’s failure to (a) cooperate in the foreclosure proceeding on the Pennsylvania property;

(b) provide annual audited financial statements for fiscal years 2023 and 2024;

or (c) obtain a certificate of occupancy for the New Jersey facility by May 15, 2024.

The AFC parties have appealed the preliminary injunction ruling to the Third Circuit Court of Appeals and are seeking an expeditious resolution of the appeal.

Following the filing of the appeal, the Plaintiffs filed an amended complaint in the District Court, asserting an additional claim seeking declaratory relief regarding the loan balance.

The credit facility to Subsidiary of Private Company G matures on May 1, 2026.

Because each of these actions are in their early stages, no reasonable estimate of possible outcomes resulting from these legal actions can be made at this time.

Developments During the Third Quarter Ended September 30, 2025:

Updates to Our Loan Portfolio During the Third Quarter Ended September 30, 2025

We placed the loan with Private Company P on nonaccrual status effective June 1, 2025.

In November 2025, the Company and AFC Agent entered into a mutual release and settlement agreement with Private Company P and other related parties to resolve various claims and counterclaims among the parties relating to, among other things, the Company’s credit facility with Private Company P and the underlying loan collateral.

See further discussion in “ Recent Developments ”.

In August 2025, we entered into an agreement to purchase $10.0 million in outstanding principal amount of a senior secured term loan to Subsidiary of Public Company S, a publicly traded operator, at a 4.0% discount.

The term loan under the Subsidiary of Public Company S Credit Facility accrues interest at a fixed rate per annum of 12.5% and matures in August 2030.

Concurrently, our existing $10.0 million investment with Subsidiary of Public Company S was repaid at par plus accrued interest and we recognized an exit fee of approximately $0.2 million.

In August 2025, we were fully repaid on our loan with Private Company J at par plus accrued interest.

The outstanding principal balance of the senior secured term loan on the date of repayment was approximately $23.2 million.

We received exit fees of approximately $0.9 million upon repayment of the loan.

In September 2025, we entered into the third amendment to the credit agreement with Private Company O, which, among other things, increased the loan commitment by an additional $3.0 million under the terms of the existing credit agreement, extended the draw period and amortization start date until August 1, 2027 and increased the unused fee from 2.0% to 3.15%.

All other material terms of the credit agreement remained substantially unchanged.

At-the-Market Offering Program

In April 2022, we filed a shelf registration statement on Form S-3 with the SEC, registering the offer and sale of up to $1.0 billion of securities (the “ Prior Shelf Registration Statement”).

The Prior Shelf Registration Statement enabled us to issue shares of common stock, preferred stock, debt securities, warrants, rights, as well as units that include one or more of such securities.

The Prior Shelf Registration Statement enabled us to issue shares of common stock, preferred stock, debt securities, warrants, rights, as well as units that include one or more of such

On April 17, 2025, we filed a new shelf registration statement on Form S-3 (File No.

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The ATM Program and related Sales Agreement expired in April 2025, in connection with the expiration of our Prior Shelf Registration Statement.

During the three and six months ended June 30, 2025, the Company did not sell any shares of the Company’s common stock under the Sales Agreement.

During the three and nine months ended September 30, 2025, the Company did not sell any shares of the Company’s common stock under the Sales Agreement.

We do not currently have an ATM program, but we may enter into a new ATM program and related sales agreement in the future pursuant to which sales may be made under the Shelf Registration Statement.

Dividends Declared Per Share

For the six months ended June 30, 2025, we declared the following cash dividend:

For the nine months ended September 30, 2025, we declared the following cash dividends:

Date Declared Payable to Shareholders of Record at the Close of Business on Payment Date Amount per Share Total Amount

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June 13, 2025 June 30, 2025 July 15, 2025 0.15 3,389,267

September 15, 2025 September 30, 2025 October 15, 2025 0.15 3,389,181

2025 Period Subtotal

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Recent Developments

In July 2025, AFC Agent delivered a notice of default and acceleration to Private Company P based on certain payment defaults, including the failure to make its interest payment when due for July 1, 2025, and began charging additional default interest of 5.0%, in accordance with the terms of the credit facility with Private Company P.

The loan with Private Company P on nonaccrual status effective June 1, 2025.

AFC Agent, on behalf of the Company and its affiliates, is actively pursuing judicial and non-judicial remedies against Private Company P.

The term loan under the Subsidiary of Public Company S Credit Facility accrues interest at a fixed rate per annum of 12.5% and matures in August 2030.

Concurrently, our existing $10.0 million investment with Subsidiary of Public Company S was repaid at par plus accrued interest and we recognized an exit fee of approximately $0.2 million.

At the August Meeting, the Board approved the Sixth Amendment, which expands the Company’s investment strategy (as discussed above in “Note 1—Organization”).

In addition, the Board approved at the August Meeting a new Investment

Advisory Agreement, which will be submitted to shareholders for approval.

The proposal related to the new Investment Advisory Agreement relates to the Conversion (as discussed above in “Note 18—Subsequent Events”).

In October 2025, AFC Agent received approximately $5.4 million in total loan payments from Private Company A’s sale of its collateral assets, of which approximately $4.2 million was allocated to us relating to our pro rata portion of the Private Company A Credit Facility and was applied as a reduction to the amortized cost of the Private Company A loan.

Following the payment, our outstanding principal balance under the Private Company A Credit Facility was approximately $46.8 million.

AFC Agent continues to monitor the court-appointed receivership installed to maintain the borrower’s operations and maximize value for the benefit of its creditors.

Subsequent to the end of the reporting period, on November 6, 2025, the Company held the Special Meeting, at which shareholders approved the Proposals.

In the coming months, the Board will consider other matters required to effect the Conversion.

There can be no assurance that the Board will approve the matters required to effect the Conversion.

In connection with these initiatives, w e incurred approximately $0.6 million and $0.8 million of professional fees and related expenses during the three and nine months ended September 30, 2025, respectively, which are recorded within BDC conversion expenses line item in the Company’s consolidated statements of operations.

In connection with the settlement and release, we will be paid a settlement in the amount of $13.3 million, less certain fees and expenses, with $6.0 million of the settlement payment to be financed by the Company via a new loan to Private Company T at a 10% interest rate.

The new loan will be secured by a second priority lien on the borrower’s real property and a first priority lien on certain of the borrower’s equipment and other personal property.

The new loan is to be repaid over a term of three years (subject to a one-year extension), with monthly cash payments of principal and interest.

Closing of the settlement and the related loan is expected to occur in the fourth quarter of 2025.

As of September 30, 2025, the Company’s net carrying value of its non-performing loan with Private Company P was approximately $11.2 million, which was net of a $4.1 million CECL Reserve.

In connection with the settlement and release, the Company expects to realize a taxable loss of approximately $4.1 million and write-off the CECL Reserve of $4.1 million once the closing of the transaction is completed.

The Company currently expects that the realized tax loss will significantly impact the anticipated distributable earnings for the fourth quarter of 2025, and thus the Company does not anticipate paying a dividend for that quarter.

Key Financial Measures and Indicators

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We believe that book value per share is helpful to shareholders in evaluating our growth as we scale our equity capital base and continue to invest in our target investments.

The book value per share of our common stock as of June 30, 2025 and December 31, 2024 was approximately $8.18 and $9.02, respectively.

The book value per share of our common stock as of September 30, 2025 and December 31, 2024 was approximately $7.49 and $9.02, respectively.

Non-GAAP Metrics

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

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7,372,778 181,370 20,747,674 (1,077,196)

TRS loss (income), net of dividends 934,187 (624,235) 870,605 306,998

TRS (income) loss, net of dividends (1,542,335) 840,556 (671,730) 1,147,554

One-time events pursuant to changes in GAAP and certain non-cash charges — — — —

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Distributable earnings per basic weighted average share $ 0.16 $ 0.35 $ 0.52 $ 1.40

(1) The provision for current expected credit losses above includes zero and zero for the three and six months ended June 30, 2025, respectively, and approximately $71.9 thousand and $71.9 thousand for the three and six months ended June 30, 2024, respectively, in connection with the Spin-Off, which is included in the net income from discontinued operations, net of tax financial statement line on the consolidated statements of operations.

(2) The provision for (reversal of) current expected credit losses is presented net of the current period write-off.

Refer to Note 6.

(1) In the prior period, the provision for current expected credit losses above included zero and approximately $71.9 thousand for the three and nine months ended September 30, 2024, respectively, in connection with the Spin-Off, which was included in the net income from discontinued operations, net of tax financial statement line on the consolidated statements of operations.

(2) The provision for (reversal of) current expected credit losses is presented net of any write-offs.

Factors Impacting our Operating Results

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Our operating results may also be impacted by credit losses in excess of initial anticipations or unanticipated credit events experienced by our borrowers.

Results of Operations f or the three and six months ended June 30, 2025 and 2024

The following table summarizes our consolidated results of operations for the three and six months ended June 30, 2025 and 2024:

Results of Operations f or the three and nine months ended September 30, 2025 and 2024

The following table summarizes our consolidated results of operations for the three and nine months ended September 30, 2025 and 2024:

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

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Net income (loss) from continuing operations .

Our net loss from continuing operations allocable to our common shareholders for the three and six months ended June 30, 2025, was approximately $(13.2) million and $(9.1) million, or $(0.60) and $(0.42) per basic weighted average common share from continuing operations, respectively, compared to net income from continuing operations allocable to our common shareholders of approximately $15.2 million and $13.6 million, or $0.74 and $0.66 per basic weighted average common share from continuing operations for the three and six months ended June 30, 2024, respectively.

Our net loss from continuing operations allocable to our common shareholders for the three and nine months ended September 30, 2025, was approximately $(12.5) million and $(21.6) million, or $(0.57) and $(0.99) per basic common share from continuing operations, respectively, compared to net income from continuing operations allocable to our common shareholders of approximately $1.2 million and $14.9 million, or $0.05 and $0.71 per basic common share from continuing operations for the three and nine months ended September 30, 2024, respectively.

Interest income.

Interest income decreased approximately $(9.9) million, or (55.2)%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

The decrease was driven by three loan exits in the prior period, resulting in less interest income of $(8.8) million, which included nonrecurring prior period activity such as:

repayment of past due cash interest of approximately $2.3 million, acceleration of unaccreted OID upon exit of $1.9 million, default interest of approximately $0.6 million when the loan with Subsidiary of Public Company H was sold and repaid in cash in June 2024, $1.0 million exit fee recognized with the sale of Private Company B in June 2024 and $1.7 million exit fee recognized in May 2024 related to the repayment of our loan with Private Company C.

Loans on nonaccrual status had lower interest income of $(2.4) million period over period for the three months ended.

Interest income decreased $(15.8) million, or (48.9)%, for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

This decrease was driven by fewer exits and related fees in the current period compared to the prior period.

During the six months ended June 30, 2024, four loans were exited, which included $(8.2) million nonrecurring prior period interest income relating to:

repayment of past due cash interest of approximately $2.3 million, acceleration of unaccreted OID upon exit of $1.9 million, default interest of approximately $0.6 million when the loan with Subsidiary of Public Company H was sold and repaid in cash in June 2024, $1.0 million exit fee recognized with the sale of Private Company B in June 2024, $1.7 million exit fee recognized in May 2024 related to the repayment of our loan with Private Company C, and repayment of past due interest in cash of $0.7 million when our loan with Private Company I was

repaid in March 2024.

Loans on nonaccrual status had lower interest income of $(4.2) million period over period for the six months ended.

Interest income decreased approximately $(2.3) million, or (21.9)%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

The decrease was driven by lower interest income of approximately $(3.0) million due to loans with Private Company A, Private Company P, Subsidiary of Private Company G, and Private Company K on nonaccrual status.

Interest income decreased $(18.1) million, or (42.3)%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

The decrease in interest income was driven more loan exits and prepayments in the prior period, which resulted in ($3.7) million lower fee income, ($3.9) million lower OID income due to the acceleration of unaccreted OID, ($2.7) million lower interest income driven by less capital deployed and ($1.3) million lower PIK income during the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, respectively.

Loans on nonaccrual status resulted in ($6.6) million lower interest income period over period for the nine months ended.

Interest expense.

Interest expense increased approximately $0.3 million, or 18.1%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, driven by an increase in borrowings on our Revolving Credit Facility resulting in additional interest expense of $0.3 million.

Interest expense increased approximately $0.5 million, or 15.6%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, driven by an increase in borrowings on our Revolving Credit Facility resulting in additional interest expense of $0.4 million and an increase in unused fees of $0.1 million, respectively.

Interest expense increased approximately $0.1 million, or 3.7%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, driven by an increase in time borrowings were outstanding on our Revolving Credit Facility resulting in additional interest expense of $0.1 million.

Interest expense increased approximately $0.6 million, or 11.7%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, driven by an increase in time borrowings were outstanding on our Revolving Credit Facility resulting in additional interest expense of $0.5 million and an increase in unused fees of $0.1 million, respectively.

Management and incentive fees, net.

Management fees decreased approximately $(0.4) million, or (39.8)%, for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024.

Management fees decreased approximately $(0.6) million, or (28.8)%, for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

The decrease in both the three and six months ended period over period was driven by lower equity, attributable to the Spin-Off of SUNS completed on July 9, 2024.

Management fees decreased approximately $(13.5) thousand, or (1.9)%, for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024.

Management fees decreased approximately $(0.6) million, or (21.8)%, for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024.

The decrease in the nine months ended period over period was driven by lower equity, attributable to the Spin-Off of SUNS completed on July 9, 2024.

In connection with the Spin-Off, we recognized a reduction to additional paid-in capital of approximately $115 million.

Incentive fees decreased approximately $(2.9) million and $(5.3) million, for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, respectively, driven by lower Core Earnings (as defined in the Management Agreement).

There was no incentive fee incurred during the three and six months ended June 30, 2025.

Incentive fees decreased approximately $(0.3) million and $(5.6) million, for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, respectively, driven by lower Core Earnings (as defined in the Management Agreement).

There was no incentive fee incurred during the three and nine months ended September 30, 2025.

General and administrative expenses.

General and administrative expenses decreased approximately $(0.2) million, or (18.1)%, and decreased $(0.5) million, or (24.2)%, and for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024, respectively.

The decrease in both the three and six months ended was primarily due to less reimbursable shared expenses allocated by our Manager of approximately $(0.2) million and $(0.4) million, respectively.

General and administrative expenses decreased approximately $(0.2) million, or (21.3)%, and decreased $(0.7) million, or (23.3)%, and for the three and nine months ended September 30, 2025, as compared to the three and nine months ended September 30, 2024, respectively.

The decrease in both the three and nine months ended was primarily due to less reimbursable shared expenses allocated by our Manager of approximately $(0.1) million and $(0.5) million, respectively.

Stock-based compensation .

Stock-based compensation increased $0.1 million, or 31.2%, and $0.1 million, or 13.8%, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, respectively.

Stock-based compensation increased $0.3 million, or 122.9%, and $0.4 million, or 34.9%, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024, respectively.

Professional fees .

Professional fees decreased approximately $(6.3) thousand, or (1.7)%, and decreased $(0.1) million, or (10.0)%, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, respectively.

Professional fees decreased approximately $(0.1) million, or (15.0)%, and decreased $(0.1) million, or (11.7)%, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024, respectively.

BDC conversion expenses .

BDC conversion expenses are expensed as incurred and primarily include legal fees related to the creation and organization of our election to be regulated as a BDC.

The Conversion process began during the second quarter of 2025 and we incurred approximately $0.2 million and $0.2 million of conversion expenses during the three and six months ended June 30, 2025, respectively.

The Conversion process began during the second quarter of 2025 and we incurred approximately $0.6 million and $0.8 million of conversion expenses during the three and nine months ended September 30, 2025, respectively.

No such costs were incurred in the prior year.

Realized (losses) gains.

The decrease in realized losses recognized for the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024, was driven by a realized loss recognized in the prior period due to separate sales of our investment in Subsidiary of Public Company M.

There were no realized losses recognized during the three and six months ended June 30, 2025, respectively.

The decrease in realized losses recognized for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, was driven by a realized loss recognized in the prior period due to separate sales of our investment in Subsidiary of Public Company M.

There were no realized losses recognized during the three and nine months ended September 30, 2025, respectively.

Unrealized (losses) gains.

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An unrealized gain arises when the fair value of the loan portfolio exceeds its cost and an unrealized loss arises when the fair value of the loan portfolio is less than its cost.

The net change in unrealized gain (loss) of approximately $0.4 million and $3.3 million for the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024, respectively, was driven by the sale of our loan with Private Company B in the prior period with an unrealized loss that was recovered, as well as the net change in the valuation of the loans, which was impacted by changes in market yields, revenue multiples, and recovery rates.

The net change in unrealized gain (loss) of approximately $(5.1) million and $(1.8) million for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 30, 2024, respectively, was driven by the sale of our loan with Private Company B in the prior period with an unrealized loss that was recovered, as well as the net change in the valuation of the loans, which was impacted by changes in recovery rates.

Income tax (benefit) expense .

Income taxes decreased approximately $(0.4) million, or (148.3)%, and decreased $(0.5) million, or (105.8)%, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, respectively.

The change was driven by an excise tax refund received in the current period of approximately $(0.1) million and lower federal and state taxes incurred driven by lower taxable income.

Income taxes decreased approximately $(1.3) million, or (326.4)%, and decreased $(1.7) million, or (208.4)%, for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024, respectively.

The change was driven by lower taxable income resulting from the write-off recognized during the second quarter of 2025 associated with Public Company A equipment loan.

Provision for Current Expected Credit Losses

The provision for current expected credit losses increased approximately $22.1 million , or 353.1%, and $16.5 million, or 1238.9%, for the three and six months ended June 30, 2025 as compared to the three and six months ended June 30, 2024, respectively .

The balance as of June 30, 2025 was approximatel y $44.0 million , or 14.61%, of our total loans held at carrying value with a balance of approximately $300.9 million and was bifurcated between (i) the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value of approximately $43.8 million and (ii) a liability for unfunded commitments of approximately $0.1 million .

The balance as of June 30, 2024 was approximately $25.1 million, or 10.54%, of our total loans held at carrying value and loan receivable held at carrying value balance of approximately $238.0 million and was bifurcated between (i) the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value and loan receivable held at carrying value of approximately $25.0 million and (ii) a liability for unfunded commitments of approximately $0.1 million.

June 30, 2024 CECL Reserve balances exclude the commercial real estate loan portfolio and related CECL Reserve of SUNS in connection with the Spin-Off.

The provision for current expected credit losses increased approximately $7.2 million and $23.7 million for the three and nine months ended September 30, 2025 as compared to the three and nine months ended September 30, 2024, respectively .

Our CECL Reserve as of September 30, 2025 was approximatel y $51.3 million , or 18.69%, of our total loans held at carrying value with a balance of approximately $274.7 million and was bifurcated between (i) the current expected credit

loss reserve (contra-asset) related to outstanding balances on loans held at carrying value of approximately $51.2 million and (ii) a liability for unfunded commitments of approximately $0.2 million .

The balance as of September 30, 2024 was approximately $25.3 million, or 10.70%, of our total loans held at carrying value and loan receivable held at carrying value balance of approximately $236.3 million and was bifurcated between (i) the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value and loan receivable held at carrying value of approximately $25.1 million and (ii) a liability for unfunded commitments of approximately $0.2 million.

September 30, 2024 CECL Reserve balances exclude the commercial real estate loan portfolio and related CECL Reserve of SUNS in connection with the Spin-Off.

The CRE CECL Reserve is included within discontinued operations for the prior periods presented.

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We continuously evaluate the credit quality of each loan by assessing the risk factors of each loan.

The change in the provision for current expected credit losses for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 was due to changes in macroeconomic factors, changes to the loan portfolio including new commitments and repayments, borrower payment status, and changes in other data points we use in estimating the reserve.

The change in the provision for current expected credit losses for the three and nine months ended period over period was due to an increase in CECL Reserves for loans with a risk rating of “4” or “5” as a result of changes in macroeconomic factors, changes to the loan portfolio including new commitments and repayments, borrower payment status, and changes in other data points we use in estimating the reserve.

Loan Portfolio

As of June 30, 2025 , our portfolio was comprised of 15 loans (such portfolio, our “Existing Portfolio”).

The aggregate originated commitment under these loans was approximately $370.3 million and outstanding principal was approximately $359.6 million as of June 30, 2025.

As of June 30, 2025, our portfolio had a weighted-average estimated YTM of approximately 18% and was secured by various types of assets of our borrowers, including real property and personal property, such as cash flows and the value associ ated with licenses (where applicable), equipment, and other assets to the extent permitted by applicable laws and the regulations governing our borrowers.

As of June 30, 2025 , we had four loans on nonaccrual status, which included three loans held for investment with a carrying value of $104.2 million and carrying value net of CECL Reserve of $65.3 million, and one loan held at fair value with an outstanding principal balance of $51.2 million and fair value of $26.8 million.

The table below summarizes our total loan portfolio as of June 30, 2025, unless otherwise specified.

As of September 30, 2025 , our portfolio was comprised of 14 loans (such portfolio, our “Existing Portfolio”).

The aggregate originated commitment under these loans was approximately $344.6 million and outstanding principal was approximately $332.8 million as of September 30, 2025.

As of September 30, 2025 , we had four loans on nonaccrual status, which included three loans held for investment with a carrying value of $104.2 million and carrying value net of CECL Reserve of $59.9 million, and one loan held at fair value with an outstanding principal balance of $51.0 million and fair value of $16.9 million.

The table below summarizes our total loan portfolio as of September 30, 2025, unless otherwise specified.

Borrower names have been kept confidential due to confidentiality agreement obligations.

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4/30/2021 5/1/2026 73,164,277 21.2% 78,880,165 12.5% N/A Fixed No —%

J 8/30/2021 9/1/2025 28,500,000 7.7% 23,359,234 16.3% 2.0% Floating Yes 25%

4/28/2022 5/3/2027 13,229,626 3.8% 12,195,762 16.1% 2.0% Floating Yes —%

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R 10/4/2024 11/1/2027 41,000,000 11.9% 34,828,192 12.0% N/A Floating Yes 15%

of Public Co.

S 11/19/2024 8/12/2026 10,000,000 2.7% 10,000,000 9.5% N/A Fixed No 10%

U 2/14/2025 3/1/2028 15,000,000 4.4% 15,000,000 14.0% N/A Fixed Yes 16%

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V 4/1/2025 4/1/2029 14,000,000 4.1% 12,323,460 12.5% 1.5% Fixed Yes 17%

of Public Co.

S 8/13/2025 8/13/2030 10,000,000 2.9% 10,000,000 12.5% N/A Fixed No 15%

$ 344,614,870 100.0% $ 332,823,811 12.6% 0.5%

(1) All loans originated prior to July 31, 2020 were purchased from an affiliated entity at fair value which approximated accreted and/or amortized cost plus accrued interest on July 31, 2020.

(2) YTM excludes loans on nonaccrual status.

Estimated YTM includes a variety of fees and features that affect the total yield, which may include, but is not limited to, OID, exit fees, prepayment fees, unused fees and contingent features.

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The estimated YTM calculations require management to make estimates and assumptions, including, but not limited to, the timing and amounts of loan draws on delayed draw loans, the timing and collectability of exit fees, the probability and timing of prepayments and the probability of contingent features occurring.

For example, certain credit agreements contain provisions pursuant to which certain PIK interest rates and fees earned by us under such credit agreements will decrease upon the satisfaction of certain specified criteria which we believe may improve the risk profile of the applicable borrower.

For example, certain credit agreements contain provisions pursuant to which certain PIK interest rates and fees earned by us under such credit agreements will decrease upon the satisfaction

of certain specified criteria which we believe may improve the risk profile of the applicable borrower.

To be conservative, we have not assumed any prepayment penalties or early payoffs in our estimated YTM calculation.

Estimated YTM is based on current management estimates and assumptions, which may change.

Estimated YTM is calculated using the interest rate as of June 30, 2025 applied through maturity.

Estimated YTM is calculated using the interest rate as of September 30, 2025 applied through maturity.

Actual results could differ from those estimates and assumptions.

(3) Estimated YTM for the loan with Private Company A is enhanced by purchase discounts attributed to the fair value of equity warrants that were separated from the loan prior to our acquisition of such loan.

The purchase discounts accrete to income over the respective remaining terms of the applicable loan.

(3) Cash interest and PIK interest rates for Private Company A represent a blended rate of differing cash interest and PIK interest rates applicable to each of the tranches to which the Company is a lender under the senior secured term loan credit facility with Private Company A (as may be amended, restated, and supplemented or otherwise modified from time to time, the “Private Company A Credit Facility”).

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Loans Held for Investment at Fair Value

As of June 30, 2025 and December 31, 2024, our portfolio included one loan held at fair value.

The aggregate commitment

under this loan was approximately $42.5 million and $44.4 million, respectively, and outstanding principal was approximately $51.2 million and $53.1 million as of June 30, 2025 and December 31, 2024, respectively.

For the six months ended June 30, 2025, we received approximately $1.9 million of principal repayments of loans held at fair value.

As of June 30, 2025 and December 31, 2024, our loan held at fair value did not have a floating interest rate.

The following tables summarize our loan held at fair value as of June 30, 2025 and December 31, 2024 :

As of June 30, 2025

As of September 30, 2025 and December 31, 2024, our portfolio included one loan held at fair value.

The aggregate commitment under this loan was approximately $42.3 million and $44.4 million, respectively, and outstanding principal was approximately $51.0 million and $53.1 million as of September 30, 2025 and December 31, 2024, respectively.

For the nine months ended September 30, 2025, we received approximately $2.1 million of principal repayments of loans held at fair value.

As of September 30, 2025 and December 31, 2024, our loan held at fair value did not have a floating interest rate.

The following tables summarize our loan held at fair value as of September 30, 2025 and December 31, 2024 :

As of September 30, 2025

Fair Value (1)

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(2) The difference between the carrying value and the outstanding principal amount of the loans consists of unaccreted OID and loan origination costs.

(3) As of June 30, 2025 and December 31, 2024 , the maturity date passed on the credit facility with Private Company A without repayment.

The following table presents changes in loans held at fair value as of and for the six months ended June 30, 2025:

(3) As of September 30, 2025 and December 31, 2024 , the maturity date passed on the credit facility with Private Company A without repayment.

The following table presents changes in loans held at fair value as of and for the nine months ended September 30, 2025:

Principal Original Issue

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Loan repayments (2,133,120) — — (2,133,120)

Total loan held at fair value at June 30, 2025 $ 51,186,315 $ (2,867,431) $ (21,471,662) $ 26,847,222

Total loan held at fair value at September 30, 2025 $ 50,975,329 $ (2,867,431) $ (31,184,089) $ 16,923,809

Loans Held for Investment at Carrying Value

As of June 30, 2025 and December 31, 2024, our portfolio included 14 and 14 loans held at carrying value, respectively.

A s of June 30, 2025 and December 31, 2024, t he aggregate originated commitment under these loans was approximately $327.8 million and $312.8 million, resp ectively, and outstanding principal was approximately $308.4 million and $301.8 million, respectively.

During the six months ended June 30, 2025, we funded approximately $30.0 million of new loans and additional principal and had approximately $23.6 million of principal repayments of loans held at carrying value.

As of June 30, 2025 and December 31, 2024, approximately 49% and 52%, respectively, of our loans held at carrying value had

floating interest rates.

As of June 30, 2025, t hese floating benchmark rates included one-month Secured Overnight Financing Rate (“SOFR”) quoted at 4.3% and subject to a weighted average floor of 3.8% based on outstanding principal.

The following tables summarize our loans held at carrying value as of June 30, 2025 and December 31, 2024 :

As of June 30, 2025

As of September 30, 2025 and December 31, 2024, our portfolio included 13 and 14 loans held at carrying value, respectively.

A s of September 30, 2025 and December 31, 2024, t he aggregate originated commitment under these loans was approximately $302.3 million and $312.8 million, resp ectively, and outstanding principal was approximately $281.8 million and $301.8 million, respectively.

During the nine months ended September 30, 2025, we funded approximately $40.7 million of new loans and additional principal and had approximately $61.0 million of principal repayments of loans held at carrying value.

As of September 30, 2025 and December 31, 2024, approximately 44% and 52%, respectively, of our loans held at carrying value had floating interest rates.

As of September 30, 2025, t hese floating benchmark rates included one-month Secured Overnight Financing Rate (“SOFR”) quoted at 4.1% and subject to a weighted average floor of 4.3% based on outstanding principal.

The following tables summarize our loans held at carrying value as of September 30, 2025 and December 31, 2024 :

As of September 30, 2025

Principal (1)

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(1) The difference between the carrying value and the outstanding principal amount of the loans consists of unaccreted OID and loan origination costs.

(2) Weighted average remaining life is calculated based on the carrying value of the loans as of June 30, 2025 and December 31, 2024 .

The following table presents changes in loans held at carrying value as of and for the six months ended June 30, 2025:

(2) Weighted average remaining life is calculated based on the carrying value of the loans as of September 30, 2025 and December 31, 2024 .

The following table presents changes in loans held at carrying value as of and for the nine months ended September 30, 2025:

Principal Original Issue

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Loan amortization payments (14,148,239) — (14,148,239)

Total loans held at carrying value at June 30, 2025 $ 308,405,751 $ (7,459,543) $ 300,946,208

Total loans held at carrying value at September 30, 2025 $ 281,848,482 $ (7,122,813) $ 274,725,669

Loan Receivable Held at Carrying Value

As of June 30, 2025 and December 31, 2024, our portfolio included zero and one loan receivable held at carrying value.

The originated commitment under this loan was $4.0 million and outstanding principal was approximately zero and $1.9 million as of June 30, 2025 and December 31, 2024, respectively.

During the six months ended June 30, 2025, we received $0.1 million of principal repayments of loan receivable held at carrying value.

Based on discussions with the collateral agent, we do not expect future proceeds and deemed the remaining balance on the loan with Public Company A to be uncollectible.

As of September 30, 2025 and December 31, 2024, our portfolio included zero and one loan receivable held at carrying value.

The originated commitment under this loan was $4.0 million and outstanding principal was approximately zero and $1.9 million as of September 30, 2025 and December 31, 2024, respectively.

During the nine months ended September 30, 2025, we received $0.1 million of principal repayments of loan receivable held at carrying value.

Based on discussions with the collateral agent, no further proceeds were expected and we deemed the remaining balance on the loan with Public Company A to be uncollectible.

Prior to the write-off, the loan receivable had a CECL Reserve that was fully reserved for.

In the second quarter of 2025, we wrote off $1.8 million, which was equal to the carrying value of the loan receivable, excluding the CECL Reserve at the time the loan was written off.

The following table presents changes in loans receivable as of and for the six months ended June 30, 2025:

During the second quarter of 2025, we wrote off $1.8 million, which was equal to the carrying value of the loan receivable, excluding the CECL Reserve at the time the loan was written off.

The following table presents changes in loans receivable as of and for the nine months ended September 30, 2025:

Principal Original Issue

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Loan write-off (1,778,932) 1,686 (1,777,246)

Total loan receivable held at carrying value at June 30, 2025 $ — $ — $ —

Total loan receivable held at carrying value at September 30, 2025 $ — $ — $ —

Collateral Overview

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While we believe that the appraised value of any real estate assets or other collateral securing our loans may impact the amount of the recovery in each such scenario, the amount of any such recovery from the sale of such real estate or other collateral may be less than the appraised value of such collateral and the sale of such collateral may not be sufficient to pay off the remaining balance on the defaulted loan.

Becoming the holder of a license through foreclosure or otherwise, the sale of a license or other realization of the value of licenses requires the approval of regulatory authorities.

As of June 30, 2025, our portfolio of assets held outside of TRS1 had a weighted average real estate collateral coverage of approximately 1.0 times our aggregate committed principal amount of such loans, with the real estate collateral coverage for each of our loans measured as of the time of closing for such loan and based on various sources of data available at such time.

Becoming the holder of a license through foreclosure or otherwise, the sale of a license or other

realization of the value of licenses requires the approval of regulatory authorities.

As of September 30, 2025, our portfolio of assets held outside of TRS1 had a weighted average real estate collateral coverage of approximately 1.0 times our aggregate committed principal amount of such loans, with the real estate collateral coverage for each of our loans measured as of the time of closing for such loan and based on various sources of data available at such time.

We calculate our weighted average real estate collateral coverage by estimating the underlying value of our real estate collateral based on various objective and subjective factors, including, without limitation, third-party appraisals, total cost basis of the subject property and/or our own internal estimates.

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Our primary sources of cash generally consist of unused borrowing capacity under the Revolving Credit Facility, the net proceeds of future debt or equity offerings, payments of principal and interest we receive on our portfolio of assets and cash generated from our operating results.

Our net cash provided by operating activities for the six months ended June 30, 2025 of approximately $5.7 million was less than our dividends declared of $8.6 million made during the same period due to earned OID of $1.8 million.

Our net cash provided by operating activities for the nine months ended September 30, 2025 of approximately $11.8 million was less than our dividends declared of $12.0 million made during the same period due to earned OID of $2.6 million and PIK repayments of $2.7 million related to the repayment from Private Company J during such period.

OID relates to cash withheld by the Company upon funding of its investments and is included under the ‘Supplemental disclosure of non-cash activity’ on the Consolidated Statements of Cash Flows.

As of June 30, 2025 and December 31, 2024, all of our cash was unrestricted and totaled approximately $3.4 million and $103.6 million, respectively.

As of June 30, 2025, we believe that our cash on hand, capacity available under the Revolving Credit Facility and cash flows from operations will be sufficient to satisfy the operating requirements of our business through at least the next twelve months.

As of September 30, 2025 and December 31, 2024, all of our cash was unrestricted and totaled approximately $45.1 million and $103.6 million, respectively.

As of September 30, 2025, we believe that our cash on hand, capacity available under the Revolving Credit Facility and cash flows from operations will be sufficient to satisfy the operating requirements of our business through at least the next twelve months.

Capital Markets

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The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

As of June 30, 2025, the ATM Program was no longer in effect.

As of September 30, 2025, the ATM Program was no longer in effect.

The ATM Program and related Sales Agreement expired in April 2025, in connection with the expiration of our Prior Shelf Registration Statement.

During the three months ended June 30, 2025, we did not sell any shares of our common stock under the Sales Agreement.

We do not currently have an ATM program, but we may enter into a new ATM program and related sales agreement in the future pursuant to which sales may be made under the Shelf Registration Statement.

We may seek to raise further equity capital and issue debt securities in order to fund our future investments in loans.

As the cannabis industry continues to evolve and to the extent that additional states legalize cannabis, the demand for capital continues to increase as operators seek to enter and build out new markets.

We expect the principal amount of the loans we originate for cannabis operators to increase.

We also expect our expanded investment focus to require additional capital.

As a result, we expect we will need to raise additional equity and/or debt funds to increase our liquidity in the near future.

We may seek to raise further equity capital and issue debt securities in order to fund our future investments in loans, as we expect our expanded investment focus to require additional capital.

Revolving Credit Facility

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In April 2025, we entered into Amendment Number Four to Loan and Security Agreement, by and among the Company, as borrower, the lenders party thereto, and the lead arranger, bookrunner and administrative agent party thereto.

The Amendment, among other things, (i) extends the maturity date of the Agreement to April 29, 2028, (ii) increases the interest rate floor from 4.00% to 7.00%, (iii) permits certain restricted payments to be made upon the Company meeting certain terms and conditions, and (iv) expands the collateral secured under the Agreement from assets comprising of or relating to loan obligations designed for inclusion in the borrower base to substantially all of the Company’s and its

subsidiaries’ assets.

Amendment Number Four, among other things, (i) extends the maturity date of the Revolving Credit Agreement to April 29, 2028, (ii) increases the interest rate floor from 4.00% to 7.00%, (iii) permits certain restricted payments to be made upon the Company meeting certain terms and conditions, and (iv) expands the collateral secured under the Revolving Credit Agreement from assets comprising of or relating to loan obligations designed for inclusion in the borrower base to substantially all of the Company’s and its subsidiaries’ assets.

In connection with the amendment, the Revolving Credit Facility has a lead commitment of $30.0 million from a FDIC-insured banking institution (which may be increased up to $100.0 million in aggregate, subject to available borrowing base and additional commitments) 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.

In June 2025, we entered into Amendment Number Five to the Loan and Security Agreement, by and among the Company, as borrower, the lenders party thereto, and the lead arranger, bookrunner and administrative agent party thereto.

The Amendment among other things increased the commitment from the lenders by $20.0 million, to a total aggregate commitment of $50.0 million.

Amendment Number Five among other things increased the commitment from the lenders by $20.0 million, to a total aggregate commitment of $50.0 million.

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

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(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 us and our subsidiaries.

To the best of our knowledge, as of June 30, 2025, we were in compliance in all material respects with all covenants contained in our Revolving Credit Agreement.

To the best of our knowledge, as of September 30, 2025, we were in compliance in all material respects with all covenants contained in our Revolving Credit Agreement.

AFCF Credit Facility

In December 2024, we entered into the AFCF Credit Facility, which provides for an unsecured revolving credit facility with a $40.0 million commitment, which may be borrowed, repaid and redrawn, subject to a draw fee and the other conditions provided in the AFCF Credit Agreement .

In April 2025, in conjunction with the entry by the Company into Amendment Number Four to the Revolving Credit Facility, we terminated that certain AFCF Credit Agreement, dated December 17, 2024.

At the time of termination, we had no borrowings outstanding and $40.0 million of availability under our AFCF Credit Agreement.

As of June 30, 2025, the AFCF Credit Facility was no longer in effect.

In April 2025, in conjunction with the entry by the Company into Amendment Number Four to the Revolving Credit Agreement, we terminated that certain AFCF Credit Agreement, dated December 17, 2024.

At the time of termination, we had no borrowings outstanding and $40.0 million of availability under our AFCF Credit Facility.

As of September 30, 2025, the AFCF Credit Facility was no longer in effect.

2027 Senior Notes

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The net proceeds from the issuance of the 2027 Senior Notes were approximately $97.0 million, after deducting the initial purchasers’ discounts and commissions and estimated offering fees and expenses payable by us.

We used the net 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.

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 the Indenture.

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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.

These events of default are subject to a number of important exceptions and qualifications set forth in the Indenture.

We were in compliance with the terms of the Indenture as of the date of this quarterly report.

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We expect that these facilities will typically have maturities ranging from two to five years and may accrue interest at either fixed or floating rates.

As of June 30, 2025 , we believe that our cash on hand, capacity available under our Revolving Credit Facility and cash flows from operations will be sufficient to service our outstanding debt during the next twelve months.

Cash provided by (used in) operating, investing and financing activities of continuing operations for the six months ended June 30, 2025 and 2024 is as follows:

Six months ended

As of September 30, 2025 , we believe that our cash on hand, capacity available under our Revolving Credit Facility and cash flows from operations will be sufficient to service our outstanding debt during the next twelve months.

Cash provided by (used in) operating, investing and financing activities of continuing operations for the nine months ended September 30, 2025 and 2024 is as follows:

Nine months ended

September 30,

Net cash provided by (used in) operating activities of continuing operations $ 11,796,234 $ 16,064,202

Net cash (used in) provided by investing activities of continuing operations $ (3,547,884) $ 96,634,888

Net cash provided by (used in) investing activities of continuing operations $ 23,846,844 $ 99,298,100

Net cash (used in) provided by financing activities of continuing operations $ (94,133,149) $ (70,885,129)

Net Cash Provided by (Used in) Operating Activities of Continuing Operations

Net cash provided by operating activities of continuing operations during the six months ended June 30, 2025 was approximately $5.7 million, compared to approximately $14.0 million for the same period in 2024.

Net cash provided by operating activities of continuing operations during the nine months ended September 30, 2025 was approximately $11.8 million, compared to approximately $16.1 million for the same period in 2024.

The decrease of approximately $(4.3) million period over period was primarily due lower revenue and related incoming cash payments from borrowers due to loans on nonaccrual status and no sales of loans in the current year, partially offset by lower management and incentive paid to our Manager period over period.

Net Cash (Used in) Provided by Investing Activities of Continuing Operations

Net cash used in investing activities of continuing operations during the six months ended June 30, 2025 was approximately $(3.5) million, compared to approximately $96.6 million for the same period in 2024.

The decrease in net cash used in investing activities of approximately $(100.2) million during the six months ended June 30, 2024 to June 30, 2025 was primarily due to a decrease on loan repayments of approximately $(14.2) million and a decrease in loan repayments from the prior period of $(96.1) million.

Net Cash Provided by (Used in) Investing Activities of Continuing Operations

Net cash provided by investing activities of continuing operations during the nine months ended September 30, 2025 was approximately $23.8 million, compared to approximately $99.3 million for the same period in 2024.

The decrease in net cash used in investing activities of approximately $(75.5) million during the nine months ended September 30, 2024 to September 30, 2025 was primarily due to a decrease in proceeds from the sale of loans in the prior period of $(96.1) million, partially offset by an increase on loan repayments of approximately $10.0 million and a decrease in loan fundings of approximately $10.6 million, respectively.

Net Cash (Used in) Provided by Financing Activities of Continuing Operations

Net cash used in financing activities of continuing operations during the six months ended June 30, 2025 was approximately $(102.3) million, compared to approximately $(27.1) million for the same period in 2024.

The decrease of approximately $(75.2) million during the six months ended June 30, 2024 to June 30, 2025 was primarily due to a decrease in borrowings on the Revolving Credit Facility and the AFCF Credit Facility of $(59.5) million in the aggregate and increase in repayments on the Revolving Credit Facility and the AFCF Credit Facility of $(23.1) million in the aggregate.

Cash provided by (used in) operating, investing and financing activities of discontinued operations for the six months ended June 30, 2025 and 2024 is as follows:

Six months ended

Net cash used in financing activities of continuing operations during the nine months ended September 30, 2025 was approximately $(94.1) million, compared to approximately $(70.9) million for the same period in 2024.

The decrease of approximately $(23.2) million during the nine months ended September 30, 2024 to September 30, 2025 was primarily due to a decrease in borrowings on the Revolving Credit Facility and the AFCF Credit Facility of $(114.4) million in the aggregate, partially offset by a decrease in repayments on the Revolving Credit Facility and the AFCF Credit Facility of $18.4 million in the aggregate and decrease in cash distributions in connection with the Spin-Off of SUNS of approximately $67.9 million, respectively.

Cash provided by (used in) operating, investing and financing activities of discontinued operations for the nine months ended September 30, 2025 and 2024 is as follows:

Nine months ended

September 30,

Net cash provided by (used in) operating activities of discontinued operations $ — $ 3,271,445

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Net Cash Provided by (Used in) Operating Activities of Discontinued Operations

Net cash provided by operating activities of discontinued operations during the six months ended June 30, 2025 was zero, compared to approximately $2.7 million for the same period in 2024.

The decrease of approximately $(2.7) million during the six months ended June 30, 2024 to June 30, 2025 was primarily due to a decrease in net income from discontinued operations of $(2.8) million and changes in working capital of $0.1 million, respectively.

Net cash provided by operating activities of discontinued operations during the nine months ended September 30, 2025 was zero, compared to approximately $3.3 million for the same period in 2024.

The decrease of approximately $(3.3) million during the nine months ended September 30, 2024 to September 30, 2025 was primarily due to a decrease in net income from discontinued operations of $(2.9) million and changes in working capital of $(0.3) million, respectively.

Net Cash Provided by (Used in) Investing Activities of Discontinued Operations

Net cash used in investing activities of discontinued operations during the six months ended June 30, 2025 was zero, compared to net cash provided by investing activities of $(37.6) million for the same period in 2024.

Net cash used in investing activities of discontinued operations during the nine months ended September 30, 2025 was zero, compared to net cash provided by investing activities of $(47.2) million for the same period in 2024.

The increase of net cash used in investing activities of discontinued operations was primarily due to the issuance and fundings on loans of approximately $(67.3) million, offset by principal repayments of loans of $15.1 million, respectively.

Net Cash Provided by (Used in) Financing Activities of Discontinued Operations

There were no cash flows related to financing activities of discontinued operations during the six months ended June 30, 2025 and 2024.

There were no cash flows related to financing activities of discontinued operations during the nine months ended September 30, 2025 and 2024.

Contractual Obligations, Other Commitments, and Off-Balance Sheet Arrangements

Our contractual obligations as of June 30, 2025 are as follows:

As of June 30, 2025

Our contractual obligations as of September 30, 2025 are as follows:

As of September 30, 2025

1 year 1-3 years 3-5 years More than

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Total $ 6,227,088 $ 5,141,110 $ — $ — $ 11,368,198

As of June 30, 2025 , all unfunded commitments were related to our total loan commitments and were available for funding in less than two years.

We also had the following contractual obligations as of June 30, 2025 relating to the 2027 Senior Notes:

As of June 30, 2025

As of September 30, 2025 , all unfunded commitments were related to our total loan commitments and were available for funding in less than two years.

We also had the following contractual obligations as of September 30, 2025 relating to the 2027 Senior Notes:

As of September 30, 2025

1 year 1-3 years 3-5 years More than

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Total $ 5,175,000 $ 95,175,000 $ — $ — $ 100,350,000

(1) Amounts include projected interest payments during the period based on interest rates in effect as of June 30, 2025 .

(1) Amounts include projected interest payments during the period based on interest rates in effect as of September 30, 2025 .

We may enter into certain contracts that may contain a variety of indemnification obligations.

1 unchanged sentence

Off-balance sheet commitments consist of unfunded commitments on delayed draw loans.

Other than as set forth in this Quarterly Report, we do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured investment vehicles, special purpose entities or variable interest entities, established to

facilitate off-balance sheet arrangements or other contractually narrow or limited purposes.

Further, we have not guaranteed any obligations of unconsolidated entities or entered into any commitment or intend to provide additional funding to any such entities.

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We have elected to be taxed as a REIT for United States federal income tax purposes and, as such, intend to annually distribute to our shareholders at least 90% of our REIT taxable income, prior to the deduction for dividends paid and excluding our net capital gain.

If we distribute less than 100% of our REIT taxable income in any tax year (taking into account any distributions made in a subsequent tax year under Sections 857(b)(9) or 858 of the Code), we will pay tax at regular corporate rates on that undistributed portion.

regular corporate rates on that undistributed portion.

Furthermore, if we distribute less than the sum of (i) 85% of our ordinary income for the calendar year, (ii) 95% of our capital gain net income for the calendar year and (iii) any undistributed shortfall from our prior calendar year (the “Required Distribution”) to our shareholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then we are required to pay non-deductible excise tax equal to 4% of any shortfall between the Required Distribution and the amount that was actually distributed.

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Critical Accounting Policies and Estimates

As of June 30, 2025 , there were no significant changes in or changes in the application of our critical accounting policies or estimates from those presented in our Annual Report on Form 10-K.

As of September 30, 2025 , there were no significant changes in or changes in the application of our critical accounting policies or estimates from those presented in our Annual Report on Form 10-K.

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 2. Management’s Discussion and Analysis