What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-07 compared with 2025-11-12 · 798 added, 782 removed, 248 unchanged (86% of the section changed)

1 unchanged sentence

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED BALANCE SHEETS

September 30, 2025 December 31, 2024

Loans held for investment at fair value (cost of $ 48,107,898 and $ 50,241,018 at September 30, 2025 and December 31, 2024, respectively, net)

CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES

March 31, 2026

Non-controlled, non-affiliated investments at fair value (cost of $ 345,918,978 )

$ 279,237,624

Cash and cash equivalents 112,730,935

Interest receivable 1,290,660

Prepaid expenses and other assets 1,617,704

Total assets $ 394,876,923

Accrued interest $ 2,065,620

Distribution payable 1,176,442

Management fee payable 739,247

Income based incentive fee payable 1,023,725

Accrued direct administrative expenses 717,039

Director fees payable 63,750

Accounts payable and other liabilities 823,992

Senior notes payable, net 76,448,216

Line of credit payable 106,000,000

Line of credit payable to affiliate 20,000,000

Total liabilities 209,058,031

Commitments and contingencies (Note 8)

Common stock, par value $ 0.01 per share, 50,000,000 shares authorized;

23,528,844 shares issued and outstanding at March 31, 2026

Additional paid-in capital 258,694,609

Distributable (loss) earnings ( 73,111,005 )

Total net assets 185,818,892

Total liabilities and net assets $ 394,876,923

Net asset value per share $ 7.90

See accompanying notes to the consolidated financial statements

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED BALANCE SHEET

December 31, 2025

Loans held for investment at fair value (cost of $ 53,744,253 )

Loans held for investment at carrying value, net 253,625,119

Loan receivable held at carrying value, net — 1,895,638

Current expected credit loss reserve ( 46,059,838 )

Loans held for investment at carrying value and loan receivable held at carrying value, net of current expected credit loss reserve 223,555,516 264,738,335

Loans held for investment at carrying value, net of current expected credit loss reserve 207,565,281

Cash and cash equivalents 38,605,507

3 unchanged sentences

Accrued interest $ 763,180

Due to affiliate — 6,754

Dividends payable 3,389,181 7,369,866

Current expected credit loss reserve 76,469

4 unchanged sentences

Line of credit payable 21,000,000

Line of credit payable to affiliate — 40,000,000

Total liabilities 100,026,760

1 unchanged sentence

Shareholders’ equity

Preferred stock, par value $ 0.01 per share, 10,000 shares authorized at September 30, 2025 and December 31, 2024 and 0 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Common stock, par value $ 0.01 per share, 50,000,000 shares authorized at September 30, 2025 and December 31, 2024 and 22,594,541 and 22,332,927 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

225,945 223,329

Preferred stock, par value $ 0.01 per share, 10,000 shares authorized;

0 shares issued and outstanding at December 31, 2025

Common stock, par value $ 0.01 per share, 50,000,000 shares authorized;

23,528,844 shares issued and outstanding at December 31, 2025

Additional paid-in capital 258,694,609

4 unchanged sentences

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

CONSOLIDATED STATEMENT OF OPERATIONS

Three Months Ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

March 31, 2026

Investment income:

From non-controlled/non-affiliated investments:

Interest income $ 7,670,790

Payment-in-kind interest income 332,640

Other income 1,809,788

Total investment income 9,813,218

Interest expense 1,726,540

Management fee 973,235

Incentive fee on net investment income 1,023,725

General and administrative expenses 860,496

Director fees 63,800

Professional fees 463,911

Total expenses 5,111,707

Management fee rebate ( 233,988 )

Net expenses 4,877,719

Net investment income before taxes 4,935,499

Income tax expense 109,368

Net investment income 4,826,131

Net change in unrealized appreciation on investments 7,118,443

Provision for taxes on unrealized appreciation on investments 517,227

Net unrealized gain on investments, net of taxes 6,601,216

Net increase in net assets resulting from operations $ 11,427,347

Per share data:

Basic and diluted net investment income per share $ 0.21

Basic and diluted net increase in net assets resulting from operations per share $ 0.49

Basic and diluted weighted average shares of common stock outstanding 23,528,844

See accompanying notes to the consolidated financial statements

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED STATEMENT OF OPERATIONS

Three Months Ended

March 31, 2025

Interest income $ 8,458,248

Interest expense ( 1,815,271 )

Net interest income 6,642,977

Management and incentive fees, net (less rebate of $ 235,670 , $ 180,552 , $ 624,992 and $ 769,545 , respectively)

715,138 981,785 2,211,686 8,429,575

Management and incentive fees, net (less rebate of $ 128,580 )

General and administrative expenses 734,957

1 unchanged sentence

Professional fees 371,936

BDC conversion expenses 579,192 — 805,972 —

Total expenses 2,476,832

(Provision for) reversal of current expected credit losses ( 7,372,778 ) ( 181,370 ) ( 22,524,920 ) 1,149,050

Realized (losses) gains on investments, net — — — ( 93,338 )

Change in unrealized gains (losses) on loans at fair value, net ( 9,712,427 ) ( 4,621,702 ) ( 11,453,875 ) ( 9,655,396 )

Net (loss) income from continuing operations before income taxes ( 13,365,168 ) 1,604,046 ( 22,487,772 ) 15,684,262

Income tax (benefit) expense ( 874,662 ) 386,256 ( 900,300 ) 830,591

Net (loss) income from continuing operations ( 12,490,506 ) 1,217,790 ( 21,587,472 ) 14,853,671

Net income from discontinued operations, net of tax — 165,944 — 2,922,068

Net (loss) income $ ( 12,490,506 ) $ 1,383,734 $ ( 21,587,472 ) $ 17,775,739

Basic earnings per common share:

Continuing operations $ ( 0.57 ) $ 0.05 $ ( 0.99 ) $ 0.71

Discontinued operations $ — $ 0.01 $ — $ 0.14

Total basic earnings per common share $ ( 0.57 ) $ 0.06 $ ( 0.99 ) $ 0.85

Diluted earnings per common share:

Continuing operations $ ( 0.57 ) $ 0.05 $ ( 0.99 ) $ 0.71

Discontinued operations $ — $ 0.01 $ — $ 0.14

Total diluted earnings per common share $ ( 0.57 ) $ 0.06 $ ( 0.99 ) $ 0.85

Reversal of current expected credit losses 699,424

Change in unrealized losses on loans at fair value, net ( 685,478 )

Net income before income taxes 4,180,091

Income tax expense 112,406

Net income $ 4,067,685

Earnings per common share:

Diluted $ 0.18

Weighted average number of common shares outstanding:

3 unchanged sentences

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Three months ended September 30, 2025

Stock Common Stock Additional

Capital Accumulated

(Deficit) Total

Shareholders’

Shares Amount

Balance at June 30, 2025 $ — 22,595,111 $ 225,951 $ 252,901,392 $ ( 68,396,269 ) $ 184,731,074

Stock-based compensation, net of forfeitures — ( 570 ) ( 6 ) 487,442 — 487,436

Dividends declared on common shares ($ 0.15 per share)

— — — — ( 3,389,181 ) ( 3,389,181 )

Net loss — — — — ( 12,490,506 ) ( 12,490,506 )

Balance at September 30, 2025 $ — 22,594,541 $ 225,945 $ 253,388,834 $ ( 84,275,956 ) $ 169,338,823

Three months ended September 30, 2024

Stock Common Stock Additional

Capital Accumulated

(Deficit) Total

Shareholders’

Shares Amount

Balance at June 30, 2024 $ — 20,667,094 $ 206,671 $ 350,591,362 $ ( 36,514,212 ) $ 314,283,821

Issuance of common stock, net of offering costs — 1,214,953 12,150 12,149,217 — 12,161,367

Stock-based compensation — — — 218,643 — 218,643

Dividends declared on common shares ($ 0.33 per share)

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

Three Months Ended

March 31, 2026

Increase in net assets resulting from operations:

Net investment income $ 4,826,131

Net change in unrealized appreciation on investments 6,601,216

Net increase in net assets resulting from operations 11,427,347

Distributions to shareholders:

Distributions declared ($ 0.05 per share)

( 1,176,442 )

Distributions in connection with the Spin-Off — — — ( 114,765,177 ) — ( 114,765,177 )

Net income — — — — 1,383,734 1,383,734

Balance at September 30, 2024 $ — 21,882,047 $ 218,821 $ 248,194,045 $ ( 42,351,554 ) $ 206,061,312

Net decrease in net assets resulting from distributions ( 1,176,442 )

Total increase in net assets 10,250,905

Net assets, beginning of the period 175,567,987

Net assets, end of the period $ 185,818,892

See accompanying notes to the consolidated financial statements

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Nine months ended September 30, 2025

Stock Common Stock Additional

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

Three months ended March 31, 2025

Common Stock Additional

Capital Accumulated

6 unchanged sentences

— — — ( 5,197,082 ) ( 5,197,082 )

Net loss — — — — ( 21,587,472 ) ( 21,587,472 )

Balance at September 30, 2025 $ — 22,594,541 $ 225,945 $ 253,388,834 $ ( 84,275,956 ) $ 169,338,823

Nine months ended September 30, 2024

Stock Common Stock Additional

Capital Accumulated

(Deficit) Total

Shareholders’

Shares Amount

Balance at December 31, 2023 $ 1 20,457,697 $ 204,577 $ 349,805,890 $ ( 29,958,243 ) $ 320,052,225

Issuance of common stock, net of offering costs — 1,214,953 12,150 12,149,217 — 12,161,367

Stock-based compensation — 209,397 2,094 1,129,114 — 1,131,208

Dividends declared on common shares ($ 1.44 per share)

— — — — ( 30,161,550 ) ( 30,161,550 )

Dividends declared on preferred shares ($ 60 per share)

— — — — ( 7,500 ) ( 7,500 )

Redemption of preferred shares ( 1 ) — — ( 124,999 ) — ( 125,000 )

Distributions in connection with the Spin-Off — — — ( 114,765,177 ) — ( 114,765,177 )

Net income — — — 4,067,685 4,067,685

Balance at September 30, 2024 $ — 21,882,047 $ 218,821 $ 248,194,045 $ ( 42,351,554 ) $ 206,061,312

Balance at March 31, 2025 22,596,007 $ 225,960 $ 252,416,881 $ ( 51,842,351 ) $ 200,800,490

See accompanying notes to the consolidated financial statements

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

September 30,

CONSOLIDATED STATEMENT OF CASH FLOWS

Three Months Ended

March 31, 2026

Operating activities:

Net (loss) income $ ( 21,587,472 ) $ 17,775,739

Net (income) from discontinued operations, net of tax — ( 2,922,068 )

Net (loss) income from continuing operations ( 21,587,472 ) 14,853,671

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Provision for (reversal of) current expected credit losses 22,524,920 ( 1,149,050 )

Realized losses (gains) on investments, net — 93,338

Change in unrealized losses (gains) on loans at fair value, net 11,453,875 9,655,396

Net increase in net assets resulting from operations $ 11,427,347

Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:

Net change in unrealized appreciation on investments ( 7,118,443 )

Net accretion of discount on investments ( 1,107,387 )

Amortization of deferred financing costs - revolving credit facilities 44,798

Amortization of deferred financing costs - senior notes 134,473

Payment-in-kind interest ( 327,524 )

Purchases of investments ( 78,866,344 )

Proceeds from principal repayments and sale of investments 41,751,649

Changes in operating assets and liabilities:

Interest receivable ( 391,278 )

Prepaid expenses and other assets 802,986

Accrued interest 1,302,440

Management fee payable 23,066

Income based incentive fee payable 1,023,725

Accrued direct administrative expenses 342,187

Accounts payable and other liabilities 114,157

Net cash used in operating activities ( 30,844,148 )

Cash flows from financing activities:

Payment of financing costs ( 30,424 )

Borrowings on revolving credit facilities 188,300,000

Repayments on revolving credit facilities ( 83,300,000 )

Net cash provided by financing activities 104,969,576

Net increase in cash and cash equivalents 74,125,428

Cash and cash equivalents, beginning of period 38,605,507

Cash and cash equivalents, end of period $ 112,730,935

Supplemental disclosure of non-cash activity:

OID withheld from funding of loans $ 1,701,923

Distributions declared and not yet paid $ 1,176,442

Supplemental information:

Interest paid during the period $ 244,829

Income taxes paid (net of refunds received) during the period $ 2,848

See accompanying notes to the consolidated financial statements

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

Three Months Ended

March 31, 2025

Operating activities:

Net income $ 4,067,685

Adjustments to reconcile net income to net cash provided by operating activities:

Reversal of current expected credit losses ( 699,424 )

Change in unrealized losses on loans at fair value, net 685,478

Accretion of deferred loan original issue discount and other discounts ( 873,806 )

10 unchanged sentences

Accounts payable and other liabilities 312,616

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

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

Net cash provided by (used in) operating activities 11,796,234 19,335,647

Net cash provided by operating activities 3,921,374

Cash flows from investing activities:

Issuance of and fundings on loans ( 15,472,181 )

Proceeds from sales of loans — 96,061,029

Funding to title agent for loan closing ( 10,080,000 )

Principal repayment of loans 6,474,523

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

Net cash (used in) provided by investing activities of discontinued operations — ( 47,211,339 )

Net cash provided by (used in) investing activities 23,846,844 52,086,761

Net cash used in investing activities ( 19,077,658 )

Cash flows from financing activities:

Proceeds from sale of common stock — 12,335,674

Payment of offering costs - equity offering — ( 174,307 )

Payment of financing costs ( 16,007 )

Redemption of preferred shares — ( 125,000 )

Cash distribution in connection with the Spin-Off of SUNS — ( 67,913,215 )

Borrowings on revolving credit facilities 26,500,000

Repayments on revolving credit facilities ( 104,250,000 )

Dividends paid to common and preferred shareholders ( 15,956,215 ) ( 32,767,669 )

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

Net cash provided by (used in) financing activities of discontinued operations — —

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

Net (decrease) increase in cash and cash equivalents ( 58,490,071 ) 537,279

Dividends paid to common shareholders ( 7,369,866 )

Net cash used in financing activities ( 85,135,873 )

Net decrease in cash and cash equivalents ( 100,292,157 )

Cash and cash equivalents, beginning of period 103,610,460

3 unchanged sentences

Dividends declared and not yet paid $ 5,197,082

Non-cash funding of new loan $ — $ 14,672,640

Non-cash net assets distribution in connection with the spin-off of SUNS $ — $ 46,851,962

Supplemental information:

Interest paid during the period $ 144,389

Income taxes paid (net of refunds received) during the period $ 185,668 $ 939,046

Income taxes paid during the period $ 138

See accompanying notes to the consolidated financial statements

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of March 31, 2026

Company (1)(2)

Reference Rate and Spread (3)

Interest Rate (3)

Maturity Date (4)

Principal (5)(6)

Amortized Cost (5)

Fair Value (7)

% of Net Assets

Non-controlled, non-affiliated debt investments

Devi Holdings Inc.

Cash 13.00 % + 2.50 % PIK

15.5 % 5/8/2024 $ 40,556,807 $ 37,689,376 $ 17,763,882

MI Opportunity Fund I, LLC Fixed 10.0 % 12/8/2028 5,843,241 4,664,241 4,697,089

Trulieve Cannabis Corp.

Fixed 10.5 % 12/17/2030 5,000,000 5,000,000 5,000,000

Justice Cannabis Company (9)(10)

Fixed 12.5 % 5/1/2026 78,768,556 77,323,709 42,889,479

DMA Holdings (MA), LLC (10)

SOFR + Cash 12.00 % + 2.00 % PIK

17.7 % 5/3/2027 12,195,762 11,513,143 5,103,926

Story of Natures Medicine LLC Fixed 9.0 % 7/31/2026 22,099,497 21,567,444 21,265,240

High End Holdings LLC SOFR + 8.00 %

12.5 % 4/1/2028 19,327,505 18,937,323 15,512,255

High End Holdings LLC SOFR + 8.00 %

12.5 % 4/1/2028 17,200,000 16,856,000 13,804,720

Theratrue, Inc.

SOFR + 8.75 %

13.8 % 9/1/2028 7,970,970 7,705,137 7,702,747

Story of Maryland LLC SOFR + 7.50 %

12.0 % 11/1/2027 31,457,793 31,036,712 31,275,337

Story of Ohio LLC Fixed 14.0 % 3/1/2028 14,750,000 14,516,892 14,637,900

Standard Wellness Company, LLC Cash 12.50 % + 1.50 % PIK

14.0 % 4/1/2029 11,633,251 11,338,678 11,468,059

Cresco Labs, LLC Fixed 12.5 % 8/13/2030 10,000,000 9,653,333 10,000,000

276,803,382 267,801,988 201,120,634 108.2 %

BCIS AH Borrower LLC (11)

Cash 7.50 % + 9.00 % PIK

16.5 % 2/1/2030 20,358,000 19,876,990 19,876,990 10.7 %

Commercial & Professional Services

STAT Buyer, LLC SOFR + 8.50 %

12.2 % 2/1/2031 59,400,000 58,240,000 58,240,000 31.3 %

Total investments $ 356,561,382 $ 345,918,978 $ 279,237,624 150.2 %

(1) The Company’s investments are all first lien senior term loans that are geographically located in the United States.

(2) All debt investments are income producing unless otherwise indicated.

(3) As of March 31, 2026, the floating benchmark rate included one-month Secured Overnight Financing Rate (“SOFR”) quoted at 3.7 % and subject to a weighted average floor of 3.8 % based on outstanding principal.

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

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

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

(5) The difference between the amortized cost and the outstanding principal amount of the investments consists of unaccreted original issue discount (“OID”) and loan origination costs.

(6) Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may be subject to unused commitment fees.

The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated.

Refer to Note 8 for more information on the Company’s unfunded commitments.

(7) Refer to Note 5.

(8) Effective March 1, 2024, the Company placed the investment on nonaccrual status.

The maturity date passed without repayment.

(9) Represents co-investments made with the Fund’s affiliates in accordance with the terms of the exemptive relief received from the U.S.

Securities and Exchange Commission (the “SEC”).

Refer to Note 3 Related Party Transactions.

(10) Effective December 1, 2023, the Company placed the investment on nonaccrual status.

(11) The loan bears cash interest at a rate of 7.5 % and 9.0 % interest paid-in kind, with the option for the borrower to elect to pay cash interest at a rate of 5.5 % and 13.0 % interest paid-in kind until the end of the fiscal quarter following the first anniversary of the initial closing date.

ADVANCED FLOWER CAPITAL INC.

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of December 31, 2025

(unaudited) 1

Company (1)(2)

Reference Rate and Spread (3)

Interest Rate (3)

Maturity Date (4)

Principal (5)(6)

Amortized Cost (5)

Fair Value (7)

% of Net Assets

Debt investments

Devi Holdings Inc.

Cash 13.00 % + 2.50 % PIK

15.5 % 5/8/2024 $ 46,790,684 $ 43,923,253 $ 16,259,763

MI Opportunity Fund I, LLC Fixed 10.0 % 12/8/2028 6,000,000 4,821,000 4,821,000

Trulieve Cannabis Corp.

Fixed 10.5 % 12/17/2030 5,000,000 5,000,000 5,000,000

Justice Cannabis Company (9)(10)

Fixed 12.5 % 5/1/2026 78,768,556 77,323,709 43,907,721

DMA Holdings (MA), LLC (10)

SOFR + Cash 12.00 % + 2.00 % PIK

17.7 % 5/3/2027 12,195,762 11,513,143 5,451,148

Bloom Hold Co.

SOFR + 8.00 %

13.0 % 5/1/2026 25,146,957 25,029,524 25,029,524

Story of Natures Medicine LLC Fixed 9.0 % 7/31/2026 23,599,497 22,668,405 22,043,979

High End Holdings LLC SOFR + 8.00 %

12.5 % 4/1/2028 19,327,505 18,888,550 15,775,932

High End Holdings LLC SOFR + 8.00 %

12.5 % 4/1/2028 17,200,000 16,813,000 14,038,855

Gron Holdings, Inc.

SOFR + 8.50 %

13.5 % 6/1/2028 5,358,890 5,111,731 5,111,731

Theratrue, Inc.

SOFR + 8.75 %

13.8 % 9/1/2028 7,479,626 7,186,293 7,051,381

Story of Maryland LLC SOFR + 7.50 %

12.0 % 11/1/2027 33,179,518 32,691,950 32,691,950

Story of Ohio LLC Fixed 14.0 % 3/1/2028 15,000,000 14,736,486 14,736,486

Standard Wellness Company, LLC Cash 12.50 % + 1.50 % PIK

14.0 % 4/1/2029 12,370,245 12,028,995 12,016,772

Cresco Labs, LLC Fixed 12.5 % 8/13/2030 10,000,000 9,633,333 9,633,333

Total investments $ 317,417,240 $ 307,369,372 $ 233,569,575 133.0 %

(1) The Company’s investments are all first lien senior term loans that are geographically located in the United States.

(2) All debt investments are income producing unless otherwise indicated.

(3) As of December 31, 2025 , the floating benchmark rate included one-month Secured Overnight Financing Rate (“SOFR”) quoted at 3.7 % and subject to a weighted average floor of 4.3 % based on outstanding principal.

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

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

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

1 The Consolidated Schedule of Investments as of December 31, 2025 is presented for comparative purposes only and is unaudited.

The Company was not regulated as a business development company as of December 31, 2025 and therefore did not include a Consolidated Schedule of Investments in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

The December 31, 2025 data presented herein has been prepared by management to conform to the investment company presentation requirements of Article 6 of Regulation S-X and has not been audited in this form.

(5) The difference between the amortized cost and the outstanding principal amount of the investments consists of unaccreted original issue discount (“OID”) and loan origination costs.

(6) Position or portion thereof is an unfunded loan commitment, and no interest is being earned on the unfunded portion, although the investment may be subject to unused commitment fees.

The unfunded loan commitment may be subject to a commitment termination date that may expire prior to the maturity date stated.

Refer to Note 8 for more information on the Fund’s unfunded commitments.

(7) Refer to Note 5.

(8) Effective March 1, 2024, the Company placed the investment on nonaccrual status.

The maturity date passed without repayment.

(9) Represents co-investments made with the Fund’s affiliates in accordance with the terms of the exemptive relief received from the U.S.

Securities and Exchange Commission (the “SEC”).

Refer to Note 3 Related Party Transactions.

(10) Effective December 1, 2023, the Company placed the investment on nonaccrual status.

See accompanying notes to the consolidated financial statements

ADVANCED FLOWER CAPITAL INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2025

As of March 31, 2026

Advanced Flower Capital Inc.

(the “Company” or “AFC”) is an institutional lender that was founded in July 2020 by a veteran team of investment profe ssionals.

The Company primarily originates, structures, underwrites, invests in and manages senior secured mortgage loans and other types of loans and debt securities, with a specialization in loans to cannabis industry operators in states that have legalized medical and/or adult-use cannabis.

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

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

The Company’s wholly-owned subsidiary, AFCG TRS1, LLC, a Delaware limited liability company (“TRS1”), operates as a taxable real estate investment trust subsidiary (a “TRS”).

TRS1 began operating in July 2021, and the financial statements of TRS1 are consolidated within the Company’s consolidated financial statements.

On July 9, 2024, the Company completed the spin-off (the “Spin-Off”) of the Company’s wholly-owned subsidiary, Sunrise Realty Trust, Inc.

(“SUNS”), which held the Company’s commercial real estate (“CRE”) loan portfolio, into an independent, publicly traded REIT, SUNS.

In connection with the Spin-Off, the operating results of the SUNS business through the date of the Spin-Off are reported in net income from discontinued operations, net of tax in the consolidated statements of operations for all periods presented.

The related assets and liabilities are reported as assets and liabilities of discontinued operations on the consolidated balance sheets.

Cash flows from the Company’s discontinued operations are presented as such in the consolidated statements of cash flows for all periods presented.

Unless otherwise noted, all amounts and disclosures included in the notes to consolidated financial statements reflect only the Company’s continuing operations.

For additional information, see Note 16, “Discontinued Operations.”

During the reporting period, the Company operated in one operating segment.

The Company focused on senior secured loans to cannabis industry operators in states where medical and/or adult-use cannabis is legal.

These loans are generally held for investment and are typically secured, directly or indirectly, by real estate, equipment, cash flows and the value associated with licenses (where applicable) and/or other assets of borrowers depending on the applicable laws and regulations governing such borrowers.

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

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 shareholders and complies with various other requirements as a REIT.

At a meeting of the Board of Directors (the “Board”) on August 12, 2025 (the “August Meeting”), the Board approved the sixth amendment to the Company’s existing Management Agreement (the “Sixth Amendment”) to expand the Company’s investment strategy.

Accordingly, under the Sixth Amendment, the Company expanded its investment strategy and intends 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.

The Company believes 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, the Company expects to be able to diversify its exposure across industries and credit risk profiles while maintaining deal selectivity.

The Company may make investments in accordance with this expanded investment strategy to the extent consistent with maintaining its eligibility to continue to qualify as a REIT under the Code and maintain our exemption from registration under the Investment Company Act of 1940, as amended (“1940 Act”).

During the reporting period, the Company formed TCGDL LLC, a wholly-owned subsidiary of the Company, to facilitate direct lending transactions.

As of the end of the reporting period, the subsidiary had no operations or balances.

The Company anticipates that this subsidiary will be utilized in connection with direct lending activities that align with the Company’s long term strategic initiatives.

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.

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

(the “Company” or “AFC”) is a Maryland corporation and an institutional lender that originates, structures, underwrites, and manages senior secured loans and other debt investments.

The Company is externally managed by AFC Management, LLC (the “Adviser”) pursuant to an investment advisory agreement (the “Advisory Agreement”) .

Effective January 1, 2026, the Company elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

As a BDC, the Company is now subject to the regulatory framework applicable to BDCs under the 1940 Act, including requirements relating to portfolio composition, asset coverage, affiliate transactions, governance, and compliance.

federal income tax purposes, the Company intends to elect to be treated as a regulated investment company (“RIC”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ending December 31, 2026.

The Company’s primary investment focus is on senior secured lending to lower middle market companies across industries.

Prior to its election to be regulated as a BDC, the Company primarily focused on senior secured lending, including loans to cannabis industry operators in states that have legalized medical and/or adult-use cannabis.

In August 2025, the Company expanded its investment strategy to include senior secured lending to companies ancillary to the cannabis industry, as well as to companies outside of the cannabis industry.

These investments are generally held for investment and are typically secured, directly or indirectly, by real estate, equipment, cash flows, licenses (where applicable), and other borrower assets, depending on applicable laws and regulations governing such borrowers.

The Company operates in one operating segment.

The Company’s objective is to provide attractive risk-adjusted returns over time through cash distributions and capital appreciation, primarily by sourcing, underwriting, structuring and funding loans to lower middle market companies across a broad range of industries.

The Company has formed wholly-owned subsidiaries, AFCG TRS1, LLC and TCGDL LLC, to facilitate certain investment and operational activities.

The financial statements of these subsidiaries are consolidated in the Company’s consolidated financial statements.

SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and results of operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC.

Securities and Exchange Commission (“SEC”), which were prepared when the Company operated as a real estate investment trust (“REIT”) and prior to its election to be regulated as a BDC (“pre-Conversion”).

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.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q, ASC 946, Financial Services—Investment Companies (“ASC 946”), and Articles 6 and 10 of Regulation S-X.

Accordingly, certain disclosures accompanying the annual consolidated financial statements prepared in accordance with GAAP are omitted.

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 accounting principles generally accepted in the United States of America (“GAAP”) and in conformity with the rules and regulations of the SEC applicable to interim financial information and include the accounts of the Company and its wholly-owned subsidiary.

The accompanying unaudited interim consolidated financial statements and related notes have been prepared on the accrual basis of accounting in conformity with GAAP and include the accounts of the Company and its wholly-owned subsidiaries.

As of January 1, 2026, the Company is an investment company under GAAP and follows the accounting and reporting guidance applicable to investment companies in ASC 946 and SEC Regulation S-X.

As the Company is an investment company, portfolio investments held by the Company and its subsidiaries are not consolidated into the Consolidated Financial Statements.

The portfolio investments held by the Company and its subsidiaries are included on the Statement of Assets and Liabilities as investments at fair value.

Effective January 1, 2026, the Company elected to be regulated as a BDC under the Investment Company Act of 1940 and adopted investment company accounting.

As a result, the Company adopted ASC 946 from its prior accounting as a REIT to investment company accounting, which requires, among other things, that investments be carried at fair value with changes in fair value recognized in the statement of operations.

Due to the prospective application of a change in accounting as required under ASC 946-10-25-3, the Company has determined that the presentation of its consolidated financial statements for periods beginning after December 31, 2025 are not comparable to the consolidated financial statements previously prepared for prior periods for which the Company did not apply ASC 946.

As a result, the Company has provided separate consolidated financial statements for applicable prior periods in Item 1 of this Quarterly Report on Form 10-Q.

Reclassifications and Presentation

Effective January 1, 2026, the Company prospectively adopted ASC 946.

Upon its change in status, the following significant changes and elections were made:

• Loans previously held for investment at carrying value with related current expected credit loss reserves are now measured at fair value under ASC 946.

The opening balance sheet adjustment was $ 207,488,812 .

There was no impact to opening accumulated earnings related to this change;

• Inclusion of Schedule of Investments;

• Change in presentation of Statement of Cash Flows to align with investment company activities.

The unaudited interim consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented.

All intercompany balances and transactions have been eliminated in consolidation.

The Company’s results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results that may ultimately be realized for the full fiscal year ending December 31, 2025.

BDC Conversion Expenses

Expenses associated with the Company’s election and subsequent conversion to be regulated as a BDC are expensed as incurred and include legal fees related to the proxy statement and special shareholder meeting in connection the BDC election, the entry into certain agreements relating to the BDC election and adoption of certain compliance policies and procedures relating to the BDC election.

During the three and nine months ended September 30, 2025, the Company incurred approximately $ 0.6 million and $ 0.8 million in expenses related to the Conversion, respectively, which are recorded within BDC conversion expenses line item in the Company’s consolidated statements of operations.

The Company’s results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results that may ultimately be realized for the full fiscal year ending December 31, 2026.

Valuation of Portfolio Investments

The Adviser shall value the investments owned by the Company, subject at all times to the oversight of the Company's Board of Directors (the “Board” or the “Board of Directors”).

The Adviser shall follow its own written valuation policies and procedures as approved by the Board when determining valuations.

Investments for which market quotations are readily available are typically valued at such market quotations.

Pursuant to Rule 2a-5 under the 1940 Act, the Board designates the Adviser as Valuation Designee to perform fair value determinations for the Company for investments that do not have readily available market quotations.

Market quotations are obtained from an independent pricing service, where available.

If a price cannot be obtained from an independent pricing service or if the independent pricing service is not deemed to be current with the market, certain investments held by the Company will be valued on the basis of prices provided by principal market makers.

Generally, investments marked in this manner will be marked at the mean of the bid and ask of the independent broker quotes obtained.

To validate market quotations, the Company utilizes a number of factors to determine if the quotations are representative of fair value.

Debt and equity securities that are not publicly traded or whose market prices are not readily available will be valued at a price that reflects such security’s fair value.

With respect to investments for which market quotations are not readily available, in particular, illiquid/hard to value assets, the Advisor will typically undertake a multi-step valuation process.

The Company applies ASC Topic 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value in accordance with US GAAP and required disclosures of fair value measurements.

The fair value of a financial instrument is the amount that would be received in an orderly transaction between market participants at the measurement date.

The Company determines the fair value of investments consistent with its valuation policy.

The Company discloses the fair value of its investments in a hierarchy which prioritizes and ranks the level of market observability used in the determination of fair value.

In accordance with ASC 820, these levels are summarized below:

• Level 1 — Valuations based on quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

• Level 2 — Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

• Level 3 — Valuations based on inputs that are unobservable and significant to the fair value measurement.

A financial instrument’s level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Valuations of Level 2 investments are generally based on quotations received from pricing services, dealers or brokers.

Consideration is given to the source and nature of the quotations and the relationship of recent market activity to the quotations provided.

Transfers between levels, if any, are recognized at the beginning of the reporting period in which the transfers occur.

The Company evaluates the source of inputs used in the determination of fair value, including any markets in which the investments, or similar investments, are trading.

When the fair value of an investment is determined using inputs from a pricing service (or principal market makers), the Company considers various criteria in determining whether the investment should be classified as a Level 2 or Level 3 investment.

Criteria considered includes the pricing methodologies of the pricing services (or principal market makers) to determine if the inputs to the valuation are observable or unobservable, as well as the number of prices obtained and an assessment of the quality of the prices obtained.

The level of an investment within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

However, the determination of what constitutes “observable” requires significant judgment.

The fair value assigned to these investments is based upon available information and may fluctuate from period to period.

In addition, it does not necessarily represent the amount that might ultimately be realized upon sale.

Due to inherent uncertainty of valuation, the estimated fair value of investments may differ from the value that would have been used had a ready market for the security existed, and the difference could be material.

Use of Estimates in the Preparation of Financial Statements

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Actual results could differ from those estimates.

Significant estimates include the valuation of loans held for investment at fair value and current expected credit losses reserve (“CECL Reserve”).

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

Recent Accounting Pronouncements

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”).

Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.

In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

The Company has elected to take advantage of this extended transition period.

As a result, the Company will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies, which may make comparison of the Company’s financials to those of other public companies more difficult.

In December 2023, the FASB issued ASU 2023-09—Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

ASU 2023-09 improves the transparency of income tax disclosures related to rate reconciliation and income taxes.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024.

For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The amendments should be applied prospectively, however, retrospective application is permitted.

The adoption of ASU 2023-09 is not expected to have a material impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

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The adoption of ASU 2024-03 is not expected to have a material impact on the Company’s consolidated financial statements.

LOANS HELD FOR INVESTMENT AT FAIR VALUE

As of September 30, 2025 and December 31, 2024, the Company’s 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, the Company received approximately $ 2.1 million of principal repayments of loans held at fair value.

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

The following tables summarize the Company’s loans held at fair value as of September 30, 2025 and December 31, 2024:

As of September 30, 2025

Fair Value (1)

Carrying Value (2)

Principal (2)

Weighted Average

Remaining Life

Senior term loan $ 16,923,809 $ 48,107,898 $ 50,975,329 0.0

Total loan held at fair value $ 16,923,809 $ 48,107,898 $ 50,975,329 0.0

As of December 31, 2024

RELATED PARTY TRANSACTIONS

Advisory Agreement

Effective January 1, 2026, in connection with the Company’s conversion to a BDC (the “Conversion”), the Company entered into an Advisory Agreement with the Adviser, pursuant to which the Adviser serves as the Company’s investment adviser.

As of such date, the Advisory Agreement replaced the prior management agreement between the Company and AFC Management, LLC, as amended (the “Management Agreement”) (in such capacity under the Management Agreement, the “Manager”), which ceased to govern our operations as of that date, and we became managed pursuant to the Advisory Agreement and an administration agreement (the “Administration Agreement”) entered into with AFC Management, LLC (in its capacity as administrator under the Administration Agreement, the “Administrator”).

Pursuant to the Advisory Agreement, the Adviser manages the investment activities and day-to-day operations of the Company, subject to the oversight of the Board and in accordance with the requirements of the 1940 Act.

The Advisory Agreement was approved by our Board of Directors, including a majority of the Directors who are not “interested persons” of the Company (as such term is defined in the 1940 Act) (the “Independent Directors”), and by our shareholders at a

special meeting of shareholders held on November 6, 2025.

The Advisory Agreement remains subject to the terms, conditions, and termination provisions set forth therein and to applicable requirements under the 1940 Act.

Adviser Compensation subsequent to January 1, 2026

The following compensation arrangements under the Advisory Agreement took effect on January 1, 2026.

The Adviser receives base management fees (the “Management Fee”) that are calculated at a quarterly rate of 0.375 % of the average value of our average of gross assets at the end of the two most recently completed calendar quarters (excluding cash or cash equivalents but including assets purchased with borrowed funds) during the most recently completed calendar quarter;

less 50 % of the a ggregate amount of any other fees (“Outside Fees”), including any agency fees relating to our investments, but excluding the incentive fees payable to the Adviser (as defined below) and any diligence fees paid and earned by the Adviser and paid by third parties in connection with the Adviser’s due diligence of potential investments;

provided further, that the Management Fee will be calculated at an annual rate equal to 1.00 % of the average value of our gross assets (excluding cash or cash equivalents but including assets purchased with borrowed funds) during the most recently completed calendar quarter that exceeds an amount equal to the product of (i) 200 % and (ii) our net asset value at the end of the most recently completed calendar quarter (for purposes of this section only, the “Leverage Break Point”).

In addition to the Management Fee, pursuant to the Advisory Agreement, the Company will pay the Adviser an incentive fee consisting of two parts (the “Incentive Fees”).

The first part is determined and paid quarterly based on the Company’s pre-incentive fee net investment income in respect of the current calendar quarter and the three preceding calendar quarters (or the appropriate portion thereof in the case of any of the Company’s first three calendar quarters following the effective date of the Advisory Agreement (the “Trailing Four Quarters”), and the second part is determined and payable in arrears based on net capital gains as of the end of each calendar year or upon termination of the Advisory Agreement.

(i) Income based incentive fee

Pre-incentive fee net investment income is defined as interest income, dividend income and any other income accrued during the calendar quarter, minus operating expenses for the quarter, including the Management Fee, expenses payable to the Administrator under the Administration Agreement, any interest expense and distributions paid on any issued and outstanding preferred stock, but excluding the Incentive Fees.

Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as debt instruments with payment-in-kind (“PIK”) interest and zero coupon securities), accrued income that the Company has not yet received in cash.

The Adviser is not obligated to return to the Company the Incentive Fee it receives on PIK interest that is later determined to be uncollectible in cash.

For the avoidance of doubt, Pre-Incentive Fee Net Investment Income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

Pre-incentive fee net investment income will be compared to a new hurdle rate (the “New Hurdle Rate”) equal to the product of (i) 1.5 % per quarter ( 6.0 % annualized) and (ii) the sum of the Company’s net assets at the beginning of each applicable calendar quarter comprising the relevant Trailing Four Quarters.

The New Hurdle Rate will be calculated after making appropriate adjustments to our net asset value at the beginning of each applicable calendar quarter for all issuances by us of shares of common stock, including issuances pursuant to any dividend reinvestment plan, and distributions during the applicable calendar quarter.

The Company will pay the Adviser an incentive fee based on income with respect to its pre-incentive fee net investment income as follows:

• no incentive fee based on pre-incentive fee net investment income in any calendar quarter in which the Company’s aggregate pre-incentive fee net investment income in respect of the relevant Trailing Four Quarters does not exceed the New Hurdle Rate in respect of the relevant Trailing Four Quarters;

• 100 % of pre-incentive fee net investment income in respect that portion of such pre-incentive fee net investment income, if any, that exceeds the New Hurdle Rate but is less than 1.8182 % in any calendar quarter ( 7.2728 % annualized).

The Company refers to this portion of the pre-incentive fee net investment income (which exceeds the New Hurdle Rate but is less than 1.8182 %) as the catch-up (the “New Catch-Up”).

The New Catch-Up is meant to provide the Adviser with approximately 17.5 % of the Company’s pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 1.8182 % in any calendar quarter;

• 17.5 % of the pre-incentive fee net investment income in respect of the relevant Trailing Four Quarters that exceeds 1.8182 % in respect of the relevant Trailing Four Quarters ( 7.2728 % annualized), which reflects that once the New Hurdle Rate is reached and the New Catch-Up is achieved, 17.5 % of the pre-incentive fee net investment

income in respect of the relevant Trailing Four Quarters that exceeds the New Catch-Up amounts is paid to the Adviser.

These calculations are adjusted for all issuances by the Company of shares of its common stock, including issuances pursuant to any dividend reinvestment plan and distributions during the applicable calendar quarter.

There was $ 1.0 million of Incentive Fees on net investment income for the three months ended March 31, 2026.

(ii) Capital gains incentive fee

The incentive fee on capital gains is calculated and payable in arrears in cash as of the end of each calendar year or upon the termination of the Advisory Agreement in an amount equal to 17.5 % of the Company’s realized capital gains, if any, on a cumulative basis from January 1, 2026 (the date on which the Company elected to be regulated as a BDC under the 1940 Act) through the end of a given calendar year or upon the termination of the Advisory Agreement, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees.

For the purpose of computing the incentive fee on capital gains, the calculation methodology looks through derivative financial instruments or swaps as if the Company owned the reference assets directly.

Therefore, realized gains and realized losses on the disposition of any reference assets, as well as unrealized depreciation on reference assets retained in the derivative financial instrument or swap, will be included on a cumulative basis in the calculation of the capital gains incentive fee.

With respect to investments the Company held at the time of the Conversion, such investments, for purposes of calculating the capital gains incentive fee, shall have a cost basis equal to the fair market value as of the date of the Conversion.

See “ Part 1, Item 1—Business—Adviser Compensation subsequent to January 1, 2026 ” in the Company’s Annual Report Form 10-K for the period ended December 31, 2025 for more information.

For the three months ended March 31, 2026, there was no Incentive Fees on capital gains.

Manager Compensation prior to January 1, 2026

The Manager received base management fees (the “Base Management Fee”) that were calculated and payable quarterly in arrears, in an amount equal to 0.375 % of the Company’s Equity (as defined in the Management Agreement), 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.

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

Under the Management Agreement, the Company paid 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, 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 were included in net income for the applicable reporting period, regardless of whether such items were 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.

See “ Part 1, Item 1—Business—Management Compensation prior to January 1, 2026 ” in our Annual Report on Form 10-K for the period ended December 31, 2025 for more information.

There was no Incentive Compensation on Core Earnings during the three months ended March 31, 2025.

Administration Agreement

Pursuant to the Administration Agreement, the Administrator performs, or oversees or arranges for the performance of, the Company’s required administrative services, which include, among other things, providing us with office facilities, equipment, clerical, bookkeeping, compliance, and recordkeeping services.

In addition, the Administrator conducts relations with custodians, depositories, transfer agents, dividend disbursing agents, other shareholder servicing agents, accountants, attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers, banks, and other persons in any other capacity deemed by the Administrator to be necessary and desirable.

The Administrator will be responsible for the financial and other records that we are required to maintain, and under the 1940 Act, will prepare, print and disseminate reports to shareholders and reports and other materials filed with the SEC.

Further, the Administrator is responsible for

assisting the Company in determining and publishing the Company’s net asset value, overseeing the preparation and filing of the Company’s tax returns, and generally overseeing the payment of the Company’s expenses and the performance of administrative and professional services rendered to the Company by others.

No separate fee is paid by the Company for the services provided by the Administrator under the Administration Agreement, so long as the Adviser (or an affiliate) continues to serve as the investment adviser to the Company.

Notwithstanding the foregoing, the Company will reimburse the Administrator an amount equal to the Company’s allocable portion of certain expenses incurred by the Administrator in performing its obligations under the Administration Agreement, including the Company’s fair and equitable allocable share of the compensation, including annual base salary, bonus, any related withholding taxes and employee benefits, paid to personnel providing finance, tax, accounting, internal audit, legal, risk management, operations, originations, marketing, investor relations, portfolio monitoring and servicing, compliance services and other non-investment personnel of the Adviser and its affiliates as reasonably determined by the Adviser to appropriately reflect the portion of time spent devoted by such personnel to the Company’s affairs, as well as the actual cost of goods and services used for the Company and obtained by the Administrator from entities not affiliated with the Company.

The Company will also reimburse the Administrator for the reasonably allocated actual costs of administrative services performed by Administrator for the operation of the Company.

The Administration Agreement has an initial term expiring on December 31, 2027 unless terminated earlier in accordance with its terms.

Thereafter, the Administration Agreement will renew automatically for successive annual periods, provided that such continuance is specifically approved at least annually by (a) the vote of the Board or the vote of a majority of the outstanding voting securities of the Company and (b) the vote of a majority of the Independent Directors.

The following table summarizes the related party costs incurred by the Company for the three months ended March 31, 2026:

Three Months Ended

March 31, 2026

Affiliate Costs

Management fees before rebate $ 973,235

outside fees earned ( 233,988 )

Management fees 739,247

Incentive fee on net investment income 1,023,725

General and administrative expenses reimbursable to Adviser 685,922

Professional fees reimbursable to Adviser 20,023

Total $ 2,468,917

Amounts payable to the Adviser as of March 31, 2026 was approximately $ 2.5 million and is recorded within management fee payable, income based incentive fee payable and accrued direct administrative expenses in the Company’s consolidated statement of assets and liabilities .

The Adviser is a wholly-owned subsidiary of Castleground Holdings LLC, a majority of the outstanding equity of which is beneficially owned by certain officers and directors as of the date of this Quarterly Report on Form 10-Q.

The following table summarizes the related party costs incurred by the Company under the Management Agreement prior to the Conversion for the three months ended March 31, 2025:

Three Months Ended

March 31, 2025

Affiliate Costs

Management fees $ 944,770

outside fees earned ( 128,580 )

Base management fees 816,190

Incentive fees earned —

General and administrative expenses reimbursable to Manager 562,496

Professional fees reimbursable to Manager 6,038

Total $ 1,384,724

Amounts payable to the Manager as of December 31, 2025 was approximately $ 1.1 million, and is recorded within accrued management fees and incentive fees and accrued direct administrative expenses in the Company’s consolidated Balance Sheets.

Investments in Loans

From time to time, the Company may co-invest with other investment vehicles managed by the Adviser or its affiliates, including the Adviser, 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.

Additionally, the Adviser or its affiliates, including AFC Agent LLC (“AFC Agent”), an entity wholly owned by Mr.

Tannenbaum, may from time to time serve as administrative and collateral agent to the lenders under the Company’s loans.

As of March 31, 2026, there were two co-invested loans held by the Company and affiliates of the Company.

Unsecured Revolving Credit Facility with Affiliate

In December 2024, the Company entered into the AFCF Credit Facility with AFC Finance LLC, an affiliate of the Company and Mr.

The AFCF Credit Facility was terminated in April 2025.

Refer to Note 7 for more information.

In January 2026, the Company entered into the TCGSL Credit Facility with TCGSL LLC, an affiliate of the Company and Mr.

Refer to Note 7 for more information.

As of March 31, 2026, the Company’s investment portfolio included 15 loans, comprised of first lien senior term loans that are geographically headquartered in the United States.

The aggregate commitment under these loans was approximately $ 375.7 million and outstanding principal was approximately $ 356.6 million as of March 31, 2026.

For the three months ended March 31, 2026, the Company funded $ 80.6 million of new loans and additional principal and received approximately $ 41.8 million of principal repayments.

As of March 31, 2026, on a fair value basis, 59.3 % of performing debt investments bore interest at a floating rate and 40.7 % of performing debt investments bore interest at a fixed rate, respectively.

The following table summarizes the Company’s investments as of March 31, 2026:

As of March 31, 2026

Amortized cost (1)

Fair Value (2)

Carrying Value (2)

Principal (2)

Weighted Average

Remaining Life

Senior term loan $ 30,510,804 $ 50,241,018 $ 53,108,449 0.0

Total loan held at fair value $ 30,510,804 $ 50,241,018 $ 53,108,449 0.0

(1) Refer to Note 13.

(2) 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.

(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

Discount Unrealized Gains (Losses) Fair Value

Total loan held at fair value at December 31, 2024 $ 53,108,449 $ ( 2,867,431 ) $ ( 19,730,214 ) $ 30,510,804

Change in unrealized gains (losses) on loans at fair value, net — — ( 11,453,875 ) ( 11,453,875 )

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

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

As of September 30, 2025 and December 31, 2024 , the Company ha d one l oan held at fair value on nonaccrual status.

Effective March 1, 2024, the Company placed Private Company A on nonaccrual status.

As of September 30, 2025 , the loan with Private Company A had an outstanding principal balance of approximately $ 51.0 million and an unrealized loss of approximately $( 31.2 ) million.

During the three and nine months ended September 30, 2025, approximately $ 0.2 million and $ 2.1 million of payments were received and applied as a reduction to the amortized cost of the Private Company A loan, respectively.

A more detailed listing of the Company’s loan held at fair value portfolio based on information available as of September 30, 2025 is as follows:

Collateral Location Collateral

Principal (3)

Rate Maturity Date (4)

A AZ, MA, NM C, D $ 16,923,809 $ 48,107,898 $ 50,975,329 15.5 % (6)

Total loan held at fair value $ 16,923,809 $ 48,107,898 $ 50,975,329

(1) C = Cultivation Facilities, D = Dispensary/Retail Facilities.

First lien senior term loans $ 345,918,978 $ 279,237,624

Total investments $ 345,918,978 $ 279,237,624

(1) The difference between the amortized cost and the outstanding principal amount of the loans consists of unaccreted original issue discount (“OID”) and loan origination costs.

(2) Refer to Note 5.

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

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

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

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

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

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

(6) Base weighted average interest rate of 13.0 % and payment-in-kind (“PIK”) weighted average interest rate of 2.5 %.

In October 2023, AFC Agent LLC (“AFC Agent”) delivered a notice of default to Private Company A based on certain financial and other covenant defaults and began charging additional default interest of 5.0 %, beginning as of July 1, 2023, in accordance with the terms of the Private Company A Credit Facility.

Effective March 1, 2024, the Company placed the borrower on nonaccrual

The maturity date passed on the credit facility to Private Company A without repayment.

In November 2023, Private Company A was placed into receivership to maintain the borrower’s operations and maximize value for the benefit of its creditors.

The court-appointed receiver is determining the amount of principal payments the borrower is able to repay on a monthly basis either from operations or from sale of collateral assets.

LOANS HELD FOR INVESTMENT AT CARRYING VALUE

As of September 30, 2025 and December 31, 2024, t he Company’s 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, the Company 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 the Company’s 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 the Company’s loans held at carrying value as of September 30, 2025 and December 31, 2024:

As of September 30, 2025

Principal (1)

Discount Carrying

Remaining Life

Senior term loans $ 281,848,482 $ ( 7,122,813 ) $ 274,725,669 1.6

Total loans held at carrying value $ 281,848,482 $ ( 7,122,813 ) $ 274,725,669 1.6

As of December 31, 2024

Principal (1)

Discount Carrying

Remaining Life

Senior term loans $ 301,755,791 $ ( 8,493,417 ) $ 293,262,374 1.9

Total loans held at carrying value $ 301,755,791 $ ( 8,493,417 ) $ 293,262,374 1.9

(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 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

Discount Carrying Value

Total loans held at carrying value at December 31, 2024 $ 301,755,791 $ ( 8,493,417 ) $ 293,262,374

New fundings 40,700,409 ( 1,270,000 ) 39,430,409

Accretion of original issue discount — 2,640,604 2,640,604

Loan repayments ( 46,877,502 ) — ( 46,877,502 )

The Company uses Global Industry Classification Standards for classifying the industry groupings of its portfolio companies.

The industrial composition of the Company’s portfolio at fair value as of March 31, 2026 were as follows:

As of March 31, 2026

Investment Type Fair Value % of Total Investments at Fair Value

Cannabis $ 201,120,634 72.0 %

Insurance 19,876,990 7.1 %

Commercial & Professional Services 58,240,000 20.9 %

Total investments $ 279,237,624 100.0 %

As of March 31, 2026 , the Company had certain investments in three portfolio companies on nonaccrual status, which represented 23.5 % of total debt investments at fair value.

As of March 31, 2026 , investments on nonaccrual status had an aggregate amortized cost and fair value of approximately $ 126.5 million and $ 65.8 million , respectively.

Loans Held for Investment

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

Alternative valuation methodologies may be used as appropriate, and can include a market analysis, income analysis, or recovery analysis.

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

In the yield analysis, the Company considers the current contractual interest rate, the maturity and other terms of the loan relative to risk of the company and the specific loan.

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

As loans held by the Company are substantially illiquid with no active loan market, the Company depends on primary market data, including newly funded loans, as well as secondary market data with respect to high-yield debt instruments and syndicated loans, as inputs in determining the appropriate market yield, as applicable.

The following table presents fair value measurements of investments and cash and cash equivalents as of March 31, 2026:

Fair Value Measurement as of March 31, 2026

Total Level 1 Level 2 Level 3

First lien senior term loans $ 279,237,624 $ — $ — $ 279,237,624

Cash and cash equivalents 112,730,935 112,730,935 — —

Total portfolio investments, cash and cash equivalents $ 391,968,559 $ 112,730,935 $ — $ 279,237,624

The following table presents fair value measurements of investments and cash and cash equivalents pre-Conversion as of December 31, 2025:

Fair Value Measurement as of December 31, 2025

Total Level 1 Level 2 Level 3

First lien senior term loans $ 26,080,763 $ — $ — $ 26,080,763

Cash and cash equivalents 38,605,507 38,605,507 — —

Total portfolio investments, cash and cash equivalents $ 64,686,270 $ 38,605,507 $ — $ 26,080,763

The following table presents changes in investments that use Level 3 inputs as of and for the three months ended March 31, 2026:

Three Months Ended

March 31, 2026

Fair value, at December 31, 2025 $ 26,080,763

Conversion fair value adjustment (1)

Net change in unrealized appreciation on investments 7,118,443

Purchases of investments 78,866,344

Proceeds from principal repayments and sales of investments ( 41,751,649 )

Net accretion of discount on investments 1,107,387

PIK interest 327,524

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

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

As of September 30, 2025 and December 31, 2024 , the Company had three and two loans held at carrying value on nonaccrual status, respectively, with a total amortized cost of approximately $ 104.2 million and $ 89.3 million, respectively.

During the three and nine months ended September 30, 2025, the Company recognized interest income of zero and $ 0.7 million on loans on nonaccrual status.

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

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 on July 1, 2025.

As of September 30, 2025, the loan with Private Company P had an outstanding principal amount of approximately $ 15.6 million and amortized cost of $ 15.3 million.

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 “Note 18—Subsequent Events”.

The Company placed Subsidiary of Private Company G on nonaccrual status effective December 1, 2023.

As of September 30, 2025, the loan with Subsidiary of Private Company G had an outstanding principal amount of approximately $ 78.9 million and an amortized cost of approximately $ 77.4 million, respectively.

During the three and nine months ended September 30, 2025, the Company recognized interest income of zero an d approximately $ 0.7 million related to this loan, which was received in cash.

As full recovery of principal and accrued interest is doubtful, future cash receipts received in accordance with terms of the forbearance agreement are accounted for under the cost recovery method.

During the three and nine months ended September 30, 2025, zero and approximately $ 0.3 million of contractual interest payments were received and applied as a reduction to this loan’s amortized cost, respectively.

The Company placed Private Company K on nonaccrual status effective December 1, 2023, with an outstanding principal amount of approximately $ 12.2 million and an amortized cost of approximately $ 11.5 million as of September 30, 2025 .

During the three and nine months ended September 30, 2025, the Company recognized no interest income related to this loan.

A more detailed listing of the Company’s loans held at carrying value portfolio based on information available as of September 30, 2025 is as follows:

Collateral Location Collateral

Principal (2)

Discount Carrying

Rate Maturity

of Private Co.

G NJ, PA C, D $ 78,880,165 $ ( 1,444,847 ) $ 77,435,318 12.5 % (5)

K MA C, D 12,195,762 ( 682,619 ) 11,513,143 18.1 % (6)

L OH C, D 29,575,644 ( 240,615 ) 29,335,029 13.0 % (7)

M AZ D 25,099,497 ( 1,330,132 ) 23,769,365 9.0 % (8)

7/31/2026 P/I

N - Real Estate FL C, D 19,327,505 ( 487,727 ) 18,839,778 12.5 % (9)

N - Non-Real Estate FL C, D 17,200,000 ( 430,000 ) 16,770,000 12.5 % (10)

O AZ, MD, MO, NJ, NV, NY, OH, OR, Canada C 5,358,890 ( 272,727 ) 5,086,163 13.5 % (11)

P MI C, D 15,609,914 ( 311,172 ) 15,298,742 13.0 % (12)

Q GA C, D 6,449,453 ( 320,833 ) 6,128,620 13.8 % (13)

R MD C, D 34,828,192 ( 554,055 ) 34,274,137 12.0 % (14)

11/1/2027 P/I

U GA, OH C, D 15,000,000 ( 293,919 ) 14,706,081 14.0 % (15)

Sub of Private Co.

V MO, OH, UT C, D 12,323,460 ( 367,500 ) 11,955,960 14.0 % (16)

of Public Co.

S FL, IL, MA, NY, OH, PA C, D 10,000,000 ( 386,667 ) 9,613,333 12.5 % (17)

8/13/2030 I/O

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

(1) For cannabis operators, C = Cultivation Facilities, D = Dispensary/Retail Facilities.

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

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

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

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

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

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

(5) Base interest rate of 12.5 %.

Effective December 1, 2023, the Company placed the borrower on nonaccrual status.

(6) Base interest rate of 12.0 % plus SOFR (SOFR floor of 1.0 %) and PIK interest rate of 2.0 %.

Effective December 1, 2023, the Company placed the borrower on nonaccrual status.

(7) Base interest rate of 8.0 % plus SOFR (SOFR floor of 5.0 %).

(8) Base interest rate of 9.0 %.

(9) Base interest rate of 8.0 % plus SOFR (SOFR floor of 4.5 %).

(10) Base interest rate of 8.0 % plus SOFR (SOFR floor of 4.5 %).

(11) Base interest rate of 8.5 % plus SOFR (SOFR floor of 5.0 %).

(12) Base interest rate of 13.0 %.

Effective June 1, 2025, the Company placed the borrower on nonaccrual status.

(13) Base interest rate of 8.75 % plus SOFR (SOFR floor of 5.0 %).

(14) Base interest rate of 7.5 % plus SOFR (SOFR floor of 4.5 %).

(15) Base interest rate of 14.0 %.

(16) Base interest rate of 12.5 % and PIK interest rate of 1.5 %.

(17) Base interest rate of 12.5 %.

LOAN RECEIVABLE HELD AT CARRYING VALUE

As of September 30, 2025 and December 31, 2024, the Company’s 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 zero and $ 1.9

million as of September 30, 2025 and December 31, 2024, respectively.

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

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

Principal Original Issue

Discount Carrying

Total loan receivable held at carrying value at December 31, 2024 $ 1,897,324 $ ( 1,686 ) $ 1,895,638

Fair value, at March 31, 2026 $ 279,237,624

Net change in unrealized appreciation on investments still held as of March 31, 2026 $ 7,118,443

(1) Refer to Note 2 for more information on the Conversion.

The following table presents changes in investments that use Level 3 inputs pre-Conversion as of and for the three months ended March 31, 2025 :

Three Months Ended

March 31, 2025

Fair value, at December 31, 2024 $ 30,510,804

Change in unrealized losses on loans at fair value, net ( 685,478 )

Loan repayments ( 1,252,941 )

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

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

Effective October 1, 2022, the Company placed Public Company A equipment loan receivable on nonaccrual status.

During the three and nine months ended September 30, 2025, the Company recognized no interest income related to this loan.

Payments received were accounted for under the cost recovery method and applied as a reduction to the amortized cost of the Public Company A equipment loan.

Prior to the 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.

Based on discussions with the collateral agent, no other proceeds were expected and the Company 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.

During the second quarter of 2025, the Company 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.

CURRENT EXPECTED CREDIT LOSSES

As of September 30, 2025 and December 31, 2024, the Company’s CECL Reserve for its loans held at carrying value and loan receivable held at carrying value was approximately $ 51.3 million and $ 30.6 million, respectively, or 18.69 % and 10.36 %, respectively, of the Company’s total loans held at carrying value and loan receivable held at carrying value of approximately $ 274.7 million and $ 295.2 million, respectively, and is bifurcated between the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value and loan receivable held at carrying value of approximately $ 51.2 million and $ 30.4 million, respectively, and a liability for unfunded commitments of approximately $ 0.2 million and $ 0.2 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 when determining the amount to allocate to its CECL Reserve.

Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loan receivable held at carrying value as of and for the three and nine months ended September 30, 2025 was as follows:

Outstanding (1)

Balance at June 30, 2025 $ 43,834,149 $ 127,126 $ 43,961,275

Provision for (reversal of) current expected credit losses 7,336,004 36,774 7,372,778

Write-offs — — —

Recoveries — — —

Balance at September 30, 2025 $ 51,170,153 $ 163,900 $ 51,334,053

Outstanding (1)

Balance at December 31, 2024 $ 30,419,677 $ 166,702 $ 30,586,379

Provision for (reversal of) current expected credit losses 22,527,722 ( 2,802 ) 22,524,920

Write-offs ( 1,777,246 ) — ( 1,777,246 )

Recoveries — — —

Balance at September 30, 2025 $ 51,170,153 $ 163,900 $ 51,334,053

(1) As of September 30, 2025 and December 31, 2024, the CECL Reserve related to outstanding balances on loans held at carrying value and loan receivable held at carrying value is recorded within current expected credit loss reserve in the Company’s consolidated balance sheets.

(2) As of September 30, 2025 and December 31, 2024, 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 each loan by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors.

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

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

Rating Definition

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

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

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

business plan is met or can reasonably be achieved

4 High Risk/ Potential for Loss — Collateral performance falls short of underwriting, material differences from business plans, defaults may exist, or may soon exist absent material improvement.

Risk of recovery of interest exists

5 Impaired/ Loss Likely — Performance is significantly worse than underwriting with major variances from business plan observed.

Loan covenants or financial milestones have been breached;

exit from loan or refinancing is uncertain.

Full recovery of principal is unlikely

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

As of September 30, 2025, the carrying value, excluding the CECL Reserve, of the Company’s loans held at carrying value and loan receivable held at carrying value within each risk rating by year of origination is as follows:

2025 2024 2023 2022 2021 2020 Total

1 $ — $ — $ — $ — $ — $ — $ —

2 — — — — — — —

3 36,275,374 81,098,698 23,769,365 29,335,029 — — 170,478,466

4 — — — — — — —

5 — 15,298,742 — 11,513,143 77,435,318 — 104,247,203

Total $ 36,275,374 $ 96,397,440 $ 23,769,365 $ 40,848,172 $ 77,435,318 $ — $ 274,725,669

Gross write-offs $ — $ — $ — $ — $ — $ ( 1,777,246 ) $ ( 1,777,246 )

During the nine months ended September 30, 2025, the Company deemed its 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 risk rating of “5” and was fully reserved for.

In the second quarter of 2025, the Company 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.

Refer to Note 5 for more information.

Fair value, at March 31, 2025 $ 28,572,385

Net change in unrealized losses on loans still held as of March 31, 2025 $ ( 685,478 )

The following tables summarize the significant unobservable inputs the Company used to value the loans categorized within Level 3 as of March 31, 2026 and December 31, 2025.

The tables are not intended to be all-inclusive, but instead capture the significant unobservable inputs relevant to the Company’s determination of fair values.

As of March 31, 2026

Unobservable Input

Asset Category Fair Value Primary Valuation Techniques Input Estimated Range Weighted Average (1)

First lien term loan $ 17,763,882 Recovery analysis Recovery rate 39.40 % - 48.20 %

198,480,337 Yield analysis Market yield 12.76 % - 28.14 %

15,000,000 Market quotes Broker/dealer bids or quotes N/A N/A

47,993,405 Market approach Revenue multiple 0.40 x - 0.95 x

Total investments $ 279,237,624

As of December 31, 2025

Unobservable Input

Asset Category Fair Value Primary Valuation Techniques Input Estimated Range Weighted Average (1)

First lien term loan $ 16,259,763 Recovery analysis Recovery rate 31.60 % - 37.90 %

4,821,000 Yield analysis Market yield 19.50 % - 21.50 %

5,000,000 Market quotes Broker/dealer bids or quotes N/A N/A

Total investments $ 26,080,763

(1) Unobservable inputs were weighted by the relative fair value of the investments.

Changes in market yields, revenue multiples, and recovery rates may change the fair value of certain of the Company’s loans.

Generally, an increase in market yields may result in a decrease in the fair value of certain of the Company’s loans, while a decrease in revenue multiples and recovery rates may result in a decrease in the fair value of certain of the Company’s loans.

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

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

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

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

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

Fair Value of Financial Instruments

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

The following table details the carrying value and fair value of the Company’s debt obligations not recognized at fair value in the unaudited interim consolidated statement of assets and liabilities as of March 31, 2026:

As of March 31, 2026

Carrying Value Fair Value

Financial assets:

Cash and cash equivalents $ 112,730,935 $ 112,730,935

Financial liabilities:

Senior notes payable, net $ 76,448,216 $ 74,305,000

The following table details the carrying value and fair value of the Company’s financial instruments not recognized at fair value in the consolidated balance sheet as of December 31, 2025:

As of December 31, 2025

Carrying Value Fair Value

Financial assets:

Cash and cash equivalents $ 38,605,507 $ 38,605,507

Loans held for investment at carrying value, net $ 253,625,119 $ 207,805,490

Financial liabilities:

Senior notes payable, net $ 76,322,493 $ 74,151,000

Cash and cash equivalents have a carrying value which approximates their fair value due to the short-term nature of these instruments.

The Company categorizes the fair value measurement of these assets as Level 1.

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

The fair value of the Company’s 2027 Senior Notes is estimated using a market bid technique based on observable inputs of the last available bid price in the market at the end of the period, or Level 2 inputs.

INTEREST RECEIVABLE

The following table summarizes the interest receivable by the Company as of September 30, 2025 and December 31, 2024:

September 30, 2025 As of

The following table summarizes the interest receivable by the Company as of March 31, 2026:

March 31, 2026

Interest receivable $ 1,267,521

PIK receivable 21,095

Unused fees receivable 2,044

Total interest receivable $ 1,290,660

The following table summarizes the interest receivable by the Company pre-Conversion as of December 31, 2025:

December 31, 2025

4 unchanged sentences

Revolving Credit Facility

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 administrative agent party thereto, pursuant to which, the Company obtained a $ 60.0 million senior secured revolving credit facility (as amended from time to time, the “Revolving Credit Facility”).

arranger, bookrunner and administrative agent party thereto, pursuant to which, the Company obtained a $ 80.0 million senior secured revolving credit facility (as amended from time to time, the “Revolving Credit Facility”).

The Revolving Credit Facility’s initial maturity date of April 29, 2025 was extended to April 29, 2028 under Amendment Number Four to the Revolving Credit Agreement, as described further below.

The Revolving Credit Facility contains aggregate commitments of $ 60.0 million from two FDIC-insured banking institutions (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 Agreement.

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 the Revolving Credit Agreement, the Company incurred a one-time commitment fee expense of approximately $ 0.5 million, which was included in prepaid expenses and other assets on the Company’s consolidated balance sheets and amortized over the life of the facility.

As amended, the Revolving Credit Facility contains aggregate commitments of $ 80.0 million ($ 106.0 million solely during the 2026 temporary increase period (defined below) 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 Agreement.

Interest is payable on the Revolving Credit Facility at the greater of (1) the applicable base rate plus 0.50 % and (2) 7.00 %, as provided in the Revolving Credit Agreement, as amended, payable in cash in arrears.

In connection with the Revolving Credit Agreement and related amendments, the Company incurred certain closing costs of approximately $ 0.1 million, which were included in prepaid expenses and other assets on the Company’s consolidated statement of assets and liabilities and amortized over the life of the Revolving Credit Facility.

The Company is required to pay certain fees to the agent and the lenders under the Revolving Credit Agreement, including a $ 75.0 thousand agent fee payable to the agent and a 0.25 % per annum loan fee payable ratably to the lenders, in each case, payable on the closing date and on the annual anniversary thereafter.

Commencing on the six-

month anniversary of the closing date, the Revolving Credit Facility has an unused line fee of 0.25 % per annum, payable semi-annually in arrears, which is included within interest expense in the Company’s unaudited interim consolidated statements of operations.

Commencing on the six-month anniversary of the closing date, the Revolving Credit Facility has an unused line fee of 0.25 % per annum, payable semi-annually in arrears, which is included within interest expense in the Company’s unaudited interim consolidated statement of operations.

Based on the terms of the Revolving Credit Agreement, the unused line fee is waived if our average revolver usage exceeds the minimum amount required per the Revolving Credit Agreement.

During the three and nine months ended September 30, 2025, the Company incurred an unused line fee of approximately $ 28.6 thousand and $ 103.1 thousand, respectively.

During the three months ended March 31, 2026 and 2025, the Company incurred an unused line fee of approximately $ 19.4 thousand and $ 56.3 thousand, approximately.

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.

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(1) liquidity of at least $ 5.0 million, (2) annual debt service coverage of at least 1.5 to 1.0 and (3) secured debt not to exceed 25 % of total consolidated assets of the Company and its subsidiaries.

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.

In January 2025, the Company entered into Amendment Number Three 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, pursuant to which, among other things, the parties agreed to reduce the procedural requirements for obligor loan receivables to become eligible under the borrowing base.

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

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, the Company entered into Amendment Number Five to the Loan and Security Agreement (“Amendment Number Five”), by and among the Company, as borrower, the lenders party thereto, and the lead arranger, bookrunner and administrative party thereto.

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.

In connection with the Revolving Credit Agreement and related amendments, the Company incurred certain closing costs of approximately $ 0.1 million, which were included in prepaid expenses and other assets on the Company’s consolidated balance sheets and amortized over the life of the Revolving Credit Facility.

As of September 30, 2025 and December 31, 2024, outstanding borrowings under the Revolving Credit Facility were $ 22.0 million and $ 60.0 million, respectively, and $ 28.0 million and zero were available for borrowing as of September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the interest rate on the Company’s borrowings under the Revolving Credit Facility was 7.75 % and 8.00 %, respectively.

To the best of our knowledge, as of March 31, 2026, we were in compliance in all material respects with all covenants contained in our Revolving Credit Agreement.

In January 2026, the Company entered into Amendment Number Six to the Loan and Security Agreement (“Amendment Number Six”), by and among the Company, as borrower, the lenders party thereto, and the lead arranger, bookrunner and administrative party thereto.

Amendment Number Six, among other things, includes provisions relevant in light of the Company’s conversion from a REIT to a BDC.

In March 2026, the Company entered into Amendment Number Seven to the Loan and Security Agreement (“Amendment Number Seven”), by and among the Company, as borrower, the lenders party thereto and the lead arranger, bookrunner and administrative agent party thereto.

Amendment Number Seven, among other things, added TCGDL LLC, a subsidiary of the Company, as a borrower under the Revolving Credit Facility and amended certain provisions related to the inclusion of TCGDL LLC as a Borrower.

In March 2026, the Company entered into Amendment Number Eight to the Loan and Security Agreement (“Amendment Number Eight”), by and among the Company, as borrower, the lenders party thereto, and the lead arranger, bookrunner and administrative party thereto.

Amendment Number Eight, among other things, increased the commitment from the lenders by $ 56.0 million, from $ 50.0 million to $ 106.0 million, consisting of (i) a $ 30.0 million permanent increase in revolver commitments and (ii) a $ 26.0 million increase in revolver commitments during a specified temporary increase period beginning on March 27, 2026 and ending on April 10, 2026 (the “Temporary Increase Period”).

Upon expiration of the Temporary Increase Period, the aggregate revolving commitments and the maximum revolver amount under the facility was automatically reduced to $ 80.0 million.

As of March 31, 2026 and December 31, 2025, outstanding borrowings under the Revolving Credit Facility were $ 106.0 million and $ 21.0 million, respectively, and zero and $ 29.0 million were available for borrowing as of March 31, 2026 and December 31, 2025, respectively.

As of each of March 31, 2026 and December 31, 2025, the interest rate on the Company’s borrowings under the Revolving Credit Facility was 7.25 %.

AFCF Credit Facility

In December 2024, the Company entered into an unsecured revolving credit agreement (the “AFCF Credit Agreement”), by and among the Company, as borrower, the lenders party thereto from time to time, and AFC Finance, LLC, as agent and lender.

AFC Finance, LLC is wholly owned by Leonard M.

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The AFCF Credit Facility matures on the earlier of (i) December 31, 2025 and (ii) the date of the closing of any unsecured debt with principal of at least $ 40.0 million used to refinance the AFCF Credit Agreement.

In April 2025, in conjunction with the entry by the Company into Amendment Number Four to the Revolving Credit Agreement, the Company terminated that certain AFCF Credit Agreement, by and among the Company, as borrower, the

lenders party thereto from time to time, and AFC Finance, LLC, as agent and lender.

There were no outstanding borrowings under the AFCF Credit Agreement at the time of its termination.

As December 31, 2024, outstanding borrowings under the AFCF Credit Facility were $ 40.0 million and no amounts available for borrowing.

As of September 30, 2025, the AFCF Credit Facility had been terminated and no amounts were outstanding or available for borrowing thereunder.

In January 2026, the Company entered into an unsecured revolving credit agreement (the “TCGSL Credit Agreement”), by and among the Company, as borrower, the lenders party thereto from time to time, and TCGSL LLC, as agent and lender.

TCGSL is wholly owned by Leonard M.

Tannenbaum, Chairman of the Company’s Board of Directors.

The TCGSL Credit Agreement provides for an unsecured revolving credit facility (the “TCGSL Credit Facility”) with a $ 20.0 million commitment, which may be borrowed, repaid and redrawn, subject to a draw fee and the other conditions provided in the TCGSL Credit Agreement.

Interest is payable on the TCGSL Credit Facility at a rate per annum equal to 8.5 % and matures on August 1, 2028.

As of March 31, 2026, outstanding borrowings on the TCGSL Credit Facility were $ 20.0 million and zero was available for borrowing.

As of December 31, 2025, the TCGSL Credit Facility was not in place and no amounts were outstanding or available for borrowing thereunder.

2027 Senior Notes

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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.

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.

As of September 30, 2025 and December 31, 2024, the Company had $ 90.0 million in principal amount of the 2027 Senior Notes outstanding.

As of March 31, 2026 and December 31, 2025, the Company had $ 77.0 million in principal amount of the 2027 Senior Notes outstanding, respectively.

The 2027 Senior Notes are due on May 1, 2027.

Scheduled principal payments on the 2027 Senior Notes as of September 30, 2025 are as follows:

Scheduled principal payments on the 2027 Senior Notes as of March 31, 2026 are as follows:

2027 Senior Notes

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Senior notes payable, net $ 76,448,216

The following tables reflect a summary of interest expense incurred during the three and nine months ended September 30, 2025 and 2024:

The following table reflects a summary of interest expense incurred during the three months ended March 31, 2026:

Three Months Ended

September 30, 2025

2027 Senior Notes Revolving Credit Facility AFCF Credit Facility Total

March 31, 2026

2027 Senior Notes Revolving Credit Facility TCGSL Revolving Credit Facility Total Borrowings

Interest expense $ 1,106,875 $ 408,588 $ 12,389 $ 1,527,852

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Total interest expense $ 1,241,348 $ 472,803 $ 12,389 $ 1,726,540

The following table reflects a summary of interest expense incurred pre-Conversion during the three months ended March 31, 2025:

Three Months Ended

September 30, 2024

2027 Senior Notes Revolving Credit Facility AFCF Credit Facility Total

Interest expense $ 1,293,750 $ 21,667 $ — $ 1,315,417

Unused fee expense — — — —

Amortization of deferred financing costs 158,964 98,324 — 257,288

Total interest expense $ 1,452,714 $ 119,991 $ — $ 1,572,705

Nine months ended

September 30, 2025

2027 Senior Notes Revolving Credit Facility AFCF Revolving Credit Facility Total Borrowings

Interest expense $ 3,881,250 $ 628,458 $ 8,889 $ 4,518,597

Unused fee expense — 103,066 — 103,066

Amortization of deferred financing costs 471,994 210,915 — 682,909

Total interest expense $ 4,353,244 $ 942,439 $ 8,889 $ 5,304,572

Nine months ended

September 30, 2024

March 31, 2025

2027 Senior Notes Revolving Credit Facility AFCF Revolving Credit Facility Total Borrowings

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COMMITMENTS AND CONTINGENCIES

As of September 30, 2025 and December 31, 2024, the Company had the following commitments to fund various investments:

September 30, 2025 As of

As of March 31, 2026, the Company had the following commitments to fund various investments:

March 31, 2026

Total loan commitments $ 375,661,201

drawn commitments ( 361,215,505 )

Total undrawn commitments $ 14,445,696

See below for more information on the Company’s unfunded commitments:

March 31, 2026

Unfunded Commitment Balances

First lien delayed draw term loan:

Theratrue, Inc.

Standard Wellness Company, LLC 1,750,000

BCIS AH Borrower LLC 9,666,666

Total $ 14,445,696

As of December 31, 2025, the Company had the following commitments to fund various investments pre-Conversion:

December 31, 2025

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Total undrawn commitments $ 10,291,239

See below for more information on the Company’s unfunded commitments pre-Conversion:

December 31, 2025

Unfunded Commitment Balances

First lien delayed draw term loan:

Theratrue, Inc.

Gron Holdings, Inc.

Standard Wellness Company, LLC 1,629,755

Total $ 10,291,239

The Company from time to time may be a party to litigation or other legal proceedings relating to claims arising from the ordinary course of business.

As of September 30, 2025, the Company was not subject to any material pending legal proceedings to which the Company is a party or any of the Company’s assets are subject that could materially impact its business, financial condition or results of operations.

The Company provides loans to companies operating in the cannabis industry which involves significant risks, including the risk of strict enforcement against the Company’s borrowers on the federal illegality of cannabis, the Company’s borrowers’ inability to renew or otherwise maintain their licenses or other requisite authorizations for their cannabis operations, and such loans lack of liquidity, and the Company could lose all or part of any of the Company’s loans.

Refer to Part II.

Item 1 – Legal Proceedings for information regarding certain material developments in pending litigation during the quarter ended March 31, 2026.

The Company is required to establish reserves for litigation matters where those matters present loss contingencies that are both probable and estimable.

When loss contingencies are not both probable and estimable, we do not establish reserves.

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.

Historically, the Company provided loans to companies operating in the cannabis industry which involved significant risks, including the risk of strict enforcement against the Company’s borrowers on the federal illegality of cannabis, the Company’s borrowers’ inability to renew or otherwise maintain their licenses or other requisite authorizations for their

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

The Company’s ability to grow or maintain its business with respect to the loans it makes to companies operating in the cannabis industry depends on state laws pertaining to the cannabis industry.

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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.

SHAREHOLDERS’ EQUITY

Series A Preferred Stock

As of September 30, 2025 and December 31, 2024, the Company authorized 10,000 preferred shares and previously 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 September 30, 2025 and December 31, 2024, there were zero shares of Series A Preferred Stock issued and outstanding, respectively.

As of March 31, 2026 and December 31, 2025 , the Company authorized 10,000 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, 2026 and December 31, 2025, there were zero shares of Series A Preferred Stock issued and outstanding, respectively.

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

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

The Company generally may not declare or pay, or set apart for payment, any dividend or other distribution on any shares of the Company’s stock ranking junior to the Series A Preferred Stock as to dividends, including the Company’s common stock, or redeem, repurchase or otherwise make payments on any such shares, unless full, cumulative dividends on all outstanding shares of Series A Preferred Stock have been declared and paid or set apart for payment for all past dividend periods.

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

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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.

In June 2024, the Company redeemed all 125 outstanding shares of its Series A Preferred Stock.

The Series A Preferred Stock was redeemed at a price of $ 1,000 per share, plus all accrued and unpaid dividends thereon to and including the date fixed for redemption.

There were no accrued and unpaid dividends at the time of redemption.

As of September 30, 2025 and December 31, 2024, the Company authorized 50,000,000 shares of common stock at $ 0.01 par value per share, pursuant to the Articles of Amendment, dated March 10, 2022 (“Common Stock”).

As of September 30, 2025 and December 31, 2024, 22,594,541 and 22,332,927 shares of Common Stock were issued and outstanding, respectively.

During the three and nine months ended September 30, 2025 and the year ended December 31, 2024 , the Company did not issue any shares of its common stock, other than shares of common stock sold under the ATM Program (hereinafter defined) and restricted stock awards granted under the 2020 Plan.

As of March 31, 2026 and December 31, 2025 , the Company authorized 50,000,000 shares of common stock at $ 0.01 par value per share, pursuant to the Articles of Amendment, dated March 10, 2022 (“Common Stock”).

As of March 31, 2026 and December 31, 2025, 23,528,844 shares of Common Stock were issued and outstanding, respectively.

During the three months ended March 31, 2026 and year ended December 31, 2025, the Company did not issue any shares of its common stock, other than shares of common stock sold under the ATM Program (hereinafter defined) and restricted stock awards granted under the 2020 Plan.

Shelf Registration Statement

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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.

Following its election to be regulated as a BDC, the Company is no longer eligible to issue securities pursuant to the Shelf Registration Statement.

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

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

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”).

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.

At the time of termination, the Company’s remaining authorization under the Sales Agreement was approximately $ 47.4 million.

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 the Company’s Prior Shelf Registration Statement.

As of March 31, 2026, 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 the Company’s Prior Shelf Registration Statement in conjunction with its election to be regulated as a BDC.

The Company does not currently have an ATM Program, but 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.

Prior to commencing a new ATM Program, the Company would need to register the offering on a new registration statement on Form N-2, which would be subject to review and would need to be declared effective by the SEC .

Under the terms of the Sales Agreement, the Company 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.

Sales of common stock, if any, were to 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”).

During the three months ended March 31, 2026, the Company did not sell any shares of the Company’s common stock under the Sales Agreement.

At the time of termination, the Company’s remaining authorization under the Sales Agreement was approximately $ 47.4 million.

Stock Incentive Plan

The Company has established a stock incentive compensation plan (the “2020 Plan”).

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

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

Any award may be structured to be paid or settled in cash.

The Company has granted, and currently intends to continue to grant, stock options and restricted stock awards 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, consultants and other service providers to the Company or any of its subsidiaries.

During the nine months ended September 30, 2025, the Company’s Board of Directors approved grants of an aggregate of 271,497 shares of restricted stock to the Company’s directors and certain officers, as well as certain employees of the Manager and its affiliates.

The restricted stock awards granted during the nine months ended September 30, 2025 under the 2020 Plan are subject to vesting periods that vary from immediately vested, one-year vesting and to vesting over a three-year period, with approximately 33 % vesting on each of the first, second and third anniversaries of the vesting commencement date.

As of September 30, 2025, there were 951,518 shares of common stock granted under the 2020 Plan, underlying 240,594 options and 710,924 shares of restricted stock.

As of September 30, 2025, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the 2020 Plan (the “Share Limit”) equaled 3,609,722 shares, of which 2,658,204 shares remained available for future issuance under the 2020 Plan.

The Share Limit is consistent with the Share Limit as of June 30, 2025.

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

Modification of Stock Options and Restricted Stock Outstanding at Spin-Off

Stock Options

On July 9, 2024, the Company completed the separation of its CRE portfolio through the Spin-Off of SUNS.

As a result, the strike price for the outstanding stock options of the Company were adjusted to give effect to the Spin-Off.

All adjustments were made with the intent to preserve the intrinsic value of each award immediately before and after the Spin-Off.

The Company accounted for the modification as Type I modification (probable to probable).

The number of awards remained constant, while the strike prices were modified to preserve the intrinsic value of each award.

The modified stock option awards otherwise retained substantially the same terms and conditions, including term and vesting provisions.

The fair value of such unvested stock option awards remained constant pre- and post-Spin-Off, resulting in no incremental compensation cost.

The Company will recognize the remaining unrecognized compensation cost of the original stock option awards over the remaining vesting period.

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

The Company has elected to recognize forfeitures as they occur.

Previously recognized compensation expense related to forfeitures are reversed in the period the nonvested awards are forfeited.

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

Treasury yield curve in effect at the date of grant.

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

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

The expected term for each award is based on the contractual term for all awards granted thus far under the 2020 Plan.

Restricted stock grant expense is based on the Company’s stock price at the time of the grant and amortized over the vesting period.

The weighted-average exercise price of stock options have been retroactively adjusted to give effect to the Spin-Off for all periods presented.

The following table presents the assumptions used in the Black-Scholes pricing model of options granted under the 2020 Plan during the three and nine months ended September 30, 2025 and 2024:

Expected term

Expected volatility 40 % - 50 %

Expected dividend yield 10 % - 20 %

Risk-free interest rate 0.5 % - 2.0 %

Expected forfeiture rate 0 %

The modification date fair value of the stock options was determined using the Binomial-Lattice Model with the following assumptions on July 9, 2024:

Expected term

3.1 - 4.5 years

Expected volatility 31.24 % - 32.41 %

Expected dividend yield 15.65 %

Risk-free interest rate 4.16 % - 4.25 %

Expected forfeiture rate 0 %

As additional Company history and information is available, the Company determined the use of the Binomial-Lattice Model to be appropriate compared to the closed-form Black-Scholes model.

The risk-free interest rate is based on the continuously compounded rates from the U.S.

Treasury yield curve in effect at the date of Spin-Off.

The expected term is based on the remaining contractual term of each option’s life as of the date of Spin-Off.

The expected dividend yield was based on the Company’s most recent quarterly dividend, annualized, divided by the three-month average stock price as of the Spin-Off date.

Expected volatility is based on the remaining contractual term-matched historical volatility.

In cases where the look back period exceeds the trading history of the Company’s Common Stock, the Company’s entire trading history was used.

Restricted Stock

Restricted stock awards originally granted under the 2020 Plan include awards granted to employees of the Manager that perform shared fun ctions pre- and post-Spin-Off.

In co nnection with the Spin-Off transaction and as a result of the related modification, approximately 33 % of the remaining unrecognized compensation cost of unvested restricted stock awards will be recognized over the remaining vesting period of the Company’s former wholly-owned subsidiary, SUNS.

The Company will recognize the remaining 67 % of unrecognized compensation cost of unvested restricted stock awards over the remaining vesting period.

The Company previously established a stock incentive compensation plan (the “2020 Plan”).

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

The Company previously granted stock options and restricted stock awards to participants in the 2020 Plan.

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

T he Company did not grant any options and no options were exercised d uring the three months ended March 31, 2025 .

The total fair value of shares vested during the three months ended March 31, 2025, was approximately $ 1.1 million.

During the three months ended March 31, 2025, 271,497 shares of restricted stock were granted with a weighted-average grant date fair value of $ 8.37 per share, and 127,944 shares of restricted stock vested with a weighted-average grant date fair value of $ 8.68 per share.

As of March 31, 2026, there were 1,646,127 shares of common stock granted under the 2020 Plan, underlying 900 options and 1,645,227 shares of restricted stock that had been granted under the 2020 Plan prior to Conversion.

Because externally managed BDCs are not permitted under the 1940 Act to issue or have outstanding restricted stock or stock options, the Company’s Board, in advance of the Conversion, approved the accelerated vesting of its outstanding restricted stock and cancelled its outstanding stock options.

The Company accounted for this modification as a Type I modification (probable to probable).

Stock Compensation

The following table summarize s the stock-based compensation expense incurred by the Company for the three and nine months ended September 30, 2025 and 2024:

The following table summarize s the stock-based compensation expense incurred by the Company for the three months ended March 31, 2026 and 2025:

Three months ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

Stock-based compensation $ — $ 553,749

Stock Options

The following table summarizes the (i) non-vested options granted, (ii) vested options granted, (iii) exercised and (iv) forfeited options granted for the Company’s directors and officers and employees of the Manager and its affiliates as of September 30, 2025 and December 31, 2024:

September 30, 2025 As of

December 31, 2024

Non-vested 129,862 149,133

Vested 2,244,770 2,225,499

Exercised ( 5,511 ) ( 5,511 )

Forfeited ( 2,129,427 ) ( 200,669 )

Balance 239,694 2,168,452

The following tables summarize stock option activity as of and during the nine months ended September 30, 2025:

Number of options Weighted-average

exercise price Weighted-average remaining contractual term Aggregate intrinsic value

Outstanding as of December 31, 2024 2,168,452 $ 11.46

Exercised — —

Forfeited ( 1,928,758 ) 11.37

Outstanding as of September 30, 2025 239,694 $ 12.16 2.88 years $ —

Exercisable as of September 30, 2025 229,023 $ 12.12 2.86 years $ —

Unvested as of September 30, 2025 10,671 $ 12.99 3.28 years $ —

T he Company did not grant any options d uring the nine months ended September 30, 2025 and 2024 .

No options were exercised during the nine months ended September 30, 2025 and 2024 .

As of September 30, 2025 , there was approximately $ 3.3 thousand of total unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 0.28 years.

Restricted Stock

The following table summarizes restricted stock (i) granted, (ii) vested and (iii) forfeited for the Company’s directors and officers and employees of the Manager and its affiliates as of September 30, 2025 and December 31, 2024:

September 30, 2025 As of

December 31, 2024

Granted 754,741 483,244

Vested ( 233,138 ) ( 102,780 )

Forfeited ( 43,817 ) ( 33,934 )

Balance 477,786 346,530

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

The following table summarizes the restricted stock activity as of and during the nine months ended September 30, 2025:

Number of shares of restricted stock Weighted-average

grant date fair value

Balance as of December 31, 2024 346,530 $ 8.72

Granted 271,497 8.37

Vested ( 130,358 ) 8.79

Forfeited ( 9,883 ) 8.74

Balance as of September 30, 2025 477,786 $ 8.50

There were no shares of restricted stock granted during the three months ended September 30, 2025 and 2024.

The total fair value of shares vested during the three months ended September 30, 2025 and 2024, was $ 11.2 thousand and $ 25.0 thousand, respectively.

During the nine months ended September 30, 2024, 209,397 shares of restricted stock were granted with a weighted-average grant date fair value of $ 11.70 per share.

During the nine months ended September 30, 2024, 64,752 shares of restricted stock vested with a weighted-average grant date fair value of $ 14.50 per share.

The total fair value of shares vested during the nine months ended September 30, 2025 and 2024, was approximately $ 1.1 million and $ 0.8 million, respectively.

As of September 30, 2025 , there was approximately $ 2.8 million of total unrecognized compensation cost related to non-vested restricted stock.

That cost is expected to be recognized over a weighted-average period of 1.97 years.

Distributions

The following table summarizes the Company’s distributions declared during the three months ended March 31, 2026 and 2025:

Declaration Date Record Date Payment

Date Per Common Share

Amount Total Distribution Amount

3/11/2025 3/31/2025 4/15/2025 $ 0.23 $ 5,197,082

2025 Period Subtotal $ 0.23 $ 5,197,082

3/2/2026 3/31/2026 4/15/2026 $ 0.05 $ 1,176,442

2026 Period Subtotal $ 0.05 $ 1,176,442

EARNINGS PER SHARE

The following information sets forth the computations of basic and diluted earnings per common share for the three and nine months ended September 30, 2025 and 2024:

The following information sets forth the computations of basic and diluted net increase in net assets resulting from operations per common share for the three months ended March 31, 2026:

Three Months Ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

Net (loss) income from continuing operations $ ( 12,490,506 ) $ 1,217,790 $ ( 21,587,472 ) $ 14,853,671

Dividends paid on preferred stock — — — ( 7,500 )

March 31, 2026

Net increase in net assets resulting from operations $ 11,427,347

Basic weighted average shares of common stock outstanding 23,528,844

Basic and diluted net increase in net assets resulting from operations per common share $ 0.49

The following information sets forth the computations of basic and diluted earnings per common share for the three months ended March 31, 2025:

Three Months Ended

March 31, 2025

Net income $ 4,067,685

Dividends paid on unvested restricted stock ( 114,355 )

Net income from continuing operations attributable to common shareholders ( 12,562,622 ) 1,050,165 ( 21,884,726 ) 14,493,150

Net income from discontinued operations — 165,944 — 2,922,068

Net income attributable to common shareholders 3,953,330

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Diluted weighted average shares of common stock outstanding 22,110,102

Basic earnings per share

Continuing operations $ ( 0.57 ) $ 0.05 $ ( 0.99 ) $ 0.71

Discontinued operations $ — $ 0.01 $ — $ 0.14

Total basic earnings per common share $ ( 0.57 ) $ 0.06 $ ( 0.99 ) $ 0.85

Diluted earnings per share

Continuing operations $ ( 0.57 ) $ 0.05 $ ( 0.99 ) $ 0.71

Discontinued operations $ — $ 0.01 $ — $ 0.14

Total diluted earnings per common share $ ( 0.57 ) $ 0.06 $ ( 0.99 ) $ 0.85

Basic earnings per common share $ 0.18

Diluted earnings per common share $ 0.18

Diluted EPS was computed using the treasury stock method for stock options and restricted stock.

Diluted earnings per common share excluded 1,717,543 and 2,104,898 weighted average shares of unvested restricted stock and stock options due to anti-dilutive effect for the three and nine months ended September 30, 2025, respectively, and 1,499,235 and 1,499,235 for the three and nine months ended September 30, 2024, respectively .

For the three and nine months ended September 30, 2025 , the potential dilutive shares due to unvested restricted stock and stock options were not included in the computation of diluted loss per share since to do so would decrease the loss per share from continuing operations.

Diluted earnings per common share excluded 2,320,290 weighted average shares of unvested restricted stock and stock options due to anti-dilutive effect for the three months ended March 31, 2025.

A TRS is an entity taxed as a corporation that has not elected to be taxed as a REIT, in which a REIT directly or indirectly holds equity, and that has made a joint election with such REIT to be treated as a TRS.

A TRS generally may engage in any business, including investing in assets and engaging in activities that could not be held or conducted directly by the Company without jeopardizing its qualification as a REIT.

A TRS is subject to applicable United States federal, state and local income tax on its taxable income.

In addition, as a REIT, the Company also may be subject to a 100% excise tax on certain transactions between it and its TRS that are not conducted on an arm’s-length basis.

TRS1 was subject to applicable United States federal, state and local income tax on its taxable income.

In addition, while the Company was a REIT, it was subject to a 100% excise tax on certain transactions between it and TRS1 that were not conducted on an arm’s-length basis.

The income tax provision is included in the line item income tax expense, including excise tax.

The income tax (benefit) provision for the Company was approximately $( 0.9 ) million and $( 0.9 ) million for the three and nine months ended September 30, 2025, respectively, and $ 0.4 million and $ 0.8 million for the three and nine months ended September 30, 2024 , respectively.

The income tax expense for the three and nine months ended September 30, 2025 and 2024 primarily related to activities of the Company’s taxable REIT subsidiary.

The income tax provision for the Company and TRS1 consisted of the following for the three and nine months ended September 30, 2025 and 2024:

Effective January 1, 2026, in connection with the Conversion to a BDC, the Company became subject to the 1940 Act and ceased to rely on the exclusion from the definition of an “investment company” in Section 3(c)(5) of the 1940 Act.

Beginning with taxable year ending December 31, 2026, the Company intends to elect to be treated as a RIC under Subchapter M of the Code.

To maintain qualification as a RIC, the Company generally must distribute 90% of investment company taxable income each taxable year and meet certain source-of-income, asset diversification, and other requirements.

The income tax (benefit) provision for the Company was approximately $ 0.1 million and $ 0.2 million for the three months ended March 31, 2026 and 2025 , respectively.

The income tax benefit/expense for the three months ended March 31, 2026 and 2025 primarily related to activities of the Company’s TRS1 subsidiary.

The income tax provision for the Company and TRS1 consisted of the following for the three months ended March 31, 2026:

Three Months Ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

March 31, 2026

Net investment income taxes:

Federal $ 86,090

State ( 28,171 ) 79,210 ( 6,140 ) 235,245

Total current income tax (benefit) expense ( 1,994 ) 394,210 92,735 838,545

Total deferred income tax (benefit) expense ( 872,668 ) — ( 881,370 ) —

Excise tax — ( 7,954 ) ( 111,665 ) ( 7,954 )

Total income tax (benefit) expense, including excise tax $ ( 874,662 ) $ 386,256 $ ( 900,300 ) $ 830,591

For the three and nine months ended September 30, 2025 and 2024, the Company did not incur United States federal excise tax expense, respectively.

During the nine months ended September 30, 2025, the Company received a partial refund of previously paid excise tax relating to the 2023 tax year.

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.

Total current income tax expense (benefit) 109,368

Investment valuation related taxes:

Total deferred income tax expense (benefit) 517,227

Total income tax expense (benefit), including excise tax $ 626,595

The income tax provision for the Company and TRS1 pre-Conversion consisted of the following for the three months ended March 31, 2025:

Three Months Ended

March 31, 2025

Federal $ 100,000

Total current income tax expense (benefit) 164,981

Total deferred income tax expense (benefit) ( 52,575 )

Total income tax expense (benefit), including excise tax $ 112,406

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

As of September 30, 2025, tax years since 2022 remain subject to examination by taxing authorities.

The federal statutory rate was 21% for the three and nine months ended September 30, 2025 and 2024.

The primary difference between the Company’s statutory rate and effective tax rate is largely determined by the amount of income subject to tax by the Company’s taxable REIT subsidiary .

As of March 31, 2026, tax years 2022-2025 remain subject to examination by taxing authorities.

The federal statutory rate was 21% for the three months ended March 31, 2026 and 2025.

The primary difference between the Company’s statutory rate and effective tax rate is largely determined by the amount of income subject to tax by TRS1 .

TRS1 is a corporate subsidiary that was formerly treated as a taxable REIT subsidiary prior to the Conversion.

Following the Conversion, TRS1 is a taxable corporation.

The Company expects that its future effective tax rate will be determined in a similar manner.

As of September 30, 2025 and December 31, 2024, the Company’s deferred tax assets were $ 1.6 million and $ 0.7 million, respectively, and are included in prepaid expenses and other assets in the Company’s consolidated balance sheets.

For the three months ended March 31, 2026, the Company did not incur United States federal excise tax expense.

A s a RIC, the Company is subject to ordinary income and capital gain distribution requirements under U.S.

federal excise tax rules for each calendar year.

If the Company does not meet the required distributions, the Company will be subject to a 4 % nondeductible federal excise tax on the undistributed amount .

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.

Pre-Conversion Excise Tax

For the three months ended March 31, 2025 , the Company did not incur United States federal excise tax expense.

As previously taxed as a REIT, 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 accrued excise tax on estimated excess taxable income as such taxable income is earned.

The expense is calculated in accordance with applicable tax regulations.

As of March 31, 2026 and 2025, the Company’s deferred tax assets were $ 0.8 million and $ 1.4 million, respectively, and are included in prepaid expenses and other assets in the Company’s consolidated statements of assets and liabilities .

The Company believes it is more likely than not that the deferred tax assets will be realized in the future.

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The amount of deferred tax assets considered realizable is subject to adjustment in future periods if estimates of future taxable income change.

The Company recorded deferred tax assets related to temporary differences on the fair value adjustments of the unrealized losses of loans held in the TRS and CECL allowance on loans held in the TRS.

There were no valuation allowances for deferred tax assets during the three and nine months ended September 30, 2025 and 2024.

Loans Held for Investment

Alternative valuation methodologies may be used as appropriate, and can include a market analysis, income analysis, or recovery analysis.

In the yield analysis, the Company considers the current contractual interest rate, the maturity and other terms of the loan relative to risk of the company and the specific loan.

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

The following tables present fair value measurements of loans held at fair value as of September 30, 2025 and December 31, 2024:

Fair Value Measurement as of September 30, 2025

Total Level 1 Level 2 Level 3

Loans held at fair value $ 16,923,809 $ — $ — $ 16,923,809

Total $ 16,923,809 $ — $ — $ 16,923,809

Fair Value Measurement as of December 31, 2024

Total Level 1 Level 2 Level 3

Loans held at fair value $ 30,510,804 $ — $ — $ 30,510,804

Total $ 30,510,804 $ — $ — $ 30,510,804

The following table presents changes in loans that use Level 3 inputs as of and for the nine months ended September 30, 2025:

Nine months ended

September 30, 2025

Total loans using Level 3 inputs at December 31, 2024 $ 30,510,804

Change in unrealized (losses) gains on loans at fair value, net ( 11,453,875 )

Loan repayments ( 2,133,120 )

Total loans using Level 3 inputs at September 30, 2025 $ 16,923,809

The change in unrealized losses included in the unaudited interim consolidated statements of operations attributable to loans held at fair value, categorized as Level 3, held as of September 30, 2025 is $( 11,453,875 ).

The following tables summarize the significant unobservable inputs the Company used to value the loans categorized within Level 3 as of September 30, 2025 and December 31, 2024.

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, 2025

Unobservable Input

Fair Value Primary Valuation Techniques Input Estimated Range Weighted Average

Senior term loan $ 16,923,809 Recovery analysis Recovery rate 29.60 % - 36.80 %

Total investment $ 16,923,809

As of December 31, 2024

Unobservable Input

Fair Value Primary Valuation Techniques Input Estimated Range Weighted Average

Senior term loan $ 30,510,804 Recovery analysis Recovery rate 54.90 % - 60.00 %

Total investment $ 30,510,804

Changes in market yields, revenue multiples, and recovery rates may change 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.

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.

Fair Value of Financial Instruments

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

The following table details the carrying value and fair value of the Company’s financial instruments not recognized at fair value in the unaudited interim consolidated balance sheets as of September 30, 2025 :

As of September 30, 2025

Carrying Value Fair Value

Financial assets:

Cash and cash equivalents $ 45,120,389 $ 45,120,389

Loans held for investment at carrying value, net $ 274,725,669 $ 222,847,572

Financial liabilities:

Senior notes payable, net $ 89,057,895 $ 86,040,000

Cash and cash equivalents have a carrying value which approximates their fair value due to the short-term nature of these instruments.

The Company categorizes the fair value measurement of these assets as Level 1.

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

The fair value of the Company’s 2027 Senior Notes is estimated using observable inputs based on the last available bid price in the market at the end of the period, 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 receives 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 in the Management Agreement), 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.

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 pays 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, the net income (loss) for such period, computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) the Incentive Compensation, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income and (v) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between the Manager and the Company’s independent directors and approved by a majority of the independent directors.

There was no Incentive Compensation for the three and nine months ended September 30, 2025, respectively.

The Incentive Compensation for the three and nine months ended September 30, 2024 was approximately $ 0.3 million and $ 5.6 million, respectively.

The Company is required to pay all of its costs and expenses and 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.

With respect to certain office expenses incurred by the Manager on behalf of the Company and other funds managed by the Manager or its affiliates, such as rent, the Manager determines each fund’s pro rata portion of such expenses in an amount equal to the proportional amount of time employees of the Manager spent providing services to the Company, as reasonably stipulated by time sheets.

The following table summarizes the related party costs incurred by the Company for the three and nine months ended September 30, 2025 and 2024 :

Three months ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

Affiliate Costs

Management fees $ 950,808 $ 909,229 $ 2,836,678 $ 3,599,338

outside fees earned ( 235,670 ) ( 180,552 ) ( 624,992 ) ( 769,545 )

Base management fees 715,138 728,677 2,211,686 2,829,793

Incentive fees earned — 253,108 — 5,599,782

General and administrative expenses reimbursable to Manager 493,358 589,475 1,621,203 2,105,458

Professional fees reimbursable to Manager 21,853 13,451 39,985 29,731

Total $ 1,230,349 $ 1,584,711 $ 3,872,874 $ 10,564,764

Amounts payable to the Manager as of September 30, 2025 and December 31, 2024 were approximately $ 1.4 million and $ 3.1 million, respectively.

The Manager is a wholly-owned subsidiary of Castleground Holdings LLC (the “Parent Manager”).

The outstanding equity of the Parent Manager is beneficially owned by certain officers as of the date of this Quarterly Report on Form 10-Q:

72.4 % by Leonard Tannenbaum, Chairman of the Board, 9.7 % by Robyn Tannenbaum, President and Chief Investment Officer, 9.7 % by other Tannenbaum family members and trusts, 2.9 % by Bernard Berman, a member of the Company’s Investment Committee, 2.5 % by Daniel Neville, Chief Executive Officer, 1.5 % by Brandon Hetzel, Chief Financial Officer and Treasurer, and 1.0 % by Gabriel Katz, Chief Legal Officer and Secretary.

At the August Meeting, the Board unanimously approved a series of matters intended to facilitate the Conversion.

Among other things, the Board, including the Independent Directors, approved the Investment Advisory Agreement, subject to approval by the Company’s shareholders.

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 additional matters required to effect the Conversion.

Investments in Loans

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

Additionally, the Manager or its affiliates, including AFC Agent, may from time to time serve as administrative and collateral agent to the lenders under the Company’s loans.

As of September 30, 2025, there were two co-invested loans held by the Company and affiliates of the Company.

Unsecured Revolving Credit Facility with Affiliate

In December 2024, the Company entered the AFCF Credit Facility with AFC Finance LLC, an affiliate of the Company and Mr.

The AFCF Credit Facility was terminated in April 2025.

Refer to Note 8 for more information.

DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared during the nine months ended September 30, 2025 and 2024:

Declaration Date Record Date Payment

Date Per Common Share

Amount Total Distribution Amount

Regular cash dividend 3/4/2024 3/31/2024 4/15/2024 $ 0.48 $ 9,920,205

Regular cash dividend 6/13/2024 6/24/2024 7/15/2024 0.48 9,920,205

Special cash dividend 6/27/2024 7/8/2024 7/15/2024 0.15 3,100,064

Regular cash dividend 9/13/2024 9/30/2024 10/15/2024 0.33 7,221,076

2024 Period Subtotal

$ 1.44 $ 30,161,550

Regular cash dividend

3/11/2025 3/31/2025 4/15/2025 $ 0.23 $ 5,197,082

Regular cash dividend

6/13/2025 6/30/2025 7/15/2025 0.15 3,389,267

Regular cash dividend

9/15/2025 9/30/2025 10/15/2025 0.15 3,389,181

2025 Period Subtotal

$ 0.53 $ 11,975,530

DISCONTINUED OPERATIONS

On July 9, 2024, the Company announced the completion of the previously announced separation and Spin-Off of the Company’s CRE portfolio into an independent, publicly-traded REIT, SUNS.

The Spin-Off was effected by the distribution of all of the outstanding shares of SUNS common stock to the Company’s shareholders of record as of the close of business on July 8, 2024 (the “Record Date”).

The Company’s shareholders of record as of the Record Date received one share of SUNS common stock for every three shares of the Company’s common stock held as of the Record Date.

The Spin-Off was completed July 9, 2024 (the “Distribution Date”).

On the Distribution Date, SUNS became an independent, publicly-traded company, trading on the Nasdaq Capital Market under the symbol “SUNS”.

The Company retained no ownership interest in SUNS following the Spin-Off.

On the Distribution Date, the Company recognized a reduction to additional paid-in capital of approximately $ 114.8 million in connection with the Spin-Off related to the transfer of certain assets and liabilities associated with its CRE portfolio to SUNS.

In connection with the Spin-Off, the Company entered into several agreements with SUNS that govern the relationship between the Company and SUNS following the spin-off, including the Separation and Distribution Agreement and the Tax Matters Agreement.

These agreements provide for the allocation between the Company and SUNS of the assets, liabilities and obligations (including, among others, investments, property and tax-related assets and liabilities) of the Company and its subsidiaries attributable to periods prior to, at and after the Spin-Off.

The operating results of the SUNS business through the date of the Spin-Off are reported in net income from discontinued operations, net of tax in the consolidated statements of operations for all periods presented.

The related assets and liabilities are reported as assets and liabilities of discontinued operations on the consolidated balance sheets.

Cash flows from the Company’s discontinued operations are presented as such in the consolidated statements of cash flows for all periods presented.

The following table summarizes the financial statement lines included in net income from discontinued operations, net of tax for the three and nine months ended September 30, 2025 and 2024:

Three months ended

September 30, Nine months ended

September 30,

2025 2024 2025 2024

Interest income $ — $ 150,453 $ — $ 4,156,335

General and administrative expenses — ( 83 ) — ( 21,651 )

Professional fees — 15,574 — ( 1,140,762 )

(Provision for) reversal of current expected credit losses — — — ( 71,854 )

Net income from discontinued operations, net of tax $ — $ 165,944 $ — $ 2,922,068

During the three and nine months ended September 30, 2025 and 2024, Spin-Off costs incurred were zero and zero , respectively, and approximately $( 15.6 ) thousand and $ 1.1 million, respectively.

During the three months ended September 30, 2024, previous estimates for Spin-Off work performed were less than actuals, resulting in a credit to expense.

Prior to the completion of the Spin-Off in the third quarter of 2024, Spin-Off costs were historically presented within professional fees in the consolidated statements of operations and are now included in the measurement and presentation of discontinued operations for all periods presented.

There were no assets or liabilities classified as discontinued operations as of September 30, 2025 or December 31, 2024.

The Company recorded deferred tax assets related to temporary differences related to the change in unrealized appreciation and depreciation on investments held in TRS1.

There were no valuation allowances for deferred tax assets during the three months ended March 31, 2026 and 2025.

REPORTABLE SEGMENTS

ASC 280, Segment Reporting, establishes standards for reporting financial and descriptive information about an enterprise’s reportable segments.

The Company generates revenue from loans to state law compliant cannabis operators in the United States.

The Company generates revenue from loans to senior secured mortgage loans and other types of loans and debt securities to public and privately held lower-middle-market companies, including state law-compliant cannabis operators and ancillary cannabis companies.

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

These investments typically have maturities ranging from two to five years and may accrue interest at either fixed or floating rates.

The accounting policies of the institutional lending segment are the same as those described in the summary of significant accounting policies.

The accounting policies of the direct lending segment are the same as those described in the summary of significant accounting policies.

The presentation of financial results as one reportable segment is consistent with the way the Company operates its business and is consistent with the manner in which the Company’s Chief Operating Decision Maker (“CODM”), the Company’s Chief Executive Officer, evaluates performance and makes resource and operating decisions for the business.

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The Company’s portfolio exhibits similar economic characteristics, similar yields and is operated using consistent business strategies.

The Company operates as one operating segment and has one reportable operating segment for activities related to institutional lending.

The Company operates as one operating segment and has one reportable operating segment for activities related to direct lending.

The CODM assesses performance and evaluates the allocation of resources of the Company on a consolidated basis, based on the Company’s net income from continuing operations, which is reported on the Company’s consolidated statements of operations.

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Significant segment expenses are listed on the accompanying consolidated statements of operations.

The measure of segment assets is reported on the consolidated balance sheets as total assets.

The CODM uses net income to evaluate income generated from segment assets and in deciding the amount of dividends to be distributed, as well as using net income as a basis for evaluating lender terms for loans with state law compliant operators.

During the three and nine months ended September 30, 2025, interest income earned on the Company’s portfolio was concentrated with five and five borrowers, respectively, each comprising more than 10% of consolidated interest income for an aggregate amount of $ 6.1 million, or 75 %, and $ 17.8 million, or 72 %, of consolidated interest income, respectively.

During the three and nine months ended September 30, 2024, interest income earned on the Company’s portfolio was concentrated with six and three borrowers, respectively, each comprising more than 10% of consolidated interest income for an aggregate amount of $ 9.0 million, or 86 %, and $ 19.8 million, or 46 %, of consolidated interest income, respectively.

The measure of segment assets is reported on the consolidated statements of assets and liabilities as total assets.

The CODM uses net investment income to evaluate income generated from segment assets and in deciding the amount of distributions, as well as using net investment income as a basis for evaluating lender terms for loans with public and privately held lower-middle-market companies, including state law-compliant cannabis operators and ancillary cannabis companies.

During the three months ended March 31, 2026 and 2025, interest income earned on the Company’s portfolio was concentrated with five and five borrowers, respectively, each comprising more than 10% of consolidated interest income for an aggregate amount of $ 6.7 million, or 68 %, and $ 5.9 million, or 70 %, of consolidated interest income, respectively.

FINANCIAL HIGHLIGHTS

The following is a schedule of financial highlights for the three months ended March 31, 2026 (1) :

Three months ended

March 31, 2026

Per Share Data (2) :

Net asset value at beginning of period $ 7.46

Net investment income 0.21

Net unrealized gain on investments 0.28

Net increase in net assets resulting from operations 0.49

Distributions declared ( 0.05 )

Total increase in net assets 0.44

Net asset value at end of period $ 7.90

Per share market price, beginning of period $ 2.85

Per share market price, end of period $ 2.82

Total return based on market value (3)

Total return based on net asset value (4)

Shares outstanding at end of period 23,528,844

Ratios/Supplemental Data:

Ratio of operating expenses to average net assets (5)

Ratio of net operating expenses to average net assets (5)

Ratio of debt related expenses to average net assets (5)

Ratio of net investment income to average net assets (5)

Portfolio turnover rate (6)

(1) Prior period financial highlights have not been presented as the Company was not regulated as a BDC under the 1940 Act prior to January 1, 2026.

(2) Per share data amount is based on the basic weighted average number of common shares outstanding for the year/period presented (except for distributions to shareholders which is based on actual rate per share).

(3) Total return equals the increase or decrease of ending market value over beginning market value, plus declared dividends per share assuming reinvestment of dividends, divided by the beginning market value.

Total return does not include sales load.

(4) Total return based on net asset value is calculated as the change in net asset value per share during the period, plus declared and payable distributions per share for the period, divided by beginning net asset value per share.

(5) Amounts are annualized except for non-recurring income and expenses (other income).

(6) The portfolio turnover rate is calculated based on the lesser of purchases or sales of investments year to date divided by the average fair value of the portfolio.

CURRENT EXPECTED CREDIT LOSSES

As of March 31, 2026, the Company did not have a CECL Reserve, as all investments are held at fair value.

As of December 31, 2025, the Company’s CECL Reserve for its loans held at carrying value was approximately $ 46.1 million, or 18.19 % of the Company’s total loans held at carrying value of approximately $ 253.6 million, and is bifurcated between 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 $ 46.1 million and a liability for unfunded commitments of approximately $ 0.1 million, respectively.

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

Management considered the likelihood that funding will occur and, if funded, the expected credit loss on the funded portion when determining the amount to allocate to its CECL Reserve.

LOANS HELD FOR INVESTMENT AT CARRYING VALUE

As of March 31, 2026, the Company did not hold any loans at carrying value.

As of December 31, 2025, t he Company’s portfolio included 12 loans held at carrying value.

A s of December 31, 2025, t he aggregate commitment under these loans was $ 283.5 million and outstanding principal was $ 259.6 million.

As of December 31, 2025, approximately 46 % of the Company’s loans held at carrying value had floating interest rates.

The following tables summarize the Company’s loans held at carrying value as of December 31, 2025:

As of December 31, 2025

Principal (1)

Discount Carrying

Remaining Life

Senior term loans $ 259,626,556 $ ( 6,001,437 ) $ 253,625,119 1.4

Total loans held at carrying value $ 259,626,556 $ ( 6,001,437 ) $ 253,625,119 1.4

(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 December 31, 2025.

SUBSEQUENT EVENTS

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

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 the Company relating to the Company’s 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, the Company’s 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 the settlement and release, the Company 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 .

In February 2026, the Company delivered a notice of default and reservation of rights to High End Holdings LLC under the credit facilities governing the real estate and non-real estate loans, following the breach of certain financial covenants.

Subsequently, in April 2026, the Company entered into a forbearance agreement with High End Holdings LLC, under which the Company agreed to forbear from exercising its rights and remedies with respect to the specified defaults for a defined forbearance period, subject to High End Holdings LLC’s compliance with certain payment and other obligations.

In May 2026, after failing to meet certain milestones under the forbearance agreement, the Company entered into a forbearance and modification agreement, which extended the forbearance period through June 8, 2026, subject to High End Holdings LLC’s compliance with certain payment, capital raise, and other obligations, and amended certain provisions of the credit facilities, including, but not limited to, adjusted monthly amortization payments and amended maturity date to December 15, 2027.

High End Holdings LLC is current on all interest and amortization obligations under the credit facilities.

In April 2026, the Company funded the remaining unfunded commitment on our investment with BCIS AH Borrower LLC.

The Company funded approximately $ 9.7 million of additional principal.

In April 2026, the Company committed $ 2.5 million to each of the notes with Kristoff Buyer, LLC and Kristoff Parent, LLC, respectively.

The Company committed $ 2.5 million to a $ 50.0 million term loan as part of a $ 80.0 million senior secured credit facility with Kristoff Buyer, LLC, with the commitment fully funded at closing.

The loan was originated at a discount of 2.0 % and matures April 2031.

The loan bears cash interest at a rate of SOFR plus 5.75 %, with a rate index floor of 2.50 %.

Concurrently, the Company committed $ 2.5 million of a $ 25.0 million senior secured credit facility with Kristoff Parent, LLC, which was fully funded at closing.

The loan was originated at a discount of 2.25 % and matures October 2031.

The loan bears cash interest at a rate of 10.0 % and 3.0 % interest paid-in kind, with the option for the borrower to elect to pay interest at a rate of 15.0 % paid-in kind.

In May 2026, the Company’s credit facility to Justice Cannabis Company matured without repayment.

The Company is pursuing all rights and remedies against the borrowers under the credit facility.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”), filed by Advanced Flower Capital Inc.

(the “Company,” “we,” “us,” and “our”), and the information incorporated by reference in it, or made in other reports, filings with the SEC, press releases contain “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.

Some of the statements contained in this Quarterly Report, other than statements of current or historical facts, are forward-looking statements and are based on our current intent, belief, expectations and views of future events.

(the “Company,” “AFC”, “we,” “us,” and “our”), and the information incorporated by reference herein, or made in other reports, filings with the SEC, and press releases contain “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.

The forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results or performance, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “project,” “could,” “would,” “will,” “can,” “continuing,” “may,” “aim,” “intend,” “ongoing,” “plan,” “predict,” “potential,” “should,” “seeks,” “likely to” or words or phrases of similar meaning.

Specifically, this Quarterly Report includes forward-looking statements regarding (i) the conditions in the adult-use and medicinal cannabis markets and their impact on our business;

(ii) our portfolio and strategies for the growth thereof;

Specifically, this Quarterly Report includes forward-looking statements regarding (i) the conversion to a business development company (“BDC”) (the “Conversion”) and the other related transactions, as well as the future financial and operating results, plans, objectives, expectations and intentions of the Company, (ii) our portfolio and strategies for the growth of our lending business;

(iii) our working capital, liquidity and capital requirements;

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(v) our expectations and estimates regarding certain tax, legal and accounting matters, including the impact on our financial statements and/or those of our borrowers;

(vi) our expectations regarding our portfolio companies and their businesses, including demand, sales volume, profitability, and future growth;

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

(viii) our expected ranges of originations and repayments;

and (ix) estim ates relating to our ability to make distributions to our shareholders in the f uture.

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

(vii) our expected ranges of originations and repayments;

(viii) estimates relating to our ability to make distributions to our shareholders in the future;

and (ix) our investment strategy.

These forward-looking statements reflect management’s current views about future events, and are subject to risks, uncertainties and assumptions.

Our actual results may differ materially from the future results and events expressed or implied by the forward-looking statements.

The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:

• our business and investment strategy;

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

Key factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, the following:

• our expanded business and investment strategy;

• our ability to maintain our status as a BDC;

• our ability to maintain our status under Subchapter M of the Code of 1986, as amended (the “Code”) as a regulated investment company (“RIC”) and our qualification for tax treatment as a RIC;

• the ability of our Adviser (as defined below) to locate suitable loan opportunities for us and to monitor and actively manage our portfolio and implement our expanded investment strategy;

• our expectations for origination targets and repayments;

• our ability to obtain our target mix of loan and collateral types with our expected ranges of yields;

• the allocation of loan opportunities to us by our Manager;

• the allocation of loan opportunities to us by our Adviser;

• actual and potential conflicts of interest with our Adviser and its affiliates;

• 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;

• changes in general economic conditions, in our industry and in the commercial finance and real estate markets;

• the demand for cannabis cultivation and processing facilities;

• shifts in public opinion and state regulation regarding cannabis;

• the state of the U.S.

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• changes in the value of our loans;

• our being subject to regulations and SEC oversight as a BDC, including limits on affiliated transactions, co-investments, asset diversification requirements, and limits on issuance of debt.

If we fail to comply with applicable requirements, it may adversely impact our results relative to companies that are not subject to such regulations;

• losses that may arise due to the concentration of our portfolio in a limited number of loans and borrowers;

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• the rates of default or recovery rates on our loans;

• the estimated growth in and evolving market dynamics of private credit, including in the cannabis market;

• changes in general economic conditions, in our industry and in the commercial finance and real estate markets;

• the demand for cannabis cultivation and processing facilities;

• shifts in public opinion and state regulation regarding cannabis;

• actions and initiatives of the U.S.

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

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• 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;

• the departure of any of the executive officers or key personnel supporting and assisting us from our Adviser, Administrator (as defined below) and/or their affiliates;

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

• our ability to maintain our exemption from registration under the Investment Company Act of 1940 (the “1940 Act”);

• our ability to qualify and maintain our qualification as a real estate investment trust (a “REIT”) for U.S.

federal income tax purposes;

• estimates relating to our ability to make distributions to our shareholders in the future;

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

• uncertainties as to the impact of the Spin-Off on our business.

The above list of factors is not exhaustive or necessarily in order of importance.

Please see the section entitled “ Risk Factors ” located in our Annual Report on Form 10-K, filed with the SEC on March 13, 2025 and in our subsequently filed Quarterly Reports on Form 10-Q, for a further discussion of these and other risks and uncertainties which could affect our future results.

The above list of factors is not exhaustive or necessarily in order of importance.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions may be based on the work of third parties and any of those assumptions could prove to be inaccurate;

as a result, forward-looking statements based on those assumptions also could prove to be inaccurate.

In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved.

You should not place undue reliance on these forward-looking statements.

Please see the section entitled “ Risk Factors ” located in our Annual Report on Form 10-K, filed with the SEC on March 4, 2026, for further discussion of these and other risks and uncertainties which could affect our future results.

These forward-looking statements apply only as of the date of this report and we undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except to the extent we are legally required to disclose certain matters in SEC filings or otherwise.

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