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Item 2. Management’s Discussion and Analysis

2026-05-07 compared with 2025-11-12 · 257 added, 416 removed, 79 unchanged (89% of the section changed)

1 unchanged sentence

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes and other information included in this Quarterly Report on Form 10-Q (the “Form 10-Q”).

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

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

This discussion and analysis contains forward-looking statements that involve risks and uncertainties which could cause our actual results to differ materially from those anticipated in these forward-looking statements, including, but not limited to, risks and uncertainties discussed under the heading “Cautionary Note Regarding Forward-Looking Statements,” in this Form 10-Q, and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025.

Unless the context otherwise requires, the terms “AFC,” “we,” “us” or “our” refers to Advanced Flower Capital Inc.

Effective January 1, 2026, we are an externally managed, non-diversified management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as

amended (the “1940 Act”).

Advanced Flower Capital Inc.

is an institutional lender that was founded in July 2020 by a veteran team of investment professionals.

We primarily originate, structure, underwrite, invest in and manage senior secured loans and other types of mortgage loans and debt securities, with a specialization in loans to cannabis industry operators in states that have legalized medical and/or adult-use cannabis.

Our investment guidelines primarily relate to deploying capital in attractive lending opportunities, typically secured by real estate, equipment, cash flows and license value, to (i) state law-compliant cannabis operators and ancillary cannabis companies and (ii) other public and privately held middle-market companies.

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

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

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

As states continue to legalize cannabis for medical and adult-use, an increasing number of companies operating in the cannabis industry need financing.

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

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

We are a Maryland corporation and externally managed by AFC Management, LLC (in its capacity as investment adviser, the “Adviser”) pursuant to an investment advisory agreement (the “Advisory Agreement”), and we entered into an administration agreement (the “Administration Agreement”) with AFC Management, LLC (in its capacity as administrator, the “Administrator”).

We commenced operations on July 31, 2020 and completed our initial public offering (“IPO”) in March 2021.

We have elected to be taxed as a REIT under Section 856 of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with our taxable year ended December 31, 2020.

We believe that we have qualified as a REIT and that our current and proposed method of operation will enable us to continue to qualify as a REIT.

However, no assurances can be given that our beliefs or expectations will be fulfilled, since qualification as a REIT depends on us continuing to satisfy numerous asset, income and distribution tests, which in turn depends, in part, on our operating results and ability to obtain financing.

We also intend to operate our business in a manner that will permit us to maintain our exemption from registration under the 1940 Act.

Our wholly-owned subsidiary, AFCG TRS1, LLC (“TRS1”), operates as a taxable REIT subsidiary (a “TRS”).

TRS1 began operating in July 2021.

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

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

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

The Advisory Agreement reflects an expanded investment mandate approved by our Board, including the ability to invest in a broader range of debt and other investments than was permitted under our prior REIT structure.

While we continue to pursue lending opportunities within the cannabis industry, such investments are no longer our primary focus and are evaluated alongside opportunities in other industries, including private publicly held middle-market companies and businesses ancillary to the cannabis industry, subject to the requirements of the 1940 Act as applicable to BDCs.

We primarily originate, structure, underwrite, invest in and manage senior secured mortgage loans and other types of loans and debt securities to companies ancillary to the cannabis industry as well as companies outside of the cannabis industry.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Prior to the Spin-Off, Sunrise Realty Trust, Inc.

(“SUNS”) held our commercial real estate (“CRE”) portfolio as our wholly-owned subsidiary.

On July 9, 2024, we completed the separation of our CRE portfolio through the spin-off of SUNS into an independent, publicly traded REIT (the “Spin-Off”) through a pro-rata distribution of all of the outstanding shares of SUNS common stock to our shareholders of record as of the close of business on July 8, 2024 (the “Record Date”).

Our shareholders of record as of the Record Date received one share of SUNS common stock for every three shares of our common stock held as of the Record Date.

We retained no ownership interest in SUNS following the Spin-Off.

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, percentages and discussion below reflect only the results of operations and financial condition from our continuing operations.

Developments During the Third Quarter Ended September 30, 2025:

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

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

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

See further discussion in “ Recent Developments ”.

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

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

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

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

Our 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.

AFCG TRS1, LLC (“TRS1”), a wholly-owned subsidiary, began operating in July 2021 and was formerly treated as a taxable REIT subsidiary (a “TRS”) prior to the Conversion.

TCGDL LLC (“TCGDL”), a wholly-owned subsidiary, began operating in January 2026.

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

In January 2026, the Company completed a strategic transition from operating as a REIT to operating as a BDC.

As a result of this election, the Company is now subject to the regulatory framework applicable to BDCs, including requirements relating to portfolio composition, asset coverage, affiliate transactions, governance, and compliance.

The Company was not regulated as a BDC during the year ended December 31, 2025.

Beginning with its taxable year ending December 31, 2026, we intend to elect to be treated as a regulated investment company (“RIC”) for U.S.

federal income tax purposes.

Prior to the Conversion, w e elected to be taxed as a REIT under Section 856 of the Code, commencing with our taxable year ended December 31, 2020 and ending with our taxable year ended December 31, 2025.

During that period, we also operated our business in a manner that permitted us to rely on an exemption from registration under the 1940 Act.

Key Components of Results of Operations

Our primary investment focus is senior secured lending to lower middle market companies across industries.

Our level of investment activity (both the number of investments and the size of each investment) can and will vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to lower middle market companies, the level of merger and acquisition activity for such companies, the general economic environment, trading prices of loans and other securities and the competitive environment for the types of investments we make.

As a BDC, we may not invest in any assets other than "qualifying assets" specified in the 1940 Act, unless, at the time the investments are made, at least 70% of our total assets are qualifying assets (with certain limited exceptions).

Qualifying assets include investments in "eligible portfolio companies." Pursuant to rules adopted by the SEC, "eligible portfolio companies" include certain companies that do not have any securities listed on a national securities exchange and public companies whose securities are listed on a national securities exchange but whose market capitalization is less than $250 million.

We expect to generate revenues in the form of interest income from the debt securities we hold and dividends.

We expect to receive payments on our debt investments based on scheduled amortization of the outstanding balances.

In addition, we may receive repayments of some of our debt investments prior to their scheduled maturity date.

The frequency or volume of these repayments fluctuates significantly from period to period.

Our portfolio activity also reflects the proceeds of sales of securities.

In some cases, our investments may provide for deferred interest payments or PIK interest.

The principal amount of loans and any accrued but unpaid interest generally become due at the maturity date.

In addition, we expect to generate revenue from various fees in the ordinary course of business such as in the form of commitment, loan origination, structuring, consent, waiver, amendment, syndication and other miscellaneous fees as well as fees for providing managerial assistance to our portfolio companies.

Except as provided for in the Advisory Agreement, investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory services to us, and the base compensation, bonus and benefits, and the routine overhead expenses, of such personnel allocable to such services, will be provided and paid for by the Adviser.

We bear all other costs and expenses of our operations, administration and transactions, including, but not limited to investment advisory fees to the Adviser pursuant to the Advisory Agreement, consisting of (i) a management fee and (ii) an incentive fee comprised of (A) an income-based incentive fee and (B) a capital gains incentive fee, and our allocable portion of compensation, overhead (including rent, office equipment and utilities) and other expenses incurred by the Administrator in performing its administrative obligations under the Administration Agreement.

From time to time, the Adviser, the Administrator or their affiliates may pay third-party providers of goods or services on our behalf.

We will reimburse the Adviser, the Administrator or such affiliates thereof for any such amounts.

From time to time, the Adviser or the Administrator may defer or waive fees and/or rights to be reimbursed.

Costs and expenses of the Administrator and the Adviser that are eligible for reimbursement by us will be reasonably allocated on the basis of time spent, assets under management, usage rates, proportionate holdings, a combination thereof or other reasonable methods determined by the Administrator.

Updates to Our Loan Portfolio During the Three Months Ended March 31, 2026

In January 2026, we were fully repaid on our loan with Bloom Hold Co.

at par plus accrued interest.

The outstanding principal balance of the senior secured term loan on the date of repayment was approximately $25.1 million.

We received exit fees of approximately $1.5 million upon repayment of the loan.

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

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

At-the-Market Offering Program

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

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

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

333-286604) (the “Shelf Registration Statement”) to replace the Prior Shelf Registration Statement, which was declared effective on April 25, 2025.

The Prior Shelf Registration Statement also included a prospectus for the ATM Program to sell up to an aggregate of $75.0 million of shares of our common stock that may be issued and sold from time to time under the Sales Agreement, dated April 5, 2022 (the “Sales Agreement”), with Jefferies LLC and Citizens JMP Securities LLC, as Sales Agents.

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

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

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

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

Dividends Declared Per Share

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

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

March 11, 2025 March 31, 2025 April 15, 2025 $ 0.23 $ 5,197,082

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

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

2025 Period Subtotal

$ 0.53 $ 11,975,530

Recent Developments

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

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

In January 2026, we were fully repaid on our loan with Gron Holdings, Inc.

at par plus accrued interest.

The outstanding principal balance of the senior secured term loan on the date of repayment was approximately $5.4 million.

We received a prepayment premium of approximately $0.2 million upon repayment of the loan.

In January 2026, we entered into a $60.0 million senior secured credit facility with STAT Buyer, LLC which was fully funded at closing.

The loan was originated at a discount of 2.0% and matures February 1, 2031.

The loan bears interest at rate of SOFR plus 8.5%, with a rate index floor of 2.75%.

In February 2026, we committed $29.7 million of a $60.0 million senior secured credit facility with BCIS AH Borrower LLC, of which $20.1 million was funded at closing.

The loan was originated at a discount of 2.5% and matures February 1, 2030.

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.

In March 2026, we received approximately $6.2 million in total loan payments from Devi Holdings Inc.’s receipt of certain tax credits, which was applied as a reduction to the amortized cost of the loan with Devi Holdings Inc.

As of March 31, 2026, our outstanding principal balance under the Devi Holdings Inc.

Credit Facility was approximately $40.6 million.

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

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

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

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

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

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

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

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

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

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

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

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

Key Financial Measures and Indicators

As a commercial real estate finance company, we believe the key financial measures and indicators for our business are Distributable Earnings, book value per share and dividends declared per share.

Book Value Per Share

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

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

Non-GAAP Metrics

Distributable Earnings

In addition to using certain financial metrics prepared in accordance with GAAP to evaluate our performance, we also use Distributable Earnings to evaluate our performance excluding the effects of certain transactions and GAAP adjustments we believe are not necessarily indicative of our current loan activity and operations.

Distributable Earnings is a measure that is not prepared in accordance with GAAP.

We use these non-GAAP financial measures both to explain our results to shareholders and the investment community and in the internal evaluation and management of our businesses.

Our management believes that these non-GAAP financial measures and the information they provide are useful to investors since these measures permit investors and shareholders to assess the overall performance of our business using the same tools that our management uses to evaluate our past performance and prospects for future performance.

The determination of Distributable Earnings is substantially similar to the determination of Core Earnings under our Management Agreement, provided that Core Earnings is a component of the calculation of any Incentive Compensation earned under the Management Agreement for the applicable time period, and thus Core Earnings is calculated without giving effect to Incentive Compensation expense, while the calculation of Distributable Earnings accounts for any Incentive Compensation earned for such time period.

We define Distributable Earnings as, for a specified period, the net income (loss) computed in accordance with GAAP, excluding (i) stock-based compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss);

provided that Distributable Earnings does not exclude, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash, (iv) provision for (reversal of) current expected credit losses, (v) TRS (income) loss, net of any dividends received from TRS and (vi) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between our Manager and our independent directors and after approval by a majority of such independent directors.

We believe providing Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to shareholders in assessing the overall performance of our business.

As a REIT, we are required to distribute at least 90% of our annual REIT taxable income, subject to certain adjustments, and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of such taxable income.

Given these requirements and our belief that dividends are generally one of the principal reasons that shareholders invest in our common stock, we generally intend to attempt to pay dividends to our shareholders in an amount at least equal to such REIT taxable income, if and to the extent authorized by our Board.

Distributable Earnings is one of many factors considered by our Board in authorizing dividends and, while not a direct measure of net taxable income, over time, the measure can be considered a useful indicator of our dividends.

Distributable Earnings is a non-GAAP financial measure and should not be considered as a substitute for GAAP net income.

We caution readers that our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our reported Distributable Earnings may not be comparable to similar measures presented by other REITs.

The following table provides a reconciliation of GAAP net income (loss) to distributable earnings:

Portfolio and Investment Activity

Our investment activity is presented below (information presented herein is at amortized cost unless otherwise indicated):

Three months ended

September 30, Nine months ended

September 30,

Total investments, beginning of period $ 307,369,372 $ 345,399,030

New investments purchased, net of discount 78,866,344 15,472,181

Proceeds from principal repayments and sales of investments (41,751,649) (6,474,523)

Net accretion of discount on investments 1,107,387 873,806

PIK interest 327,524 118,869

Total investments, end of period $ 345,918,978 $ 345,918,978 $ 355,389,363

The following table presents certain selected information regarding our investment portfolio as of March 31, 2026:

March 31, 2026

Number of portfolio companies 15

Weighted average yield on debt and income producing investments, at amortized cost (1)

Weighted average yield on debt and income producing investments, at fair value (1)

Percentage of debt investments bearing a floating rate, at fair value 47.1 %

Percentage of debt investments bearing a fixed rate, at fair value 52.9 %

Percentage of debt investments on nonaccrual, at amortized cost (2)

(1) Yield excludes investments on nonaccrual status.

Computed as (a) the annual stated interest rate or yield earned plus the net annual amortization of original issue discount and market discount or premium earned on the relevant accruing investments, divided by (b) the total accruing investments at amortized cost or at fair value, as applicable.

Actual yields earned over the life of each investment could differ materially from the yields presented above.

(2) As a percentage of total amortized cost of investments.

Investments on nonaccrual represented 23.5% of total fair value of investments as of March 31, 2026.

Our investments consisted of the following:

As of March 31, 2026

Amortized cost (1)

Fair Value (2)

% of Total Investments at Fair Value

First lien senior term loans $ 345,918,978 $ 279,237,624 100.0 %

Total investments $ 345,918,978 $ 279,237,624 100.0 %

(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.

Portfolio Asset Quality

As part of the monitoring process, our Adviser, in its capacity as “valuation designee” under, and in accordance with, Rule 2a-5 under the 1940 Act, also employs an investment rating system to categorize our investments.

In addition to various risk management and monitoring tools, our Audit and Committee grades the credit risk of all investments on a scale of 1 to 5 no less frequently than quarterly.

This system is intended primarily to reflect the underlying risk of a portfolio investment relative to our initial cost basis in respect of such portfolio investment (e.g., at the time of origination or acquisition), although it may also take into account under certain circumstances the performance of the portfolio company’s business, the collateral coverage of the investment and other relevant factors.

The grading system for our investments is as follows:

Investment Grade Definition

1 Very Low Risk — The portfolio investment exceeds performance metrics included in original underwriting expectations.

2 Low Risk — The portfolio investment is performing consistent with expectations.

Trends and risk factors are neutral to favorable.

3 Medium Risk — The portfolio investment is performing as expected at the time of underwriting, but requires closer monitoring due to industry or borrower trends and risk factors.

4 High Risk/ Potential for Loss — The portfolio investment is operating below our underwriting expectations and requires closer monitoring.

Trends and risk factors are negative.

Returns on our investment may soon be impaired, absent material improvement.

Risk of recovery of interest exists.

5 Impaired/ Loss Likely — The portfolio investment is underperforming with expected loss of interest, and full recovery of principal is uncertain.

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

The following table shows the composition of our debt portfolio on the 1 to 5 rating scale as of March 31, 2026:

As of March 31, 2026

Fair Value % of Portfolio Number of Companies

2 78,116,990 28.0 % 2

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

Adjustments to net income (loss):

Stock-based compensation expense 487,436 218,643 1,525,687 1,131,208

Depreciation and amortization — — — —

Unrealized losses (gains) or other non-cash items 9,712,427 4,621,702 11,453,875 9,655,396

Provision for (reversal of) current expected credit losses (1)(2)

3 135,363,347 48.5 % 10

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

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

Distributable earnings $ 3,539,800 $ 7,246,005 $ 11,468,034 $ 28,632,701

Basic weighted average shares of common stock outstanding 22,114,761 20,684,149 22,109,088 20,493,375

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

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

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

Factors Impacting our Operating Results

The results of our operations are affected by a number of factors and primarily depend on, among other things, the level of our net interest margin, the market value of our assets and the supply of, and demand for, commercial real estate debt and other financial assets in the marketplace.

Our net interest margin, which includes the accretion and amortization of OID, is recognized based on the contractual rate and the outstanding principal balance of the loans we originate.

Interest rates will vary according to the type of loan, conditions in the financial markets, creditworthiness of our borrowers, competition and other factors, some of which cannot be predicted with any certainty.

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

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

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

Three months ended

September 30, Nine months ended

September 30,

5 65,757,287 23.5 % 3

Total $ 279,237,624 100.0 % 15

As of March 31, 2026, the weighted average grade of the investments in our portfolio at fair value was 3.2.

As of March 31, 2026, we had three loans on nonaccrual status, and nonaccrual investments as a percentage of total debt investments at cost and fair value were 36.6% and 23.5%, respectively.

Results of Operations f or the three months ended March 31, 2026 and 2025

Due to the prospective application of a change in accounting as required under ASC 946-10-25-3, we have determined that the presentation of our 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 we did not apply ASC 946.

The following table summarizes our consolidated results of operations for the three months ended March 31, 2026:

Three Months Ended

March 31, 2026

Total investment income $ 9,813,218

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

The following table summarizes our consolidated results of operations for the three months ended March 31, 2025:

Three Months Ended

March 31, 2025

Interest income $ 8,458,248

1 unchanged sentence

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 (loss) from continuing operations .

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

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

Net increase (decrease) in net assets resulting from operations can vary from period to period due to various factors, including, but not limited to, including acquisitions, the level of new investment commitments, expenses, the recognition of realized gains and losses and changes in unrealized appreciation and depreciation on the investment portfolio.

Investment income

Three months ended

Interest income $ 7,670,790 $ 8,278,488

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

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

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

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

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

Payment-in-kind interest income 332,640 119,900

Other income 1,809,788 59,860

Total investment income $ 9,813,218 $ 8,458,248

Investment income.

Investment income increased approximately $1.4 million, or 16%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

Interest income decreased $(0.6) million period

over period primarily due to lower interest income of $(0.7) million on our loan with Justice Cannabis Company, which was on nonaccrual status in the current and prior period.

While accruing debt investments outstanding principal balance increased approximately $4.0 million, comparing March 31, 2026 to March 31, 2025, the weighted average yield decreased approximately (0.1)% for the same period, based on outstanding principal, excluding loans on nonaccrual, due to a decline in benchmark interest rates.

This is offset by an increase in other income of $1.7 million, driven by fees recognized associated with the loan exits of Bloom Hold Co.

and Gron Holdings, Inc.

Three months ended

Interest expense $ 1,726,540 $ 1,815,271

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

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

Management and incentive fees, net.

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

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

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

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

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

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

Management fee 973,235 944,770

Incentive fee 1,023,725 —

General and administrative expenses 860,496 734,957

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

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

Stock-based compensation — 553,749

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

Director fees 63,800 68,471

Professional fees 463,911 303,465

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

BDC conversion expenses .

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

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

No such costs were incurred in the prior year.

Realized (losses) gains.

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

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

Unrealized (losses) gains.

Investments in loans held at fair value are recorded on the trade date at cost, which reflects the amount of principal funded net of any original issue discounts.

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

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

Total expenses 5,111,707 4,420,683

Management fee rebate (233,988) (128,580)

Net expenses $ 4,877,719 $ 4,292,103

Interest expense.

Interest expense decreased approximately $(0.1) million, or (4.9)%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, driven by $(0.2) million lower interest incurred on the 2027 Senior Notes due to a weighted average decrease in the 2027 Senior Notes principal outstanding of $(13.0) million relating to the repurchase of $13.0 million of our 2027 Senior Notes in the prior year.

This is partially offset by an increase in the duration borrowings were outstanding on our Revolving Credit Facility, resulting in additional interest expense of $0.1 million.

Average borrowings on the Revolving Credit Facility increased $13.0 million period over period, offset by a lower weighted average interest rate on borrowings of (0.75)% due to a lower benchmark rate.

Management fees.

Management fees increased approximately $28.5 thousand, or 3.0%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

Following the Conversion, the compensation arrangement under the Advisory Agreement took effect as of January 1, 2026.

Under the Advisory Agreement, management fees are calculated based on the average value of our gross assets at the end of the two most recently completed calendar quarters, excluding cash, versus prior to the Conversion, the management fee was calculated off the Company’s Equity (as defined in the Management Agreement).

Incentive fee on net investment income.

Following the Conversion, the income-based incentive fee under the Advisory Agreement took effect as of January 1, 2026.

Incentive fees increased approximately $1.0 million, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

There was no incentive fee incurred during the three months ended March 31, 2025.

General and administrative expenses.

General and administrative expenses increased $0.1 million, or 17.1%, for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

Stock-based compensation .

Stock-based compensation decreased $(0.6) million, or (100.0)%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

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.

Following the Conversion, there was no stock-based compensation activity.

Professional fees .

Professional fees increased approximately $0.2 million, or 52.9%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, respectively.

Income tax (benefit) expense .

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

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

Provision for Current Expected Credit Losses

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

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

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

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

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

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

The liability is based on the unfunded portion of loan commitments over the full contractual period over which we are 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.

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

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

Loan Portfolio

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

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

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

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

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

Loan Names Original Funding Date (1)

Loan Maturity AFC Loan, net of Syndication % of Total AFC Principal Balance as of 9/30/2025 Cash Interest Rate PIK Fixed/

Floating Amortization During Term YTM

5/8/2020 5/8/2024 $ 42,309,775 12.3% $ 50,975,329 13.0% 2.5% Fixed No —%

Sub of Private Co.

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

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

L 4/20/2022 5/1/2026 32,757,254 9.5% 29,575,644 13.0% N/A Floating Yes 19%

7/31/2023 7/31/2026 30,000,000 8.7% 25,099,497 9.0% N/A Fixed Yes 18%

N - Real Estate 3/22/2024 4/1/2028 19,327,505 5.6% 19,327,505 12.5% N/A Floating Yes 16%

N - Non-Real Estate 3/22/2024 4/1/2028 17,200,000 5.0% 17,200,000 12.5% N/A Floating Yes 16%

O 5/20/2024 6/1/2028 10,500,000 3.0% 5,358,890 13.5% N/A Floating Yes 19%

6/18/2024 7/1/2027 15,126,433 4.4% 15,609,914 13.0% N/A Fixed Yes —%

Q 8/16/2024 9/1/2028 11,000,000 3.2% 6,449,453 13.8% N/A Floating Yes 18%

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

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

Sub of Private Co.

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

of Public Co.

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

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

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

(2) YTM excludes loans on nonaccrual status.

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

OID is recognized as a discount to the funded loan principal and is accreted to income over the term of the loan.

Loans originated before July 31, 2020 were acquired by us, net of unaccreted OID, which we accrete to income over the remaining term of the loan.

In some cases, additional OID is recognized from additional purchase discounts attributed to the fair value of equity positions that were separated from the loans prior to our acquisition of such loans.

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

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

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

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

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

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

Actual results could differ from those estimates and assumptions.

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

In October 2023, 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, Private Company A was placed on nonaccrual status.

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 either from operations or from sale of collateral assets on a monthly basis.

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

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

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

(7) The interest and PIK subtotal rates are weighted average rates.

Loans Held for Investment at Fair Value

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

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

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

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

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

As of September 30, 2025

Fair Value (1)

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

Fair Value (1)

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 to our consolidated financial statements titled “Fair Value” .

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

(3) As of 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

Loans Held for Investment at Carrying Value

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

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

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

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

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

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

As of September 30, 2025

Principal (1)

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)

PIK interest 418,023 — 418,023

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

Loan Receivable Held at Carrying Value

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

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

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

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

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

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

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

Principal Original Issue

Discount Carrying

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

Loan repayments (118,392) — (118,392)

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

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

Collateral Overview

Our loans are typically secured by various types of assets of our borrowers, including real property and certain personal property, such as cash flows and the value associated with licenses (where applicable), equipment, and other assets to the extent permitted by applicable laws and the regulations governing our borrowers.

With respect to our loans to cannabis operators, we do not have liens on cannabis inventory and are generally restricted from taking ownership of state licenses by current statutory prohibitions and exchange listing standards.

The documents governing our loans also include a variety of provisions intended to provide remedies against the value associated with licenses.

For example, some loan documents require a grant of a security interest in all property of the entities holding licenses to the extent not prohibited by applicable law or regulations (or requiring regulatory approval), equity pledges of entities holding licenses, receivership remedies and/or other remedies to secure the value associated with the borrowers’ licenses.

Upon default of a loan, we may seek to sell the loan to a third party or have an affiliate or a third party work with the borrower to have the borrower sell collateral securing the loan to a third party or institute a foreclosure proceeding to have such collateral sold, in each case, to generate funds towards the payoff of the loan.

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

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

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

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

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

We may pursue a sale of a defaulted loan if we believe that a sale would yield higher proceeds or that a sale could be accomplished more quickly than a foreclosure proceeding while yielding proceeds comparable to what would be expected from a foreclosure sale.

To the extent that we determine that the proceeds are more likely to be maximized through instituting a foreclosure sale or through taking title to the underlying collateral, we will be subject to the rules and regulations under state law that govern foreclosure sales and Nasdaq listing standards that do not permit us to take title to real estate while it is involved in commercial sales of cannabis.

In addition, the sale of the collateral securing our loans may be difficult and even for loans to cannabis operators, the collateral securing our loans may be sold to a party outside of the cannabis industry.

Therefore, any appraisal-based value of our real estate and other collateral may not equal the value of such collateral if it were to be sold to a third party in a foreclosure or similar proceeding.

We may seek to sell a defaulted loan prior to commencing a foreclosure proceeding or during a foreclosure proceeding to a purchaser that is not required to comply with Nasdaq listing standards.

We believe a third-party purchaser that is not subject to Nasdaq listing standards may be able to realize greater value from real estate and other collateral securing our loans with respect to loans to cannabis operators.

However, we can provide no assurances that a third party would buy such loans or that the sales price of such loans would be sufficient to recover the outstanding principal balance, accrued interest, and fees.

We will not own real estate as long as it is used in the commercial sale of cannabis due to current statutory prohibitions and exchange listing standards, which may delay or limit our remedies in the event that any of our borrowers default under the terms of their loans with us.

Income tax expense on net investment income decreased $(0.1) million, or (33.7)%, for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025.

The provision for taxes on

unrealized appreciation on investments increased $0.6 million, driven by an increase in temporary differences relating to the net change in unrealized appreciation on investments.

Net change in unrealized appreciation (depreciation)

Three months ended

Net change in unrealized appreciation (depreciation) on investments $ 7,118,443 $ (685,478)

Net change in unrealized appreciation (depreciation).

Investments in loans held at fair value are recorded on the trade date at cost, which reflects the amount of principal funded net of any original issue discounts.

An unrealized appreciation arises when the fair value of the investment exceeds its cost and an unrealized depreciation arises when the fair value of the investment is less than its cost.

The net change in unrealized appreciation on investments of approximately $7.1 million for the three months ended March 31, 2026, was driven by the net change in the valuation of the loans, which was impacted by changes in recovery rates, market yields, and revenue multiples, as well as the number of investments in our portfolio held at fair value.

In the prior period, only one loan was held at fair value, compared to 15 loans held at fair value in the current period, as a result of our Conversion to a BDC on January 1, 2026.

Liquidity and Capital Resources

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The sources of financing for our target investments are described below.

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

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

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

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

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

Capital Markets

Our current Shelf Registration Statement became effective on April 25, 2025, allowing us to sell, from time to time in one or more offerings, up to $1.0 billion of our securities, including common stock, preferred stock, debt securities, warrants and rights (including as part of a unit) to purchase shares of our common stock or preferred stock.

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

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

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

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

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

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

As of March 31, 2026 and December 31, 2025, all of our cash was unrestricted and totaled approximately $112.7 million and $38.6 million, respectively.

As of March 31, 2026, we believe that our cash on hand, capacity available under the Revolving Credit Facility, TCGSL Credit Facility, and cash flows from operations will be sufficient to satisfy the operating requirements of our business through at least the next twelve months.

From time to time, we review opportunities to proactively manage our balance sheet by evaluating transactions that may potentially improve our overall debt profile.

We are currently exploring opportunities to refinance our outstanding debt which, depending on market conditions, may occur in the near term.

Our ability to refinance any of our debt will depend on market conditions and there can be no assurance as to when any such financing transactions will occur, if at all, or the terms of any such financing.

In accordance with applicable SEC staff guidance and interpretations, effective as of January 1, 2026 we, as a BDC, are permitted to borrow amounts such that our asset coverage ratio is at least 150% after such borrowing (if certain requirements are met).

The amount of leverage that we may employ depends on our Adviser’s and our Board’s assessment of market conditions and other factors at the time of any proposed borrowing.

As of March 31, 2026 and December 31, 2025, we had an aggregate amount of $203.0 million and $98.0 million, respectively, of principal debt outstanding and our asset coverage ratio was 191% and 278%, respectively.

Distributions Declared Per Share

For the three months ended March 31, 2026 and 2025, we declared the following cash distributions:

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

March 11, 2025 March 31, 2025 April 15, 2025 $ 0.23 $ 5,197,082

2025 Period Subtotal

$ 0.23 $ 5,197,082

March 2, 2026 March 31, 2026 April 15, 2026 $ 0.05 $ 1,176,442

2026 Period Subtotal $ 0.05 $ 1,176,442

As of March 31, 2026 As of December 31, 2025

Aggregate Principal Committed Outstanding Principal Carrying Value Aggregate Principal Committed Outstanding Principal Carrying Value

2027 Senior Notes $ 77,000,000 $ 77,000,000 $ 76,448,216 $ 77,000,000 $ 77,000,000 $ 76,322,493

Revolving Credit Facility (1)

106,000,000 106,000,000 106,000,000 50,000,000 21,000,000 21,000,000

TCGSL Credit Facility 20,000,000 20,000,000 20,000,000 — — —

Total $ 203,000,000 $ 203,000,000 $ 202,448,216 $ 127,000,000 $ 98,000,000 $ 97,322,493

(1) Borrowings under the Revolving Credit Facility are subject to borrowing base and other restrictions.

Revolving Credit Facility

On April 29, 2022, we entered into the Revolving Credit Facility, which contained initial aggregate commitments of $60.0 million from two FDIC-insured banking institutions, (which may be increased to up to $100.0 million in aggregate, subject to available borrowing base and additional commitments) which may be borrowed, repaid and redrawn, subject to a borrowing base based on eligible loan obligations held by us and subject to the satisfaction of other conditions provided under the Revolving Credit Agreement.

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.

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

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

In connection with the amendment, the Revolving Credit Facility has a lead commitment of $30.0 million from a FDIC-insured banking institution (which may be increased up to $100.0 million in aggregate, subject to available borrowing base and additional commitments) which may be borrowed, repaid and redrawn, subject to a borrowing base based on eligible loan obligations held by the Company and subject to the satisfaction of other conditions provided under the Revolving Credit Facility.

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

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.

As amended, the Revolving Credit Facility’s initial maturity date of April 29, 2025 was extended to April 29, 2028.

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.

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

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(1) liquidity of at least $5.0 million, (2) annual debt service coverage of at least 1.50 to 1.0 and (3) secured debt not to exceed 25% of total consolidated assets of us and our subsidiaries.

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

AFCF Credit Facility

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

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

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

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

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, we 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 our conversion from a REIT to a BDC.

In March 2026, we 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, we 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, outstanding borrowings under the Revolving Credit Facility were $106.0 million and zero was available for borrowing.

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

On April 1, 2026, we repaid $88.0 million on our outstanding debt obligations under the Revolving Credit Facility.

TCGSL Credit Facility

In January 2026, we entered into the TCGSL Credit Facility, which provides for an unsecured revolving 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 .

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

On April 1, 2026, we repaid $20.0 million on our outstanding debt obligations under the TCGSL Credit Facility.

2027 Senior Notes

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

operating in the cannabis industry that are consistent with our investment strategy and (iii) for working capital and other general corporate purposes.

We used the net proceeds from the issuance of the 2027 Senior Notes (i) to fund loans related to unfunded commitments to existing borrowers, (ii) to originate and participate in commercial loans to companies operating in the cannabis industry that are consistent with our investment strategy and (iii) for working capital and other general corporate purposes.

The terms of the 2027 Senior Notes are governed by the Indenture.

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TRS1 is currently a subsidiary guarantor under the Indenture.

As of March 31, 2026, we had $77.0 million in principal amount of the 2027 Senior Notes outstanding.

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

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If any event of default occurs, any amount then outstanding under the Indenture may immediately become due and payable.

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

These events of default are subject to a number of important exceptions and

qualifications set forth in the Indenture.

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

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

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

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

Nine months ended

September 30,

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

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

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

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

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

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

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

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

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

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

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

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

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

Nine months ended

September 30,

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

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

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

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

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

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

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

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

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

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

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

As of March 31, 2026 , we believe that our cash on hand, capacity available under our Revolving Credit Facility, TCGSL Credit Facility, and cash flows from operations will be sufficient to service our outstanding debt during the next twelve months.

Recent Developments

In February 2026, we 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, we 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, we 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, we funded the remaining unfunded commitment on our investment with BCIS AH Borrower LLC.

We funded approximately $9.7 million of additional principal.

In April 2026, we committed $2.5 million to each of the notes with Kristoff Buyer, LLC and Kristoff Parent, LLC, respectively.

We 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, we 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, our credit facility to Justice Cannabis Company matured without repayment.

We are pursuing all rights and remedies against the borrowers under the credit facility.

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

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

As of September 30, 2025

Our contractual obligations as of March 31, 2026 are as follows:

As of March 31, 2026

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

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Total $ 14,445,696 $ — $ — $ — $ 14,445,696

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

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

As of September 30, 2025

As of March 31, 2026 , all unfunded commitments were related to our total loan commitments and were available for funding in less than one year.

We also had the following contractual obligations as of March 31, 2026 relating to the 2027 Senior Notes:

As of March 31, 2026

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

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Total $ 4,427,500 $ 79,213,750 $ — $ — $ 83,641,250

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

(1) Amounts include projected interest payments during the period based on interest rates in effect as of March 31, 2026 .

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

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

Leverage Policies

We currently do not intend to have leverage of more than one times equity.

While we are required to maintain our leverage ratio in compliance with the 2027 Senior Notes Indenture, we expect to employ prudent amounts of leverage and, when appropriate, to use debt as a means of providing additional funds for the acquisition of loans, to refinance existing debt or for general corporate purposes.

Leverage is primarily used to provide capital for forward commitments until additional equity is raised or additional medium- to long-term financing is arranged.

This policy is subject to change by management and our Board.

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

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

regular corporate rates on that undistributed portion.

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

Any of these taxes would decrease cash available for distribution to our shareholders.

The 90% distribution requirement does not require the distribution of net capital gains.

However, if we elect to retain any of our net capital gain for any tax year, we must notify our shareholders and pay tax at regular corporate rates on the retained net capital gain.

The shareholders must include their proportionate share of the retained net capital gain in their taxable income for the tax year, and they are deemed to have paid the REIT’s tax on their proportionate share of the retained capital gain.

Furthermore, such retained capital gain may be subject to the nondeductible 4% excise tax.

If we determine that our estimated current year taxable income (including net capital gain) will be in excess of estimated dividend distributions (including capital gains dividends) for the current year from such income, we will accrue excise tax on a portion of the estimated excess taxable income as such taxable income is earned.

To the extent that our cash available for distribution is less than the amount required to be distributed under the REIT provisions of the Code, we may be required to fund distributions from working capital or through equity, equity-related or debt financings or, in certain circumstances, asset sales, as to which our ability to consummate transactions in a timely manner on favorable terms, or at all, cannot be assured, or we may make a portion of the Required Distribution in the form of a taxable stock distribution or distribution of debt securities.

Critical Accounting Policies and Estimates

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

As of March 31, 2026 , there were no significant changes in or changes in the application of our critical accounting policies or estimates from those presented in our Annual Report on Form 10-K.

For a description of our critical accounting policies and estimates, see Note 2 “Significant Accounting Policies” to our consolidated financial statements.

We consider the most significant accounting policies to be those related to our Valuation of Portfolio Investments, Use of Estimates in the Preparation of Financial Statements, and Basis of Presentation.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis