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Furthermore, third parties may try to seek to impose liability on us in connection with our loans.
+Added: In February 2025, AFC Agent, on behalf of the Company and the other lenders, initiated a mortgage foreclosure proceeding in connection with the forbearance agreement entered into by the Company and affiliates of the Justice Cannabis Company in March 2024 (the “2024 Justice Cannabis Company Forbearance Agreement”) over a cultivation facility owned indirectly by Justice Cannabis Company.
+Added: The Company also delivered a reservation of rights letter to entities in the Justice Cannabis Company credit facility concerning the occurrence of events of default and forbearance defaults under the credit agreement and the 2024 Justice Cannabis Company Forbearance Agreement, respectively, including unpermitted payments, the failure to maintain and preserve one of Justice Cannabis Company’s cannabis licenses and its cultivation facility and its failure to cooperate with us in the foreclosure proceeding.
+Added: We believe these defaults have had a material adverse impact on Justice Cannabis Company’s ability to operate its business and make payments under the credit agreement.
+Added: AFC Agent is also therefore pursuing a payment guarantee from the parent company and the beneficial shareholders of Justice Cannabis Company that guaranteed the loan.
+Added: In April 2025, we and AFC Agent (collectively, the “AFC Parties”) commenced legal actions against two shareholders (the “Guarantors”) of the parent of Justice Cannabis Company in the United States District Court for the Southern District of New York asserting claims for violations of the Racketeer Influenced and Corrupt Organizations Act, breach of a shareholder guaranty, tortious interference with contract, fraud, aiding and abetting fraud, and conversion.
+Added: Also in April 2025, AFC Agent commenced an action against the parent of Justice Cannabis Company (“Parent”) in New York state court asserting a claim for breach of contract arising from Parent’s failure to satisfy its obligations under a guaranty agreement related to the Company’s credit facility with Justice Cannabis Company.
+Added: In June 2025, the AFC Parties filed an amended complaint against the Guarantors, asserting claims for breach of contract, tortious interference with contract, fraud, aiding and abetting fraud, and conversion, and dismissing without prejudice the RICO cause of action.
+Added: In July 2025, the Parent moved to dismiss the New York state action.
+Added: On March 17, 2026, the New York state court denied Parent’s motion to dismiss the action.
+Added: On April 3, 2026, AFC Agent and Parent each moved for a stay of the action.
+Added: The Court has now temporarily stayed the New York state action until the Court can resolve certain issues raised by the parties’ stay motions, which are scheduled to be argued to the Court on July 2, 2026.
+Added: On March 31, 2026, the Southern District of New York denied the Guarantors’ motion to transfer and denied their motion to dismiss the cause of action for fraud, and dismissed the remaining causes of action.
+Added: That action is in discovery.
+Added: In April 2025, two Justice Cannabis Company-affiliated cannabis companies (the “Plaintiffs”) that are borrowers under the Company’s credit facility with Justice Cannabis Company filed a complaint in the United States District Court for the District of New Jersey alleging, among other things, breach of contract, breach of the implied covenant of good faith and fair dealing, and violations of the New York Uniform Commercial Code in connection with the Company’s termination of a forbearance agreement between the parties.
+Added: In May 2025, the court granted Plaintiffs’ request for a preliminary injunction, enjoining the Company from seizing any of Plaintiffs’ assets or cash or enforcing any remedy for the Justice Cannabis Company affiliates’ failure to (a) cooperate in the foreclosure proceeding on the Pennsylvania property;
+Added: (b) provide annual audited financial statements for fiscal years 2023 and 2024;
+Added: or (c) obtain a certificate of occupancy for the New Jersey facility by May 15, 2024.
+Added: The Court did not consider Justice Cannabis Company’s failure to maintain and preserve one of its subsidiary’s cannabis licenses or its unpermitted payments.
+Added: In June 2025, the AFC Parties appealed the injunction to the Third Circuit Court of Appeals, which heard oral argument on March 3, 2026.
+Added: On February 23, 2026, the District Court granted the AFC Parties’ motion for summary judgment on the Amended Complaint’s fourth count, which sought declaratory relief relating to the outstanding loan balance.
+Added: The credit facility to Justice Cannabis Company matured on May 1, 2026.
On September 9, 2025, a complaint was filed in the Superior Court of the State of California in Los Angeles County naming, among others, the Company, the Manager, and certain of their officers and/or directors as defendants.
On September 19, 2025, an amended complaint was filed in the same action that revised certain allegations, but did not assert new causes of action or add or remove plaintiffs or defendants.
−Removed: The amended complaint was filed by the parent company and two subsidiaries of Private Company G.
−Removed: The Company has filed separate legal actions in New York against the
−Removed: guarantors of the loan the Company made to the two subsidiaries (among other borrowers), and those two subsidiaries have filed an action against the Company (and others) in New Jersey.
+Added: The amended complaint was filed by the parent company and two subsidiaries of Justice Cannabis Company.
The complaint alleges that the Company conspired with a restructuring advisory firm to mismanage the borrowers’ operations and wrongfully seize their assets during a forbearance period that followed the borrowers’ material defaults under the credit facility.
−Removed: The complaint alleges claims for breach of fiduciary duty, conversion, intentional interference with contract, and unjust enrichment, and seeks substantial monetary damages.
−Removed: The Company, the Manager, and affiliated officers and/or directors (but not the restructuring advisory firm) are preparing a motion to quash the summonses on the grounds of lack of personal jurisdiction over them in California.
−Removed: The Company believes the claims are baseless and intends to vigorously defend this matter.
+Added: The complaint alleges claims for breach of fiduciary
+Added: duty, conversion, intentional interference with contract, and unjust enrichment, and seeks substantial monetary damages.
+Added: On January 8, 2026, the Superior Court quashed service of summons as to the Company, Manager, and their officers and directors for lack of personal jurisdiction.
+Added: On March 26, 2026, Bloc Dispensary LLC, Hayden Gateway LLC, and JG HoldCo LLC—which are two borrowers under the credit facility to Justice Cannabis Company entities—filed suit against Leonard Tannenbaum, Robyn Tannenbaum, Daniel Neville, the Company, AFC Agent, and the Adviser in the Circuit Court for the 15th Judicial Circuit for Palm Beach County, Florida.
+Added: The complaint reiterates many of the allegations in the now-dismissed complaint filed in California, including that the defendants harmed plaintiffs’ business and breached the 2024 Justice Cannabis Company Forbearance Agreement, among other alleged misconduct.
+Added: Plaintiffs’ assert causes of action against all defendants for breach of fiduciary duty, tortious interference with a contractual relationship, unjust enrichment, breaches of contract, negligent hiring, and negligent retention and supervision, and seek damages, interest, costs, attorney fees, and an injunction against foreclosure.
+Added: Because each of these actions are in their early stages, no reasonable estimate of possible outcomes resulting from these legal actions can be made at this time.
There have been no material changes to the risk factors disclosed in Item 1A - “Risk Factors” in the Company’s Annual Report for the fiscal year ended December 31, 2025 and as disclosed in Item 1A.
“Risk Factors” in subsequently filed Quarterly Reports on Form 10-Q.
−Removed: Unregistered Sales of Equity Securities and Use of Proceeds
−Removed: Recent Sales of Unregistered Securities
−Removed: Issuer Purchases of Equity Securities
−Removed: Defaults Upon Senior Securities
−Removed: Mine Safety Disclosures
−Removed: Not applicable.
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.