What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-08 · 152 added, 127 removed, 305 unchanged (48% of the section changed)

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We could remain an “emerging growth company” for up to five years from our initial public offering, or until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed $1.235 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the preceding three-year period.

Developments during the Second Quarter of 2023:

Updates to our Loan Portfolio during the Second Quarter of 2023

In April 2023, the credit facility with Subsidiary of Private Company G was amended to, among other things and subject to certain other terms and conditions, (i) amend certain cash equity capital contribution requirements, (ii) add additional real property to the collateral, (iii) extend the draw period, (iv) permit 75% of accrued cash interest due and owing to instead be paid in kind until and including the payment due May 1, 2023, subject to a monthly fee, and (v) modify the excess cash flow sweep.

Due to challenges raising equity capital in this current market environment, Subsidiary of Private Company G intends to sell certain collateral assets to pay down outstanding principal under the loan and certain non-core, non-collateral assets to generate additional capital for its operations.

Subsidiary of Private Company G failed to make its cash interest payment due July 1, 2023 in arrears for the month of June, and we placed the borrower on non-accrual as of June 1, 2023.

In connection therewith, we have initiated a consensual foreclosure proceeding with respect to certain of the borrower’s assets in Pennsylvania, with the expectation that the net cash proceeds of the public auction will be used to prepay a portion of the principal outstanding under the credit facility.

Subsidiary of Private Company G also intends to sell certain non-core, non-collateral assets to pay the overdue interest amount and generate additional capital for the expansion of its New Jersey operations.

In April 2023, the credit agreement with Subsidiary of Public Company H was amended to, among other things, (i) reduce the total loan commitment by $10.0 million ratably amongst the lenders, including us, of which $6.0 million of the reduced commitment was allocated to us and $9.0 million of additional principal was funded by us, (ii) strengthen the real estate coverage covenants and (iii) require certain conditions precedent be met prior to disbursing funds to construction projects.

Following the amendment, we now hold $84.0 million in commitments, which is fully funded.

In May 2023, Private Company I failed to pay its full principal and interest payments due May 1, 2023.

The agent on the credit facility, AFC Agent LLC (“AFC Agent”), promptly delivered a notice of an event of default based on this payment default and certain other defaults under the credit agreement, accelerated all obligations due thereunder and subsequently initiated a foreclosing procedure in the State of Maryland .

In June 2023, we sold two-thirds of the Private Company I credit facility at par plus accrued interest to a multi-state cannabis operator and have a put right on the remaining one-third immediately prior to the transfer of one of the borrower’s cannabis licenses.

Following the sale, we now hold approximately $3.5 million in commitments, which is fully funded.

During the second quarter of 2023, AFC Agent received approximately $8.3 million in total loan principal prepayments from Private Company A’s sale of its Maryland assets, of which approximately $5.9 million was allocated to us relating to our portion of the Private Company A credit facility and was applied to the outstanding principal balance.

In June 2023, Subsidiary of Private Company H repaid its loan in full.

The outstanding principal of Subsidiary of Private Company H on the date of repayment was approximately $5.8 million .

We received exit fees of approximately $0.2 million .

In June 2023, TRS1 purchased $12.0 million in outstanding principal amount of Subsidiary of Public Company M, issued at a blended weighted-average discount of 19.3%, from a third party lender and the third party lender assigned all rights, title and interest to the Company.

The term loans under the Subsidiary of Public Company M Credit Facility accrue interest at a fixed rate per annum of 9.5%.

Developments during the Third Quarter of 2023:

Updates to our Loan Portfolio during the Third Quarter of 2023

In August 2023, AFC Agent received approximately $37.6 million in total loan principal prepayments and $1.3 million in related exit fees from Private Company A’s sale of certain collateral assets, of which approximately $27.1 million in principal prepayments and $1.0 million in related exit fees were allocated to us relating to our pro rata portion of the Private Company A Credit Facility and was applied to the outstanding principal balance.

In July 2023, TRS1 purchased a secured seller promissory note from Private Company A (the “seller note”) that was issued by Private Company M in favor of Private Company A as a portion of the total purchase price for certain of Private Company A and its subsidiaries’ assets and operations in Arizona.

The seller note is for an amount equal to $30.0 million and is secured by substantially all the assets of Private Company M.

The seller note is also guaranteed by the parent company of Private Company M.

The seller note matures on July 31, 2026 and accrues interest at a rate of 9.0% per annum until February 2026, and at a rate of 15.0% per annum thereafter.

TRS1 purchased the seller note from Private Company A at a discount of approximately 16.0% for a purchase price equal to approximately $25.2 million.

Subsidiary of Private Company G failed to make its cash interest payment due July 1, 2023 in arrears for the month of June, and we placed the borrower on non-accrual from June 1, 2023 to August 31, 2023.

We entered into a forbearance agreement with Subsidiary of Private Company G in September 2023, pursuant to which we agreed to forbear from exercising certain remedies as a result of certain defaults under the credit agreement.

In exchange for such forbearance, Subsidiary of Private Company G agreed to, among other things, sell certain assets, including certain collateral, the proceeds of which will be applied to the outstanding obligations under the credit agreement with Private Company G, to provide certain additional collateral, and to contribute additional cash equity to be held in escrow by AFC Agent.

As amended by the forbearance agreement entered into with Subsidiary of Private Company G, the borrower was required to pay interest of $0.8 million pro rata to the lender group for the month of September and must pay $1.0 million pro rata to the lender group for each of the months of October, November, and December.

Subsidiary of Private Company G paid September and October interest in accordance with the terms of the forbearance agreement, which was due October 1, 2023 and November 1, 2023, respectively, and the credit facility was restored to accrual status.

The outstanding principal balance of the loan to Subsidiary of Private Company G includes a protective advance of approximately $1.6 million made in September 2023 to cover certain construction expenses and was repaid in October 2023.

Interest on the protective advance is calculated at the same rate as standard monthly cash interest, plus an additional 5.0% default interest rate.

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

The agent on the credit facility sent the borrower a notice of default and placed the borrower in receivership to maintain the borrower’s operations that were disrupted as a result of a management dispute.

We have been in discussion with the borrower regarding refinancing the credit facility and with the receiver regarding a potential sale of the business in order to repay the loan.

Until the loan is repaid, the borrower is obligated to pay interest at a base weighted average interest rate of 14.7% and PIK interest rate of 4.0%, plus a default interest rate of 4.0%.

As amended by the forbearance and modification agreement entered into with Private Company B in February 2023, the 4.0% default interest rate is applicable from January 15, 2023 and is paid in kind.

Outstanding principal balance also includes a protective advance of approximately $0.2 million made in September 2023 to cover certain expenses and was repaid in November 2023.

Interest on the protective advance is calculated at the same rate as standard monthly cash interest and PIK interest, plus default interest.

In August 2023, we entered into an amendment with Private Company K, which among other things, (i) amended the minimum cash balance financial covenant, (ii) delayed the start date for amortization payments and (iii) the total loan commitment under the credit facility with Private Company K was reduced from approximately $14.5 million to $13.2 million, which is fully funded.

In September 2023, we entered into an amendment with Private Company L, which, among other things, amended the interest rate to a base interest rate of 8.4% per annum plus SOFR, with a SOFR floor of 5.0%.

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.

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.

In September 2023, the credit facility with Public Company A matured without repayment.

The agent on the credit facility has placed the borrower in default, and the Company has recorded a realized loss of approximately $(1.2) million.

At-the-Market Offering Program

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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.

During the three and six months ended June 30, 2023, we did not sell any shares of our common stock under the Sales Agreement.

During the three and nine months ended September 30, 2023, we did not sell any shares of our common stock under the Sales Agreement.

Share Repurchase Program

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The Repurchase Program may be discontinued, modified or suspended at any time.

During the three and six months ended June 30, 2023, we did not repurchase any shares of our common stock pursuant to the Repurchase Program.

During the three and nine months ended September 30, 2023, we did not repurchase any shares of our common stock pursuant to the Repurchase Program.

Dividends Declared Per Share

In June 2023, we declared a regular cash dividend of $0.48 per share of our common stock, relating to the quarter ended June 30, 2023 , which was paid on July 14, 2023 to shareholders of record as of June 30, 2023 .

In September 2023, we declared a regular cash dividend of $0.48 per share of our common stock, relating to the quarter ended September 30, 2023 , which was paid on October 13, 2023 to shareholders of record as of September 30, 2023 .

The aggregate amount of the regular cash dividend payment was approximately $9.8 million.

For the six months ended June 30, 2023 and 2022, we paid the following cash dividends:

For the nine months ended September 30, 2023 and 2022, we paid the following cash dividends:

Date Declared Payable to Shareholders of Record at the Close of Business on Date Paid Amount per Share Aggregate Amount Paid

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June 15, 2022 June 30, 2022 July 15, 2022 0.56 11.1 million

September 15, 2022 September 30, 2022 October 14, 2022 0.56 11.4 million

2022 Period Subtotal $1.67 $33.4 million

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June 15, 2023 June 30, 2023 July 14, 2023 0.48 9.8 million

September 15, 2023 September 30, 2023 October 13, 2023 0.48 9.8 million

2023 Period Subtotal $1.52 $31.1 million

Recent Developments

In July 2023, Private Company A closed on the sale of certain of its real estate, cannabis licenses and other related assets located in Arizona for a total purchase price of $65.0 million, a portion of which is held in escrow subject to meeting certain post-closing conditions set forth under the purchase agreement, and $30.0 million of which was financed by a secured seller promissory note in favor of Private Company A.

The net cash proceeds of the sale were used to prepay a portion of the lender’s outstanding obligations under the credit facility with Private Company A, allocated pro-rata to each lender based on its commitments under the credit facility.

Subsequent to quarter end and thus far, AFC Agent has received approximately $37.6 million in total loan principal prepayments and $1.3 million in related exit fees, of which approximately $27.1 million in principal prepayments and $1.0 million in related exit fees were allocated to us based on our pro rata portion of the Private Company A credit facility and was applied to the outstanding principal balance.

Following the prepayment, our outstanding principal balance under the credit facility with Private Company A was approximately $54.6 million, which is fully funded.

In July 2023, TRS1 purchased a secured seller promissory note that was issued by Private Company M in favor of Private Company A as a portion of the total purchase price for certain of Private Company A and its subsidiaries’ assets and operations in Arizona.

The seller promissory note is for an amount equal to $30.0 million and is secured by four Arizona cannabis dispensary licenses as well as certain assets related thereto.

The seller note matures on July 31, 2026 and accrues interest at a rate of 9.0% per annum until February 2026, and at a rate of 15.0% per annum thereafter.

TRS1 purchased the seller note from Private Company A at a discount of approximately 16.0% for a purchase price equal to approximately $25.2 million.

In October 2023, AFC Agent received approximately $2.3 million in total loan principal prepayments and $0.1 million in related exit fees from Private Company A’s sale of its collateral assets, of which approximately $1.7 million in principal prepayments and $0.1 million in related exit fees were allocated to us relating to our pro rata portion of the Private Company A Credit Facility and was applied to the outstanding principal balance.

Following the prepayment, our outstanding principal balance under the Private Company A Credit Facility was approximately $53.2 million.

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.

In October 2023, Private Company B was placed into receivership following the maturity date of the credit facility, which has not been repaid.

We have been in discussions with the borrower regarding refinancing the credit facility and with the receiver regarding a potential sale of the business in order to repay the loan.

In October 2023, the Board appointed Daniel Neville as the Chief Executive Officer of the Company and a member of its Investment Committee, effective as of November 13, 2023.

Neville succeeds Leonard Tannenbaum, who will transition from his role as Chairman of the Board and Chief Executive Officer to Executive Chairman and Chief Investment Officer as of the effective date.

Key Financial Measures and Indicators

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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) (decrease) increase in provision for 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.

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) increase (decrease) in provision for 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.

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

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Depreciation and amortization — — — —

Unrealized losses, (gains) or other non-cash items 462,918 1,005,454 1,940,609 924,611

(Decrease) increase in provision for current expected credit losses (1,606,187) 1,593,048 (903,761) 2,498,177

Unrealized (gains) losses, or other non-cash items (787,799) 637,279 1,152,810 1,561,890

Increase (decrease) in provision for current expected credit losses 1,053,398 541,958 149,637 3,040,135

TRS (income) loss, net of dividends 1,399,920 (1,019,424) (716,684) (1,567,970)

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

The book value per share of our common stock as of June 30, 2023 and December 31, 2022 was approximately $16.64 and $16.65, respectively.

The book value per share of our common stock as of September 30, 2023 and December 31, 2022 was approximately $16.56 and $16.65, respectively.

Factors Impacting our Operating Results

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

Results of Operations f or the three and six months ended June 30, 2023 and 2022

Our net income allocable to our common shareholders for the three and six months ended June 30, 2023, was approximately $12.1 million and $22.2 million or $0.59 and $1.08 per basic weighted average common share, respectively, compared to net income allocable to our common shareholders of approximately $11.4 million and $21.5 million or $0.57 and $1.10 per basic weighted average common share for the three and six months ended June 30, 2022.

Interest income decreased approximately $(4.0) million, or (18.4)%, for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

This decrease was driven by lower fee income recognized of approximately ($2.4) million, lower unused fees of approximately ($0.4) million driven by less unfunded commitments, and lower OID income of approximately ($3.1) million due to acceleration of unaccreted OID of prior year loan repayments, partially offset by an increase in interest income of approximately $1.9 million driven by additional principal deployed as well as an increase in variable interest rates during the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, respectively.

Interest income decreased approximately $(4.1) million, or (10.2)%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

This decrease was driven by lower fee income recognized of approximately ($4.2) million, lower unused fees of approximately ($0.7) million driven by less unfunded commitments, and lower OID income of approximately ($5.8) million due to acceleration of unaccreted OID of prior year loan repayments, partially offset by an increase in interest income of approximately $6.6 million driven by additional principal deployed as well as an increase in variable interest rates during the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, respectively.

Interest expense decreased approximately $(0.2) million, or (9.8)%, for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

The decrease was primarily due to lower interest incurred on the 2027 Senior Notes due to $90.0 million principal outstanding for the three months ended June 30, 2023, as compared to $100.0 million principal outstanding for the three months ended June 30, 2022.

Interest expense decreased approximately $(0.2) million, or (5.9)%, for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

The decrease was primarily due to lower interest incurred on the 2027 Senior Notes due to a weighted average decrease in the 2027 Senior Notes principal outstanding of approximately $(6.2) million, or (6.2)%, for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

This relates to the repurchase of $10.0 million of our 2027 Senior Notes during the six months ended June 30, 2023.

Results of Operations f or the three and nine months ended September 30, 2023 and 2022

Our net income allocable to our common shareholders for the three and nine months ended September 30, 2023, was approximately $8.0 million and $30.1 million or $0.39 and $1.47 per basic weighted average common share, respectively, compared to net income allocable to our common shareholders of approximately $11.5 million and $33.0 million or $0.57 and $1.67 per basic weighted average common share for the three and nine months ended September 30, 2022.

Interest income decreased approximately $(3.0) million, or (15.1)%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

This decrease was driven by lower fee income recognized of approximately ($2.1) million, lower unused fees of approximately ($0.4) million driven by less unfunded commitments, and lower interest income of approximately ($1.0) million driven by two months of non-accrual in the third quarter of 2023 for Subsidiary of Private Company G interest income, partially offset by an increase in OID income of approximately $0.6 million during the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, respectively.

Interest income decreased approximately $(7.1) million, or (11.8)%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

This decrease was driven by lower fee income recognized of approximately ($6.3) million, lower unused fees of approximately ($1.1) million driven by less unfunded commitments, and lower OID income of approximately ($5.3) million due to acceleration of unaccreted OID of prior year loan repayments, partially offset by an increase in interest income of approximately $5.5 million driven by additional principal deployed as well as an increase in variable interest rates during the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, respectively.

Interest expense decreased approximately $(0.1) million, or (6.8)%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

The decrease was primarily due to lower interest incurred on the 2027 Senior Notes due to $90.0 million principal outstanding for the three months ended September 30, 2023, as compared to $100.0 million principal outstanding for the three months ended September 30, 2022.

Interest expense decreased approximately $(0.3) million, or (6.2)%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

The decrease was primarily due to lower interest incurred on the 2027 Senior Notes due to a weighted average decrease in the 2027 Senior Notes principal outstanding of approximately $(7.5) million, or (7.5)%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

This relates to the repurchase of $10.0 million of our 2027 Senior Notes during the nine months ended September 30, 2023.

No repurchases took place during the same period in 2022.

Management fees increased approximately $0.1 million, or 14.5%, for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

Incentive fees decreased approximately $(1.0) million, or (29.6)%, for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, driven by lower Core Earnings (as defined in the Management Agreement).

Management fees increased approximately $0.1 million, or 7.0%, for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

Incentive fees decreased approximately $(1.1) million, or (18.0)%, for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, driven by lower Core Earnings (as defined in the Management Agreement).

General and administrative expenses decreased approximately $(0.1) million, or (8.6)%, for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022.

General and administrative expenses increased approximately $0.8 million, or 32.7%, for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022.

This increase was primarily due to severance expense incurred during the six months ended June 30, 2023 attributable to the departure of our former chief financial officer of approximately $0.7 million.

Stock-based compensation was in line with the prior period, increasing approximately $13.4 thousand, or 11.4%, for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

Stock-based compensation decreased approximately $(0.7) million, or (62.9)%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

Management fees increased approximately $0.1 million, or 6.3%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

Incentive fees decreased approximately $(0.3) million, or (10.4)%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, driven by lower Core Earnings (as defined in the Management Agreement).

Management fees increased approximately $0.2 million, or 6.8%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

Incentive fees decreased approximately $(1.5) million, or (15.6)%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, driven by lower Core Earnings (as defined in the Management Agreement).

General and administrative expenses decreased approximately $(0.1) million, or (6.1)%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

General and administrative expenses increased approximately $0.7 million, or 20.6%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

This increase was primarily due to severance expense incurred during the nine months ended September 30, 2023 attributable to the departure of our former Chief Financial Officer of approximately $0.7 million.

Stock-based compensation increased approximately $0.2 million, or 157.8%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

This was driven by the acceleration of restricted stock owned by our former Head of Real Estate and a former Director , who resigned during the three months ended September 30, 2023.

Stock-based compensation decreased approximately $(0.5) million, or (42.3)%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

This was primarily due to the majority of equity awards granted in January 2022 that vested immediately, as compared to the majority of equity awards granted in January 2023 with a three-year vesting period.

Professional fees increased approximately $0.1 million, or 43.0%, for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022.

Professional fees increased approximately $0.1 million, or 21.3%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022.

The net change in realized (losses) gains on sales of investments for the three and six months ended June 30, 2023 as compared to the three and six months ended June 30, 2022 was zero and approximately $(0.5) million, respectively.

Professional fees decreased approximately $(29.3) thousand, or (9.0)%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022.

Professional fees increased approximately $0.1 million, or 11.6%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022.

The net change in realized gains (losses) on investments for the three and nine months ended September 30, 2023 as compared to the three and nine months ended September 30, 2022 was $(1.2) million and approximately $(1.7) million, respectively.

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 (loss) gain of approximately $(0.5) million and $(1.0) million for the three months ended June 30, 2023 and 2022, respectively, and $(1.9) million and $(0.9) million for the six months ended June 30, 2023 and 2022, respectively, was mainly driven by the net change in the valuation of the loans.

The gain (loss) on extinguishment of debt was zero and approximately $2.0 million for the three and six months ended June 30, 2023 as a result of the repurchase of $10.0 million of our 2027 Senior Notes during the period.

The net change in unrealized gain (loss) of approximately $0.8 million and $(0.6) million for the three months ended September 30, 2023 and 2022, respectively, and $(1.2) million and $(1.6) million for the nine months ended September 30, 2023 and 2022, respectively, was mainly driven by the net change in the valuation of the loans, which was impacted by changes in market yields and revenue multiples.

The gain (loss) on extinguishment of debt was zero and approximately $2.0 million for the three and nine months ended September 30, 2023 as a result of the repurchase of $10.0 million of our 2027 Senior Notes during the period.

No repurchases took place during the same period in 2022.

Provision for Current Expected Credit Losses

The provision for current expected credit losses decreased approximately $(3.2) million, or (200.8)%, for the three months ended June 30, 2023 as compared to the three months ended June 30, 2022 .

The provision for current expected credit losses decreased approximately $(3.4) million, or (136.2)%, for the six months ended June 30, 2023 as compared to the six months ended June 30, 2022 .

The balance as of June 30, 2023 was approximatel y $13.4 million , or 4.68%, of our total loans held at carrying value and loan receivable held at carrying value balance of approximately $285.8 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 $13.1 million and (ii) a liability for unfunded commitments of approximately $0.3 million .

The balance as of June 30, 2022 was approximately $5.6 million, or 1.76%, of our total loans held at carrying value and loan receivable held at carrying value balance of approximately $318.1 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 $5.0 million and (ii) a liability for unfunded commitments of approximately $0.6 million.

The provision for current expected credit losses increased approximately $0.5 million, or 94.4%, for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 .

The provision for current expected credit losses decreased approximately $(2.9) million, or (95.1)%, for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022 .

The balance as of September 30, 2023 was approximatel y $14.4 million , or 4.66%, of our total loans held at carrying value and loan receivable held at carrying value balance of approximately $310.1 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 $14.3 million and (ii) a liability for unfunded commitments of approximately $0.2 million .

The balance as of September 30, 2022 was approximately $6.2 million, or 1.80%, of our total loans held at carrying value and loan receivable held at carrying value balance of approximately $341.4 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 $5.5 million and (ii) a liability for unfunded commitments of approximately $0.7 million.

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.

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

The decrease in the provision for current expected credit losses for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022 was due to changes in macroeconomic factors, changes to the loan portfolio including new commitments and repayments, and changes in other data points we use in estimating the reserve.

The change in the provision for current expected credit losses for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022 was due to changes in macroeconomic factors, changes to the loan portfolio including new commitments and repayments, and changes in other data points we use in estimating the reserve.

Loan Portfolio

As of June 30, 2023 and December 31, 2022, our portfolio included three loans held at fair value.

The aggregate originated commitment under these loans was approximately $98.4 million and $104.3 million, respectively, and outstanding principal was approximately $100.3 million and $102.4 million as of June 30, 2023 and December 31, 2022, respectively.

For the six months ended June 30, 2023, we funded approximately $1.7 million of additional principal and had approximately $5.9 million of principal repayments of loans held at fair value.

As of June 30, 2023 and December 31, 2022, none of our loans held at fair value had floating interest rates.

The following tables summarize our loans held at fair value as of June 30, 2023 and December 31, 2022:

As of June 30, 2023

As of September 30, 2023 and December 31, 2022, our portfolio included two and three loans held at fair value, respectively.

The aggregate originated commitment under these loans was approximately $94.2 million and $104.3 million, respectively, and outstanding principal was approximately $73.0 million and $102.4 million as of September 30, 2023 and December 31, 2022, respectively.

For the nine months ended September 30, 2023, we funded approximately $1.9 million of additional principal and had approximately $33.0 million of principal repayments of loans held at fair value.

As of September 30, 2023 and December 31, 2022, none of our loans held at fair value had floating interest rates.

The following tables summarize our loans held at fair value as of September 30, 2023 and December 31, 2022:

As of September 30, 2023

Fair Value (1)

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Remaining Life

(Years) (3)(4)

Senior term loans $ 70,010,878 $ 72,573,622 $ 73,005,930 0.6

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(2) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted OID and loan origination costs.

(3) Weighted average remaining life is calculated based on the fair value of the loans as of June 30, 2023 and December 31, 2022.

The following table presents changes in loans held at fair value as of and for the six months ended June 30, 2023:

(3) Weighted average remaining life is calculated based on the fair value of the loans as of September 30, 2023 and December 31, 2022.

(4) As of September 30, 2023, the weighted average remaining life only reflects the remaining life of the Private Company A Credit Facility.

The following table presents changes in loans held at fair value as of and for the nine months ended September 30, 2023:

Principal Original Issue

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Total loans held at fair value at December 31, 2022 $ 102,376,546 $ (1,740,561) $ (1,409,934) $ 99,226,051

Realized gains (losses) on loans at fair value, net (1,213,416) — — (1,213,416)

Change in unrealized gains (losses) on loans at fair value, net — — (1,152,810) (1,152,810)

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PIK interest 2,993,521 — — 2,993,521

Total loans held at fair value at June 30, 2023 $ 100,271,604 $ (980,389) $ (3,350,543) $ 95,940,672

As of June 30, 2023 and December 31, 2022 , our portfolio did not include any debt securities.

For the three and six months ended June 30, 2023, we had no sales of debt securities.

For the three and six months ended June 30, 2022, the realized loss on the sale of debt securities was approximately zero and $0.2 million, respectively.

As of June 30, 2023 and December 31, 2022, our portfolio included eight and nine loans held at carrying value, respectively.

The aggregate originated commitment under these loans was approximately $306.3 million and $338.9 million, respectively, and outstanding principal was approximately $294.8 million and $296.6 million, respectively, as of June 30, 2023 and December 31, 2022 .

During the six months ended June 30, 2023 , we funded approximately $27.2 million of additional principal, had approximately $12.4 million of principal repayments of loans held at carrying value and sold $22.6 million in the aggregate of the Company’s investment in Subsidiary of Public Company M and Private Company I.

As of June 30, 2023 and December 31, 2022, approximately 75% and 73%, respectively, of our loans held at carrying value had floating interest rates.

As of June 30, 2023, t hese floating benchmark rates included one-month LIBOR subject to a weighted average floor of 1.0% and quoted at 5.2%, one-month Secured Overnight Financing Rate (“SOFR”) subject to a weighted average floor of 1.0% and quoted at 5.1% and U.S.

Total loans held at fair value at September 30, 2023 $ 73,005,930 $ (432,308) $ (2,562,744) $ 70,010,878

In September 2023, the credit facility with Public Company A matured without repayment.

The agent on the credit facility has placed the borrower in default, and we recorded a realized loss of approximately $(1.2) million.

As of September 30, 2023 and December 31, 2022 , our portfolio did not include any debt securities.

For the three and nine months ended September 30, 2023, we had no sales of debt securities.

For the three and nine months ended September 30, 2022, the realized loss on the sale of debt securities was approximately zero and $0.2 million, respectively.

As of September 30, 2023 and December 31, 2022, our portfolio included nine loans held at carrying value.

The aggregate originated commitment under these loans was approximately $335.1 million and $338.9 million, respectively, and outstanding principal was approximately $322.7 million and $296.6 million, respectively, as of September 30, 2023 and December 31, 2022 .

During the nine months ended September 30, 2023 , we funded approximately $59.1 million of new loans and additional principal, had approximately $16.7 million of principal repayments of loans held at carrying value and sold $22.6 million in the aggregate of the Company’s investment in Subsidiary of Public Company M and Private Company I.

As of September 30, 2023 and December 31, 2022, approximately 84% and 73%, respectively, of our loans held at carrying value had floating interest rates.

As of September 30, 2023, t hese floating benchmark rates included one-month Secured Overnight Financing Rate (“SOFR”) subject to a weighted average floor of 3.3% and quoted at 5.3% and U.S.

prime rate subject to a weighted average floor of 4.9% and quoted at 8.5%.

The following tables summarize our loans held at carrying value as of June 30, 2023 and December 31, 2022:

As of June 30, 2023

The following tables summarize our loans held at carrying value as of September 30, 2023 and December 31, 2022:

As of September 30, 2023

Principal (1)

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(1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted OID and loan origination costs.

(2) Weighted average remaining life is calculated based on the carrying value of the loans as of June 30, 2023 and December 31, 2022.

The following table presents changes in loans held at carrying value as of and for the six months ended June 30, 2023:

(2) Weighted average remaining life is calculated based on the carrying value of the loans as of September 30, 2023 and December 31, 2022.

The following table presents changes in loans held at carrying value as of and for the nine months ended September 30, 2023:

Principal Original Issue

7 unchanged sentences

Loan amortization payments (4,063,178) — (4,063,178)

Total loans held at carrying value at June 30, 2023 $ 294,766,125 $ (11,013,567) $ 283,752,558

As of June 30, 2023 and December 31, 2022, our portfolio included one loan receivable held at carrying value.

The originated commitment under this loan was $4.0 million and outstanding principal was approximately $2.0 million and $2.2 million as of June 30, 2023 and December 31, 2022, respectively.

During the six months ended June 30, 2023, we had approximately $0.2 million of principal repayments of loan receivable held at carrying value.

The following table presents changes in loans receivable as of and for the six months ended June 30, 2023:

Total loans held at carrying value at September 30, 2023 $ 322,737,668 $ (14,726,592) $ 308,011,076

As of September 30, 2023 and December 31, 2022, our portfolio included one loan receivable held at carrying value.

The originated commitment under this loan was $4.0 million and outstanding principal was approximately $2.0 million and $2.2 million as of September 30, 2023 and December 31, 2022, respectively.

During the nine months ended September 30, 2023, we had approximately $0.2 million of principal repayments of loan receivable held at carrying value.

The following table presents changes in loans receivable as of and for the nine months ended September 30, 2023:

Principal Original Issue

2 unchanged sentences

Loan repayments (180,595) — (180,595)

Total loan receivable held at carrying value at June 30, 2023 $ 2,041,744 $ (1,686) $ 2,040,058

The below table summarizes our total loan portfolio as of June 30, 2023:

Total loan receivable held at carrying value at September 30, 2023 $ 2,041,744 $ (1,686) $ 2,040,058

The below table summarizes our total loan portfolio as of September 30, 2023:

Loan Names Original Funding Date (1)

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Floating Amortization During Term YTM

A - Real Estate Loan (4)

7/3/2019 9/30/2023 $ 2,940,000 0.7% $ 1,213,416 7.5% 7.5% Fixed No 6%

A - Equipment Loans (4)

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K 4/28/2022 5/3/2027 13,229,626 3.1% 13,378,015 17.3% 2.0% Floating Yes 27%

L 4/20/2022 5/1/2026 63,000,000 15.4% 53,000,000 12.0% N/A Fixed Yes 16%

L 4/20/2022 5/1/2026 63,000,000 14.5% 53,000,000 13.7% N/A Floating Yes 18%

Sub of Public Co.

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M 8/26/2022 8/27/2025 20,822,000 4.8% 20,822,000 9.5% N/A Fixed No 18%

7/31/2023 7/31/2026 30,000,000 6.9% 30,000,000 N/A 9.0% Fixed Yes 18%

Subtotal (10)

$ 433,239,912 100.0% $ 397,785,342 14.0% 1.6% 19%

Information is as of June 30, 2023 unless otherwise specified.

Information is as of September 30, 2023 unless otherwise specified.

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

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

Estimated YTM is calculated using the interest rate as of June 30, 2023 applied through maturity.

Estimated YTM is calculated using the interest rate as of September 30, 2023 applied through maturity.

Actual results could differ from those estimates and assumptions.

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

(4) As of October 1, 2022, these loans were placed on non-accrual status.

(4) As of October 1, 2022, Public Company A equipment loan receivable was placed on non-accrual status.

(5) 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”).

(6) Cash interest and PIK interest rates for Private Co.

B are weighted average rates.

As amended, an additional 4.0% PIK interest rate is applicable from January 15, 2023 through maturity on September 1, 2023.

As amended by the forbearance and modification agreement entered into with Private Company B in February 2023, the default interest rate of 4.0% is applicable from January 15, 2023 and is paid in kind.

(7) As amended, 75.0% of Subsidiary of Private Company G’s monthly cash interest was paid in kind from December 1, 2022 to May 1, 2023.

As of June 1, 2023, this loan was placed on non-accrual status.

Subsidiary of Private Company G was placed on non-accrual status from June 1, 2023 to August 31, 2023.

In September 2023, a forbearance agreement was entered into with Subsidiary of Private Company G.

Subsidiary of Private Company G paid September and October interest in accordance with the terms of the forbearance agreement, which was due October 1, 2023 and November 1, 2023, and the credit facility was restored to accrual status.

(8) As amended, an additional 5.0% default rate has been applied since May 8, 2023 and the agent on this credit facility has since initiated a foreclosure proceeding.

As of May 1, 2023, this loan was placed on non-accrual status.

(9) Quarterly cash interest is paid in kind from closing to February 1, 2024 and then payable in cash thereafter.

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

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

As of June 30, 2023, our portfolio of assets held outside of TRS1 had a weighted average real estate collateral coverage of approximately 1.2 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.

As of September 30, 2023, our portfolio of assets held outside of TRS1 had a weighted average real estate collateral coverage of approximately 1.2 times our aggregate committed principal amount of such loans, with the real estate collateral coverage for each of our loans measured as of the time of closing for such loan and based on various sources of data available at such time.

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

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

Our net cash provided by operating activities for the six months ended June 30, 2023 of approximately $9.5 million was less than our dividend payments of $22.9 million made during the same period due to earned OID of $2.5 million, gain on extinguishment of debt of $2.0 million, the net change in interest reserve of $3.6 million and PIK repayments of $1.0 million related to the repayment from Private Company I during such period.

Our net cash provided by operating activities for the nine months ended September 30, 2023 of approximately $15.0 million was less than our dividend payments of $32.7 million made during the same period due to earned OID of $4.4 million, gain on extinguishment of debt of $2.0 million, the net change in interest reserve of $4.1 million and PIK repayments of $1.5 million related to the repayment from Private Company I and Private Company A 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, 2023 and December 31, 2022, all of our cash was unrestricted and totaled approximately $73.2 million and $140.4 million, respectively.

As of September 30, 2023, we believe that our cash on hand, capacity available under our line of credit and cash flows from operations will be sufficient to satisfy the operating requirements of our business through at least the next twelve months.

Capital Markets

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We may also access liquidity through our ATM Program, which was established in April 2022, pursuant to which we may sell, from time to time, up to $75.0 million of our common stock.

During the three and six months ended June 30, 2023, we did not sell any shares of our common stock under the Sales Agreement.

During the three and nine months ended September 30, 2023, we did not sell any shares of our common stock under the Sales Agreement.

During the year ended December 31, 2022 , we sold an aggregate of 621,398 shares of our common stock under the Sales Agreement at an average price of $18.30 per share generating net proceeds of approximately $10.4 million .

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

As of June 30, 2023 and December 31, 2022, all of our cash was unrestricted and totaled approximately $82.1 million and $140.4 million, respectively.

As of June 30, 2023, we believe that our cash on hand, capacity available under our line of credit and cash flows from operations will be sufficient to satisfy the operating requirements of our business through at least the next twelve months.

Revolving Credit Facility

On April 29, 2022, we entered into a Revolving Credit Agreement by and among us, the other loan parties from time to time party thereto, the lenders party thereto, and the lead arranger, bookrunner and administrative agent party thereto, pursuant to which, we obtained a $60.0 million senior secured revolving credit facility.

As of June 30, 2023, we had $0.0 million of borrowings outstanding and $60.0 million of availability under our Revolving Credit Agreement, 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 Facility.

As of September 30, 2023, we had $0.0 million of borrowings outstanding and $60.0 million of availability under our Revolving Credit Agreement, 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 Facility.

During the third quarter of 2023, we drew $21.0 million under the Revolving Credit Facility, which was repaid prior to the end of the third quarter of 2023.

The Revolving Credit Facility contains aggregate commitments of $60.0 million from two FDIC-insured banking institutions, which may be increased to up to $100.0 million in aggregate (subject to available borrowing base and additional commitments), and contains a maturity date of April 29, 2025.

2 unchanged sentences

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

Based on the terms of the Revolving Credit Agreement, our estimated average cash balance will exceed the minimum balance required to waive the unused line fee and as such, we did not incur an unused line fee for the three months ended September 30, 2023.

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.

1 unchanged sentence

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

To the best of our knowledge, as of June 30, 2023, we were in compliance in all material respects with all covenants contained in our Revolving Credit Agreement.

To the best of our knowledge, as of September 30, 2023, we were in compliance in all material respects with all covenants contained in our Revolving Credit Agreement.

Termination of AFC Finance Revolving Credit Facility

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Subsequent to the transfer of our investment in the senior secured loan to Private Company I to TRS1 on April 1, 2022, TRS1 was added as a subsidiary guarantor under the Indenture.

As of June 30, 2023 , the 2027 Senior Notes are guaranteed by TRS1.

As of September 30, 2023 , the 2027 Senior Notes are guaranteed by TRS1.

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

During the six months ended June 30, 2023, we repurchased $10.0 million in principal amount of our 2027 Senior Notes at 77.4% of par value, plus accrued interest.

During the nine months ended September 30, 2023, we repurchased $10.0 million in principal amount of our 2027 Senior Notes at 77.4% of par value, plus accrued interest.

This resulted in a gain on extinguishment of debt of approximately $2.0 million, recorded within the unaudited interim consolidated statements of operations.

Following this transaction, as of June 30, 2023, we had $90.0 million in principal amount of the 2027 Senior Notes outstanding.

Following this transaction, as of September 30, 2023, we had $90.0 million in principal amount of the 2027 Senior Notes outstanding.

The table below sets forth the material terms of our outstanding senior notes as of the date of this quarterly report:

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

As of June 30, 2023 , 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.

The following table sets forth changes in cash and cash equivalents for the six months ended June 30, 2023 and 2022:

As of September 30, 2023 , 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.

The following table sets forth changes in cash and cash equivalents for the nine months ended September 30, 2023 and 2022:

September 30,

Net income $ 30,140,482 $ 32,994,312

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Net Cash Provided by (Used in) Operating Activities

Net cash provided by operating activities during the six months ended June 30, 2023 was approximately $9.5 million, compared to approximately $15.2 million for the same period in 2022.

The decrease of approximately $(5.7) million during the six months ended June 30, 2022 to June 30, 2023 was primarily due to an increase in the gain on extinguishment of debt of approximately $(2.0) million, increase in PIK interest of approximately $(4.6) million, decrease in provision for current expected credit losses of approximately $(3.4) million, increase in interest reserve of approximately $(4.0) million, offset by a decrease in accretion of OID of approximately $5.8 million and an increase in interest receivable of approximately $3.0 million, respectively.

Net cash provided by operating activities during the nine months ended September 30, 2023 was approximately $15.0 million, compared to approximately $27.5 million for the same period in 2022.

The decrease of approximately $(12.5) million during the nine months ended September 30, 2022 to September 30, 2023 was primarily due to an increase in the gain on extinguishment of debt of approximately $(2.0) million, increase in PIK interest of approximately $(4.4) million, decrease in the change in provision for current expected credit losses of approximately $(2.9) million, decrease in interest reserve of approximately $(5.0) million, increase in accrued management and incentive fees of approximately $(1.3) million, offset by a decrease in accretion of OID of approximately $5.3 million, respectively.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities during the six months ended June 30, 2023 was approximately $23.0 million, compared to net cash used in investing activities of approximately $(49.1) million for the same period in 2022.

The increase of net cash provided by investing activities of approximately $72.1 million during the six months ended June 30, 2022 to June 30, 2023 was primarily due to a decrease in issuance and fundings on loans of approximately $87.0 million, an increase in proceeds from the sale of loans of approximately $10.7 million, offset by a decrease in principal repayments of loans of approximately $(9.7) million and decrease in the sale of available-for-sale debt securities of $(15.9) million, respectively.

Net cash provided by investing activities during the nine months ended September 30, 2023 was approximately $18.5 million, compared to net cash used in investing activities of approximately $(68.5) million for the same period in 2022.

The increase of net cash provided by investing activities of approximately $87.0 million during the nine months ended September 30, 2022 to September 30, 2023 was primarily due to a decrease in issuance and fundings on loans of approximately $75.5 million, an increase in proceeds from the sale of loans of approximately $10.7 million, an increase in principal repayments of loans of approximately $17.7 million, offset by a decrease in the sale of available-for-sale debt securities of $(15.9) million, respectively.

Net Cash Provided by (Used in) Financing Activities

Net cash used in financing activities during the six months ended June 30, 2023 was approximately $(90.8) million, compared to approximately $(29.8) million for the same period in 2022.

The decrease of approximately $(61.1) million during the six months ended June 30, 2022 to June 30, 2023 was primarily due to a decrease in proceeds from the sale of common stock of approximately $(66.0) million, repayments on the 2027 Senior Notes of approximately $(7.7) million, offset by a lower repayment on the Revolving Credit Facility of approximately $15.0 million, respectively.

Net cash used in financing activities during the nine months ended September 30, 2023 was approximately $(100.7) million, compared to approximately $(31.9) million for the same period in 2022.

The decrease of approximately $(68.8) million during the nine months ended September 30, 2022 to September 30, 2023 was primarily due to a decrease in proceeds from the sale of common stock of approximately $(75.1) million, repayments on the 2027 Senior Notes of approximately $(7.7) million, lower repayments on the Revolving Credit Facility of approximately $(6.0) million, offset by an increase in borrowings on the revolving credit facility of $21.0 million, respectively.

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

Our contractual obligations as of June 30, 2023 are as follows:

As of June 30, 2023

Our contractual obligations as of September 30, 2023 are as follows:

As of September 30, 2023

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

2 unchanged sentences

Total $ 10,000,000 $ — $ — $ — $ 10,000,000

As of June 30, 2023 , all unfunded commitments relate to our total loan commitments and were available for funding in less than one year.

We also had the following contractual obligations as of June 30, 2023 relating to the 2027 Senior Notes:

As of June 30, 2023

As of September 30, 2023 , all unfunded commitments relate to our total loan commitments and were available for funding in less than one year.

We also had the following contractual obligations as of September 30, 2023 relating to the 2027 Senior Notes:

As of September 30, 2023

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

3 unchanged sentences

Total $ 5,175,000 $ 10,350,000 $ 95,175,000 $ — $ 110,700,000

(1) Amounts include projected interest payments during the period based on interest rates in effect as of June 30, 2023 .

(1) Amounts include projected interest payments during the period based on interest rates in effect as of September 30, 2023 .

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

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Critical Accounting Policies and Estimates

As of June 30, 2023 , there were no significant changes in or changes in the application of our critical accounting policies or estimates from those presented in our Annual Report on Form 10-K.

As of September 30, 2023 , there were no significant changes in or changes in the application of our critical accounting policies or estimates from those presented in our Annual Report on Form 10-K.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis