Try our mobile app

Published: 2023-08-08 08:30:55 ET
<<<  go to AFCG company page
afcg-20230630
000182252312/312023Q2falseP12MP12MP1Y.3333.6666600018225232023-01-012023-06-3000018225232023-08-08xbrli:shares00018225232023-06-30iso4217:USD00018225232022-12-310001822523us-gaap:RelatedPartyMember2023-06-300001822523us-gaap:RelatedPartyMember2022-12-31iso4217:USDxbrli:shares00018225232023-04-012023-06-3000018225232022-04-012022-06-3000018225232022-01-012022-06-300001822523us-gaap:PreferredStockMember2023-03-310001822523us-gaap:CommonStockMember2023-03-310001822523us-gaap:AdditionalPaidInCapitalMember2023-03-310001822523us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001822523us-gaap:RetainedEarningsMember2023-03-3100018225232023-03-310001822523us-gaap:CommonStockMember2023-04-012023-06-300001822523us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001822523us-gaap:RetainedEarningsMember2023-04-012023-06-300001822523us-gaap:PreferredStockMember2023-06-300001822523us-gaap:CommonStockMember2023-06-300001822523us-gaap:AdditionalPaidInCapitalMember2023-06-300001822523us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300001822523us-gaap:RetainedEarningsMember2023-06-300001822523us-gaap:PreferredStockMember2022-03-310001822523us-gaap:CommonStockMember2022-03-310001822523us-gaap:AdditionalPaidInCapitalMember2022-03-310001822523us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-03-310001822523us-gaap:RetainedEarningsMember2022-03-3100018225232022-03-310001822523us-gaap:CommonStockMember2022-04-012022-06-300001822523us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001822523us-gaap:RetainedEarningsMember2022-04-012022-06-300001822523us-gaap:PreferredStockMember2022-06-300001822523us-gaap:CommonStockMember2022-06-300001822523us-gaap:AdditionalPaidInCapitalMember2022-06-300001822523us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001822523us-gaap:RetainedEarningsMember2022-06-3000018225232022-06-300001822523us-gaap:PreferredStockMember2022-12-310001822523us-gaap:CommonStockMember2022-12-310001822523us-gaap:AdditionalPaidInCapitalMember2022-12-310001822523us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001822523us-gaap:RetainedEarningsMember2022-12-310001822523us-gaap:CommonStockMember2023-01-012023-06-300001822523us-gaap:AdditionalPaidInCapitalMember2023-01-012023-06-300001822523us-gaap:RetainedEarningsMember2023-01-012023-06-300001822523us-gaap:PreferredStockMember2021-12-310001822523us-gaap:CommonStockMember2021-12-310001822523us-gaap:AdditionalPaidInCapitalMember2021-12-310001822523us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310001822523us-gaap:RetainedEarningsMember2021-12-3100018225232021-12-310001822523us-gaap:CommonStockMember2022-01-012022-06-300001822523us-gaap:AdditionalPaidInCapitalMember2022-01-012022-06-300001822523us-gaap:RetainedEarningsMember2022-01-012022-06-300001822523us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-06-300001822523us-gaap:LineOfCreditMember2023-01-012023-06-300001822523us-gaap:LineOfCreditMember2022-01-012022-06-300001822523us-gaap:SeniorNotesMember2023-01-012023-06-300001822523us-gaap:SeniorNotesMember2022-01-012022-06-30afcg:segment00018225232022-01-012022-12-31afcg:loan0001822523us-gaap:SeniorLoansMember2023-06-300001822523us-gaap:SeniorLoansMember2023-01-012023-06-300001822523us-gaap:SeniorLoansMember2022-12-310001822523us-gaap:SeniorLoansMember2022-01-012022-12-310001822523us-gaap:NonperformingFinancingReceivableMember2023-06-300001822523afcg:PrivateCompanyAMemberafcg:CultivationFacilityCDispensariesDMemberafcg:MultiStateMember2023-06-300001822523afcg:PrivateCompanyAMemberafcg:CultivationFacilityCDispensariesDMemberafcg:MultiStateMember2023-01-012023-06-30xbrli:pure0001822523afcg:PublicCompanyAMemberafcg:CultivationFacilitiesCMemberstpr:NV2023-06-300001822523afcg:PublicCompanyAMemberafcg:CultivationFacilitiesCMemberstpr:NV2023-01-012023-06-300001822523stpr:MIafcg:CultivationFacilityCDispensariesDMemberafcg:PrivateCompanyBMember2023-06-300001822523stpr:MIafcg:CultivationFacilityCDispensariesDMemberafcg:PrivateCompanyBMember2023-01-012023-06-300001822523afcg:PrivateCompanyAMemberafcg:MultiStateMember2023-01-012023-06-300001822523stpr:MIafcg:PrivateCompanyBMember2023-01-012023-06-300001822523afcg:PublicCompanyAMemberstpr:NV2023-01-012023-06-300001822523afcg:PublicCompanyAMemberstpr:NVus-gaap:SubsequentEventMember2023-01-152023-09-010001822523afcg:LondonInterbankOfferedRateLIBOR1Member2023-06-300001822523afcg:SecuredOvernightFinancingRateSOFRMember2023-06-300001822523us-gaap:PrimeRateMember2023-06-300001822523afcg:NonAccrualMember2023-06-300001822523afcg:NonAccrualMember2023-05-010001822523afcg:NonAccrualMember2023-06-010001822523stpr:PAafcg:PrivateCompanyCMemberafcg:CultivationFacilityCDispensariesDMember2023-06-300001822523stpr:PAafcg:PrivateCompanyCMemberafcg:CultivationFacilityCDispensariesDMember2023-01-012023-06-300001822523afcg:SubsidiaryOfPrivateCompanyGMemberafcg:CultivationFacilityCDispensariesDMemberafcg:MultiStateMember2023-06-300001822523afcg:SubsidiaryOfPrivateCompanyGMemberafcg:CultivationFacilityCDispensariesDMemberafcg:MultiStateMember2023-01-012023-06-300001822523stpr:MAafcg:CultivationFacilityCDispensariesDMemberafcg:PrivateCompanyKMember2023-06-300001822523stpr:MAafcg:CultivationFacilityCDispensariesDMemberafcg:PrivateCompanyKMember2023-01-012023-06-300001822523stpr:MDafcg:CultivationFacilityCDispensariesDMemberafcg:PrivateCompanyIMember2023-06-300001822523stpr:MDafcg:CultivationFacilityCDispensariesDMemberafcg:PrivateCompanyIMember2023-01-012023-06-300001822523afcg:CultivationFacilityCDispensariesDMemberafcg:PrivateCompanyJMemberstpr:MO2023-06-300001822523afcg:CultivationFacilityCDispensariesDMemberafcg:PrivateCompanyJMemberstpr:MO2023-01-012023-06-300001822523afcg:CultivationFacilityCDispensariesDMemberafcg:SubsidiaryOfPublicCompanyHMemberafcg:MultiStateMember2023-06-300001822523afcg:CultivationFacilityCDispensariesDMemberafcg:SubsidiaryOfPublicCompanyHMemberafcg:MultiStateMember2023-01-012023-06-300001822523afcg:PrivateCompanyLMemberafcg:CultivationFacilityCDispensariesDMemberafcg:MultiStateMember2023-06-300001822523afcg:PrivateCompanyLMemberafcg:CultivationFacilityCDispensariesDMemberafcg:MultiStateMember2023-01-012023-06-300001822523afcg:CultivationFacilityCDispensariesDMemberafcg:MultiStateMemberafcg:SubsidiaryOfPublicCompanyMMember2023-06-300001822523afcg:CultivationFacilityCDispensariesDMemberafcg:MultiStateMemberafcg:SubsidiaryOfPublicCompanyMMember2023-01-012023-06-300001822523afcg:PrivateCompanyCMemberus-gaap:BaseRateMember2023-01-012023-06-300001822523afcg:PrivateCompanyCMemberus-gaap:PrimeRateMember2023-01-012023-06-300001822523afcg:PrivateCompanyCMemberafcg:PaymentInKindInterestRateMember2023-01-012023-06-300001822523afcg:SubsidiaryOfPrivateCompanyGMemberus-gaap:BaseRateMember2023-01-012023-06-300001822523afcg:SubsidiaryOfPrivateCompanyGMemberus-gaap:PrimeRateMember2023-01-012023-06-300001822523afcg:SubsidiaryOfPrivateCompanyGMember2022-12-012023-04-300001822523us-gaap:BaseRateMemberafcg:PrivateCompanyKMember2023-01-012023-06-300001822523afcg:SecuredOvernightFinancingRateSOFRMemberafcg:PrivateCompanyKMember2023-01-012023-06-300001822523afcg:PaymentInKindInterestRateMemberafcg:PrivateCompanyKMember2023-01-012023-06-300001822523us-gaap:BaseRateMemberafcg:PrivateCompanyIMember2023-01-012023-06-300001822523afcg:LondonInterbankOfferedRateLIBOR1Memberafcg:PrivateCompanyIMember2023-01-012023-06-300001822523afcg:PaymentInKindInterestRateMemberafcg:PrivateCompanyIMember2023-01-012023-06-300001822523srt:MinimumMemberafcg:PrivateCompanyIMember2022-10-012023-03-310001822523srt:MaximumMemberafcg:PrivateCompanyIMember2022-10-012023-03-310001822523us-gaap:MeasurementInputDefaultRateMemberafcg:PrivateCompanyIMember2023-05-082023-05-080001822523afcg:PrivateCompanyJMemberus-gaap:BaseRateMember2023-01-012023-06-300001822523afcg:SecuredOvernightFinancingRateSOFRMemberafcg:PrivateCompanyJMember2023-01-012023-06-300001822523afcg:PrivateCompanyJMemberafcg:PaymentInKindInterestRateMember2023-01-012023-06-300001822523us-gaap:BaseRateMemberafcg:SubsidiaryOfPublicCompanyHMember2023-01-012023-06-300001822523us-gaap:PrimeRateMemberafcg:SubsidiaryOfPublicCompanyHMember2023-01-012023-06-300001822523afcg:PrivateCompanyLMemberus-gaap:BaseRateMember2023-01-012023-06-300001822523us-gaap:BaseRateMemberafcg:SubsidiaryOfPublicCompanyMMember2023-01-012023-06-300001822523afcg:CurrentExpectedCreditLossesReserveMember2023-06-300001822523afcg:CurrentExpectedCreditLossesReserveMember2022-12-310001822523afcg:FundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2023-06-300001822523afcg:FundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2022-12-310001822523us-gaap:UnfundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2023-06-300001822523us-gaap:UnfundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2022-12-310001822523afcg:FundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2023-03-310001822523us-gaap:UnfundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2023-03-310001822523afcg:CurrentExpectedCreditLossesReserveMember2023-03-310001822523afcg:FundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2023-04-012023-06-300001822523us-gaap:UnfundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2023-04-012023-06-300001822523afcg:CurrentExpectedCreditLossesReserveMember2023-04-012023-06-300001822523afcg:FundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2023-01-012023-06-300001822523us-gaap:UnfundedLoanCommitmentMemberafcg:CurrentExpectedCreditLossesReserveMember2023-01-012023-06-300001822523afcg:CurrentExpectedCreditLossesReserveMember2023-01-012023-06-300001822523afcg:RiskLevelVeryLowMember2023-06-300001822523us-gaap:RiskLevelLowMember2023-06-300001822523us-gaap:RiskLevelMediumMember2023-06-300001822523us-gaap:RiskLevelHighMember2023-06-300001822523afcg:RiskLevelImpairedLossLikelyMember2023-06-300001822523us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-04-2900018225232022-04-290001822523us-gaap:LineOfCreditMemberus-gaap:BaseRateMemberus-gaap:RevolvingCreditFacilityMember2022-04-292022-04-290001822523us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-01-012022-12-310001822523us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-04-292022-04-290001822523us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2023-06-300001822523us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-12-310001822523us-gaap:SecuredDebtMemberus-gaap:RevolvingCreditFacilityMember2020-07-310001822523us-gaap:SecuredDebtMemberus-gaap:RevolvingCreditFacilityMember2020-07-012020-07-310001822523us-gaap:SecuredDebtMemberafcg:FirstAmendmentRevolvingCreditFacilityMember2021-05-070001822523us-gaap:SecuredDebtMemberafcg:FirstAmendmentRevolvingCreditFacilityMember2021-05-072021-05-070001822523afcg:SecondAmendmentRevolvingCreditFacilityMemberus-gaap:SecuredDebtMember2021-11-030001822523afcg:SecondAmendmentRevolvingCreditFacilityMemberus-gaap:SecuredDebtMember2021-11-032021-11-03afcg:installment0001822523afcg:SecondAmendmentRevolvingCreditFacilityMemberus-gaap:SecuredDebtMember2022-04-012022-06-300001822523afcg:SeniorNotesDue2027Memberus-gaap:SeniorNotesMember2021-11-030001822523afcg:SeniorNotesDue2027Memberus-gaap:SeniorNotesMember2021-11-032021-11-030001822523afcg:SeniorNotesDue2027Memberus-gaap:SeniorNotesMember2023-06-300001822523afcg:SeniorNotesDue2027Memberus-gaap:SeniorNotesMember2023-01-012023-06-300001822523us-gaap:SeniorNotesMember2023-06-300001822523us-gaap:SeniorNotesMember2023-04-012023-06-300001822523afcg:RevolvingCreditFacilityOtherMember2023-04-012023-06-300001822523us-gaap:RevolvingCreditFacilityMember2023-04-012023-06-300001822523us-gaap:SeniorNotesMember2022-04-012022-06-300001822523afcg:RevolvingCreditFacilityOtherMember2022-04-012022-06-300001822523us-gaap:RevolvingCreditFacilityMember2022-04-012022-06-300001822523afcg:RevolvingCreditFacilityOtherMember2023-01-012023-06-300001822523us-gaap:RevolvingCreditFacilityMember2023-01-012023-06-300001822523afcg:RevolvingCreditFacilityOtherMember2022-01-012022-06-300001822523us-gaap:RevolvingCreditFacilityMember2022-01-012022-06-3000018225232023-03-172023-03-17afcg:tranche0001822523us-gaap:SeriesAPreferredStockMember2022-12-310001822523us-gaap:SeriesAPreferredStockMember2023-06-300001822523us-gaap:SeriesAPreferredStockMember2022-01-012022-12-310001822523us-gaap:SeriesAPreferredStockMember2023-01-012023-06-3000018225232022-01-102022-01-1000018225232022-01-100001822523us-gaap:OverAllotmentOptionMember2022-01-102022-01-100001822523us-gaap:OverAllotmentOptionMember2022-01-192022-01-1900018225232022-01-192022-01-1900018225232022-03-100001822523afcg:ShelfRegistrationMember2022-04-052022-04-050001822523afcg:OpenMarketSaleMember2022-04-052022-04-050001822523afcg:OpenMarketSaleMember2022-01-012022-12-310001822523afcg:OpenMarketSaleMember2022-12-3100018225232023-06-130001822523afcg:EquityIncentivePlan2020Memberus-gaap:RestrictedStockMember2022-01-012022-01-310001822523afcg:EquityIncentivePlan2020Member2022-01-012022-01-310001822523afcg:EquityIncentivePlan2020Memberus-gaap:EmployeeStockOptionMember2022-01-012022-01-310001822523afcg:EquityIncentivePlan2020Memberus-gaap:RestrictedStockMember2023-01-012023-01-310001822523afcg:JamesCFaganMemberafcg:EquityIncentivePlan2020Memberus-gaap:RestrictedStockMember2023-06-202023-06-200001822523afcg:JamesCFaganMemberafcg:EquityIncentivePlan2020Memberus-gaap:RestrictedStockMember2023-06-132023-06-130001822523afcg:EquityIncentivePlan2020Member2023-06-300001822523afcg:EquityIncentivePlan2020Memberus-gaap:RestrictedStockMember2023-06-300001822523srt:MinimumMemberafcg:EquityIncentivePlan2020Memberus-gaap:EmployeeStockOptionMember2023-01-012023-06-300001822523afcg:EquityIncentivePlan2020Memberus-gaap:EmployeeStockOptionMembersrt:MaximumMember2023-01-012023-06-300001822523afcg:EquityIncentivePlan2020Memberus-gaap:EmployeeStockOptionMember2023-01-012023-06-300001822523us-gaap:RestrictedStockMember2023-06-300001822523us-gaap:RestrictedStockMember2022-12-310001822523us-gaap:RestrictedStockMember2023-03-310001822523us-gaap:RestrictedStockMember2023-04-012023-06-300001822523us-gaap:RestrictedStockMember2022-03-310001822523us-gaap:RestrictedStockMember2022-04-012022-06-300001822523us-gaap:RestrictedStockMember2022-06-300001822523us-gaap:RestrictedStockMember2023-01-012023-06-300001822523us-gaap:RestrictedStockMember2021-12-310001822523us-gaap:RestrictedStockMember2022-01-012022-06-300001822523us-gaap:FairValueInputsLevel1Member2023-06-300001822523us-gaap:FairValueInputsLevel2Member2023-06-300001822523us-gaap:FairValueInputsLevel3Member2023-06-300001822523us-gaap:FairValueInputsLevel1Member2022-12-310001822523us-gaap:FairValueInputsLevel2Member2022-12-310001822523us-gaap:FairValueInputsLevel3Member2022-12-310001822523us-gaap:FairValueInputsLevel3Member2023-01-012023-06-300001822523us-gaap:FairValueInputsLevel3Memberus-gaap:SeniorLoansMember2023-06-300001822523afcg:YieldAnalysisMemberus-gaap:FairValueInputsLevel3Membersrt:MinimumMemberus-gaap:SeniorLoansMemberafcg:MeasurementInputMarketYieldMember2023-06-300001822523afcg:YieldAnalysisMemberus-gaap:FairValueInputsLevel3Memberus-gaap:SeniorLoansMembersrt:MaximumMemberafcg:MeasurementInputMarketYieldMember2023-06-300001822523srt:WeightedAverageMemberafcg:YieldAnalysisMemberus-gaap:FairValueInputsLevel3Memberus-gaap:SeniorLoansMemberafcg:MeasurementInputMarketYieldMember2023-06-300001822523us-gaap:FairValueInputsLevel3Memberus-gaap:SeniorLoansMember2022-12-310001822523afcg:YieldAnalysisMemberus-gaap:FairValueInputsLevel3Membersrt:MinimumMemberus-gaap:SeniorLoansMemberafcg:MeasurementInputMarketYieldMember2022-12-310001822523afcg:YieldAnalysisMemberus-gaap:FairValueInputsLevel3Memberus-gaap:SeniorLoansMembersrt:MaximumMemberafcg:MeasurementInputMarketYieldMember2022-12-310001822523srt:WeightedAverageMemberafcg:YieldAnalysisMemberus-gaap:FairValueInputsLevel3Memberus-gaap:SeniorLoansMemberafcg:MeasurementInputMarketYieldMember2022-12-310001822523us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-06-300001822523us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-06-300001822523us-gaap:RelatedPartyMember2023-04-012023-06-300001822523us-gaap:RelatedPartyMember2022-04-012022-06-300001822523us-gaap:RelatedPartyMember2023-01-012023-06-300001822523us-gaap:RelatedPartyMember2022-01-012022-06-300001822523srt:AffiliatedEntityMember2023-06-300001822523srt:AffiliatedEntityMember2022-12-310001822523srt:AffiliatedEntityMember2023-01-012023-06-300001822523srt:AffiliatedEntityMemberafcg:PrivateCompanyIMember2021-07-310001822523srt:AffiliatedEntityMemberafcg:PrivateCompanyIMember2023-06-300001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2021-09-300001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2021-12-012021-12-310001822523afcg:FlowerLoanHoldcoLLCMemberafcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2021-12-012021-12-310001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMemberafcg:TheCompanyAndThirdPartyLenderMember2022-02-012022-02-280001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2022-02-012022-02-280001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMemberafcg:ThirdPartyLenderMember2022-02-012022-02-280001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMemberafcg:TheCompanyFlowerLoanHoldcoLLCAndThirdPartyLendersMember2022-11-012022-11-300001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2022-11-012022-11-300001822523afcg:FlowerLoanHoldcoLLCMemberafcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2022-11-012022-11-300001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMemberafcg:ThirdPartyLenderMember2022-11-012022-11-300001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2023-03-012023-03-310001822523afcg:LendersIncludingTheCompanyMemberafcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2023-04-012023-06-300001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2023-04-012023-06-300001822523afcg:PrivateCompanyAMembersrt:AffiliatedEntityMember2023-06-300001822523afcg:TheCompanyAndABDCWarehouseLLCMembersrt:AffiliatedEntityMemberafcg:SubsidiaryOfPrivateCompanyGMember2021-09-012021-09-300001822523srt:AffiliatedEntityMemberafcg:SubsidiaryOfPrivateCompanyGMemberafcg:ABDCWarehouseLLCMember2021-09-012021-09-300001822523srt:AffiliatedEntityMemberafcg:SubsidiaryOfPrivateCompanyGMember2021-09-012021-09-300001822523srt:AffiliatedEntityMemberafcg:SubsidiaryOfPrivateCompanyGMember2022-08-012022-08-310001822523srt:AffiliatedEntityMemberafcg:SubsidiaryOfPrivateCompanyGMember2023-06-300001822523srt:AffiliatedEntityMemberafcg:SubsidiaryOfPrivateCompanyGMember2021-09-012023-06-300001822523srt:AffiliatedEntityMemberafcg:TheCompanyPredecessorInInterestToAFCInstitutionalFundLLCAndThirdPartyLendersMemberafcg:SubsidiaryOfPublicCompanyHMember2021-12-310001822523srt:AffiliatedEntityMemberafcg:SubsidiaryOfPublicCompanyHMember2021-12-310001822523afcg:PredecessorInInterestToAFCInstitutionalFundLLCMembersrt:AffiliatedEntityMemberafcg:SubsidiaryOfPublicCompanyHMember2021-12-310001822523srt:AffiliatedEntityMemberafcg:ThirdPartyLenderMemberafcg:SubsidiaryOfPublicCompanyHMember2021-12-310001822523srt:AffiliatedEntityMemberafcg:TheCompanyPredecessorInInterestToAFCInstitutionalFundLLCAndThirdPartyLendersMemberafcg:SubsidiaryOfPublicCompanyHMember2022-10-012022-10-310001822523srt:AffiliatedEntityMemberafcg:SubsidiaryOfPublicCompanyHMember2022-10-012022-10-310001822523afcg:PredecessorInInterestToAFCInstitutionalFundLLCMembersrt:AffiliatedEntityMemberafcg:SubsidiaryOfPublicCompanyHMember2022-10-012022-10-310001822523srt:AffiliatedEntityMemberafcg:ThirdPartyLenderMemberafcg:SubsidiaryOfPublicCompanyHMember2022-10-012022-10-310001822523srt:AffiliatedEntityMemberafcg:TheCompanyPredecessorInInterestToAFCInstitutionalFundLLCAndThirdPartyLendersMemberafcg:SubsidiaryOfPublicCompanyHMember2023-04-012023-04-300001822523afcg:SubsidiaryOfPublicCompanyHMember2023-04-012023-04-300001822523afcg:SubsidiaryOfPublicCompanyHMember2023-06-300001822523srt:AffiliatedEntityMemberafcg:AFCInstitutionalFundLLCMemberafcg:PrivateCompanyIMember2023-06-300001822523srt:AffiliatedEntityMemberafcg:PrivateCompanyIMember2023-06-130001822523afcg:RegularCashDividendMember2022-01-012022-03-310001822523afcg:RegularCashDividendMember2022-04-012022-06-300001822523afcg:RegularCashDividendMember2023-01-012023-03-310001822523afcg:RegularCashDividendMember2023-04-012023-06-300001822523afcg:PrivateCompanyAMemberus-gaap:SubsequentEventMember2023-07-310001822523us-gaap:SecuredDebtMemberus-gaap:SubsequentEventMember2023-07-310001822523us-gaap:SubsequentEventMemberafcg:AFCAgentMember2023-07-012023-08-080001822523us-gaap:SubsequentEventMember2023-07-012023-08-080001822523us-gaap:SubsequentEventMember2023-08-080001822523us-gaap:SecuredDebtMemberus-gaap:SubsequentEventMemberafcg:TRS1Member2023-07-310001822523us-gaap:SubsequentEventMemberafcg:TRS1Member2023-07-31afcg:license0001822523us-gaap:SubsequentEventMemberafcg:July2023ToFebruary2026Memberafcg:TRS1Member2023-07-310001822523afcg:March2026AndThereafterMemberus-gaap:SubsequentEventMemberafcg:TRS1Member2023-07-310001822523us-gaap:SubsequentEventMemberafcg:TRS1Member2023-07-012023-07-310001822523us-gaap:SecuredDebtMemberafcg:PrivateCompanyAMemberus-gaap:SubsequentEventMemberafcg:TRS1Member2023-07-31
Index
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-39995

AFCGamma_new_logo.jpg
AFC GAMMA, INC.
(Exact name of registrant as specified in its charter)
Maryland85-1807125
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
525 Okeechobee Blvd., Suite 1650, West Palm Beach, FL 33401
(Address of principal executive offices) (Zip Code)
(561) 510-2390
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareAFCGThe Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Class
Outstanding at August 8, 2023
Common stock, $0.01 par value per share20,457,697


Index
AFC GAMMA, INC.
TABLE OF CONTENTS
INDEX
3


Index
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
AFC GAMMA, INC.
CONSOLIDATED BALANCE SHEETS
As of
June 30, 2023December 31, 2022
(unaudited)
Assets
Loans held for investment at fair value (cost of $99,291,215 and $100,635,985 at June 30, 2023 and December 31, 2022, respectively, net)
$95,940,672 $99,226,051 
Loans held for investment at carrying value, net283,752,558 285,177,112 
Loan receivable held at carrying value, net2,040,058 2,220,653 
Current expected credit loss reserve(13,129,270)(13,538,077)
Loans held for investment at carrying value and loan receivable held at carrying value, net of current expected credit loss reserve272,663,346 273,859,688 
Cash and cash equivalents82,079,402 140,372,841 
Interest receivable2,605,303 5,257,475 
Prepaid expenses and other assets697,888 460,844 
Total assets$453,986,611 $519,176,899 
Liabilities
Interest reserve$1,130,541 $3,200,944 
Accrued interest889,167 1,036,667 
Due to affiliate19,418 18,146 
Dividends payable9,819,695 11,403,840 
Current expected credit loss reserve259,174 754,128 
Accrued management and incentive fees3,313,493 3,891,734 
Accrued direct administrative expenses1,242,669 1,843,652 
Accounts payable and other liabilities1,284,153 836,642 
Payable for securities purchased7,995,934  
Senior notes payable, net87,714,130 97,131,777 
Line of credit payable, net 60,000,000 
Total liabilities113,668,374 180,117,530 
Commitments and contingencies (Note 10)
Shareholders’ equity
Preferred stock, par value $0.01 per share, 10,000 shares authorized at June 30, 2023 and December 31, 2022 and 125 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively
1 1 
Common stock, par value $0.01 per share, 50,000,000 shares authorized at June 30, 2023 and December 31, 2022 and 20,457,697 and 20,364,000 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively
204,577 203,640 
Additional paid-in capital349,216,404 348,817,914 
Accumulated (deficit) earnings(9,102,745)(9,962,186)
Total shareholders’ equity340,318,237 339,059,369 
Total liabilities and shareholders’ equity$453,986,611 $519,176,899 
See accompanying notes to the consolidated financial statements
1

Index
AFC GAMMA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended
June 30,
Six months ended
June 30,
 20232022 20232022
Revenue
Interest income$17,675,188 $21,651,207 $36,175,674 $40,287,060 
Interest expense(1,575,775)(1,747,004)(3,243,935)(3,447,119)
Net interest income16,099,413 19,904,203 32,931,739 36,839,941 
Expenses
Management and incentive fees, net (less rebate of $427,581, $488,050, $906,225 and $875,543, respectively)
3,313,493 4,201,568 7,017,712 8,048,781 
General and administrative expenses1,075,873 1,177,437 3,082,008 2,321,881 
Stock-based compensation130,769 117,397 411,347 1,107,420 
Professional fees419,577 293,311 840,475 692,679 
Total expenses4,939,712 5,789,713 11,351,542 12,170,761 
Provision for current expected credit losses1,606,187 (1,593,048)903,761 (2,498,177)
Realized (losses) gains on sales of investments, net  (26,384)450,000 
Gain (loss) on extinguishment of debt  1,986,381  
Change in unrealized (losses) gains on loans at fair value, net(462,918)(1,005,454)(1,940,609)(924,611)
Net income before income taxes12,302,970 11,515,988 22,503,346 21,696,392 
Income tax expense167,637 164,315 342,739 182,599 
Net income$12,135,333 $11,351,673 $22,160,607 $21,513,793 
Earnings per common share:
Basic earnings per common share (in dollars per share)$0.59 $0.57 $1.08 $1.10 
Diluted earnings per common share (in dollars per share)$0.59 $0.57 $1.08 $1.09 
Weighted average number of common shares outstanding:
Basic weighted average shares of common stock outstanding (in shares)20,317,341 19,715,749 20,310,606 19,518,964 
Diluted weighted average shares of common stock outstanding (in shares)20,322,857 19,811,594 20,381,724 19,614,809 
See accompanying notes to the consolidated financial statements

2

Index
AFC GAMMA, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)

Three months ended
June 30,
Six months ended
June 30,
 20232022 20232022
Net income$12,135,333 $11,351,673 $22,160,607 $21,513,793 
Other comprehensive income (loss):
Reversal of unrealized loss to recognized loss on debt securities available for sale held at fair value
   168,750 
Total other comprehensive income (loss)   168,750 
Total comprehensive income$12,135,333 $11,351,673 $22,160,607 $21,682,543 
See accompanying notes to the consolidated financial statements
3

Index
AFC GAMMA, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(unaudited)
Three months ended June 30, 2023
Preferred
Stock
Common StockAdditional
Paid-In
Capital
Accumulated Other Comprehensive Income (Loss)Accumulated
Earnings
(Deficit)
Total
Shareholders’
Equity
SharesAmount
Balance at March 31, 2023$1 20,489,234 $204,892 $349,085,320 $ $(11,410,883)$337,879,330 
Stock-based compensation— (31,537)(315)131,084 — — 130,769 
Dividends declared on common shares ($0.48 per share)
— — — — — (9,819,695)(9,819,695)
Dividends declared on preferred shares ($60 per share)
— — — — — (7,500)(7,500)
Net income— — — — — 12,135,333 12,135,333 
Balance at June 30, 2023$1 20,457,697 $204,577 $349,216,404 $ $(9,102,745)$340,318,237 
Three months ended June 30, 2022
Preferred
Stock
Common StockAdditional
Paid-In
Capital
Accumulated Other Comprehensive Income (Loss)Accumulated
Earnings
(Deficit)
Total
Shareholders’
Equity
SharesAmount
Balance at March 31, 2022$1 19,742,940 $196,784 $338,102,982 $ $(1,789,374)$336,510,393 
Issuance of common stock, net of offering costs— 114,932 1,149 1,347,662 — — 1,348,811 
Stock-based compensation— — — 117,397 — — 117,397 
Dividends declared on common shares ($0.56 per share)
— — — — — (11,120,409)(11,120,409)
Dividends declared on preferred shares ($60 per share)
— — — — — (7,500)(7,500)
Net income— — — — — 11,351,673 11,351,673 
Balance at June 30, 2022$1 19,857,872 $197,933 $339,568,041 $ $(1,565,610)$338,200,365 
See accompanying notes to the consolidated financial statements


4

Index
AFC GAMMA, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(unaudited)
Six months ended June 30, 2023
 Preferred
Stock
Common StockAdditional
Paid-In-
Capital
Accumulated Other Comprehensive Income (Loss)Accumulated
Earnings
(Deficit)
Total
Shareholders’
Equity
 SharesAmount
Balance at December 31, 2022$1 20,364,000 $203,640 $348,817,914 $ $(9,962,186)$339,059,369 
Stock-based compensation— 93,697 937 398,490 — — 399,427 
Dividends declared on common shares ($1.04 per share)
— — — — — (21,293,666)(21,293,666)
Dividends declared on preferred shares ($60 per share)
— — — — — (7,500)(7,500)
Net income— — — — — 22,160,607 22,160,607 
Balance at June 30, 2023$1 20,457,697 $204,577 $349,216,404 $ $(9,102,745)$340,318,237 
Six months ended June 30, 2022
 Preferred
Stock
Common StockAdditional
Paid-In-
Capital
Accumulated Other Comprehensive Income (Loss)Accumulated
Earnings
(Deficit)
Total
Shareholders’
Equity
 SharesAmount
Balance at December 31, 2021$1 16,442,812 $163,866 $274,172,934 $(168,750)$(1,092,877)$273,075,174 
Issuance of common stock, net of offering costs— 3,406,764 34,067 64,287,687 — — 64,321,754 
Stock-based compensation— 8,296 — 1,107,420 — — 1,107,420 
Dividends declared on common shares ($1.11 per share)
— — — — — (21,979,026)(21,979,026)
Dividends declared on preferred shares ($60 per share)
— — — — — (7,500)(7,500)
Other comprehensive income (loss)— — — — 168,750 — 168,750 
Net income— — — — — 21,513,793 21,513,793 
Balance at June 30, 2022$1 19,857,872 $197,933 $339,568,041 $ $(1,565,610)$338,200,365 
See accompanying notes to the consolidated financial statements
5

Index
AFC GAMMA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six months ended
June 30,
20232022
Operating activities: 
Net income$22,160,607 $21,513,793 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:  
Provision for current expected credit losses(903,761)2,498,177 
Realized losses (gains) on sale of investments, net26,384 (450,000)
(Gain) loss on extinguishment of debt(1,986,381) 
Change in unrealized losses (gains) on loans at fair value, net1,940,609 924,611 
Accretion of deferred loan original issue discount and other discounts(2,496,655)(8,337,513)
Amortization of deferred financing costs - revolving credit facility116,452 182,125 
Amortization of deferred financing costs - senior notes323,734 325,758 
Stock-based compensation399,427 1,107,420 
Payment-in-kind interest(8,109,786)(3,475,182)
Changes in operating assets and liabilities  
Interest receivable2,652,172 (384,377)
Prepaid expenses and other assets(145,996)226,826 
Interest reserve(3,570,403)404,344 
Accrued interest(147,500)(33,507)
Accrued management and incentive fees, net(578,241)1,378,523 
Accrued direct administrative expenses(600,983)(118,664)
Accounts payable and other liabilities448,783 (536,112)
Net cash provided by (used in) operating activities9,528,462 15,226,222 
Cash flows from investing activities:  
Issuance of and fundings on loans(16,796,204)(103,799,812)
Proceeds from sales of loans21,312,827 10,600,000 
Sale of available-for-sale debt securities 15,900,000 
Principal repayment of loans18,509,287 28,176,844 
Net cash provided by (used in) investing activities23,025,910 (49,122,968)
Cash flows from financing activities:  
Proceeds from sale of common stock 65,971,445 
Payment of offering costs - equity offering (1,649,691)
Payment of financing costs(225,000) 
Dividends paid to common and preferred shareholders(22,885,311)(19,087,523)
Repayment of senior notes(7,737,500) 
Repayment on revolving credit facility(60,000,000)(75,000,000)
Net cash provided by (used in) financing activities(90,847,811)(29,765,769)
Net (decrease) increase in cash and cash equivalents(58,293,439)(63,662,515)
Cash and cash equivalents, beginning of period140,372,841 109,246,048 
Cash and cash equivalents, end of period$82,079,402 $45,583,533 
Supplemental disclosure of non-cash activity:  
Interest reserve withheld from funding of loans$1,500,000 $ 
OID withheld from funding of loans$2,610,000 $4,682,675 
Change in other comprehensive income (loss) during the period$ $168,750 
Payable for securities purchased$7,995,934 $ 
Dividends declared and not yet paid$9,819,695 $11,120,409 
Supplemental information:  
Interest paid during the period$2,951,250 $2,972,743 
Income taxes paid during the period$415,359 $40,588 
See accompanying notes to the consolidated financial statements
6

Index
AFC GAMMA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2023
(unaudited)
1.    ORGANIZATION
AFC Gamma, Inc. (the “Company” or “AFCG”) is an institutional lender to the commercial real estate sector that was founded in July 2020 by a veteran team of investment professionals. The Company primarily originates, structures, underwrites, invests in and manages senior secured commercial real estate loans and other types of loans and debt securities, with a specialization in loans to cannabis industry operators in states that have legalized medical and/or adult-use cannabis.
The Company is a Maryland corporation and completed its initial public offering (the “IPO”) in March 2021. The Company is externally managed by AFC Management, LLC, a Delaware limited liability company (the Company’s “Manager”), pursuant to the terms of the Amended and Restated Management Agreement, dated January 14, 2021, between the parties (as amended from time to time, the “Management Agreement”). The Company’s wholly-owned subsidiary, AFCG TRS1, LLC, a Delaware limited liability company (“TRS1”), operates as a taxable real estate investment trust subsidiary (a “TRS”). TRS1 began operating in July 2021, and the financial statements of TRS1 have been consolidated within the Company’s consolidated financial statements beginning with the quarter ended September 30, 2021.
The Company operates in one operating segment and is primarily focused on financing senior secured loans and other types of loans primarily to (i) senior secured loans to cannabis industry operators in states where medical and/or adult-use cannabis is legal and (ii) secured loans to commercial real estate owners, operators and related businesses. These loans are generally held for investment and are secured, directly or indirectly, by real estate, equipment, the value associated with licenses (where applicable) and/or other assets of borrowers depending on the applicable laws and regulations governing such borrowers.
The Company has elected to be taxed as a real estate investment trust (“REIT”) for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). The Company generally will not be subject to United States federal income taxes on its REIT taxable income as long as it annually distributes all of its REIT taxable income prior to the deduction for dividends paid to shareholders and complies with various other requirements as a REIT.
2.    SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and results of operations included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC.
Refer to Note 2 to the Company’s Annual Report on Form 10-K for a description of the Company’s significant accounting policies. The Company has included disclosures below regarding basis of presentation and other accounting policies that (i) are required to be disclosed quarterly, (ii) have material changes or (iii) the Company views as critical as of the date of this report.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements and related notes have been prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and in conformity with the rules and regulations of the SEC applicable to interim financial information and include the accounts of the Company, and its wholly-owned subsidiary. The unaudited interim consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition as of and for the periods presented. All intercompany balances and transactions have been eliminated in consolidation.
The current period’s results of operations will not necessarily be indicative of results that ultimately may be achieved for the year ending December 31, 2023.

7

Index
Use of Estimates in the Preparation of Financial Statements
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant estimates include the valuation of loans held for investment at fair value and current expected credit losses (“CECL”).
Recent Accounting Pronouncements
The Company considered the applicability and impact of all Accounting Standard Updates (“ASU”) issued by the Financial Accounting Standards Board (“FASB”). Recently issued ASU’s were assessed and determined either to be not applicable or expected to have minimal impact on the Company’s unaudited interim consolidated financial statements.
3.    LOANS HELD FOR INVESTMENT AT FAIR VALUE
As of June 30, 2023 and December 31, 2022, the Company’s 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, the Company 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 the Company’s loans held at fair value had floating interest rates.
The following tables summarize the Company’s loans held at fair value as of June 30, 2023 and December 31, 2022:
As of June 30, 2023
Fair Value(1)
Carrying Value(2)
Outstanding
Principal(2)
Weighted Average
Remaining Life
(Years)(3)
Senior term loans$95,940,672 $99,291,215 $100,271,604 0.7
Total loans held at fair value$95,940,672 $99,291,215 $100,271,604 0.7
As of December 31, 2022
Fair Value(1)
Carrying Value(2)
Outstanding
Principal(2)
Weighted Average
Remaining Life
(Years)(3)
Senior term loans$99,226,051 $100,635,985 $102,376,546 1.2
Total loans held at fair value$99,226,051 $100,635,985 $102,376,546 1.2
(1)Refer to Note 14 to the Company's unaudited interim consolidated financial statements.
(2)The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount (“OID”) and loan origination costs.
(3)Weighted average remaining life is calculated based on the fair value of the loans as of June 30, 2023 and December 31, 2022.
8

Index
The following table presents changes in loans held at fair value as of and for the six months ended June 30, 2023:
Principal Original Issue
Discount
Unrealized Gains (Losses)Fair Value
Total loans held at fair value at December 31, 2022$102,376,546 $(1,740,561)$(1,409,934)$99,226,051 
Change in unrealized gains (losses) on loans at fair value, net— — (1,940,609)(1,940,609)
New fundings1,705,873 — — 1,705,873 
Accretion of original issue discount— 760,172 — 760,172 
Loan repayments(5,897,934)— — (5,897,934)
PIK interest2,087,119 — — 2,087,119 
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, the Company had one loan held at fair value on non-accrual status with an outstanding principal amount of approximately $1.2 million with a related unrealized loss recorded of approximately $(1.2) million.
A more detailed listing of the Company’s loans held at fair value portfolio based on information available as of June 30, 2023 is as follows:
Collateral Location
Collateral
Type (1)
Fair
Value (2)
Carrying
Value (3)
Outstanding
Principal (3)
Interest
Rate
Maturity Date (4)
Payment
Terms (5)
Private Co. AAZ, MI, MA, NMC, D$78,414,898 $80,367,494 $81,274,550 15.7 %
(6)
5/8/2024P/I
Public Co. ANVC 1,213,416 1,213,416 15.0 %
(7)
9/30/2023I/O
Private Co. BMIC, D17,525,774 17,710,305 17,783,638 18.7 %
(8)
9/1/2023P/I
Total loans held at fair value$95,940,672 $99,291,215 $100,271,604   
(1)C = Cultivation Facilities, D = Dispensary/Retail Facilities.
(2)Refer to Note 14 to the Company’s unaudited interim consolidated financial statements.
(3)The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of OID and loan origination costs.
(4)Certain loans are subject to contractual extension options and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.
(5)I/O = interest-only, P/I = principal and interest. P/I loans may include interest-only periods for a portion of the loan term.
(6)Base weighted average interest rate of 12.9% and payment-in-kind (“PIK”) weighted average interest rate of 2.8%.
(7)Base interest rate of 7.5% and PIK interest rate of 7.5%. As of October 1, 2022, this loan was placed on non-accrual status.
(8)Base weighted average interest rate of 14.7% and PIK interest rate of 4.0%. As amended, an additional 4.0% PIK interest rate is applicable from January 15, 2023 through maturity on September 1, 2023.
9

Index
4.    LOANS HELD FOR INVESTMENT AT CARRYING VALUE
As of June 30, 2023 and December 31, 2022, the Company’s 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, the Company 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 the Company’s loans held at carrying value had floating interest rates. As of June 30, 2023, these 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. prime rate subject to a weighted average floor of 4.9% and quoted at 8.3%.
The following tables summarize the Company’s loans held at carrying value as of June 30, 2023 and December 31, 2022:
As of June 30, 2023
Outstanding
Principal(1)
Original
Issue
Discount
Carrying
Value(1)
Weighted
Average
Remaining Life
(Years)(2)
Senior term loans$294,766,125 $(11,013,567)$283,752,558 2.7
Total loans held at carrying value$294,766,125 $(11,013,567)$283,752,558 2.7
 As of December 31, 2022
 
Outstanding
Principal(1)
Original
Issue
Discount
Carrying
Value(1)
Weighted
Average
Remaining Life
(Years)(2)
    
Senior term loans$296,584,529 $(11,407,417)$285,177,112 3.1
Total loans held at carrying value$296,584,529 $(11,407,417)$285,177,112 3.1

(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.

10

Index
The following table presents changes in loans held at carrying value as of and for the six months ended June 30, 2023:
Principal Original Issue
Discount
Carrying Value
Total loans held at carrying value at December 31, 2022$296,584,529 $(11,407,417)$285,177,112 
New fundings27,196,265 (2,610,000)24,586,265 
Accretion of original issue discount— 1,736,483 1,736,483 
Loan repayments(9,586,534)— (9,586,534)
Sale of loans(22,606,578)1,267,367 (21,339,211)
PIK interest6,022,667 — 6,022,667 
Loan amortization payments(2,844,224)— (2,844,224)
Total loans held at carrying value at June 30, 2023$294,766,125 $(11,013,567)$283,752,558 
As of June 30, 2023, the Company had two loans held at carrying value on non-accrual status. As of May 1, 2023, Private Company I was placed on non-accrual status with an outstanding principal amount of approximately $3.8 million with a related current expected credit loss reserve recorded of approximately $0.5 million. As of June 1, 2023, Subsidiary of Private Company G was placed on non-accrual status with an outstanding principal amount of approximately $79.0 million with a related current expected credit loss reserve recorded of approximately $8.3 million.
A more detailed listing of the Company’s loans held at carrying value portfolio based on information available as of June 30, 2023 is as follows:
Collateral Location
Collateral
Type (1)
Outstanding
Principal (2)
Original
Issue
Discount
Carrying
Value (2)
Interest
Rate
Maturity
Date (3)
Payment
Terms (4)
Private Co. CPAC, D$18,646,082 $(465,708)$18,180,374 19.3 %
(5)
12/01/2025P/I
Sub. of Private Co. GMO, NJ, PAC, D78,976,331 (1,589,918)77,386,413 18.5 %
(6)
05/01/2026P/I
Private Co. K MAC, D13,066,813 (765,865)12,300,948 19.1 %
(7)
05/03/2027P/I
Private Co. IMDC, D3,767,454 (50,036)3,717,418 21.7 %
(8)
08/01/2026P/I
Private Co. J MOC, D22,487,445 (426,390)22,061,055 21.1 %
(9)
09/01/2025P/I
Sub. of Public Co. HCT, IA, IL, ME, MI, NJ, PAC, D84,000,000 (3,053,269)80,946,731 14.0 %
(10)
01/01/2026I/O
Private Co. LMO, OHC, D53,000,000 (1,821,429)51,178,571 12.0 %
(11)
05/01/2026P/I
Sub. of Public Co. MIL, MI, MA, NJ, OH, PAC, D20,822,000 (2,840,952)17,981,048 9.5 %
(12)
08/27/2025I/O
Total loans held at carrying value$294,766,125 $(11,013,567)$283,752,558 
(1)C = Cultivation Facilities, D = Dispensary/Retail Facilities.
(2)The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted OID and loan origination costs.
(3)Certain loans are subject to contractual extension options and may be subject to performance based or other conditions as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein as certain borrowers may have the right to prepay with or without paying a prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.
(4)I/O = interest-only, P/I = principal and interest. P/I loans may include interest-only periods for a portion of the loan term.
(5)Base interest rate of 9.0% plus U.S. prime rate (U.S. prime rate floor of 4.0%) and PIK interest rate of 2.0%.
(6)Base interest rate of 10.25% plus U.S. prime rate (U.S. prime rate floor of 4.5%). As amended, 75.0% of the 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.
(7)Base interest rate of 12.0% plus SOFR (SOFR floor of 1.0%) and PIK interest rate of 2.0%.
11

Index
(8)Base interest rate of 12.0% plus LIBOR (LIBOR floor of 1.0%) and PIK interest rate of 4.5%. As amended, between 50.0% and 60.0% of the monthly cash interest was paid in kind from October 1, 2022 to April 1, 2023 and 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)Base interest rate of 12.0% plus SOFR (SOFR floor of 1.0%) and PIK interest rate of 4.0%. Effective April 1, 2023, Private Company J transitioned from LIBOR to SOFR.
(10)Base interest rate of 5.8% plus U.S. prime rate (U.S. prime rate floor of 5.5%).
(11)Base interest rate of 12.0%.
(12)Base interest rate of 9.5%.
5.    LOAN RECEIVABLE HELD AT CARRYING VALUE
As of June 30, 2023 and December 31, 2022, the Company’s 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, the Company 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:
Principal Original Issue
Discount
Carrying
Value
Total loan receivable held at carrying value at December 31, 2022$2,222,339 $(1,686)$2,220,653 
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 
As of June 30, 2023, the Company had one loan receivable held at carrying value on non-accrual status with an outstanding principal amount of approximately $2.0 million with a related current expected credit loss reserve recorded of approximately $0.5 million.
6.    CURRENT EXPECTED CREDIT LOSSES
The Company estimates its current expected credit losses (“CECL”) on both the outstanding balances and unfunded commitments on loans held for investment and requires consideration of a broader range of historical experience adjusted for current conditions and reasonable and supportable forecast information to inform the “CECL Reserve” using a model that considers multiple datapoints and methodologies that may include the likelihood of default and expected loss given default for each individual loan, discounted cash flows (“DCF”), and other inputs which may include the risk rating of the loan, how recently the loan was originated compared to the measurement date, and expected prepayment if applicable. Calculation of the CECL Reserve requires loan specific data, which may include fixed charge coverage ratio, loan-to-value, property type and geographic location. Estimating the CECL Reserve also requires significant judgment with respect to various factors, including but not limited to (i) the appropriate historical loan loss reference data, (ii) the expected timing of loan repayments, (iii) calibration of the likelihood of default to reflect the risk characteristics of the Company’s loan portfolio and (iv) the Company’s current and future view of the macroeconomic environment. The Company may consider loan-specific qualitative factors on certain loans to estimate its CECL Reserve, which may include (i) whether cash from the borrower’s operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan and (iii) the liquidation value of collateral. For loans where the Company has deemed the borrower/sponsor to be experiencing financial difficulty, the Company may elect to apply a practical expedient in which the fair value of the underlying collateral is compared to the amortized cost of the loan in determining a specific CECL allowance. In order to estimate the future expected loan losses relevant to the Company’s portfolio, the Company may consider historical market loan loss data provided by a third-party data service. The third party’s loan database includes historical loss data for commercial mortgage-backed securities (“CMBS”), which the Company believes is a reasonably comparable and available data set to its type of loans.
12

Index
As of June 30, 2023 and December 31, 2022, the Company’s CECL Reserve for its loans held at carrying value and loan receivable held at carrying value is approximately $13.4 million and $14.3 million, respectively, or 4.68% and 4.97%, respectively, of the Company’s total loans held at carrying value and loan receivable held at carrying value of approximately $285.8 million and $287.4 million, respectively, and is bifurcated between the current expected credit loss reserve (contra-asset) related to outstanding balances on loans held at carrying value and loan receivable held at carrying value of approximately $13.1 million and $13.5 million, respectively, and a liability for unfunded commitments of approximately $0.3 million and $0.8 million, respectively. The liability was based on the unfunded portion of the loan commitment over the full contractual period over which the Company is exposed to credit risk through a current obligation to extend credit. Management considered the likelihood that funding will occur, and if funded, the expected credit loss on the funded portion.
Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loan receivable held at carrying value as of and for the three and six months ended June 30, 2023 was as follows:
Outstanding (1)
Unfunded (2)
Total
Balance at March 31, 2023$14,408,793 $585,838 $14,994,631 
Provision for current expected credit losses(1,279,523)(326,664)(1,606,187)
Write-offs   
Recoveries   
Balance at June 30, 2023$13,129,270 $259,174 $13,388,444 
Outstanding (1)
Unfunded (2)
Total
Balance at December 31, 2022$13,538,077 $754,128 $14,292,205 
Provision for current expected credit losses(408,807)(494,954)(903,761)
Write-offs   
Recoveries   
Balance at June 30, 2023$13,129,270 $259,174 $13,388,444 
(1)As of June 30, 2023 and December 31, 2022, the CECL Reserve related to outstanding balances on loans held at carrying value and loan receivable held at carrying value is recorded within current expected credit loss reserve in the Company’s consolidated balance sheets.
(2)As of June 30, 2023 and December 31, 2022, the CECL Reserve related to unfunded commitments on loans held at carrying value is recorded within current expected credit loss reserve as a liability in the Company’s consolidated balance sheets.
13

Index
The Company continuously evaluates the credit quality of each loan by assessing the risk factors of each loan and assigning a risk rating based on a variety of factors. Risk factors include property type, geographic and local market dynamics, physical condition, projected cash flow, loan structure and exit plan, loan-to-value ratio, fixed charge coverage ratio, project sponsorship, and other factors deemed necessary. Based on a 5-point scale, the Company’s loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:
RatingDefinition
1Very Low Risk — Materially exceeds performance metrics included in original or current credit underwriting and business plan
2Low Risk — Collateral and business performance exceeds substantially all performance metrics included in original or current credit underwriting and business plan
3Medium Risk — Collateral and business performance meets, or is on track to meet underwriting expectations; business plan is met or can reasonably be achieved
4High Risk/ Potential for Loss — Collateral performance falls short of underwriting, material differences from business plans, defaults may exist, or may soon exist absent material improvement. Risk of recovery of interest exists
5Impaired/ Loss Likely — Performance is significantly worse than underwriting with major variances from business plan observed. Loan covenants or financial milestones have been breached; exit from loan or refinancing is uncertain. Full recovery of principal is unlikely
The risk ratings are primarily based on historical data as well as taking into account future economic conditions.
As of June 30, 2023, the carrying value, excluding the CECL Reserve, of the Company’s loans held at carrying value and loan receivable held at carrying value within each risk rating by year of origination is as follows:
Risk Rating:202220212020Total
1$ $ $ $ 
2    
381,460,567 80,946,731 18,180,374 180,587,672 
4 103,164,886  103,164,886 
5  2,040,058 2,040,058 
Total$81,460,567 $184,111,617 $20,220,432 $285,792,616 
7.    INTEREST RECEIVABLE
The following table summarizes the interest receivable by the Company as of June 30, 2023 and December 31, 2022:
As of
June 30, 2023
As of
December 31, 2022
Interest receivable$2,129,890 $3,722,134 
PIK receivable449,422 1,409,678 
Unused fees receivable25,991 125,663 
Total interest receivable$2,605,303 $5,257,475 
8.    INTEREST RESERVE
At June 30, 2023 and December 31, 2022, the Company had one and three loans, respectively, that included a loan-funded interest reserve. For the three and six months ended June 30, 2023, approximately $0.6 million and $3.6 million, respectively, of aggregate interest income was earned and disbursed from the interest reserves. For the three and six months ended June 30, 2022, approximately $1.4 million and $5.6 million, respectively, of aggregate interest income was earned and disbursed from the interest reserves.
14

Index
The following table presents changes in interest reserve as of and for the three and six months ended June 30, 2023 and 2022:
Three months ended
June 30,
Six months ended
June 30,
2023202220232022
Beginning reserves$1,690,334 $607,163 $3,200,944 $4,782,271 
New reserves 6,000,000 1,526,065 6,000,000 
Reserves disbursed(559,793)(1,420,548)(3,596,468)(5,595,656)
Ending reserves$1,130,541 $5,186,615 $1,130,541 $5,186,615 
9.    DEBT
Revolving Credit Facility
On April 29, 2022, the Company entered into the Loan and Security Agreement (the “Revolving Credit Agreement”) by and among the Company, the other loan parties from time to time party thereto, the lenders party thereto, and the lead arranger, bookrunner and administrative agent party thereto, pursuant to which, the Company obtained a $60.0 million senior secured revolving credit facility (the “Revolving Credit Facility”). The Revolving Credit Facility has a maturity date of April 29, 2025.
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) 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. Interest is payable on the Revolving Credit Facility at the greater of (1) the applicable base rate plus 0.50% and (2) 4.50%, as provided in the Revolving Credit Agreement, payable in cash in arrears. During the year ended December 31, 2022, the Company incurred a one-time commitment fee expense of approximately $0.5 million, which was included in prepaid expenses and other assets on the Company’s consolidated balance sheets and amortized over the life of the facility. Commencing on the six-month anniversary of the closing date, the Revolving Credit Facility has an unused line fee of 0.25% per annum, payable semi-annually in arrears, which is included within interest expense in the Company’s unaudited interim consolidated statements of operations. As of June 30, 2023 and December 31, 2022, the outstanding loan balance under the Revolving Credit Facility was $0.0 million and $60.0 million, respectively. All borrowings that were previously outstanding as of December 31, 2022 were repaid in full on January 3, 2023.
The obligations of the Company under the Revolving Credit Facility are secured by certain assets of the Company comprising of or relating to loan obligations designated for inclusion in the borrowing base. In addition, the Company is subject to various financial and other covenants, including: (1) liquidity of at least $5.0 million, (2) annual debt service coverage of at least 1.5 to 1.0 and (3) secured debt not to exceed 25% of total consolidated assets of the Company and its subsidiaries.
Termination of AFC Finance Revolving Credit Facility
In July 2020, the Company obtained a secured revolving credit line (the “AFCF Revolving Credit Facility”) from AFC Finance, LLC and Gamma Lending HoldCo LLC, each affiliates of the Company’s management, secured by the assets of the Company. The AFCF Revolving Credit Facility originally had a loan commitment of $40.0 million at an interest rate of 8% per annum, payable in cash in arrears. The maturity date of the AFCF Revolving Credit Facility was the earlier of (i) July 31, 2021 and (ii) the date of the closing of any credit facility where the proceeds are incurred to refund, refinance or replace the AFCF Revolving Credit Agreement, in accordance with terms of the credit agreement governing the AFCF Revolving Credit Facility (the “AFCF Revolving Credit Agreement”).
On May 7, 2021, the Company amended the AFCF Revolving Credit Agreement (the “First Amendment”). The First Amendment (i) increased the loan commitment from $40.0 million to $50.0 million, (ii) decreased the interest rate from 8% per annum to 6% per annum, (iii) removed Gamma Lending HoldCo LLC as a lender and (iv) extended the maturity date from July 31, 2021 to the earlier of (A) December 31, 2021 or (B) the date of the closing of any refinancing credit facility.
15

Index
On November 3, 2021, the Company entered into the Second Amendment to the AFCF Revolving Credit Agreement (the “Second Amendment”). Under the Second Amendment, payments to AFC Finance, LLC for interest, commitment fees and unused fees (net applicable taxes) were required to be paid directly or indirectly through AFC Finance, LLC to charitable organizations designated by AFC Finance, LLC. The Second Amendment also (i) increased the loan commitment from $50.0 million to $75.0 million, (ii) decreased the interest rate from 6% per annum to 4.75% per annum, (iii) introduced a one-time commitment fee of 0.25%, to be paid in three equal quarterly installments, and an unused line fee of 0.25% per annum, to be paid quarterly in arrears, (iv) provided an optional buyout provision for the holders of the 2027 Senior Notes upon an event of default under the AFCF Revolving Credit Agreement and (v) extended the fixed element of the maturity date from December 31, 2021 to September 30, 2022. Pursuant to the Second Amendment, the Company incurred a one-time commitment fee expense of approximately $0.2 million in November 2021, payable in three quarterly installments that began in the first quarter of 2022, which was amortized over the life of the loan.
On April 29, 2022, upon the Company’s entry into the Revolving Credit Facility, the Company terminated the AFCF Revolving Credit Agreement. In connection with the termination, the Company paid the remaining amount of the commitment fee outstanding of approximately $0.1 million and accelerated the remaining deferred financing costs of approximately $0.1 million in the second quarter of 2022. There were no other payments, premiums or penalties required to be paid in connection with the termination.
2027 Senior Notes
On November 3, 2021, the Company issued $100.0 million in aggregate principal amount of senior unsecured notes due in May 2027 (the “2027 Senior Notes”). The 2027 Senior Notes accrue interest at a rate of 5.75% per annum. Interest on the 2027 Senior Notes is due semi-annually on May 1 and November 1 of each year, which began on May 1, 2022. The net proceeds from the offering were approximately $97.0 million, after deducting the initial purchasers’ discounts and commissions and estimated offering fees and expenses payable by the Company. The Company used the 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 the Company’s investment strategy and (iii) for working capital and other general corporate purposes. The terms of the 2027 Senior Notes are governed by an indenture, dated November 3, 2021, among us, as issuer, and TMI Trust Company, as trustee (the “Indenture”).
Under the Indenture, the Company is required to cause all of its existing and future subsidiaries to guarantee the 2027 Senior Notes, other than certain immaterial subsidiaries as set forth in the Indenture. Subsequent to the Company’s investment in the senior secured loan to Private Company I being transferred 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.
Prior to February 1, 2027, the Company 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. On or after February 1, 2027, we may redeem the 2027 Senior Notes in whole or in part at a price equal to 100% of the principal amount of the 2027 Senior Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding, the applicable redemption date. The Indenture also requires us to offer to purchase all of the 2027 Senior Notes at a purchase price equal to 101% of the principal amount of the 2027 Senior Notes, plus accrued and unpaid interest if a “change of control triggering event” (as defined in the Indenture) occurs.
The Indenture contains customary terms and restrictions, subject to a number of exceptions and qualifications, including restrictions on the Company’s ability to (1) incur additional indebtedness unless the Annual Debt Service Charge (as defined in the Indenture) is no less than 1.5 to 1.0, (2) incur or maintain total debt in an aggregate principal amount greater than 60% of the Company’s consolidated Total Assets (as defined in the Indenture), (3) incur or maintain secured debt in an aggregate principal amount greater than 25% of the Company’s consolidated Total Assets (as defined in the Indenture), and (4) merge, consolidate or sell substantially all of the Company’s assets. In addition, the Indenture also provides for customary events of default. If any event of default occurs, any amount then outstanding under the Indenture may immediately become due and payable. These events of default are subject to a number of important exceptions and qualifications set forth in the Indenture.
During the six months ended June 30, 2023, the Company repurchased $10.0 million in principal amount of the Company’s 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. As of June 30, 2023, the Company had $90.0 million in principal amount of the 2027 Senior Notes outstanding.
16

Index
The 2027 Senior Notes are due on May 1, 2027. Scheduled principal payments on the 2027 Senior Notes as of June 30, 2023 are as follows:
2027 Senior Notes
Year
2023 (remaining)$ 
2024 
2025 
2026 
202790,000,000 
Thereafter 
Total principal$90,000,000 
The following tables reflect a summary of interest expense incurred during the three and six months ended June 30, 2023 and 2022:

Three months ended
June 30, 2023
2027 Senior NotesRevolving Credit FacilityAFCF Revolving Credit FacilityTotal Borrowings
Interest expense$1,293,750 $ $ $1,293,750 
Unused fee expense 38,749  38,749 
Amortization of deferred financing costs166,082 77,194  243,276 
Total interest expense$1,459,832 $115,943 $ $1,575,775 

Three months ended
June 30, 2022
2027 Senior NotesRevolving Credit FacilityAFCF Revolving Credit FacilityTotal Borrowings
Interest expense$1,437,499 $ $ $1,437,499 
Unused fee expense  14,583 14,583 
Amortization of deferred financing costs163,779 27,480 103,663 294,922 
Total interest expense$1,601,278 $27,480 $118,246 $1,747,004 

Six months ended
June 30, 2023
2027 Senior NotesRevolving Credit FacilityAFCF Revolving Credit FacilityTotal Borrowings
Interest expense$2,702,500 $26,667 $ $2,729,167 
Unused fee expense 74,582  74,582 
Amortization of deferred financing costs323,734 116,452  440,186 
Total interest expense$3,026,234 $217,701 $ $3,243,935 

17

Index
Six months ended
June 30, 2022
2027 Senior NotesRevolving Credit FacilityAFCF Revolving Credit FacilityTotal Borrowings
Interest expense$2,859,027 $ $19,792 $2,878,819 
Unused fee expense  60,417 60,417 
Amortization of deferred financing costs325,758 27,480 154,645 507,883 
Total interest expense$3,184,785 $27,480 $234,854 $3,447,119 
10.    COMMITMENTS AND CONTINGENCIES
As of June 30, 2023 and December 31, 2022, the Company had the following commitments to fund various investments:
As of
June 30, 2023
As of
December 31, 2022
Total original loan commitments$408,676,412 $447,101,864 
Less: drawn commitments(396,697,725)(401,476,418)
Total undrawn commitments$11,978,687 $45,625,446 
The Company from time to time may be a party to litigation in the normal course of business. As of June 30, 2023, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.
On March 17, 2023, the Company appointed Brandon Hetzel to serve as its Chief Financial Officer and Treasurer in place of Brett Kaufman, effective as of such date, with Mr. Kaufman’s employment with AFC Management, LLC, the Company’s external manager (the “Manager”), terminated, effective as of April 17, 2023 (the “Separation Date”). In connection with his termination, Mr. Kaufman will receive (i) twelve (12) months’ worth of his current base salary, (ii) his annual target bonus, (iii) continued payment by our Manager of 100% of the COBRA premiums for him and his dependents for a period of twelve (12) months following his Separation Date, (iv) accelerated vesting of one (1) additional tranche of each of Mr. Kaufman’s outstanding equity awards, and (v) extension of the exercise period for Mr. Kaufman’s outstanding options until one (1) year following the Separation Date, contingent on Mr. Kaufman executing and not revoking a release of claims in favor of the Company. During the six months ended June 30, 2023, the Company recorded approximately $0.7 million in severance expense, recorded within general and administrative expenses within the unaudited interim consolidated statements of operations.
The Company primarily provides loans to companies operating in the cannabis industry which involves significant risks, including the risk of strict enforcement against the Company’s borrowers on the federal illegality of cannabis, the Company’s borrowers’ inability to renew or otherwise maintain their licenses or other requisite authorizations for their cannabis operations, and such loans lack of liquidity, and the Company could lose all or part of any of the Company’s loans.
The Company’s ability to grow or maintain its business with respect to the loans it makes to companies operating in the cannabis industry depends on state laws pertaining to the cannabis industry. New laws that are adverse to the Company’s borrowers may be enacted, and current favorable state or national laws or enforcement guidelines relating to cultivation, production and distribution of cannabis may be modified or eliminated in the future, which would impede the Company’s ability to grow and could materially adversely affect the Company’s business.
Management’s plan to mitigate risks include monitoring the legal landscape as deemed appropriate. Also, should a loan default or otherwise be seized, the Company may be prohibited from owning cannabis assets and thus could not take possession of collateral, in which case the Company would look to sell the loan, which could result in the Company realizing a loss on the transaction.
18

Index
11.    SHAREHOLDERS’ EQUITY
Series A Preferred Stock
As of June 30, 2023 and December 31, 2022, the Company has authorized 10,000 preferred shares and issued 125 of the preferred shares designated as 12.0% Series A Cumulative Non-Voting Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”).
The Series A Preferred Stock entitles the holders thereof to receive cumulative cash dividends at a rate per annum of 12.0% of the liquidation preference of $1,000 per share plus all accumulated and unpaid dividends thereon. The Company generally may not declare or pay, or set apart for payment, any dividend or other distribution on any shares of the Company’s stock ranking junior to the Series A Preferred Stock as to dividends, including the Company’s common stock, or redeem, repurchase or otherwise make payments on any such shares, unless full, cumulative dividends on all outstanding shares of Series A Preferred Stock have been declared and paid or set apart for payment for all past dividend periods. The holders of the Series A Preferred Stock generally have no voting rights except in limited circumstances, including certain amendments to the Company’s charter and the authorization or issuance of equity securities senior to or on parity with the Series A Preferred Stock. The Series A Preferred Stock is not convertible into shares of any other class or series of our stock. The Series A Preferred Stock is senior to all other classes and series of shares of the Company’s stock as to dividend and redemption rights and rights upon the Company’s liquidation, dissolution and winding up.
Upon written notice to each record holder of the Series A Preferred Stock as to the effective date of redemption, the Company may redeem the shares of the outstanding Series A Preferred Stock at the Company’s option, in whole or in part, at any time for cash at a redemption price equal to $1,000 per share, for a total of $125,000 for the 125 shares outstanding, plus all accrued and unpaid dividends thereon up to and including the date fixed for redemption. Shares of the Series A Preferred Stock that are redeemed shall no longer be deemed outstanding shares of the Company and all rights of the holders of such shares will terminate.
Common Stock
On January 10, 2022, the Company completed an underwritten offering of 3,000,000 shares of our common stock, at a price to the public of $20.50 per share. The gross proceeds to the Company from the offering were $61.5 million, before deducting underwriting discounts and commissions, a structuring fee and offering expenses payable by the Company. In connection with the offering, the underwriters were granted an over-allotment option to purchase up to an additional 450,000 shares of the Company’s common stock. On January 14, 2022, the underwriters partially exercised the over-allotment option with respect to 291,832 shares of common stock, which was completed on January 19, 2022. The underwriting commissions of approximately $3.5 million were reflected as a reduction of additional paid-in capital in the first quarter of fiscal year 2022. The Company incurred approximately $1.0 million of expenses in connection with the offering. After giving effect to the partial exercise of the over-allotment option, the total number of shares sold by the Company in the public offering was 3,291,832 shares and total gross proceeds, before deducting underwriting discounts and commissions, a structuring fee and other offering expenses payable by the Company, were approximately $67.5 million. The net proceeds to the Company totaled approximately $63.0 million.
Pursuant to the Articles of Amendment, dated March 10, 2022, the Company increased the number of authorized shares of common stock to 50,000,000 shares at $0.01 par value per share.
Shelf Registration Statement
On April 5, 2022, the Company filed a shelf registration statement on Form S-3 (File No. 333-264144) (the “Shelf Registration Statement”), which was declared effective on April 18, 2022. Under the Shelf Registration Statement, the Company may, from time to time, issue and sell up to $1.0 billion of the Company’s common stock, preferred stock, debt securities, warrants and rights (including as part of a unit) to purchase shares of the Company’s common stock or preferred stock.
19

Index
At-the-Market Offering Program (“ATM Program”)
On April 5, 2022, the Company entered into an Open Market Sales Agreement (the “Sales Agreement”) with Jefferies LLC and JMP Securities LLC, as Sales Agents, under which the Company may, from time to time, offer and sell shares of common stock, having an aggregate offering price of up to $75.0 million. Under the terms of the Sales Agreement, the Company has agreed to pay the Sales Agents a commission of up to 3.0% of the gross proceeds from each sale of common stock sold through the Sales Agents. Sales of common stock, if any, may be made in transactions that are deemed to be “at-the-market” offerings, as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended (the “Securities Act”). During the three and six months ended June 30, 2023, the Company did not sell any shares of the Company’s common stock under the Sales Agreement. During the year ended December 31, 2022, the Company sold an aggregate of 621,398 shares of the Company’s common stock under the Sales Agreement at an average price of $18.30 per share generating net proceeds of approximately $10.4 million.
As of June 30, 2023, the shares of common stock sold under the ATM Program are the only offerings that have been initiated under the Shelf Registration Statement.
Share Repurchase Program
On June 13, 2023, the Company's Board of Directors authorized a share repurchase program providing for the repurchase of up to $20.0 million of the Company's outstanding common stock (the “Repurchase Program”). The timing, price, and volume of repurchases will be based on the Company’s stock price, general market conditions, applicable legal requirements and other factors. The repurchase of the Company’s common stock may be made from time to time in the open market, in privately negotiated transactions or otherwise in compliance with Rule 10b-18 and Rule 10b5-1 under the Securities Exchange Act of 1934. The Company expects to finance any share repurchases under the Repurchase Program using cash on hand, capacity available under our line of credit and cash flows from operations. The Repurchase Program may be discontinued, modified or suspended at any time. During the three and six months ended June 30, 2023, the Company did not repurchase any shares of its common stock pursuant to the Repurchase Program.
Stock Incentive Plan
The Company has established a stock incentive compensation plan (the “2020 Plan”). The 2020 Plan authorizes stock options, stock appreciation rights, restricted stock, stock bonuses, stock units and other forms of awards granted or denominated in the Company’s common stock or units of common stock. The 2020 Plan retains flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash. The Company has, and currently intends to continue to grant stock options to participants in the 2020 Plan, but it may also grant any other type of award available under the 2020 Plan in the future. Persons eligible to receive awards under the 2020 Plan include officers or employees of the Company or any of its subsidiaries, directors of the Company, employees of the Manager and certain directors and consultants and other service providers to the Company or any of its subsidiaries.
During the first quarter of 2022, the Company’s Board of Directors approved grants of restricted stock and stock options to the Company’s directors and officers, as well as employees of the Manager. In January 2022, the Company granted an aggregate of 8,296 shares of restricted stock and 742,000 stock options to certain of our officers and other eligible persons. The restricted stock granted in January 2022 under the 2020 Plan vests over a four-year period with approximately 33% vesting on each of the second, third and fourth anniversaries of the vesting commencement date. The stock options granted in January 2022 under the 2020 Plan have a strike price of $20.18 and contain vesting periods that vary from immediately vested to vesting over a four-year period.
During the first quarter of 2023, the Company’s Board of Directors approved grants of restricted stock to the Company’s directors and officers, as well as certain employees of the Manager. In January 2023, the Company granted an aggregate of 125,234 shares of restricted stock to certain of our directors, officers and other eligible persons. The restricted stock granted in January 2023 under the 2020 Plan contain vesting periods that vary from immediately vested to vesting over a three-year period, with approximately 33% vesting on each of the first, second and third anniversaries of the vesting commencement date. On June 20, 2023, the Company granted 1,159 shares of restricted stock to James C. Fagan in connection with his recent appointment to the Company’s Board of Directors, which will vest upon the one-year anniversary of the grant date. As of June 30, 2023, there were 2,431,212 shares of common stock granted under the 2020 Plan, underlying 2,274,172 options and 157,040 shares of restricted stock.
20

Index
As of June 30, 2023, the maximum number of shares of the Company’s common stock that may be delivered pursuant to awards under the 2020 Plan (the “Share Limit”) equals 2,793,288 shares, which is consistent with the Share Limit at March 31, 2023. Shares that are subject to or underlie awards that expire or for any reason are cancelled, terminated, forfeited, fail to vest, or for any other reason are not paid or delivered under the 2020 Plan will not be counted against the Share Limit and will again be available for subsequent awards under the 2020 Plan.
The following table summarizes the (i) non-vested options granted, (ii) vested options granted, (iii) exercised and (iv) forfeited options granted for the Company’s directors and officers and employees of the Manager as of June 30, 2023 and December 31, 2022:
As of
June 30, 2023
As of
December 31, 2022
Non-vested232,489 293,420 
Vested2,142,143 2,081,212 
Exercised(5,511)(5,511)
Forfeited(95,849)(88,749)
Balance