# Chicago Atlantic Real Estate Finance, Inc.: Form 10-Q for the period ended Mar 31, 2025

- Company: [Chicago Atlantic Real Estate Finance, Inc.](/companies/refi.md) (CIK 1867949)
- Form: 10-Q
- Filed: 2025-05-07
- Accepted by EDGAR: May 7, 2025, 07:00 ET
- Period: 2025-03-31
- Accession: 0000950170-25-064974
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1867949/000095017025064974/refi-20250331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1867949/000095017025064974/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Income tax | 3 months, 2025-01-01 to 2025-03-31 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | $10.0m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.47 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | $0.48 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 21,264,891 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | $7.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 3 months, 2025-01-01 to 2025-03-31 | $13.6m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2025-03-31 | $9.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2025-03-31 | $414.7m | us-gaap:Assets |
| Total liabilities | at 2025-03-31 | $103.9m | us-gaap:Liabilities |
| Long-term debt | at 2025-03-31 | $49.2m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2025-03-31 | $310.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 75,902 characters.

### FORWARD-LOOKING STATEMENTS

Some of the statements contained in this quarterly report constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend such statements to be covered by the safe harbor provisions contained therein. Forward-looking statements relate to future events or the future performance or financial condition of Chicago Atlantic Real Estate Finance, Inc. (the “Company,” “we,” “us,” and “our”). The information contained in this section should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this quarterly report on Form 10-Q. This description contains forward-looking statements that involve risks and uncertainties. Actual results could differ significantly from the results discussed in the forward-looking statements due to the factors set forth in this quarterly report and in “Risk Factors” in our annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) and in Part II, Item 1A of this quarterly report on Form 10-Q, as such risks may by updated, amended, or superseded from time to time by subsequent reports we file with the SEC. The forward-looking statements contained in this report involve a number of risks and uncertainties, including statements concerning:

- our future operating results and projected operating results;
- the ability of our Manager to locate suitable loan opportunities for us, monitor and actively manage our loan portfolio, and implement our investment strategy;
- the allocation of loan opportunities to us by our Manager;
- the impact of inflation on our operating results;
- actions and initiatives of the federal or state governments and changes to government policies related to cannabis and the execution and impact of these actions, initiatives, and policies, including the fact that cannabis remains illegal under federal law;
- the estimated growth in and evolving market dynamics of the cannabis market;
- the demand for cannabis cultivation and processing facilities;
- shifts in public opinion regarding cannabis;
- the state of the U.S. economy generally or in specific geographic regions;
- economic trends and economic recoveries;
- the amount and timing of our cash flows, if any, from our loans;
- our ability to obtain and maintain financing arrangements;
- our expected leverage;
- changes in the value of our loans;
- our expected investment and underwriting process;
- rates of default or decreased recovery rates on our loans;
- the degree to which any interest rate or other hedging strategies may or may not protect us from interest rate volatility;
- changes in interest rates and impacts of such changes on our results of operations, cash flows, and the market value of our loans;
- interest rate mismatches between our loans and our borrowings used to fund such loans;
- the departure of any of the executive officers or key personnel supporting and assisting us from our Manager or its affiliates;
- impact of and changes in governmental regulations, tax law and rates, accounting guidance, and similar matters;
- our ability to maintain our exclusion or exemption from registration under the Investment Company Act;
- our ability to qualify and maintain our qualification as a real estate investment trust (“REIT”) for U.S. federal income tax purposes;
- estimates relating to our ability to make distributions to our stockholders in the future;
- our understanding of our competition;
- market trends in our industry, interest rates, real estate values, the securities markets or the general economy; and
- any of the other risks, uncertainties and other factors we identify in our annual report on Form 10-K or this quarterly report on Form 10-Q.

### Available Information

We routinely post important information for investors on our website, www.chicagoatlantic.com. We intend to use this webpage as a means of disclosing material information, for complying with our disclosure obligations under Regulation FD and to post and update investor presentations and similar materials on a regular basis. We encourage investors, analysts, the media, and others interested in us to monitor the Investments section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations, webcasts and other information we post from time to time on our website. To sign-up for email-notifications, please visit “Contact” section of our website under “Join Our Mailing List” and enter the required information to enable notifications.

### Overview

We are a commercial mortgage real estate investment trust. Our primary investment objective is to provide attractive, risk-adjusted returns for stockholders over time primarily through consistent current income dividends and other distributions and secondarily through capital appreciation. We intend to achieve this objective by originating, structuring and investing in first mortgage loans and alternative structured financings secured by commercial real estate properties. Our current portfolio is comprised primarily of senior loans to state-licensed operators in the cannabis industry, secured by real estate, equipment, receivables, licenses or other assets of the borrowers to the extent permitted by applicable laws and regulations governing such borrowers. We also invest in companies or properties that are not related to the cannabis industry that provide return characteristics consistent with our investment objective. We intend to grow the size of our portfolio by continuing the track record of our business and the business conducted by our Manager and its affiliates by making loans to leading operators and property owners in the cannabis industry. There is no assurance that we will achieve our investment objective.

Our Manager and its affiliates seek to originate real estate loans between $5 million and $200 million, generally with one- to five-year terms and amortization when terms exceed three years. We generally act as co-lenders in such transactions and intend to hold up to $50 million of the aggregate loan amount, with the remainder to be held by affiliates or third party co-investors. We may revise such concentration limits from time to time as our loan portfolio grows. Other investment vehicles managed by our Manager or affiliates of our Manager may co-invest with us or hold positions in a loan where we have also invested, including by means of splitting commitments, participating in loans or other means of syndicating loans. We will not engage in a co-investment transaction with an affiliate where the affiliate has a senior position to the loan held by us. To the extent that an affiliate provides financing to one of our borrowers, such loans will be working capital loans or loans that are subordinate to our loans. We may also serve as co-lenders in loans originated by third parties and, in the future, we may also acquire loans or loan participations. Loans that have one to two year maturities are generally interest only loans.

Our loans are secured by real estate and, in addition, when lending to owner-operators in the cannabis industry, other collateral, such as equipment, receivables, licenses or other assets of the borrowers to the extent permitted by applicable laws and regulations. In addition, we seek to impose strict loan covenants and seek personal or corporate guarantees for additional protection. As of March 31, 2025 and December 31, 2024, 61.2% and 50.0%, respectively, of the principal of loans held in our portfolio are backed by personal or corporate guarantees. We aim to maintain a portfolio diversified across jurisdictions and across verticals, including cultivators, processors, dispensaries, as well as ancillary businesses. In addition, we may invest in borrowers that have equity securities that are publicly traded on the Canadian Stock Exchange (“CSE”) in Canada and/or over-the-counter in the United States.

As of March 31, 2025, our portfolio is comprised primarily of first mortgages to established multi-state or single-state cannabis operators or property owners. We consider cannabis operators to be established if they are state-licensed and are deemed to be operational and in good standing by the applicable state regulator. We do not own any stock, warrants to purchase stock or other forms of equity in any of our portfolio companies that are involved in the cannabis industry, and we will not take stock, warrants or equity in such issuers until permitted by applicable laws and regulations, including U.S. federal laws and regulations.

We are an externally managed Maryland corporation that elected to be taxed as a REIT under Section 856 of the Code, commencing with our taxable year ended December 31, 2021. We believe that our method of operation will enable us to continue to qualify as a REIT. However, no assurances can be given that our beliefs or expectations will be fulfilled, since qualification as a REIT depends on us continuing to satisfy numerous asset, income, and distribution tests, which in turn depend, in part, on our operating results. We also intend to operate our business in a manner that will permit us and our subsidiaries to maintain one or more exclusions or exemptions from registration under the Investment Company Act.

### Revenues

We operate as one operating segment and are primarily focused on financing senior secured loans and other types of loans for established state-licensed operators in the cannabis industry. These loans are generally held for investment and are substantially secured by real estate, equipment, licenses and other assets of the borrowers to the extent permitted by the applicable laws and the regulations governing such borrowers.

We generate revenue primarily in the form of interest income on loans. As of March 31, 2025 and December 31, 2024, approximately 58.5% and 62.1%, respectively, of our total portfolio was comprised of floating rate loans, and 41.5% and 37.9% of our total portfolio was comprised of fixed rate loans, respectively. The floating rate loans described above are variable based upon the Prime Rate plus an applicable margin, and in many cases, a Prime Rate floor. We have one floating rate loan, which comprises approximately 0.1% of the aggregate portfolio outstanding principal that bears a rate based on SOFR.

The below table reflects the changes in the Prime Rate since January 1, 2024:

| Effective Date | Rate(1) |
| --- | ---: |
| December 19, 2024 | 7.50% |
| November 8, 2024 | 7.75% |
| September 19, 2024 | 8.00% |

(1) Rate obtained from the Wall Street Journal’s “Bonds, Rates & Yields” table.

Interest on our loans is generally payable monthly. The principal amount of our loans and any accrued but unpaid interest thereon generally become due at the applicable maturity date. In some cases, our interest income includes a paid-in-kind (“PIK”) component for a portion of the total interest. The PIK interest, computed at the contractual rate specified in each applicable loan agreement, is accrued in accordance with the terms of such loan agreement and capitalized to the principal balance of the loan and recorded as interest income. The PIK interest added to the principal balance is typically amortized and paid in accordance with the applicable loan agreement. In cases where the loans do not amortize, the PIK interest is collected upon repayment of the outstanding principal. We also generate revenue from original issue discounts (“OID”), which is also recognized as interest income from loans over the initial term of the applicable loans. Delayed draw loans may earn interest or unused fees on the undrawn portion of the loan, which is recognized as interest income in the period earned. Other fees, including prepayment fees and exit fees, are also recognized as interest income when received. Any such fees will be generated in connection with our loans and recognized as earned in accordance with generally accepted accounting principles (“GAAP”).

### Expenses

Our primary operating expense is the payment of Base Management Fees and Incentive Compensation under our Management Agreement with our Manager and the allocable portion of overhead and other expenses paid or incurred on our behalf, including reimbursing our Manager for a certain portion of the compensation of certain personnel of our Manager who assist in the management of our affairs, excepting only those expenses that are specifically the responsibility of our Manager pursuant to our Management Agreement. We bear all other costs and expenses of our operations and transactions, including (without limitation) fees and expenses relating to:

- organizational and offering expenses;
- quarterly valuation expenses;
- fees payable to third parties relating to, or associated with, making loans and valuing loans (including third-party valuation firms);
- fees and expenses associated with investor relations and marketing efforts (including attendance at investment conferences and similar events);
- accounting and audit fees and expenses from our independent registered public accounting firm;
- federal and state registration fees;
- any exchange listing fees;
- federal, state and local taxes;
- independent directors’ fees and expenses;
- brokerage commissions;
- costs of proxy statements, stockholders’ reports and notices; and
- costs of preparing government filings, including periodic and current reports with the SEC.

### Income Taxes

We are a Maryland corporation that elected to be taxed as a REIT under the Code, commencing with the taxable period ended December 31, 2021. We believe that we qualify as a REIT and that our method of operation will enable us to continue to qualify as a REIT. However, no assurances can be given that our beliefs or expectations will be fulfilled, since qualification as a REIT depends on us satisfying numerous asset, income and distribution tests which depends, in part, on our operating results.

To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute annually to our stockholders at least 90% of our REIT taxable income prior to the deduction for dividends paid. To the extent that we distribute less than 100% of our REIT taxable income in any tax year (taking into account any distributions made in a subsequent tax year under Sections 857(b)(9) or 858 of the Code), we will pay tax at regular corporate rates on that undistributed portion. Furthermore, if we distribute less than the sum of 1) 85% of our ordinary income for the calendar year, 2) 95% of our capital gain net income for the calendar year, and 3) any undistributed shortfall from our prior calendar year (the “Required Distribution”) to our stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then we are required to pay a non-deductible excise tax equal to 4% of any shortfall between the Required Distribution and the amount that was actually distributed. The 90% distribution requirement does not require the distribution of net capital gains. However, if we elect to retain any of our net capital gain for any tax year, we must notify our stockholders and pay tax at regular corporate rates on the retained net capital gain. Our stockholders must include their proportionate share of the retained net capital gain in their taxable income for the tax year, and they are deemed to have paid the REIT’s tax on their proportionate share of the retained capital gain. Furthermore, such retained capital gain may be subject to the nondeductible 4% excise tax. If it is determined that our estimated current year taxable income will be in excess of estimated dividend distributions (including capital gain dividend) for the current year from such income, we will accrue excise tax on estimated excess taxable income as such taxable income is earned. The annual expense is calculated in accordance with applicable tax regulations. Excise tax expense, if any, is included in the line item, income tax expense. For the three months ended March 31, 2025, we did not incur excise tax expense.

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 740 - Income Taxes (“ASC 740”), prescribes a recognition threshold and measurement attribute for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have analyzed our various federal and state filing positions and believe that our income tax filing positions and deductions are documented and supported as of March 31, 2025. Based on our evaluation, there is no reserve for any uncertain income tax positions. Accrued interest and penalties, if any, are included within other liabilities in the consolidated balance sheets.

### Factors Impacting our Operating Results

The results of our operations are affected by a number of factors and primarily depend on, among other things, the level of our net interest income, the market value of our assets and the supply of, and demand for, commercial real estate debt and other financial assets in the marketplace. Our net interest income, which includes the accretion and amortization of OID, is recognized based on the contractual rate and the outstanding principal balance of the loans we originate. Interest rates will vary according to the type of loan, conditions in the financial markets, creditworthiness of our borrowers, competition and other factors, some of which cannot be predicted with any certainty. Our operating results may also be impacted by credit losses in excess of initial anticipations or unanticipated credit events experienced by borrowers.

### Changes in Market Interest Rates and Effect on Net Interest Income

Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We are subject to interest rate risk in connection with our assets and our related financing obligations.

Our operating results depend in large part on differences between the income earned on our assets and our cost of borrowing. The cost of our borrowings generally are based on prevailing market interest rates. During a period of rising interest rates, our borrowing costs generally will increase (a) while the yields earned on our leveraged fixed-rate loan assets will remain static, and (b) at a faster pace than the yields earned on our leveraged floating-rate loan assets, which could result in a decline in our net interest spread and net interest margin. The severity of any such decline would depend on our asset/liability composition at the time as well as the magnitude and duration of the interest rate increase. Further, an increase in short-term interest rates could also have a negative impact on the market value of our target investments. If any of these events happen, we could experience a decrease in net income or incur a net loss during these periods, which could adversely affect our liquidity and results of operations.

### Interest Rate Cap Risk

We currently own and intend to acquire in the future floating-rate assets. These are assets in which the loans may be subject to periodic and lifetime interest rate caps and floors, which limit the amount by which the asset’s interest yield may change during any given period. However, our borrowing costs pursuant to our financing agreements may not be subject to similar restrictions. Therefore, in a period of increasing interest rates, interest rate costs on our borrowings could increase without limitation by caps, while the interest-rate yields on our floating-rate assets would effectively be limited. In addition, floating-rate assets may be subject to periodic payment caps that result in some portion of the interest being deferred and added to the principal outstanding. This could result in our receipt of cash income from such assets in an amount that is less than the amount that we would need to pay the interest cost on our related borrowings.

These factors could lower our net interest income or cause a net loss during periods of rising interest rates, which would harm our financial condition, cash flows and results of operations. As of March 31, 2025, 58.5% of our floating rate loans, based on total principal outstanding have interest Prime rate floors as summarized below:

| As of March 31, 2025 Prime Rate Floor | Outstanding Principal |
| ---: | ---: |
| 8.50% | $50,469,178 |
| 8.00% | 7,460,000 |
| 7.75% | 16,995,029 |
| 7.50% | 45,865,201 |
| 7.00% | 75,616,173 |
| 6.25% | 19,255,716 |
| 5.50% | 520,000 |
| 0.00% | 21,789,444 |
|  | **$237,970,741** |

### Interest Rate Mismatch Risk

We may fund a portion of our origination of loans, or of loans that we may in the future acquire, with borrowings that are based on the Prime Rate or a similar measure, while the interest rates on these assets may be fixed or indexed to the Prime Rate or another index rate. Accordingly, any increase in the Prime Rate will generally result in an increase in our borrowing costs that would not be matched by fixed-rate interest earnings and may not be matched by a corresponding increase in floating-rate interest earnings. Any such interest rate mismatch could adversely affect our profitability, which may negatively impact distributions to our stockholders.

Our analysis of risks is based on our Manager’s experience, estimates, models and assumptions. These analyses rely on models which utilize estimates of fair value and interest rate sensitivity. Actual economic conditions or implementation of decisions by our Manager and our management may produce results that differ significantly from the estimates and assumptions used in our models and the projected results.

### Market Conditions

We believe that favorable market conditions, including an imbalance in supply and demand of credit to cannabis operating companies, have provided attractive opportunities for non-bank lenders, such as us, to finance commercial real estate loans and other loans that exhibit strong fundamentals but also require more customized financing structures and loan products than regulated financial institutions can presently provide. Additionally, to the extent that additional states legalize cannabis, our addressable market will increase. We intend to continue to capitalize on these opportunities and growing the size of our portfolio.

### Developments During the First Quarter of 2025

### Updates to Our Loan Portfolio during the First Quarter of 2025

#### Loan #9

On March 31, 2025, following completion of the foreclosure proceedings, the Company extinguished the original term loan, previously identified as Loan #9, and the Agent distributed the assets acquired from the foreclosure to the Lenders pursuant to an Agreement Among Lenders by and between the Agent and Lenders (the "AAL"). Pursuant to the AAL, the affiliated co-lender received rights to the membership interests acquired in the UCC sale and intends to engage third-parties, as necessary, and is currently in the process of restoring the business to a fully operational status. Further pursuant to the AAL, in satisfaction of the original loan, the Company now holds two loans with an aggregate principal balance of approximately $16.5 million, comprised of a $14.5 million first lien judgment loan (the "Judgment Loan") and a $2.0 million second lien term loan (the "Term Loan"), which had an aggregate fair value of approximately $16.5 million, resulting in a gain on extinguishment of approximately $66 thousand. The fair value of each of the Judgment Loan and Term Loan was determined by the Manager's investment committee using Level 3 inputs under the discounted cash flow method.

The Judgment Loan bears interest at a statutory rate of 9.0% pursuant to Illinois law, and will remain outstanding until paid by the borrower. The Term Loan bears interest at a contractual rate of 9.0% and has a maturity of March 31, 2028. The assets securing the original loan, which included mortgaged cultivation real estate in Pennsylvania and operations related thereto, continue to secure the Judgment Loan and the Term Loan. Accordingly, by virtue of the relationship between the Company, as holder of the Judgment Loan and the Term Loan, and the affiliated co-lender, as new owner of the membership interests of the original borrower credit parties, Loan #9 remains a related party loan. For comparability to previously issued financial statements, management will continue to reference the Judgment Loan and the Term Loan, collectively, as Loan #9, as shown in Note 3.

In connection with the extinguishment of the original Loan #9, the CECL reserve of approximately $1.2 million was reversed, primarily due to the fact that the Company is the sole owner of the Judgment Loan and the Term Loan, which now include a senior liquidation preference and represent the only indebtedness in the borrower's new capital structure. These factors improve the Company's expectations regarding collectibility of principal and interest. In April 2025, the borrower opened its three dispensary locations all of which were previously non-operational and expect improved financial performance as a result. However; given the history of non-payment resulting from these locations being non-operational, management will closely monitor and evaluate the financial and cash flow performance of the now operational assets, before restoring Loan #9 to accrual status. Accordingly, Loan #9 remains on non-accrual status as of March 31, 2025. The Company intends to hold both the Judgment Loan and the Term Loan until maturity or payoff, as applicable, and therefore has classified these assets as loans held for investment - related party as of March 31, 2025, with a carrying value of approximately $16.5 million.

### Dividends Declared Per Share

During the three months ended March 31, 2025, we declared an ordinary cash dividend of $0.47 per share of our common stock, relating to the first quarter of 2025, which was paid on April 15, 2025 to stockholders of record as of the close of business on March 31, 2025. The total amount of the cash dividend payment was approximately $9.8 million.

The payment of this dividend is not indicative of our ability to pay such dividends in the future.

### Results of Operations

### Comparison of the three months ended March 31, 2025 and 2024

| Revenues | For the three months ended March 31, 2025 | 2024 | Variance Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Interest income | $15,107,315 | $15,343,667 | $(236,352) | -2% |
| Interest expense | (2,065,382) | (2,104,050) | 38,668 | -2% |
| **Net interest income** | 13,041,933 | 13,239,617 | (197,684) | -1% |
| **Expenses** |  |  |  |  |
| Management and incentive fees, net | 1,735,533 | 1,754,741 | (19,208) | -1% |
| General and administrative expense | 1,196,106 | 1,390,267 | (194,161) | -14% |
| Professional fees | 492,946 | 449,858 | 43,088 | 10% |
| Stock based compensation | 649,312 | 531,293 | 118,019 | 22% |
| (Benefit) provision for current expected credit losses | (1,073,276) | 380,279 | (1,453,555) | -382% |
| **Total expenses** | 3,000,621 | 4,506,438 | (1,505,817) | -33% |
| Change in unrealized gain on investments | - | (75,604) | 75,604 | 100% |
| Realized gain on debt securities, at fair value | - | 72,428 | (72,428) | 100% |
| **Net Income before income taxes** | **10,041,312** | **8,730,003** | **1,311,309** | 15% |
| Income tax expense | - | - | - | - |
| **Net Income** | **$10,041,312** | **$8,730,003** | **$1,311,309** | **15%** |

- Interest income decreased by approximately $0.2 million during the quarter ended March 31, 2025, compared to the quarter ended March 31, 2024. The decrease was driven primarily by the outstanding principal of the Company's loans that bear a floating rate which decreased from 77% at March 31, 2024 to 58.5% at March 31, 2025. Interest income from prepayment fees and acceleration of original issue discounts and other upfront fees generated approximately $0.4 million and $0.1 million of gross interest income during the three months ended March 31, 2025 and 2024, respectively. Additionally, the weighted average YTM IRR on our portfolio decreased from 19.4% at March 31, 2024 to 16.9% at March 31, 2025, as a result of certain re-pricing amendments relating to de-risking of our portfolio and the impact of the 100 basis point prime rate decline on our floating rate portfolio.
- Interest expense remained consistent over the comparative period. The Notes Payable, which were not included in interest expense during the three months ended March 31, 2024, contributed to approximately $1.2 million of the expense during the first quarter of 2025. This increase was offset by decrease in the weighted average outstanding balance on the Revolving Loan, which was approximately $41.6 million and $90.4 million, as of March 31, 2025 and 2024, respectively.
- Base management and incentive fees payable to our Manager remained consistent over the comparative period. Management fees were approximately $1.2 million for the three months ended March 31, 2025, as compared to approximately $1.1 million for the three months ended March 31, 2024. The slight increase in management fees was primarily attributable to the increase in weighted average equity as defined by the Management Agreement for the comparable period. The origination fee offsets in the three months ended March 31, 2025 were approximately $4 thousand, compared to approximately $16 thousand for the three months ended March 31, 2024. Incentive fees were approximately $0.5 million for the three months ended March 31, 2025, as compared to approximately $0.7 million for the three months ended March 31, 2024.
- General and administrative expenses and professional fees decreased by approximately $151 thousand for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The decrease was primarily due to a decrease in overhead reimbursements for costs incurred by the Manager on behalf of the Company, which were approximately $1.1 million for the three months ended March 31, 2025, compared to approximately $1.2 million for the three months ended March 31, 2024.
- Stock based compensation expense increased slightly by approximately $0.1 million for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The increase over the comparative period is driven by the incremental expense recognized on the 187,335 of restricted stock awards granted on during 2024, which had not been granted as of March 31, 2024.
- Our provision for current expected credit losses decreased due to both borrower specific credit factors and regular re-evaluations of overall current macroeconomic conditions affecting our borrowers and the industry.
- Benefit for current expected credit losses was approximately $1.1 million in the three months ended March 31, 2025, as compared to a provision of approximately $380 thousand in the three months ended March 31, 2024.The

decrease in expected credit losses was primarily driven by the $1.2 million reversal from Loan #9 during the three months ended March 31, 2025. The current expected credit loss reserve represents approximately 83 basis points of our aggregate loan commitments held at carrying value of approximately $3.3 million as of March 31, 2025.

- Changes in portfolio risk composition resulting from principal paydowns and new fundings also contributed to the decrease with reserves on new 2024 originations representing a larger portion of the reserve than loans originated as of March 31, 2024. As of March 31, 2025 and March 31, 2024 approximately 60.3% and 59.5% of our loans carry a risk rating of "1" or 2".
- We record a reserve liability based on the unfunded portion of loan commitments over the full contractual period over which we are exposed to credit risk through a current obligation to extend credit. Management considered the likelihood that funding will occur, and if funded, the expected credit loss on the funded portion. We continuously evaluate the credit quality of each loan by assessing the risk factors of each loan. The reserve recorded applicable to the $19.8 million of unfunded commitments as of March 31, 2025 is approximately $45 thousand.

### Loan Portfolio

As of both March 31, 2025 and December 31, 2024, our portfolio included 30 loans held for investment, with a carrying value of approximately $399.5 million and $402.5 million, respectively, prior to the reserve for current expected credit losses. The aggregate outstanding principal was approximately $401.5 million and $404.7 million as of March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025 and December 31, 2024, our loan portfolio had a weighted-average yield-to-maturity internal rate of return (“YTM IRR”) of 16.9% and 17.2%, respectively, and was substantially secured by real estate and, with respect to certain of our loans, substantially all assets of the borrowers and certain of their subsidiaries, including equipment, receivables, and licenses. YTM IRR is calculated using various inputs, including (i) cash and paid-in-kind (“PIK”) interest, which is capitalized and added to the outstanding principal balance of the applicable loan, (ii) original issue discount (“OID”), (iii) amortization, (iv) unused fees, and (v) exit fees. Certain of our loans have extension fees, which are not included in our YTM IRR calculations, but may increase YTM IRR if such extension options are exercised by borrowers.

The below table summarizes our portfolio of loans held for investment by rate type as of March 31, 2025 and December 31, 2024:

|  | As of March 31, 2025 Total Principal | Original Issue Discount | Carrying Value | Percentage of loans held for investment |
| --- | ---: | ---: | ---: | ---: |
| Fixed-rate loans | $163,307,742 | $(591,962) | $162,715,780 | 40.7% |
| Floating-rate loans | 238,204,074 | (1,464,375) | 236,739,699 | 59.3% |
| Total | $401,511,816 | $(2,056,337) | $399,455,479 | 100.0% |

|  | As of December 31, 2024 Total Principal | Original Issue Discount | Carrying Value | Percentage of loans held for investment |
| --- | ---: | ---: | ---: | ---: |
| Fixed-rate loans | $149,771,871 | $(545,081) | $149,226,790 | 37.0% |
| Floating-rate loans | 254,949,683 | (1,699,427) | 253,250,256 | 63.0% |
| Total | $404,721,554 | $(2,244,508) | $402,477,046 | 100.0% |

As of March 31, 2025, the Company has one loan held at fair value with a principal balance of $5.5 million, which bears a fixed rate. On an aggregate basis, our total loan portfolio is comprised of 58.5% and 41.5% floating rate loans and fixed rate loans, respectively.

The table below summarizes our portfolio as of March 31, 2025:

| Loan (1) | Location(s) | Initial Funding Date (1) | Maturity Date (2) | Principal Balance | Original Issue Discount | Carrying Value | Percentage of Loans Held for Investment | Future Fundings | Interest Rate (3) | Periodic Payment (4) | YTM IRR (5) |
| ---: | --- | --- | --- | ---: | ---: | ---: | ---: | ---: | --- | --- | ---: |
| **1** | Various | 10/27/2022 | 10/30/2026 | $19,255,716 | $(271,789) | $18,983,927 | 4.8% | - | P+6.5% Cash (8) | P&I | 17.1% |
| **2** | Michigan | 12/31/2021 | 12/31/2025 | 27,110,506 | - | 27,110,506 | 6.8% | - | P+3% Cash (13) | I/O | 17.3% |
| **3** | Various | 11/18/2021 | 1/29/2027 | 21,384,473 | (461,592) | 20,922,881 | 5.2% | - | P+10.375% Cash, 2.75% PIK (11)(14)(15) | P&I | 22.6% |
| **4** | Arizona | 4/19/2021 | 6/17/2026 | 6,626,809 | - | 6,626,809 | 1.7% | - | 11.91% Cash | I/O | 17.0% |
| **6** | Michigan | 8/20/2021 | 1/30/2026 | 4,958,672 | - | 4,958,672 | 1.2% | - | P+6.5% Cash (13) | P&I | 17.2% |
| **7** | Illinois, Arizona | 8/24/2021 | 6/30/2025 | 23,573,222 | (27,357) | 23,545,865 | 5.9% | - | P+6% Cash, 2% PIK (9) | I/O | 19.3% |
| **8** | West Virginia | 9/1/2021 | 12/31/2025 | 8,491,943 | - | 8,491,943 | 2.1% | - | 10% Cash | I/O | 15.0% |
| **9** | Pennsylvania | 3/31/2025 | 3/31/2028 | 16,576,987 | (108,037) | 16,468,950 | 4.1% | - | 9.0% Cash (16) | I/O | 9.5% |
| **12** | Various | 11/8/2021 | 10/31/2027 | 13,285,201 | (52,847) | 13,232,354 | 3.3% | - | P+7% Cash, 2% PIK (10) | P&I | 19.3% |
| **16** | Florida | 12/30/2021 | 8/29/2025 | 6,557,500 | (15,812) | 6,541,688 | 1.6% | - | 16.75% Cash | I/O | 31.2% |
| **18** | Ohio | 2/3/2022 | 12/31/2025 | 45,589,764 | (326,924) | 45,262,840 | 11.3% | - | P+1.75% Cash, 5% PIK (9)(17) | I/O | 16.5% |
| **19** | Florida | 3/11/2022 | 12/31/2025 | 18,378,759 | (17,969) | 18,360,790 | 4.6% | - | 11% Cash, 5% PIK | I/O | 16.5% |
| **20** | Missouri | 5/9/2022 | 11/28/2025 | 21,675,015 | (48,086) | 21,626,929 | 5.4% | - | 11% Cash, 2% PIK | P&I | 14.7% |
| **21** | Illinois | 7/1/2022 | 7/29/2026 | 6,453,187 | (29,315) | 6,423,872 | 1.6% | - | P+7% Cash, 2% PIK (9) | P&I | 23.3% |
| **23** | Arizona | 3/27/2023 | 3/31/2026 | 1,560,000 | (16,591) | 1,543,409 | 0.4% | - | P+7.5% Cash (12) | P&I | 18.7% |
| **24** | Oregon | 3/31/2023 | 9/27/2026 | 520,000 | - | 520,000 | 0.1% | - | P+10.5% Cash (7) | P&I | 21.7% |
| **25** | New York | 8/1/2023 | 6/29/2036 | 24,337,297 | - | 24,337,297 | 6.1% | - | 15% Cash | P&I | 16.6% |
| **27** | Nebraska | 8/15/2023 | 6/30/2027 | 17,400,000 | - | 17,400,000 | 4.4% | - | P+6.5% Cash (18) | P&I | 15.7% |
| **29** | Illinois | 10/11/2023 | 10/9/2026 | 1,920,477 | - | 1,920,477 | 0.5% | - | 11.4% Cash, 1.5% PIK | I/O | 14.7% |
| **30** | Missouri, Arizona | 12/19/2023 | 12/31/2026 | 18,400,000 | (122,131) | 18,277,869 | 4.6% | - | P+7.75% Cash (13) | I/O | 18.7% |
| **31** | California, Illinois | 5/3/2023 | 5/3/2026 | 6,680,000 | - | 6,680,000 | 1.7% | - | P+8.75% Cash (10) | P&I | 18.3% |
| **32** | Nevada | 4/15/2024 | 8/15/2027 | 5,900,000 | (25,351) | 5,874,649 | 1.5% | - | P+6.5% Cash (12) | P&I | 16.1% |
| **33** | Minnesota | 5/20/2024 | 5/28/2027 | 1,080,000 | (4,286) | 1,075,714 | 0.3% | - | 12% Cash (14) | I/O | 12.9% |
| **34** | Arizona | 6/17/2024 | 5/29/2026 | 10,000,000 | - | 10,000,000 | 2.5% | - | 11.91% Cash | I/O | 12.8% |
| **35** | California | 8/23/2024 | 8/23/2027 | 24,438,420 | - | 24,438,420 | 6.1% | - | 12% Cash, 3% PIK | P&I | 16.3% |
| **36** | Illinois | 10/28/2024 | 1/1/2027 | 25,900,000 | (107,202) | 25,792,798 | 6.5% | 1,700,000 | P+6.25% Cash (10) | I/O | 15.4% |
| **37** | Various | 11/26/2024 | 11/24/2028 | 20,069,535 | (365,730) | 19,703,805 | 4.9% | 10,000,000 | 12% Cash, 1% PIK (19) | I/O | 15.2% |
| **38** | Various | 12/13/2024 | 7/14/2025 | 2,905,000 | (24,676) | 2,880,324 | 0.7% | 2,095,000 | 10% Cash (19) | I/O | 16.1% |
| **40** | Various | 3/28/2025 | 7/28/2028 | 233,333 | (23,276) | 210,057 | 0.1% | - | SOFR +10.25% Cash (6) | I/O | 19.4% |
| **41** | Ohio | 3/1/2025 | 3/13/2027 | 250,000 | (7,366) | 242,634 | 0.1% | - | 14.5% Cash | I/O | 16.4% |
|  |  |  | **Total** | $401,511,816 | $(2,056,337) | $399,455,479 | 100% | $13,795,000 |  | **Wtd Average** | 16.9% |

(1) Loan numbering in the table above is maintained from origination for purposes of comparability and may not be sequential due to maturities, payoffs, or refinancings.

(2) Certain loans are subject to contractual extension options as stipulated in the loan agreement. Actual maturities may differ from contractual maturities stated herein and certain borrowers may have the right to prepay with or without a contractual prepayment penalty. The Company may also extend contractual maturities and amend other terms of the loans in connection with loan modifications.

(3) "P" = prime rate; "SOFR"= Secured Overnight Financing Rate. "P" and "SOFR" represent floating rate loans that pay interest at the designed benchmark rate plus an applicable spread; "PIK" = paid-in-kind interest.

(4) P&I = principal and interest. I/O = interest only. P&I loans may include interest only periods for a portion of the loan term.

(5) Estimated YTM, calculated on a weighted average principal basis, includes a variety of fees and features that affect the total yield, which may include, but is not limited to, OID, exit fees, prepayment fees, unused fees and contingent features. OID is recognized as a discount to the funded loan principal and is accreted to income over the term of the loan. The estimated YTM calculations require management to make estimates and assumptions, including, but not limited to, the timing and amounts of loan draws on delayed draw loans, the timing and collectability of exit fees, the probability and timing of prepayments and the probability of contingent features occurring. For example, certain credit agreements contain provisions pursuant to which certain PIK interest rates and fees earned by us under such credit agreements will decrease upon the satisfaction of certain specified criteria which we believe may improve the risk profile of the applicable borrower. To be conservative, we have not assumed any prepayment penalties or early payoffs in our estimated YTM calculation. Estimated YTM is based on current management estimates and assumptions, which may change. Actual results could differ from those estimates and assumptions.

(6) This Loan is subject to a prime rate floor of 3.25%

(7) This Loan is subject to a prime rate floor of 5.50%

(8) This Loan is subject to a prime rate floor of 6.25%

(9) This Loan is subject to a prime rate floor of 7.00%

(10) This Loan is subject to a prime rate floor of 7.50%

(11) This Loan is subject to a prime rate floor of 7.75%

(12) This Loan is subject to a prime rate floor of 8.00%

(13) This Loan is subject to a prime rate floor of 8.50%

(14) The borrower of Loan #33 is an affiliate of the borrower of Loan #3, a related party. The aggregate principal balance of these loans is included on the consolidated balance sheet as loans held for investment - related party. See Note 8 of the consolidated financial statements for further details.

(15) The aggregate principal balance outstanding of Loan #3 is comprised of two tranches. The first tranche has a principal balance of approximately $16.9 million, bears a floating interest rate of prime plus 10.375% cash and 2.75% PIK and has a maturity date of January 29, 2027. The second tranche has a principal balance of approximately $4.4 million, bears an interest rate of 15.00% cash and 2.00% PIK, and a maturity date of May 29, 2026. The statistics presented reflect the weighted average of the rate terms under both tranches for the total aggregate loan principal, however only the maturity date for the first tranche has been presented in the table above.

(16) Loan #9, is comprised of two tranches, a $14.5 million first lien judgment loan (the "Judgment Loan") and a $2.0 million second lien term loan (the "Term Loan"). The Judgment Loan and the Term Loan bear interest at a rate of 9.0%. The Judgment Loan has no contractual maturity and will remain outstanding until paid by the obligor and the Term Loan has a maturity of March 31, 2028. For comparability to previously issued financial statements, management will continue to reference the Judgment Loan and the Term Loan, collectively, as Loan #9, and the maturity date presented represents the maturity date of the Term Loan. See Note 8 for additional information.

(17) An affiliate under common control holds a controlling equity investment in this portfolio company (Note 8).

(18) This loan has floating grid pricing based on the Prime Rate plus a spread of 5.00% to 8.75% based on monthly annualized EBITDA performance. As of March 31, 2025, applied interest rate is Prime Rate + 6.50%.

(19) Loan #37 and Loan #38 bear unused fees on the unfunded commitment of 0.75% and 1.50% per annum, respectively.

The following tables summarize our loans held for investment as of March 31, 2025 and December 31, 2024:

|  | As of March 31, 2025 Outstanding Principal | Original Issue Discount | Carrying Value | Weighted Average Remaining Life (Years) (1) |
| --- | ---: | ---: | ---: | ---: |
| Senior Term Loans | $401,511,816 | $(2,056,337) | $399,455,479 | 2.1 |
| Current expected credit loss reserve | - | - | (3,274,058) |  |
| **Total loans held at carrying value, net** | **$401,511,816** | **$(2,056,337)** | **$396,181,421** |  |

|  | As of December 31, 2024 Outstanding Principal | Original Issue Discount | Carrying Value | Weighted Average Remaining Life (Years) (1) |
| --- | ---: | ---: | ---: | ---: |
| Senior Term Loans | $404,721,554 | $(2,244,508) | $402,477,046 | 2.2 |
| Current expected credit loss reserve | - | - | (4,346,869) |  |
| **Total loans held at carrying value, net** | **$404,721,554** | **$(2,244,508)** | **$398,130,177** |  |

(1) Weighted average remaining life is calculated based on the carrying value of the loans as of March 31, 2025 and December 31, 2024, respectively.

The following tables present changes in loans held for investment at carrying value as of and for the three months ended March 31, 2025 and 2024:

|  | Principal | Original Issue Discount | Current Expected Credit Loss Reserve | Carrying Value |
| --- | ---: | ---: | ---: | ---: |
| **Balance at December 31, 2024** | **$404,721,554** | **$(2,244,508)** | **$(4,346,869)** | **$398,130,177** |
| New fundings | 4,365,832 | (181,800) | - | 4,184,032 |
| Principal repayment of loans | (9,170,628) | - | - | (9,170,628) |
| Accretion of original issue discount | - | 369,971 | - | 369,971 |
| PIK Interest | 1,595,058 | - | - | 1,595,058 |
| Decrease in provision for current expected credit losses | - | - | 1,072,811 | 1,072,811 |
| **Balance at March 31, 2025** | **$401,511,816** | **$(2,056,337)** | **$(3,274,058)** | **$396,181,421** |

|  | Principal | Original Issue Discount | Current Expected Credit Loss Reserve | Carrying Value |
| --- | ---: | ---: | ---: | ---: |
| **Balance at December 31, 2023** | **$355,745,305** | **$(2,104,695)** | **$(4,972,647)** | **$348,667,963** |
| New fundings | 22,485,888 | (105,081) | - | 22,380,807 |
| Principal repayment of loans | (3,663,452) | - | - | (3,663,452) |
| Accretion of original issue discount | - | 477,756 | - | 477,756 |
| PIK Interest | 3,008,593 | - | - | 3,008,593 |
| Increase in provision for current expected credit losses | - | - | (383,371) | (383,371) |
| **Balance at March 31, 2024** | **$377,576,334** | **$(1,732,020)** | **$(5,356,018)** | **$370,488,296** |

We may make modifications to loans, including loans that are in default. Loan terms that may be modified include interest rates, required prepayments, maturity dates, covenants, principal amounts and other loan terms. The terms and conditions of each modification vary based on individual circumstances and will be determined on a case by case basis. Our Manager monitors and evaluates each of our loans held for investment and has maintained regular communications with borrowers regarding potential impacts on our loans.

### Non-GAAP Measures and Key Financial Measures and Indicators

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

### Distributable Earnings and Adjusted Distributable Earnings

In addition to using certain financial metrics prepared in accordance with GAAP to evaluate our performance, we also use Distributable Earnings and Adjusted Distributable Earnings to evaluate our performance. Each of Distributable Earnings and Adjusted Distributable Earnings is a measure that is not prepared in accordance with GAAP. We define Distributable Earnings as, for a specified period, the net income (loss) computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period; provided that Distributable Earnings does not exclude, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash, (iv) provision for current expected credit losses and (v) 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 define Adjusted Distributable Earnings, for a specified period, as Distributable Earnings excluding certain non-recurring organizational expenses (such as one-time expenses related to our formation and start-up).

We believe providing Distributable Earnings and Adjusted Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to stockholders in assessing the overall performance of our business. As a REIT, we are required to distribute at least 90% of our annual REIT taxable income and to pay tax at regular corporate rates to the extent that we annually distribute less than 100% of such taxable income. Given these requirements and our belief that dividends are generally one of the principal reasons that stockholders invest in our common stock, we generally intend to attempt to pay dividends to our stockholders in an amount equal to our net taxable income, if and to the extent authorized by our Board. Distributable Earnings is one of many factors considered by our Board in authorizing dividends and, while not a direct measure of net taxable income, over time, the measure can be considered a useful indicator of our dividends.

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

The following table provides a reconciliation of GAAP net income to Distributable Earnings and Adjusted Distributable Earnings (in thousands, except per share data):

|  | Three months ended March 31, 2025 | Three months ended March 31, 2024 |
| --- | ---: | ---: |
| **Net Income** | $10,041,312 | $8,730,003 |
| **Adjustments to net income** |  |  |
| Stock based compensation | 649,312 | 531,293 |
| Amortization of debt issuance costs | 110,309 | 90,915 |
| (Benefit) provision for current expected credit losses | (1,073,276) | 380,279 |
| Change in unrealized gain on investments | - | 75,604 |
| **Distributable Earnings** | $9,727,657 | $9,808,094 |
| Basic weighted average shares of common stock outstanding (in shares) | 20,858,466 | 18,273,919 |
| **Basic Distributable Earnings per Weighted Average Share** | $0.47 | $0.54 |
| Diluted weighted average shares of common stock outstanding (in shares) | 21,264,891 | 18,640,492 |
| **Diluted Distributable Earnings per Weighted Average Share** | $0.46 | $0.53 |

### Book Value Per Share

The book value per share of our common stock as of March 31, 2025 and December 31, 2024 was approximately $14.87 and $14.83, respectively.

### Liquidity and Capital Resources

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain our assets and operations, make distributions to our stockholders, and meet other general business needs. We use significant cash to invest in loans, repay principal and interest on our borrowings, make distributions to our stockholders, and fund our operations.

Our primary sources of cash generally consist of unused borrowing capacity under our financing sources, the net proceeds of future offerings of equity or debt securities, payments of principal and interest we receive on our portfolio of assets and cash generated from our operating results. On a long-term basis, we expect that our primary sources of financing will be, to the extent available to us, through (a) credit facilities and (b) public and private offerings of our equity and debt securities. We may utilize other sources of financing to the extent available to us. As the cannabis industry continues to evolve and to the extent that additional states legalize cannabis, the demand for capital continues to increase as operators seek to enter and build out new markets. In the short-term, we expect the principal amount of the loans we originate to increase and that we will need to raise additional equity and/or debt financing to increase our liquidity. We expect to achieve this through recycling capital from loan paydowns, repayments, and sales of common stock related to our shelf registration statement.

As of March 31, 2025 and December 31, 2024, all of our cash was unrestricted and totaled approximately $9.9 million and $26.4 million, respectively. We believe that our cash on hand, capacity available under our Revolving Loan, and cash flows from operations for the next twelve months will be sufficient to satisfy the operating requirements of our business through at least the next twelve months. The sources of financing for our target investments are described below.

### Credit Facility

As of March 31, 2025 and December 31, 2024, unamortized debt issuance costs related to the Revolving Loan, including all amendments and amendments and restatements thereto, as applicable, of $254,229 and $305,075, respectively, are recorded in other receivables and assets, net on the consolidated balance sheets.

As of and for the three months ended March 31, 2025, the Company had net repayments of $17.0 million against the Revolving Loan. As of March 31, 2025, the Company had $72.0 million available and $38.0 million outstanding under the Revolving Loan (Note 7 of Part 1, Item 1 - *Financial Information).*

### Notes Payable

On October 18, 2024 (the "Closing Date"), the Company entered into a Loan Agreement by and among the Company and the various financial institutions party thereto, for an aggregate commitment of $50.0 million in senior unsecured notes (the "Unsecured Notes"). The Unsecured Notes have a contractual four year term maturing on October 18, 2028 and bear a fixed interest rate of 9.00% per annum. The Company may prepay the Unsecured Notes at any time without penalty following the second anniversary of the Closing Date. A prepayment penalty of 3.00% and 2.00% would be due and payable in the event of prepayment prior to the first and second anniversary of the Closing Date, respectively.

The $50.0 million aggregate commitment was advanced on the closing date and proceeds were used to temporarily repay outstanding obligations on the Revolving Loan and for other working capital purposes. The Company incurred debt issuance costs of approximately $0.9 million related to Unsecured Notes, which were capitalized and offset against the outstanding face value of the Unsecured Notes within the line item titled Notes Payable, net on the consolidated balance sheets.

The Unsecured Notes provide for certain affirmative covenants, including requiring us to deliver certain financial information and any notices of default, and conducting business in the normal course. Additionally, the Company must comply with certain financial and non-financial covenants including but not limited to: (1) minimum stockholders' equity of $200.0 million, (2) maximum aggregate indebtedness of $225.0 million, subject to increase from time to time based upon ratable increases in stockholders' equity, and (3) maintenance of a credit rating. As of March 31, 2025, the Company is in compliance with all financial covenants with respect to the Unsecured Notes.

### Capital Markets

We may seek to raise further equity capital and issue debt securities in order to fund our future investments in loans. Our Shelf Registration Statement became effective on January 19, 2023, allowing us to sell, from time to time in one or more offerings, up to $500 million of our securities, including common stock, preferred stock, debt securities, warrants and rights (including as part of a unit) to purchase shares of our common stock, preferred stock, or debt securities. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering. We may also access liquidity through our ATM Program, which was established in June 2023 and amended in March 2025, pursuant to which we may sell, from time to time, up to $100.0 million of our common stock.

During the quarter ended March 31, 2024, the Company sold an aggregate of 896,443 shares of the Company’s common stock under the Sales Agreement at a weighted average price of $15.93 per share, generating net proceeds of approximately $13.9 million.

During the quarter ended March 31, 2025, the Company sold an aggregate of 64,557 shares of the Company’s common stock under the Sales Agreement at a weighted average price of $16.01 per share, generating net proceeds of approximately $1.0 million.

### Cash Flows

The following table sets forth changes in cash and cash equivalents for the three months ended March 31, 2025 and 2024, respectively:

|  | For the three months ended March 31, 2025 | 2024 |
| --- | ---: | ---: |
| Net income | $10,041,312 | $8,730,003 |
| Adjustments to reconcile net income to net cash used in operating activities and changes in operating assets and liabilities | (2,416,144) | (1,812,131) |
| Net cash provided by operating activities | 7,625,168 | 6,917,872 |
| Net cash provided by/(used in) investing activities | 5,507,310 | (18,717,355) |
| Net cash (used in)/provided by financing activities | (29,653,749) | 10,805,556 |
| Change in cash and cash equivalents | (16,521,271) | (993,927) |

38

### Net Cash Provided by Operating Activities

For the three months ended March 31, 2025 and 2024, we reported “Net cash provided by operating activities” of approximately $7.6 million and $6.9 million, respectively. Net cash provided by operating activities increased approximately $0.7 million, primarily attributable to a decrease in PIK interest of approximately $1.4 million, increase in related party net payable of approximately $2.1 million, a decrease in management and incentive fees payable of approximately $0.3 million and an increase in net income over the comparable period of approximately $1.3 million. These changes were offset by a decrease in the interest reserve for applied interest payments of approximately $2.2 million, a decrease in provision for current expected credit losses of approximately $1.4 million and an increase in stock based compensation of approximately $0.1 million, over the comparable period.

### Net Cash Provided by/(Used in) by Investing Activities

For the three months ended March 31, 2025 and 2024, we reported “Net cash provided by/(used in) investing activities” of approximately $5.5 million and $(18.7) million, respectively.

For the three months ended March 31, 2025 cash outflows primarily related to $3.7 million used for the origination and funding of loans held for investment, partially offset by $9.2 million of cash received from the principal repayment of loans held for investment.

For the three months ended March 31, 2024, cash outflows primarily related to $22.4 million used for the origination and funding of loans held for investment, partially offset by $3.7 million of cash received from the principal repayment of loans held for investment.

### Net Cash (Used in)/Provided by Financing Activities

For the three months ended March 31, 2025 and 2024, we reported “Net cash (used in)/provided by financing activities” of approximately $(29.7) million and $10.8 million, respectively.

For the three months ended March 31, 2025, cash inflows of approximately $1.0 million related to proceeds received from sales of our common stock through the registered at-the-market offering, which were offset by approximately $17.0 million in net repayments on our Revolving Loan, $13.6 million in dividends paid and approximately $82 thousand in offering costs associated with the registered at-the-market offering.

For the three months ended March 31, 2024, cash inflows of approximately $9.8 million related to proceeds received from sales of our common stock through the registered at-the-market offering and $15.3 million net draw downs on our Revolving Loan, which were offset by $13.9 million in dividends paid, approximately $50 thousand in debt issuance costs paid, and approximately $340 thousand in offering costs associated with the registered at-the-market offering.

### Leverage Policies

Although we are not required to maintain any particular leverage ratio, we expect to employ prudent amounts of leverage and, when appropriate, to use debt as a means of providing additional funds for the acquisition of loans, to refinance existing debt or for general corporate purposes. Leverage is primarily used to provide capital for forward commitments until additional equity is raised or additional medium- to long-term financing is arranged. This policy is subject to change by management and our Board.

### Dividends

We have elected to be taxed as a REIT for United States federal income tax purposes and, as such, anticipate annually distributing to our stockholders at least 90% of our REIT taxable income, prior to the deduction for dividends paid and our net capital gain. If we distribute less than 100% of our REIT taxable income in any tax year (taking into account any distributions made in a subsequent tax year under Sections 857(b)(9) or 858 of the Code), we will pay tax at regular corporate rates on that undistributed portion. Furthermore, if we distribute less than the sum of (i) 85% of our ordinary income for the calendar year, (ii) 95% of our capital gain net income for the calendar year and (iii) any Required Distribution to our stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then we are required to pay non-deductible excise tax equal to 4% of any shortfall between the Required Distribution and the amount that was actually distributed. Any of these taxes would decrease cash available for distribution to our stockholders. The 90% distribution requirement does not require the distribution of net capital gains. However, if we elect to retain any of our net capital gain for any tax year, we must notify our stockholders and pay tax at regular corporate rates on the retained net capital gain. The stockholders must include their proportionate share of the retained net capital gain in their taxable income for the tax year, and they are deemed to have paid the REIT’s tax on their proportionate share of the retained capital gain. Furthermore, such retained capital gain may be subject to the nondeductible 4% excise tax. If we determine that our estimated current year taxable income (including net capital gain) will be in excess of estimated dividend distributions (including capital gains dividends) for the current year from such income, we accrue excise tax on a portion of the estimated excess taxable income as such taxable income is earned.

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

The following table summarizes the Company’s dividends declared during the three months ended March 31, 2025 and 2024, respectively.

|  | Record Date | Payment Date | Common Share Distribution Amount | Taxable Ordinary Income | Return of Capital | Section 199A Dividends |
| --- | --- | --- | ---: | ---: | ---: | ---: |
| Regular cash dividend | 3/31/2025 | 4/15/2025 | $0.47 | $0.47 | $- | $0.47 |
| Total cash dividend |  |  | **$0.47** | **$0.47** | **-** | **$0.47** |

|  | Record Date | Payment Date | Common Share Distribution Amount | Taxable Ordinary Income | Return of Capital | Section 199A Dividends |
| --- | --- | --- | ---: | ---: | ---: | ---: |
| Regular cash dividend | 3/28/2024 | 4/15/2024 | $0.47 | $0.47 | $- | $0.47 |
| Total cash dividend |  |  | **$0.47** | **$0.47** | **$-** | **$0.47** |

### CECL Reserve

In accordance with ASC 326, we record allowances for our loans held for investment. The allowances are deducted from the gross carrying amount of the assets to present the net carrying value of the amounts expected to be collected on such assets. The Company estimates its CECL Reserve using among other inputs, third-party valuations, and a third-party probability-weighted model that considers the likelihood of default and expected loss given default for each individual loan based on the risk profile for approximately three years after which we immediately revert to use of historical loss data.

ASC 326 requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. We consider multiple datapoints and methodologies that may include likelihood of default and expected loss given default for each individual loans, valuations derived from discounted cash flows (“DCF”), and other inputs including the risk rating of the loan, how recently the loan was originated compared to the measurement date, and expected prepayment, if applicable. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, and off-balance sheet credit exposures such as unfunded loan commitments.

We evaluate our loans on a collective (pool) basis by aggregating on the basis of similar risk characteristics as explained above. We make the judgment that loans to cannabis-related borrowers that are fully collateralized by real estate exhibit similar risk characteristics and are evaluated as a pool. Further, loans that have no real estate collateral, but are secured by other forms of collateral, including equity pledges of the borrower, and otherwise have similar characteristics as those collateralized by real estate are evaluated as a pool. All other loans are analyzed individually, either because they operate in a different industry, may have a different risk profile, or have maturities that extend beyond the forecast horizon for which we are able to derive reasonable and supportable forecasts.

Estimating the CECL Reserve also requires significant judgment with respect to various factors, including (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 our loan portfolio, and (iv) our current and future view of the macroeconomic environment. From time to time, we may consider loan-specific qualitative factors on certain loans to estimate our 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 we have deemed the borrower/sponsor to be experiencing financial difficulty, we 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 CECL Reserve.

To estimate the historic loan losses relevant to our portfolio, we evaluate our historical loan performance, which includes zero realized loan losses since our inception of operations. Additionally, we analyzed our repayment history, noting we have limited “true”

operating history, since the incorporation date of March 30, 2021. However, our Sponsor has had operations for the past five fiscal years and has made investments in similar loans that have similar characteristics, including interest rate, collateral coverage, guarantees, and prepayment/make whole provisions, which fall into the pools identified above.

In addition, we review each loan on a quarterly basis and evaluate the borrower’s ability to pay the monthly interest and principal, if required, as well as the loan-to-value (LTV) ratio. In considering the potential current expected credit loss, the Manager primarily considers significant inputs to our forecasting methods, which include (i) key loan-specific inputs such as the value of the real estate collateral, liens on equity (including the equity in the entity that holds the state-issued license to cultivate, process, distribute, or retail cannabis), presence of personal or corporate guarantees, among other credit enhancements, LTV ratio, ratio type (fixed or floating) and IRR, loan-term, geographic location, and expected timing and amount of future loan fundings, (ii) performance against the underwritten business plan and our internal loan risk rating and (iii) a macro-economic forecast. Estimating the enterprise value of our borrowers in order to calculate LTV ratios is often a significant estimate. We rely primarily on comparable transactions to estimate enterprise value of our portfolio companies and supplement such analysis with a multiple-based approach to enterprise value to revenue multiples of publicly-traded comparable companies obtained from S&P Capital IQ as of the quarter end, to which we apply a private company discount based on our current borrower profile. These estimates may change in future periods based on available future macro-economic data and might result in a material change in our future estimates of expected credit losses for our loan portfolio.

Regarding real estate collateral, we generally cannot take the position of mortgagee-in-possession as long as the property is used by a cannabis operator, but we can request that the court appoint a receiver to manage and operate the subject real property until the foreclosure proceedings are completed. Additionally, while we cannot foreclose under state Uniform Commercial Code (“UCC”) and take title or sell equity in a licensed cannabis business, a potential purchaser of a delinquent or defaulted loan could.

In order to estimate the future expected loan losses relevant to our portfolio, we utilize historical market loan loss data obtained from a third-party database for commercial real estate loans, which we believe is a reasonably comparable and available data set to use as an input for our type of loans. We expect this dataset to be representative for future credit losses whilst considering that the cannabis industry is maturing, and consumer adoption, demand for production, and retail capacity are increasing akin to commercial real estate over time. For periods beyond the reasonable and supportable forecast period, we revert back to historical loss data.

All of the above assumptions, although made with the most available information at the time of the estimate, are subjective and actual activity may not follow the estimated schedule. These assumptions impact the future balances that the loss rate will be applied to and as such impact our CECL Reserve. As we acquire new loans and our Manager monitors loan and borrower performance, these estimates will be revised each period.

### Risk Ratings

We assess the risk factors of each loan, and assign a risk rating based on a variety of factors, including, without limitation, payment history, real estate collateral coverage, property type, geographic and local market dynamics, financial performance, enterprise value of the portfolio company, loan structure and exit strategy, and project sponsorship. This review is performed quarterly. Based on a 5-point scale, our loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:

| Rating | Definition |
| ---: | --- |
| 1 | Very low risk |
| 2 | Low risk |
| 3 | Moderate/average risk |
| 4 | High risk/potential for loss: a loan that has a risk of realizing a principal loss |
| 5 | Impaired/loss likely: a loan that has a high risk of realizing principal loss, has incurred principal loss or an impairment has been recorded |

The risk ratings are primarily based on historical data and current conditions specific to each portfolio company, as well as consideration of future economic conditions and each borrower’s estimated ability to meet debt service requirements. The risk ratings shown in the following table as of March 31, 2025 and December 31, 2024 consider borrower specific credit history and performance and quarterly re-evaluation of overall current macroeconomic conditions affecting the borrowers. As interest rates have increased due to rising rates from the Federal Reserve Board, it has impacted borrowers’ ability to service their debt obligations on a global scale. Changes in risk ratings had an effect on the level of the current expected credit loss reserve though, other than the one loan placed on non-accrual status, the loans continued to perform as expected. For approximately 50.4% of the portfolio, the fair value of the underlying real estate collateral exceeded the amounts outstanding under the loans as of March 31, 2025. The remaining approximately 49.6% of the portfolio, while not fully collateralized by real estate, may be partially collateralized by real estate and was secured by other forms of collateral including equipment, receivables, licenses and/or other assets of the borrowers to the extent permitted by applicable laws and regulations governing such borrowers.

As of March 31, 2025 and December 31, 2024, the carrying value, excluding the CECL Reserve, of the Company’s loans within each risk rating by year of origination is as follows:

| Risk Rating | As of March 31, 2025(1) 2025 | 2024 | 2023 | 2022 | 2021 | Total |
| ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| 1 | $- | $1,075,713 | $520,000 | $21,626,930 | $- | $23,222,643 |
| 2 | 1,040,870 | 64,835,378 | 63,479,052 | 64,691,470 | 23,545,865 | 217,592,635 |
| 3 | 242,634 | 34,737,436 | - | 72,373,346 | 29,701,304 | 137,054,720 |
| 4 | - | 10,000,000 | - | - | 11,585,481 | 21,585,481 |
| 5 | - | - | - | - | - | - |
| Total | $1,283,504 | $110,648,527 | $63,999,052 | $158,691,746 | $64,832,650 | $399,455,479 |

(1) Amounts are presented by loan origination year with subsequent advances shown in the original year of origination.

### Accounting Policies and Estimates

As of March 31, 2025, there were no significant changes in the application of our accounting policies or estimates from those presented in our annual report on Form 10-K. Refer to Note 2 to our consolidated financial statements for the three months ended March 31, 2025, titled “*Significant Accounting Policies”* for information on recent accounting pronouncements.

## Market risk

As filed, 12,799 characters.

We are exposed to market risks in the ordinary course of our business. These risks primarily relate to fluctuations in interest rates. Our loans are typically valued using a yield analysis, which is typically performed for performing loans to borrowers. Changes in market yields may change the fair value of certain of our loans. Generally, an increase in market yields may result in a decrease in the fair value of certain of our loans, however this is mitigated to the extent our loans bear interest at a floating rate. As of March 31, 2025, we had 16 floating-Prime rate loans, representing approximately 58.5% of our total loan portfolio based on outstanding principal balances, subject to a Prime Rate floor. We estimate that a hypothetical 100 basis points increase in the Prime Rate would result in an increase in annual cash interest income, excluding the effects of PIK interest, of approximately $2.4 million and a 100 basis points decrease in the Prime Rate would result in a decrease in annual interest income of approximately $0.8 million. Our loans generally have a Prime Rate floor established at the prevailing Prime Rate at the time of origination. Refer to Note 3 for Prime Rate floor by loan.

In addition, our Revolving Loan is exposed to similar market risks. Changes in market rates may change the fair value of our Revolving Loan as our loan bears interest at the greater of (1) the Prime Rate plus the applicable margin and (2) 3.25%. As of March 31, 2025, we had an outstanding balance of $38.0 million under the Revolving Loan. Based on our outstanding balance as of March 31, 2025, we estimate that a hypothetical 100 basis points increase in the Prime Rate would result in an increase in annual cash interest expense, excluding unused fees, of approximately $0.4 million and a 100 basis points decrease in the Prime Rate would result in a decrease in annual interest expense of approximately $0.4 million.

The Unsecured Notes bear a fixed interest rate of 9.00% per annum and are not impacted by changes in market rates.

### Changes in Market Interest Rates and Effect on Net Interest Income

Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We are subject to interest rate risk in connection with our assets and our related financing obligations.

Our operating results depend in large part on differences between the income earned on our assets and our cost of borrowing. The cost of our borrowings generally are based on prevailing market interest rates. During a period of rising interest rates, our borrowing costs generally will increase (a) while the yields earned on our leveraged fixed-rate loan assets will remain static, and (b) at a faster pace than the yields earned on our leveraged floating-rate loan assets, which could result in a decline in our net interest spread and net interest margin. The severity of any such decline would depend on our asset/liability composition at the time as well as the magnitude and duration of the interest rate increase. Further, an increase in short-term interest rates could also have a negative impact on the market value of our target investments. If any of these events happen, we could experience a decrease in net income or incur a net loss during these periods, which could adversely affect our liquidity and results of operations.

### Risk Management

To the extent consistent with maintaining our REIT qualification and our exemption from registration under the Investment Company Act, we seek to manage risk exposure by closely monitoring our portfolio and actively managing the financing, interest rate, credit, prepayment and convexity (a measure of the sensitivity of the duration of a loan to changes in interest rates) risks associated with holding our portfolio of loans. Generally, with the guidance and experience of our Manager:

- we manage our portfolio through an interactive process with our Manager and service our self-originated loans through our Manager’s servicer;
- we invest in a mix of floating-rate and fixed-rate loans to mitigate the interest rate risk associated with the financing of our portfolio;
- we actively employ portfolio-wide and asset-specific risk measurement and management processes in our daily operations, including utilizing our Manager’s risk management tools such as software and services licensed or purchased from third-parties and proprietary analytical methods developed by our Manager; and
- we seek to manage credit risk through our due diligence process prior to origination or acquisition and through the use of non-recourse financing, when and where available and appropriate. In addition, with respect to any particular target investment, prior to origination or acquisition our Manager’s investment team evaluates, among other things, relative valuation, comparable company analysis, supply and demand trends, shape-of-yield curves, delinquency and default rates, recovery of various sectors and vintage of collateral.

### Market Conditions

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

We believe that favorable market conditions, including an imbalance in supply and demand of credit to cannabis operating companies, have provided attractive opportunities for non-bank lenders, such as us, to finance commercial real estate loans and other loans that exhibit strong fundamentals but also require more customized financing structures and loan products than regulated financial institutions can presently provide. Additionally, to the extent that additional states legalize cannabis, our addressable market will increase. While we intend to continue capitalizing on these opportunities and growing the size of our portfolio, we are aware that the competition for the capital we provide is increasing.

Our ability to grow or maintain our business depends on state laws pertaining to the cannabis industry. New laws that are adverse to our 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 our ability to grow and could materially adversely affect our business.

Management’s plan to mitigate risks include monitoring the legal landscape as deemed appropriate. Also, should a loan default or otherwise be seized, we may be prohibited from owning cannabis assets and thus could not take possession of collateral, in which case we would look to sell the loan, which could result in us realizing a loss on the transaction.

While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain loans, particularly those not fully collateralized by real estate. In order to mitigate that risk, our loans are generally collateralized by other assets, such as equipment, receivables, licenses or other assets of the borrowers to the extent permitted by applicable laws and regulations. In addition, we seek to impose strict loan covenants and seek personal or corporate guarantees for additional protection. As of March 31, 2025, 50% of our portfolio is fully secured by real estate. Our portfolio on average had real estate collateral coverage of 1.1x as of March 31, 2025, and all of our loans are secured by equity pledges of the borrower entities and all asset liens. As of March 31, 2024, 66% of our portfolio was fully secured by real estate. Our portfolio on average had real estate collateral coverage of 1.3x as of March 31, 2024 and all of our loans were secured by equity pledges of the borrower and all asset liens.

### Credit Risk

We are subject to varying degrees of credit risk in connection with our loans and interest receivable. Our Manager seeks to mitigate this risk by seeking to originate loans, and may in the future acquire loans, of higher quality at appropriate prices given anticipated and unanticipated losses, by employing a comprehensive review and selection process and by proactively monitoring originated and acquired loans. Nevertheless, unanticipated credit losses could occur that could adversely impact our operating results. For additional information regarding the credit risk associated with our loans and interest receivables, see “*Risk Factors- Loans to relatively new and/or small companies and companies operating in the cannabis industry generally involve significant risks”* in our Annual Report on Form 10-K for the year ended December 31, 2024.

Our Manager or affiliates of our Manager have originated all of our loans and intend to continue to originate our loans, but we may in the future also acquire loans from time to time. Our Investment Guidelines are not subject to any limits or proportions with respect to the mix of target investments that we make or that we may in the future acquire other than as necessary to maintain our exemption from registration under the Investment Company Act and our qualification as a REIT. Our investment decisions will depend on prevailing market conditions and may change over time in response to opportunities available in different interest rate, economic and credit environments. As a result, we cannot predict the percentage of our capital that will be invested in any individual target investment at any given time.

Our loan portfolio as of March 31, 2025 and December 31, 2024, was concentrated with the top three borrowers representing approximately 24.6% and 24.0% of principal outstanding, respectively. As of and for the three months ended March 31, 2025 and 2024, the top three borrowers represented approximately 24.3% and 29.7% of the total interest income, respectively. The largest loan represented approximately 11.4% and 11.1% of principal outstanding as of March 31, 2025 and December 31, 2024, respectively.

As of March 31, 2025 and December 31, 2024, our borrowers have operations in the jurisdiction noted within the table below based on real estate collateral location or principal place of business:

| As of March 31, 2025 Jurisdiction | Outstanding Principal (1) | Percentage of Our Loan Portfolio | As of December 31, 2024 Jurisdiction | Outstanding Principal (1) | Percentage of Our Loan Portfolio |
| --- | ---: | ---: | --- | ---: | ---: |
| Illinois | $61,370,819 | 15% | Illinois | $55,958,079 | 14% |
| Ohio | 61,364,965 | 15% | Ohio | 60,065,707 | 15% |
| Florida | 42,242,026 | 11% | Florida | 42,712,285 | 11% |
| Pennsylvania | 35,832,703 | 9% | Pennsylvania | 35,727,045 | 9% |
| Missouri | 32,082,102 | 8% | Missouri | 38,208,259 | 9% |
| Michigan | 32,069,178 | 8% | Michigan | 32,068,629 | 8% |
| Arizona | 28,914,569 | 7% | Arizona | 28,023,340 | 7% |
| California | 24,859,640 | 6% | California | 26,057,479 | 6% |
| New York | 24,337,297 | 6% | New York | 25,093,595 | 6% |
| Maryland | 22,049,473 | 5% | Maryland | 21,835,901 | 5% |
| Nebraska | 17,400,000 | 4% | Nebraska | 17,400,000 | 4% |
| West Virginia | 8,491,943 | 2% | West Virginia | 8,491,943 | 2% |
| Nevada | 5,900,000 | 1% | Nevada | 6,000,000 | 1% |
| Texas | 2,763,768 | 1% | Texas | 2,756,870 | 1% |
| Minnesota | 1,160,460 | 0% | Minnesota | 1,116,000 | 0% |
| Oregon | 672,873 | 0% | Oregon | 580,000 | 0% |
| Massachusetts | — | -% | Massachusetts | 2,626,423 | 1% |
| Total | $401,511,816 | 100% | Total | $404,721,554 | 100% |

(1) The principal balance of the loans not secured by real estate collateral are included in the jurisdiction representing the principal place of business.

### Real Estate Risk

Commercial real estate loans are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loan or loans, as the case may be, which could also cause us to suffer losses.

## Controls and procedures

As filed, 2,121 characters.

#### Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to provide reasonable assurance that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the forms and rules of the SEC and that such information is accumulated and communicated to management, including the Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

In connection with the preparation of this quarterly report on Form 10-Q, our management, including the Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2025. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2025 to ensure that (a) information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the forms and rules of the SEC and (b) such information is accumulated and communicated to management, including the Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.

#### Changes in Internal Control over Financial Reporting

Except as discussed in the preceding paragraph, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended March 31, 2025 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 1,003 characters.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, which could materially affect our business, financial condition and/or results of operations. Except to the extent updated below or to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10-Q relates to such risk factors, there have been no material changes to the risk factors described in the “Risk Factors” sections in our Annual Report on Form 10-K for the year ended December 31, 2024. The risks described in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or results of operations.

Filed May 7, 2025.
Source: SEC EDGAR, the filing index for accession 0000950170-25-064974. Last ingested by Listed: Oct 24, 2026, 15:16 ET. No prices; not investment advice.