Advanced Flower Capital : AFC Q1 2025 Earnings Presentation

Published: 2025-05-14 07:41:09 ET AFCG

Published on 05/14/2025 at 07:41

A D V A N C E D F LO W E R C A P IT A L | I N V E S T O R P R E S E N T A T I O N

Investor Presentation

First Quarter 2025

May 14, 2025

Some of the statements contained in this presentation constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, and we intend such statements to be covered by the safe harbor provisions contained therein. Such forward-looking statements are based on the current intent, belief, expectations and views of future events of Advanced Flower Capital Inc. ("Advanced Flower Capital", "AFC", the "Company" and "we" "us" and "our"). The forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results or performance, and may contain the words "believe," "anticipate," "expect," "estimate," "project," "could," "would," "will," "can," "continuing," "may," "aim," "intend," "ongoing," "plan," "predict," "potential," "should," "seeks," "likely to" or words or phrases of similar meaning. Specifically, this presentation includes forward-looking statements regarding (i) our expectations in the adult-use and medicinal cannabis markets and their impact on our business; (ii) our portfolio and strategies for the growth thereof; (iii) our strategic goals; (iv) potential state and federal legislative and regulatory matters; (v) our expectations and estimates regarding certain tax, legal and accounting matters, including the impact on our financial statements and/or those of our borrowers; (vi) our expectation regarding capital in the cannabis industry; (vii) our expectations regarding our portfolio companies and their businesses, including demand, sales volume, profitability, and future growth; (viii) our expectation of returns from cannabis lending; (ix) the amount, collectability and timing of cash flows, if any, from our loans; (x) our expected ranges of originations and repayments; and (xi) estimates relating to our ability to make distributions to our shareholders in the future.

Actual results could differ significantly from the results and events discussed in the forward-looking statements due to the factors set forth under the heading "Cautionary Note Regarding Forward-Looking Statements" in the Quarterly Report on Form 10-Q that we filed with the Securities and Exchange Commission (the "SEC") on May 14, 2025 and under the heading "Risk Factors" in the Annual Report on Form 10-K that we filed with the SEC on March 13, 2025, and the other documents we file from time to time with the SEC. The forward looking statements contained in this presentation involve a number of risks and uncertainties, including factors relating to: our business and investment strategy; our projected operating results including our projections for distributable earnings, originations and repayments; the estimated growth in and evolving market dynamics of the cannabis market; the impact of economic conditions on our business and the United States; the ability of our manager to locate suitable loan opportunities for us, monitor, service and administer our loans and execute our investment strategy; actions and initiatives of the U.S. or state governments and changes to government policies and the execution and impact of these actions, initiatives and policies, including the fact that cannabis remains illegal under federal law; the demand for cannabis cultivation and processing facilities; shifts in public opinion regarding cannabis; our ability to obtain and maintain financing arrangements; our expected leverage; changes in the value of our loans; our expected portfolio of loans; our expected investment and underwriting process; rates of default or decreased recovery rates on our loans; the degree to which our hedging strategies may or may not protect us from interest rate volatility; changes in interest rates of our loans and impacts of such changes on our results of operations, cash flows and the market value of our loans; our ability to qualify and maintain our qualification as a real estate investment trust ("REIT") for United States federal income tax purposes; estimates relating to our ability to make distributions to our stockholders in the future and our understanding of our competition.

We have based the forward-looking statements included in this presentation on information available to us on the date of this presentation, and we assume no obligation to update any such forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make through reports that we have filed, or in the future may file, with the SEC, including the Information Statement, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

Important Notices

This presentation is by Advanced Flower Capital Inc. ("Advanced Flower Capital", "AFC" or the "Company"), a publicly traded company that has elected to be taxed as a REIT for federal income tax purposes. This presentation is provided for informational purposes only and is not an offer to sell, or a solicitation of an offer to buy, any security or instrument. AFC is not a registered investment adviser. AFC is managed by AFC Management, LLC ("AFCM" or our "manager"), a registered investment adviser. This presentation is not a communication by AFCM and is not designed to maintain any existing AFCM client or investor or solicit new AFCM clients or investors. We routinely post important information for investors on our website, https://www.advancedflowercapital.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. AFC encourages investors, analysts, the media and others interested in AFC to monitor the Investors 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 the "Email Alerts" section of our website under the "IR Resources" section and enter the required information to enable notifications. Past performance is no guarantee of future results. There is no guarantee that any investment strategy referenced herein will work under all market conditions. You alone assume the responsibility of evaluating the merits and risks associated with any potential investment or investment strategy referenced herein. The information contained herein is not intended to provide, and should not be relied upon for accounting, legal or tax advice or investment recommendations for AFC or any of its affiliates. Certain information contained in the presentation discusses general market activity, industry or sector trends, or other broad-based economic, market or political conditions and should not be construed as research or investment advice.

Non-GAAP Financial Measures

This presentation includes certain non-GAAP financial measures, including Distributable Earnings, to evaluate our performance excluding the effects of certain transactions and certain GAAP adjustments that we believe are not necessarily indicative of our current loan activity and operations. We believe the non-GAAP financial measures are useful for management, investors, analysts, and other interested parties in evaluating our performance but should not be viewed in isolation and are not a substitute for financial measures computed in accordance with GAAP. The determination of Distributable Earnings is substantially similar to the determination of Core Earnings under our Management Agreement, provided that Core Earnings is a component of the calculation of any Incentive Fees earned under the Management Agreement for the applicable time period, and thus Core Earnings is calculated prior to Incentive Fee expense, while the calculation of Distributable Earnings accounts for any Incentive Fees earned for such time period. We define Distributable Earnings as, for a specified period, the net income (loss) computed in accordance with GAAP, excluding (i) stock-based compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains, losses or other non-cash items recorded in net income (loss) for the period, regardless of whether such items are included in other comprehensive income or loss, or in net income (loss); provided that Distributable Earnings does not exclude, in the case of investments with a deferred interest feature (such as OID, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash, (iv) provision for (reversal of) current expected credit losses, (v) taxable REIT subsidiary ("TRS") (income) loss, net of any dividends received from TRS, and (vi) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between our manager and our independent directors and after approval by a majority of such independent directors. We caution readers that our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our reported Distributable Earnings may not be comparable to similar measures presented by other REITs. Please see the section entitled "Reconciliation of GAAP Net Income to Distributable Earnings" in the Appendix for a reconciliation to the most directly comparable GAAP financial measure. We have not provided reconciliations of expected distributable earnings for the future period(s), in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. We are unable, without unreasonable efforts, to forecast certain items required to develop meaningful comparable GAAP financial measures. These items include changes in unrealized gains, non-cash equity compensation expenses and the impact of non-cash adjustments for current expected credit losses that are difficult to predict in order to include in a GAAP estimate.

supplemental performance measures, and as a result, our reported Distributable Earnings may not be comparable to similar measures presented by other REITs. Please see the section entitled "Reconciliation of GAAP Net Income to Distributable Earnings" in the Appendix for a reconciliation to the most directly comparable GAAP financial measure. We have not provided reconciliations of expected distributable earnings for the future period(s), in reliance on the unreasonable efforts exception provided under Item 10(e)(1)(i)(B) of Regulation S-K. We are unable, without unreasonable efforts, to forecast certain items required to develop meaningful comparable GAAP financial measures. These items include changes in unrealized gains, non-cash equity compensation expenses and the impact of non-cash adjustments for current expected credit losses that are difficult to predict in order to include in a GAAP estimate.

Total Commitments

Since Inception(3)

Estimated YTM of Portfolio Loans(4)

Active Pipeline(5)

Current Commitments

Dividend Yield(6)

Deal Selectivity Since Inception(7)

Advanced Flower Capital (Nasdaq: AFCG) is the first Nasdaq-listed commercial mortgage REIT that provides institutional loans to state law-compliant cannabis operators in the United States

We aim to provide attractive risk-adjusted returns through investments with significant collateral, modest loan to value and favorable pricing, driving target average portfolio gross yield of 12%-20%

Robust investment review process includes market research, management underwriting and in-depth due diligence(2)

Management and the investment team have collectively structured over $15 billion in loan transactions and taken four companies public

AFC's BBB+ investment grade rating was affirmed by Egan-Jones in September 2024

Financial and company data as of May 1, 2025 unless otherwise specified.

The diligence we conduct may differ for loans that our manager originates as compared to the loans for which we are a syndicate partner. For prospective loans in which we are a syndicate partner, we typically focus our own due diligence efforts on the prospective borrower's financial performance.

Includes amounts committed by affiliated predecessor entities to Advanced Flower Capital.

See footnote #2 on page 17 for management description and calculation of yield to maturity ("YTM").

Includes potential syndications; AFC is in various stages of negotiation and has not completed its due diligence process with respect to these projects. As a result, there can be no assurance that we will move forward with any of these potential investments.

Q1 2025 dividend of $0.23 per share annualized and divided by closing stock price of $5.44 as of May 1, 2025.

Represents the total number of closed deals since inception divided by the aggregate count of all deals sourced / reviewed by AFC's manager from January 1, 2020 through May 1, 2025.

Significant lending, investment management and operational experience, which helps to navigate rapidly evolving markets and underwrite complex credits

Constrained capital in the marketplace allows us to move up the quality curve and target an average portfolio gross yield of 12%-20%

Early mover in cannabis and one of the few specialized players in a sizable debt market with high barriers to entry

Rigorous, repeatable and dependable investment review process utilizing both an experienced lender's process and an operator's lens to underwrite

Utilize deep-rooted industry relationships and M&A structuring competency to create good outcomes for both AFC and our borrowers

Strong balance sheet with quality real estate, cash flow and license collateral coverage across the portfolio

Strong Risk-Adjusted Returns

Growing Total Addressable Market

Disciplined & Proven Investment Process

Cycle-Tested Leadership Team

Active Portfolio Management

Strong Balance Sheet

Leonard Tannenbaum

Chairman

30+ years experience

Founded TCG, an alternative asset management platform focused on real estate and strategic private credit investing

Founder and CEO of $5 billion AUM Fifth Street prior to its 2017 sale to Oaktree

Daniel NeVille

Chief Executive Officer, Director

15+ years experience

Former CFO of Ascend Wellness Holdings, responsible for accounting, finance, M&A activity and deal structuring

Robyn Tannenbaum

President

15+ years experience

5+ years as Head of Investor Relations for three Fifth Street public entities

7+ years focused on mergers and acquisitions and leveraged loans at CIT Group

Brandon Hetzel

Chief Financial Officer

15+ years experience

Former VP of Finance for El-AD National Properties, LLC

Former Manager in REIT audit practice at PwC

Gabriel Katz

Chief Legal Officer

11+ years experience

Former Corporate & Securities Counsel at AmLaw 100 law firms and Lead Corporate Counsel at a unicorn technology startup

Advised public and private companies in securities offerings and M&A

James Velgot

Chief Marketing Officer

30+ years experience

Former Chief Marketing Officer at Fifth Street Asset Management

Former Global Head of Brand & Strategic Communications at Alliance Bernstein

Leadership's focus on credit quality, risk management and institutional infrastructure has supported inVestments through multiple market cycles

AFC's loan portfolio includes 18 loans to borrowers with significant operations and/or collateral across 16 states. Our portfolio is diversified across operators, geographies and asset types(1)

$372MM

95%

40%

$372MM

53%

As of May 1, 2025.

Calculated based off principal balance outstanding as of May 1, 2025.

Completed Construction

Ongoing Construction

No Construction

The U.S. legal cannabis market is expected to reach $63 billion by 2030, with the total economic impact surpassing $200 billion(1)

$172.1

$194.4

$219.7

$123.6

$137.2

$153.6

$122.9

$138.8

$156.9

$88.3

$98.0

$109.7

$35.3

2025

$39.2

2026

$43.9

$49.2

$55.6

$62.8

2027

2028

2029

2030

U.S. Cannabis Market Size(1)

Projected Market Growth by Comparable Product Type(2)

~7%

~5%

~4%

~12%

Beer

Tobacco

Spirits

Wine

Cannabis

9 out of 10 Americans

support adult-use and/or medicinal cannabis(3)

Gen Z and Millennial

cannabis usage is significantly higher than that of past generations(4)

Alcohol sales in legal

cannabis states have underperformed by 1-1.5% over past 5 years(5)

Cannabis growth trend

expected to continue with increasing adoption cutting into alcohol purchases(5)

Recent Trends Support Accelerating Growth

Source: MJBizFactbook 2025; Data as of April 1, 2025.

Data reflects 2025 - 2030 CAGR; Sources: New Frontier Data; Grand View; Statista; Cowen.

Pew Research Center, "9 facts about Americans and marijuana", April 2024.

NY Times, "Marijuana and Psychedelics Use Soars Among Young Adults, Study Finds", August 2022.

TD Cowen, "Cannabis Beats Booze", January 2024.

42 states and DC have legalized medical cannabis; of those, 24 states and DC have legalized adult-use ("AU") cannabis, and two states have legalized the use of low-THC, high-CBD cannabis products for medical purposes(1)

Cannabis is a $35 billion legal market

projected to grow to $63 billion by 2030(2)

The industry is rapidly expanding in the United States with continued legalization at the state level creating an influx of opportunities

With Pennsylvania's Congress advancing Adult-Use legislation in May 2025 and Minnesota's A-U sales beginning in late summer, ~19 million Americans could gain access to A-U cannabis by 2026(3)

Cannabis is a capital-intensive industry

with limited supply of institutional capital

Sources: Cannabis Business Times, The Landscape of Legal Cannabis in the U.S. MJBiz Factbook Q1 2025.

Source: MJBizFactbook 2025; Data as of April 1, 2025.

Sources: MPR News, "An overview of Minnesota's cannabis industry in 2024 and what to expect in 2025." Broad and Liberty, "PA House advances bill legalizing recreational marijuana."

Medical Startups

States legalizing for the first time open doors to new patients and market growth

Georgia

N/A 11MM $100MM

Exp. Med Sales Population Capital Need

Alabama

$486MM 5MM $250MM

Exp. Med Sales Population Capital Need

Kentucky

$136MM 5MM $200MM

Exp. Med Sales Population Capital Need

Adult-Use Transitions

New states coming online for recreational use unlock fresh market opportunities

Pennsylvania

$2.8B 13MM $100MM

Exp. AU Sales Population Capital Need

Minnesota

$1.6B 6MM $475MM

Exp. AU Sales Population Capital Need

Ohio

$1.7B 12MM $450MM

Exp. AU Sales Population Capital Need

Potential Debt Capital Demand(2)

(1)

Sources: Data from MJBiz Factbook 2025, BDSA, FTI Consulting and respective cannabis commissions for each state.

Potential debt capital demand based on internal estimates.

Cannabis is a capital-intensive industry with a lack of specialized lenders and high barriers to entry

Capital Environment

Cannabis sector has seen a difficult capital raising environment over the last two years - capital raised down 30% on a LTM basis(1)

Elevated rates have increased the cost of debt capital

Little equity capital raised over the last two years

Competitive Environment

Few specialized lenders focused on the cannabis industry

Many portfolios burdened by exposure to underperforming West Coast credits

Several players are in the process of winding down and exiting the industry

Key Competitors

Specialization

Breadth of Service

Capabilities

Dirt REITs

Regional Banks

Equipment Lessors

AFC is well-positioned to capitalize on the favorable

1. Viridian Capital Advisors Cannabis Capital Raise Tracker, February 28, 2025. 11

Growth

Return to Sustainable Growth

Emergence

Expected Rise in M&A

2025 is expected to see a rise in M&A due to persistent industry fragmentation, excessive leverage across subscale businesses and an increasingly attractive opportunity set from interstate expansion(1)

MSO 3.0 Players

We are increasingly seeing high-quality operators emerge with clean capital stacks and under-levered asset bases

Additional medical and adult-use transitions, the elimination of 280E and continued transition from the illicit to legal market is expected to drive client ambitions and capital demand

Expanding borrower pipelines and market complexity faVor AFC as a trusted financial partner offering flexibility and efficiency

1. MJBizDaily, "Marijuana experts cite M&A and interstate expansion as areas for opportunity in 2025", December 9, 2024. 12

Cannabis lending offers a significant premium to traditional leveraged finance

AFC Weighted Average YTM vs. Benchmarks

~18%

U.S. Leveraged

Loan Yield Index(1)

U.S. High

Yield Index(2)

AFC Weighted

Average YTM(3)

Note: All market, financial and company data as of May 1, 2025.

Bloomberg: Morningstar LSTA US Leveraged Loan Index.

Bloomberg: ICE BoA US High Yield Index.

See footnote #2 on page 17 for management description and calculation of yield to maturity ("YTM").

1.3x

AFC Price-to-Book vs. Peers(1)

1.0x

17%

0.7x

0.6x

14%

12%

Sale Leaseback

Providers(2)

REFI

AFC(3)

Commercial

Mortgage REITs(2)

Dividend Yield

High return income-generating company

at an attractive valuation Vs. peer group

Price to book and dividend yields calculated based on data sourced from Bloomberg as of May 1, 2025.

Sale leaseback providers include: ERPT, IIPR, NLCP, NNN, O, VICI, and WPC; Mortgage REITS include: ABR, ACRE, ARI, BRSP, BXMT, FBRT, KREF, LADR, LFT, NREF, RC, SEVN, STWD, SUNS, and TRTX.

AFC's price to book value calculated by taking the closing stock price of $5.44 as of May 1, 2025 divided by book value per share of $8.89 as of March 31, 2025; AFC's dividend calculated by taking Q1 2025 dividend of $0.23 per share annualized and dividing by the closing stock price of $5.44 as of May 1, 2025.

AFC is involved in each phase of the lending process, aiming to source loans with high return potential and downside protection

Sourcing & Origination

Loan Selection & Underwriting

Investment Committee

Portfolio Management

AFC maintains a direct origination platform, which works to create enhanced yields

Leading deals allows us to put in greater controls for loans that we source and structure

The platform drives increased deal flow, which allows for improved selectivity

AFC employs a disciplined screening and underwriting process of potential opportunities

Criteria includes:

Collateral

Credit metrics

Property-value metrics

Management team

Business plan

Company financial strength

Regulatory/license value considerations

Our Investment Committee oversees the entire investment process, emphasizing thorough risk analysis and delivering tailored solutions to borrowers

Each loan must be approved by the Investment Committee

Management and the investment team have collectively structured over

$15 billion in transactions

Our investment team collaborates with external counsel to negotiate loan documents, focusing on collateral preservation, risk mitigation, and covenants

Post-funding, we internally monitor the loan throughout its life cycle, retaining decision-making authority over key items

SOURCE

EVALUATE

APPROVE

MONITOR

Emphasizing credit discipline and risk management

throughout the inVestment lifecycle

Through its direct origination platform, AFC sources deals via various leads in select jurisdictions, maintaining a robust pipeline of active opportunities

Multiple Origination Channels

Advanced Flower Capital Pipeline(1)

3rdParty Co-

Databases Lenders

Direct

Operator Relationships

Sourcing

Channels

Brokers

Industry Cannabis

Conferences Advisors /

Consultants

$21.3B

Deals Sourced(2)

$917MM

Total Commitments Since Inception(3)

$387MM

Current Commitments

$372MM

Outstanding Principal Balance

Powerful Deal Flow Engine

Reputation as a credible, reliable and sector-focused partner

3.9%

Deal Selectivity(5)

$287MM

Active Pipeline(4)

Deep network of long-standing relationships

Solution-driven flexibility and negotiating in good faith solidify repeat partnerships

All company data as of May 1, 2025.

Represents deals from January 1, 2020 through May 1, 2025 sourced by AFC's manager.

Includes amounts committed by affiliated predecessor entities to Advanced Flower Capital.

Represents the total number of closed deals since inception divided by the aggregate count of all deals sourced / reviewed by AFC's manager from January 1, 2020 through May 1, 2025.

Current Commitments(1)

In $MM

$10

$375

$387

$335

$350

$361

$13

$11

$20

$10

$421

$437

$324

$330

$351

$366

$374

$431 $444

Q4 2023 Q1 2024 Q2 2024 Q3 2024 Q4 2024 Q1 2025 5/1/2025

Weighted average yield-to-maturity of ~18% as of May 1, 2025(2)

Represents total committed principal at closing for outstanding loans as of specified dates (December 31, 2023, March 31, 2024, June 30, 2024, September 30, 2024, December 31, 2024, March 31, 2025, and May 1, 2025). Excludes early prepayments.

Estimated YTM includes a variety of fees and features that affect the total yield, which may include, but is not limited to, OID, exit fees, prepayment fees, unused fees and contingent features. OID is recognized as a discount to the funded loan principal and is accreted to income over the term of the loan. Loans originated before July 31, 2020 were acquired by us, net of unaccreted OID, which we accrete to income over the remaining term of the loan. In some cases, additional OID is recognized from additional purchase discounts attributed to the fair value of equity positions that were separated from the loans prior to our acquisition of such loans. The estimated YTM calculations require management to make estimates and assumptions, including, but not limited to, the timing and amounts of loan draws on delayed draw loans, the timing collectability of exit fees, the probability and timing of prepayments and the probability of contingent features occurring. For example, certain credit agreements may 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 17

is based on current management estimates and assumptions, which may change. Actual results could differ from those estimates and assumptions.

AFC's manager has reviewed 891 deals, representing approximately $21 billion in aggregate value*

Deals Rejected*

As of 5/1/2025; In $ millions unless otherwise noted

Current Deals in Review

Current Deals Funded

Loan Name

Original Funding Date(1)

Loan Maturity

AFC Loan, net of Syndication

As % of Total

Total OID(2)

Principal Balance

Cash Interest Rate(3)

Paid In-Kind ("PIK")(2)

Fixed/ Floating

Amort. During Term

YTM(2)

Public Co. A - Equipment Loans

Aug-19

Mar-25

$ 4.0

1.0%

0.1%

$ 1.9

12.0%

N/A

Fixed

Yes

Private Co. A(4)

May-20

May-24

43.0

11.1%

7.7%

51.6

13.0%

2.6%

Fixed

18%

Sub of Private Co. G

Apr-21

May-26

73.5

19.0%

4.0%

79.2

12.5%

N/A

Fixed

18%

Private Co. K

Apr-22

May-27

13.2

3.4%

4.0%

12.2

16.3%

2.0%

Floating

Yes

22%

Private Co. J

Aug-21

Sep-25

28.5

7.4%

3.2%

23.5

16.3%

2.0%

Floating

Yes

25%

Private Co. L

Apr-22

May-26

32.8

8.5%

4.2%

30.8

13.0%

N/A

Floating

Yes

19%

Sub of Public Co. M

Aug-22

Aug-25

2.8

0.7%

8.9%

2.8

9.5%

N/A

Fixed

23%

Private Co. M

Jul-23

Jul-26

30.0

7.8%

16.0%

27.6

9.0%

N/A

Fixed

Yes

18%

Private Co. N - RE

Mar-24

Apr-28

19.3

5.0%

4.0%

19.3

12.5%

N/A

Floating

Yes

16%

Private Co. N

Mar-24

Apr-28

17.2

4.5%

4.0%

17.2

12.5%

N/A

Floating

Yes

16%

Private Co. O

May-24

Jun-28

7.5

1.9%

4.0%

4.3

13.5%

N/A

Floating

Yes

18%

Private Co. P

Jun-24

Jul-27

15.1

3.9%

3.0%

15.6

13.0%

N/A

Fixed

Yes

16%

Private Co. Q

Aug-24

Sep-28

11.0

2.8%

3.0%

5.8

13.8%

N/A

Floating

Yes

18%

Private Co. R

Oct-24

Nov-27

41.0

10.6%

2.0%

37.5

12.0%

N/A

Floating

Yes

15%

Sub of Public Co. S

Nov-24

Aug-26

10.0

2.6%

0.0%

10.0

9.5%

N/A

Fixed

10%

Private Co. T

Dec-24

Jul-27

8.9

2.3%

0.0%

7.7

11.3%

N/A

Fixed

Yes

12%

Private Co. U

Feb-25

Mar-28

15.0

3.9%

2.5%

15.0

14.0%

N/A

Fixed

Yes

16%

Sub of Private Co. V

Apr-25

Apr-29

14.0

3.6%

3.0%

10.5

12.5%

1.5%

Fixed

Yes

17%

Total Portfolio(5)

$ 386.8

100.0%

4.7%

$ 372.5

12.6%

0.6%

18%

* Represents deals from January 1, 2020 through May 1, 2025 sourced by AFC's manager; Totals may not sum due to rounding.

All loans originated prior to July 31, 2020 were purchased from affiliated entities at fair value which approximated accreted and/or amortized cost plus accrued interest on July 31, 2020 and does not include early pre-payments by borrowers.

See footnote #2 on page 17 for management description and calculation of yield to maturity ("YTM"), PIK and OID.

Future Cash Interest Rate on loans with floating rates are based on its May 1, 2025 benchmark rate.

Estimated YTM for the loan with Private Co. A is enhanced by purchase discounts attributed to the fair value of equity warrants that were separated from the loans prior to our acquisition of such loans. The purchase discounts accrete to income over the respective remaining terms of the applicable loans.

Portfolio Totals for the Cash Interest Rate, OID and PIK are calculated as a weighted average rate by principal balance outstanding.

A F C | Q 1 2 0 2 5 IN V E S T O R P R E S E N T A T I O N

As of

March 31, 2025 December 31, 2024

(unaudited)

Assets

Loans held for investment at fair value (cost of $48,988,077 and $50,241,018 at March 31, 2025 and December 31, 2024, respectively, net)

$ 28,572,385

$ 30,510,804

Loans held for investment at carrying value, net

304,505,648

293,262,374

Loan receivable held at carrying value, net

1,895,638

Current expected credit loss reserve

(29,744,212)

(30,419,677)

Loans held for investment at carrying value and loan receivable held at carrying value, net of current expected credit loss

reserve 276,657,074 264,738,335

Cash and cash equivalents

3,318,303

103,610,460

Interest receivable

1,816,084

1,982,897

Prepaid expenses and other assets

11,291,443

1,214,817

Total assets

$ 321,655,289

$ 402,057,313

Liabilities

Accrued interest

$ 2,300,453

$ 894,611

Due to affiliate

6,754

Dividends payable

5,197,082

7,369,866

Current expected credit loss reserve

142,743

166,702

Accrued management and incentive fees

816,190

1,932,246

Accrued direct administrative expenses

568,534

1,197,518

Accounts payable and other liabilities

820,698

501,328

Senior notes payable, net

88,759,099

88,612,150

Line of credit payable

22,250,000

60,000,000

Line of credit payable to affiliate

40,000,000

Total liabilities

120,854,799

200,681,175

Commitments and contingencies (Note 9)

Shareholders' equity

Preferred stock, par value $0.01 per share, 10,000 shares authorized at March 31, 2025 and December 31, 2024 and 0 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Common stock, par value $0.01 per share, 50,000,000 shares authorized at March 31, 2025 and December 31, 2024 and 22,596,007 and 22,332,927 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

225,960

223,329

Additional paid-in capital

252,416,881

251,865,763

Accumulated (deficit) earnings

(51,842,351)

(50,712,954)

Total shareholders' equity

200,800,490

201,376,138

Total liabilities and shareholders' equity

$ 321,655,289

$ 402,057,313

(unaudited)

Three months ended March 31,

2025

2024

Revenue

Interest income

$ 8,458,248

$ 14,334,754

Interest expense

(1,815,271)

(1,603,163)

Net interest income

6,642,977

12,731,591

Expenses

Management and incentive fees, net (less rebate of $128,580 and $374,803, respectively)

816,190

3,462,762

General and administrative expenses

734,957

1,051,853

Stock-based compensation

553,749

543,222

Professional fees

371,936

447,032

Total expenses

2,476,832

5,504,869

Reversal of (provision for) current expected credit losses

699,424

(4,931,674)

Realized gains (losses) on investments, net

(93,338)

Change in unrealized gains (losses) on loans at fair value, net

(685,478)

(3,613,693)

Net income (loss) from continuing operations before income taxes

4,180,091

(1,411,983)

Income tax expense

112,406

158,360

Net income (loss) from continuing operations

4,067,685

(1,570,343)

Net income from discontinued operations, net of tax

1,516,227

Net income (loss)

$ 4,067,685

$ (54,116)

Basic earnings per common share:

Continuing operations

$ 0.18

$ (0.08)

Discontinued operations

$ -

$ 0.07

Total basic earnings per common share

$ 0.18

$ (0.01)

Diluted earnings per common share:

Continuing operations

$ 0.18

$ (0.08)

Discontinued operations

$ -

$ 0.07

Total diluted earnings per common share

$ 0.18

$ (0.01)

Weighted average number of common shares outstanding:

Basic weighted average shares of common stock outstanding

22,097,979

20,393,875

Diluted weighted average shares of common stock outstanding

22,110,102

20,405,187

2025

Three months ended March 31,

2024

Net income (loss)

4,067,685

(54,116)

Adjustments to net income (loss):

Stock-based compensation expense

553,749

543,222

Depreciation and amortization

Unrealized losses (gains) or other non-cash items

685,478

3,613,693

(Reversal of) provision for current expected credit losses

(699,424)

4,931,674

TRS (income) loss, net of dividends

(63,582)

931,233

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

Distributable earnings

4,543,906

9,965,706

Basic weighted average shares of common stock outstanding

22,097,979

20,393,875

Distributable earnings per basic weighted average share

0.21

0.49

Undisclosed Amount

May 2024

$14,000,000

Lender and Agent

April 2025

$15,000,000

Lender and Agent

February 2025

$34,000,000

Lender and Agent

March 2024

$41,000,000

Lender and Agent

October 2024

$63,000,000

Lender and Agent

April 2022

$140,000,000

Lead Lender and Co-Agent

December 2021

$23,000,000

Lender and Agent

July 2021

$15,500,000

Lender and Agent

July 2021

$86,600,000

Lender

May 2021

$24,000,000

Lender and Agent

November 2020

[email protected] https://www.adVancedflowercapital.com

Disclaimer

Advanced Flower Capital Inc. published this content on May 14, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 14, 2025 at 11:40 UTC.