Financial Data and Key Metrics Changes - For Q1 2025, the company generated distributable earnings of $0.21 per basic weighted average share of common stock, with net interest income of $4,500,000 and GAAP net income of $4,100,000, or $0.18 per share [9][13] - The weighted average portfolio yield to maturity was approximately 18% as of both March 31, 2025, and May 1, 2025 [14] - The CECL reserve was $29,900,000, approximately 9.75% of loans at carrying value, with total unrealized losses of $20,400,000 for loans held at fair value [14] Business Line Data and Key Metrics Changes - The company ended Q1 2025 with $366,300,000 of principal outstanding across 17 loans, which increased to $372,500,000 across 18 loans by May 1, 2025 [13] - The active pipeline as of May 1, 2025, included $287,000,000 of deals, with a focus on sourcing deals from operators with a successful track record [7][14] Market Data and Key Metrics Changes - The cannabis industry continues to experience a supply and demand imbalance for capital, with demand outpacing limited supply due to refinancing activity and increased M&A expected in the second half of the year [6] - Many capital market participants remain on the sidelines due to a lack of clarity around federal reform, impacting the availability of capital in the industry [6] Company Strategy and Development Direction - The company is focused on protecting principal in its investments and is selective in its originations, prioritizing high-quality borrowers and proven operators [7][19] - The company aims to unlock value from underperforming loans while evaluating new lending opportunities [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the volatility in the cannabis market and uncertainty surrounding federal progress will influence their opportunistic approach to originations [19] - The board is expected to declare dividends on or about June 15, with a policy of distributing 85% to 100% of earnings over the year [20] Other Important Information - The company is engaged in legal proceedings related to a subsidiary, Justice Grown, and is focused on protecting shareholder capital amid ongoing litigation [12][30] - The company renewed its senior secured credit facility with a lead commitment from an FDIC insured bank, with a maturity date of April 29, 2028 [14] Q&A Session Summary Question: Can you unpack the decline in interest income from Q4 to Q1? - The decline was primarily due to lower income from a subsidiary and the absence of dividends from the TRS in Q1 [16][17] Question: How should we think about distributable earnings progression for the rest of the year? - Management indicated that they will be opportunistic in originations and will not set targets due to market volatility [19][20] Question: What can be assumed regarding inflows from the proceeds of the Georgia asset sale? - Management stated that they cannot provide guidance on timing or amounts due to the receiver's control over the process [21][23] Question: Is there an opportunity for private lenders in Pennsylvania's potential state-run framework? - Management noted that the Senate has rejected the state-run model, making it unlikely to be an opportunity for the company [34][35] Question: Are borrowers feeling the impact of tariffs on their costs? - Management indicated that the cannabis industry is likely to see minimal impact from tariffs, as many materials are sourced domestically [40][42]

Financial Data and Key Metrics Changes - For Q1 2025, the company generated distributable earnings of $0.21 per basic weighted average share, with net interest income of $4,500,000 and GAAP net income of $4,100,000 or $0.18 per basic weighted average share [10][15] - The weighted average portfolio yield to maturity was approximately 18% as of both March 31, 2025, and May 1, 2025 [16] - The CECL reserve was $29,900,000, approximately 9.75% of loans at carrying value, with total unrealized losses of $20,400,000 for loans held at fair value [16] Business Line Data and Key Metrics Changes - The active pipeline as of May 1, 2025, had $287,000,000 in deals, with a focus on sourcing deals from operators with a successful track record [7] - The company is currently managing 18 loans with a total principal outstanding of $372,500,000 [15] Market Data and Key Metrics Changes - The cannabis industry is experiencing a supply and demand imbalance for capital, with demand outpacing limited supply due to refinancing activity and increased M&A [6] - Many capital market participants remain on the sidelines due to a lack of clarity around federal reform, impacting the availability of capital in the industry [6] Company Strategy and Development Direction - The company aims to protect principal in its investments and is focused on selectively providing construction financing to operators with existing operations in other states [7] - The management is committed to supporting strong operators in attractive limited license states and diversifying the portfolio [11] Management's Comments on Operating Environment and Future Outlook - Management noted that earnings will be impacted by the underperformance of some legacy loans, but significant progress has been made in reducing exposure to underperforming credits [10] - The company is being opportunistic in its originations, focusing on high-quality borrowers amid market volatility [22] Other Important Information - The company renewed its senior secured credit facility with a lead commitment from an FDIC insured bank, with a maturity date of April 29, 2028 [16] - The board is expected to declare a dividend on or about June 15, with a policy of distributing 85% to 100% of earnings over the year [23] Q&A Session Summary Question: What caused the decline in interest income from Q4 to Q1? - The decline was attributed to lower income from a subsidiary of a private company and the absence of dividends from the TRS in Q1 [20][21] Question: How should investors think about progression for distributable earnings? - Management indicated that they will be opportunistic in originations and will not set targets due to market volatility [22][23] Question: What can be assumed regarding inflows from the proceeds of the Georgia asset? - Management stated that they cannot provide guidance on timing or amounts as it is uncertain and out of their control [24][26] Question: Can you provide updates on the situation with Justice Grown? - Management refrained from commenting further due to pending litigation and advised to refer to the 10-Q for details [32][34] Question: Is there an opportunity for private lenders in Pennsylvania's potential state-run framework? - Management noted that the Senate rejected the state-run model proposal, making it unlikely to be an opportunity for the company [36] Question: What is the expected yield on new originations? - Yields have generally remained consistent, with a focus on moving up the quality curve in lending [49]

Core Viewpoint - AFC Gamma Inc. reported quarterly earnings of $0.21 per share, missing the Zacks Consensus Estimate of $0.25 per share, and down from $0.49 per share a year ago, indicating a significant earnings surprise of -16% [1][2] Financial Performance - The company posted revenues of $6.64 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 14.17%, and a decline from $16.36 million year-over-year [2] - Over the last four quarters, AFC Gamma has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Performance - AFC Gamma shares have declined approximately 30.7% since the beginning of the year, contrasting with the S&P 500's gain of 0.1% [3] - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $8.6 million, and for the current fiscal year, it is $1.06 on revenues of $38.76 million [7] Industry Outlook - The REIT and Equity Trust industry, to which AFC Gamma belongs, is currently ranked in the bottom 30% of over 250 Zacks industries, indicating potential challenges ahead [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact AFC Gamma's stock performance [5][6]

Company Overview - Advanced Flower Capital (AFCG) aims to provide attractive risk-adjusted returns with a target average portfolio gross yield of 12%-20%[13,15] - The company's management and investment team have collectively structured over $15 billion in loan transactions[13,54] - AFC's deal selectivity since inception is 39% based on $917MM total commitments since inception and $213B deals sourced[59] Market Opportunity - The U S legal cannabis market is expected to reach $63 billion by 2030, with a total economic impact surpassing $200 billion[28] - Cannabis market is projected to grow at approximately 12% CAGR from 2025 to 2030[31,34] - Approximately 19 million Americans could gain access to adult-use cannabis by 2026 with Pennsylvania and Minnesota legalizing[37] Portfolio and Performance - AFC's loan portfolio includes 18 loans to borrowers across 16 states, with $372 million in principal outstanding[22,25,27] - The portfolio is primarily focused on vertical operators, representing 95% of the principal outstanding[25] - AFC's weighted average yield to maturity (YTM) is approximately 18%[49,65] Financial Highlights - Total assets were $32165 million as of March 31, 2025[75] - Net income for the three months ended March 31, 2025 was $406 million, or $018 per share[76] - Distributable earnings for the three months ended March 31, 2025 were $454 million, or $021 per share[77]

Financial Performance - For Q1 2025, Advanced Flower Capital reported GAAP net income of $4.1 million, or $0.18 per basic weighted average common share, and Distributable Earnings of $4.5 million, or $0.21 per basic weighted average common share[1][2]. - The reconciliation of GAAP net income to Distributable Earnings showed a net income of $4,067,685 and Distributable Earnings of $4,543,906 for the three months ended March 31, 2025[14]. - The basic weighted average shares of common stock outstanding increased to 22,097,979 in Q1 2025 from 20,393,875 in Q1 2024[14]. Dividends - The company paid a regular cash dividend of $0.23 per common share for Q1 2025 on April 15, 2025[3]. - The company emphasizes the importance of Distributable Earnings as a measure to assess overall performance and intends to distribute at least 90% of its annual REIT taxable income[12]. Business Strategy - Advanced Flower Capital aims to reduce exposure to underperforming credits while providing debt capital to accomplished operators, focusing on quality credits with strong risk-adjusted returns[3]. - The management's forward-looking statements indicate a focus on future growth and strategies, subject to inherent uncertainties[15]. - Advanced Flower Capital operates as a commercial mortgage REIT, providing loans ranging from $10 million to over $100 million to state law compliant cannabis operators in the U.S.[8]. Investor Relations - The company encourages stakeholders to monitor its Investor Relations webpage for important updates and disclosures[5]. - The Q1 2025 earnings presentation is available on the company's website for further details on financial results[4].

Core Insights - Advanced Flower Capital Inc. reported a GAAP net income of $4.1 million, translating to $0.18 per basic weighted average common share for Q1 2025 [1][2] - The company also reported Distributable Earnings of $4.5 million, or $0.21 per basic weighted average common share for the same period [1][2] Financial Performance - The net income for the first quarter of 2025 was $4,067,685, a significant improvement compared to a net loss of $54,116 in Q1 2024 [15] - Distributable Earnings for Q1 2025 were $4,543,906, down from $9,965,706 in Q1 2024, with Distributable Earnings per basic weighted average share decreasing from $0.49 to $0.21 [15][16] Dividend Information - The company paid a regular cash dividend of $0.23 per common share on April 15, 2025, for shareholders of record as of March 31, 2025 [3] Strategic Focus - The CEO emphasized the company's priority in reducing exposure to underperforming credits while maintaining discipline in providing debt capital to successful operators [3] - The company aims to leverage market dislocations to invest in quality credits with strong risk-adjusted returns [3] Company Overview - Advanced Flower Capital Inc. is a commercial mortgage REIT that provides loans to state law compliant cannabis operators in the U.S., with loans typically ranging from $10 million to over $100 million [8]

Financial Performance - The company declared a cash dividend of $0.23 per share for the three months ended March 31, 2025, totaling $5,197,082 [163]. - Distributable Earnings for the three months ended March 31, 2025, was approximately $4.54 million, compared to $9.97 million for the same period in 2024, reflecting a decrease of 54.4% [177]. - Net income from continuing operations for the three months ended March 31, 2025, was approximately $4.07 million, or $0.18 per basic weighted average common share, compared to a net loss of approximately $(1.6) million, or $(0.08) per share for the same period in 2024 [180]. - The company reported a decrease in net income from discontinued operations of approximately $(1.5) million for the three months ended March 31, 2025 [231]. Loan Portfolio - As of March 31, 2025, the loan portfolio comprised 17 loans with an aggregate originated commitment of approximately $375.0 million and outstanding principal of approximately $366.3 million [188]. - The aggregate outstanding principal for loans held at carrying value was approximately $312.5 million as of March 31, 2025, compared to $301.8 million as of December 31, 2024 [197]. - The portfolio included fifteen loans held at carrying value with an aggregate originated commitment of approximately $327.8 million as of March 31, 2025, compared to $312.8 million as of December 31, 2024 [197]. - The total loan held at fair value as of March 31, 2025, was approximately $28.6 million, reflecting a decrease in unrealized losses of approximately $685,478 [195]. - The loan portfolio as of March 31, 2025, was concentrated with the top three borrowers representing approximately 46.2% of the aggregate outstanding principal balances and approximately 42.0% of total loan commitments [258]. Interest Income and Expense - Interest income decreased by approximately $(5.9) million, or (41.0)%, for the three months ended March 31, 2025, primarily due to lower income from loans on nonaccrual status and reduced loan exits and prepayments [181]. - Interest expense increased by approximately $0.2 million, or 13.2%, for the three months ended March 31, 2025, driven by increased borrowings on the Revolving Credit Facility [182]. Cash Flow and Liquidity - Net cash provided by operating activities for the three months ended March 31, 2025, was approximately $3.9 million, which was less than the declared dividends of $5.2 million during the same period [207]. - Total cash as of March 31, 2025, was approximately $3.3 million, a significant decrease from $103.6 million as of December 31, 2024 [208]. - The net cash used in investing activities during the three months ended March 31, 2025 was approximately $(19.1) million, compared to $(7.5) million for the same period in 2024, reflecting an increase in cash fundings to title agents [228]. - The net cash used in financing activities was approximately $(85.1) million for the three months ended March 31, 2025, a significant decrease of approximately $(93.3) million compared to $8.2 million for the same period in 2024 [229]. Debt and Financing - Advanced Flower Capital Inc. originated a $15.0 million senior secured credit facility with Private Company U, maturing on March 1, 2028, with an interest rate of 14.0% [156]. - A $14.0 million senior secured credit facility was entered into with Subsidiaries of Private Company V, bearing cash interest at 12.5% and 1.5% paid-in-kind [165]. - The company entered into Amendment Number Four to the Revolving Credit Agreement, extending the maturity date to April 29, 2028, and increasing the interest rate floor from 4.00% to 7.00% [215]. - The company has total unfunded commitments of $9.5 million as of March 31, 2025, which are related to total loan commitments available for funding in less than two years [234]. Risk Management - The company actively manages risk exposure related to interest rates, credit, and prepayment risks associated with its portfolio [242]. - Credit risk is managed through a comprehensive review and selection process, with ongoing monitoring of loans for variance from expected performance [254][256]. - The company is exposed to significant risks in the cannabis industry, including federal illegality and potential loss of loans due to borrower issues [260]. - Management plans to monitor the legal landscape to mitigate risks associated with the cannabis industry [262]. Regulatory and Compliance - The company has qualified as a REIT and intends to maintain this status, which depends on satisfying various asset, income, and distribution tests [151]. - The company intends to distribute at least 90% of its REIT taxable income annually to shareholders, with potential tax implications for undistributed portions [239]. - The company does not intend to have leverage exceeding one times equity, maintaining compliance with the 2027 Senior Notes Indenture [238]. Market Conditions - As of March 31, 2025, a 50 basis points decrease or increase in market yield would have resulted in an unrealized gain (loss) of approximately $0.3 million and $(0.3) million, respectively [250]. - A hypothetical 100 basis points increase in the floating benchmark rate would result in an increase in annual interest income of approximately $1.1 million [250].

Core Viewpoint - Advanced Flower Capital Inc. has renewed its senior secured revolving credit facility to support its financing strategy and operations in the cannabis sector [1][3]. Group 1: Credit Facility Details - The renewed credit facility has a maximum expansion capability of $100 million, with a maturity date set for April 29, 2028, and an interest rate of Prime + 0.50%, with a Prime floor of 6.50% [2]. - The facility will be utilized for funding unfunded commitments to existing borrowers, originating and participating in commercial loans to cannabis operators, and for general corporate purposes [1][2]. Group 2: Company Overview - Advanced Flower Capital Inc. is a leading commercial mortgage REIT that provides institutional loans to state law compliant cannabis operators in the U.S., with loan amounts ranging from $10 million to over $100 million [4]. - The company leverages its management team's extensive network and expertise in credit and cannabis to structure and underwrite loans secured by quality real estate assets, license value, and cash flows [4].

Group 1 - The stock of Advanced Flower Capital Inc. (AFCG) is experiencing significant attention due to high implied volatility in the options market, particularly the May 16, 2025 $10 Call option [1] - Implied volatility indicates the market's expectation of future movement, suggesting that investors anticipate a significant price change or an upcoming event that could lead to a major rally or sell-off [2] - Advanced Flower Capital currently holds a Zacks Rank 3 (Hold) in the REIT and Equity Trust industry, which is in the bottom 31% of the Zacks Industry Rank [3] Group 2 - Over the past 60 days, no analysts have increased their earnings estimates for the current quarter, while two analysts have revised their estimates downward, resulting in a decrease of the Zacks Consensus Estimate from 38 cents per share to 30 cents [3] - The high implied volatility may indicate a developing trade, as options traders often seek to sell premium on options with high implied volatility to capture decay, hoping the underlying stock does not move as much as expected at expiration [4]

Company Overview - Advanced Flower Capital Inc. (NASDAQ: AFCG) is a leading commercial mortgage REIT that provides institutional loans to state-law compliant cannabis operators in the U.S. [3] - The company originates, structures, underwrites, and manages loans ranging from $10 million to over $100 million, typically secured by quality real estate assets, license value, and cash flows [3]. - Advanced Flower Capital is based in West Palm Beach, Florida [3]. Financial Results Announcement - The company will release its financial results for the first quarter ended March 31, 2025, on May 14, 2025, before market open [1]. - Management will review the financial results via a webcast at 10:00 am ET on the same day [1]. - A replay of the event will be available one hour after the live presentation [1]. Investor Relations - AFC distributes its earnings releases via its website and email lists, allowing interested parties to sign up for updates [2]. - The Investor Relations contact for the company is Robyn Tannenbaum, reachable at 561-510-2293 or via email [4].