AFCGHIGH SIGNALREGULATORY10-K

AFC Gamma elected to be regulated as a Business Development Company (BDC) effective January 1, 2026, marking a significant regulatory transformation for the cannabis-focused lender.

The election to become a BDC represents a fundamental shift in regulatory oversight and operational structure, subjecting AFCG to Investment Company Act restrictions including leverage limits and specific investment requirements. This transition coincides with the company's qualification as a Smaller Reporting Company, indicating a strategic repositioning that may provide new capital-raising opportunities but will constrain operational flexibility through enhanced regulatory compliance requirements.

Comparing 2026-03-04 vs 2025-03-13View on EDGAR →
FINANCIAL ANALYSIS

AFCG experienced a substantial contraction across key financial metrics, with revenues declining meaningfully and net income falling notably year-over-year. The balance sheet reflects significant deleveraging, with total liabilities cut roughly in half and cash reserves declining substantially from $103.6M to $38.6M. While total assets contracted by approximately one-third, stockholders' equity declined more modestly at 12.8%, suggesting the company maintained reasonable capital preservation during this period of operational restructuring and regulatory transition.

FINANCIAL STATEMENT CHANGES
Cash & Equivalents
Balance Sheet
-62.7%
$103.6M→$38.6M

Cash declined 62.7% — significant cash burn or deployment; verify adequacy of remaining liquidity runway.

Total Liabilities
Balance Sheet
-50.2%
$200.7M→$100.0M

Liabilities reduced 50.2% — deleveraging improves balance sheet strength and financial flexibility.

Operating Cash Flow
Cash Flow
-47.9%
$21.6M→$11.2M

Operating cash flow fell 47.9% — earnings quality concerns; investigate working capital changes and non-cash items.

Revenue
P&L
-46.2%
$45.7M→$24.6M

Revenue declined 46.2% — significant demand weakness or market share loss warrants investigation.

Net Income
P&L
-41.7%
$35.9M→$21.0M

Net income declined 41.7% — review whether driven by operations, interest costs, or non-recurring items.

Total Assets
Balance Sheet
-31.5%
$402.1M→$275.6M

Total assets contracted 31.5% — asset sales, write-downs, or balance sheet optimization underway.

Stockholders Equity
Balance Sheet
-12.8%
$201.4M→$175.6M

Equity decreased 12.8% — buybacks or losses reducing book value, monitor solvency ratios.

LANGUAGE CHANGES
NEW — 2026-03-04
PRIOR — 2025-03-13
ADDED
EXPLANATORY NOTE The Company did not check the box indicating its status as a Smaller Reporting Company on the cover page of this Annual Report on Form 10-K due to a technical issue encountered with the SEC s EDGAR filing system at the time of submission.
However, the Company qualified as a Smaller Reporting Company under applicable SEC rules for the fiscal year ended December 31, 2025 and for the purpose of reporting its results for such fiscal year, and the disclosures included in this Annual Report on Form 10-K have been prepared in accordance with the disclosure requirements applicable to Smaller Reporting Companies.
economy generally or in the specific geographic regions in which we operate, including as a result of the impact of natural disasters; the impact of a protracted decline in the liquidity of credit markets on our business; the amount, collectability and timing of our cash flows, if any, from our loans; our ability to obtain and maintain competitive financing arrangements; our ability to achieve expected leverage; changes in the value of our loans; our being subject to regulations and SEC oversight as a BDC, including limits on issuance of debt.
We are a Maryland corporation and externally managed by AFC Management, LLC.
Effective January 1, 2026, we elected to be regulated as a BDC under the Investment Company Act of 1940, as amended (the 1940 Act ).
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REMOVED
, Suite 301 , West Palm Beach , FL 33401 (Address of principal executive offices) (Zip Code) ( 561 ) 510-2390 (Registrant s telephone number, including area code) AFC GAMMA, INC.
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 and certain state laws; the estimated growth in and evolving market dynamics of the cannabis market; changes in general economic conditions, in our industry and in the commercial finance and real estate markets; the demand for cannabis cultivation and processing facilities; shifts in public opinion and state regulation regarding cannabis; the state of the U.S.
federal income tax purposes; estimates relating to our ability to make distributions to our shareholders 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 uncertainties as to the impact of the Spin-Off on our business.
We primarily originate, structure, underwrite, invest in and manage senior secured loans and other types of mortgage loans and debt securities, with a specialization in loans to cannabis industry operators in states that have legalized medical and/or adult-use cannabis.
Our investment guidelines primarily relate to deploying capital in attractive lending opportunities to state law-compliant cannabis operators, typically secured by real estate, equipment, cash flows and license value.
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