0001213900-22-026022 | 10-Q | XBRL Viewer | Chicago Atlantic Real Estate Finance INC

ORGANIZATION AND DESCRIPTION OF BUSINESS

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Chicago Atlantic Real Estate Finance, Inc., and its wholly owned subsidiary, Chicago Atlantic Lincoln, LLC (“CAL”) (collectively the “Company”, “we”, or “our”), is a commercial mortgage real estate investment trust (“REIT”) incorporated in the state of Maryland on March 30, 2021. The Company has elected to be taxed as a REIT for United States federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2021. The Company generally will not be subject to United States federal income taxes on its REIT taxable income as long as it annually distributes to stockholders all of its REIT taxable income prior to the deduction for dividends paid and complies with various other requirements as a REIT.

The Company operates as one operating segment and its primary investment objective is to provide attractive, risk-adjusted returns for stockholders over time, primarily through consistent current income (dividends and distributions) and secondarily, through capital appreciation. The Company intends to achieve this objective by originating, structuring and investing in first mortgage loans and alternative structured financings secured by commercial real estate properties. The Company’s loan portfolio is primarily comprised of senior loans to state-licensed operators in the cannabis industry, secured by real estate, equipment, receivables, licenses and/or other assets of the borrowers to the extent permitted by applicable laws and regulations governing such borrowers.

The Company is externally managed by Chicago Atlantic REIT Manager, LLC (the “Manager”), a Delaware limited liability company, pursuant to the terms of the management agreement dated May 1, 2021, as amended, which extends for a three-year initial term set to expire on April 30, 2024 (the “Management Agreement”), by and among the Company and the Manager. After the initial term, the management agreement is automatically renewed for one-year periods unless the Company or the Manager elects not to renew in accordance with the terms of the Management Agreement. The Manager conducts substantially all of the Company’s operations and provides asset management services for its real estate investments. For its services, the Manager is entitled to management fees and incentive compensation, both defined in, and in accordance with the terms of, the Management Agreement (Note 7). All of the Company’s investment decisions are made by the investment committee of the Manager, subject to oversight by the Company’s board of directors (the “Board”). The Manager is wholly-owned by Chicago Atlantic Group, LLC (the “Sponsor”).

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they may not contain all disclosures required by generally accepted accounting principles. Reference should be made to Note 2 of the Company’s Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the period ended December 31, 2021. In the opinion of the Company, all normal recurring adjustments have been made that are necessary to present fairly the results of operations for the interim periods. Operating results for the three-month period ended March 31, 2022 is not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates. Significant estimates include the provision for current expected credit losses.

Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. General and administrative expenses reimbursements due to the Manager which were previously included in the line item, management fee payable, have been reclassified into related party payable in the consolidated balance sheet.

Cash

Cash includes deposits with financial institutions. The Company’s cash held with financial institutions may at times exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limits. Cash and short-term investments with an original maturity of three months or less when acquired are considered cash for the purpose of the consolidated balance sheet and consolidated statements of cash flows.

Concentration of Credit Risks

Financial instruments that may subject the Company to concentrations of credit risk consist primarily of cash, loans and interest receivable. The Company and the Manager seek to manage this credit risk relating to cash by monitoring the financial institutions and their ability to continue in business for the foreseeable future. Concentration of credit risk relating to loans and interest receivable are managed by the Company and the Manager through robust portfolio monitoring and performing due diligence prior to origination or acquisition and through the use of non-recourse financing, when and where available and appropriate.

Organizational expenses

Costs associated with the organization of the Company are expensed as incurred. These expenses consist primarily of legal fees and other formation costs associated with the organization of the Company.

Loans Held for Investment

The Company originates commercial real estate (“CRE”) loans and related debt instruments that it has both the intent and ability to hold for the foreseeable future, so they are classified as held for investment.

Loans that are held-for-investment are carried at their aggregate outstanding face amount, net of applicable (i) unamortized origination or acquisition premium and discounts, (ii) unamortized deferred fees and other direct loan origination costs, (iii) valuation allowance for credit losses and (iv) write-downs of uncollectible loans. The Company uses a method which approximates the effective interest method to amortize origination or acquisition premiums and discounts and deferred fees or other direct loan origination costs.

The Company’s loans are primarily collateralized by real estate, equipment, licenses and/or other collateral assets of borrowers. The extent of any credit deterioration associated with the performance and/or value of the underlying collateral property and the financial and operating capability of the borrower could impact the expected amounts received. The Company monitors performance of its portfolio of loans held for investment under the following methodology: (1) borrower review, which evaluates each borrower’s financial condition including consideration of interest and principal payment history, ability to execute its business plan, and assessment of any alleged actual, threatened, or pending litigation; (2) economic review, which contemplates the value of underlying collateral (i.e. leasing performance, unit sales and cash flow of the collateral and its ability to cover debt service, as well as the residual loan balance at maturity); (3) property review, which considers current environmental risks, changes in insurance costs or coverage, current site visibility, capital expenditures and market perception; and (4) market review, which analyzes the collateral from a supply and demand perspective of similar property types, as well as from a capital markets perspective. Changes in other observable market data may be utilized in determining the immediate recognition of expected credit losses over the life of financial instruments.

CECL Reserve

The Company measures current expected credit losses (“CECL”) for loans held for investment based on Accounting Standards Codification (“ASC”) No. 326, Financial Instruments – Credit Losses (“ASC 326”). The Company early adopted ASC 326 at inception. ASC 326 introduces a new allowance for credit losses methodology and requires earlier recognition of credit losses, while also providing additional transparency about credit risk. The CECL methodology utilizes a lifetime “expected credit loss” methodology for the recognition of credit losses for loans and other receivables at the time the financial asset is originated or based on historical experience and current conditions, as well as reasonable and supportable forecasts incorporating forward-looking information. The allowance for credit losses (the “CECL Reserve”) required under ASC 326 is deducted from the respective loans’ amortized cost basis on the Company’s Consolidated Balance Sheets. The CECL Reserve attributed to unfunded loan commitments is included in “Accounts payable and accrued expenses” on the Consolidated Balance Sheets. The expected credit losses are adjusted each period for changes in expected lifetime credit losses through a provision for current expected credit losses recognized on the consolidated Statements of Operations. Refer to “Note 3 – Loans Held for Investment, Net” for further information regarding the CECL Reserve.

Fair Value Measurements

Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement assumes that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability, or, in the absence of a principal market, in the most advantageous market for the asset or liability. The Company discloses the fair value of its financial assets and liabilities based on observable market information where available or on market participant assumptions. These assumptions are subjective in nature and involve matters of judgment and, therefore, fair values cannot always be determined with precision. When determining fair value, the Company maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of the fair value hierarchy as set forth in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820 – Fair Value Measurement and Disclosure are as follows:

●

Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

●

Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

●

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

If inputs used to measure fair value fall into different levels of the fair value hierarchy, a loan’s level is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the instrument being measured. This includes instruments that are valued using “bid” and “ask” prices obtained from independent third-party pricing services or directly from brokers.

GAAP requires disclosure of fair value information about financial and nonfinancial assets and liabilities, whether or not recognized in the consolidated financial statements, for which it is practical to estimate the value. In cases where quoted market prices are not available, fair values are based upon the application of discount rates to estimated future cash flows using market yields, or other valuation methodologies. Any changes to the valuation methodology will be reviewed by the Company’s management to ensure the changes are appropriate. The methods used may produce a fair value calculation that is not indicative of net realizable value or reflective of future fair values. Furthermore, while the Company anticipates that the valuation methods are appropriate and consistent with other market participants, the use of different methodologies, or assumptions, to determine the fair value of certain financial and nonfinancial assets and liabilities could result in a different estimate of fair value at the reporting date. The Company uses inputs that are current as of the measurement date, which may fall within periods of market dislocation, during which price transparency may be reduced.

The fair value of loans held for investment is discussed in Note 3. Excluding the aforementioned assets, the carrying values of our current financial assets and current financial liabilities approximate fair values.

Equity-Based Compensation

The Company accounts for equity-based compensation issued to employees of the Manager and its affiliates and the members of its Board of Directors (the “Board”) pursuant to the 2021 Omnibus Incentive Plan (the “2021 Plan”) under the fair value method. This method measures compensation cost at the date of grant based on the value of the award and recognizes the cost over the service period, which is usually the vesting period. Forfeitures are recognized as they occur. The fair value of equity-based compensation awards is based on the estimated fair value of the Company’s common stock, based on the Company’s stock price on grant date, and approved by the Board. Fair values of award grants also recognize any ongoing restrictions on the sale of securities.

Debt Issuance Costs

Debt issuance costs are presented as a direct deduction from the debt liability, consistent with debt discounts or premiums unless they relate to an undrawn line of credit, in which case they are amortized on a straight-line basis over the life of the line of credit. Unamortized debt issuance costs are subsequently expensed if the associated debt is repaid prior to maturity. As of March 31, 2022 and December 31, 2021, the Company incurred debt issuance costs of $795,754 and $868,022, respectively, which are capitalized within Other Assets on the Company’s consolidated balance sheets. For the three months ended March 31, 2022, the Company recorded amortization expense of $72,268.

Formation Transaction

The Company commenced operations on April 1, 2021. The assets and liabilities constituting its Initial Portfolio were contributed at amortized cost on April 1, 2021 (the “Formation Transaction”). The fair values of the contributed cash and accrued interest approximated their carrying values because of the short-term nature of these instruments in relation to their origination date. The amortized cost of the contributed assets described above were agreed upon by the parties that contributed assets to the Company in the Formation Transaction and used to determine the number of shares of common stock issued. Any purchase premiums or discounts are amortized over the expected life of the investment.

The following table shows the par values, amortized cost and purchase premiums (discounts) of the portfolio of assets contributed on April 1, 2021:

	Par value		Amortized Cost		Premium (Discount)
Assets
Cash	$	97,976	$	97,976	$	-
Loans, held-for-investment, net		9,883,211		9,802,024		(81,187	)
Total contributions	$	9,981,187	$	9,900,000	$	(81,187	)

Acquisition Accounting

The Company accounts for the acquisitions of the Initial Portfolio and other loans acquired during the period from March 30, 2021 (Inception) to December 31, 2021 as asset acquisitions. Substantially all of the fair value of the assets acquired are concentrated in a group of similarly identifiable loan assets, and as such, lack physical facilities, employees, customer base, operating rights, and do not constitute businesses. The investments were contributed to the Company in non-cash transactions including the Formation Transaction described above and the cost was determined based on the amortized cost of the assets acquired. There were no such acquisitions during the three months ended March 31, 2022.

Revenue Recognition

Interest income is recognized on an accrual basis and is reported as an interest receivable until collected. Interest income is accrued based on the outstanding principal amount and the contractual terms of the loan. Original issue discount (“OID”), market discounts or premiums, and loan amendment fees for minor modifications (collectively, “Net Loan Fees”) are recorded as an adjustment to the amortized cost of the loan, and accreted or amortized as an adjustment to interest income over the initial term of the respective loan using a method that approximates the effective interest method. When the Company receives a loan principal payment, the unamortized Net Loan Fees related to the paid principal is accelerated and recognized in interest income.

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 or success fees, are recognized as interest income when received.

Certain of the Company’s loans contain a payment-in-kind interest income provision (“PIK interest”). The PIK interest, computed at the contractual rate specified in the applicable loan agreement, is added to the principal balance of the loan, rather than being paid in cash, and is generally collected upon repayment of the outstanding principal. Recognition of PIK interest includes assessments of collectability and may discontinue accrual of interest income, including PIK interest, when there is reasonable doubt that the interest income will be collected. To maintain the Company’s status as a REIT, and/or to avoid incurring an excise tax, accrued income such as this may need to be distributed to stockholders in the form of dividends for the year earned, even though the Company has not yet collected the cash.

Loans are generally placed on non-accrual status when principal or interest payments are past due 90 days or more or when there is reasonable doubt that principal or interest will be collected in full. Accrued and unpaid interest is generally reversed against interest income in the period the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding the borrower’s ability to make pending principal and interest payments. Non-accrual loans are restored to accrual status when principal and interest payments are brought current, the borrower demonstrates sustained repayment performance, or the loan becomes well secured and is in the process of collection. The Company may make exceptions to placing a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.

Interest Reserves

The Company utilizes interest reserves on certain loans which are applied to future interest payments. Such reserves are established at the time of loan origination. The interest reserve is recorded as a liability as it represents unearned interest revenue. The interest reserve is relieved when the interest on the loan is earned, and interest income is recorded in the period when the interest is earned in accordance with the credit agreement. The interest payment is deducted from the interest reserve deposit balance on the date when the interest payment is due.

The decision to establish an interest reserve is made during the underwriting process and considers the creditworthiness and expertise of the borrower, the feasibility of the project, and the debt coverage provided by the real estate and other pledged collateral.

It is the Company’s policy to recognize income for this interest component as long as the borrower is progressing as originally projected and if there has been no deterioration in the financial condition of the borrower or the underlying project. The Company’s standard accounting policies for interest income recognition are applied to all loans, including those with interest reserves.

Expenses

Interest expense, in accordance with the Company’s financing agreements, is recorded on the accrual basis. Debt issuance costs are reported as interest expense. General and administrative expenses, including professional fees, are expensed as incurred.

Income Taxes

The Company is a Maryland corporation and elected to be taxed as a REIT under the Code, commencing with its taxable year ended December 31, 2021. The Company believes that its method of operations will enable it to continue to qualify as a REIT. However, no assurances can be given that the Company’s beliefs or expectations will be fulfilled, since qualification as a REIT depends on the Company satisfying numerous asset, income and distribution tests which depends, in part, on the Company’s operating results.

To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that the Company distributes annually to its stockholders at least 90% of the Company’s REIT taxable income prior to the deduction for dividends paid. To the extent that the Company distributes less than 100% of its 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), the Company will pay tax at regular corporate rates on that undistributed portion. Furthermore, if the Company distributes less than the sum of 1) 85% of its ordinary income for the calendar year, 2) 95% of its capital gain net income for the calendar year, and 3) any undistributed shortfall from its prior calendar year (the “Required Distribution”) to its stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then it is 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 the Company elects to retain any of its net capital gain for any tax year, it must notify its 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 and receive an income tax credit for such amount. Furthermore, such retained capital gain may be subject to the nondeductible 4% excise tax. If it is determined that the Company’s estimated current year taxable income will be in excess of estimated dividend distributions (including capital gain dividend) for the current year from such income, the Company accrues excise tax on estimated excess taxable income as such taxable income is earned. The annual expense is calculated in accordance with applicable tax regulations.

FASB 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. The Company has analyzed its various federal and state filing positions and believes that its income tax filing positions and deductions are well documented and supported as of March 31, 2022. Based on the Company’s evaluation, the Company does not have any unrecognized tax benefits and does not expect that to change in the next 12 months.

Earnings per Share

The Company calculates basic earnings / (loss) per share by dividing net income / (loss) allocable to common stockholders for the period by the weighted average shares of common stock outstanding for that period. Diluted earnings / (loss) per share takes into effect any dilutive instruments, except when doing so would be anti-dilutive. As of March 31, 2022 and December 31, 2021, there were dilutive instruments relating to restricted share awards. See Note 10 included in these consolidated financial statements for the earnings per share calculations.

Recent Accounting Pronouncements

As of March 31, 2022, there are no recent accounting pronouncements that have been issued that are expected to have a significant impact on the Company’s consolidated financial statements.

Loans Held For Investment, Net

3 Months Ended

Mar. 31, 2022

Loans Held For Investment Net [Abstract]

LOANS HELD FOR INVESTMENT, NET

3. LOANS HELD FOR INVESTMENT, NET

As of March 31, 2022 and December 31, 2021, the Company’s portfolio was comprised of 22 and 21 loans, respectively, held on the consolidated balance sheet at amortized cost. The Company’s aggregate loan commitments and outstanding principal were approximately $321.1 million and $282.7 million as of March 31, 2022, and $235.1 million and $200.6 million as of December 31, 2021. For the three months ended March 31, 2022, the Company funded approximately $86.7 million in new loan principal.

As of March 31, 2022 and December 31, 2021, the Company did not have any loans held for investment with floating interest rates tied to the London Inter-bank Offered Rate (“LIBOR”). As of March 31, 2022 and December 31, 2021, approximately 63.4% and 53.2%, respectively, of its portfolio was comprised of floating rate loans that pay interest at the prime rate plus an applicable margin, and were subject to prime rate floors. The outstanding principal of these loans was approximately $179.2 million and $106.7 million as of March 31, 2022 and December 31, 2021, respectively.

The remaining 36.6% and 46.8% of the portfolio as of March 31, 2022 and December 31, 2021, respectively, was comprised of fixed rate loans that had outstanding principal of approximately $103.5 million and $93.9 million.

The following tables summarize the Company’s loans held for investment as of March 31, 2022 and December 31, 2021:

	As of March 31, 2022
	Outstanding Principal (1)		Original Issue Discount			Carrying Value (1)			Weighted Average Remaining Life (Years)(2)
Senior Term Loans	$	282,708,732	$	(3,881,818	)	$	278,826,914			2.4
Total loans held at carrying value		282,708,732		(3,881,818	)		278,826,914			2.4
Allowance for credit losses		N/A		N/A			(182,838	)
Total loans held at carrying value, net	$	282,708,732	$	(3,881,818	)	$	278,644,076

(1)

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount and loan origination costs

(2)

Weighted average remaining life is calculated based on the carrying value of the loans as of March 31, 2022

As of December 31, 2021

Outstanding Principal (1) Original Issue Discount Carrying Value (1) Weighted Average Remaining Life
(Years)(2)

Senior Term Loans $ 200,632,056 $ (3,647,490 ) $ 196,984,566 2.2

Total loans held at carrying value 200,632,056 (3,647,490 ) 196,984,566 2.2

Allowance for credit losses
N/A

N/A
(134,542 )

Total loans held at carrying value, net $ 200,632,056 $ (3,647,490 ) $ 196,850,024

(1)

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount and loan origination costs

(2) Weighted average remaining life is calculated based on the carrying value of the loans as of December 31, 2021

The following tables presents changes in loans held at carrying value as of and for the three months ended March 31, 2022. The Company had no loans held at carrying value as of March 31, 2021.

Principal Original Issue Discount Allowance for Credit Losses Carrying Value

Balance at December 31, 2021 $ 200,632,056 $ (3,647,490 ) $ (134,542 ) $ 196,850,024

New fundings 86,725,308 (1,128,415 )
-
85,596,893

Principal repayment of loans (5,619,201 )
-

-
(5,619,201 )

Accretion of original issue discount
-
894,087
-
894,087

PIK Interest 970,569
-

-
970,569

Provision for credit losses
-

-
(48,296 ) (48,296 )

Balance at March 31, 2022 $ 282,708,732 $ (3,881,818 ) $ (182,838 ) $ 278,644,076

A more detailed listing of the Company’s loans held at carrying value portfolio based on information available as of March 31, 2022, is as follows:

Loan		Location	Outstanding Principal(1)		Original Issue Premium/(Discount)			Carrying Value(1)			Contractual Interest Rate(4)	Maturity Date(2)		Payment Terms(3)
	1	Michigan		537,500		19,308			556,808		15.00%		12/31/2022		P&I
	2	Various		30,000,000		(517,906	)		29,482,094		10.07%⁽⁶⁾		5/30/2023		I/O
	3	Pennsylvania		6,957,500		(239,669	)		6,717,831		P + 11.00%⁽⁵⁾		1/31/2025		P&I
	4	Michigan		29,333,311		(149,336	)		29,183,975		P + 6.65%⁽⁵⁾Cash, 2.5% PIK		12/31/2024		P&I
	5	Various		19,321,082		(583,643	)		18,737,439		13.625% Cash, 2.75% PIK		3/31/2024		P&I
	6	Arizona		11,061,997		-			11,061,997		19.85%⁽⁷⁾		4/28/2023		P&I
	7	Massachusetts		1,500,000		-			1,500,000		P + 12.25%⁽⁵⁾		4/28/2023		P&I
	8	Pennsylvania		13,235,127		-			13,235,127		P + 10.75%⁽⁵⁾Cash, 4% PIK⁽⁸⁾		5/31/2025		P&I
	9	Michigan		4,500,000		(7,560	)		4,492,440		P + 9.00%⁽⁵⁾		2/20/2024		P&I
	10	Various		19,388,944		(238,164	)		19,150,780		13% Cash, 1% PIK		8/30/2024		P&I
	11	West Virginia		9,599,451		(153,282	)		9,446,169		P + 9.25%⁽⁵⁾Cash, 2% PIK		9/1/2024		P&I
	12	Pennsylvania		15,263,207		-			15,263,207		P + 10.75%⁽⁵⁾Cash, 3% PIK		6/30/2024		P&I
	13	Michigan		392,009		-			392,009		11.00%		9/30/2024		P&I
	14	Maryland		20,203,076		(500,365	)		19,702,711		P + 8.75%⁽⁵⁾Cash, 2% PIK		9/30/2024		I/O
	15	Various		12,000,000		(260,570	)		11,739,430		13.00%		10/31/2024		P&I
	16	Michigan		10,600,000		(89,946	)		10,510,054		P + 7.00%⁽⁵⁾		11/22/2022		I/O
	17	Various		5,000,000		-			5,000,000		15% Cash, 2.5% PIK		12/27/2026		P&I
	18	Michigan		3,646,200		(78,658	)		3,567,542		10.50% Cash, 1% to 5% PIK⁽⁹⁾		12/29/2023		I/O
	19	Various		7,500,000		(68,778	)		7,431,222		P + 9.25%⁽⁵⁾		12/31/2024		I/O
	20	Florida		15,000,000		(357,104	)		14,642,896		11.00%		1/31/2025		P&I
	21	Ohio		30,140,161		(570,026	)		29,570,135		P + 8.25%⁽⁵⁾Cash, 3% PIK		2/28/2025		P&I
	22	Florida		17,529,167		(86,119	)		17,443,048		11.00% Cash, 3% PIK		8/29/2025		P&I

	Current expected credit loss reserve			-		-			(182,838	)
	Total loans held at carry value			282,708,732		(3,881,818	)		278,644,076

(1) The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted purchase discount, deferred loan fees and loan origination costs

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

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

(4) P = prime rate and depicts floating rate loans that pay interest at the prime rate plus a specific percentage; “PIK” = paid in kind interest.

(5) This loan is subject to a 3.25% prime rate floor.

(6) The aggregate loan commitment to Loan #2 includes a $4.005 million initial advance which has an interest rate of 15.25%, a second advance of $15.995 million which has an interest rate of 9.75%, and a third advance of $10.0 million which has an interest rate of 8.5%. The statistics presented reflect the weighted average of the terms under all advances for the total aggregate loan commitment.

(7)	The aggregate loan commitment to Loan #6 includes a $8.9 million initial commitment which has a base interest rate of 15.25% and PIK interest rate of 2%, and a second commitment of $2.0 million which has an interest rate of 39%. The statistics presented reflect the weighted average of the terms under both advances for the total aggregate loan commitment.
(8)	Subject to adjustment not below 2% if borrower receives at least two consecutive quarters of positive cash flow after the closing date.

(9)

PIK is variable with an initial rate of five percent (5.00%) per annum, until borrower’s delivery of audited financial statements for the Fiscal Year ended December 31, 2021, at which time the PIK interest rate shall equal a rate of one percent (1.00%) if EBITDA is greater than $6,000,000; three percent (3.00%) if EBITDA is greater than $4,000,000 and less than or equal to $6,000,000; or will remain at five percent (5.00%) if EBITDA is less than $4,000,000.

As of March 31, 2022, all loans are current, and none have been placed on non-accrual status. The aggregate fair value of the Company’s loan portfolio was $279,085,998 and $197,901,779, with gross unrecognized holding gains of $259,084 and $917,213 as of March 31, 2022 and December 31, 2021, respectively. The fair values, which are classified as Level 3 in the fair value hierarchy (Note 2), are estimated using discounted cash flow models based on current market inputs for similar types of arrangements. The primary sensitivity in these models is based on the selection of appropriate discount rates. Fluctuations in these assumptions could result in different estimates of fair value.

Credit Quality Indicators

The Company assesses the risk factors of each loan, and assigns 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, the Company’s 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.

As of March 31, 2022 and December 31, 2021, the carrying value, excluding the CECL reserve, of the Company’s loans within each risk rating by year of origination is as follows:

	As of March 31, 2022
Risk Rating	2022		2021		2020		2019		Total
1		-		122,035,698		29,482,094		556,808		152,074,600
2		90,840,054		29,194,429		6,717,831		-		126,752,314
3		-		-		-		-		-
4		-		-		-		-		-
5		-		-		-		-		-
Total		90,840,054		151,230,127		36,199,925		556,808		278,826,914

	As of December 31, 2021
Risk Rating	2021		2020		2019		Total
1	$	135,076,307	$	32,242,114	$	590,384	$	167,908,805
2		29,075,761		-		-		29,075,761
3		-		-		-		-
4		-		-		-		-
5		-		-		-		-
Total		164,152,068		32,242,114		590,384		196,984,566

Real estate collateral coverage is also a significant credit quality indicator, and real estate collateral coverage, excluding the CECL reserve, was as follows as of March 31, 2022 and December 31, 2021:

As of March 31, 2022

Real Estate Collateral Coverage

< 1.0x 1.0x - 1.25x 1.25x - 1.5x 1.50x - 1.75x 1.75x - 2.0x > 2.0x Total

Fixed-rate $ 5,000,000 $
-
$ 17,443,048 $
-
$
-
$ 79,531,559 $ 101,974,607

Floating-rate 15,649,053 15,263,207 48,307,574 39,658,934 24,297,124 33,676,415 176,852,307

$ 20,649,053 $ 15,263,207 $ 65,750,622 $ 39,658,934 $ 24,297,124 $ 113,207,974 $ 278,826,914

As of December 31, 2021 Real Estate Collateral Coverage
	< 1.0x		1.0x - 1.25x		1.25x - 1.5x		1.50x - 1.75x		1.75x - 2.0x		> 2.0x		Total
Fixed-rate	$	7,017,793	$	-	$	35,836,099	$	3,086,298	$	-	$	45,373,778	$	91,313,968
Floating-rate		8,925,068		18,022,518		-		30,029,953		32,377,087		16,315,972		105,670,598
	$	15,942,861	$	18,022,518	$	35,836,099	$	33,116,251	$	32,377,087	$	61,689,750	$	196,984,566

CECL Reserve

The Company records allowances for its 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 a 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. In the future, we may use other acceptable methods, such as a discounted cash flow method, WARM method, or other methods permitted under the standard.

ASC 326 requires an entity to consider historical loss experience, current conditions, and a reasonable and supportable forecast of the macroeconomic environment. The Company evaluates its loans on a collective (pool) basis by aggregating on the basis of similar risk characteristics, primarily: (i) industry sector of the borrower, (ii) risk ratings, (iii) collateral type, (iv) term, among other characteristics. We make the judgment that loans to cannabis-related borrowers with risk ratings indicating very low or low risk (1 and 2, respectively) that are fully collateralized by real estate with short maturities of less than three years exhibit similar risk characteristics and are evaluated as a pool. Further, loans that are not fully collateralized by real estate, but 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, have higher risk, or 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 the Company’s loan portfolio and (iv) the Company’s current and future view of the macroeconomic environment. From time to time, the Company may consider loan-specific qualitative factors on certain loans to estimate its CECL Reserve, which may include (i) whether cash from the borrower’s operations is sufficient to cover the debt service requirements currently and into the future, (ii) the ability of the borrower to refinance the loan and (iii) the liquidation value of collateral. For loans where 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 the Company’s portfolio, the Company evaluates its historical loan performance, which includes zero realized loan losses since the inception of its operations. Additionally, the Company analyzed its repayment history, noting it has limited “true” operating history, since the incorporation date of March 30, 2021. However; the Company’s Sponsor has had operations for the past two 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. The Sponsor has experienced prepayment on seven loans since its inception history, and in no such case was an event of loss experienced. Given the similarity of the structuring of the credit agreements for the loans in the Company’s portfolio, management considered it appropriate to consider the past repayment history of loans originated by the Sponsor in determining the extent to which a CECL reserve shall be recorded.

In addition, the Company reviews each loan on a quarterly basis and evaluates the borrower’s ability to pay the monthly interest and principal, if required, as well as the loan-to-value (LTV) ratio. When evaluating qualitative factors that may indicate the need for a CECL Reserve, we forecast losses considering a variety of factors. In considering the potential current expected credit loss, the Manager primarily considered significant inputs to the Company’s 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, loan-term, geographic location, and expected timing and amount of future loan fundings, (ii) performance against the underwritten business plan and the Company’s internal loan risk rating and (iii) a macro-economic forecast. Regarding real estate collateral, the Company 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. 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 CapitalIQ as of March 31, 2022, 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 the Company’s future estimates of expected credit losses for its loan portfolio.

In order to estimate the future expected loan losses relevant to the Company’s portfolio, the Company utilizes historical market loan loss data obtained from Federal Reserve economic data for bank business loans, which the Company believes is a reasonably comparable and available data set to its type of loans. We expect the period from 2018-2021 to be representative for future credit losses during the years of 2022-2024, as the cannabis industry is maturing, consumer adoption is increasing, and demand for production and retail capacity is increasing. For periods beyond the reasonable and supportable forecast period, the Company reverts back to historical loss data. 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.

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 the Company’s CECL Reserve. As the Company acquires new loans and the Manager monitors loan and sponsor performance, these estimates will be revised each period.

Activity related to the CECL Reserve for outstanding balances and unfunded commitments on the Company’s loans held at carrying value and loans receivable at carrying value as of and for the three months ended March 31, 2022 was as follows:

	Outstanding⁽¹⁾		Unfunded⁽²⁾		Total
Balance at December 31, 2021	$	134,542	$	13,407	$	147,949
Provision for current expected credit losses		48,296		3,047		51,343
Balance at March 31, 2022	$	182,838	$	16,454	$	199,292

(1)

As of March 31, 2022, the CECL Reserve related to outstanding balances on loans at carrying value is recorded within current expected credit loss reserve in the Company’s consolidated balance sheets.

(2)

As of March 31, 2022, the CECL Reserve related to unfunded commitments on loans at carrying value is recorded within accounts payable and accrued liabilities in the Company’s consolidated balance sheets.

The Company has made an accounting policy election to exclude accrued interest receivable, ($373,695 as of March 31, 2022) included in Interest Receivable on its consolidated balance sheet, from the amortized cost basis of the related loans held for investment in determining the CECL Reserve, as any uncollectible accrued interest receivable is written off in a timely manner. To date, the Company has had zero write-offs related to uncollectible interest receivable, but will discontinue accruing interest on loans if deemed to be uncollectible, with any previously accrued uncollected interest on the loan charged to interest income in the same period.

As of March 31, 2022 there were no loans with principal or interest greater than 30 days past due.

Interest Receivable

3 Months Ended

Mar. 31, 2022

Interest Receivable [Abstract]

INTEREST RECEIVABLE

4. INTEREST RECEIVABLE

The following table summarizes the interest receivable by the Company as of March 31, 2022 and December 31, 2021:

	As of March 31, 2022		As of December 31, 2021
Interest receivable	$	370,244	$	193,790
Unused fees receivable		3,451		3,945
Total interest receivable	$	373,695	$	197,735

Interest Reserve

3 Months Ended

Mar. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

INTEREST RESERVE

5. INTEREST RESERVE

At March 31, 2022, the Company had nine loans that included a loan funded interest reserve.

The following table presents changes in interest reserves for the three months ended March 31, 2022. There were no interest reserves as of March 31, 2021:

	As of March 31, 2022
Initial reserves	$	6,636,553
New reserves		3,919,974
Reserves disbursed		(3,084,470	)
Total interest reserve	$	7,472,057

Debt

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

DEBT

6. DEBT

In May 2021, in connection with our acquisition of our financing subsidiary, CAL, we were assigned a secured revolving credit facility (the “Revolving Loan”). The Revolving Loan has an aggregate borrowing base of up to $10,000,000 and bears interest, payable in cash in arrears, at a per annum rate equal to the greater of (x) Prime Rate plus 1.00% and (y) 4.75%. The Company incurred debt issuance costs of $100,000 related to the origination of the Revolving Loan, which were capitalized and are subsequently being amortized through maturity. The maturity date of the Revolving Loan is the earlier of (i) February 12, 2023 and (ii) the date on which the Revolving Loan is terminated pursuant to terms in the Revolving Loan Agreement.

On December 16, 2021, the Company amended the Revolving Loan Agreement (the “First Amendment”). The First Amendment increased the loan commitment from $10,000,000 to $45,000,000 and decreased the interest rate, from the greater of the (1) Prime Rate plus 1.00% and (2) 4.75% to the greater of (1) the Prime Rate plus the applicable margin and (2) 3.25%. The applicable margin depends on the ratio of debt to equity of CAL and increases from 0% at a ratio of 0.25 to 1 to 1.25% at a ratio of 1.5 to 1. The First Amendment also extended the maturity date from February 12, 2023 to the earlier of (i) December 16, 2023 and (ii) the date on which the Revolving Loan is terminated pursuant to the terms in the Revolving Loan agreement. The Company incurred debt issuance costs of $859,500 related to the First Amendment, which were capitalized and are subsequently being amortized through maturity. As of March 31, 2022 and December 31, 2021, unamortized debt issuance costs related to the Revolving Loan and First Amendment of $795,754 and $868,022, respectively, are recorded in Other Assets on the Consolidated Balance Sheet.

The Revolving Loan incurs unused fees at a rate of 0.25% per annum beginning July 1, 2022 pursuant to the First Amendment. During the period from January 1, 2022 to March 31, 2022, the Company did not incur unused fees. Additionally, for the period from January 1, 2022 to March 31, 2022, the Company did not borrow against the Revolving Loan and therefore no interest expense was incurred for the period then ended.

The First Amendment provides for certain affirmative covenants, including requiring us to deliver financial information and any notices of default, and conducting business in the normal course. Additionally, the Company must comply with certain financial covenants including: (1) maximum capital expenditures of $150,000, (2) maintaining a debt service coverage ratio greater than 1.35 to 1, and (3) maintaining a leverage ratio less than 1.50 to 1. To the best of our knowledge, as of March 31, 2022, we were in compliance in all material respects with the covenants with respect to the Revolving Loan.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 1B
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 1
-Subparagraph (SX 210.4-08(c))
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 470
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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RELATED PARTY TRANSACTIONS

Related Party Transactions

3 Months Ended

Mar. 31, 2022

7. RELATED PARTY TRANSACTIONS

Management Agreement

Pursuant to the Management Agreement, the Manager will manage the loans and day-to-day operations of the Company, subject at all times to the further terms and conditions set forth in the Management Agreement and such further limitations or parameters as may be imposed from time to time by the Company’s Board.

The Manager will receive base management fees (the “Base Management Fee”) that are calculated and payable quarterly in arrears, in an amount equal to 0.375% of the Company’s Equity, determined as of the last day of each such quarter; reduced by an amount equal to 50% of the pro rata amount of origination fees earned and paid to the Manager during the applicable quarter for loans that were originated on the Company’s behalf by the Manager or affiliates of the Manager (“Outside Fees”). For the three months ended March 31, 2022, the Base Management Fee payable was reduced by Outside Fees in the amount of $717,750.

In addition to the Base Management Fee, the Manager is entitled to receive incentive compensation (the “Incentive Compensation” or “Incentive Fees”) under the Management Agreement. Under the Management Agreement, the Company will pay Incentive Fees to the Manager based upon the Company’s achievement of targeted levels of Core Earnings. “Core Earnings” is defined in the Management Agreement as, for a given period means the net income (loss) for such period, computed in accordance with GAAP, excluding (i) non-cash equity compensation expense, (ii) the Incentive Compensation, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income and (v) one-time events pursuant to changes in GAAP and certain non-cash charges, in each case after discussions between the Manager and the Independent Directors and approved by a majority of the Independent Directors. Incentive compensation for the three months ended March 31, 2022 was $382,143.

Pursuant to Fee Waiver Letter Agreements executed by the Manager, dated June 30, 2021 and September 30, 2021, all Base Management Fees that would have been payable to the Manager for the period from May 1, 2021 to September 30, 2021 were voluntarily waived and are not subject to recoupment at a later date. Additionally, Pursuant to a Fee Waiver Letter Agreement executed by the Manager, dated December 31, 2021, all Incentive Compensation that would have been payable to the Manager for the period from October 1, 2021 to December 31, 2021 was voluntarily waived and is not subject to recoupment at a later date.

The Company shall pay all of its costs and expenses and shall reimburse the Manager or its Affiliates for expenses of the Manager and its Affiliates paid or incurred on behalf of the Company, excepting only those expenses that are specifically the responsibility of the Manager pursuant to the Management Agreement. We reimburse our Manager or its affiliates, as applicable, for the Company’s fair and equitable allocable share of the compensation, including annual base salary, bonus, any related withholding taxes and employee benefits, paid to (i) subject to review by the Compensation Committee of the Board, the Manager’s personnel serving as an officer of the Company, based on the percentage of his or her time spent devoted to the Company’s affairs and (ii) other corporate finance, tax, accounting, internal audit, legal, risk management, operations, compliance and other non-investment personnel of the Manager and its affiliates who spend all or a portion of their time managing the Company’s affairs, with the allocable share of the compensation of such personnel described in this clause (ii) being as reasonably determined by the Manager to appropriately reflect the amount of time spent devoted by such personnel to our affairs.

The following table summarizes the related party costs incurred by the Company and amounts payable to the Manager for the periods ended March 31, 2022 and December 31, 2021.

	As of March 31, 2022			As of December 31, 2021
Affiliate Payments
Management fees earned	$	1,007,112		$	989,322
Less: Outside Fees earned		(717,750	)		(187,028	)
Base management fees, net		289,362			802,294
Incentive fees		382,143			-
Management and incentive fees payable		671,505			802,294
General and administrative expenses reimbursable to Manager		411,521			102,829
Total	$	1,083,026		$	905,123

General administrative expenses reimbursable to the Manager are included in related party payable line item of the consolidated balance sheet as of March 31, 2022 and December 31, 2021.

Investments in Loans

From time to time, the Company may co-invest with other investment vehicles managed by its affiliates, in accordance with the Manager’s co-investment allocation policies. The Company is not obligated to provide, nor has it provided, any financial support to the other managed investment vehicles. As such, the Company’s risk is limited to the carrying value of its investment in any such loan. As of and for the three months ended March 31, 2022, ten of the Company’s loans were co-invested by affiliates of the Company.

For the period from March 30, 2021 (Inception) to December 31, 2021, the Company advanced $20,000,000 to the borrower of Loan #14. The Company noted that a member of the Sponsor is a voting board member to the borrower of Loan #14. The Company evaluated the nature of such transaction in accordance with the guidance set forth in FASB ASC Topic 850, Related Party Disclosures (“ASC 850”), noting no material conflict of interest.

On October 1, 2021, the Company assigned $14.0 million of unfunded commitment in Loan #14 and $5.0 million of unfunded commitment in Loan #10 to an affiliate. Further, on October 3, 2021, the Company sold $5.0 million of principal related to the second tranche of Loan #2 to an affiliate at an amortized cost, plus accrued interest of $4.9 million.

Loans Acquired From Affiliates

As a result of the Formation Transaction, for the period from March 30, 2021 (Inception) to December 31, 2021 the Company acquired loans at amortized cost and cash of $9,802,024 and $97,976, respectively, from affiliates of the Manager in exchange for issuance of 635,194 shares of common stock.

Subsequently, for the period from March 30, 2021 (Inception) to December 31, 2021 the Company also acquired loans at amortized cost of $22,516,005 from affiliates of the Manager in exchange for issuance of 1,446,473 shares of common stock, as well as cash contributions of $125,517,500 to fund loans in exchange for 8,067,010 shares of common stock.

Additionally, for the period from March 30, 2021 (Inception) to December 31, 2021 the Company acquired 100% of CAL from an affiliate of the Manager in exchange for issuance of 481,259 shares of common stock. The Company accounted for the transaction as an asset acquisition pursuant to ASC 805-50 rather than as a business combination. Substantially all of the fair value of the assets acquired are concentrated in a group of similarly identifiable loan assets, and as such, do not constitute a business as defined by GAAP. The financial position and results of operations of CAL are consolidated into the consolidated financial statements of the Company. CAL held $7.7 million and $10.4 million of loans held at carrying value as of March 31, 2022 and December 31, 2021, respectively.

On December 15, 2021, the Company acquired $10.0 million of additional interests in senior secured loans in the third tranche of Loan #2 from an affiliate at a purchase price, which equaled amortized cost, of $9.74 million.

There were no loans acquired from affiliates during the three months ended March 31, 2022.

Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

8. COMMITMENTS AND CONTINGENCIES

Off-Balance Sheet Arrangements

Off-balance sheet commitments may consist of unfunded commitments on delayed draw term loans. We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured investment vehicles, special purpose entities or variable interest entities, established to facilitate off-balance sheet arrangements or other contractually narrow or limited purposes. Further, we have not guaranteed any obligations of unconsolidated entities or entered into any commitment or intend to provide additional funding to any such entities. As of March 31, 2022 and December 31, 2021, the Company had the following commitments to fund various existing loans.

	As of March 31, 2022			As of December 31, 2021

Total original loan commitments	$	321,110,130		$	235,063,593
Less: drawn commitments		(281,535,892	)		(200,359,026	)
Total undrawn commitments	$	39,574,238		$	34,704,567

Refer to “Note 3 – Loans Held for Investment, Net” for further information regarding the CECL Reserve attributed to unfunded commitments.

COVID-19 Pandemic

The outbreak of the coronavirus (“COVID-19”) pandemic has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving, and many countries, including the United States, have reacted by instituting quarantines, mandating business and school closures and restricting travel. As a result, the COVID-19 pandemic has negatively impacted almost every industry directly or indirectly, including the regulated cannabis industry. Although most of these measures have been lifted or scaled back, surges of COVID-19 in certain parts of the world, including the United States, have resulted and may in the future result in the re-imposition of certain restrictions and may lead to more restrictions to reduce the spread of COVID-19. Over the course of the pandemic, medical cannabis companies have been deemed “essential” by almost all states with legalized cannabis and stay-at-home orders. Consequently, the impact of the COVID-19 pandemic and the related regulatory and private sector response on our financial and operating results for the three months ended March 31, 2022, was somewhat mitigated as all of our borrowers were permitted to continue to operate during the pandemic. The full effect that these disruptions may have on the operations and financial performance of the Company will depend on future developments, including possible impacts on the performance of the Company’s loans, general business activity, and ability to generate revenue, which cannot be determined.

Other Contingencies

The Company from time to time may be a party to litigation in the normal course of business. As of March 31, 2022, the Company is not aware of any legal claims that could materially impact its business, financial condition or results of operations.

The Company’s ability to grow or maintain its business depends on state laws pertaining to the cannabis industry. New laws that are averse to the Company’s portfolio companies may be enacted, and current favorable state or national laws or enforcement guidelines relating to cultivation, production and distribution of cannabis may be modified or eliminated in the future, which would impede the Company’s ability to grow and could materially adversely affect its business.

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

Stockholders' Equity

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

STOCKHOLDERS’ EQUITY

9. STOCKHOLDERS’ EQUITY

Common Stock

On January 5, 2022, the underwriters partially exercised their over-allotment option to purchase 302,800 shares of the Company’s common stock at a price of $16.00 per share, raising $4,844,800 in additional gross proceeds or $4,505,664 in net proceeds after underwriting commissions of $339,136, which is reflected as a reduction of additional paid-in capital on the consolidated statements of stockholders’ equity.

During the period from March 30, 2021 (inception) to December 31, 2021, the Company issued 10,636,363 shares of its common stock pursuant to transactions that were exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended.

On December 10, 2021, the Company completed its IPO of 6,250,000 shares of its common stock at a price of $16.00 per share, raising $100,000,000 in gross proceeds. The underwriting commission of $7,000,000 is reflected as a reduction of additional paid-in capital on the consolidated statements of stockholders’ equity. The Company incurred approximately $1,265,877 of expenses in connection with the IPO, which is reflected as a reduction in additional paid-in capital. The net proceeds to the Company totaled approximately $91,734,123. Concurrent with the closing of the IPO, the Company sold 468,750 shares of its common stock at the public offering price of $16.00 per share in a private placement to John Mazarakis, the Company’s Executive Chairman, Anthony Cappell, the Company’s Chief Executive Officer, and Dr. Andreas Bodmeier, the Company’s Co-President. Gross proceeds received were $7,500,000, and no underwriting discounts or commissions were paid in respect of these shares.

On October 21, 2021, the Board approved a 6,427-for-one stock split of the Company’s common stock. All common shares and per share information presented in the consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis for all periods presented, including reclassifying an amount equal to the increase in par value of common stock from additional paid-in capital. There was no change in the par value of the Company’s common stock.

Equity Incentive Plan

The Company has established an equity incentive compensation plan (the “2021 Plan”). The Board authorized the adoption of the 2021 Plan and the Compensation Committee of the Board approved restricted stock award grants 98,440 shares of common stock during the quarter ended December 31, 2021. The Compensation Committee appointed by the Board administers the 2021 Plan. The 2021 Plan authorizes stock options, stock appreciation rights, restricted stock, stock bonuses, stock units and other forms of awards granted or denominated in the Company’s common stock. The 2021 Plan retains flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash. The Company has, and currently intends to continue to grant restricted stock awards to participants in the 2021 Plan, but it may also grant any other type of award available under the 2021 Plan in the future. Persons eligible to receive awards under the 2021 Plan include the Company’s officers and employees of the Manager and its affiliates or officers and employees of the Company’s subsidiaries, if any, the members of the Board, and certain consultants and other service providers.

As of March 31, 2022 and December 31, 2021, the maximum number of shares of the Company common stock that may be delivered pursuant to awards under the 2021 Plan (the “Share Limit”) equals 8.50% of the issued and outstanding shares of the Company’s common stock on a fully-diluted basis. Shares that are subject to or underlie awards that expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2021 Plan will not be counted against the Share Limit and will again be available for subsequent awards under the 2021 Plan. There were 3,750 shares forfeited during the three months ended March 31, 2022.

Shares that are exchanged by a participant or withheld by us as full or partial payment in connection with any award granted under the 2021 Plan, as well as any shares exchanged by a participant or withheld by the Company to satisfy tax withholding obligations related to any award granted under the 2021 Plan, will not be counted against the Share Limit and will again be available for subsequent awards under the 2021 Plan. To the extent that an award is settled in cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the Share Limit and will again be available for subsequent awards under the 2021 Plan.

The following table summarizes the restricted stock activity for the Company’s directors and officers and employees of the Manager as of March 31, 2022 and December 31, 2021.

	As of March 31, 2022			As of December 31, 2021
Non-vested		98,440			98,440
Forfeited		(3,750	)		-
Balance		94,690			98,440

Restricted stock grant expense is based on the Company’s stock price at the time of the grant and amortized over the vesting period. Forfeitures are recognized as they occur. The share-based compensation expense for the Company was approximately $120,940 for the three months ended March 31, 2022.

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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Earnings Per Share

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

EARNINGS PER SHARE

10. EARNINGS PER SHARE

The following information sets forth the computations of basic earnings per common share for the three months ended March 31, 2022 and for the period from March 30, 2021 (inception) to March 31, 2021:

	For the three months ended March 31, 2022		For the period from March 30, 2021 (Inception) to March 31, 2021
Net income attributable to common stockholders	$	7,803,952	$	-
Divided by:
Basic weighted average shares of common stock outstanding		17,641,090		6,427
Diluted weighted average shares of common stock outstanding		17,737,975		6,427
Basic earnings per common share	$	0.44	$	0.00
Diluted earnings per common share	$	0.44	$	0.00

Income Tax

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAX

11. INCOME TAX

The income tax provision for the Company was $0 for the three months ended March 31, 2022.

For the three months ended March 31, 2022, the Company incurred no expense for United Stated federal excise tax. If it is determined that the Company’s estimated current year taxable income will be in excess of estimated dividend distributions (including capital gain dividend) for the current year from such income, the Company 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.

As of March 31, 2022 and December 31, 2021, the Company does not have any unrecognized tax benefits and does not expect that to change in the next 12 months.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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Dividends And Distributions [Abstract]

Dividends and Distributions

3 Months Ended

Mar. 31, 2022

DIVIDENDS AND DISTRIBUTIONS

12. DIVIDENDS AND DISTRIBUTIONS

The following table summarizes the Company’s dividends declared during the three months ended March 31, 2022. There were no dividends declared for the three months ended March 31, 2021.

	Record Date	Payment Date	Common Share Distribution Amount		Taxable Ordinary Income		Return of Capital		Section 199A Dividends
Regular cash dividend	3/31/2022	4/14/2022	$	0.40	$	0.40	$	-	$	0.40
Total cash dividend			$	0.40	$	0.40	$	-	$	0.40

Subsequent Events

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

13. SUBSEQUENT EVENTS

Management has evaluated the impact of all subsequent events on the Company through May 12, 2022, the date the consolidated financial statements were issued, and determined there are no subsequent events to report, other than those disclosed below.

Normal Course of Business Operations

During the period from April 1, 2022 through May 12, 2022, the Company funded a loan amounting to $17.0 million in loan principal to a new portfolio company, and two loan advances amounting to approximately $8.3 million in loan principal to an existing portfolio company.

Payment of Dividend

On April 14, 2022, the Company paid a cash dividend of $0.40 per share of its common stock, relating to the first quarter of 2022, in the amount of $7,063,165 which was paid to stockholders of record as of the close of business on March 31, 2021.

Revolving Loan

During the period from April 1, 2022 through May 12, 2022, the Company drew $30.0 million on the Revolving Loan, which will bear interest until repaid in full of the greater of (1) the Prime Rate plus the applicable margin and (2) 3.25%. See Note 6 included in these consolidated financial statements for more information on the Company’s Revolving Loan Agreement.

On May 12, 2022, the Company’s wholly-owned financing subsidiary, CAL, entered into a Second Amended and Restated Loan and Security Agreement (the “Second Amendment”) relating to the Revolving Loan. The Second Amendment provides for an increase in the aggregate commitment from $45 million to $65 million. No other material terms of the Revolving Loan were modified as a result of the execution of the Second Amendment. As of May 12, 2022, the Company has approximately $35.0 million of availability under the Revolving Loan.

Accounting Policies, by Policy (Policies)

3 Months Ended

Mar. 31, 2022

Use of Estimates in the Preparation of Consolidated Financial Statements

Basis of Presentation

Basis of Presentation

Use of Estimates in the Preparation of Consolidated Financial Statements

Reclassifications

Reclassifications

Cash

Cash

Concentration of Credit Risks

Concentration of Credit Risks

Organizational expenses

Organizational expenses

Loans Held for Investment

Loans Held for Investment

CECL Reserve

CECL Reserve

Fair Value Measurements

Fair Value Measurements

●

Level 1—Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

●

Level 2—Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

●

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Equity-Based Compensation

Equity-Based Compensation

Debt Issuance Costs

Debt Issuance Costs

Formation Transaction

Formation Transaction

The following table shows the par values, amortized cost and purchase premiums (discounts) of the portfolio of assets contributed on April 1, 2021:

	Par value		Amortized Cost		Premium (Discount)
Assets
Cash	$	97,976	$	97,976	$	-
Loans, held-for-investment, net		9,883,211		9,802,024		(81,187	)
Total contributions	$	9,981,187	$	9,900,000	$	(81,187	)

Acquisition Accounting

Acquisition Accounting

Revenue Recognition

Revenue Recognition

Interest Reserves

Interest Reserves

Expenses

Expenses

Income Taxes

Income Taxes

Earnings per Share

Earnings per Share

Recent Accounting Pronouncements

Recent Accounting Pronouncements

As of March 31, 2022, there are no recent accounting pronouncements that have been issued that are expected to have a significant impact on the Company’s consolidated financial statements.

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2022

Schedule of amortized cost and purchase premiums (discounts) of the initial portfolio

	Par value		Amortized Cost		Premium (Discount)
Assets
Cash	$	97,976	$	97,976	$	-
Loans, held-for-investment, net		9,883,211		9,802,024		(81,187	)
Total contributions	$	9,981,187	$	9,900,000	$	(81,187	)

Loans Held For Investment, Net (Tables)

3 Months Ended

Mar. 31, 2022

Loans Held For Investment Net [Abstract]

Schedule of loans held for investment

	As of March 31, 2022
	Outstanding Principal (1)		Original Issue Discount			Carrying Value (1)			Weighted Average Remaining Life (Years)(2)
Senior Term Loans	$	282,708,732	$	(3,881,818	)	$	278,826,914			2.4
Total loans held at carrying value		282,708,732		(3,881,818	)		278,826,914			2.4
Allowance for credit losses		N/A		N/A			(182,838	)
Total loans held at carrying value, net	$	282,708,732	$	(3,881,818	)	$	278,644,076

(1)

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount and loan origination costs

(2)

Weighted average remaining life is calculated based on the carrying value of the loans as of March 31, 2022

(1)

The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount and loan origination costs

(2) Weighted average remaining life is calculated based on the carrying value of the loans as of December 31, 2021

Schedule of changes in loans held at carrying value

	Principal			Original Issue Discount			Allowance for Credit Losses			Carrying Value
Balance at December 31, 2021	$	200,632,056		$	(3,647,490	)	$	(134,542	)	$	196,850,024
New fundings		86,725,308			(1,128,415	)		-			85,596,893
Principal repayment of loans		(5,619,201	)		-			-			(5,619,201	)
Accretion of original issue discount		-			894,087			-			894,087
PIK Interest		970,569			-			-			970,569
Provision for credit losses		-			-			(48,296	)		(48,296	)
Balance at March 31, 2022	$	282,708,732		$	(3,881,818	)	$	(182,838	)	$	278,644,076

Schedule of loans held at carrying value portfolio based on information

Loan		Location	Outstanding Principal(1)		Original Issue Premium/(Discount)			Carrying Value(1)			Contractual Interest Rate(4)	Maturity Date(2)		Payment Terms(3)
	1	Michigan		537,500		19,308			556,808		15.00%		12/31/2022		P&I
	2	Various		30,000,000		(517,906	)		29,482,094		10.07%⁽⁶⁾		5/30/2023		I/O
	3	Pennsylvania		6,957,500		(239,669	)		6,717,831		P + 11.00%⁽⁵⁾		1/31/2025		P&I
	4	Michigan		29,333,311		(149,336	)		29,183,975		P + 6.65%⁽⁵⁾Cash, 2.5% PIK		12/31/2024		P&I
	5	Various		19,321,082		(583,643	)		18,737,439		13.625% Cash, 2.75% PIK		3/31/2024		P&I
	6	Arizona		11,061,997		-			11,061,997		19.85%⁽⁷⁾		4/28/2023		P&I
	7	Massachusetts		1,500,000		-			1,500,000		P + 12.25%⁽⁵⁾		4/28/2023		P&I
	8	Pennsylvania		13,235,127		-			13,235,127		P + 10.75%⁽⁵⁾Cash, 4% PIK⁽⁸⁾		5/31/2025		P&I
	9	Michigan		4,500,000		(7,560	)		4,492,440		P + 9.00%⁽⁵⁾		2/20/2024		P&I
	10	Various		19,388,944		(238,164	)		19,150,780		13% Cash, 1% PIK		8/30/2024		P&I
	11	West Virginia		9,599,451		(153,282	)		9,446,169		P + 9.25%⁽⁵⁾Cash, 2% PIK		9/1/2024		P&I
	12	Pennsylvania		15,263,207		-			15,263,207		P + 10.75%⁽⁵⁾Cash, 3% PIK		6/30/2024		P&I
	13	Michigan		392,009		-			392,009		11.00%		9/30/2024		P&I
	14	Maryland		20,203,076		(500,365	)		19,702,711		P + 8.75%⁽⁵⁾Cash, 2% PIK		9/30/2024		I/O
	15	Various		12,000,000		(260,570	)		11,739,430		13.00%		10/31/2024		P&I
	16	Michigan		10,600,000		(89,946	)		10,510,054		P + 7.00%⁽⁵⁾		11/22/2022		I/O
	17	Various		5,000,000		-			5,000,000		15% Cash, 2.5% PIK		12/27/2026		P&I
	18	Michigan		3,646,200		(78,658	)		3,567,542		10.50% Cash, 1% to 5% PIK⁽⁹⁾		12/29/2023		I/O
	19	Various		7,500,000		(68,778	)		7,431,222		P + 9.25%⁽⁵⁾		12/31/2024		I/O
	20	Florida		15,000,000		(357,104	)		14,642,896		11.00%		1/31/2025		P&I
	21	Ohio		30,140,161		(570,026	)		29,570,135		P + 8.25%⁽⁵⁾Cash, 3% PIK		2/28/2025		P&I
	22	Florida		17,529,167		(86,119	)		17,443,048		11.00% Cash, 3% PIK		8/29/2025		P&I

	Current expected credit loss reserve			-		-			(182,838	)
	Total loans held at carry value			282,708,732		(3,881,818	)		278,644,076

(7)	The aggregate loan commitment to Loan #6 includes a $8.9 million initial commitment which has a base interest rate of 15.25% and PIK interest rate of 2%, and a second commitment of $2.0 million which has an interest rate of 39%. The statistics presented reflect the weighted average of the terms under both advances for the total aggregate loan commitment.
(8)	Subject to adjustment not below 2% if borrower receives at least two consecutive quarters of positive cash flow after the closing date.

(9)

Schedule of risk rating

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

Schedule of carrying value of loans held for investment

	As of March 31, 2022
Risk Rating	2022		2021		2020		2019		Total
1		-		122,035,698		29,482,094		556,808		152,074,600
2		90,840,054		29,194,429		6,717,831		-		126,752,314
3		-		-		-		-		-
4		-		-		-		-		-
5		-		-		-		-		-
Total		90,840,054		151,230,127		36,199,925		556,808		278,826,914

	As of December 31, 2021
Risk Rating	2021		2020		2019		Total
1	$	135,076,307	$	32,242,114	$	590,384	$	167,908,805
2		29,075,761		-		-		29,075,761
3		-		-		-		-
4		-		-		-		-
5		-		-		-		-
Total		164,152,068		32,242,114		590,384		196,984,566

Schedule of carrying value of loans held for investment

As of March 31, 2022
Real Estate Collateral Coverage
	< 1.0x		1.0x - 1.25x		1.25x - 1.5x		1.50x - 1.75x		1.75x - 2.0x		> 2.0x		Total
Fixed-rate	$	5,000,000	$	-	$	17,443,048	$	-	$	-	$	79,531,559	$	101,974,607
Floating-rate		15,649,053		15,263,207		48,307,574		39,658,934		24,297,124		33,676,415		176,852,307
	$	20,649,053	$	15,263,207	$	65,750,622	$	39,658,934	$	24,297,124	$	113,207,974	$	278,826,914

As of December 31, 2021 Real Estate Collateral Coverage
	< 1.0x		1.0x - 1.25x		1.25x - 1.5x		1.50x - 1.75x		1.75x - 2.0x		> 2.0x		Total
Fixed-rate	$	7,017,793	$	-	$	35,836,099	$	3,086,298	$	-	$	45,373,778	$	91,313,968
Floating-rate		8,925,068		18,022,518		-		30,029,953		32,377,087		16,315,972		105,670,598
	$	15,942,861	$	18,022,518	$	35,836,099	$	33,116,251	$	32,377,087	$	61,689,750	$	196,984,566

Schedule of Activity related to the CECL Reserve for outstanding balances

	Outstanding⁽¹⁾		Unfunded⁽²⁾		Total
Balance at December 31, 2021	$	134,542	$	13,407	$	147,949
Provision for current expected credit losses		48,296		3,047		51,343
Balance at March 31, 2022	$	182,838	$	16,454	$	199,292

(1)

(2)

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

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Schedule of summarizes the interest receivable

Interest Receivable (Tables)

3 Months Ended

Mar. 31, 2022

Interest Receivable [Abstract]

	As of March 31, 2022		As of December 31, 2021
Interest receivable	$	370,244	$	193,790
Unused fees receivable		3,451		3,945
Total interest receivable	$	373,695	$	197,735

Interest Reserve (Tables)

3 Months Ended

Mar. 31, 2022

Equity Method Investments and Joint Ventures [Abstract]

Schedule of changes in interest reserves

	As of March 31, 2022
Initial reserves	$	6,636,553
New reserves		3,919,974
Reserves disbursed		(3,084,470	)
Total interest reserve	$	7,472,057

Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2022

	As of March 31, 2022			As of December 31, 2021
Affiliate Payments
Management fees earned	$	1,007,112		$	989,322
Less: Outside Fees earned		(717,750	)		(187,028	)
Base management fees, net		289,362			802,294
Incentive fees		382,143			-
Management and incentive fees payable		671,505			802,294
General and administrative expenses reimbursable to Manager		411,521			102,829
Total	$	1,083,026		$	905,123

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Schedule of commitments to fund various existing loans

	As of March 31, 2022			As of December 31, 2021

Total original loan commitments	$	321,110,130		$	235,063,593
Less: drawn commitments		(281,535,892	)		(200,359,026	)
Total undrawn commitments	$	39,574,238		$	34,704,567

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2022

Stockholders' Equity Note [Abstract]

Schedule of restricted stock

	As of March 31, 2022			As of December 31, 2021
Non-vested		98,440			98,440
Forfeited		(3,750	)		-
Balance		94,690			98,440

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2022

Earnings Per Share [Abstract]

Schedule of basic earnings per common share

	For the three months ended March 31, 2022		For the period from March 30, 2021 (Inception) to March 31, 2021
Net income attributable to common stockholders	$	7,803,952	$	-
Divided by:
Basic weighted average shares of common stock outstanding		17,641,090		6,427
Diluted weighted average shares of common stock outstanding		17,737,975		6,427
Basic earnings per common share	$	0.44	$	0.00
Diluted earnings per common share	$	0.44	$	0.00

Dividends and Distributions (Tables)

3 Months Ended

Mar. 31, 2022

Dividends And Distributions [Abstract]

Schedule of dividends declared

	Record Date	Payment Date	Common Share Distribution Amount		Taxable Ordinary Income		Return of Capital		Section 199A Dividends
Regular cash dividend	3/31/2022	4/14/2022	$	0.40	$	0.40	$	-	$	0.40
Total cash dividend			$	0.40	$	0.40	$	-	$	0.40

Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Incurred debt issuance costs (in Dollars)	$ 795,754	$ 868,022
Amortization expense (in Dollars)	$ 72,268
Stockholders percentage	90.00%
Distributes percentage	100.00%
Percentage of ordinary income	85.00%
Percentage of capital gain net income	95.00%
Percentage of non-deductible excise tax equal	4.00%
Percentage of distribution requirement	90.00%
Percentage of excise tax	4.00%

Summary of Significant Accounting Policies (Details) - Schedule of amortized cost and purchase premiums (discounts) of the initial portfolio	Apr. 01, 2021 USD ($)
Par value [Member]
Assets
Cash	$ 97,976
Loans, held-for-investment, net	9,883,211
Total contributions	9,981,187
Amortized Cost [Member]
Assets
Cash	97,976
Loans, held-for-investment, net	9,802,024
Total contributions	9,900,000
Premium (Discount) [Member]
Assets
Cash
Loans, held-for-investment, net	(81,187)
Total contributions	$ (81,187)

Loans Held For Investment, Net (Details) - USD ($)	3 Months Ended	12 Months Ended
Loans Held For Investment, Net (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan commitments	$ 321,100,000
Outstanding principal	282,700,000	$ 200,600,000
New loan principal	$ 86,700,000
Portfolio percentage	63.40%	53.20%
Loan carrying value	$ 103,500,000	$ 93,900,000
Remaining Portfolio percentage	36.60%	46.80%
Increased interest rate	3.25%
Interest rate	39.00%
Aggregate fair value	$ 279,085,998	$ 197,901,779
Gross proceeds	259,084	917,213
Accrued interest receivable	373,695	197,735
London Inter-bank [Member]
Loans Held For Investment, Net (Details) [Line Items]
Loan carrying value	179,200,000	106,700,000
Loans [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan	$ 8,900,000
PIK Initial Rate [Member]
Loans Held For Investment, Net (Details) [Line Items]
Interest rate	5.00%
PIK Equal Rate [Member]
Loans Held For Investment, Net (Details) [Line Items]
Interest rate	1.00%
EBITDA One [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan	$ 6,000,000
Interest rate	3.00%
EBITDA Two [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan	$ 4,000,000
EBITDA Three [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan	$ 6,000,000
EBITDA Four [Member]
Loans Held For Investment, Net (Details) [Line Items]
Interest rate	5.00%
Twenty-one [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan commitments		$ 235,100,000
Debt [Member] \| First Advance [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan	$ 4,005,000.000
Interest rate	15.25%
Debt [Member] \| Second Advance [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan	$ 15,995,000
Interest rate	9.75%
Debt [Member] \| Third Advance [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan	$ 10,000,000
Interest rate	8.50%
Base Three [Member] \| Loans [Member]
Loans Held For Investment, Net (Details) [Line Items]
Interest rate	15.25%
PIK Interest Rate [Member]
Loans Held For Investment, Net (Details) [Line Items]
Interest rate	2.00%
Second Commitment [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan	$ 2,000,000
Two Consecutive [Member]
Loans Held For Investment, Net (Details) [Line Items]
Borrower percentage	2.00%
Base Ten [Member]
Loans Held For Investment, Net (Details) [Line Items]
Interest rate	1.00%
EBITDA Four [Member]
Loans Held For Investment, Net (Details) [Line Items]
Aggregate loan	$ 4,000,000

Loans Held For Investment, Net (Details) - Schedule of loans held for investment - USD ($)

3 Months Ended

12 Months Ended

Mar. 31, 2022

Dec. 31, 2021

Loans Held For Investment, Net (Details) - Schedule of loans held for investment [Line Items]

Total loans held at carrying value, Outstanding Principal

^[1]

$ 282,708,732

$ 200,632,056

Total loans held at carrying value, Original Issue Discount

(3,881,818)

(3,647,490)

Senior Term Loans [Member]

^[1]

278,644,076

196,850,024

Loans Held For Investment, Net (Details) - Schedule of loans held for investment [Line Items]

Total loans held at carrying value, Outstanding Principal

^[1]

282,708,732

200,632,056

Total loans held at carrying value, Original Issue Discount

(3,881,818)

(3,647,490)

Total loans held at carrying value, Weighted Average Remaining Life (Years)

^[1]

$ 278,826,914

$ 196,984,566

2 years 4 months 24 days

^[2]

2 years 2 months 12 days

^[3]

Total loans held at carrying value [Member]

Loans Held For Investment, Net (Details) - Schedule of loans held for investment [Line Items]

Total loans held at carrying value, Outstanding Principal

^[1]

$ 282,708,732

$ 200,632,056

Total loans held at carrying value, Original Issue Discount

(3,881,818)

(3,647,490)

Total loans held at carrying value, Weighted Average Remaining Life (Years)

^[1]

$ 278,826,914

$ 196,984,566

2 years 4 months 24 days

^[2]

2 years 2 months 12 days

^[3]

Allowance for Credit Losses [Member]

Loans Held For Investment, Net (Details) - Schedule of loans held for investment [Line Items]

Total loans held at carrying value, Outstanding Principal

^[1]

Total loans held at carrying value, Original Issue Discount

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

^[1]

$ (182,838)

$ (134,542)

[1]	The difference between the Carrying Value and the Outstanding Principal amount of the loans consists of unaccreted original issue discount and loan origination costs
[2]	Weighted average remaining life is calculated based on the carrying value of the loans as of March 31, 2022
[3]	Weighted average remaining life is calculated based on the carrying value of the loans as of December 31, 2021

Loans Held For Investment, Net (Details) - Schedule of changes in loans held at carrying value	3 Months Ended
	Mar. 31, 2022 USD ($)
Principal [Member]
Debt Instrument [Line Items]
Principal Loans, Beginning	$ 200,632,056
Principal New fundings	86,725,308
Principal repayment of loans	(5,619,201)
Principal Accretion of original issue discount
Principal PIK Interest	970,569
Principal Provision for credit losses
Principal, Ending	282,708,732
Original Issue Discount [Member]
Debt Instrument [Line Items]
Original Issue Discount Loans, Beginning	(3,647,490)
Original Issue Discount New fundings	(1,128,415)
Original Issue Discount Principal repayment of loans
Accretion of original issue discount	894,087
Original Issue Discount PIK Interest
Original Issue Discount Provision for credit losses
Original Issue Discount, Ending	(3,881,818)
Allowance for Credit Losses [Member]
Debt Instrument [Line Items]
Allowance for Credit Losses, Beginning	(134,542)
Allowance for Credit Losses New fundings
Allowance for Credit Losses Principal repayment of loans
Allowance for Credit Losses Accretion of original issue discount
Allowance for Credit Losses PIK Interest
Allowance for Credit Losses Provision for credit losses	(48,296)
Allowance for Credit Losses, Ending	(182,838)
Carrying Value [Member]
Debt Instrument [Line Items]
Carrying Value, Beginning	196,850,024
Carrying Value New fundings	85,596,893
Carrying Value Principal repayment of loans	(5,619,201)
Carrying Value Accretion of original issue discount	894,087
Carrying Value PIK Interest	970,569
Carrying Value Provision for credit losses	(48,296)
Carrying Value, Ending	$ 278,644,076

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information

3 Months Ended

Mar. 31, 2022

USD ($)

$ 282,708,732

^[1]

(3,881,818)

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

$ 278,644,076

^[1]

Michigan [Member]

Michigan

$ 537,500

^[1]

19,308

$ 556,808

^[1]

15.00%

^[2]

Dec. 31, 2022

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Various [Member]

Various

$ 30,000,000

^[1]

(517,906)

$ 29,482,094

^[1]

10.07%(6)

^[2],[5]

May 30, 2023

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

I/O

^[4]

Pennsylvania [Member]

Pennsylvania

$ 6,957,500

^[1]

(239,669)

$ 6,717,831

^[1]

P + 11.00%(5)

^[2],[6]

Jan. 31, 2025

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Michigan One [Member]

Michigan

$ 29,333,311

^[1]

(149,336)

$ 29,183,975

^[1]

P + 6.65%(5) Cash, 2.5% PIK

^[2],[6]

Dec. 31, 2024

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Various One [Member]

Various

$ 19,321,082

^[1]

(583,643)

$ 18,737,439

^[1]

13.625% Cash, 2.75% PIK

^[2]

Mar. 31, 2024

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Arizona [Member]

Arizona

$ 11,061,997

^[1]

$ 11,061,997

^[1]

19.85%(7)

^[2],[7]

Apr. 28, 2023

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Massachusetts [Member]

Massachusetts

$ 1,500,000

^[1]

$ 1,500,000

^[1]

P + 12.25%(5)

^[2],[6]

Apr. 28, 2023

^[3]

Pennsylvania One [Member]

P&I

^[4]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

Pennsylvania

$ 13,235,127

^[1]

$ 13,235,127

^[1]

P + 10.75%(5) Cash, 4% PIK(8)

^[2],[6]

May 31, 2025

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Michigan Two [Member]

Michigan

$ 4,500,000

^[1]

(7,560)

$ 4,492,440

^[1]

P + 9.00%(5)

^[2],[6]

Feb. 20, 2024

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Various Two [Member]

Various

$ 19,388,944

^[1]

(238,164)

$ 19,150,780

^[1]

13% Cash, 1% PIK

^[2]

Aug. 30, 2024

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

West Virginia [Member]

West Virginia

$ 9,599,451

^[1]

(153,282)

$ 9,446,169

^[1]

P + 9.25%(5) Cash, 2% PIK

^[2],[6]

Sep. 01, 2024

^[3]

Pennsylvania Two [Member]

P&I

^[4]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

Pennsylvania

$ 15,263,207

^[1]

$ 15,263,207

^[1]

P + 10.75%(5) Cash, 3% PIK

^[2],[6]

Jun. 30, 2024

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Michigan Three [Member]

Michigan

$ 392,009

^[1]

$ 392,009

^[1]

11.00%

^[2]

Sep. 30, 2024

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Maryland [Member]

Maryland

$ 20,203,076

^[1]

(500,365)

$ 19,702,711

^[1]

P + 8.75%(5) Cash, 2% PIK

^[2],[6]

Sep. 30, 2024

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

I/O

^[4]

Various Three [Member]

Various

$ 12,000,000

^[1]

(260,570)

$ 11,739,430

^[1]

13.00%

^[2]

Oct. 31, 2024

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Michigan Four [Member]

Michigan

$ 10,600,000

^[1]

(89,946)

$ 10,510,054

^[1]

P + 7.00%(5)

^[2],[6]

Nov. 22, 2022

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

I/O

^[4]

Various Four [Member]

Various

$ 5,000,000

^[1]

$ 5,000,000

^[1]

15% Cash, 2.5% PIK

^[2]

Dec. 27, 2026

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Michigan Five [Member]

Michigan

$ 3,646,200

^[1]

(78,658)

$ 3,567,542

^[1]

10.50% Cash, 1% to 5% PIK(9)

^[2],[8]

Dec. 29, 2023

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

I/O

^[4]

Various Five [Member]

Various

$ 7,500,000

^[1]

(68,778)

$ 7,431,222

^[1]

P + 9.25%(5)

^[2],[6]

Dec. 31, 2024

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

I/O

^[4]

Florida [Member]

Florida

$ 15,000,000

^[1]

(357,104)

$ 14,642,896

^[1]

11.00%

^[2]

Jan. 31, 2025

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Ohio [Member]

Ohio

$ 30,140,161

^[1]

(570,026)

$ 29,570,135

^[1]

P + 8.25%(5) Cash, 3% PIK

^[2],[6]

Feb. 28, 2025

^[3]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

P&I

^[4]

Flowery [Member]

Florida

$ 17,529,167

^[1]

(86,119)

$ 17,443,048

^[1]

11.00% Cash, 3% PIK

^[2]

Aug. 29, 2025

^[3]

Current expected credit loss reserve [Member]

P&I

^[4]

Loans Held For Investment, Net (Details) - Schedule of loans held at carrying value portfolio based on information [Line Items]

^[1]