Advanced Flower Capital Inc. (AFC) reported significant financial changes in its latest 10-Q filing for the quarter ending June 30, 2025. The company recorded a net loss of approximately $13.2 million, or $(0.60) per share, compared to a net income of $15.2 million, or $0.74 per share, for the same period in 2024. Total interest income fell to $8.1 million from $18.0 million year-over-year, primarily due to fewer loan exits and lower interest income from loans on nonaccrual status. The company's interest expense increased to $1.9 million, reflecting higher borrowings on its revolving credit facility.
In terms of operational metrics, AFC's total assets decreased to $290.6 million from $402.1 million at the end of 2024, largely due to a reduction in cash and cash equivalents, which dropped to $3.4 million from $103.6 million. The company’s loans held for investment at carrying value increased to $300.9 million, up from $293.3 million, while the current expected credit loss reserve rose to $44.0 million, representing 14.61% of total loans held at carrying value. This increase in the reserve was attributed to macroeconomic factors and changes in the loan portfolio.
Strategically, AFC is expanding its investment strategy to include loans to ancillary businesses related to the cannabis industry, as well as companies outside this sector. This decision was formalized in the Sixth Amendment approved by the Board in August 2025. The company is also pursuing a conversion to a Business Development Company (BDC), which would allow it to broaden its investment opportunities. This conversion is subject to shareholder approval and aims to enhance the company's ability to lend to a wider range of businesses, particularly those that do not own real estate.
The company’s loan portfolio as of June 30, 2025, consisted of 15 loans, with an aggregate commitment of approximately $370.3 million. Notably, four loans were on nonaccrual status, including a significant loan to a subsidiary of Private Company G, which had an outstanding principal of approximately $78.9 million. AFC's management is actively pursuing legal remedies related to this loan, which has faced payment defaults. The company’s outlook remains cautious, with expectations of needing to raise additional equity and debt to support its expanded investment strategy and maintain liquidity in the evolving cannabis market.
About Advanced Flower Capital Inc.
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