AFC Gamma (AFCG) Risk Analysis

¦ our failure to meet, or the lowering of, our earnings estimates or those of any securities analysts;

There is a risk that stockholders may not receive distributions or that such dividends may not grow over time. In that event, the trading price of our common stock could decline, and you may lose some or all of your investment.

Our CECL Allowances are evaluated on a quarterly basis. The determination of CECL Allowances requires us to make certain estimates and judgments based on numerous factors, which are inherently subjective. As a result, our estimates of credit losses may differ from actual losses and may adversely affect our financial condition and results of operations.

We may in the future pay distributions from sources other than our cash flow from operations, including borrowings, offering proceeds or the sale of assets, which means we will have less funds available for investments or less income-producing assets and your overall return may be reduced.

? These companies may have limited financial resources and may be unable to meet their obligations, which may be accompanied by a deterioration in the value of any collateral securing our loan and a reduction in the likelihood of us realizing a return on our loan;

? They typically have shorter operating histories, narrower product lines and smaller market shares than larger and more established businesses, which renders them more vulnerable to competitors’ actions and adverse market conditions;

? They generally have less predictable operating results and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position;

• Our current and potential future earnings and cash distributions.

Ineffective internal controls could impact our business and operating results. Our internal control over financial reporting may not prevent or detect misstatements, due to inherent limitations such as human error, circumvention or override of controls or fraud.

Our indebtedness may affect our ability to operate our business, potentially limiting our capacity to satisfy our financial obligations and hindering our efforts to secure additional financing in adverse market conditions.

As of December 31, 2021, our total consolidated indebtedness, including that of our subsidiaries, was approximately $175.0 million, including $75.0 million drawn under our Revolving Credit Facility. Such high leverage could adversely affect our liquidity and financial flexibility.

Our loans may be forfeited to the U.S. federal government in connection with government enforcement actions, which could result in significant losses if collateral is not sufficient to recover the outstanding loan balances.

Our investments in construction loans require us to make estimates about the fair value of land improvements that may be challenged by the Internal Revenue Service. There can be no assurance that our estimates of the loan values of the real property will be accepted by the IRS.

We may incur significant debt, and our governing documents and current credit facility contain no limit on the amount of debt we may incur. This could increase our fixed obligations and reduce our financial flexibility.

Interest rate fluctuations could increase our financing costs, which could lead to a significant decrease in our results of operations, cash flows and the market value of our loans.

Our Existing Portfolio contains loans to companies with operations that are geographically concentrated in Arizona, Arkansas, Connecticut, Florida, Illinois, Iowa, Maryland, Massachusetts, Michigan, Missouri, Nevada, New Jersey, New Mexico, New York, Ohio and Pennsylvania, and we will be subject to social, political and economic risks of doing business in those states and any other state in which we in the future have lending exposure. Our Existing Portfolio contains loans to companies with operations that are geographically concentrated in the above-mentioned states, and any adverse changes in the economic or political conditions in these areas may adversely affect our business, financial condition, liquidity and results of operations.

¦ increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock and which could cause the cost of our interest expenses on our debt to increase;

¦ loss of a major funding source or inability to obtain new favorable funding sources in the future;

¦ adverse market reaction to any increased indebtedness we may incur in the future;

Our Manager and its affiliates endeavor to allocate loan opportunities in a fair and equitable manner, considering factors such as available capital and risk profiles; however, conflicts in the allocation process may result in us being passed over for attractive loans.

We may in the future enter into credit agreements with borrowers that permit them to incur debt ranking equally with, or senior to, the loans we extend. Such debt instruments could provide that holders receive payments before us, thereby reducing the recoverable value on default.

Our ability to refinance our indebtedness or obtain additional financing will also depend on the restrictions in the agreements governing our indebtedness.

Our Manager may change its investment process without the consent of our stockholders and at any time, which could result in us making riskier loans that do not meet our originally intended standards.

While our Manager and its affiliates have agreed not to sponsor or manage other mortgage REITs investing primarily in similar loans, they may manage other investment vehicles with similar objectives. This could lead to conflicts in the allocation of opportunities between us and those vehicles.

Other investment vehicles managed by our Manager or its affiliates may co-invest with us or hold positions in loans in which we participate. Such co-investments may create conflicts of interest and could adversely affect the terms or returns of our investments.

¦ our actual or projected operating results, financial condition, cash flows and liquidity or changes in business strategy or prospects;