Note 7 – Finance leases receivable

When the G Farma Settlors coincidentally defaulted on the Notes Purchase Agreement, as mentioned in Note 4 above, they also defaulted on certain related equipment finance leases with Partner I, resulting in an eventual final $803,399 impairment by Partner I. On July 11, 2023, a $2,539,597 judgment was entered against the G Farma Settlors in favor of the Company and Partner I in connection with Partner I’s finance leases receivable and the Company’s Notes Purchase Agreement receivables described at Note 4. In addition to the judgment, interest of $691,605 is due on March 31, 2026. However, collection is unlikely, and since its inception, the judgment has remained fully reserved. See “Credit quality of notes receivable and finance leases receivable and credit loss reserve” at Note 2 for further explanation. The Company routinely monitors post-judgment collection potential and feasibility from a long-term collection perspective regarding the finance leases receivable portion of the Judgment related to Partner I’s share of the Judgment collection proceeds. Payment received will first be applied against the notes receivable described in Note 4, and if any additional amounts are recovered, they will then be applied against the finance leases receivable. Payments from G Farma Settlors will be recognized in Other Income as they are received. No recovery payments were included in other income in the consolidated financial statements as of March 31, 2026, and 2025, respectively. See Note 9 to the consolidated financial statements and the Company’s Annual Report for the period ended December 31, 2024, on Form 10-K as filed with the Securities and Exchange Commission on March 31, 2025, for further information related to notes purchase agreement and consulting agreement with G Farma.