[10-Q] Silver Spike Investment Corp. Common Stock Quarterly Earnings Report
Chicago Atlantic BDC, Inc. (formerly Silver Spike Investment Corp.) completed its Loan Portfolio Acquisition last year and reported total assets of $331,750,419 at June 30, 2025, up from $309,561,041 at year-end 2024. Investments at fair value increased to $307,499,004 from $275,241,398, and total net assets were $301,843,563 with a net asset value per share of $13.23 versus $13.20 at December 31, 2024.
Operating results for the period show substantially higher interest and fee income, producing net investment income of $7.66 million for the quarter and $15.31 million year-to-date. The company recorded a net increase in net assets from operations of $8.58 million for the quarter and $16.20 million for six months. Liquidity tightened as cash fell to $13.83 million from $23.93 million, while total liabilities rose to $29.91 million including a $5.0 million revolving line of credit, $11.76 million payable for investments purchased and $7.76 million distributions payable. The portfolio remains concentrated in the cannabis sector, representing approximately 78.5% of fair value, and three portfolio companies represent 39.5% of investment fair value as of June 30, 2025.
Chicago Atlantic BDC, Inc. (precedentemente Silver Spike Investment Corp.) ha completato lo scorso anno l'acquisizione del portafoglio di prestiti e al 30 giugno 2025 riportava attività totali per $331,750,419, in aumento rispetto a $309,561,041 alla fine del 2024. Gli investimenti valutati al fair value sono cresciuti a $307,499,004 da $275,241,398, e il patrimonio netto totale ammontava a $301,843,563, con un valore patrimoniale netto per azione di $13.23 rispetto a $13.20 al 31 dicembre 2024.
I risultati operativi mostrano un notevole aumento dei proventi da interessi e commissioni, con un reddito netto da investimenti di $7.66 milioni nel trimestre e di $15.31 milioni da inizio anno. La società ha registrato un incremento netto del patrimonio derivante dalle operazioni di $8.58 milioni per il trimestre e di $16.20 milioni nei sei mesi. La liquidità si è ridotta a $13.83 milioni rispetto a $23.93 milioni, mentre le passività totali sono salite a $29.91 milioni, inclusa una linea di credito revolving di $5.0 milioni, $11.76 milioni dovuti per investimenti acquistati e $7.76 milioni di distribuzioni da pagare. Il portafoglio rimane concentrato nel settore della cannabis, che rappresenta circa il 78.5% del fair value, e tre società del portafoglio costituiscono il 39.5% del valore degli investimenti al 30 giugno 2025.
Chicago Atlantic BDC, Inc. (anteriormente Silver Spike Investment Corp.) completó el año pasado la adquisición de su cartera de préstamos y al 30 de junio de 2025 reportó activos totales por $331,750,419, frente a $309,561,041 al cierre de 2024. Las inversiones a valor razonable aumentaron a $307,499,004 desde $275,241,398, y el patrimonio neto total fue de $301,843,563, con un valor patrimonial neto por acción de $13.23 frente a $13.20 al 31 de diciembre de 2024.
Los resultados operativos muestran un incremento sustancial en ingresos por intereses y comisiones, generando un ingreso neto por inversiones de $7.66 millones en el trimestre y $15.31 millones en lo que va del año. La compañía registró un aumento neto en el patrimonio por operaciones de $8.58 millones en el trimestre y $16.20 millones en seis meses. La liquidez se tensó al disminuir el efectivo a $13.83 millones desde $23.93 millones, mientras que los pasivos totales aumentaron a $29.91 millones, incluyendo una línea de crédito revolvente de $5.0 millones, $11.76 millones por pagar por inversiones adquiridas y $7.76 millones en distribuciones por pagar. La cartera continúa concentrada en el sector del cannabis, que representa aproximadamente el 78.5% del valor razonable, y tres compañías del portafolio constituyen el 39.5% del valor de inversión al 30 de junio de 2025.
Chicago Atlantic BDC, Inc. (구 Silver Spike Investment Corp.)는 지난해 대출 포트폴리오 인수를 완료했으며 2025년 6월 30일 기준 총자산이 $331,750,419로 2024년 말의 $309,561,041에서 증가했습니다. 공정가치 기준 투자액은 $275,241,398에서 $307,499,004로 늘었고, 총 순자산은 $301,843,563이며 주당 순자산가치는 2024년 12월 31일의 $13.20 대비 $13.23입니다.
영업실적은 이자 및 수수료 수익의 큰 증가를 반영하여 분기 기준 순투자수익이 $7.66백만, 연누계로는 $15.31백만을 기록했습니다. 영업으로 인한 순자산 증가는 분기 $8.58백만, 6개월 누계 $16.20백만이었습니다. 현금은 $23.93백만에서 $13.83백만으로 줄어 유동성이 축소되었고, 총부채는 $29.91백만으로 증가했으며 여기에는 $5.0백만의 리볼빙 신용한도, 인수 투자금으로 지급해야 할 $11.76백만, 지급예정 분배금 $7.76백만이 포함됩니다. 포트폴리오는 여전히 대마(캔나비스) 섹터에 집중되어 있어 공정가치의 약 78.5%를 차지하며, 3개 포트폴리오 기업이 2025년 6월 30일 기준 투자 공정가치의 39.5%를 구성합니다.
Chicago Atlantic BDC, Inc. (anciennement Silver Spike Investment Corp.) a finalisé l'acquisition de son portefeuille de prêts l'année dernière et déclarait au 30 juin 2025 des actifs totaux de $331,750,419, en hausse par rapport à $309,561,041 à la clôture 2024. Les investissements à la juste valeur ont augmenté, passant de $275,241,398 à $307,499,004, et l'actif net total s'élevait à $301,843,563, avec une valeur nette d'inventaire par action de $13.23 contre $13.20 au 31 décembre 2024.
Les résultats d'exploitation montrent une augmentation notable des produits d'intérêts et de frais, aboutissant à un revenu net des investissements de $7.66 millions pour le trimestre et de $15.31 millions depuis le début de l'année. La société a enregistré une augmentation nette des actifs provenant des opérations de $8.58 millions pour le trimestre et de $16.20 millions sur six mois. La liquidité s'est resserrée, les liquidités passant de $23.93 millions à $13.83 millions, tandis que le passif total a augmenté à $29.91 millions, incluant une ligne de crédit renouvelable de $5.0 millions, $11.76 millions à payer pour des investissements acquis et $7.76 millions de distributions à payer. Le portefeuille reste concentré dans le secteur du cannabis, représentant environ 78.5% de la juste valeur, et trois sociétés du portefeuille représentent 39.5% de la valeur des investissements au 30 juin 2025.
Chicago Atlantic BDC, Inc. (ehemals Silver Spike Investment Corp.) hat im vergangenen Jahr die Übernahme des Kreditportfolios abgeschlossen und meldete zum 30. Juni 2025 Gesamtanlagen in Höhe von $331,750,419, gegenüber $309,561,041 zum Jahresende 2024. Die nach Fair Value bewerteten Investments stiegen von $275,241,398 auf $307,499,004, und das Nettovermögen belief sich auf $301,843,563 mit einem Nettoinventarwert je Aktie von $13.23 gegenüber $13.20 zum 31. Dezember 2024.
Die operative Entwicklung weist deutlich höhere Zins- und Gebühreneinnahmen aus, was zu einem Nettoanlageergebnis von $7.66 Millionen im Quartal und $15.31 Millionen im Jahresverlauf führte. Das Unternehmen verzeichnete einen Nettoanstieg des Nettovermögens aus dem Geschäftsbetrieb von $8.58 Millionen im Quartal und $16.20 Millionen in sechs Monaten. Die Liquidität verringerte sich, da Barmittel von $23.93 Millionen auf $13.83 Millionen sanken, während die Gesamtverbindlichkeiten auf $29.91 Millionen stiegen, darunter eine revolvierende Kreditlinie von $5.0 Millionen, $11.76 Millionen Verbindlichkeiten aus Investitionskäufen und $7.76 Millionen auszuschüttende Zahlungen. Das Portfolio bleibt stark im Cannabis-Sektor konzentriert und macht etwa 78.5% des Fair Value aus; drei Portfoliounternehmen stehen zum 30. Juni 2025 für 39.5% des Investitions-Fair-Value.
- Investments at fair value increased to $307,499,004 from $275,241,398, expanding the portfolio size.
- Net investment income rose materially, producing $7.66 million for the quarter and $15.31 million year-to-date.
- Net assets and NAV per share were stable to slightly higher, with NAV at $13.23 versus $13.20 at year-end 2024.
- Loan Portfolio Acquisition completed (Oct 1, 2024), contributing scale and portfolio diversification into private loans.
- Cash declined to $13.83 million from $23.93 million, reflecting deployment and distributions.
- Total liabilities increased to $29.91 million from $8.40 million, including $11.76 million payable for investments purchased and $7.76 million distributions payable.
- High sector concentration: cannabis investments represent ~78.5% of portfolio fair value, increasing sector-specific risk.
- Operating cash flow was negative for the six months (net cash used in operating activities of $5.31 million).
Insights
TL;DR: Strong income growth and higher investment fair value boosted NAV slightly, but liquidity and payables tightened.
Chicago Atlantic reported meaningful quarter-over-quarter growth in investment assets and interest/fee income, producing a substantial increase in net investment income and driving operational net asset growth. NAV per share held steady, reflecting appreciation and income offsetting distributions. The Loan Portfolio Acquisition remains a central driver of scale. However, cash fell materially and payables for purchases and distributions are elevated—indicating the company is deploying capital and using short-term financing to support investment activity. For holders, the key facts are elevated earnings from debt investments and persistently high portfolio concentration in cannabis.
TL;DR: Concentration in cannabis and increased short-term liabilities raise portfolio and liquidity risk despite strong reported income.
About 78.5% of the portfolio's fair value is in cannabis-related investments and three names account for nearly 40% of fair value, producing concentration risk. Cash declined by roughly $10.1 million during the six months while payables for investments purchased and distributions payable are significant, and the company utilized a $5.0 million revolving credit facility. These factors increase refinancing, sector and liquidity risk should market conditions change or if sector-specific stress occurs.
Chicago Atlantic BDC, Inc. (precedentemente Silver Spike Investment Corp.) ha completato lo scorso anno l'acquisizione del portafoglio di prestiti e al 30 giugno 2025 riportava attività totali per $331,750,419, in aumento rispetto a $309,561,041 alla fine del 2024. Gli investimenti valutati al fair value sono cresciuti a $307,499,004 da $275,241,398, e il patrimonio netto totale ammontava a $301,843,563, con un valore patrimoniale netto per azione di $13.23 rispetto a $13.20 al 31 dicembre 2024.
I risultati operativi mostrano un notevole aumento dei proventi da interessi e commissioni, con un reddito netto da investimenti di $7.66 milioni nel trimestre e di $15.31 milioni da inizio anno. La società ha registrato un incremento netto del patrimonio derivante dalle operazioni di $8.58 milioni per il trimestre e di $16.20 milioni nei sei mesi. La liquidità si è ridotta a $13.83 milioni rispetto a $23.93 milioni, mentre le passività totali sono salite a $29.91 milioni, inclusa una linea di credito revolving di $5.0 milioni, $11.76 milioni dovuti per investimenti acquistati e $7.76 milioni di distribuzioni da pagare. Il portafoglio rimane concentrato nel settore della cannabis, che rappresenta circa il 78.5% del fair value, e tre società del portafoglio costituiscono il 39.5% del valore degli investimenti al 30 giugno 2025.
Chicago Atlantic BDC, Inc. (anteriormente Silver Spike Investment Corp.) completó el año pasado la adquisición de su cartera de préstamos y al 30 de junio de 2025 reportó activos totales por $331,750,419, frente a $309,561,041 al cierre de 2024. Las inversiones a valor razonable aumentaron a $307,499,004 desde $275,241,398, y el patrimonio neto total fue de $301,843,563, con un valor patrimonial neto por acción de $13.23 frente a $13.20 al 31 de diciembre de 2024.
Los resultados operativos muestran un incremento sustancial en ingresos por intereses y comisiones, generando un ingreso neto por inversiones de $7.66 millones en el trimestre y $15.31 millones en lo que va del año. La compañía registró un aumento neto en el patrimonio por operaciones de $8.58 millones en el trimestre y $16.20 millones en seis meses. La liquidez se tensó al disminuir el efectivo a $13.83 millones desde $23.93 millones, mientras que los pasivos totales aumentaron a $29.91 millones, incluyendo una línea de crédito revolvente de $5.0 millones, $11.76 millones por pagar por inversiones adquiridas y $7.76 millones en distribuciones por pagar. La cartera continúa concentrada en el sector del cannabis, que representa aproximadamente el 78.5% del valor razonable, y tres compañías del portafolio constituyen el 39.5% del valor de inversión al 30 de junio de 2025.
Chicago Atlantic BDC, Inc. (구 Silver Spike Investment Corp.)는 지난해 대출 포트폴리오 인수를 완료했으며 2025년 6월 30일 기준 총자산이 $331,750,419로 2024년 말의 $309,561,041에서 증가했습니다. 공정가치 기준 투자액은 $275,241,398에서 $307,499,004로 늘었고, 총 순자산은 $301,843,563이며 주당 순자산가치는 2024년 12월 31일의 $13.20 대비 $13.23입니다.
영업실적은 이자 및 수수료 수익의 큰 증가를 반영하여 분기 기준 순투자수익이 $7.66백만, 연누계로는 $15.31백만을 기록했습니다. 영업으로 인한 순자산 증가는 분기 $8.58백만, 6개월 누계 $16.20백만이었습니다. 현금은 $23.93백만에서 $13.83백만으로 줄어 유동성이 축소되었고, 총부채는 $29.91백만으로 증가했으며 여기에는 $5.0백만의 리볼빙 신용한도, 인수 투자금으로 지급해야 할 $11.76백만, 지급예정 분배금 $7.76백만이 포함됩니다. 포트폴리오는 여전히 대마(캔나비스) 섹터에 집중되어 있어 공정가치의 약 78.5%를 차지하며, 3개 포트폴리오 기업이 2025년 6월 30일 기준 투자 공정가치의 39.5%를 구성합니다.
Chicago Atlantic BDC, Inc. (anciennement Silver Spike Investment Corp.) a finalisé l'acquisition de son portefeuille de prêts l'année dernière et déclarait au 30 juin 2025 des actifs totaux de $331,750,419, en hausse par rapport à $309,561,041 à la clôture 2024. Les investissements à la juste valeur ont augmenté, passant de $275,241,398 à $307,499,004, et l'actif net total s'élevait à $301,843,563, avec une valeur nette d'inventaire par action de $13.23 contre $13.20 au 31 décembre 2024.
Les résultats d'exploitation montrent une augmentation notable des produits d'intérêts et de frais, aboutissant à un revenu net des investissements de $7.66 millions pour le trimestre et de $15.31 millions depuis le début de l'année. La société a enregistré une augmentation nette des actifs provenant des opérations de $8.58 millions pour le trimestre et de $16.20 millions sur six mois. La liquidité s'est resserrée, les liquidités passant de $23.93 millions à $13.83 millions, tandis que le passif total a augmenté à $29.91 millions, incluant une ligne de crédit renouvelable de $5.0 millions, $11.76 millions à payer pour des investissements acquis et $7.76 millions de distributions à payer. Le portefeuille reste concentré dans le secteur du cannabis, représentant environ 78.5% de la juste valeur, et trois sociétés du portefeuille représentent 39.5% de la valeur des investissements au 30 juin 2025.
Chicago Atlantic BDC, Inc. (ehemals Silver Spike Investment Corp.) hat im vergangenen Jahr die Übernahme des Kreditportfolios abgeschlossen und meldete zum 30. Juni 2025 Gesamtanlagen in Höhe von $331,750,419, gegenüber $309,561,041 zum Jahresende 2024. Die nach Fair Value bewerteten Investments stiegen von $275,241,398 auf $307,499,004, und das Nettovermögen belief sich auf $301,843,563 mit einem Nettoinventarwert je Aktie von $13.23 gegenüber $13.20 zum 31. Dezember 2024.
Die operative Entwicklung weist deutlich höhere Zins- und Gebühreneinnahmen aus, was zu einem Nettoanlageergebnis von $7.66 Millionen im Quartal und $15.31 Millionen im Jahresverlauf führte. Das Unternehmen verzeichnete einen Nettoanstieg des Nettovermögens aus dem Geschäftsbetrieb von $8.58 Millionen im Quartal und $16.20 Millionen in sechs Monaten. Die Liquidität verringerte sich, da Barmittel von $23.93 Millionen auf $13.83 Millionen sanken, während die Gesamtverbindlichkeiten auf $29.91 Millionen stiegen, darunter eine revolvierende Kreditlinie von $5.0 Millionen, $11.76 Millionen Verbindlichkeiten aus Investitionskäufen und $7.76 Millionen auszuschüttende Zahlungen. Das Portfolio bleibt stark im Cannabis-Sektor konzentriert und macht etwa 78.5% des Fair Value aus; drei Portfoliounternehmen stehen zum 30. Juni 2025 für 39.5% des Investitions-Fair-Value.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the Quarterly Period Ended
OR
Commission file number:
(Exact name of registrant as specified in its charter)
|
||
(State or other jurisdiction of incorporation or organization) |
|
(IRS Employer Identification No.) |
|
|
|
|
|
|
|
|
|
(Address of principal executive offices) |
|
(Zip Code) |
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
|
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer |
☐ |
|
Accelerated filer |
☐ |
☒ |
|
Smaller reporting company |
||
|
|
|
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of August 13, 2025, the registrant had
Table of Contents
CHICAGO ATLANTIC BDC, INC.
FORM 10-Q
|
TABLE OF CONTENTS |
|
|
|
PAGE NO. |
PART I |
FINANCIAL INFORMATION |
|
Item 1 |
Financial Statements (unaudited) |
2 |
|
Statements of Assets and Liabilities |
2 |
|
Statements of Operations |
3 |
|
Statements of Changes in Net Assets |
4 |
|
Statements of Cash Flows |
6 |
|
Schedule of Investments |
7 |
|
Notes to Financial Statements |
13 |
Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
34 |
Item 3 |
Quantitative and Qualitative Disclosures About Market Risk |
51 |
Item 4 |
Controls and Procedures |
51 |
PART II |
OTHER INFORMATION |
|
Item 1 |
Legal Proceedings |
52 |
Item 1A |
Risk Factors |
52 |
Item 2 |
Unregistered Sales of Equity Securities and Use of Proceeds |
52 |
Item 3 |
Defaults Upon Senior Securities |
52 |
Item 4 |
Mine Safety Disclosures |
52 |
Item 5 |
Other Information |
53 |
Item 6 |
Exhibits |
54 |
SIGNATURES |
55 |
|
Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Except where the context suggests otherwise, the terms “we,” “us,” “our,” “the Company,” and “LIEN” refer to Chicago Atlantic BDC, Inc. In addition, the terms “Adviser,” “investment adviser” and “administrator” refer to Chicago Atlantic BDC Advisers, LLC, our external investment adviser and administrator.
Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:
In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Item 1A. Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2024 and elsewhere in this quarterly report on Form 10-Q. Other factors that could cause actual results to differ materially include:
We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements contained in this quarterly report on Form 10-Q are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
1
Table of Contents
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Chicago Atlantic BDC, Inc.
Statements of Assets and Liabilities
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||
|
|
(Unaudited) |
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Investments at fair value: |
|
|
|
|
|
|
||
Non-control/non-affiliate investments at fair value (amortized cost of $ |
|
$ |
|
|
$ |
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
Due from affiliates |
|
|
|
|
|
|
||
Interest receivable |
|
|
|
|
|
|
||
Prepaid expenses and other assets |
|
|
|
|
|
|
||
Receivable for investment sold |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
LIABILITIES |
|
|
|
|
|
|
||
Payable for investments purchased |
|
$ |
|
|
$ |
|
||
Distributions payable |
|
|
|
|
|
|
||
Revolving line of credit |
|
|
|
|
|
|
||
Income-based incentive fees payable |
|
|
|
|
|
|
||
Management fee payable |
|
|
|
|
|
|
||
Due to affiliates |
|
|
|
|
|
|
||
Professional fees payable |
|
|
|
|
|
|
||
Capital gains incentive fees payable |
|
|
|
|
|
|
||
Other payables |
|
|
|
|
|
|
||
Unearned interest income |
|
|
|
|
|
|
||
Offering costs payable |
|
|
|
|
|
|
||
Deferred financing costs payable |
|
|
|
|
|
|
||
Transaction fees payable related to the Loan Portfolio Acquisition |
|
|
|
|
|
|
||
Excise tax payable |
|
|
|
|
|
|
||
Total liabilities |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Commitments and contingencies (Note 6) |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
NET ASSETS |
|
|
|
|
|
|
||
Common stock, $ |
|
$ |
|
|
$ |
|
||
Additional paid-in-capital |
|
|
|
|
|
|
||
Distributable earnings (Accumulated loss) |
|
|
( |
) |
|
|
( |
) |
Total net assets |
|
$ |
|
|
$ |
|
||
NET ASSET VALUE PER SHARE |
|
$ |
|
|
$ |
|
||
See notes to financial statements.
2
Table of Contents
Chicago Atlantic BDC, Inc.
Statements of Operations
(Unaudited)
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
INVESTMENT INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-control/non-affiliate investment income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fee income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total investment income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income-based incentive fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Management fee |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Legal expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Professional fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Audit expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sub-administrator fees |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital gains incentive fees |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Transaction expenses related to the Loan Portfolio Acquisition |
|
|
|
|
|
|
` |
|
|
|
|
|
||||
Total expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Waiver of General and administrative expense (Note 6) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Expense limitation agreement (Note 6) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET INVESTMENT INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET REALIZED GAIN (LOSS) FROM INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-controlled non-affiliate investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net realized gain (loss) from investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-controlled non-affiliate investments |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Net change in unrealized appreciation (depreciation) on investments |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Net realized and unrealized gains (losses) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
NET INVESTMENT INCOME (LOSS) PER SHARE - BASIC AND DILUTED |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
WEIGHTED AVERAGE SHARES OUTSTANDING - BASIC AND DILUTED |
|
|
|
|
|
|
|
|
|
|
|
|
||||
See notes to financial statements.
3
Table of Contents
Chicago Atlantic BDC, Inc.
Statements of Changes in Net Assets
(Unaudited)
|
Common Stock |
|
|
|
|
|
|
|
|||||||||||||
|
Shares |
|
|
|
Par Value |
|
|
Additional |
|
|
Distributable |
|
|
Total |
|
||||||
Balance, March 31, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Net increase (decrease) in net assets resulting from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net investment income (loss) |
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|||
Net realized gain (loss) from investments |
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Net change in unrealized appreciation (depreciation) from investments |
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|||
Total net increase (decrease) in net assets resulting from operations |
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|||
Distributions to stockholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment income-net |
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Capital transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Issuance of common stock, net of offering costs |
|
- |
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Reinvestment of stockholder distributions |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||||
Total net increase (decrease) in net assets from capital transactions |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
||||
Total increase (decrease) in net assets |
|
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|||||
Balance, June 30, 2025 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
Common Stock |
|
|
|
|
|
|
|
|||||||||||
|
Shares |
|
|
Par Value |
|
|
Additional |
|
|
Distributable |
|
|
Total |
|
|||||
Balance, March 31, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Net increase (decrease) in net assets resulting from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net investment income (loss) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Net realized gain (loss) from investments |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net change in unrealized appreciation (depreciation) from investments |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Total net increase (decrease) in net assets resulting from operations |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Distributions to stockholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income-net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Capital transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Issuance of common stock, net of offering costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Reinvestment of stockholder distributions |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Total net increase (decrease) in net assets from capital transactions |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Total increase (decrease) in net assets |
|
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Balance, June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
See notes to financial statements.
4
Table of Contents
Chicago Atlantic BDC, Inc.
Statements of Changes in Net Assets
(Unaudited)
|
Common Stock |
|
|
|
|
|
|
|
|||||||||||
|
Shares |
|
|
Par Value |
|
|
Additional |
|
|
Distributable |
|
|
Total |
|
|||||
Balance, December 31, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Net increase (decrease) in net assets resulting from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net investment income (loss) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Net realized gain (loss) from investments |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net change in unrealized appreciation (depreciation) from investments |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Total net increase (decrease) in net assets resulting from operations |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Distributions to stockholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income-net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Capital transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Issuance of common stock, net of offering costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Reinvestment of stockholder distributions |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Total net increase (decrease) in net assets from capital transactions |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Total increase (decrease) in net assets |
|
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
||||
Effect of permanent adjustments |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
- |
|
|||
Balance, June 30, 2025 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
Common Stock |
|
|
|
|
|
|
|
|||||||||||
|
Shares |
|
|
Par Value |
|
|
Additional |
|
|
Distributable |
|
|
Total |
|
|||||
Balance, December 31, 2023 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Net increase (decrease) in net assets resulting from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net investment income (loss) |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Net realized gain (loss) from investments |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Net change in unrealized appreciation (depreciation) from investments |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Total net increase (decrease) in net assets resulting from operations |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
||
Distributions to stockholders from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Investment income-net |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
Capital transactions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Issuance of common stock, net of offering costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Reinvestment of stockholder distributions |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Total net increase (decrease) in net assets from capital transactions |
|
|
|
|
- |
|
|
|
|
|
|
- |
|
|
|
|
|||
Total increase (decrease) in net assets |
|
|
|
|
- |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Effect of permanent adjustments |
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
|
|
|
- |
|
|
Balance, June 30, 2024 |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
See notes to financial statements.
5
Table of Contents
Chicago Atlantic BDC, Inc.
Statements of Cash Flows
(Unaudited)
|
|
For the Six Months Ended |
|
|||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
||
Net increase (decrease) in net assets resulting from operations |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net increase (decrease) in net assets resulting from |
|
|
|
|
|
|
||
Net change in unrealized (appreciation) depreciation from investments |
|
|
( |
) |
|
|
( |
) |
Net (accretion of discounts) and amortization of premiums |
|
|
( |
) |
|
|
( |
) |
Purchase of investments |
|
|
( |
) |
|
|
( |
) |
PIK interest capitalized |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of investments and principal repayments |
|
|
|
|
|
|
||
Amortization of deferred financing costs |
|
|
|
|
|
|
||
(Increase) Decrease in operating assets: |
|
|
|
|
|
|
||
Interest receivable |
|
|
|
|
|
|
||
Receivable for investment sold |
|
|
|
|
|
( |
) |
|
Due from affiliates |
|
|
( |
) |
|
|
|
|
Prepaid expenses and other assets |
|
|
( |
) |
|
|
( |
) |
Increase (Decrease) in operating liabilities: |
|
|
|
|
|
|
||
Income-based incentive fees payable |
|
|
( |
) |
|
|
|
|
Management fee payable |
|
|
|
|
|
( |
) |
|
Capital gains incentive fees payable |
|
|
|
|
|
|
||
Professional fees payable |
|
|
|
|
|
( |
) |
|
Transaction fees payable related to the Loan Portfolio Acquisition |
|
|
( |
) |
|
|
|
|
Other payables |
|
|
|
|
|
|
||
Due to affiliates |
|
|
( |
) |
|
|
|
|
Excise tax payable |
|
|
( |
) |
|
|
( |
) |
Unearned interest income |
|
|
|
|
|
|
||
Payable for investments purchased |
|
|
|
|
|
|
||
Net cash provided by (used in) operating activities |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
||
Cash flows from financing activities |
|
|
|
|
|
|
||
Offering costs paid |
|
|
( |
) |
|
|
( |
) |
Distributions paid |
|
|
( |
) |
|
|
( |
) |
Financing costs paid |
|
|
( |
) |
|
|
|
|
Proceeds from borrowings on revolving line of credit |
|
|
|
|
|
|
||
Net cash provided by (used in) financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Net increase (decrease) in cash and cash equivalents |
|
|
( |
) |
|
|
|
|
Cash and cash equivalents, beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents, end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Supplemental disclosure of non-cash operating, financing and investing activity |
|
|
|
|
|
|
||
Reinvestment of dividend distribution |
|
$ |
|
|
$ |
|
||
Accrual for deferred financing costs (Note 2) |
|
$ |
|
|
$ |
|
||
Excise taxes paid |
|
$ |
|
|
$ |
|
||
See notes to financial statements.
6
Table of Contents
CHICAGO ATLANTIC BDC, INC.
Schedule of Investments
June 30, 2025
(Unaudited)
(In thousands)
Portfolio Company |
|
Facility |
|
All in |
|
|
Benchmark (3) |
|
Spread |
|
|
PIK |
|
|
Floor |
|
|
Initial |
|
Maturity |
|
Par (2) |
|
|
Amortized Cost(15) |
|
|
Fair |
|
|
% of |
|
Footnotes |
|||||||
Investments at Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)(5)(16) |
|||||||
Aeriz Holdings Corp |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9)(17) |
||||||||||
Archos Capital Group, LLC |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Cannabis & Glass |
|
Delayed Draw Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11)(17) |
||||||||||
Deep Roots Harvest, Inc. |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11)(17) |
||||||||||
Dreamfields Brands, Inc. (d/b/a Jeeter) |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11)(17) |
||||||||||
Elevation Cannabis, LLC |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)(17) |
||||||||||
Flowery - Bill's Nursery, Inc. |
|
Delayed Draw Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(12)(17) |
||||||||||
Fluent Corp. |
|
Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(12)(17) |
||||||||||
HA-MD, LLC |
|
Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(12) |
||||||||||
Kaleafa, Inc. |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11)(17) |
||||||||||
Nova Farms, LLC |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9)(17) |
||||||||||
Oasis - AZ GOAT AZ LLC |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11)(17) |
||||||||||
Proper Holdings, LLC |
|
Delayed Draw Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)(17) |
||||||||||
Remedy - Maryland Wellness, LLC |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Shangri-La Columbia, LLC |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)(17) |
||||||||||
STIIIZY Inc. (Shryne Group Inc.) |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11)(17) |
||||||||||
Silver Therapeutics, Inc. |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9)(17) |
||||||||||
Subsero Holdings - Illinois, Inc |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)(17) |
||||||||||
TheraTrue, Inc. |
|
Delayed Draw Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Verano Holdings Corp. |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)(17) |
||||||||||
Total Cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Finance and Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Hartford Gold Group, LLC |
|
Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) |
||||||||||
Minden Holdings, LLC |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)(17) |
||||||||||
Total Finance and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
AI Software, LLC (d/b/a Capacity) |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Protect Animals With Satellites LLC (Halo Collar) |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Protect Animals With Satellites LLC (Halo Collar) - 1st Amendment |
|
Incremental Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Total Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Public Administration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Youth Opportunity Investments, LLC |
|
Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)(17) |
||||||||||
Total Public |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Real Estate and Rental |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Workbox Holdings Inc. |
|
Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Total Real Estate and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Retail Trade |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Aura Home, Inc - Term A&B |
|
Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Aura Home, Inc - Term DDTL B |
|
Delayed Draw Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Aura Home, Inc - Term D |
|
Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
7
Table of Contents
Portofino Labs, Inc. (d/b/a Because Market) |
|
Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Retail Trade |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total First Lien Senior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Portfolio Company |
|
Facility |
|
All in |
|
|
Benchmark (3) |
|
Spread |
|
|
PIK |
|
|
Floor |
|
|
Initial |
|
Maturity |
|
Par (2) |
|
|
Amortized Cost(15) |
|
|
Fair |
|
|
% of |
|
Footnotes |
|||||||
Senior Secured |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Ascend Wellness |
|
Senior Secured Note |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Curaleaf Holdings, Inc. |
|
Senior Secured Note |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9)(14) |
||||||||||
Total Cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Finance and Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RTCP, LLC |
|
Senior Secured Note |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(13) |
||||||||||
West Creek Financial Holdings, Inc. dba Koalafi |
|
Series A Senior Note |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(12) |
||||||||||
Total Finance and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Senior Secured |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total U.S. Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
First Lien Senior Secured |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tulip.io Inc. |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(8)(14) |
||||||||||
Total Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total First Lien |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Canadian |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Portfolio Company |
|
|
|
Class Series |
|
Initial |
|
Shares |
|
|
Cost |
|
|
Fair Value |
|
|
% of |
|
Footnotes |
|||
U.S. Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) |
|||
Real Estate and Rental and Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Workbox Holdings Inc. |
|
|
|
A-1 Preferred |
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
|||||
Total Real Estate and Rental and Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total U.S. Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U .S. Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) |
|||
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
AI Software, LLC (d/b/a Capacity) |
|
|
|
Warrants |
|
|
|
- |
|
|
|
|
|
|
|
|
|
(10) |
||||
Total Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Real Estate and Rental and Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Workbox Holdings Inc. |
|
|
|
A-3 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
|||||
Workbox Holdings Inc. |
|
|
|
A-4 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
|||||
Total Real Estate and Rental and Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Retail Trade |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Portofino Labs, Inc. (dba Because Market) |
|
|
|
Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
(11) |
|||||
Total Retail Trade |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total U.S. Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canadian Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) |
|||
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Tulip.io Inc. |
|
|
|
Warrants |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
(8)(14) |
|||
Total Information |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Total Canadian Warrants |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
||
Total Equity Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
TOTAL INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Footnote Legend
8
Table of Contents
F - Fixed
P - Prime
PIK - Payment-In-Kind
S - SOFR
See notes to financial statements.
9
Table of Contents
CHICAGO ATLANTIC BDC, INC.
Schedule of Investments
December 31, 2024
(In thousands)
Portfolio Company |
|
Facility Type |
|
All in |
|
|
Benchmark (3) |
|
Spread |
|
|
PIK |
|
|
Floor |
|
|
Initial |
|
Maturity |
|
Par (2) |
|
|
Amortized Cost (17) |
|
|
Fair |
|
|
% of |
|
Footnote |
|||||||
Investments at Fair Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) (5) |
|||||||
Aeriz Holdings Corp |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
(9) |
||||||||||
Archos Capital Group, LLC |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Deep Roots Harvest, Inc. |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) |
||||||||||
Dreamfields Brands, Inc. |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) |
||||||||||
Elevation Cannabis, LLC |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Flowery - Bill's Nursery, Inc. |
|
Delayed Draw Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(12) |
||||||||||
HA-MD, LLC |
|
Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(12) |
||||||||||
Kaleafa, Inc. |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) |
||||||||||
Nova Farms, LLC |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Oasis - AZ GOAT AZ LLC |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) |
||||||||||
Proper Holdings, LLC |
|
Delayed Draw Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Remedy - Maryland Wellness, |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
STIIIZY, Inc. (f/k/a Shryne |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) |
||||||||||
Subsero Holdings - Illinois, |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Verano Holdings Corp. |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10)(14) |
||||||||||
Total Cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Finance and Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Hartford Gold Group, LLC |
|
Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) |
||||||||||
Hartford Gold Group, LLC |
|
Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(11) |
||||||||||
Minden Holdings, LLC |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Total Finance and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Health Care and Social |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Sunny Days Enterprises, LLC |
|
Delayed Draw Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Total Health Care and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Protect Animals With |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Protect Animals With |
|
Incremental Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Simspace Corporation |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Total Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Public Administration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Youth Opportunity |
|
Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Total Public |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Real Estate and Rental |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Workbox Holdings Inc. |
|
Term Loan |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
||||||||||
Total Real Estate and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Retail Trade |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Aura Home, Inc |
|
Term Loan |
|
|
% |
|
S |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Total Retail Trade |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total First Lien Senior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Senior Secured U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Ascend Wellness Holdings, |
|
Senior Secured Notes |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
||||||||||
Curaleaf Holdings, Inc. |
|
Senior Secured Notes |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(9)(14) |
||||||||||
Total Cannabis |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Finance and Insurance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
RTCP, LLC |
|
Senior Secured Notes |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(13) |
||||||||||
West Creek Financial |
|
Series A Senior Note |
|
|
% |
|
F |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(12) |
||||||||||
Total Finance and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
10
Table of Contents
Portfolio Company |
|
Facility Type |
|
All in |
|
|
Benchmark (3) |
|
Spread |
|
|
PIK |
|
|
Floor |
|
|
Initial |
|
Maturity |
|
Par (2) |
|
|
Amortized Cost (17) |
|
|
Fair |
|
|
% of |
|
Footnote |
|||||||
Total Senior Secured |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total U.S. Corporate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
First Lien Senior Secured |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tulip.io Inc. |
|
Term Loan |
|
|
% |
|
P |
|
|
% |
|
|
% |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(8)(14) |
||||||||||
Total Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total First Lien Senior |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Canadian |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total Debt Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Portfolio Company |
|
Class Series |
|
Initial |
|
Shares |
|
|
Amortized |
|
|
Fair Value |
|
|
% of Net Assets |
|
Footnote |
|||
U.S. Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Real Estate and Rental and Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Workbox Holdings Inc. |
|
A-1 Preferred |
|
|
|
|
|
|
|
|
|
|
|
|
(6)(10) |
|||||
Total Real Estate and Rental and Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total U.S. Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U .S. Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Real Estate and Rental and Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Workbox Holdings Inc. |
|
A-3 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
(6)(10) |
|||||
Workbox Holdings Inc. |
|
A-4 Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
(6)(10) |
|||||
Total Real Estate and Rental and Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total U.S. Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canadian Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Tulip.io Inc. |
|
Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
(6)(8)(14) |
|||||
Total Information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Canadian Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Equity Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
TOTAL INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Portfolio Company |
|
Yield |
|
|
Cost |
|
|
Fair |
|
|
% of |
|
Footnote |
|||
Cash & Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
State Street Institutional US Government Money Market Fund |
|
|
% |
|
|
|
|
|
|
|
|
(15)(16) |
||||
Total Cash & Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Total Portfolio Investments and Cash & Cash Equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Footnote Legend
11
Table of Contents
F - Fixed
P - Prime
PIK - Payment-In-Kind
S - SOFR
See notes to financial statements.
12
Table of Contents
CHICAGO ATLANTIC BDC, INC.
Notes to Financial Statements
(Unaudited)
NOTE 1 — ORGANIZATION
Chicago Atlantic BDC, Inc. (formerly, Silver Spike Investment Corp.) (an emerging growth company) (the “Company”, “we” or “our”) was formed on January 25, 2021 as a Maryland corporation structured as an externally managed, closed-end, non-diversified management investment company. The Company has elected to be regulated as a business development company (“BDC”), under the Investment Company Act of 1940, as amended (“1940 Act”). In addition, for U.S. federal income tax purposes the Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for the tax period ended December 31, 2021. The Company adopted the tax year end of March 31 and elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) for the tax period January 1, 2022 through March 31, 2022, and has maintained (and intends to continue to maintain) such election in subsequent taxable years. However, there is no guarantee that the Company will qualify to make such an election for any taxable year.
The Company is managed by Chicago Atlantic BDC Advisers, LLC (formerly, Silver Spike Capital, LLC) (the “Adviser”), a registered investment adviser under the Investment Advisers Act of 1940 with the Securities and Exchange Commission (“SEC”). The Adviser has engaged SS&C Technologies, Inc. and ALPS Fund Services, Inc. (“SS&C”), as sub-administrator, to perform administrative services necessary for the Company's operations.
The Company is a specialty finance company focused on investing in companies in highly complex and highly regulated industries typically underserved by other capital providers, including investing across the cannabis ecosystem through investments in the form of direct loans to privately held cannabis companies. Although the Company focuses on investments in the cannabis industry, the Company may also invest in growth and technology companies, esoteric and asset-based lending opportunities, and liquidity solutions opportunities.
The Company’s investment objective is to maximize risk-adjusted returns on equity for its shareholders. The Company seeks to capitalize on, among other things, what it believes to be nascent cannabis industry growth, and drive return on equity by generating current income from its debt investments and capital appreciation from its equity and equity-related investments. The Company intends to achieve its investment objective by investing primarily in secured debt, unsecured debt, equity warrants and direct equity investments in privately held businesses. The Company intends that its debt investments will often be secured by either a first or second priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and will generally have a term of between three and
On October 1, 2024, the Company completed its previously announced acquisition of a portfolio of loans (the “Loan Portfolio”) from Chicago Atlantic Loan Portfolio, LLC ("CALP") in exchange for newly issued shares of the Company’s common stock (the “Loan Portfolio Acquisition”), pursuant to the Purchase Agreement, dated as of February 18, 2024, between the Company and CALP (the “Loan Portfolio Acquisition Agreement”). In accordance with the terms of the Loan Portfolio Acquisition Agreement, at the effective time of the Loan Portfolio Acquisition, the Company issued
On October 1, 2024, the Adviser and Chicago Atlantic BDC Holdings, LLC (together with its affiliates, “Chicago Atlantic”), the investment adviser of CALP, consummated a previously announced transaction pursuant to which a joint venture between Chicago Atlantic and the Adviser has been created to combine and jointly operate the Adviser’s, and a portion of Chicago Atlantic’s, investment management businesses (the “Joint Venture”).
In connection with the Loan Portfolio Acquisition and the Joint Venture, the Company has been renamed “Chicago Atlantic BDC, Inc.,” and its ticker symbol has been changed to “LIEN,” and the Adviser has been renamed “Chicago Atlantic BDC Advisers, LLC.” The changes to the Company’s name and ticker symbol became effective in the market at the open of business on October 2, 2024.
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company is an investment company following the accounting and reporting requirements set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies and Articles 6 and 12 of Regulation S-X. The financial statements reflect all adjustments and reclassification that, in the opinion of management, are necessary for the fair presentation of results of operations and financial condition as of and for
13
Table of Contents
the periods presented. The current period’s results of operations are not necessarily indicative of results that may be achieved for the year ending December 31, 2025.
Reclassifications
Certain reclassifications have been made in the presentation of prior year financial statements and accompanying notes to conform to the presentation as of and for the three and six months ended June 30, 2025.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions affecting reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income, expenses, and gains and losses during the reported period. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions and conditions.
Cash and Cash Equivalents
Cash and cash equivalents consists of funds deposited with financial institutions and short-term (maturity of 90 days or less) liquid investments and money market funds. Funds held in money market funds are considered Level 1 in the fair value hierarchy in accordance with ASC 820, Fair Value Measurement ("ASC 820"). Cash held in demand deposit accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit. The Company has not incurred any losses on these accounts, and the credit risk exposure is mitigated by the financial strength of the banking institution where the accounts are held. As of June 30, 2025 and December 31, 2024, cash and cash equivalents consisted of $
Investment Transactions
Investment transactions are recorded on the trade date. Realized gains or losses are recognized as the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments written off during the period, net of recoveries. Current-period changes in the fair value of investments are reflected as a component of the net change in unrealized appreciation (depreciation) from investments on the Statements of Operations. The net change in unrealized appreciation (depreciation) primarily reflects the change in fair value of investments as of the last business day of the reporting period, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.
Investments traded but not yet settled, if any, are reported in payable for investments purchased and receivable for investments sold on the Statements of Assets and Liabilities.
Investment Valuation
The Company’s investments are recorded at their estimated fair value on the Statements of Assets and Liabilities.
Investments for which market quotations are readily available will typically be valued at the bid price of those market quotations. To validate market quotations, the Adviser utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith by the Adviser, as the Company’s valuation designee (the “Valuation Designee”), based on inputs that may include valuations, or ranges of valuations, provided by independent third-party valuation firm(s) engaged by the Adviser. Generally, the valuation approach used for debt investments is the income approach. The approach derives a value based on either determining the present value of a projected level of cash flow, including a terminal value, or by the capitalization of a normalized measure of future cash flow. The discounted cash flow (“DCF”) method, one of the methodologies under the income approach, involves estimating future cash flows under various scenarios and discounting them to the measurement date. The discount rate represents a return required by a market participant in order to make an investment in the subject company.
Alternatively, the market approach or asset approach may be used. The market approach is a way of determining a value indication by using one or more methods that compare the portfolio company to similar businesses. Value indicators are applied to relevant financial information of the entity being valued to estimate its fair value. There are two methodologies to consider under the market approach: the guideline public company method (“GPC”) and the controlling transaction method (“CTM”). The GPC method is based on the premise that the pricing multiples of comparable publicly traded companies can be used as a tool to value privately held companies. The publicly traded companies’ ratios and business enterprise value provide guidance in the valuation process. Considerations of factors such as size, growth, profitability and return on investment are also analyzed and compared to the subject business. The CTM is based
14
Table of Contents
on the same premise as the GPC. Guideline transactions include change-of-control transactions involving public or private businesses for companies engaged in similar lines of business or with similar economic characteristics. The valuation considers the price at which the merger or acquisition took place to other factors in order to create a pricing multiple that can be used to determine an estimate of value for the subject company.
The asset approach provides an indication of the portfolio company’s value by developing a valuation-based balance sheet. This approach requires adjusting the historical assets and liabilities listed on the U.S. GAAP-based balance sheet to estimated fair values. The excess of assets over liabilities represents the tangible value of the business enterprise. The asset approach does not consider the relevant earnings capacity of a going concern business.
Pursuant to Rule 2a-5 under the 1940 Act, the Board of Directors of the Company (the "Board") designated the Adviser as the Valuation Designee to perform the fair value determinations for the Company, subject to the oversight of the Board and certain Board reporting and other requirements.
As part of the valuation process, the Adviser takes into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Adviser considers whether the pricing indicated by the external event corroborates its valuation.
The Adviser undertakes a multi-step valuation process, which includes, among other procedures, the following:
We conduct this valuation process on a quarterly basis.
We apply ASC 820, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, we consider the principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could
15
Table of Contents
realize amounts that are different from the amounts presented and such differences could be material. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected previously.
Equity Securities and Warrants
The Company may be issued warrants by portfolio companies as yield enhancements in connection with a related debt investment. These warrants are recorded as assets at estimated fair value on the grant date. The Company determines the cost basis of the warrants or other equity securities received based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and warrants or other equity securities received. Depending on the facts and circumstances, the Company generally utilizes a combination of one or several forms of the market approach and contingent claim analyses (a form of option analysis) to estimate the fair value of the securities as of the measurement date and determines the cost basis using a relative fair value methodology. As part of its application of the market approach, the Company estimates the enterprise value of a portfolio company utilizing customary pricing multiples, based on the development stage of the underlying issuers, or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations that are assessed to be indicative of fair value of the respective portfolio company. If appropriate, based on the facts and circumstances, the Company performs an allocation of the enterprise value to the equity securities utilizing a contingent claim analysis and/or other waterfall calculation by which it allocates the enterprise value across the portfolio company’s warrants and other equity securities in order of their preference relative to one another.
Earnings per share
Basic earnings per share is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted-average number of common shares outstanding for the period. Other potentially dilutive common shares, and the related impact to earnings are considered when calculating earnings per share on a diluted basis using the treasury stock method.
Revenue Recognition
Interest Income
Interest income is recorded on an accrual basis and includes accretion and amortization of discounts or premiums, respectively. Discounts and premiums to par value on securities purchased are accreted and amortized, respectively, into interest income over the contractual life of the respective security using the effective yield method. The amortized cost of investments includes the original cost adjusted for the accretion and amortization of discounts and premiums, respectively. Upon prepayment of a loan or debt security, any prepayment premiums and unamortized discounts or premiums are recorded as interest income.
Certain investments may have contractual payment-in-kind ("PIK") interest or dividends. PIK interest or dividends represents accrued interest or dividends that is added to the principal amount of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity.
Dividend Income
Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.
Fee Income
All transaction fees earned in connection with our investments are recognized as fee income and are generally non-recurring. Such fees typically include fees for services, including administrative, structuring (including with respect to amendments) and advisory services, provided to portfolio companies. We recognize income from fees for providing such structuring and advisory services when the services are rendered or the transactions are completed, and payment is received (generally immediately).
Non-Accrual Policy
When a debt security becomes 90 days or more past due, or if management otherwise does not expect that principal, interest, and other obligations due will be collected in full, the Company will generally place the debt security on non-accrual status and cease recognizing interest income on that debt security until all principal and interest due has been paid or the Company believes the borrower has demonstrated the ability to repay its current and future contractual obligations. Any interest receivable is reversed from income in the period that a loan is placed on non-accrual status. However, the Company may make exceptions to this policy if the investment has sufficient collateral value and is in the process of collection. If PIK interest or dividends are not expected to be realized by the Company, the investment generating PIK interest or dividends will be placed on non-accrual status. When an investment with PIK is placed on
16
Table of Contents
non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest or dividend income, respectively. As of June 30, 2025 and December 31, 2024, there were
Unearned Revenue
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, and the debt coverage provided by the pledged collateral. It is the Company’s policy to recognize income for this interest component as long as the subject loan is performing as originally projected and if there has been no deterioration in the financial condition of the borrower. The Company’s standard accounting policies for interest income recognition are applied to all loans, including those with interest reserves. As of June 30, 2025 and December 31, 2024, the Company recorded $
Income Taxes
The Company adopted an initial tax year end of December 31, 2021 and was taxed as a corporation for U.S. federal income tax purposes for the tax period ended December 31, 2021. The Company adopted the tax year end of March 31 and elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code for the tax period January 1, 2022 through March 31, 2022 and in subsequent years. The Company intends to maintain such election in the current and future taxable years. To maintain its tax treatment as a RIC, the Company must meet specified source-of-income and asset diversification requirements and timely distribute to its stockholders for each taxable year at least
For the three and six months ended June 30, 2025 and 2024, the Company did
During the quarter ended March 31, 2025, the Company determined that it had overpaid its estimated federal excise tax liability for the prior fiscal year by $
The Company evaluates tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority in accordance with ASC Topic 740, Income Taxes (“ASC 740”). Tax benefits of positions not deemed to meet the more-likely-than-not threshold, or uncertain tax positions, would be recorded as tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense.
Based on the analysis of the Company’s tax position, the Company had
17
Table of Contents
Distributions
Distributions to common stockholders are recorded on the record date. The amount of taxable income to be paid out as a distribution is determined by our Board on a quarterly basis and is generally based upon the future taxable income estimated by management. Capital gains, if any, are distributed at least annually, although the Company may decide to retain all or some of those capital gains for investment and pay U.S. federal income tax at corporate rates on those retained amounts. If the Company chooses to do so, this generally will increase expenses and reduce the amount available to be distributed to stockholders. Our distributions may exceed our earnings, and therefore, portions of the distributions that we make may be a return of the money originally invested and represent a return of capital distribution to shareholders for tax purposes.
Offering Costs
These costs consist primarily of legal fees and other costs incurred in connection with issuances of the Company’s common stock, including the preparation of the Company’s registration statement, registration fees, transfer agent expenses, and other expenses relating to the offering. Offering costs are capitalized as deferred offering costs and, if any, are included in prepaid expenses and other assets on the Statements of Assets and Liabilities. As of June 30, 2025 and December 31, 2024, deferred offering costs were $
The deferred offering costs were charged to capital upon the issuance of shares subsequent to the completion of the Loan Portfolio Acquisition. For the three and six months ended June 30, 2025, $
Transaction expenses related to the Loan Portfolio Acquisition
Cumulative transaction expenses related to the Loan Portfolio Acquisition through June 30, 2025 and December 31, 2024 were $
For the three and six months ended June 30, 2025, the Company incurred transaction expenses related to the Loan Portfolio Acquisition of $
Deferred Financing Costs
Deferred financing costs consist of origination expenses incurred in connection with the closing, or anticipated closing, of a credit facility, and include legal, accounting, and other related expenses. These costs are deferred and amortized as interest expense using the straight-line method over the term of the applicable credit facility. In addition to origination expenses, the Company pays an annual upfront fee related to its credit facility. These fees are deferred and amortized as interest expense using the straight-line method over a
New Accounting Standards
On January 1, 2025, the Company adopted Accounting Standards Update ("ASU") No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, greater disaggregation of information in the income tax rate reconciliation and for paid income taxes to be disaggregated by jurisdiction. This ASU affects financial statement disclosure only, which is not required until year end 2025 and, as a result, does not affect our results of operations or financial condition.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU No. 2024-03 requires disaggregated disclosure of certain costs and expenses, including purchase of inventory, employee compensation, depreciation, amortization and depletion, within relevant income statement captions. ASU 2024-03 is effective for annual years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption and retrospective application are permitted. The Company is currently evaluating the impact of adopting ASU No. 2024-03.
18
Table of Contents
NOTE 3 — INVESTMENTS
The Company’s investments in portfolio companies are primarily in the form of debt investments, but may include equity warrants received in connection with debt investments, equity investments and derivative investments.
In the tables presented below for the Company’s debt investments, the amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.
The following tables summarize the composition of the Company’s portfolio investments by investment type as of June 30, 2025 and December 31, 2024.
|
|
As of June 30, 2025 |
|
|||||||||||||||||||||
Investment Type |
|
Principal |
|
|
Percentage |
|
|
Amortized |
|
|
Percentage at |
|
|
Fair |
|
|
Percentage |
|
||||||
First Lien Senior Secured Loans |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Senior Secured Notes |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Preferred Stock |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Warrants |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
|
|
As of December 31, 2024 |
|
|||||||||||||||||||||
Investment Type |
|
Principal |
|
|
Percentage |
|
|
Amortized |
|
|
Percentage |
|
|
Fair |
|
|
Percentage at |
|
||||||
First Lien Senior Secured Loans |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Senior Secured Notes |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Preferred Stock |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Warrants |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
The following tables summarize the composition of the Company’s debt portfolio based on rate characteristics as of June 30, 2025 and December 31, 2024.
|
|
As of June 30, 2025 |
||||||||||||
Rate Type |
|
Principal |
|
|
Amortized |
|
|
Fair |
|
|
Time to |
|||
Fixed-rate debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Floating-rate debt (SOFR) |
|
|
|
|
|
|
|
|
|
|
||||
Floating-rate debt (PRIME) |
|
|
|
|
|
|
|
|
|
|
||||
Total Debt Instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|||
|
|
As of December 31, 2024 |
||||||||||||
Rate Type |
|
Principal |
|
|
Amortized |
|
|
Fair |
|
|
Time to |
|||
Fixed-rate debt |
|
$ |
|
|
$ |
|
|
$ |
|
|
||||
Floating-rate debt (SOFR) |
|
|
|
|
|
|
|
|
|
|
||||
Floating-rate debt (PRIME) |
|
|
|
|
|
|
|
|
|
|
||||
Total Debt Instruments |
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|||
19
Table of Contents
The Company’s portfolio investments are primarily in companies conducting business in or supporting the cannabis industry. The Company uses the North American Industry Classification System ("NAICS") for classifying the industry groupings of its portfolio companies, excluding any portfolio company operating in the cannabis industry.
|
|
As of June 30, 2025 |
|
|||||||||||||
Industry |
|
Amortized |
|
|
Percentage at |
|
|
Fair |
|
|
Percentage at |
|
||||
Cannabis |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Finance and Insurance |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Public Administration |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Information |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Retail Trade |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Real Estate and Rental and Leasing |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
|
|
As of December 31, 2024 |
|
|||||||||||||
Industry |
|
Amortized |
|
|
Percentage at |
|
|
Fair |
|
|
Percentage at |
|
||||
Cannabis |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Finance and Insurance |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Information |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Public Administration |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Retail Trade |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Health Care and Social Assistance |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Real Estate and Rental and Leasing |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
The geographic composition is determined by the location of the principal place of business of each portfolio company. Geographic regions are defined as: West, for the states of WA, OR, ID, MT, WY, CO, AK, HI, UT, NV and CA; Midwest, for the states of ND, SD, NE, KS, MO, IA, MN, WI, MI, IL, IN and OH; Northeast, for the states of PA, NJ, NY, CT, RI, MA, VT, NH and ME; Southeast, for the states of AR, LA, MS, TN, KY, AL, FL, GA, SC, NC, VA, DE, WV and MD; and Southwest, for the states of AZ, NM, TX and OK.
The following tables summarize the composition of the Company’s portfolio investments by geographic region as of June 30, 2025 and December 31, 2024.
|
|
As of June 30, 2025 |
|
|||||||||||||
Geographic Region |
|
Amortized |
|
|
Percentage at |
|
|
Fair |
|
|
Percentage at |
|
||||
United States: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Midwest |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
West |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Northeast |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Southeast |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Southwest |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
International: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
20
Table of Contents
|
|
As of December 31, 2024 |
|
|||||||||||||
Geographic Region |
|
Amortized |
|
|
Percentage at |
|
|
Fair |
|
|
Percentage at |
|
||||
United States: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Midwest |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
West |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Northeast |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Southwest |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Southeast |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
International: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Canada |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||
Total |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||
Certain Risk Factors
In the ordinary course of business, the Company manages a variety of risks including market risk, concentration risk, credit risk, liquidity risk, interest rate risk, prepayment risk, risks associated with financial, economic and other global market developments and disruptions, including those arising from war, terrorism, market manipulation, government interventions, defaults and shutdowns, political changes or diplomatic developments, public health emergencies (such as the spread of infectious diseases, pandemics and epidemics) and natural/environmental disasters, which can all negatively impact the securities markets generally. These events can also impair the technology and other operational systems upon which the Company’s service providers rely and could otherwise disrupt the Company’s service providers’ ability to fulfill their obligations to the Company. The Company identifies, measures and monitors risk through various control mechanisms, including trading limits and diversifying exposures and activities across a variety of instruments, markets and counterparties.
Market risk is the risk of potential adverse changes to the value of financial instruments because of changes in market conditions, including as a result of changes in the credit quality of a particular issuer, credit spreads, interest rates, and other movements and volatility in security prices or commodities. In particular, the Company may invest in issuers that are experiencing or have experienced financial or business difficulties (including difficulties resulting from the initiation or prospect of significant litigation or bankruptcy proceedings), which involves significant risks. The Company manages its exposure to market risk through the use of risk management strategies and various analytical monitoring techniques.
Concentration risk includes the risk that the Company’s focus on investments in cannabis companies may subject the Company to greater price volatility and risk of loss as a result of adverse economic, business or other developments affecting cannabis companies than funds investing in a broader range of industries or sectors. At times, the performance of investments in cannabis companies will lag the performance of other industries or sectors or the broader market as a whole. Investing in portfolio companies involved in the cannabis industry subjects us to the following risks:
21
Table of Contents
As of June 30, 2025 and December 31, 2024, we had
Any of the foregoing could have an adverse impact on our and our portfolio companies’ businesses, financial condition and results of operations.
Credit risk is the risk that a decline in the credit quality of an investment could cause the Company to lose money. The Company could lose money if the issuer or guarantor of a portfolio security fails to make timely payment or otherwise honor its obligations. Fixed income securities rated below investment grade (high-yield bonds) involve greater risks of default or downgrade and are generally more volatile than investment grade securities. Below investment grade securities involve greater risk of price declines than investment grade securities due to actual or perceived changes in an issuer’s creditworthiness. In addition, issuers of below investment grade securities may be more susceptible than other issuers to economic downturns. Such securities are subject to the risk that the issuer may not be able to pay interest or dividends and ultimately to repay principal upon maturity. Discontinuation of these payments could substantially adversely affect the market value of the security.
The Company’s investments may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.
Interest rate risk refers to the change in earnings that may result from changes in the level of interest rates. To the extent that the Company borrows money to make investments, including under its credit facility, net investment income (loss) will be affected by the difference between the rate at which the Company borrows funds and the rate at which the Company invests these funds. In periods of rising interest rates, the Company’s cost of borrowing funds would increase, which may reduce net investment income (loss). As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on net investment income (loss).
Prepayment risk is the risk that a loan in the Company’s portfolio will prepay due to the existence of favorable financing market conditions that allow the portfolio company the ability to replace existing financing with less expensive capital. As market conditions change, prepayment may be possible for each portfolio company. In some cases, the prepayment of a loan may reduce the Company’s achievable yield if the capital returned cannot be invested in transactions with equal or greater expected yields, which could have a material adverse effect on our business, financial condition and results of operations.
22
Table of Contents
NOTE 4 — FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. The Company accounts for its investments at fair value. As of June 30, 2025 and December 31, 2024, the Company’s portfolio investments consisted primarily of investments in senior secured loans and secured notes. The fair value amounts have been measured as of the reporting date and have not been reevaluated or updated for purposes of these financial statements subsequent to that date. As such, the fair values of these financial instruments subsequent to the reporting date may be different than amounts reported.
The fair value determination of each portfolio investment categorized as Level 3 required the use of one or more unobservable inputs.
The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s debt investments may vary and may include debt investments’ yield (i.e. discount rate) and volatility assumptions. The significant unobservable inputs used in the fair value measurement of the Company’s equity and warrant investments may vary and may include EBITDA multiples, revenue multiples and asset multiples.
The Company’s investments measured at fair value by investment type on a recurring basis as of June 30, 2025 and December 31, 2024 were as follows:
|
|
Fair Value Measurements at June 30, 2025 Using |
|
|||||||||||||
Investment Type |
|
Quoted Prices in |
|
|
Significant |
|
|
Significant |
|
|
Total |
|
||||
First Lien Senior Secured Loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Senior Secured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
Fair Value Measurements at December 31, 2024 Using |
|
|||||||||||||
Investment Type |
|
Quoted Prices in |
|
|
Significant |
|
|
Significant |
|
|
Total |
|
||||
First Lien Senior Secured Loans |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Senior Secured Notes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Preferred Stock |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Warrants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following tables provide a summary of the significant unobservable inputs used to fair value the Level 3 portfolio investments as of June 30, 2025 and December 31, 2024. The methodology for the determination of the fair value of the Company’s investments is discussed in “Note 2 – Significant Accounting Policies”. Discount rate ranges are shown as spread over the U.S. Prime Rate ("PRIME"), Secured Overnight Financing Rate ("SOFR") and/or U.S. Treasury Rates, as applicable, for senior secured first lien term loans, as of June 30, 2025 and December 31, 2024.
Investment Type |
|
Fair Value as of |
|
|
Valuation |
|
Unobservable Input |
|
Range |
|
|
Weighted |
|
|||
First Lien Senior Secured Loans |
|
$ |
|
|
Discounted Cash Flow |
|
Discount Rate |
|
|
|
|
% |
||||
First Lien Senior Secured Loans |
|
|
|
|
Recent Transaction |
|
Transaction Price |
|
N/A |
|
|
N/A |
|
|||
Senior Secured Notes |
|
|
|
|
Discounted Cash Flow |
|
Discount Rate |
|
|
|
|
% |
||||
Preferred Stock |
|
|
|
|
Market Approach |
|
Current Value |
|
|
|
|
|||||
Warrants |
|
|
|
|
Option Pricing Model |
|
Volatility Factor |
|
|
% |
|
|
% |
|||
Warrants |
|
|
|
|
Recent Transaction |
|
Transaction Price |
|
N/A |
|
|
N/A |
|
|||
Total |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|||
23
Table of Contents
Investment Type |
|
Fair Value as of |
|
|
Valuation |
|
Unobservable Input |
|
Range |
|
|
Weighted |
|
|||
First Lien Senior Secured Loans |
|
$ |
|
|
Discounted Cash Flow |
|
Discount Rate |
|
|
|
|
% |
||||
Senior Secured Notes |
|
|
|
|
Discounted Cash Flow |
|
Discount Rate |
|
|
|
|
% |
||||
Preferred Stock |
|
|
|
|
Market Approach |
|
Current Value |
|
|
|
|
|||||
Warrants |
|
|
|
|
Option Pricing Model |
|
Volatility Factor |
|
|
% |
|
|
% |
|||
Total |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|||
Significant increases (decreases) in discount rate in isolation would result in a significantly lower (higher) fair value assessment. Significant increases (decreases) in volatility in isolation would result in a significantly lower (higher) fair value assessment.
The following tables provide a summary of changes in the fair value of the Company’s Level 3 portfolio investments for the six months ended June 30, 2025 and 2024:
|
|
First Lien |
|
|
Senior |
|
|
Preferred |
|
|
Warrants |
|
|
Total |
|
|||||
Fair Value as of December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Purchases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accretion of discount and fees (amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
PIK interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from sales of investments and |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net realized gain (loss) on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net change in unrealized appreciation |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Balance as of June 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net change in unrealized |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
First Lien |
|
|
Senior |
|
|
Preferred |
|
|
Warrants |
|
|
Total |
|
|||||
Fair Value as of December 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
$ |
|
|||||
Purchases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accretion of discount and fees (amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
PIK interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Proceeds from sales of investments and |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Net realized gain (loss) on investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net change in unrealized appreciation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance as of June 30, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net change in unrealized |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
24
Table of Contents
NOTE 5 – DEBT
Revolving Line of Credit
On February 11, 2025, the Company entered into a senior secured revolving credit agreement (the “Credit Agreement”, the "Revolving Line of Credit") by and among the Company, as borrower, Western Alliance Trust Company, N.A. (“WATC”), as administrative agent, Western Alliance Bank, as an issuing bank and as the initial lender, and the other lenders party thereto from time to time.
Under the Credit Agreement, the lenders have agreed to extend credit to the Company on a revolving basis in an initial aggregate amount of up to $
Availability under the Credit Agreement (the “Revolving Period”) will terminate on February 11, 2027, and the Credit Agreement has a scheduled maturity date of March 31, 2028.
Borrowings under the Credit Agreement bear interest at the annual rate of
The Company incurred $
As of June 30, 2025, the Company had $
The fair value of the Revolving Line of Credit is equal to its carrying value because the revolver is a floating rate facility that reprices to a market rate frequently. The fair value is categorized as Level 2 under ASC 820.
25
Table of Contents
The following table presents the components of interest expense for the following periods:
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Commitment fee |
|
$ |
|
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
||
Amortization of deferred financing costs |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Interest expense |
|
|
|
|
|
- |
|
|
|
|
|
|
- |
|
||
Total interest expense |
|
$ |
|
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
||
Average interest rate |
|
|
% |
|
|
- |
|
|
|
% |
|
|
- |
|
||
Average daily borrowings |
|
$ |
|
|
$ |
- |
|
|
$ |
|
|
$ |
- |
|
||
NOTE 6 — RELATED PARTY TRANSACTIONS
Investment Advisory Agreement
Pursuant to the investment advisory agreement between the Company and the Adviser (the “Investment Advisory Agreement”), fees payable to the Adviser are equal to (a) a base management fee of
The incentive fee consists of two parts. The first part is calculated and payable
The management fee is payable quarterly in arrears. For the three months ended June 30, 2025 and 2024, the Company incurred management fee expenses of $
For the three months ended June 30, 2025 and 2024, the Company incurred income-based incentive fee expenses of $
For the three months ended June 30, 2025 and 2024, the Company incurred capital gains incentive fee expenses of $
Expense Limitation Agreement
On October 1, 2024, in connection with the Investment Advisory Agreement, the Company and the Adviser entered into an expense limitation agreement (the “Expense Limitation Agreement”) pursuant to which the Adviser has agreed to cap the Company’s operating expenses (excluding base management fees, incentive fees, expenses related to the Loan Portfolio Acquisition, and litigation and indemnification expenses) at an annualized rate of
On February 14, 2025, the Board approved a clarification, as proposed by the Company and the Adviser, of the Expense Limitation Agreement, that any interest expense, fees, and other costs associated with raising debt and/or equity capital for the Company are not subject to, and do not count towards, the expense cap of
26
Table of Contents
For the three months ended June 30, 2025 and 2024, $
Administration Agreement
Pursuant to the administration agreement between the Company and the Adviser (the “Administration Agreement”), the Company is to reimburse the Adviser for the costs and expenses incurred by the Adviser in performing its obligations, including but not limited to maintaining and keeping all books and records and providing personnel and facilities. This includes costs and expenses incurred by the Adviser in connection with the delegation of its obligations to SS&C, the sub-administrator. The Company is generally not responsible for the compensation of the Adviser’s employees or any overhead expenses. However, we may reimburse the Adviser for an allocable portion of the compensation paid by the Adviser to our Chief Compliance Officer ("CCO") and Chief Financial Officer ("CFO") and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs).
License Agreement
The Company has also entered into a license agreement with the Adviser pursuant to which the Adviser has agreed to grant the Company a nonexclusive, royalty-free license to use the name “Chicago Atlantic.” Under this agreement, the Company will have a right to use the “Chicago Atlantic” name, for so long as the Adviser or one of its affiliates remains the Company’s investment adviser. Other than with respect to this limited license, the Company will have no legal right to the “Chicago Atlantic” name.
Related Party Fees & Expenses
The following table summarizes the related parties fees and expenses incurred by the Company for the three and six months ended June 30, 2025 and 2024.
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Affiliate Payments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income-based incentive fees |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Management fee |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital gains incentive fees |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Total management and incentive fees earned |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expense limitation agreement |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
General and administrative expenses waiver |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
General and administrative expenses reimbursable to the Adviser |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total affiliate payments |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
General administrative expenses reimbursable to the Adviser are included in due to affiliates on the accompanying Statements of Assets and Liabilities as of June 30, 2025 and December 31, 2024. Related party fees and expenses payable to the Adviser and its affiliates as of June 30, 2025 were $
For the three and six months ended June 30, 2025, the Adviser voluntarily and irrevocably waived approximately $
Affiliated Loan Administrative and Collateral Agent
Chicago Atlantic Admin, LLC (the “Loan Administrator”), serves as a loan administrator and collateral agent for certain loans within the Company’s investment portfolio. Among other customary responsibilities as described in each respective loan document, the Loan Administrator is responsible for: (a) the collection of interest, loan fees, and principal payments from portfolio companies, and (b) the subsequent disbursement of the allocable portion of such collections to the lender(s), including the Company. The Loan Administrator is a wholly-owned subsidiary of Chicago Atlantic Group, LP.
27
Table of Contents
Interest and principal payments from our portfolio companies which were received by the Loan Administrator prior to June 30, 2025, but which were not remitted to the Company until after June 30, 2025, are included in due from affiliates on the Statements of Assets and Liabilities. As of June 30, 2025, the due from affiliates balance of $
Interest and principal payments from our portfolio companies which were received by the Loan Administrator prior to December 31, 2024, but which were not remitted to the Company until after December 31, 2024, are included in due from affiliates on the Statements of Assets and Liabilities. As of December 31, 2024, the due from affiliates balance of $
Co-Investments
From time to time, the Company may co-invest with other investment vehicles managed by its affiliates, in accordance with the Company’s co-investment exemptive order and the Adviser’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 co-investment. As of June 30, 2025 and December 31, 2024, $
Other Related Party Transactions
The Adviser was the seed investor of the Company and provided initial funding to the Company by purchasing approximately
During the six months ended June 30, 2025 and 2024, the Adviser and certain related parties received dividend distributions from the Company relating to their shares held. Refer to “Note 8 – Common Stock” for further details on the Company’s dividend reinvestment plan and the distributions declared.
28
Table of Contents
NOTE 7 — COMMITMENTS AND CONTINGENCIES
Off-Balance Sheet Arrangements
The Company’s commitments and contingencies include unfunded commitments to extend credit, typically in the form of delayed draw term loans to the Company’s portfolio companies. A portion of these unfunded contractual commitments are generally dependent upon the portfolio company reaching certain milestones before the debt commitment becomes available. Furthermore, the Company’s credit agreements with its portfolio companies generally contain customary lending provisions that allow the Company relief from funding obligations for previously made commitments in instances where the underlying portfolio company experiences materially adverse events that affect the financial condition or business outlook of the company. Since a portion of these commitments may expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements. As such, the Company’s disclosure of unfunded contractual commitments includes only those commitments that are available at the request of the portfolio company and are unencumbered by milestones or additional lending provisions.
|
|
As of |
|
|
As of |
|
||
Unfunded delayed draw loan commitments |
|
$ |
|
|
$ |
|
||
Total undrawn commitments |
|
$ |
|
|
$ |
|
||
The Company did not have any other off-balance sheet commitments or liabilities as of June 30, 2025 or December 31, 2024. The Company will fund its unfunded commitments, if any, from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents) and maintains adequate liquidity to fund its unfunded commitments through these sources.
Legal Proceedings
The Company may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to seek to impose liability on the Company in connection with the activities of its portfolio companies. As of June 30, 2025, there were no material legal matters or material litigation pending of which the Company is aware.
NOTE 8 — COMMON STOCK
As of June 30, 2025,
Loan Portfolio Acquisition
On October 1, 2024, the Company completed its previously announced the Loan Portfolio Acquisition, pursuant to the the Loan Portfolio Acquisition Agreement. In accordance with the terms of the Loan Portfolio Acquisition Agreement, at the effective time of the Loan Portfolio Acquisition, the Company issued
Distributions
The following table summarizes distributions declared by the Company during the six months ended June 30, 2025:
Declaration Date |
|
Type |
|
Record Date |
|
Payment Date |
|
Per Share Amount |
|
|
Dividends Paid |
|
||
|
|
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
$ |
|
|
$ |
|
||||||
The following table summarizes distributions declared and paid by the Company during the six months ended June 30, 2024:
Declaration Date |
|
Type |
|
Record Date |
|
Payment Date |
|
Per Share Amount |
|
|
Dividends Paid |
|
||
|
|
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
$ |
|
|
$ |
|
||||||
29
Table of Contents
Dividend Reinvestment Plan
The Company’s dividend reinvestment plan (the “DRIP”) provides for the reinvestment of distributions in the form of common stock on behalf of its stockholders, unless a stockholder has elected to receive distributions in cash. As a result, if the Company declares a cash distribution, its stockholders who have not “opted out” of the DRIP by the opt out date will have their cash distribution automatically reinvested into additional shares of the Company’s common stock. The share requirements of the DRIP may be satisfied through the issuance of common shares or through open market purchases of common shares by the DRIP plan administrator.
The DRIP is administered by its transfer agent on behalf of the Company’s record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in the DRIP but may provide a similar dividend reinvestment plan for their clients.
During the six months ended June 30, 2025, the Company issued the following shares of common stock under the DRIP:
Declaration Date |
|
Type |
|
Record Date |
|
Payment Date |
|
Shares |
|
|
|
|
|
|
|
|
|||||
During the six months ended June 30, 2024, the Company issued the following shares of common stock under the DRIP:
Declaration Date |
|
Type |
|
Record Date |
|
Payment Date |
|
Shares |
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|||||
NOTE 9 — INDEMNIFICATION
Under the Company’s organizational documents, the Company’s officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Company. In addition, in the normal course of business the Company enters into contracts that contain a variety of representations which provide general indemnifications. The Company’s maximum exposure under these agreements cannot be known; however, the Company expects any risk of loss to be remote.
In the normal course of business, the Company enters into contracts that provide a variety of representations and warranties, and general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.
NOTE 10 — EARNINGS PER SHARE
The following table sets forth the computation of the weighted average basic and diluted net increase (decrease) in net assets per share resulting from operations for the three and six months ended June 30, 2025 and 2024:
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Net increase (decrease) in net assets resulting from operations |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted Average Shares Outstanding - basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net increase (decrease) in net assets resulting from operations- basic and diluted |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
NOTE 11 — INCOME TAXES
The Company adopted a tax year end of March 31 and elected to be treated as a RIC for U.S. federal income tax purposes under Subchapter M of the Code. However, there is no guarantee that the Company will qualify to make such an election for any taxable year. As a RIC, the Company generally will not pay corporate-level income tax if it distributes to stockholders at least
30
Table of Contents
and is based upon the annual earnings estimated by the management of the Company. To the extent the Company’s earnings fall below the amount of dividend distributions declared, however, a portion of the total amount of the Company’s distributions for the tax year may be deemed a return of capital for tax purposes to the Company’s stockholders.
The amounts and sources of distributions reported are only estimates and are not being provided for U.S. federal income tax reporting purposes. The timing and character of distributions for U.S. federal income tax purposes will be determined in accordance with the U.S. federal tax rules which may differ from U.S. GAAP. The final determination of the source of all distributions in 2025 will be made after the tax year-end and the amounts represented may be materially different from the amounts disclosed in the final Form 1099-DIV notice. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Company’s investment performance and may be subject to change based on tax regulations.
Because federal income tax regulations differ from U.S. GAAP, distributions in accordance with tax regulations may differ from net investment income (loss) and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary in nature. Permanent differences are reclassified among the capital accounts in the financial statements to reflect their appropriate tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized in different periods for book and tax purposes. The Company had not recorded a liability for any uncertain tax positions pursuant to the provisions of ASC 740 as of June 30, 2025 and December 31, 2024. In the normal course of business, the Company is subject to examination by federal and certain state and local tax regulators.
In the normal course of business, the Company is subject to examination by federal and certain state and local tax regulators.
For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of March 31, 2025, the Company’s most recent tax year end, the Company had a net short-term capital loss carryforward of $
The Company’s taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, the final taxable income earned in each year and carried forward for distribution in the following year may be different than this estimate.
For the tax years ended March 31, 2025 and March 31, 2024, the Company reclassified for book purposes amounts arising from permanent book to tax differences primarily related to non-deductible excise tax paid.
|
|
March 31, 2025 |
|
|
March 31, 2024 |
|
||
Increase (decrease) in additional paid in capital |
|
$ |
( |
) |
|
$ |
( |
) |
Increase (decrease) in distributable earnings (accumulated loss) |
|
|
|
|
|
|
||
For income tax purposes, distributions paid to shareholders are reported as ordinary income, return of capital, long-term capital gains, or a combination thereof. The tax character of distributions paid for the three months ended June 30, 2025 and the tax year ended March 31, 2025, were as follows:
|
|
For the tax period from April 1, 2025 |
|
|
For the tax year from April 1, 2024 |
|
||
Ordinary income |
|
$ |
|
|
$ |
|
||
Long-term Capital Gain |
|
|
|
|
|
|
||
Return of Capital |
|
|
|
|
|
|
||
Total Distributions |
|
$ |
|
|
$ |
|
||
As of March 31, 2025 and March 31, 2024, the components of distributable earnings on a tax basis detailed below differ from the amounts reflected in the Company’s Statements of Assets and Liabilities by temporary book or tax differences primarily arising from the tax treatment of organizational costs, the tax treatment of transaction expenses related to the Loan Portfolio Acquisition, and the tax treatment of uncrystallized capital gain incentive fees, and distributions payable.
31
Table of Contents
|
|
March 31, 2025 |
|
|
March 31, 2024 |
|
||
Undistributed ordinary income |
|
$ |
|
|
|
|
||
Net unrealized appreciation (depreciation) on investments |
|
|
( |
) |
|
|
|
|
Capital Gain/(Loss) Carry Forwards |
|
|
( |
) |
|
|
( |
) |
Other temporary differences |
|
|
( |
) |
|
|
( |
) |
Total |
|
$ |
( |
) |
|
$ |
( |
) |
The following table sets forth the tax cost basis and the estimated aggregate gross unrealized appreciation and depreciation from investments and cash equivalents for federal income tax purposes as of June 30, 2025 and March 31, 2025:
|
|
June 30, 2025 |
|
|
March 31, 2025 |
|
|
|
||
Tax cost of investments and cash equivalents |
|
|
|
|
$ |
|
|
|
||
Unrealized appreciation |
|
|
|
|
|
|
|
|
||
Unrealized depreciation |
|
|
( |
) |
|
|
( |
) |
|
|
Net unrealized appreciation (depreciation) from investments and cash equivalents |
|
|
( |
) |
|
$ |
( |
) |
|
|
NOTE 12 — FINANCIAL HIGHLIGHTS
The following presents financial highlights for the six months ended June 30, 2025 and 2024:
|
|
For the Six Months Ended |
|
|||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||
Per share data: |
|
|
|
|
|
|
||
Net asset value at beginning of period |
|
$ |
|
|
$ |
|
||
Net investment income (loss) (1) |
|
|
|
|
|
|
||
Net realized and unrealized gains/(losses) on investments (1) |
|
|
|
|
|
|
||
Net increase/(decrease) in net assets resulting from operations (1) |
|
|
|
|
|
|
||
Distributions from net investment income (loss) (2) |
|
|
( |
) |
|
|
( |
) |
Net asset value at end of period |
|
$ |
|
|
$ |
|
||
Net assets at end of period |
|
$ |
|
|
$ |
|
||
Shares outstanding at end of period |
|
|
|
|
|
|
||
Weighted average net assets |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
Per share market value at end of period |
|
$ |
|
|
$ |
|
||
Total return based on market value (3) |
|
|
( |
)% |
|
|
% |
|
Total return based on net asset value (3) |
|
|
% |
|
|
% |
||
|
|
|
|
|
|
|
||
Ratio/Supplemental data: |
|
|
|
|
|
|
||
Ratio of net investment income (loss) to average net assets (4) |
|
|
% |
|
|
% |
||
Ratio of expenses to average net assets (3) |
|
|
% |
|
|
% |
||
Ratio of waived expenses to average net assets(4) |
|
|
( |
)% |
|
|
|
|
Ratio of net expenses to average net assets(4) |
|
|
% |
|
|
% |
||
Portfolio turnover (4) |
|
|
% |
|
|
% |
||
32
Table of Contents
NOTE 13 — SEGMENT REPORTING
The Company uses the management approach to determine reportable operating segments. The Company operates through a single operating and reporting segment with an investment objective of maximizing risk-adjusted returns on equity for its shareholders. The management approach considers the internal organization and reporting used by the Company’s Chief Executive Officer, Chief Financial Officer, and Co-Chief Investment Officers, which comprise the chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The CODM assesses the performance of, and makes operating decisions for, the Company primarily based on the Company’s net asset value, net investment income, and net increase (decrease) in net assets resulting from operations. These measures of segment performance are the same as those presented in the Company’s Statements of Assets and Liabilities and Statements of Operations, prepared in accordance with U.S. GAAP. In addition to other factors and metrics, the CODM utilizes net increase (decrease) in net assets resulting from operations, as reported on the Statements of Operations, as a key determinant of the amount of dividends to be distributed to the Company’s stockholders.
As the Company’s operations comprise of a single reporting segment, the segment assets are reflected on the accompanying Statements of Assets and Liabilities as “total assets” and the significant segment expenses are listed on the accompanying Statements of Operations.
NOTE 14 — SUBSEQUENT EVENTS
The Company’s management evaluated subsequent events through the date on which the financial statements were issued. Other than the item listed below, there have been no subsequent events that occurred during such period that have required adjustment or disclosure in the financial statements.
On August 12, 2025, the Board approved a cash dividend of $
On July 31, 2025, the Company received a principal repayment of approximately $
33
Table of Contents
CHICAGO ATLANTIC BDC, INC.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with the financial statements and the related notes that are included in Item 1 of Part I of this quarterly report on Form 10-Q. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section entitled “Item 1A. Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2024 and elsewhere in this quarterly report on Form 10-Q. Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”
Overview
We were formed in January 2021 as a Maryland corporation and are structured as an externally managed, closed-end, non-diversified management investment company. We have elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940 (the "1940 Act"). In addition, for U.S. federal income tax purposes we have elected to be treated, and intend to qualify annually to be treated, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code (the "Code"), commencing with our taxable year ended March 31, 2022.
We are a specialty finance company focused on investing in companies in highly complex and highly regulated industries typically underserved by other capital providers, including investing across the cannabis ecosystem through investments in the form of direct loans to privately held cannabis companies. Although we primarily focus on investments in the cannabis industry, we may also invest in growth and technology companies, esoteric and asset-based lending opportunities, and liquidity solutions opportunities as described further below.
Our investment objective is to maximize risk-adjusted returns on equity for our shareholders. We seek to capitalize on, among other things, what we believe to be nascent cannabis industry growth, and drive return on equity by generating current income from our debt investments and capital appreciation from our equity and equity-related investments. We intend to achieve our investment objective by investing primarily in secured debt, unsecured debt, equity warrants and direct equity investments in privately held businesses. We intend that our debt investments will often be secured by either a first or second priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and will generally have a term of between three and six years from the original investment date. To date, we have been focused on investing in first lien secured, fixed and floating rate debt with terms of two to four years. We expect our secured loans to be secured by various types of assets of our borrowers. While the types of collateral securing any given secured loan will depend on the nature of the borrower’s business, common types of collateral we expect to secure our loans include real property and certain personal property, including equipment, inventory, receivables, cash, intellectual property rights and other assets to the extent permitted by applicable laws and the regulations governing our borrowers. Certain attractive assets of our cannabis borrowers, such as cannabis licenses and cannabis inventory, may not be able to be used as collateral or transferred to us. In some of our portfolio investments, we expect to receive nominally priced equity warrants and/or make direct equity investments in connection with a debt investment. In addition, a portion of our portfolio may be comprised of derivatives, including total return swaps.
Generally, the loans we invest in have a complete set of financial maintenance covenants, which are used to proactively address materially adverse changes in a portfolio company’s financial performance. However, we may invest in “covenant-lite” loans. We use the term “covenant-lite” to refer generally to loans that do not have a complete set of financial maintenance covenants. Generally, “covenant-lite” loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition. Accordingly, to the extent we invest in “covenant-lite” loans, we may have fewer rights against a borrower and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with a complete set of financial maintenance covenants.
The loans in which we tend to invest typically pay interest at rates which are determined periodically on the basis of U.S. Prime Rate (“PRIME”) or Secured Overnight Financing Rate (“SOFR”) plus a premium. The loans in which we have invested and expect to invest are typically made to U.S. and, to a limited extent, non-U.S. (including emerging market) corporations, partnerships and other business entities which operate in various industries and geographical regions. These loans typically are not rated or are rated below investment grade. Securities rated below investment grade are often referred to as “high-yield” or “junk” securities, and may be considered a higher risk than debt instruments that are rated above investment grade.
34
Table of Contents
We have typically invested in and expect to continue to invest in loans made primarily to private leveraged lower middle-market and middle-market companies with up to $100 million of earnings before interest, taxes, depreciation and amortization, or “EBITDA.” Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. We expect that our investments will generally range between $2 million and $50 million each, although we expect that this investment size will vary proportionately with the size of our capital base. We have an active pipeline of investments and are currently reviewing approximately $780.3 million of potential investments in varying stages of underwriting.
The following describes the four primary current sub-strategies of our principal investment strategy. We are not required to have a minimum investment in any of these sub-strategies.
Cannabis
All of our cannabis investments are designed to be compliant with all applicable laws and regulations within the jurisdictions in which they are made or to which we are otherwise subject, including U.S. federal laws. We will make equity investments only in companies that are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate, including U.S. federal laws. We may make loans to companies that we determine based on our due diligence are licensed in, and complying with, state-regulated cannabis programs, regardless of their status under U.S. federal law, so long as the investment itself is designed to be compliant with all applicable laws and regulations in the jurisdiction in which the investment is made or to which we are otherwise subject, including U.S. federal law. We are externally managed by Chicago Atlantic BDC Advisers, LLC (the "Adviser") and seek to expand the compliant cannabis investment activities of the Adviser’s leading investment platform in the cannabis industry. We primarily seek to partner with private equity firms, entrepreneurs, business owners and management teams to provide credit and equity financing alternatives to support buyouts, recapitalizations, growth initiatives, refinancings and acquisitions across cannabis companies, including cannabis-enabling technology companies, cannabis-related health and wellness companies, and hemp and cannabidiol (“CBD”) distribution companies. Under normal circumstances, each such cannabis company derives at least 50% of its revenues or profits from, or commits at least 50% of its assets to, activities related to cannabis at the time of our investment in the cannabis company. We are not required to invest a specific percentage of our assets in such cannabis companies, and we may make debt and equity investments in other companies regardless of sector.
The Adviser seeks to invest in cannabis companies that it believes have some or all of the following characteristics:
Growth & Technology
Our growth and technology sub-strategy is focused on industry leaders and disruptive companies that are experiencing strong growth trajectories and typically need capital to support continued revenue growth or expansion of the business. In most cases, these businesses have found a niche in their respective markets, proven their customer value proposition, and have already reached significant revenue milestones. These businesses include both private equity and venture capital backed businesses, as well as non-sponsor backed companies. In most cases, a significant amount of equity capital has been raised, resulting in low overall loan to enterprise value.
The Adviser seeks to invest in growth and technology focused companies that it believes have some or all of the following characteristics:
35
Table of Contents
Esoteric & Asset-Based Lending
The esoteric and asset-based lending sub-strategy is focused on established companies with strong cash flow profiles in industries that carry idiosyncratic or reputational risks, which limit access to traditional sources of capital. The sub-strategy also includes companies or opportunities that have strong asset collateral coverage, low loan values or other attractive risk-reward features. The lack of access to traditional sources of capital typically enables us to extract lender-friendly terms and covenants from companies with relatively low leverage and overall credit risk.
The Adviser seeks to invest in esoteric industries or companies in need of asset-based loans that it believes have some or all of the following characteristics:
Liquidity Solutions
The liquidity solutions lending sub-strategy is typically focused on event-driven opportunities including, but not limited to, mergers, acquisitions, refinancings, dividend recaps or other strategically driven liquidity needs to established businesses. These businesses also tend to be in complex industries, have time-sensitive aspects to financing, or require idiosyncratic structuring expertise that enables us to extract relatively lender friendly terms and covenants.
The Adviser seeks to invest in liquidity solutions opportunities that it believes have some or all of the following characteristics:
None of our investment policies are fundamental, and thus may be changed without stockholder approval.
We are externally managed by the Adviser. The Adviser also provides the administrative services necessary for us to operate. We believe that our ability to leverage the existing investment management platform of Chicago Atlantic enables us to operate more efficiently and with lower overhead costs than other funds of comparable size.
Revenues
We generate revenues primarily in the form of interest income from the investments we hold. In addition, we may generate income from dividends on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. Our debt investments typically have a term of two to six years. Our loan portfolio will bear interest at a fixed or floating rate, subject to interest rate floors in certain cases. Interest on our debt investments will generally be payable either monthly or quarterly, but may be semi-annually.
Our investment portfolio consists of fixed and floating rate loans, and our revolving credit facility also bears interest at a floating rate, when drawn. Macro trends in base interest rates like PRIME or SOFR may affect our net investment income (loss) over the long term.
36
Table of Contents
We accrete premiums or amortize discounts into interest income using the effective yield method for term instruments. Repayments of our debt investments will reduce interest income in future periods. The frequency or volume of these repayments may fluctuate significantly. We will record prepayment premiums on loans as interest income. We may also generate revenue in the form of commitment, structuring, or due diligence fees, fees for providing managerial assistance to our portfolio companies, and consulting fees.
Dividend income on equity investments, if applicable, will be recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded companies.
Our portfolio activity may also reflect the proceeds from sales of investments. We will recognize realized gains or losses on sales of investments based on the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized. We will record current-period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized gains (losses) on investments on the Statements of Operations.
Expenses
Our primary operating expenses are a base management fee and any incentive fees under the investment advisory agreement between the Company and the Adviser (the "Investment Advisory Agreement"). Our investment management fee compensates our Adviser for its work in identifying, evaluating, negotiating, executing, monitoring, servicing and realizing our investments. See “Item 1. Business—Investment Advisory Agreement.”
Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory and management services to us, the base compensation, bonus and benefits, and the routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser. We may bear our allocable portion of the compensation paid by the Adviser (or its affiliates) to our Chief Financial Officer ("CFO") and Chief Compliance Officer ("CCO") and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs). We may bear any other expenses of our operations and transactions, including (without limitation) fees and expenses relating to:
37
Table of Contents
We expect, but cannot assure, that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will decline as a percentage of total assets during such periods.
Hedging
To the extent that any of our investments are denominated in a currency other than U.S. dollars, we may enter into currency hedging contracts to reduce our exposure to fluctuations in currency exchange rates. We may also enter into interest rate hedging agreements. Such hedging activities, which will be subject to compliance with applicable legal requirements, may include the use of futures, options, swaps and forward contracts. Costs incurred in entering into such contracts or in connection with settling them will be borne by us.
Portfolio Composition and Investment Activity
Portfolio Composition
As of June 30, 2025, our investment portfolio had an aggregate fair value of approximately $307.5 million and was comprised of approximately $267.6 million in first lien, senior secured loans, approximately $38.9 million in senior secured notes and approximately $1.0 million in equity securities across thirty-three portfolio companies. As of December 31, 2024, our investment portfolio had an aggregate fair value of approximately $275.2 million and was comprised of approximately $239.9 million in first lien, senior secured loans, approximately $34.7 million in senior secured notes and $0.7 million in equity securities across twenty-eight portfolio companies.
38
Table of Contents
A summary of the composition of our investment portfolio at amortized cost and fair value as a percentage of total investments as of June 30, 2025 and December 31, 2024 are shown in the following tables.
|
|
As of June 30, 2025 |
|
|||||
Investment Type |
|
Amortized Cost |
|
|
Fair Value |
|
||
First Lien Senior Secured Loans |
|
|
87.0 |
% |
|
|
87.0 |
% |
Senior Secured Notes |
|
|
12.6 |
% |
|
|
12.6 |
% |
Preferred Stock |
|
|
0.2 |
% |
|
|
0.2 |
% |
Warrants |
|
|
0.2 |
% |
|
|
0.2 |
% |
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
As of December 31, 2024 |
|
|||||
Investment Type |
|
Amortized Cost |
|
|
Fair Value |
|
||
First Lien Senior Secured Loans |
|
|
87.1 |
% |
|
|
87.1 |
% |
Senior Secured Notes |
|
|
12.6 |
% |
|
|
12.6 |
% |
Preferred Stock |
|
|
0.2 |
% |
|
|
0.2 |
% |
Warrants |
|
|
0.1 |
% |
|
|
0.1 |
% |
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
The following tables show the composition of our investment portfolio by geographic region of the United States at amortized cost and fair value as a percentage of total investments as of June 30, 2025 and December 31, 2024. The geographic composition is determined by the location of the headquarters of the portfolio company.
Geographic regions are defined as: West, for the states of WA, OR, ID, MT, WY, CO, AK, HI, UT, NV and CA; Midwest, for the states of ND, SD, NE, KS, MO, IA, MN, WI, MI, IL, IN and OH; Northeast, for the states of PA, NJ, NY, CT, RI, MA, VT, NH and ME; Southeast, for the states of AR, LA, MS, TN, KY, AL, FL, GA, SC, NC, VA, DE, WV and MD; and Southwest, for the states of AZ, NM, TX and OK.
|
|
As of June 30, 2025 |
|
|||||
Geographic Region |
|
Amortized Cost |
|
|
Fair Value |
|
||
United States: |
|
|
|
|
|
|
||
Midwest |
|
|
34.6 |
% |
|
|
34.5 |
% |
West |
|
|
29.4 |
% |
|
|
29.5 |
% |
Northeast |
|
|
18.0 |
% |
|
|
18.1 |
% |
Southeast |
|
|
9.8 |
% |
|
|
9.8 |
% |
Southwest |
|
|
7.2 |
% |
|
|
7.2 |
% |
International: |
|
|
|
|
|
|
||
Canada |
|
|
1.0 |
% |
|
|
1.0 |
% |
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
As of December 31, 2024 |
|
|||||
Geographic Region |
|
Amortized Cost |
|
|
Fair Value |
|
||
United States: |
|
|
|
|
|
|
||
Midwest |
|
|
32.4 |
% |
|
|
32.6 |
% |
West |
|
|
31.6 |
% |
|
|
31.5 |
% |
Northeast |
|
|
19.3 |
% |
|
|
19.3 |
% |
Southwest |
|
|
8.0 |
% |
|
|
8.0 |
% |
Southeast |
|
|
7.6 |
% |
|
|
7.5 |
% |
International: |
|
|
|
|
|
|
||
Canada |
|
|
1.1 |
% |
|
|
1.1 |
% |
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
39
Table of Contents
The tables below present the industry composition of our investment portfolio at amortized cost and fair value as a percentage of total investments as of June 30, 2025 and December 31, 2024.
|
|
As of June 30, 2025 |
|
|||||
Industry(1) |
|
Amortized Cost |
|
|
Fair Value |
|
||
Cannabis |
|
|
78.4 |
% |
|
|
78.5 |
% |
Finance and Insurance |
|
|
9.4 |
% |
|
|
9.4 |
% |
Public Administration |
|
|
3.8 |
% |
|
|
3.8 |
% |
Information |
|
|
3.9 |
% |
|
|
3.9 |
% |
Retail Trade |
|
|
3.6 |
% |
|
|
3.6 |
% |
Real Estate and Rental and Leasing |
|
|
0.9 |
% |
|
|
0.8 |
% |
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
As of December 31, 2024 |
|
|||||
Industry(1) |
|
Amortized Cost |
|
|
Fair Value |
|
||
Cannabis |
|
|
76.6 |
% |
|
|
76.7 |
% |
Finance and Insurance |
|
|
11.3 |
% |
|
|
11.2 |
% |
Information |
|
|
5.4 |
% |
|
|
5.4 |
% |
Public Administration |
|
|
3.7 |
% |
|
|
3.8 |
% |
Retail Trade |
|
|
1.2 |
% |
|
|
1.2 |
% |
Health Care and Social Assistance |
|
|
1.0 |
% |
|
|
1.0 |
% |
Real Estate and Rental and Leasing |
|
|
0.8 |
% |
|
|
0.7 |
% |
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
Concentrations of Credit Risk
Credit risk is the risk of default or non-performance by portfolio companies, equivalent to the investment’s carrying amount. Industry and sector concentrations will vary from period to period based on portfolio activity.
As of June 30, 2025 and December 31, 2024, we had three portfolio companies that represented 39.5% and 45.1% respectively, of our investments, at fair value. As of June 30, 2025 and December 31, 2024, our largest portfolio company represented 16.8% and 18.9%, respectively, of our investments, at fair value.
Investment Activity
The following table provides a summary of the changes in the investment portfolio for the six months ended June 30, 2025 and 2024:
|
For the Six Months Ended |
|
|||||
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||
Beginning Portfolio, at fair value |
$ |
275,241,398 |
|
|
$ |
54,120,000 |
|
Purchases |
|
59,050,605 |
|
|
|
1,575,000 |
|
Accretion of discount and fees (amortization of premium), net |
|
1,216,102 |
|
|
|
349,179 |
|
PIK interest |
|
1,045,967 |
|
|
|
113,137 |
|
Proceeds from sales of investments and principal repayments |
|
(29,940,662 |
) |
|
|
(3,126,000 |
) |
Net realized gain (loss) on investments |
|
- |
|
|
|
- |
|
Net change in unrealized appreciation (depreciation) on investments |
|
885,594 |
|
|
|
366,848 |
|
Ending Portfolio, at fair value |
$ |
307,499,004 |
|
|
$ |
53,398,164 |
|
40
Table of Contents
Portfolio Asset Quality
Our portfolio management team uses an ongoing investment risk rating system to characterize and monitor our outstanding loans. Our portfolio management team monitors and, when appropriate, recommends changes to the investment risk ratings. Our Adviser’s valuation committee reviews the recommendations and/or changes to the investment risk ratings, which are submitted on a quarterly basis to the Company's Board of Directors (the "Board") and the Audit Committee of the Board.
Investment |
|
Summary Description |
Grade 1 |
|
Investments rated 1 involve the least amount of risk to our initial cost basis. The borrower is performing above expectations, and the trends and risk factors for this investment since origination or acquisition are generally favorable. Full return of principal, interest and dividend income is expected. |
Grade 2 |
|
Investment is performing in-line with expectations. Investments rated 2 involve an acceptable level of risk that is similar to the risk at the time of origination or acquisition. Risk factors remain neutral or favorable compared with initial underwriting. All investments or acquired investments in new portfolio companies are initially assessed a rating of 2. |
Grade 3 |
|
Investments rated 3 involve a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination or acquisition. Capital impairment or payment delinquency is not anticipated. The investment may also be out of compliance with certain financial covenants. |
Grade 4 |
|
Investments rated 4 involve a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination or acquisition. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due). Delinquency of interest and / or dividend payments in anticipated. No loss of principal is anticipated. |
Grade 5 |
|
Investments rated 5 involve a borrower performing substantially below expectations and indicates that the loan’s risk has increased substantially since origination or acquisition. It is anticipated that the Company will not recoup its initial cost and may realize a loss upon exit. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 5 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered. |
The following tables show the distribution of our loan investments on the 1 to 5 investment risk rating scale at fair value as of June 30, 2025 and December 31, 2024:
|
|
As of June 30, 2025 |
|
|||||
Investment Performance Risk Rating |
|
Investments |
|
|
Percentage |
|
||
1 |
|
$ |
- |
|
|
|
0.0 |
% |
2 |
|
|
307,499,004 |
|
|
|
100.0 |
% |
3 |
|
|
- |
|
|
|
0.0 |
% |
4 |
|
|
- |
|
|
|
0.0 |
% |
5 |
|
|
- |
|
|
|
0.0 |
% |
Total |
|
$ |
307,499,004 |
|
|
|
100.0 |
% |
|
|
As of December 31, 2024 |
|
|||||
Investment Performance Risk Rating |
|
Investments |
|
|
Percentage |
|
||
1 |
|
$ |
- |
|
|
|
0.0 |
% |
2 |
|
|
275,241,398 |
|
|
|
100.0 |
% |
3 |
|
|
- |
|
|
|
0.0 |
% |
4 |
|
|
- |
|
|
|
0.0 |
% |
5 |
|
|
- |
|
|
|
0.0 |
% |
Total |
|
$ |
275,241,398 |
|
|
|
100.0 |
% |
41
Table of Contents
Debt Investments on Non-Accrual Status
As of June 30, 2025 and December 31, 2024, there were no loans in our portfolio placed on non-accrual status.
Debt
Revolving Line of Credit
On February 11, 2025, the Company entered into a senior secured revolving credit agreement (the “Credit Agreement”, the "Revolving Line of Credit") by and among the Company, as borrower, Western Alliance Trust Company, N.A. (“WATC”), as administrative agent, Western Alliance Bank, as an issuing bank and as the initial lender, and the other lenders party thereto from time to time.
Under the Credit Agreement, the lenders have agreed to extend credit to the Company on a revolving basis in an initial aggregate amount of up to $100,000,000 with an option for the Company to request additional commitments, in a minimum amount of $5,000,000, at one or more times from existing and/or new lenders. The Credit Agreement also provides for the issuance of letters of credit in an aggregate face amount of up to $5,000,000.
Availability under the Credit Agreement (the “Revolving Period”) will terminate on February 11, 2027, and the Credit Agreement has a scheduled maturity date of March 31, 2028.
As of June 30, 2025, the Company had $5,000,000 outstanding borrowings and $95,000,000 available under the Revolving Line of Credit. Additionally, as of June 30, 2025, $233.9 million of loans held for investment, at principal, were pledged as collateral in the borrowing base of the Revolving Loan.
Results of Operations
The following discussion and analysis of our results of operations encompasses our results for the three and six months ended June 30, 2025 and 2024.
Investment Income
The following table sets forth the components of investment income for the three and six months ended June 30, 2025 and 2024:
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Stated interest income |
|
$ |
10,616,576 |
|
|
$ |
2,522,397 |
|
|
$ |
20,799,750 |
|
|
$ |
5,054,514 |
|
Accretion of discount and fees (amortization of premium), net |
|
|
693,195 |
|
|
|
207,750 |
|
|
|
1,216,102 |
|
|
|
349,179 |
|
PIK |
|
|
596,295 |
|
|
|
60,186 |
|
|
|
1,169,670 |
|
|
|
113,137 |
|
Total interest income |
|
|
11,906,066 |
|
|
|
2,790,333 |
|
|
|
23,185,522 |
|
|
|
5,516,830 |
|
Fee income |
|
|
1,173,972 |
|
|
|
291,000 |
|
|
|
1,817,518 |
|
|
|
324,750 |
|
Total investment income |
|
$ |
13,080,038 |
|
|
$ |
3,081,333 |
|
|
$ |
25,003,040 |
|
|
$ |
5,841,580 |
|
We generate revenues primarily in the form of investment income from the investments we hold, generally in the form of interest income from our debt securities. We also generate revenues in the form of investment income from the cash we hold, generally in the form of interest income from our investment in a money market fund. Stated interest income represents interest income recognized as earned in accordance with the contractual terms of the loan agreement. Stated interest income from original issue discount (“OID”) and market discount represent the accretion into interest income over the term of the loan as a yield enhancement. Interest income from payment-in-kind (“PIK”) represents contractually deferred interest added to the loan balance recorded on an accrual basis to the extent such amounts are expected to be collected.
The Company also recognizes certain fees as one-time fee income, including, but not limited to, structuring fees.
42
Table of Contents
For the three and six months ended June 30, 2025, total investment income was approximately $13.1 million and $25.0 million, respectively, which was attributable to $1.2 million and $1.8 million of fee income related to commitment fees, success fees, amendment fees and administrative fees and approximately $11.9 million and $23.2 million of interest income, respectively. For the three and six months ended June 30, 2024, total investment income was approximately $3.1 million and $5.8 million, respectively, which was attributable to approximately $0.3 million and $0.3 million of fee income related to commitment fees, advisory fees, and administrative fees and approximately $2.8 million and $5.5 million of interest income, respectively.
Operating Expenses
Our operating expenses for the six months ended June 30, 2025 and 2024 are presented below:
|
|
For the Six Months Ended |
|
|
|
|
|
|
||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
$ Change |
|
|
% Change |
|||
Income-based incentive fees |
|
$ |
3,884,914 |
|
|
$ |
328,503 |
|
|
$ |
3,556,411 |
|
|
1082.6% |
Management fee |
|
|
2,606,206 |
|
|
|
492,455 |
|
|
|
2,113,751 |
|
|
429.2% |
General and administrative expense |
|
|
2,341,260 |
|
|
|
- |
|
|
|
2,341,260 |
|
|
100.0% |
Legal expenses |
|
|
564,065 |
|
|
|
139,873 |
|
|
|
424,192 |
|
|
303.3% |
Professional fees |
|
|
491,586 |
|
|
|
120,136 |
|
|
|
371,450 |
|
|
309.2% |
Interest expense |
|
|
446,641 |
|
|
|
- |
|
|
|
446,641 |
|
|
100.0% |
Audit expense |
|
|
343,752 |
|
|
|
203,550 |
|
|
|
140,202 |
|
|
68.9% |
Other expenses |
|
|
314,139 |
|
|
|
199,158 |
|
|
|
114,981 |
|
|
57.7% |
Sub-administrator fees |
|
|
286,590 |
|
|
|
199,643 |
|
|
|
86,947 |
|
|
43.6% |
Capital gains incentive fees |
|
|
177,119 |
|
|
|
73,369 |
|
|
|
103,750 |
|
|
141.4% |
Transaction expenses related to the Loan Portfolio Acquisition |
|
|
- |
|
|
|
2,639,069 |
|
|
|
(2,639,069 |
) |
|
-100.0% |
Total operating expenses |
|
|
11,456,272 |
|
|
|
4,395,756 |
|
|
|
7,060,516 |
|
|
160.6% |
Waiver of General and administrative expense (Note 6) |
|
|
(658,477 |
) |
|
|
- |
|
|
|
(658,477 |
) |
|
-100.0% |
Expense limitation agreement (Note 6) |
|
|
(1,107,783 |
) |
|
|
- |
|
|
|
(1,107,783 |
) |
|
-100.0% |
Net operating expenses |
|
$ |
9,690,012 |
|
|
$ |
4,395,756 |
|
|
$ |
5,294,256 |
|
|
120.4% |
Net Investment Income
Net investment income was approximately $7.7 million and $15.3 million for the three and six months ended June 30, 2025, respectively, as compared to approximately $1.5 million and $1.4 million for the three and six months ended June 30, 2024, respectively. The fluctuation in net investment income is attributable to the increase in complexity, portfolio size and growth of the Company following the close of the previously announced acquisition of a portfolio of loans (the “Loan Portfolio”) from Chicago Atlantic Loan Portfolio, LLC (“CALP”) in exchange for newly issued shares of the Company’s common stock (the “Loan Portfolio Acquisition”). The amortized cost of the Company’s investment portfolio increased by $253.3 million from June 30, 2024 to June 30, 2025.
Net Realized Gains and Losses
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the amortized cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period. There were no net realized gains or losses from investments during the three and six months ended June 30, 2025 and 2024.
Net Change in Unrealized Appreciation (Depreciation) from Investments
Net change in unrealized appreciation (depreciation) from investments primarily reflects the net change in the fair value as of the last business day of the reporting period, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period. We record current-period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments on the Statements of Operations.
Net change in unrealized appreciation (depreciation) from investments for the three and six months ended June 30, 2025 and 2024 is comprised of the following:
43
Table of Contents
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Gross unrealized appreciation |
|
$ |
1,428,075 |
|
|
$ |
190,134 |
|
|
$ |
1,553,712 |
|
|
$ |
389,573 |
|
Gross unrealized depreciation |
|
|
(508,417 |
) |
|
|
(422,906 |
) |
|
|
(668,118 |
) |
|
|
(22,725 |
) |
Total net change in unrealized appreciation (depreciation) from investments |
|
$ |
919,658 |
|
|
$ |
(232,772 |
) |
|
$ |
885,594 |
|
|
$ |
366,848 |
|
44
Table of Contents
The following table details net change in unrealized appreciation (depreciation) for our portfolio for the three and six months ended June 30, 2025 and 2024:
|
|
For the Three Months Ended |
|
|
For the Six Months Ended |
|
||||||||||
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
|
June 30, 2025 |
|
|
June 30, 2024 |
|
||||
Aeriz Holdings Corp |
|
$ |
121,039 |
|
|
$ |
- |
|
|
$ |
53,418 |
|
|
$ |
- |
|
Archos Capital Group, LLC |
|
|
255 |
|
|
|
- |
|
|
|
255 |
|
|
|
- |
|
Ascend Wellness |
|
|
58,604 |
|
|
|
- |
|
|
|
84,425 |
|
|
|
- |
|
Aura Home, Inc |
|
|
(63,591 |
) |
|
|
- |
|
|
|
22,707 |
|
|
|
- |
|
Cannabis & Glass (Kapple Holdings LLC) |
|
|
18,489 |
|
|
|
- |
|
|
|
18,440 |
|
|
|
- |
|
Curaleaf Holdings, Inc. |
|
|
207,714 |
|
|
|
(36,964 |
) |
|
|
211,587 |
|
|
|
(5,519 |
) |
Deep Roots Harvest, Inc. |
|
|
797,813 |
|
|
|
- |
|
|
|
822,813 |
|
|
|
- |
|
Dreamfields Brands, Inc. (d/b/a Jeeter) |
|
|
(20,800 |
) |
|
|
(8,730 |
) |
|
|
(36,720 |
) |
|
|
(17,206 |
) |
Elevation Cannabis, LLC |
|
|
2,663 |
|
|
|
- |
|
|
|
(112,185 |
) |
|
|
- |
|
Flowery - Bill's Nursery, Inc. |
|
|
(17,934 |
) |
|
|
- |
|
|
|
(33,580 |
) |
|
|
- |
|
Fluent Corp. (f/k/a Consortium) |
|
|
(11,661 |
) |
|
|
- |
|
|
|
1,449 |
|
|
|
- |
|
HA-MD, LLC |
|
|
(831 |
) |
|
|
- |
|
|
|
(1,453 |
) |
|
|
- |
|
Hartford Gold Group, LLC: (Maturity: 1/6/2027) |
|
|
(72,170 |
) |
|
|
- |
|
|
|
(30,004 |
) |
|
|
- |
|
Hartford Gold Group, LLC: (Maturity: 12/17/2025) |
|
|
- |
|
|
|
- |
|
|
|
(12,063 |
) |
|
|
- |
|
Kaleafa, Inc. |
|
|
(431 |
) |
|
|
- |
|
|
|
28,319 |
|
|
|
- |
|
Minden Holdings, LLC |
|
|
(1,896 |
) |
|
|
- |
|
|
|
(2,450 |
) |
|
|
- |
|
Nova Farms, LLC |
|
|
(83,199 |
) |
|
|
- |
|
|
|
(107,432 |
) |
|
|
- |
|
Oasis - AZ GOAT AZ LLC |
|
|
(16,565 |
) |
|
|
- |
|
|
|
(28,177 |
) |
|
|
- |
|
PharmaCann, Inc. |
|
|
- |
|
|
|
21,134 |
|
|
|
- |
|
|
|
41,282 |
|
Proper Holdings, LLC |
|
|
(694 |
) |
|
|
- |
|
|
|
(1,543 |
) |
|
|
- |
|
Protect Animals With Satellites LLC (Halo Collar): Term Loan |
|
|
34,273 |
|
|
|
- |
|
|
|
37,982 |
|
|
|
- |
|
Protect Animals With Satellites LLC (Halo Collar): Incremental Term Loan |
|
|
18,067 |
|
|
|
- |
|
|
|
21,232 |
|
|
|
- |
|
Remedy - Maryland Wellness, LLC |
|
|
(12,172 |
) |
|
|
- |
|
|
|
(6,104 |
) |
|
|
- |
|
RTCP, LLC |
|
|
3,790 |
|
|
|
- |
|
|
|
2,417 |
|
|
|
- |
|
Silver Therapeutics, Inc. |
|
|
(87,300 |
) |
|
|
- |
|
|
|
(87,300 |
) |
|
|
- |
|
Simspace Corporation |
|
|
51,430 |
|
|
|
- |
|
|
|
72,959 |
|
|
|
- |
|
STIIIZY, Inc. (f/k/a Shryne Group Inc.) |
|
|
26,093 |
|
|
|
(251,788 |
) |
|
|
(10,994 |
) |
|
|
131,680 |
|
Subsero Holdings - Illinois, Inc |
|
|
14,675 |
|
|
|
- |
|
|
|
48,401 |
|
|
|
- |
|
Sunny Days Enterprises, LLC |
|
|
- |
|
|
|
- |
|
|
|
(43,094 |
) |
|
|
- |
|
TheraTrue, Inc. |
|
|
(14,928 |
) |
|
|
- |
|
|
|
(14,928 |
) |
|
|
- |
|
Tulip.io Inc. |
|
|
17,788 |
|
|
|
- |
|
|
|
30,144 |
|
|
|
- |
|
Verano Holdings Corp. |
|
|
7,357 |
|
|
|
(125,424 |
) |
|
|
5,316 |
|
|
|
47,611 |
|
West Creek Financial Holdings, Inc. dba Koalafi |
|
|
23,407 |
|
|
|
- |
|
|
|
72,076 |
|
|
|
- |
|
Workbox Holdings Inc. |
|
|
24,618 |
|
|
|
169,000 |
|
|
|
(16,376 |
) |
|
|
169,000 |
|
Workbox Holdings Inc.: A-3 Warrants |
|
|
(24,000 |
) |
|
|
- |
|
|
|
(40,000 |
) |
|
|
- |
|
Workbox Holdings Inc.:A-4 Warrants |
|
|
(62,715 |
) |
|
|
- |
|
|
|
(83,715 |
) |
|
|
- |
|
Youth Opportunity Investments, LLC |
|
|
(17,530 |
) |
|
|
- |
|
|
|
19,772 |
|
|
|
- |
|
Total net change in unrealized appreciation (depreciation) from investments |
|
$ |
919,658 |
|
|
$ |
(232,772 |
) |
|
$ |
885,594 |
|
|
$ |
366,848 |
|
Financial Condition, Liquidity and Capital Resources
We generate cash primarily from the net proceeds of offerings of securities and cash flows from operations, including interest earned from the temporary investment of cash in U.S. government securities.
In addition, we have entered into a revolving credit facility. The amount of leverage that we employ will depend on our assessment of market conditions and other factors at the time of any proposed borrowing, such as the maturity, covenant package and rate structure of
45
Table of Contents
the proposed borrowings, our ability to raise funds through the issuance of shares of our common stock and the risks of such borrowings within the context of our investment outlook. Ultimately, we only intend to use leverage if the expected returns from borrowing to make investments will exceed the cost of such borrowing.
Our primary use of funds will be investments in portfolio companies, dividend payments to holders of our common stock who opt out of the Company’s dividend reinvestment plan (the “DRIP”), and the payment of operating expenses. As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of approximately $13.8 million and $23.9 million, respectively, and no indebtedness.
To maintain its tax treatment as a RIC, the Company must meet specified source-of-income requirements and timely distribute to its stockholders for each taxable year at least 90% of its investment company taxable income. Additionally, in order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years.
Dividends may also be distributed in accordance with the DRIP, which provides for the reinvestment of distributions in the form of common stock on behalf of its stockholders, unless a stockholder has elected to receive distributions in cash. As a result, if the Company declares a cash distribution, its stockholders who have not “opted out” of the DRIP by the opt out date will have their cash distribution automatically reinvested into additional shares of the Company’s common stock. The share requirements of the DRIP may be satisfied through the issuance of common shares or through open market purchases of common shares by the DRIP plan administrator.
U.S. Federal Income Taxes
We elected to be treated, and intend to qualify annually to be treated, as a RIC under Subchapter M of the Code for federal income tax purposes. As a RIC, we generally will not have to pay corporate-level federal income taxes on any ordinary income or capital gains that we distribute to our stockholders from our tax earnings and profits. To obtain and maintain our RIC tax treatment, we must, among other things, meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any.
Critical Accounting Estimates
Basis of Presentation
The Company’s financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”). The Company follows accounting and reporting guidance as determined by the Financial Accounting Standards Board (“FASB”) Topic 946 Financial Services – Investment Companies.
The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions affecting amounts reported in our financial statements. We will continuously evaluate our estimates, including those related to the matters described below. These estimates will be based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions or conditions. For additional information, please refer to “Note 2 – Significant Accounting Policies” in the notes to the financial statements included with this quarterly report on Form 10-Q. Valuation of investments is considered to be our critical accounting policy and estimates. A discussion of our critical accounting estimates follows.
Investment Valuation
Investments for which market quotations are readily available will typically be valued at the bid price of those market quotations. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith by the Adviser, as the Company’s valuation designee (the “Valuation Designee”), based on inputs that may include valuations, or ranges of valuations, provided by independent third-party valuation firm(s) engaged by the Adviser. Pursuant to Rule 2a-5 under the 1940 Act, the Board designated the Adviser as the Valuation Designee to perform the fair value determinations for the Company, subject to the oversight of the Board and certain Board reporting and other requirements.
As part of the valuation process, the Adviser takes into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow,
46
Table of Contents
the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Adviser considers whether the pricing indicated by the external event corroborates its valuation.
The Adviser undertakes a multi-step valuation process, which includes, among other procedures, the following:
We conduct this valuation process on a quarterly basis.
We apply Accounting Standards Codification ("ASC") 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, we consider the principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:
All of our investments as of June 30, 2025 and December 31, 2024 were categorized at Level 3, and therefore, 100% of our portfolio requires significant estimates. Our investments may not have readily available market quotations (as such term is defined in Rule 2a-5 under the 1940 Act), and those investments which do not have readily available market quotations are valued at fair value as determined in good faith in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Significant unobservable inputs create uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s investments may vary and may include the debt investments’ yield and volatility fluctuations. Significant increases (decreases) in discount rate in isolation would result in a significantly lower (higher) fair value assessment. Significant increases (decreases) in volatility in isolation would result in a significantly lower (higher) fair value assessment.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected previously.
47
Table of Contents
Assumptions, or unobservable inputs, fluctuate based on both market and company specific factors. Please refer to “Note 4 – Fair Value of Financial Instruments” in the notes to the financial statements included with this quarterly report on Form 10-Q for specific unobservable inputs.
Other Contractual Obligations
We have certain commitments pursuant to our Investment Advisory Agreement. We have agreed to pay a fee for investment advisory services consisting of two components: a base management fee and an incentive fee. Payments under the Investment Advisory Agreement will be equal to (1) a percentage of the value of our average gross assets and (2) a two-part incentive fee. See “Item 1. Business—Investment Advisory Agreement.” We have also entered into a contract with the Adviser to serve as our administrator. Payments under the administration agreement between the Company and the Adviser (the "Administration Agreement") will be reimbursements to the Adviser for the costs and expenses incurred by the Adviser in performing its obligations, including but not limited to maintaining and keeping all books and records and providing personnel and facilities. This includes costs and expenses incurred by the Adviser in connection with the delegation of its obligations to a sub-administrator. The Company is not responsible for the compensation of the Adviser’s employees and overhead expenses. See “Item 1. Business—Administration Agreement.”
Common Stock
Our common stock began trading on the Nasdaq Global Market on February 4, 2022 in connection with our initial public offering of shares of our common stock. Since October 2, 2024, our common stock trades on the Nasdaq Global Market under the symbol “LIEN.”
The following table lists the net asset value per share of our common stock, the range of high and low closing sales prices of our common stock reported on the Nasdaq Global Market, the closing sale prices as a premium (or discount) to our net asset value per share and dividends per share for each fiscal quarter since our common stock began trading on the Nasdaq Global Market. On August 13, 2025, the last reported closing sales price of our common stock on the Nasdaq Global Market was $10.41 per share, which represented a discount of approximately 21.32% to our net asset value per share of $13.23 as of June 30, 2025.
|
|
|
|
|
Price Range |
|
|
High Sales |
|
|
Low Sales |
|
|
Cash |
|
|||||||||
Class and Period |
|
Net Asset |
|
|
High |
|
|
Low |
|
|
Net Asset |
|
|
Net Asset |
|
|
Dividend |
|
||||||
Year Ended December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Third Quarter (Through August 13, 2025) |
|
* |
|
|
$ |
10.86 |
|
|
$ |
10.12 |
|
|
* |
|
|
* |
|
|
* |
|
||||
Second Quarter |
|
$ |
13.23 |
|
|
$ |
11.11 |
|
|
$ |
9.71 |
|
|
|
-16.0 |
% |
|
|
-26.6 |
% |
|
$ |
0.34 |
|
First Quarter |
|
$ |
13.19 |
|
|
$ |
12.56 |
|
|
$ |
10.92 |
|
|
|
-4.8 |
% |
|
|
-17.2 |
% |
|
$ |
0.34 |
|
Year Ended December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fourth Quarter |
|
$ |
13.20 |
|
|
$ |
13.24 |
|
|
$ |
10.74 |
|
|
|
0.3 |
% |
|
|
-18.7 |
% |
|
$ |
0.34 |
|
Third Quarter |
|
$ |
13.28 |
|
|
$ |
12.00 |
|
|
$ |
10.64 |
|
|
|
-9.6 |
% |
|
|
-19.9 |
% |
|
$ |
0.25 |
|
Second Quarter |
|
$ |
13.56 |
|
|
$ |
12.38 |
|
|
$ |
9.61 |
|
|
|
-8.7 |
% |
|
|
-29.1 |
% |
|
$ |
0.25 |
|
First Quarter |
|
$ |
13.60 |
|
|
$ |
10.28 |
|
|
$ |
7.65 |
|
|
|
-24.4 |
% |
|
|
-43.8 |
% |
|
$ |
0.25 |
|
Year Ended December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fourth Quarter |
|
$ |
13.77 |
|
|
$ |
9.81 |
|
|
$ |
8.32 |
|
|
|
-28.8 |
% |
|
|
-39.6 |
% |
|
0.70(6) |
|
|
Third Quarter |
|
$ |
14.06 |
|
|
$ |
10.37 |
|
|
$ |
7.65 |
|
|
|
-26.3 |
% |
|
|
-45.6 |
% |
|
0.63(6) |
|
|
Second Quarter |
|
$ |
14.49 |
|
|
$ |
9.19 |
|
|
$ |
7.82 |
|
|
|
-36.3 |
% |
|
|
-45.8 |
% |
|
|
|
|
First Quarter |
|
$ |
14.29 |
|
|
$ |
9.98 |
|
|
$ |
8.25 |
|
|
|
-30.2 |
% |
|
|
-42.3 |
% |
|
|
|
|
Year Ended December 31, 2022(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Fourth Quarter |
|
$ |
13.91 |
|
|
$ |
10.55 |
|
|
$ |
9.57 |
|
|
|
-24.2 |
% |
|
|
-31.2 |
% |
|
|
- |
|
Third Quarter |
|
$ |
13.73 |
|
|
$ |
10.74 |
|
|
$ |
9.00 |
|
|
|
-21.8 |
% |
|
|
-34.5 |
% |
|
|
- |
|
Second Quarter |
|
$ |
13.64 |
|
|
$ |
13.50 |
|
|
$ |
7.80 |
|
|
|
-1.0 |
% |
|
|
-42.8 |
% |
|
|
- |
|
First Quarter(5) |
|
$ |
13.61 |
|
|
$ |
14.41 |
|
|
$ |
12.57 |
|
|
|
5.9 |
% |
|
|
-7.6 |
% |
|
|
- |
|
48
Table of Contents
* Not determined at time of filing.
Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. At times, our shares of common stock have traded at prices both above and below our net asset value per share. The possibility that our shares of common stock will trade at a discount from net asset value per share or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value per share will decrease. It is not possible to predict whether our common stock will trade at, above, or below net asset value per share.
Holders
As of August 12, 2025, there were approximately 285 holders of record of our common stock, which does not include stockholders for whom shares are held in “nominee” or “street name.”
Distributions
We intend to pay quarterly distributions to our stockholders out of assets legally available for distribution. All distributions will be paid at the discretion of our Board and will depend on our earnings, financial condition, maintenance of our tax treatment as a RIC, compliance with applicable BDC regulations and such other factors as our Board may deem relevant from time to time.
We have elected to be treated, and intend to qualify annually to be treated, as a RIC under Subchapter M of the Code, for U.S. federal income tax purposes, commencing with our taxable year ended March 31, 2022. As long as we qualify as a RIC, we will not be taxed on our investment company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to stockholders on a timely basis.
To obtain and maintain RIC tax treatment, we must distribute (or be deemed to distribute) at least 90% of the sum of our: investment company taxable income (which is generally our ordinary income plus the excess of realized short-term capital gains over realized net long-term capital losses), determined without regard to the deduction for dividends paid, for such taxable year; and net tax-exempt interest income (which is the excess of our gross tax-exempt interest income over certain disallowed deductions) for such taxable year.
As a RIC, we (but not our stockholders) generally will not be subject to U.S. federal tax on investment company taxable income and net capital gains that we distribute to our stockholders. The discussion below assumes that we will qualify to be treated as a RIC for U.S. federal tax purposes each year.
We intend to distribute annually all or substantially all of such income. To the extent that we retain our net capital gains or any investment company taxable income, we generally will be subject to corporate-level U.S. federal income tax. We can be expected to carry forward our net capital gains or any investment company taxable income in excess of current-year dividend distributions, and pay the U.S. federal excise tax as described below.
Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current-year distributions into the next tax year. We will be subject to a 4% excise tax on a certain portion of these undistributed amounts. Please refer to “Item 1. Business — Material U.S. Federal Income Tax Considerations” for further information regarding the consequences of our retention of net capital gains. We may, in the future, make actual distributions to our stockholders of our net capital gains. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we may be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings. See “Item 1. Business — Business Development Company Regulations” and “Item 1. Business —Material U.S. Federal Income Tax Considerations.”
While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed and as a result, in such cases, the excise tax will
49
Table of Contents
be imposed. In such an event, we will be liable for this tax only on the amount by which we do not meet the foregoing distribution requirement.
To the extent our current taxable earnings for a year fall below the total amount of our distributions for that year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Thus, the source of a distribution to our stockholders may be the original capital invested by the stockholder rather than our income or gains. Stockholders should read written disclosure carefully and should not assume that the source of any distribution is our ordinary income or gains.
A return of capital is a return of a portion of your original investment in shares of our common stock. As a result, a return of capital will (i) lower your tax basis in your shares and thereby increase the amount of capital gain (or decrease the amount of capital loss) realized upon a subsequent sale or redemption of such shares and (ii) reduce the amount of funds we have for investment in portfolio companies. We have not established any limit on the extent to which we may use offering proceeds to fund distributions. However, our Board, including a majority of our independent directors, will be required to determine that making return of capital distributions from our offering proceeds is in the best interests of our stockholders based upon our then-current financial condition and our expected future growth prospects.
The following table summarizes distributions declared and/or paid by the Company from inception through June 30, 2025:
Declaration Date |
|
Type |
|
Record Date |
|
Payment Date |
|
Per Share |
|
|
Dividends Paid |
|
||
August 10, 2023 |
|
Quarterly |
|
September 15, 2023 |
|
September 29, 2023 |
|
$ |
0.23 |
|
|
$ |
1,429,375 |
|
August 10, 2023 |
|
Special |
|
September 15, 2023 |
|
September 29, 2023 |
|
$ |
0.40 |
|
|
$ |
2,485,869 |
|
November 9, 2023 |
|
Quarterly |
|
December 20, 2023 |
|
December 29, 2023 |
|
$ |
0.25 |
|
|
$ |
1,553,676 |
|
November 9, 2023 |
|
Special |
|
December 20, 2023 |
|
December 29, 2023 |
|
$ |
0.45 |
|
|
$ |
2,796,617 |
|
March 8, 2024 |
|
Quarterly |
|
March 20, 2024 |
|
March 28, 2024 |
|
$ |
0.25 |
|
|
$ |
1,553,736 |
|
May 9, 2024 |
|
Quarterly |
|
June 20, 2024 |
|
June 28, 2024 |
|
$ |
0.25 |
|
|
$ |
1,553,738 |
|
August 8, 2024 |
|
Quarterly |
|
September 19, 2024 |
|
September 27, 2024 |
|
$ |
0.25 |
|
|
$ |
1,553,741 |
|
December 9, 2024 |
|
Quarterly |
|
December 19, 2024 |
|
December 27, 2024 |
|
$ |
0.34 |
|
|
$ |
7,758,925 |
|
March 14, 2025 |
|
Quarterly |
|
March 28, 2025 |
|
April 11, 2025 |
|
$ |
0.34 |
|
|
$ |
7,758,931 |
|
May 12, 2025 |
|
Quarterly |
|
June 27, 2025 |
|
July 11, 2025 |
|
$ |
0.34 |
|
|
$ |
7,758,939 |
|
Dividend Reinvestment Plan
We have adopted an “opt out” DRIP for our stockholders. As a result, if we declare a dividend, then stockholders’ cash distributions will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the DRIP so as to receive cash distributions. Stockholders who receive distributions in the form of shares of our common stock generally are subject to the same U.S. federal income tax consequences as are stockholders who elect to receive their distributions in cash.
During the six months ended June 30, 2025, the Company issued the following shares of common stock under the DRIP:
Declaration Date |
|
Type |
|
Record Date |
|
Payment Date |
|
Shares |
|
|
March 14, 2025 |
|
Quarterly |
|
March 28, 2025 |
|
April 11, 2025 |
|
|
22 |
|
During the six months ended June 30, 2024, the Company issued the following shares of common stock under the DRIP:
Declaration Date |
|
Type |
|
Record Date |
|
Payment Date |
|
Shares |
March 8, 2024 |
|
Quarterly |
|
March 20, 2024 |
|
March 28, 2024 |
|
8 |
May 9, 2024 |
|
Quarterly |
|
June 20, 2024 |
|
June 28, 2024 |
|
15 |
Issuer Purchases of Equity Securities
We did not repurchase any of our equity securities during the six months ended June 30, 2025 or the fiscal year ended December 31, 2024.
50
Table of Contents
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Uncertainty with respect to the economic effects of political tensions in the United States and around the world (including the current conflicts between Russia and Ukraine and in the Middle East) have introduced significant volatility in the financial markets, and the effect of the volatility could materially impact our market risks, including those listed below. We are subject to financial market risks, including valuation risk, interest rate risk and credit risk.
Valuation Risk
Our investments may not have readily available market quotations (as such term is defined in Rule 2a-5 under the 1940 Act), and those investments which do not have readily available market quotations are valued at fair value as determined in good faith in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material.
Interest Rate Risk
Interest rate sensitivity and risk refer to the change in earnings that may result from changes in the level of interest rates. To the extent that we borrow money to make investments, including under our credit facility, our net investment income will be affected by the difference between the rate at which we borrow funds and the rate at which we invest these funds. In periods of rising interest rates, our cost of borrowing funds would increase, which may reduce our net investment income. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.
As of June 30, 2025, 76.2% of our debt investments based on outstanding principal balance represented floating-rate investments based on PRIME or SOFR and approximately 23.8% of our debt investments based on outstanding principal balance represented fixed rate investments. As of December 31, 2024, 79.5% of our debt investments based on outstanding principal balance represented floating-rate investments based on PRIME or SOFR and approximately 20.5% of our debt investments based on outstanding principal balance represented fixed rate investments.
Based on our Statements of Operations for the six months ended June 30, 2025, the following table shows the annualized impact on net income of hypothetical base rate changes in the benchmark rate on our debt investments (considering interest rate floors for floating rate instruments):
Change in |
|
Increase (Decrease) |
|
|
Increase (Decrease) |
|
|
Increase (Decrease) |
|
|||
Up 300 basis points |
|
$ |
6,595 |
|
|
$ |
150 |
|
|
$ |
6,445 |
|
Up 200 basis points |
|
|
4,246 |
|
|
|
100 |
|
|
|
4,146 |
|
Up 100 basis points |
|
|
1,898 |
|
|
|
50 |
|
|
|
1,848 |
|
Down 100 basis points |
|
|
(1,138 |
) |
|
|
(50 |
) |
|
|
(1,088 |
) |
Down 200 basis points |
|
|
(1,796 |
) |
|
|
(66 |
) |
|
|
(1,730 |
) |
Down 300 basis points |
|
|
(2,308 |
) |
|
|
(66 |
) |
|
|
(2,242 |
) |
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q and determined that our disclosure controls and procedures are effective as of the end of the period covered by this quarterly report on Form 10-Q.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
51
Table of Contents
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently subject to any material legal proceedings, nor, to our knowledge, are any material legal proceedings threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under contracts with our portfolio companies. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. Our business is also subject to extensive regulation, which may result in regulatory proceedings against us. While the outcome of any future legal or regulatory proceedings cannot be predicted with certainty, we do not expect that any such future proceedings will have a material effect upon our financial condition or results of operations.
Item 1A. Risk Factors
Except as set forth below, there have been no material changes during the six months ended June 30, 2025 to the risk factors discussed in “Item 1A. Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2024.
Risks Relating to Our Use of Leverage and Credit Facilities
Our existing credit facility and any credit facility we may enter into in the future would likely subject all or significant amounts of our assets to security interests and if we default on our obligations under such a credit facility, we may suffer adverse consequences, including foreclosure on our assets.
In February 2025, we entered into a senior secured revolving credit agreement, under which, the lenders have agreed to extend credit to the Company on a revolving basis in an initial aggregate amount of up to $100,000,000 with an option for the Company to request additional commitments, in a minimum amount of $5,000,000, at one or more times from existing and/or new lenders at their election. The credit facility also provides for the issuance of letters of credit in an aggregate face amount of up to $5,000,000. Availability under the credit agreement will terminate on February 11, 2027, and the credit agreement has a scheduled maturity date of March 31, 2028.
Pursuant to the credit facility, all or significant amounts of our assets are pledged as collateral to secure borrowings thereunder. If we default on our obligations under the facility, the lenders may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claim. In such event, we may be forced to sell our investments to raise funds to repay our outstanding borrowings in order to avoid foreclosure and these forced sales may be at times and at prices we would not consider advantageous. Moreover, such deleveraging of our company could significantly impair our ability to effectively operate our business in the manner in which we intend to operate. As a result, we could be forced to curtail or cease new investment activities and lower or eliminate the dividends that we intend to pay to our stockholders.
In addition, if the lenders exercise their right to sell the assets pledged under the credit facility, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under such facility.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Dividend Reinvestment Plan
On April 11, 2025, pursuant to its DRIP, the Company issued 22 shares of its common stock, at a price of $10.71 per share, to stockholders of record as of March 28, 2025 that did not opt out of the DRIP in order to satisfy the reinvestment portion of the Company’s dividends. This issuance was not subject to the registration requirements of the Securities Act. See “Item 1. Financial Statements – Note 8 – Common Stock – Dividend Reinvestment Plan” for more information.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
52
Table of Contents
Not Applicable.
Item 5. Other Information
During the three months ended June 30, 2025,
53
Table of Contents
Item 6. Exhibits
The following exhibits are filed as part of this quarterly report on Form 10-Q or hereby incorporated by reference to exhibits previously filed with the SEC:
Exhibit Number |
|
Description of Exhibit |
3.1 |
|
Articles of Amendment and Restatement of the Company(1) |
3.2 |
|
Articles of Amendment of the Company(2) |
3.3 |
|
Amended and Restated Bylaws of the Company(3) |
10.1 |
|
WATC Custody Agreement(4) |
10.2 |
|
WAB Custody Agreement(5) |
10.3 |
|
Credit Agreement(6) |
31.1 |
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
31.2 |
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* |
32.1 |
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
32.2 |
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* |
101.INS |
|
Inline XBRL Instance Document (this instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)* |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents* |
104 |
|
Cover page formatted as Inline XBRL and contained in Exhibit 101* |
* Filed herewith.
54
Table of Contents
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 14, 2025.
|
CHICAGO ATLANTIC BDC, INC. |
|
|
|
|
|
By: |
/s/ Peter Sack |
|
|
Peter Sack |
|
|
Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
By: |
/s/ Thomas Geoffroy |
|
|
Thomas Geoffroy |
|
|
Interim Chief Financial Officer (Principal Financial Officer) |
55
FAQ
What were Chicago Atlantic BDC (LIEN)'s total assets and net assets at June 30, 2025?
How did the company's NAV per share change as of June 30, 2025?
What drove the increase in net investment income for the period?
How concentrated is the portfolio by industry?
Did liquidity or leverage change during the period?
