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Chicago Atlantic BDC, Inc.(LIEN) - 2024 Q2 - Quarterly Report
LIENChicago Atlantic BDC, Inc.(LIEN)2024-08-08 21:26

Financial Position - Total assets as of June 30, 2024, were 90,076,727,anincreasefrom90,076,727, an increase from 88,576,271 on December 31, 2023, representing a growth of approximately 1.7%[6] - Cash and cash equivalents increased to 34,003,851from34,003,851 from 32,611,635, reflecting a growth of about 4.2%[6] - Total liabilities rose to 5,818,654from5,818,654 from 3,023,653, indicating a significant increase of approximately 92.5%[6] - Net assets decreased to 84,258,073from84,258,073 from 85,552,618, a decline of about 1.5%[6] - The total net assets as of June 30, 2024, were 84,258,073,adecreasefrom84,258,073, a decrease from 90,044,213 as of June 30, 2023, reflecting a decline of 6.4%[8] - Total net assets as of June 30, 2024, decreased to 84,258,073from84,258,073 from 86,475,729 as of December 31, 2022[9] Investment Income and Expenses - Interest income for the three months ended June 30, 2024, was 2,790,333,comparedto2,790,333, compared to 2,762,449 for the same period in 2023, reflecting a growth of 1.0%[7] - Total investment income for the six months ended June 30, 2024, was 5,841,580,anincreasefrom5,841,580, an increase from 5,351,538 in the prior year, representing a growth of 9.1%[7] - Total expenses for the three months ended June 30, 2024, were 1,555,700,upfrom1,555,700, up from 994,287 in the same period last year, indicating a rise of 56.4%[7] - Net investment income for the three months ended June 30, 2024, was 1,525,633,downfrom1,525,633, down from 1,899,412 in the prior year, a decrease of 19.7%[7] - The company recorded a net investment income of 1,445,824forthesixmonthsendedJune30,2024,downfrom1,445,824 for the six months ended June 30, 2024, down from 3,270,135 for the same period in 2023[9] - The company incurred management fee expenses of 492,455forthesixmonthsendedJune30,2024,comparedto492,455 for the six months ended June 30, 2024, compared to 495,908 for the same period in 2023, reflecting a slight decrease of 0.3%[46] Shareholder Distributions - Distributions to stockholders from investment income-net for the six months ended June 30, 2024, totaled (1,553,738)[8]−Distributionstostockholdersfrominvestmentincome−netamountedto(1,553,738)[8] - Distributions to stockholders from investment income-net amounted to (3,107,474) for the six months ended June 30, 2024[9] - The company declared two quarterly distributions during the six months ended June 30, 2024, with the first on March 8, 2024, and the second on May 9, 2024[49] - The company declared a quarterly dividend of 0.25pershareonMarch8,2024,withapaymentdateofMarch28,2024,andissued8sharesunderthedividendreinvestmentplan(DRIP)duringthisperiod[51]InvestmentStrategyandPortfolio−ThecompanyexpandeditsinvestmentstrategytoincludecompaniesoutsidethecannabisandhealthsectorseffectiveApril22,2024[14]−Thecompany’sinvestmentobjectivefocusesonmaximizingrisk−adjustedreturnsthroughsecuredandunsecureddebtinvestments,aswellasequityinvestmentsinprivateleveragedmiddle−marketcannabiscompanies[14]−Thecompany’sinvestmentportfolioisentirelylocatedintheUnitedStates,asdeterminedbythelocationoftheportfoliocompanies′headquarters[13]−Thecompanyiscurrentlyreviewingapproximately0.25 per share on March 8, 2024, with a payment date of March 28, 2024, and issued 8 shares under the dividend reinvestment plan (DRIP) during this period[51] Investment Strategy and Portfolio - The company expanded its investment strategy to include companies outside the cannabis and health sectors effective April 22, 2024[14] - The company’s investment objective focuses on maximizing risk-adjusted returns through secured and unsecured debt investments, as well as equity investments in private leveraged middle-market cannabis companies[14] - The company’s investment portfolio is entirely located in the United States, as determined by the location of the portfolio companies' headquarters[13] - The company is currently reviewing approximately 560 million of potential investments in various stages of underwriting[75] - The company primarily seeks to invest in private leveraged middle-market companies with up to $100 million in EBITDA[75] Risk Management - The company reported a concentration risk due to its focus on investments in cannabis companies, which may lead to greater price volatility[38] - The company utilizes various risk management strategies to mitigate market risk, credit risk, and liquidity risk associated with its investments[38] - The company is exposed to prepayment risk, which may affect its yield if loans are prepaid due to favorable market conditions[38] Valuation and Fair Value - The fair value of investments is determined using various methodologies, including the discounted cash flow (DCF) method and market approach[17] - The company’s valuation process for investments includes a multi-step approach, with preliminary valuations documented and discussed by the Adviser's valuation committee[94] - As of June 30, 2024, 100% of the company's portfolio investments are categorized at Level 3, requiring significant estimates for fair value assessment[95] - The fair value of investments may fluctuate significantly due to the lack of readily available market values, impacting the overall valuation process[18] Market Conditions and Future Outlook - The company anticipates future operating results and distribution projections to be influenced by market conditions and regulatory changes in the cannabis industry[4] - The company is evaluating the potential effects of interest and inflation rates on its business prospects and those of its portfolio companies[4] - The company anticipates potential impacts from political tensions and economic conditions, including the Russia-Ukraine war and the Israel-Hamas war, which may introduce volatility in financial markets[39] Legal and Compliance - The company has no uncertain tax positions as of June 30, 2024, indicating a stable tax compliance status[27] - The company is not currently subject to any material legal proceedings, nor are any material legal proceedings threatened against it[108]