Silver Spike Investment (SSIC) - 2024 Q2 - Quarterly Report

Investment Income and Performance - Investment income for the three months ended June 30, 2024, was $3,081,333, compared to $2,893,699 for the same period in 2023, representing an increase of approximately 6.5%[7] - Total investment income for the six months ended June 30, 2024, was $5,841,580, up from $5,351,538 in the prior year, representing a growth of 9.1%[7] - Interest income for the three months ended June 30, 2024, was $2,582,583, compared to $2,601,710 for the same period in 2023, reflecting a slight decrease[24] - Interest income for the six months ended June 30, 2024, was approximately $5.5 million, compared to $5.2 million for the same period in 2023[84] - Net investment income for the three months ended June 30, 2024, was $1,525,633, down from $1,899,412 for the same period in 2023, reflecting a decrease of about 19.7%[7] - Net investment income for the six months ended June 30, 2024, was approximately $1.5 million, down from $1.9 million in the same period of 2023, reflecting a decrease of 21.1%[85] Expenses and Financial Position - Total expenses for the six months ended June 30, 2024, were $4,395,756, up from $2,081,403 for the same period in 2023, indicating an increase of approximately 111.5%[7] - Total operating expenses for the three months ended June 30, 2024, were $1,555,700, compared to $994,287 for the same period in 2023, indicating a significant increase of 56.4%[7] - The ratio of expenses to average net assets increased to 5.17% from 2.37% in the previous year[57] - The company reported a net increase in net assets from operations of $1,292,861 for the three months ended June 30, 2024, compared to $1,211,404 for the same period in 2023, representing an increase of 6.7%[51] - As of June 30, 2024, total net assets decreased to $84,258,073 from $90,044,213 as of June 30, 2023, a decrease of approximately 6.2%[8] Investment Strategy and Portfolio Composition - The company has a diversified investment portfolio with significant holdings in senior secured loans and notes across various sectors, including real estate services[12] - The company plans to acquire a loan portfolio from Chicago Atlantic Loan Portfolio, LLC, expected to close in mid-2024, which will involve issuing shares equivalent to the portfolio's net asset value[14] - 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 is to maximize risk-adjusted returns on equity through current income from debt investments and capital appreciation from equity investments[14] - As of June 30, 2024, the investment portfolio had a fair value of approximately $53.4 million, comprised of $44.3 million in first lien, senior secured loans and $8.3 million in senior secured notes[76] Cash Flow and Liquidity - Net cash provided by operating activities for the six months ended June 30, 2024, was $4,584,511, compared to a net cash used of $(2,229,660) for the same period in 2023[11] - Cash and cash equivalents at the end of the period increased to $34,003,851 from $32,895,660 year-over-year[11] - The company maintains adequate liquidity to fund its unfunded commitments through existing cash and cash equivalents[93] Shareholder Distributions - The company declared quarterly distributions of $0.25 per share on March 8, 2024, and May 9, 2024, totaling $1,553,736 and $1,553,738 respectively for the six months ended June 30, 2024[49] - The company must distribute at least 90% of its investment company taxable income to maintain its tax treatment as a RIC, which is crucial for avoiding corporate-level federal income taxes[88] Risk Management and Market Conditions - The company faces various risks including market risk, credit risk, and interest rate risk, which could impact financial performance[37] - The fair value of investments may fluctuate significantly due to the inherent uncertainty in determining fair value, especially for investments without readily available market quotations[39] - The company is actively monitoring the effects of interest rate changes on its investment income, with specific attention to interest rate floors for floating rate instruments[100] Future Outlook and Strategic Initiatives - The company anticipates future operating results and distribution projections to be influenced by interest and inflation rates, as well as the impact of the COVID-19 pandemic on its portfolio companies[4] - The company is currently reviewing approximately $560 million of potential investments in varying stages of underwriting[72] - The company plans to enter into a credit facility in the future, with leverage depending on market conditions and investment outlook[88]