Silver Spike Investment (US:SSIC)2025-08-14 11:10PART I: FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Unaudited financial statements for June 30, 2025, reflect substantial asset and income growth, primarily from the October 2024 Loan Portfolio Acquisition, maintaining a focus on U.S. cannabis industry loans Statements of Assets and Liabilities As of June 30, 2025, total assets reached $331.8 million, with net assets at $301.8 million, reflecting a slight increase from year-end 2024 and a NAV per share of $13.23 Key Balance Sheet Data (in thousands) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Investments at fair value | $307,499 | $275,241 | | Cash and cash equivalents | $13,829 | $23,932 | | Total Assets | $331,750 | $309,561 | | Liabilities | | | | Revolving line of credit | $5,000 | $0 | | Total Liabilities | $29,907 | $8,398 | | Net Assets | $301,844 | $301,163 | | NAV per Share | $13.23 | $13.20 | Statements of Operations For the six months ended June 30, 2025, total investment income surged to $25.0 million, driving net investment income to $15.3 million and a net increase in net assets from operations of $16.2 million Statements of Operations Highlights (Six Months Ended June 30) | Metric (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Total Investment Income | $25,003 | $5,842 | | Net Expenses | $9,690 | $4,396 | | Net Investment Income | $15,313 | $1,446 | | Net Realized/Unrealized Gains | $886 | $367 | | Net Increase in Net Assets | $16,199 | $1,813 | | NII Per Share | $0.67 | $0.23 | | Net Increase in Net Assets Per Share | $0.71 | $0.29 | Statements of Changes in Net Assets For the six months ended June 30, 2025, net assets increased by $0.7 million to $301.8 million, primarily due to a $16.2 million net increase from operations, largely offset by $15.5 million in stockholder distributions - The primary drivers for the change in net assets during the first six months of 2025 were net income from operations of $16.2 million, offset by distributions to stockholders of $15.5 million20 Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities was $5.3 million, and in financing activities was $4.8 million, leading to a $10.1 million decrease in cash and cash equivalents Cash Flow Summary (Six Months Ended June 30, 2025) | Activity | Net Cash Flow (in millions) | | :--- | :--- | | Operating Activities | $(5.3) | | Financing Activities | $(4.8) | | Net Decrease in Cash | $(10.1) | | Cash at Beginning of Period | $23.9 | | Cash at End of Period | $13.8 | Schedule of Investments As of June 30, 2025, the investment portfolio's fair value reached $307.5 million, predominantly in first-lien senior secured U.S. debt, with a 76.1% concentration in the U.S. Cannabis sector Total Investments (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Amortized Cost | $305,719 | $274,347 | | Fair Value | $307,499 | $275,241 | | % of Net Assets | 101.9% | 91.4% | - The portfolio is heavily concentrated in the U.S. Cannabis industry, which represents 76.1% of net assets as of June 30, 202524 Notes to Financial Statements The notes detail organization, accounting policies, and key events, including the October 2024 Loan Portfolio Acquisition and the new $100 million revolving credit facility, with all investments classified as Level 3 - On October 1, 2024, the company acquired a loan portfolio from Chicago Atlantic Loan Portfolio, LLC (CALP) in exchange for 16.6 million shares of common stock, valued at $219.6 million. In connection with this, the company was renamed Chicago Atlantic BDC, Inc. and its ticker changed to 'LIEN'4345 - As of June 30, 2025, there were no investments on non-accrual status75 - On February 11, 2025, the company entered into a $100 million senior secured revolving credit facility maturing in March 2028. As of June 30, 2025, $5 million was outstanding117119122 - Subsequent to the quarter end, on July 31, 2025, the company received a full principal repayment of approximately $38.7 million from its loan to STIIIZY Inc. Additionally, on August 12, 2025, the Board approved a quarterly cash dividend of $0.34 per share169170 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes significant growth in investment income and portfolio size to the October 2024 Loan Portfolio Acquisition, with the $307.5 million portfolio focused on first-lien senior secured cannabis loans, all rated 'Grade 2' - The company's investment strategy focuses on four primary sub-strategies: Cannabis, Growth & Technology, Esoteric & Asset-Based Lending, and Liquidity Solutions180181182 - As of June 30, 2025, the top three portfolio companies represented 39.5% of the portfolio's fair value, and the single largest portfolio company represented 16.8%209 - All investments in the portfolio were rated 'Grade 2' as of June 30, 2025, indicating they are performing in-line with expectations and involve an acceptable level of risk similar to the time of origination212 Operating Expenses Comparison (Six Months Ended June 30) | Expense Category (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Income-based incentive fees | $3,885 | $329 | | Management fee | $2,606 | $492 | | General and administrative expense | $2,341 | $0 | | Transaction expenses related to Loan Portfolio Acquisition | $0 | $2,639 | | Total operating expenses | $11,456 | $4,396 | | Waivers / Expense limitation | $(1,766) | $0 | | Net operating expenses | $9,690 | $4,396 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces valuation, interest rate, and credit risks, with 76.2% of its debt portfolio in floating-rate investments, where a 100 basis point rate increase could boost annual net income by $1.8 million - As of June 30, 2025, 76.2% of the company's debt investments by principal balance were floating-rate, while 23.8% were fixed-rate270 Annualized Impact of Interest Rate Changes on Net Income (in thousands) | Change in Interest Rates | Increase (Decrease) in Net Income | | :--- | :--- | | Up 300 basis points | $6,445 | | Up 200 basis points | $4,146 | | Up 100 basis points | $1,848 | | Down 100 basis points | $(1,088) | | Down 200 basis points | $(1,730) | | Down 300 basis points | $(2,242) | Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The company's disclosure controls and procedures were deemed effective as of the end of the period covered by the report272 - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025273 PART II: OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to, nor aware of, any material legal proceedings or threats thereof - As of the filing date, the company is not a party to any material legal proceedings274 Item 1A. Risk Factors No material changes to risk factors, except for new risks associated with the February 2025 senior secured revolving credit facility, including asset pledging and default consequences - The company highlights new risks associated with its senior secured revolving credit facility entered into in February 2025, noting that a significant amount of assets are pledged as collateral276277278 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On April 11, 2025, the company issued 22 shares of common stock at $10.71 per share via its Dividend Reinvestment Plan (DRIP), exempt from registration - The company issued 22 shares of common stock on April 11, 2025, pursuant to its DRIP280 Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None281 Item 5. Other Information No officers or directors adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements during the second quarter of 2025 - No officers or directors adopted or terminated any Rule 10b5-1 trading plans during the quarter284 Item 6. Exhibits This section lists exhibits filed with the quarterly report, including certifications from the Principal Executive Officer and Principal Financial Officer, and XBRL data