PART I: FINANCIAL INFORMATION This section provides the unaudited financial statements, management's discussion, market risk disclosures, and controls and procedures for Chicago Atlantic BDC, Inc Item 1. Financial Statements (unaudited) This section presents the unaudited financial statements for Chicago Atlantic BDC, Inc. as of June 30, 2025, including statements of assets, operations, cash flows, and investments Statements of Assets and Liabilities Assets grew to $331.8 million, liabilities to $29.9 million, driven by investments and new borrowings, with NAV per share at $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 | | Payable for investments purchased | $11,760 | $0 | | Total Liabilities | $29,907 | $8,398 | | Total Net Assets | $301,844 | $301,163 | | NAV Per Share | $13.23 | $13.20 | Statements of Operations Investment income surged to $25.0 million, driving net investment income to $15.3 million and a $16.2 million net increase in net assets Statements of Operations Highlights (Six Months Ended June 30, in USD) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Investment Income | $25,003,040 | $5,841,580 | | Net Expenses | $9,690,012 | $4,395,756 | | Net Investment Income | $15,313,028 | $1,445,824 | | Net Increase in Net Assets from Operations | $16,198,622 | $1,812,672 | | Net Investment Income Per Share | $0.67 | $0.23 | | Net Increase in Net Assets Per Share | $0.71 | $0.29 | Statements of Changes in Net Assets Net assets increased by $0.7 million to $301.8 million, driven by operations and offset by stockholder distributions - Net assets increased from $301.16 million at the end of 2024 to $301.84 million at June 30, 202520 - The increase was primarily due to a $16.2 million net increase from operations, offset by $15.5 million in distributions to stockholders20 Statements of Cash Flows Net cash used in operating activities was $5.3 million, and financing activities used $4.8 million, reducing cash to $13.8 million Cash Flow Summary (Six Months Ended June 30, 2025, in USD) | Activity | Net Cash Flow | | :--- | :--- | | Operating Activities | ($5,314,609) | | Financing Activities | ($4,788,443) | | Net Decrease in Cash | ($10,103,052) | | Cash at Beginning of Period | $23,932,406 | | Cash at End of Period | $13,829,354 | Schedule of Investments Investments at fair value reached $307.5 million, primarily debt, with the U.S. Cannabis sector as the largest concentration Total Investments (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Amortized Cost | $305,719 | $274,347 | | Fair Value | $307,499 | $275,241 | - The portfolio consists predominantly of U.S. Corporate Debt, with First Lien Senior Secured loans and Senior Secured Notes making up the vast majority of holdings2426 - The U.S. Debt Cannabis sector is the largest single concentration, with a fair value of $229.7 million24 Notes to Financial Statements Notes detail the company's BDC structure, RIC election, Level 3 investment valuation, portfolio, credit facility, related party transactions, and dividends - The company is an externally managed BDC that has elected to be treated as a RIC for tax purposes. Its investment objective is to maximize risk-adjusted returns, with a focus on the cannabis industry394142 - All investments are valued at fair value using significant unobservable inputs and are categorized as Level 3 assets. The valuation process is performed by the Adviser as the designated Valuation Designee545965 - In February 2025, the company entered into a $100 million senior secured revolving credit facility, of which $5 million was outstanding as of June 30, 2025117122 - The company declared and paid quarterly dividends of $0.34 per share for the first two quarters of 2025151 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition, operational results, investment portfolio growth to $307.5 million, asset quality, liquidity, and critical accounting estimates - The company is a specialty finance BDC focused on direct loans to privately held companies, primarily in the cannabis industry, but also in growth & technology, esoteric & asset-based lending, and liquidity solutions175180 - As of June 30, 2025, the investment portfolio's fair value was $307.5 million, up from $275.2 million at year-end 2024, with 78.5% concentrated in the cannabis industry200207 - All investments were rated 'Grade 2' as of June 30, 2025, indicating performance in line with expectations and an acceptable level of risk. No investments were on non-accrual status212213 - Net investment income for the six months ended June 30, 2025, was $15.3 million, a significant increase from $1.4 million in the prior-year period, primarily due to the growth of the investment portfolio following the Loan Portfolio Acquisition222 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company faces valuation, credit, and interest rate risks, with 76.2% of its debt portfolio in floating-rate investments, impacting net income - The company's primary market risks are valuation risk, interest rate risk, and credit risk267 - Valuation risk exists due to the inherent uncertainty of determining fair value for investments without readily available market quotes (Level 3 assets)268 Portfolio Interest Rate Composition (by Principal Balance) | Rate Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Floating-rate | 76.2% | 79.5% | | Fixed-rate | 23.8% | 20.5% | Annualized Impact of Interest Rate Changes on Net Income (in thousands) | Change in Interest Rates | Increase (Decrease) in Net Income | | :--- | :--- | | Up 200 basis points | $4,146 | | Up 100 basis points | $1,848 | | Down 100 basis points | ($1,088) | Item 4. Controls and Procedures Disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - The company's disclosure controls and procedures were deemed effective as of June 30, 2025272 - No material changes were made to the internal control over financial reporting during the three months ended June 30, 2025273 PART II: OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits for Chicago Atlantic BDC, Inc Item 1. Legal Proceedings The company is not subject to any material legal proceedings, nor is it aware of any being threatened - 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 senior secured revolving credit facility and potential asset foreclosure - No material changes to risk factors from the 2024 Form 10-K, except for new risks associated with the recently established credit facility275 - The new credit facility subjects a significant portion of the company's assets to security interests, and a default could result in foreclosure and forced sale of these assets276278 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On April 11, 2025, 22 common shares were issued at $10.71 per share under the DRIP, exempt from registration - On April 11, 2025, 22 shares of common stock were issued at $10.71 per share under the company's DRIP280 Item 3. Defaults Upon Senior Securities The company reported no defaults on its senior securities during the period - None281 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable283 Item 5. Other Information No officers or directors adopted or terminated Rule 10b5-1 trading plans during the second quarter of 2025 - No officers or directors adopted or terminated Rule 10b5-1 trading plans during the three months ended June 30, 2025284 Item 6. Exhibits This section lists exhibits filed, including CEO and CFO certifications and various incorporated agreements - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906285 - The Credit Agreement, among other documents, is incorporated by reference from previous filings285287
Chicago Atlantic BDC, Inc.(LIEN) - 2025 Q2 - Quarterly Report