UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 2.02. Results of Operations and Financial Condition
On November 7, 2024, Chicago Atlantic BDC, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2024. The press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for any purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such section. The information in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01. Regulation FD Disclosure
On November 7, 2024, the Company disseminated an earnings presentation to be used in connection with its conference call and live webcast on November 8, 2024 at 8:00 a.m. Eastern time to discuss its financial results for the quarter ended September 30, 2024. The earnings presentation is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2 furnished herewith, is being furnished and shall not be deemed “filed” for any purpose of Section 18 of the Exchange Act, or otherwise subject to the liabilities of such section. The information in Item 7.01 of this Current Report on Form 8-K shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
Exhibit Number | Description | |
99.1 | Press Release, dated November 7, 2024 | |
99.2 | Earnings Presentation, dated November 8, 2024 | |
104 | Coverage Page Interactive Data File (embedded within the Inline XRBL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Chicago Atlantic BDC, Inc. | |||
November 7, 2024 | By: | /s/ Umesh Mahajan | |
Name: | Umesh Mahajan | ||
Title: | Chief Financial Officer |
Exhibit 99.1
Chicago Atlantic BDC, Inc. Reports Third Quarter 2024 Financial Results
NEW YORK, November 7, 2024 --- Chicago Atlantic BDC, Inc. (“LIEN” or the “Company”) (NASDAQ: LIEN), formerly Silver Spike Investment Corp., a specialty finance company that has elected to be regulated as a business development company, today announced its financial results for the third quarter ended September 30, 2024.
Third Quarter 2024 Highlights and Subsequent Events
· | Total investment income of $3.2 million |
· | Net investment income of $0.0 million, or $0.00 per share |
· | Investment portfolio of $55.8 million at fair value |
· | Net asset value (“NAV”) per share was $13.28 on September 30, 2024 |
· | As previously announced, on October 1, 2024, the Company acquired 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”) |
· | As a result of the Loan Portfolio Acquisition, the Company had net assets of approximately $302 million and investments in 28 portfolio companies as of October 1, 2024. In connection with the Loan Portfolio Acquisition, the Company was renamed “Chicago Atlantic BDC, Inc.,” and its ticker symbol was changed to “LIEN.” The changes to the Company’s name and ticker symbol became effective in the market at the open of business on October 2, 2024. |
Scott Gordon, Executive Chairman and Co-Chief Investment Officer of the Company, commented, “LIEN is the only publicly listed BDC primarily focused on lending to cannabis companies and is a primary source of capital for high quality companies in both the cannabis and other typically underserved sectors. The Loan Portfolio Acquisition has allowed us to increase the size of our net assets by more than three and half times to approximately $302 million and significantly increases our diversification by increasing our number of portfolio companies from 7 to 28. With the added scale and diversification of our portfolio, and access to the originations engine of the Chicago Atlantic platform, we are well positioned to work with borrowers across industries to meet their capital needs.”
Andreas Bodmeier, Chief Executive Officer of the Company, noted, “We are in an exciting time in the cannabis sector with federal and state regulatory environments becoming more favorable, and the credit quality of borrowers improving in our markets. In the non-cannabis sectors we target, we are seeing lower middle-market and middle-market companies increasingly underserved by larger banks and private credit providers. Chicago Atlantic has carved a niche with opportunities that are time-sensitive, highly complex or in dislocated sectors where risk is fundamentally mispriced with attractive risk-adjusted returns. We look forward to the prospect of these opportunities contributing to the growth of LIEN.”
Loan Portfolio Acquisition Closing
On October 1, 2024, the Company completed its previously announced acquisition from CALP of the Loan Portfolio in exchange for 16,605,372 newly issued shares of the Company’s common stock. The Loan Portfolio was determined by the Company to have a fair value of $219.6 million as of September 28, 2024. As a result of the Loan Portfolio Acquisition, CALP and legacy Company stockholders owned approximately 72.8% and 27.2%, respectively, of the outstanding shares of the Company’s common stock as of October 1, 2024. As a result of the Loan Portfolio Acquisition, the Company had net assets of approximately $302 million and investments in 28 portfolio companies as of October 1, 2024. Upon the closing of the Loan Portfolio Acquisition, there were 22,820,367 shares of the Company’s common stock outstanding.
Results of Operations
For the three months ended September 30, 2024, total investment income was $3.2 million. This compares to total expenses of $3.2 million, which includes $2.4 million of expenses related to the Loan Portfolio Acquisition, resulting in net investment income of $0.0 million, or $0.00 per share.
The Company recorded a net unrealized loss of $0.2 million during the quarter ended September 30, 2024, primarily related to the fair valuation of our debt investments. The Company experienced a net decrease in net assets from operations of $0.2 million, or $0.03 per share.
Net Asset Value
As of September 30, 2024, NAV per share decreased to $13.28, compared to $13.56 as of June 30, 2024. The decrease in NAV per share was primarily driven by dividend payments and transaction expenses related to the Loan Portfolio Acquisition. Total net assets as of September 30, 2024 were $82.5 million, compared to $84.3 million as of June 30, 2024.
Portfolio and Investment Activity
· | As of September 30, 2024, the Company’s investment portfolio had an aggregate fair value of approximately $55.8 million, comprising approximately $43.4 million in first lien, senior secured loans, approximately $11.7 million in secured notes, and approximately $0.7 million of equity securities across seven portfolio companies. |
· | During the quarter ended September 30, 2024, the Company made one additional investment and funded a portion of one of its loan commitments. |
· | As of September 30, 2024, there were no loans on non-accrual status. |
Liquidity and Capital Resources
As of September 30, 2024, the Company had $30.1 million in available liquidity, comprising $30.1 million in cash equivalents.
Subsequent Events
Subsequent to the quarter end, in addition to the Loan Portfolio Acquisition, the Company funded three investments with an aggregate value of $14.5 million and received $9.0 million in proceeds from the repayment of one investment.
Conference Call and Quarterly Earnings Presentation
The Company will host a conference call and webcast to discuss the Company's third quarter 2024 financial results at 8:00 a.m. Eastern Time on Friday, November 8, 2024. Participants may register for the call here. A live webcast of the call will also be available on the Company’s website at lien.chicagoatlantic.com.
A replay of the call will be available at lien.chicagoatlantic.com by the end of day on November 8, 2024.
Call Details – Chicago Atlantic BDC, Inc. Third Quarter 2024 Financial Results:
· | When: Friday, November 8, 2024 |
· | Time: 8:00 a.m. ET |
· | Webcast Live Stream: https://edge.media-server.com/mmc/p/525dhocn |
· | Replay: lien.chicagoatlantic.com |
LIEN posted its Third Quarter 2024 Earnings Presentation on the Events and Presentations page of its website, lien.chicagoatlantic.com. LIEN routinely posts important information for investors on its website. The Company intends to use this website as a means of disclosing material information, for complying with our disclosure obligations under Regulation FD and to post and update investor presentations and similar materials on a regular basis. The Company encourages investors, analysts, the media and others interested in LIEN to monitor the Investor Relations page of its website, in addition to following its press releases, Securities and Exchange Commission (“SEC”) filings, publicly available earnings calls, presentations, webcasts and other information posted from time to time on the website. Please visit the IR Resources section of the website to sign up for email notifications.
About Chicago Atlantic BDC, Inc.
The Company is a specialty finance company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended, and has elected to be treated as a regulated investment company for U.S. federal income tax purposes. The Company’s investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. The Company is managed by Chicago Atlantic BDC Advisers, LLC, an investment manager focused on the cannabis and other niche or underfollowed sectors. For more information, please visit lien.chicagoatlantic.com.
Forward-Looking Statements
Some of the statements in this communication constitute forward-looking statements because they relate to future events, future performance or financial condition of the Company or the Loan Portfolio Acquisition. The forward-looking statements may include statements as to: future operating results of the Company and distribution projections; business prospects of the Company and the prospects of its portfolio companies; and the impact of the investments that the Company expects to make. In addition, words such as “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this communication involve risks and uncertainties. Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with (i) the ability to realize the anticipated benefits of the Loan Portfolio Acquisition; (ii) risks related to diverting management’s attention from ongoing business operations; (iii) the risk that stockholder litigation in connection with the Loan Portfolio Acquisition may result in significant costs of defense and liability; (iv) changes in the economy, financial markets and political environment, including the impacts of inflation and rising interest rates; (v) risks associated with possible disruption in the operations of the Company or the economy generally due to terrorism, war or other geopolitical conflict (including the current conflict between Russia and Ukraine and the current conflict between Israel and Hamas), natural disasters or global health pandemics, such as the COVID-19 pandemic; (vi) future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities); (vii) changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets that could result in changes to the value of the Company’s assets; (viii) elevating levels of inflation, and its impact on the Company, on its portfolio companies and on the industries in which it invests; (ix) the Company’s plans, expectations, objectives and intentions, as a result of the Loan Portfolio Acquisition; (x) the future operating results and net investment income projections of the Company; (xi) the ability of the Chicago Atlantic BDC Advisers, LLC (the “Adviser”) to locate suitable investments for the Company and to monitor and administer its investments; (xii) the ability of the Adviser or its affiliates to attract and retain highly talented professionals; (xiii) the business prospects of the Company and the prospects of its portfolio companies; (xiv) the impact of the investments that the Company expects to make; (xv) the expected financings and investments and additional leverage that the Company may seek to incur in the future; (xvi) conditions in the Company’s operating areas, particularly with respect to business development companies or regulated investment companies; (xvii) the realization generally of the anticipated benefits of the Loan Portfolio Acquisition and the possibility that the Company will not realize those benefits, in part or at all; (xviii) the performance of the loans included in the Loan Portfolio, and the possibility of defects or deficiencies in such loans notwithstanding the diligence performed by the Company and its advisors; (xix) the ability of the Company to realize cost savings and other management efficiencies in connection with the Loan Portfolio Acquisition as anticipated; (xx) the reaction of the trading markets to the Loan Portfolio Acquisition and the possibility that a more liquid market or more extensive analyst coverage will not develop for the Company as anticipated; (xxi) the reaction of the financial markets to the Loan Portfolio Acquisition and the possibility that the Company will not be able to raise capital as anticipated; (xxii) the strategic, business, economic, financial, political and governmental risks and other risk factors affecting the business of the Company and the companies in which it is invested as described in the Company’s public filings with the SEC and (xxiii) other considerations that may be disclosed from time to time in the Company’s publicly disseminated documents and filings. The Company has based the forward-looking statements included in this communication on information available to it on the date of this communication, and it assumes no obligation to update any such forward-looking statements. Although the Company undertakes 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 the Company may make directly to you or through reports that the Company 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.
Contact
Tripp Sullivan
SCR Partners
LIEN@chicagoatlantic.com
CHICAGO ATLANTIC BDC, INC.
Statements of Assets and Liabilities
September 30, 2024 | December 31, 2023 | |||||||
ASSETS | (unaudited) | |||||||
Investments at fair value: | ||||||||
Non-control/non-affiliate investments at fair value (amortized cost of $54,952,504 and $53,471,317, respectively) | $ | 55,788,511 | $ | 54,120,000 | ||||
Cash and cash equivalents | 30,111,563 | 32,611,635 | ||||||
Interest receivable | 1,635,943 | 1,755,360 | ||||||
Deferred offering costs | 1,125,739 | - | ||||||
Other receivable | 401,313 | - | ||||||
Prepaid expenses | 103,554 | 39,276 | ||||||
Other assets | 50,000 | 50,000 | ||||||
Deferred financing costs | 41,061 | - | ||||||
Paydown receivable | 21,000 | - | ||||||
Total assets | 89,278,684 | 88,576,271 | ||||||
LIABILITIES | ||||||||
Transaction fees payable related to the Loan Portfolio Acquisition | 4,795,549 | 711,264 | ||||||
Offering costs payable | 986,806 | - | ||||||
Management fee payable | 253,421 | 257,121 | ||||||
Audit fees payable | 213,523 | 123,998 | ||||||
Capital gains incentive fees payable | 125,048 | 87,583 | ||||||
Legal fees payable | 88,435 | 84,824 | ||||||
Administrator fees payable | 51,251 | 86,463 | ||||||
Due to affiliate | 51,142 | - | ||||||
Unearned interest income | 42,550 | - | ||||||
Deferred financing costs payable | 41,061 | - | ||||||
Directors fees payable | 25,992 | 94,760 | ||||||
Other payables | 24,296 | 13,822 | ||||||
Valuation fees payable | 22,468 | 24,675 | ||||||
Professional fees payable | 17,500 | 17,233 | ||||||
Income-based incentive fees payable | - | 1,511,253 | ||||||
Distributions payable | - | 2 | ||||||
Excise tax payable | - | 10,655 | ||||||
Total liabilities | 6,739,042 | 3,023,653 | ||||||
Commitments and contingencies | - | - | ||||||
NET ASSETS | ||||||||
Common Stock, $0.01 par value, 100,000,000 shares authorized, 6,214,995 and 6,214,941 shares issued and outstanding, respectively | 62,149 | 62,149 | ||||||
Additional paid-in-capital | 85,031,106 | 85,041,203 | ||||||
Distributable earnings (Accumulated losses) | (2,553,613 | ) | 449,266 | |||||
Total net assets | $ | 82,539,642 | $ | 85,552,618 | ||||
Total liabilities and net assets | $ | 89,278,684 | 88,576,271 | |||||
NET ASSET VALUE PER SHARE | $ | 13.28 | $ | 13.77 |
CHICAGO ATLANTIC BDC, INC.
Statements of Operations
(Unaudited)
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
INVESTMENT INCOME | ||||||||||||||||
Non-control/non-affiliate investment income | ||||||||||||||||
Interest income | $ | 2,686,771 | $ | 2,885,725 | $ | 8,203,601 | $ | 8,106,013 | ||||||||
Fee income | 489,176 | 31,250 | 813,926 | 162,500 | ||||||||||||
Total investment income | 3,175,947 | 2,916,975 | 9,017,527 | 8,268,513 | ||||||||||||
EXPENSES | ||||||||||||||||
Transaction expenses related to the Loan Portfolio Acquisition | 2,429,993 | - | 5,069,062 | - | ||||||||||||
Management fee | 253,421 | 264,565 | 745,876 | 760,473 | ||||||||||||
Income-based incentive fees | - | 405,247 | 328,503 | 1,051,741 | ||||||||||||
Audit expense | 95,675 | 223,982 | 299,225 | 409,365 | ||||||||||||
Administrator fees | 98,489 | 84,617 | 298,132 | 250,314 | ||||||||||||
Legal expenses | 60,200 | 148,292 | 200,073 | 334,308 | ||||||||||||
Insurance expense | 66,939 | 67,122 | 199,430 | 202,597 | ||||||||||||
Other expenses | 40,546 | 22,210 | 107,213 | 61,918 | ||||||||||||
Director expenses | 25,992 | 38,223 | 80,311 | 105,913 | ||||||||||||
Professional fees | 59,780 | 15,841 | 74,694 | 51,808 | ||||||||||||
Valuation fees | 22,990 | 22,890 | 50,043 | 116,955 | ||||||||||||
Capital gains incentive fees | (35,904 | ) | (5,000 | ) | 37,465 | - | ||||||||||
Custodian fees | 12,000 | 12,000 | 35,850 | 36,000 | ||||||||||||
Excise tax expense | 31,314 | - | 31,314 | - | ||||||||||||
Total expenses | 3,161,435 | 1,299,989 | 7,557,191 | 3,381,392 | ||||||||||||
NET INVESTMENT INCOME (LOSS) | 14,512 | 1,616,986 | 1,460,336 | 4,887,121 | ||||||||||||
NET REALIZED GAIN (LOSS) FROM INVESTMENTS | ||||||||||||||||
Non-controlled/non-affiliate investments | - | - | - | (210,767 | ) | |||||||||||
Net realized gain (loss) from investments | - | - | - | (210,767 | ) | |||||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) FROM INVESTMENTS | ||||||||||||||||
Non-controlled/non-affiliate investments | (179,524 | ) | (343,104 | ) | 187,324 | 166,012 | ||||||||||
Net change in unrealized appreciation (depreciation) from investments | (179,524 | ) | (343,104 | ) | 187,324 | 166,012 | ||||||||||
Net realized and unrealized gains (losses) | (179,524 | ) | (343,104 | ) | 187,324 | (44,755 | ) | |||||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ | (165,012 | ) | $ | 1,273,882 | $ | 1,647,660 | $ | 4,842,366 | |||||||
NET INVESTMENT INCOME (LOSS) PER SHARE — BASIC AND DILUTED | $ | 0.00 | (1) | $ | 0.26 | $ | 0.23 | $ | 0.79 | |||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE — BASIC AND DILUTED | $ | (0.03 | ) | $ | 0.20 | $ | 0.27 | $ | 0.78 | |||||||
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC AND DILUTED | 6,214,965 | 6,214,673 | 6,214,952 | 6,214,672 |
(1) | Represents less than $0.005 per share |
Exhibit 99.2
Third Quarter 2024 Earnings Presentation November 8, 2024
Disclaimers and Forward - Looking Statements The information contained in this presentation should be viewed in conjunction with the earnings conference call of Chicago Atlantic BDC, Inc . (the “Company”) (Nasdaq : LIEN) held on November 8 , 2024 and the Company’s Quarterly Report on Form 10 - Q for the quarter ended September 30 , 2024 . The information contained herein may not be used, reproduced or distributed to others, in whole or in part, for any other purpose without the prior written consent of the Company . This presentation does not constitute a prospectus and should under no circumstances be understood as an offer to sell or the solicitation of an offer to buy the Company’s common stock or any other securities nor will there be any sale of the common stock or any other securities referred to in this presentation in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such state or jurisdiction . Nothing in these materials should be construed as a recommendation to invest in any securities that may be issued by the Company or as legal, accounting or tax advice . An investment in securities of the type described herein presents certain risks . Nothing contained herein shall be relied upon as a promise or representation whether as to the past or future performance . Information regarding performance by the Company’s management team and their affiliates is presented for informational purposes only . You should not rely on the historical record of the Company’s management team and their affiliates as indicative of the future performance of an investment in the Company or the returns the Company will, or is likely to, generate going forward . Certain information contained herein has been derived from sources prepared by third parties . While such information is believed to be reliable for the purposes used herein, the Company makes no representation or warranty with respect to the accuracy of such information . This presentation contains references to trademarks and service marks belonging to other entities . Solely for convenience, trademarks and trade names referred to in this presentation may appear without the ® or ö symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names . The Company does not intend its use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of the Company by, any other companies . The information contained in this presentation is summary information that is intended to be considered in the context of other public announcements that the Company may make, by press release or otherwise, from time to time . The Company undertakes no duty or obligation to publicly update or revise the information contained in this presentation, except as required by law . These materials contain information about the Company, certain of its personnel and affiliates and its historical performance . You should not view information related to the past performance of the Company as indicative of the Company’s future results, the achievement of which cannot be assured . Past performance does not guarantee future results, which may vary. The value of investments and the income derived from inve stm ents will fluctuate and can go down as well as up. A loss of principal may occur. Some of the statements in this presentation constitute forward - looking statements because they relate to future events, future performance or financial condition of the Company or the Loan Portfolio Acquisition (as defined below) . The forward - looking statements may include statements as to : future operating results of the Company and distribution projections ; business prospects of the Company and the prospects of its portfolio companies ; and the impact of the investments that the Company expects to make . In addition, words such as “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan” or similar words indicate forward - looking statements, although not all forward - looking statements include these words . The forward - looking statements contained in this presentation involve risks and uncertainties . Certain factors could cause actual results and conditions to differ materially from those projected, including the uncertainties associated with ( i ) the ability to realize the anticipated benefits of the Loan Portfolio Acquisition ; ( i i ) risks related to diverting management’s attention from ongoing business operations ; (iii) the risk that stockholder litigation in connection with the Loan Portfolio Acquisition may result in significant costs of defense and liability ; (iv) changes in the economy, financial markets and political environment, including the impacts of inflation and rising interest rates ; (v) risks associated with possible disruption in the operations of the Company or the economy generally due to terrorism, war or other geopolitical conflict (including the current conflict between Russia and Ukraine and the current conflict between Israel and Hamas), natural disasters or global health pandemics, such as the COVID - 19 pandemic ; (vi) future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) ; (vii) changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets that could result in changes to the value of the Company’s assets ; (viii) elevating levels of inflation, and its impact on the Company, on its portfolio companies and on the industries in which it invests ; (ix) the Company’s plans, expectations, objectives and intentions, as a result of the Loan Portfolio Acquisition ; (x) the future operating results and net investment income projections of the Company ; (xi) the ability of the Adviser (as defined below) to locate suitable investments for the Company and to monitor and administer its investments ; (xii) the ability of the Adviser or its affiliates to attract and retain highly talented professionals ; (xiii) the business prospects of the Company and the prospects of its portfolio companies ; (xiv) the impact of the investments that the Company expects to make ; (xv) the expected financings and investments and additional leverage that the Company may seek to incur in the future ; (xvi) conditions in the Company’s operating areas, particularly with respect to business development companies or regulated investment companies ; (xvii) the realization generally of the anticipated benefits of the Loan Portfolio Acquisition and the possibility that the Company will not realize those benefits, in part or at all ; (xviii) the performance of the loans included in the Loan Portfolio (as defined below), and the possibility of defects or deficiencies in such loans notwithstanding the diligence performed by the Company and its advisors ; (xix) the ability of the Company to realize cost savings and other management efficiencies in connection with the Loan Portfolio Acquisition as anticipated ; (xx) the reaction of the trading markets to the Loan Portfolio Acquisition and the possibility that a more liquid market or more extensive analyst coverage will not develop for the Company as anticipated ; (xxi) the reaction of the financial markets to the Loan Portfolio Acquisition and the possibility that the Company will not be able to raise capital as anticipated ; (xxii) the strategic, business, economic, financial, political and governmental risks and other risk factors affecting the business of the Company and the companies in which it is invested as described in the Company’s public filings with the Securities and Exchange Commission (the “SEC”) ; and (xxiii) other considerations that may be disclosed from time to time in the Company’s publicly disseminated documents and filings . The Company has based the forward - looking statements included in this presentation on information available to it on the date of this presentation, and it assumes no obligation to update any such forward - looking statements . Although the Company undertakes 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 the Company may make directly to you or through reports that the Company 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 . 2
» Chicago Atlantic BDC, Inc . (NASDAQ : LIEN) (the “Company” is externally managed by Chicago Atlantic BDC Advisers, LLC . (the “Adviser”) » The Company acquired a portfolio of loans (the “Loan Portfolio”) from Chicago Atlantic Loan Portfolio, LLC on October 1 , 2024 (the “Loan Portfolio Acquisition”) » The Adviser, a majority - owned subsidiary of Chicago Atlantic Group, LP (together with its affiliates, “Chicago Atlantic”), is an SEC - registered investment adviser and works with its clients to originate, underwrite and deploy first - lien, senior - secured fixed and floating rate debt primarily to the cannabis industry’s most established operators and to other niche companies overlooked by the broader market » The Adviser focuses on opportunities that are time - sensitive, highly complex or in dislocated sectors where risk is fundamentally mispriced with attractive risk - adjusted returns » Seasoned investment team with decades of multi - sector experience across market cycles and complex legal and regulatory frameworks in credit, special situations, equities, distressed and emerging market debt » Access to Chicago Atlantic’s leading lending platform as lead or co - lead arranger, and its proprietary sourcing network and direct originations team Chicago Atlantic BDC, Inc. ~$559mm active pipeline under evaluation (1) $2.3B+ in loans closed since platform inception (1) 80+ loans closed across platform (1) $ 273 mm total portfolio investment value (2) 17.2 % gross weighted - average yield of Company debt investments (2) 100% senior - secured loans in current Company portfolio (2) 1. As of 9/30/24. Includes all loans closed and active pipeline across the Chicago Atlantic platform. Active pipeline under evaluation includes potential syndications and represents the active pipeline under evaluation of Chicago Atlantic. 2. As of 10/1/24; see page 10 for information regarding the calculation of Gross Weighted Average Portfolio Yield on Debt Investments (“Portfolio Yield”) and Total Portfolio Investment Value. 3 3
Investment Highlights » Strong credit metrics » Only BDC that is primarily focused on the cannabis industry » All loans are first - lien » Seventy - nine percent of the portfolio are floating rate loans, and almost all have floors » No current leverage – currently exploring various financing options » Part of the largest cannabis focused investment platform A DIFFERENTIATED BDC » Focus on highly complex and highly regulated industries underserved by other capital providers » Direct lending against cash flows and multiple types of collateral in cannabis creates a large addressable market » Pricing and structuring power with high barriers to entry FOCUS ON UNDERSERVED SECTORS » Uncorrelated, idiosyncratic credit opportunity in cannabis » Other BDCs and private credit funds tend to overlap on sponsor - backed, middle - market lending with similar risk profiles and catalysts » Seek alpha where few capital providers with requisite expertise are present DIVERSIFIED SOURCE OF CREDIT ALPHA 4
Experienced Credit and Cannabis Leadership Team S COTT G ORDON Executive Chairman & Co - CIO U MESH M AHAJAN Co - CIO, CFO and Secretary » Former Partner, Co - Head Credit of Silver Spike Capital » 29 - year career in credit, special situations and distressed investing » Former Managing Director at Ascribe Capital, an opportunistic credit investing fund » Former Managing Director at Bank of America Merrill Lynch in principal investing and special situations » Former member of J.P. Morgan’s investment banking team in Asia A NDREAS B ODMEIER CEO » Co - Founder and Partner of Chicago Atlantic » Underwritten over $500mm in cannabis credit transactions » Former Principal of consulting firm focused on FX and commodity risk management » Former Senior Advisor, U.S. Dept. of Health and Human Services » PhD in Finance and MBA from Chicago Booth and MSc from Humboldt University (Berlin) » Former Founding Partner, CEO and CIO of Silver Spike Capital » 36 - year investment career in global special situations, distressed and emerging markets » Holds board positions at Papa & Barkley and WM Holding Company, LLC » Early entrepreneur and investor in cannabis operating businesses, including a CA - based and industry leading cannabis/CBD health & wellness brand » Leadership roles at JPMorgan, ING Barings, Bank of America Distressed (International), Caxton, Marathon and Taconic D INO C OLONNA President » Former Partner, Co - Head Credit of Silver Spike Capital » 22 - year career in traditional and alternative investment portfolios and investment banking across the global capital markets » Formerly Managing Partner at Madison Capital Advisors, a middle - market asset - backed lender in the cannabis, life sciences and tech sectors » Former ECM and derivatives investment banker at Barclays London » Former senior research analyst at Forest Investment Management, a global multi - strategy hedge fund 5
About CHICAGO ATLANTIC 1. Assets under management represents total committed investor capital, total available leverage including undrawn capital, a nd capital invested by co - investors and managed by the firm, as of 6/30/24 6 A private credit - focused investment firm founded in 2019 INCEPTION Assets under management: $1.6B 1 SIZE 80+ professionals, including over 30 investment professionals TEAM Seeking attractive returns, preservation of capital and income generation predominantly through investment opportunities that are overlooked or underserved by conventional capital sources INVESTMENT PRINCIPLES Chicago, Miami & New York LOCATIONS
CHICAGO ATLANTIC Advantage: Established R elationships with Deal S ources Over the past years, Chicago Atlantic has expanded existing and developed new deal sources, providing for a robust opportunity set. Limited Partners Club Deals/Other Lenders Deal Sources Intermediaries Direct Outreach Attorneys, Accountants 7
Core Strategy Chicago Atlantic focuses on senior - secured lending in the top of the capital structure to the lower middle market and middle market. The platform’s primary investment verticals include cannabis, growth and technology finance, loans to esoteric industries / asset - based loans, and liquidity solutions. INVESTMENT STRATEGY DIFFERENTIATORS x Seek above market returns and the preservation of capital x Take advantage of opportunities across industries that are created by complexity or the lack of investor focus x Invest and lend in underserved market niches x Focus on smaller deal sizes than most direct lenders that have targeted increasingly larger deals, creating an opportunity to target smaller deals with less competition x Ability to underwrite highly complex industries x Extensive origination network x Top of the capital structure lending is risk mitigating x Prioritize preservation of capital x Low correlation to other asset classes x Floating - rate loans with high interest rate floors 8
9 Pro Forma Portfolio Financial Highlights Quarter Ended September 30, 2023 Quarter Ended September 30, 2024 $2.9 million $3.2 million G ROSS I NVESTMENT I NCOME $1.3 million $0.8 million E XPENSES E XCLUDING L OAN P ORTFOLIO A CQUISITION E XPENSES $1.6 million $2.4 million N ET I NVESTMENT I NCOME E XCLUDING L OAN P ORTFOLIO A CQUISITION E XPENSES - $2.4 million L OAN P ORTFOLIO A CQUISITION E XPENSES $1.6 million $0.0 million N ET I NVESTMENT I NCOME $87.4 million $82.5 million N ET A SSETS AT E ND OF P ERIOD P ER S HARE D ATA : $0.26 $0.39 N ET I NVESTMENT I NCOME E XCLUDING L OAN P ORTFOLIO A CQUISITION E XPENSES $0.26 $0.00 N ET I NVESTMENT I NCOME $14.06 $13.28 N ET A SSET V ALUE AT E ND OF P ERIOD 9
10 Pro Forma Portfolio A Differentiated Investment Portfolio Chicago Atlantic BDC Inc. Portfolio as of 10/1/2024 (Unaudited) $302mm N ET A SSET V ALUE ( INCLUDING C ASH ) 1 $273mm I NVESTMENTS AT F AIR V ALUE (E XCLUDING A CCRUED I NTEREST ) 2 28 N UMBER OF P ORTFOLIO C OMPANIES 17.2% G ROSS W EIGHTED A VERAGE Y IELD OF D EBT I NVESTMENTS 3 79% F LOATING R ATE D EBT (% OF D EBT I NVESTMENTS F AIR V ALUE ) 99% F LOATING R ATE D EBT W / I NTEREST R ATE F LOOR (% OF F LOATING R ATE D EBT F AIR V ALUE ) 0% N ON - ACCRUALS AT C OST (%) $8mm (3% of Total Investments Fair Value) A VERAGE P OSITION S IZE 5% PIK I NTEREST (% OF T OTAL A NNUAL I NTEREST ) 4 P ORTFOLIO C OMPANIES K EY FINANCIAL AND C REDIT M ETRICS 5 $85mm R EVENUE (M EDIAN ) $19mm EBITDA (M EDIAN ) 1.6x S R . S ECURED N ET DEBT / EBITDA ( W EIGHTED A VERAGE ) 4.1x I NTEREST C OVERAGE (W EIGHTED A VERAGE ) 10 77% 23% Cannabis Non-Cannabis 14% 4% 8% 35% 11% 21% 8% Consumer Products Precious Metals Real Estate Financial Intermediary IT Services Healthcare Consumer Services Non - Cannabis by Industry Portfolio Diversification 6 Based on Company data as of 9/30/24 and Loan Portfolio data as of 9/28/24. Weighted average amounts are weighted by the fair mar ket value of each respective investment. 1. Net of estimated expenses related to the Loan Portfolio Acquisition. 2. Investment at Fair Value excludes accrued interest of approximately $2.9mm which was part of the transaction fair value of the Loan Portfolio Acquisition. 3. Weighted Average Port fo lio Yield on Debt Investments (“Portfolio Yield”) is the weighted average of the annualized yield for each debt investment in the portfolio weighted by the fair value of each debt investment as of 9/30/24 for the Company and 9/28/24 for the Loan Portfolio (the “Reference Date”). The yield for each debt investment is c alc ulated by dividing (a) the sum of ( i ) the stated annual cash interest rate of the debt investment as of the Reference Date, (ii) the stated annual payment - in - kind interest rate, if any, of the debt inves tment as of the Reference Date, (iii) the difference between the par value and the fair value of the debt investment, express ed as a percentage of the par value of the debt investment, and annualized based on the remaining term of the debt investment as of the Reference Date, and (iv) the exit fee of the debt investment, if an y, expressed as a percentage of the par value of the debt investment and annualized based on the remaining term of the debt i nve stment as of the Reference Date, by (b) the fair value of the debt investment, expressed as a percentage of the par value of the debt investment. The Portfolio Yield calculation does not refle ct any prepayment penalties or early payoffs with respect to the debt investments. The Portfolio Yield is gross of expenses and exc ludes cash and equity holdings. The Portfolio Yield would be lower if the calculation reflected expenses and cash holdings. The Portfolio Yield does not represent actual investment returns to the Co mpany’s stockholders and the Company may not actually realize the foregoing yield of any specific debt investment, including if the remaining term of the debt investment is less than a year. 4. Represents the percentage of total annual interest expected to be received in kind instead of in cash. 5. Amounts were derive d f rom the most recently available portfolio company financial statements, have not been independently verified by the Company, and may reflect a normalized or adjusted amount. Accordingly, the Company makes no representation or warranty in respect of this information. 6. Calculated as a percentage of the net assets o f t he Company’s investment portfolio (excluding cash and cash equivalents). Industries follow GICS categorizations.
The Cannabis Landscape in the U.S. Where Chicago Atlantic Sees Timely Opportunities THE CANNABIS INDUSTRY PRESENTS A UNIQUE OPPORTUNITY TO GENERATE ALPHA AND OUTSIZED RISK - ADJUSTED RETURNS LACK OF TRADITIONAL FINANCING Banks generally don’t lend to companies in the cannabis industry, allowing higher interest rates, attractive collateral, and lender - friendly covenants. LOW CORRELATIONS TO TRADITIONAL MARKETS The medical cannabis market behaves like the pharmaceutical market, and the recreational cannabis market behaves like the tobacco and alcohol markets, both exhibiting low correlations with traditional markets. HIGH BARRIERS TO ENTRY Each state has unique investment characteristics, supply and demand dynamics, and legal frameworks, requiring sophisticated understanding of the industry and strong underwriting expertise. FOCUS ON LIMITED LICENSE STATES Limited license states have limited competition, lucrative license values, high wholesale prices, and less black - market presence. 11
The Cannabis Landscape in the U.S. 2019 2024 1. https://mjb of - us - izdaily.com/map - marijuana - legalization - by - state/ . 2. Statista 3. MJBiz Factbook 2024 x Legal in 40 states and the District of Columbia 1 x Medical use only: 16 states x Recreational/Medical use: 24 states & District of Columbia x Industry revenue estimated at $32B in 2024 3 Legalized recreational and medical use Legalized medical use only No regulated use x Legal in 35 states and the District of Columbia 1 x Medical use only: 25 states x Recreational/Medical use: 10 states & District of Columbia x Industry revenue at $19.3B 2 12
» Assuming the cannabis market enterprise value at 1x revenue, and a 35% debt to 65% equity capital structure, 6 the current value of the U.S. cannabis debt market can be estimated to be $11B . » With the Chicago Atlantic platform’s closed cannabis loans to date of $1.9B 7 , Chicago Atlantic estimates that it represents approximately 17% of the current U.S. cannabis debt market . » With the projected industry size of $58B in retail sales by 2030 , and assuming Chicago Atlantic maintains its current debt market share of 17%, the opportunity for the Chicago Atlantic platform could grow to approximately $3.5B . The Cannabis Landscape in the U.S. The Addressable Market is Growing 1. MJBiz Factbook 2024 2. TD Cowen “Ahead of the Curve Series: Cannabis Beats Booze” 12/15/23 3. Morningstar LSTA US Leveraged Loan In de x, Yield to Maturity as of 9/30/24. 4. ICE BoA US High Yield Index Effective Yield as of 9/30/24. 5. As of 10/1/24; see page 10 for information regarding the calculation of Weighted Average Portfolio Yield on Debt Investments (“Portfolio Yield”). 6 S&P Capital IQ and Company Filin gs of the 20 largest cannabis companies (ranked by market capitalization); equity and debt figures are as of 12/31/23. 7. As of 09/30/24. 13 U.S. Legal Cannabis Retail Sales ($BN) 1 Legal Cannabis Sales as a % of Alcohol Sales 2 3.6% 11.2% 13.6% 2018A 2023E 2027E $32 $35 $58 2024E 2025E 2030E / Cannabis is growing as a percentage of alcohol sales. If current 10+ year trends hold, it’s expected that legal cannabis sales growth will continue to outperform alcohol sales growth in legal cannabis states. Chicago Atlantic BDC, Inc. Offers a Significant Premium to Traditional Leveraged Finance 9.8% 6.6% 17.2% US Leveraged Loan Yield Index US High Yield Index Wtd. Average Portfolio Yield on Debt Investments 3 4 5
Impact of Further Cannabis Legalization More states may legalize cannabis, presenting numerous new financing prospects for the industry. Cannabis businesses no longer being subject to Section 280E of the Internal Revenue Code would enable them to deduct expenses, reducing their tax burdens and thus making them more profitable. 1 INCREASED MARKET OPPORTUNITIES Allowing dispensaries to process credit card transactions may lead to a significant boost in sales. ENHANCED SALES THROUGH CREDIT CARD PROCESSING Make - whole provisions and pre - payment penalties can make the investments more appealing to potential acquirers, such as private credit or private equity funds. INCREASED ATTRACTIVENESS FOR ACQUISITION Significant barriers to entry, such as stringent financial requirements and industry - specific knowledge, is likely to keep the market relatively stable and prevent an inundation of competitors over the next several years. FAVORABLE COMPETITIVE LANDSCAPE 1. On April 30, 2024, the Drug Enforcement Administration announced its intent to approve rescheduling marijuana from Schedul e I to Schedule III under the Controlled Substances Act. On May 16, 2024, the Justice Department submitted a proposed rule to reclassify marijuana from Sch edu le I to Schedule III under the Controlled Substances Act. Section 280E of the Internal Revenue Code prohibits the taking of deductions for businesses that e nga ge in trafficking of controlled substances listed in Schedule I or Schedule II of the Controlled Substances Act. 14
Target Borrowers Investment Sub - Strategies L IQUIDITY S OLUTIONS E SOTERIC & A SSET - B ASED L ENDING G ROWTH C APITAL & T ECHNOLOGY C ANNABIS L ENDING » Financing is typically event driven » Companies that are pursuing a merger, acquisition, refinancing, dividend recap, or other strategic liquidity need » Companies that are showing strong cash flow performance with low leverage profiles » Companies that have multiple areas of value and liquidity in addition to the underlying business » Low debt to enterprise value » Industry agnostic » Structured credit and asset - based loans, receivables pools, and equipment » Companies that are showing strong cash flow performance with low leverage profiles, but the industries carry regulatory, reputational or other risks » Transactions tend to be attractively priced and have better than normal covenants and amortization due to complexity of the industry or situation » Low debt to asset values and/or enterprise values » Industry leaders and disruptive companies experiencing strong growth » Companies that have raised significant equity capital validating market value » Industry focus typically includes software, hardware, E - commerce and direct to consumer » Liquidity covenants that ensure such company has adequate cash runway » Low debt to enterprise value » Profitable or demonstrated path to near term profitability » Growth or EBITDA positive entities » Companies that require capital but do not want to dilute their equity » Companies that are showing strong cash flow performance with low leverage profiles » Transactions tend to be attractively priced and have better than normal covenants and amortization due to complexity of the industry » Low debt to enterprise value 15 Although we focus on investments in the cannabis industry, sub - strategies of our principal investment strategy may also consist of growth capital and technology companies, esoteric and asset - based lending opportunities, and companies in need of liquidity solutions. We are not required to have a minimum investment in any of these sub - strategies
Driven by proprietary deal sourcing ▪ Continued cannabis legalization at the state level creates a new influx of opportunities ▪ Increase in M&A activity in both cannabis and non - cannabis verticals requires additional debt financing ▪ Robust set of profitable companies and refinancing opportunities across industries ▪ Continued pull back of banks in the lower middle market and middle market creating a longer - term opportunity in non - cannabis companies 1. As of September 30, 2024, includes potential syndications, and represents origination opportunities across the Chicago Atl ant ic platform. Loan Origination Pipeline Over 1,000 Qualified Deals Sourced and Reviewed Total current active pipeline of ~$559mm across 39 potential borrowers 1 Robust opportunity set across the current active pipeline: 1 - cannabis (~66%) - non - cannabis (~34%) 16
Schedule of Investments Appendix
Schedule of Investments (as of October 1, 2024) 1 18 % of Net Assets Investment Value 2 PIK Rate Cash Spread/Coupon Prime/SOFR Floor Floating Reference Rate Fixed vs. Floating Maturity Date Security Type Portfolio Company 2 1.2% $3,322,000 - 12.75% n/a n/a Fixed 7/16/2029 Senior Secured Note Company 1 3.8% $10,261,692 2.00% P+6.00% 7.00% Prime Floating 6/30/2025 First Lien Senior Secured Delayed Draw TL Company 2 0.7% $1,791,820 - P+5.75% 8.50% Prime Floating 12/31/2024 First Lien Senior Secured Delayed Draw TL Company 3 1.2% $3,275,125 - S+7.50% 4.00% SOFR Floating 9/22/2025 First Lien Senior Secured TL Company 4 1.6% $4,297,500 - 8.00% n/a n/a Fixed 12/15/2026 Senior Secured Note Company 5 1.8% $4,850,000 - P+6.50% 8.00% Prime Floating 8/15/2027 First Lien Senior Secured Delayed Draw TL – Unfunded Company 6 10.2% $27,870,000 - P+8.75% 7.50% Prime Floating 5/3/2026 First Lien Senior Secured Delayed Draw TL Company 7 5.3% $14,307,500 - P+7.75% 8.50% Prime Floating 12/31/2026 First Lien Senior Secured Delayed Draw TL Company 8 3.5% $9,446,592 5.00% 11.00% n/a n/a Fixed 12/31/2025 First Lien Senior Secured Delayed Draw TL Company 9 1.2% $3,395,000 - 15.00% n/a n/a Fixed 6/6/2026 First Lien Senior Secured TL Company 10 0.0% $91,043 - S+9.85% 1.50% SOFR Floating 11/30/2024 First Lien Senior Secured TL - Tranche C Company 11 0.2% $521,406 - S+9.85% 1.50% SOFR Floating 12/17/2025 First Lien Senior Secured TL - Tranche A Company 11 0.6% $1,648,410 - S+9.85% 1.50% SOFR Floating 1/6/2027 First Lien Senior Secured TL - Tranche B Company 11 1.1% $3,000,000 - P+7.25% - Prime Floating 5/31/2026 First Lien Senior Secured TL Company 12 5.4% $14,846,250 - P+6.50% 8.50% Prime Floating 3/28/2027 First Lien Senior Secured TL Company 13 2.0% $5,319,000 - P+7.50% 8.00% Prime Floating 3/31/2026 First Lien Senior Secured TL Company 14 1.5% $4,122,500 - 12.00% n/a n/a Fixed 6/30/2025 Senior Secured Note Company 15 1.7% $4,544,484 2.00% 11.00% n/a n/a Fixed 5/30/2025 First Lien Senior Secured Delayed Draw TL Company 16 1.2% $3,390,774 3.00% P+1.75% 8.50% Prime Floating 11/1/2026 First Lien Senior Secured TL Company 17 0.7% $1,870,611 3.00% P+1.75% 8.50% Prime Floating 11/1/2026 Incremental First Lien Senior Secured TL Company 17 1.2% $3,162,480 3.50% P+7.50% 5.00% Prime Floating 8/4/2025 First Lien Senior Secured Delayed Draw TL Company 18 8.1% $22,000,000 - 15.00% n/a n/a Fixed 10/2/2028 First Lien Senior Secured Note Company 19 12.3% $33,577,181 1.00% P+8.50% 4.00% Prime Floating 5/22/2026 First Lien Senior Secured TL Company 20 2.5% $6,876,703 - P+10.00% 8.25% Prime Floating 11/1/2025 First Lien Senior Secured TL Company 21 3.3% $9,000,000 2.00% P+8.75% 3.25% Prime Floating 10/4/2024 First Lien Senior Secured Delayed Draw TL Company 22 1.1% $2,921,333 2.00% P+7.00% 7.00% Prime Floating 7/29/2026 First Lien Senior Secured Delayed Draw TL Company 23 1.1% $2,899,790 8.00% P+4.75% 3.50% Prime Floating 3/31/2025 First Lien Senior Secured Delayed Draw TL Company 24 19.3% $52,513,283 - P+6.50% 6.25% Prime Floating 10/30/2026 First Lien Senior Secured TL Company 25 1.9% $5,056,337 5.00% 13.80% n/a n/a Fixed 11/29/2027 Series A Senior Note Company 26 0.5% $1,260,000 6.00% 6.00% n/a n/a Fixed 5/31/2029 Senior Secured First Lien TL Company 27 0.2% $676,000 n/a n/a n/a n/a n/a n/a Preferred Equity and Warrants Company 27 3.8% $10,402,735 - S+7.75% 4.00% SOFR Floating 9/18/2026 First Lien Senior Secured TL Company 28 100% $272,517,550 Total 1. Based on Company data as of 9/30/24 and Loan Portfolio Data as of 9/28/24. 2. Investment Value excludes accrued interest o f a pproximately $2.9mm which was part of the transaction fair value of the Loan Portfolio Acquisition.