LIEN 10-K & 10-Q changes, risk factors and insider trading
Chicago Atlantic BDC, Inc. · Nasdaq · CIK 1843162 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Removed heading “We may in the future choose to pay distributions partly in our own stock, in which case you may be subject to tax in excess of the cash you receive.”
Removed heading “We may expose ourselves to risks if we engage in hedging transactions.”
Removed heading “The Adviser and CALP have significant influence over us, including having an approximately 80% vote for matters that require the approval of stockholders, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote.”
Largest changes
“Subject to applicable provisions of the 1940 Act and applicable regulations promulgated by the CFTC, we may enter into hedging transactions, which may expose us to risks associated with such transactions. Such hedging may utilize instruments such as forward contracts, currency options and interest rate swaps, caps, collars and floors to seek to hedge against fluctuations in the relative values of our portfolio positions and amounts due under any credit facility from changes in currency and market interest rates. Use of these hedging instruments may include counterparty credit risk. …”see in full comparison
“The Adviser and CALP have significant influence over us, including having an approximately 80% vote for matters that require the approval of stockholders, which could limit your ability to influence the outcome of matters submitted to stockholders for a vote.”see in full comparison
“We may in the future choose to pay distributions partly in our own stock, in which case you may be subject to tax in excess of the cash you receive.”see in full comparison
“We may expose ourselves to risks if we engage in hedging transactions.”see in full comparison
“may not have collateral sufficient to pay any outstanding interest or principal due to us in the event of a default by these companies;”see in full comparison
“We may distribute taxable distributions that are payable in part in our stock. In accordance with certain applicable U.S. Treasury regulations and other related administrative pronouncements issued by the Internal Revenue Service, or the IRS, a RIC may be eligible to treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder is permitted to elect to receive his or her entire distribution in either cash or stock of the RIC, subject to the satisfaction of certain guidelines. …”see in full comparison
Full comparison: every changed paragraph (142)
Economic recessions or downturns may have a material adverse effect on our business, financial condition and results of operations, and could impair the ability of our portfolio companies to repay debt or pay interest.
Global economic, political and market conditions, including those caused by the current public health crisis, have (and in the future, could further) adversely affect our business, results of operations and financial condition and those of our portfolio companies.
We have limited operating history and our Adviser is a recently registered investment adviser under the Advisers Act, with limited history of managing BDCs and limited history of making credit investments in the nascent cannabis industry.
Our investment portfolio will be recorded at fair value as determined in good faith in accordance with procedures established by our Board and, as a result, there will be uncertainty as to the value of our portfolio investments.
Our ability to achieve our investment objective depends on our Adviser’s ability to support our investment process; if our Adviser were to lose key personnel or they were to resign, our ability to achieve our investment objective could be significantly harmed.
Our business model depends to a significant extent upon strong referral relationships, and the inability of the personnel associated with our Adviser to maintain or develop these relationships, or the failure of these relationships to generate investment opportunities, could adversely affect our business.
A failure on our part to maintain qualification as a BDC would significantly reduce our operating flexibility.
Regulations governing our operation as a BDC and RIC may affect our ability to raise, and the way in which we raise, additional capital or borrow for investment purposes, which may have a negative effect on our growth.
Changes in laws or regulations governing our operations, including laws and regulations governing cannabis, may adversely affect our business or cause us to alter our business strategy.
Provisions of the MGCL and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.
Because we intend to distribute at least 90% of our taxable income each taxable year to our stockholders in connection with our election to be treated as a RIC, we will continue to need additional capital to finance our growth.
We may not be able to pay you distributions, and if we are able to pay you distributions, our distributions may not grow over time and/or a portion of our distributions may be a return of capital. We have not established any limit on the extent to which we may use offering proceeds to fund distributions.
We will be subject to corporate-level U.S. federal income tax if we are unable to obtain and maintain qualification as a RIC under Subchapter M of the Code or do not satisfy the annual distribution requirement.
Our investments in portfolio companies may be risky, and we could lose all or part of our investments.
We intend to invest primarily in securities that are rated below investment grade by rating agencies or that would be rated below investment grade if they were rated. Below investment grade securities, which are often referred to as “junk,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and return principal. They may also be illiquid and difficult to value.
Some of the loans in which we may invest may be “covenant-lite” loans, which may have a greater risk of loss as compared to investments in or exposure to loans with a complete set of financial maintenance covenants.
The lack of liquidity in our investments may adversely affect our business.
Shares of closed-end investment companies, including BDCs, may trade at a discount to their NAV.
The market price of our common stock may fluctuate significantly.
Cannabis, except for hemp, is currently illegal under U.S. federal law and in other jurisdictions, and strict enforcement of federal laws would likely result in our inability to execute our business plan.
Loans to relatively new and/or small companies and companies operating in the cannabis industry generally involve significant risks.
Our investment opportunities are limited by the current illegality of cannabis under U.S. federal law, and change in the laws, regulations and guidelines that impact the cannabis industry may cause adverse effects on our ability to make investments.
Strict enforcement of U.S. federal laws regarding cannabis would likely result in our portfolio companies’ inability to execute a business plan in the cannabis industry, and could result in the loss of all or part of any of our loans.
The nascent status of the medical and recreational cannabis industry involves unique circumstances and there can be no assurance that the industry will continue to exist or grow as currently anticipated.
Any potential growth in the cannabis industry continues to be subject to new and changing state and local laws and regulations.
Portfolio companies may have difficulty borrowing from or otherwise accessing the service of banks, which may make it difficult to sell products and services.
We, portfolio companies or the cannabis industry more generally may receive unfavorable publicity or become subject to negative consumer or investor perception.
Third-parties with whom we do business may perceive themselves as being exposed to reputational risk by virtue of their relationship with us and may ultimately elect not to do business with us.
Portfolio companies may be subject to regulatory, legal or reputational risk associated with potential misuse of their products by their customers.
There may be a lack of access to U.S. bankruptcy protections for portfolio companies.
U.S. federal courts may refuse to recognize the enforceability of contracts pertaining to any business operations that are deemed illegal under U.S. federal law, including cannabis companies operating legally under state law.
Cybersecurity risks and cyber incidents may adversely affect our business or the business of our portfolio companies by causing a disruption to our operations or the operations of our portfolio companies, a compromise or corruption of our confidential information or the confidential information of our portfolio companies and/or damage to our business relationships or the business relationships of our portfolio companies, all of which could negatively impact the business, financial condition and operating results of us or our portfolio companies.
Sales of shares of our common stock after the completion of the Loan Portfolio Acquisition may cause the market price of our common stock to decline.
We may be unable to realize the benefits anticipated by the Loan Portfolio Acquisition, including estimated cost savings, or it may take longer than anticipated to achieve such benefits.
The Russian invasion of Ukraine and the conflict in the Middle East have led, are currently leading, and for an unknown period of time may continue to lead to
disruptions in local, regional, national, and global markets and economies affected thereby. Furthermore, the aforementioned conflicts and the varying involvement of the United States and other countries that are part of the North Atlantic Treaty Organization (NATO countries) could preclude prediction as to their
ultimate adverse impact on global economic and market conditions, and, as a result, presents material uncertainty and risk with respect to the performance of our investments, our operations, and our ability to achieve our investment objectives.
From time-to-time, capital markets may experience periods of disruption and instability. During such periods of market disruption and instability, we and other
companies in the financial services sector may have limited access, if available, to alternative markets for debt and equity capital. Equity capital may be difficult to raise because, subject to some limited exceptions which apply to us as a BDC,
we will generally not be able to issue additional shares of our common stock at a price less than net asset valueNAV without first obtaining approval for such issuance from our stockholders and our independent directors. In addition, our ability to
incur indebtedness (including by issuing preferred stock) is limited by applicable regulations such that our asset coverage, as defined in the 1940 Act, must equal at least 150% immediately after each time we incur indebtedness. The debt capital
that will be available, if at all, may be at a higher cost and on less favorable terms and conditions in the future. Any inability to raise capital could have a negative effect on our business, financial condition and results of operations.
Our investment portfolio will be recorded at fair value as determined in good faith in accordance with procedures established by
our Board of Directors and, as a result, there will be uncertainty as to the value of our portfolio investments.
Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value as determined
in good faith in accordance with procedures established by our Board of Directors.Board. Typically, there is not a public market for the securities of the privately held companies in which we invest. As a result, we value these securities quarterly at
fair value as determined in good faith in accordance with procedures established by our Board of Directors.Board. The fair value of such securities may change, potentially materially, between the date of the fair value determination and the release of
the financial results for the corresponding period or the next date at which fair value is determined.
In addition, the participation of the investment professionals in the valuation process, and the indirect pecuniary interest of Scott Gordon, our Co-Chief Investment
Officer, an interested member and Executive Chairman of our Board of Directors and a member of the Adviser’s Investment Committee, John Mazarakis, an interested member of our Board of Directors and a member of the Adviser’s Investment Committee,
Andreas Bodmeier, a member of the Adviser’s Investment Committee, Umesh Mahajan, our Co-Chief Investment Officer and Secretary and a member of the Adviser’s Investment Committee, Peter Sack, our Chief Executive Officer and a member of the
Adviser’s Investment Committee, and Dino Colonna, our President, in the Adviser could result in a conflict of interest as the management fee payable to our Adviser is based on our gross assets and the Incentive Fees on Capital Gains payable to
the Adviser is based, in part, on unrealized losses.
We compete for investments with other BDCs, public and private funds (including hedge funds, mezzanine funds and CLOscollateralized loan obligations) and private equity funds (to the extent they
provide an alternative form of financing), as well as traditional financial services companies such as commercial and investment banks, commercial financing companies and other sources of financing. Many of our competitors are substantially larger
and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of capital and access to funding sources that are not available to us. In addition, some of our competitors
may have higher risk tolerances or different risk assessments than we have. These characteristics could allow our competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible
structuring than we are able to do. We may lose investment opportunities if we do not match our competitors’ pricing, terms and structure. If we are forced to match our competitors’ pricing, terms and structure, we may not be able to achieve
acceptable returns on our investments or may bear substantial risk of capital loss. A significant increase in the number and/or the size of our competitors in this target market could force us to accept less attractive investment terms.
Furthermore, many of our competitors are not subject to, the regulatory restrictions that the 1940 Act imposes on us as a BDC.
Vireo Growth, Inc., a company for which Mr. Mazarakis serves as CEO and Co-Executive Chairman, and in which certain Chicago Atlantic entities hold material equity
interests, has signed agreements to acquire certain of our portfolio companies. Upon the closing of the acquisitions, we may be restricted in our ability to enter into transactions with such portfolio companies due to their relationships with Mr.
Mazarakis and Chicago Atlantic.
If we fail to continuously qualify as a BDC, we might be subject to regulation as a registered closed-end investment company under the 1940 Act, which would
significantly decrease our operating flexibility. In addition, failure to comply with the requirements imposed on Business Development CompaniesBDCs by the 1940 Act could cause the SEC to bring an enforcement action against us. For additional
information on the qualification requirements of a BDC, see “Item 1. Business — Business Development Company Regulations.”
Because we will continue to need capital to grow our investment portfolio, these limitations may prevent us from incurring debt and require us to raise additional
equity at a time when it may be disadvantageous to do so. As a result of these requirements we need to periodically access the capital markets to raise cash to fund new investments at a more frequent pace than our privately owned competitors. We
generally are not able to issue or sell our common stock at a price below NAV per share, which may be a disadvantage as compared with other public companies or private investment funds. When our common stock trades at a discount to NAV, this
restriction could adversely affect our ability to raise capital. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the current NAV of the common stock if our Board ofand Independent Directors and
independent directors determine that such sale is in our best interests and the best interests of our stockholders, and our stockholders as well as those stockholders that are not affiliated with us approve such sale in accordance with the
requirements of the 1940 Act. In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board of Directors,Board, closely approximates the market value of such securities
(less any underwriting commission or discount). We cannot assure you that equity financing will be available to us on favorable terms, or at all. If additional funds are not available to us, we could be forced to curtail or cease new investment
activities.
Our Board of Directors may change our investment objective, operating policies and strategies without prior notice or
stockholder approval, the effects of which may be adverse.
Our Board of Directors has the authority to modify or waive our current investment objective, operating policies and strategies without prior notice and without
stockholder approval. We cannot predict the effect any changes to our current investment objective, operating policies and strategies would have on our business, NAV, operating results and value of our stock. However, the effects might be adverse,
which could negatively impact our ability to pay you distributions and cause you to lose part or all of your investment.
We and our portfolio companies are subject to regulation at the local, state and federal level, including laws and regulations governing cannabis by state and federal governments. See “— Risks Related to the Cannabis and Hemp Industries” below. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we may be permitted to make or that impose limits on our ability to pledge a significant amount of our assets to secure loans or that restrict the operations of a portfolio company, any of which could harm us and our stockholders and the value of our investments, potentially with retroactive effect. For example, certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which influences many aspects of the financial services industry, have been amended or repealed and the Code has been substantially amended and reformed. Any amendment or repeal of legislation, or changes in regulations or regulatory interpretations thereof, could create uncertainty in the near term, which could have a material adverse impact on our business, financial condition and results of operations.
Provisions of the Maryland General Corporation LawMGCL and of our charter and bylaws could deter takeover attempts and have an
adverse impact on the price of our common stock.
The Maryland General Corporation Law (“MGCL”),MGCL, our charter and our bylaws contain provisions that may discourage, delay or make more difficult a change in control or
the removal of our directors. Under our charter, certain charter amendments and certain transactions such as a merger, conversion of the Company to an open-end company, liquidation, or other transactions that may result in a change of control of
us, must be approved by stockholders entitled to cast at least 80% of the votes entitled to be cast on such matter, unless the matter has been approved by at least two-thirds of our “continuing directors,” as defined in our charter. Also, we are
subject to Subtitle 6 of Title 3 of the MGCL, the Maryland Business Combination Act, subject to any applicable requirements of the 1940 Act. Our Board of Directors has adopted a resolution exempting from the Maryland Business Combination Act any
business combination between us and any other person, subject to prior approval of such business combination by our Board of Directors,Board, including approval by a majority of our directorsIndependent whoDirectors. are not “interested persons,” as defined in the 1940 Act.
If the resolution exempting business combinations is repealed or our Board of Directors does not approve a business combination, the Maryland Business Combination Act may discourage third parties from trying to acquire control of us and increase
the difficulty of consummating such a transaction. We are subject to Subtitle 7 of Title 3 of the MGCL, the Maryland Control Share Acquisition Act. The Maryland Control Share Acquisition Act also may make it more difficult for a third-party to
obtain control of us and increase the difficulty of consummating such a transaction. Our bylaws provide that the Maryland Control Share Acquisition Act does not apply to shares acquired by our Adviser and/or our Adviser’s affiliates.
We have also adopted other measures that may make it difficult for a third-party to obtain control of us, including provisions of our charter classifying our Board of
Directors in three classes serving staggered three-year terms; majority voting for directors in contested elections; and provisions of our charter authorizing our Board of Directors to classify or reclassify shares of our stock in one or more
classes or series, including preferred shares, to cause the issuance of additional shares of our stock of any class or series, and to amend our charter, without stockholder approval, to increase or decrease the number of shares of stock of any
class or series that we have authority to issue. These provisions, as well as other provisions of our charter and bylaws, may delay, defer or prevent a transaction or a change in control that could give the holders of our shares the opportunity to
realize a premium over the value of our shares or otherwise be in their best interest.
Our Board of Directors is authorized to reclassify any unissued shares of common stock into one or more classes or series of
stock, including preferred stock, which could convey special rights and privileges to its owners.
As noted above, under the MGCL and our charter, our Board of Directors is authorized to classify and reclassify any authorized but unissued shares of stock into one or
more classes or series of stock, including preferred stock. The cost of any such reclassification would be borne by our existing stockholders. Prior to issuance of shares of each class or series, our Board of Directors will be required by the MGCL
and our charter to set the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each class or series. Thus, our Board of
Directors could authorize the issuance of shares of preferred stock with terms and conditions that could have the effect of delaying, deferring or preventing a transaction or a change in control that might involve a premium price for holders of our
common stock or otherwise be in their best interest. Certain matters under the 1940 Act require the separate vote of the holders of any issued and outstanding preferred stock. For example, holders of preferred stock would vote as a separate class
from the holders of common stock on a proposal to cease operations as a BDC. In addition, the 1940 Act provides that holders of preferred stock are entitled to vote separately from holders of common stock to elect two preferred stock directors. The
issuance of preferred shares convertible into shares of common stock may also reduce the net income and net asset valueNAV per share of our common stock upon conversion; provided, that we will only be permitted to issue such convertible preferred
stock to the extent we comply with the requirements of Section 61 of the 1940 Act, including obtaining common stockholder approval. These effects, among others, could have an adverse effect on an investment in our common stock.
sudden electrical or telecommunications outages;
natural disasters such as earthquakes, tornadoes and hurricanes;
disease pandemics;
events arising from local or larger scale political or social matters, including terrorist acts; and cyber-attacks.
These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems or
those of our portfolio companies for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The risk of a security breach or disruption, particularly through cyber-attacks or cyber
intrusions, including by computer hackers, nation-state affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. We and
our investment adviser’sAdviser’s employees expect to be the target of fraudulent calls, emails and other forms of potentially malicious or otherwise negatively impacting activities and attempts to gain unauthorized access to confidential, personal or other
sensitive information. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, fines or penalties, investigations, increased cybersecurity protection and
insurance costs, litigation, and damage to business relationships and reputations causing our business and results of operations to suffer. The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified
by other means. As our and our portfolio companies’ reliance on technology has increased, so have the risks posed to our information systems, both internal and those provided by our Adviser and third-party service providers, and the information
systems of our portfolio companies. Our Adviser has implemented processes, procedures, and internal controls to help mitigate cybersecurity risks and cyber intrusions, but these measures, as well as our increased awareness of the nature and extent
of a risk of a cyber incident, do not guarantee that a cyber incident will not occur and/or that our financial results, operations or confidential information will not be negatively impacted by such an incident. Even the most well-protected
information, networks, systems, and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not
to be detected and, in fact, may not be detected. Accordingly, we and our service providers may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us and
our service providers to entirely mitigate this risk. Cybersecurity risks require continuous and increasing attention and other resources from us to, among other actions, identify and quantify these risks, upgrade and expand our technologies,
systems and processes to adequately address such risks. Such attention diverts time and other resources from other activities and there is no assurance that our efforts will be effective. In addition, cybersecurity has become a top priority for
global lawmakers and regulators, and some jurisdictions have proposed or enacted laws requiring companies to notify regulators and individuals of data security breaches involving certain types of personal data. In particular, state and federal laws
and regulations related to cybersecurity compliance continue to evolve and change, which may require substantial investments in new technology, software and personnel, which could affect our profitability. These changes may also result in enhanced
and unforeseen consequences for cyber-related breaches and incidents, which may further adversely affect our profitability. If we fail to comply with the relevant and increasing complex laws and regulations, we could suffer financial losses, a
disruption of our business, liability to investors, regulatory intervention or reputational damage.
Delays in investing the net proceeds raised in our IPO or any follow-on offering of shares of our common stock may cause our performance to be worse than that of other
fully invested Business Development Companies or other lenders or investors pursuing comparable investment strategies. We cannot assure you that we will be able to identify investments that meet our investment objective or that any investment that
we make will produce a positive return. We may be unable to invest the net proceeds of our IPO or any follow-on offering on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating
results.
We anticipate that, depending on market conditions, it may take us a substantial period of time to invest substantially all of the net proceeds of our IPO, or any
follow-on offering, in securities meeting our investment objective. During this period, we may invest the net proceeds from our IPO or any follow-on offering primarily in high-quality, short-term debt securities, consistent with our BDC election
and our election to be taxed as a RIC, at yields significantly below the returns which we expect to achieve when our portfolio is fully invested in securities meeting our investment objective. As a result, any distributions that we pay during this
period may be substantially lower than the distributions that we may be able to pay when our portfolio is fully invested in securities meeting our investment objective. In addition, until such time as the net proceeds of our IPO or any follow-on
offering are invested in securities meeting our investment objective, the market price for our common stock may decline. Thus, the return on your investment may be lower than when, if ever, our portfolio is fully invested in securities meeting our
investment objective.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act.” As a result, we intend to take advantage of
certain exemptions for emerging growth companies allowing us to temporarily forgo the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act.”). We cannot predict if investors will find shares
of our common stock less attractive because we rely on this exemption. If some investors find our shares of common stock less attractive as a result, there may be a less active trading market for our shares and our share price may be more volatile.
We will remain an emerging growth company until the earlier of (a) the last day of the fiscal year (i) following the fifth anniversary of the completion of our initial public offering,IPO, (ii) in which we have total annual gross revenue of at least
$1.235 billion, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the end of our prior second fiscal quarter, and (b) the date
on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those
standards would otherwise apply to private companies. We will take advantage of the extended transition period for complying with new or revised accounting standards, which may make it more difficult for investors and securities analysts to
evaluate us since our financial statements may not be comparable to companies that comply with public company effective dates and may result in less investor confidence.
Management's Discussion & Analysis (MD&A)
New heading “Revolving Line of Credit”
New heading “Quarterly NAV Determination”
New heading “Valuation Determinations in Connection with Certain Offerings”
Removed heading “Net Investment Income”
Removed heading “Recent Developments”
Largest changes
“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, direct to consumer and other fast-growing companies Liquidity covenants that ensure such company has adequate cash runway Profitable or demonstrated path to near term profitability”see in full comparison
“Ms. VedBrat has had a professional career spanning over 25 years of experience in both the U.S. and Europe, and within the financial and technologies industries. Since 2023, Ms. VedBrat has served as a consultant. Previously, Ms. VedBrat was Head of Global Trading at BlackRock from July 2011 to February 2023, where she oversaw the company’s trading function across asset classes and regions. Ms. VedBrat was responsible for driving innovation and setting the trading platform’s strategic vision focused on growth and sustainable scalable trading solutions. Ms. …”see in full comparison
“Additionally, on February 11, 2025, WATC and the Company entered into a custody agreement (the “WATC Custody Agreement”), pursuant to which WATC was appointed to serve as the Company’s custodian to hold securities, loans, cash, and other assets on behalf of the Company. Either party may terminate the WATC Custody Agreement at any time upon sixty (60) days’ prior written notice. …”see in full comparison
“Our liquidity and capital resources are generated primarily from cash flows from operating activities, including proceeds from sales of investments and principal repayments, and interest and fee income earned on investments, as well as borrowings under our Revolving Line of Credit and potentially from future offerings of our securities. The primary uses of our cash includes (i) investments in portfolio companies, (ii) payment of operating expenses, and (iii) dividend payments to holders of our common stock. …”see in full comparison
Full comparison: every changed paragraph (133)
The following discussion and analysis orof our financial condition and results of operations should be read together with the
consolidated financial statements and the related notes that are included in Item 8 of Part II of this annual report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and
uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section entitled “Item 1A. Risk Factors.” Please also see the
section entitled “Special Note Regarding Forward-Looking Statements.”
We were formed in January 2021 as a Maryland corporation and are structured as an externally managed, closed-end, non-diversified management
investment company. We have elected to be treatedregulated as a business development company ("BDC") under the Investment Company Act of 1940 Act.(the "1940 Act"). In addition, for U.S. federal income tax purposes we have elected to be treated, and intend to qualify annually to be treated, as a regulated investment company ("RIC") under Subchapter M of the Code,
Internal Revenue Code (the "Code"), commencing with our taxable year ended March 31, 2022.
Our investment objective is to maximize risk-adjusted returns on equity for our shareholders. We seek to capitalize on, among other things, what
we believe to be nascent cannabis industry growth, and drive return on equity by generating current income from our debt investments and capital appreciation from our equity and equity-related investments. We intend to achieve our investment
objective by investing primarily in secured debt, unsecured debt, equity warrants and direct equity investments in privately held businesses. We intend that our debt investments will often be secured by either a first or second priority lien on the
assets of the portfolio company, can include either fixed or floating rate terms and will generally have a term of between three and six years from the original investment date. To date, we have been focused on investing in first lien secured,
fixed and floating rate debt with terms of two to four years. We expect our secured loans to be secured by various types of assets of our borrowers. While the types of collateral securing any given secured loan will depend on the nature of the
borrower’s business, common types of collateral we expect to secure our loans include real property and certain personal property, including equipment, inventory, receivables, cash, intellectual property rights and other assets to the extent
permitted by applicable laws and the regulations governing our borrowers. Certain attractive assets of our cannabis borrowers, such as cannabis licenses and cannabis inventory, may not be able to be used as collateral or transferred to us. See
“Item 1A. Risk Factors—Risks Relating to Our Investments—Certain assets of our borrowers may not be used as collateral or transferred to us due to applicable state laws and regulations governing the cannabis industry, and such restrictions could
negatively impact our profitability.” In some of our portfolio investments, we expect to receive nominally priced equity warrants and/or make direct equity investments in connection with a debt investment. In addition, a portion of our portfolio
may be comprised of derivatives, including total return swaps.
All of our cannabis investments are designed to be compliant with all applicable laws and regulations within the jurisdictions in which they are made or to which we are otherwise subject, including U.S. federal laws. We will make equity investments only in companies that are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate, including U.S. federal laws. We may make loans to companies that we determine based on our due diligence are licensed in, and complying with, state-regulated cannabis programs, regardless of their status under U.S. federal law, so long as the investment itself is designed to be compliant with all applicable laws and regulations in the jurisdiction in which the investment is made or to which we are otherwise subject, including U.S. federal law. We are externally managed by Chicago Atlantic BDC Advisers, LLC (the "Adviser ") and seek to expand the compliant cannabis investment activities of the Adviser’s leading investment platform in the cannabis industry. We primarily seek to partner with private equity firms, entrepreneurs, business owners and management teams to provide credit and equity financing alternatives to support buyouts, recapitalizations, growth initiatives, refinancings and acquisitions across cannabis companies, including cannabis-enabling technology companies, cannabis-related health and wellness companies, and hemp and cannabidiol (“CBD”) distribution companies. Under normal circumstances, each such cannabis company derives at least 50% of its revenues or profits from, or commits at least 50% of its assets to, activities related to cannabis at the time of our investment in the cannabis company. We are not required to invest a specific percentage of our assets in such cannabis companies, and we may make debt and equity investments in other companies regardless of sector.
Growth or EBITDA positive entities
Companies that require capital but do not want to dilute their equity Transactions that tend to be attractively priced and have better than normal covenants and amortization due to complexity of the industry
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, direct to consumer and other fast-growing companies Liquidity covenants that ensure such company has adequate cash runway Profitable or demonstrated path to near term profitability
Companies that are showing strong cash flow performance with low leverage profiles, but the industries carry regulatory, reputational or other risks Companies with attractive assets, including, but not limited to, accounts receivable, equipment or real estate Transactions that 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 value and/or enterprise value ratios
Financing is typically event driven
Companies that are pursuing a merger, acquisition, refinancing, dividend recap, or other strategic liquidity need Companies that have multiple areas of value and liquidity in addition to the underlying business Low debt to enterprise value ratios None of our investment policies are fundamental, and thus may be changed without stockholder approval.
None of our investment policies are fundamental, and thus may be changed without stockholder approval.
Our investment portfolio consists of fixed and floating rate loans, and our revolving credit facilities,facility ifalso any, will bearbears interest at a floating rates.rate, when drawn. Macro
trends in base interest rates like PRIME or SOFR may affect our net investment income (loss) over the long term.
Our portfolio activity may also reflect the proceeds from sales of investments. We will recognize realized gains or losses on sales of investments
based on the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized. We will record current-period changes in fair value of
investments that are measured at fair value as a component of the net change in unrealized gains (losses) on investments on the Statements of Operations.
Our primary operating expenses are a base management fee and any incentive fees under the investment advisory agreement between the Company and the Adviser (the "Investment Advisory Agreement.Agreement"). Our investmentbase management
fee compensatesand any incentive fees compensate our Adviser for its work in identifying, evaluating, negotiating, executing, monitoring, servicing and realizing our investments. See “Item 1. Business—Investment Advisory Agreement.”
Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory and management services to us, the base compensation, bonus and benefits, and the routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser. We may bear our allocable portion of the compensation paid by the Adviser (or its affiliates) to our Chief Financial Officer ("CFO") and Chief Compliance Officer ("CCO") and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs). We may bear any other expenses of our operations and transactions, including (without limitation) fees and expenses relating to:
the cost of our organization and offerings;
the cost of calculating our net asset value ("NAV"), including the cost of any third-party valuation services;
the cost of effecting sales and repurchases of shares of our common stock and other securities;
fees and expenses payable under any underwriting agreements, if any;
debt service and other costs of borrowings or other financing arrangements;
We expect, but cannot assure, that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will
decline as a percentage of total assets during such periods.
Hedgingcosts of hedging;
expenses, including travel expenses, incurred by the Adviser, or members of the investment team, or payable to third-parties, performing due diligence on prospective portfolio companies and, if necessary, enforcing our rights;
management and incentive fees payable pursuant to the Investment Advisory Agreement;
fees payable to third-parties relating to, or associated with, making investments and valuing investments (including third-party valuation firms);
costs, including legal fees, associated with compliance under cannabis laws;
transfer agent and custodial fees;
fees and expenses associated with marketing efforts (including attendance at industry and investor conferences and similar events);
federal and state registration fees;
any exchange listing fees and fees payable to rating agencies;
federal, state and local taxes;
independent directors’ fees and expenses, including travel expenses;
cost of preparing financial statements and maintaining books and records and filing reports or other documents with the SEC (or other regulatory bodies) and other reporting and compliance costs, and the compensation of professionals responsible for the preparation of the foregoing;
the cost of any reports, proxy statements or other notices to our stockholders (including printing and mailing costs), the costs of any stockholder or director meetings and the compensation of investor relations personnel responsible for the preparation of the foregoing and related matters;
brokerage commissions and other compensation payable to brokers or dealers;
research and market data;
fidelity bond, directors’ and officers’ errors and omissions liability insurance and other insurance premiums;
direct costs and expenses of administration, including printing, mailing and staff;
fees and expenses associated with independent audits, and outside legal and consulting costs;
costs of winding up;
costs incurred in connection with the formation or maintenance of entities or vehicles to hold our assets for tax or other purposes;
extraordinary expenses (such as litigation or indemnification); and costs associated with reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws.
We expect, but cannot ensure, that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will decline as a percentage of total assets during such periods.
To the extent that any of our investments are denominated in a currency other than U.S. dollars, we may enter into currency hedging contracts to
reduce our exposure to fluctuations in currency exchange rates. We may also enter into interest rate hedging agreements. Such hedging activities, which will be subject to compliance with applicable legal requirements, may include the use of
futures, options, swaps and forward contracts. Costs incurred in entering into such contracts or in connection with settling them will be borne by us.
As of December 31, 2025, our investment portfolio had an aggregate fair value of approximately $333.3 million and was comprised of approximately $292.7 million in first lien, senior secured loans, approximately $37.5 million in senior secured notes, approximately $1.4 million in second lien, senior secured loans, and approximately $1.7 million in equity securities across thirty-nine portfolio companies. As of December 31, 2024, our investment portfolio had an aggregate fair value of approximately $275.2 million and was comprised of approximately $239.9 million in first lien, senior secured loans, approximately $34.7 million in senior secured notes and $0.7 million in equity securities across twenty-eight portfolio companies.
As of December 31, 2024, our investment portfolio had an aggregate fair value of approximately $275.2 million and was comprised of approximately $239.9 million in
first lien senior secured loans, approximately $34.7 million in senior secured notes, and $0.7 million in equity securities across twenty-eight portfolio companies. As of December 31, 2023, our investment portfolio had an aggregate fair value of
approximately $54.1 million and was comprised of approximately $46.0 million in first lien senior secured loans, and approximately $8.1 million in senior secured notes across five portfolio companies.
A summary of the composition of our investment portfolio at amortized cost and fair value as a percentage of total investments are shown in the following tables as of
December 31, 2024 and December 31, 2023.
The following tables show the composition of our investment portfolio by geographic region of the United States at amortized cost and fair value as a percentage of
total investments as of December 31, 2024 and December 31, 2023. The geographic composition is determined by the location of the headquarters of the portfolio company.
SetA forthsummary below are tables showingof the industry composition of our investment portfolio at amortized cost and fair value as a percentage of total investments as of
December 31, 20242025 and December 31, 2023.2024 are shown in the following tables.
The following tables show the composition of our investment portfolio by geographic region of the United States at amortized cost and fair value as a percentage of total investments as of December 31, 2025 and December 31, 2024. The geographic composition is determined by the location of the headquarters of the portfolio company.
Geographic regions are defined as: West, for the states of WA, OR, ID, MT, WY, CO, AK, HI, UT, NV and CA; Midwest, for the states of ND, SD, NE, KS, MO, IA, MN, WI, MI, IL, IN and OH; Northeast, for the states of PA, NJ, NY, CT, RI, MA, VT, NH and ME; Southeast, for the states of AR, LA, MS, TN, KY, AL, FL, GA, SC, NC, VA, DE, WV and MD; and Southwest, for the states of AZ, NM, TX and OK.
The tables below present the industry composition of our investment portfolio at amortized cost and fair value as a percentage of total investments as of December 31, 2025 and December 31, 2024.
(1) The Company uses the North American Industry Classification System (“NAICS”) code for classifying the industry grouping of its portfolio companies,
excluding any portfolio company operating in the cannabis industry.
(1) The Company uses the North American Industry Classification System (“NAICS”) code for classifying the industry grouping of its portfolio companies,
excluding any portfolio company operating in the cannabis industry.
As of December 31, 20242025 and December 31, 2023,2024, we had three portfolio companies that represented 45.1%31.8% and 85.0%,45.1%, respectively, of theour investments, at fair values
of our portfolio.value. As of December 31, 20242025 and December 31, 2023,2024, our largest portfolio company represented 18.9%15.7% and 38.7%,18.9%, respectively, of theour totalinvestments, at fair values of our investments in portfolio companies.value.
During the years ended December 31, 2024 and December 31, 2023, we made an aggregate of approximately $240.5 million and $8.4 million of investments in twenty-eight
and two portfolio companies, excluding fees and discounts, respectively. During the years ended December 31, 2024 and December 31, 2023, there were $21.4 million and $6.2 million repayments received or sales of
investments.
The following table provides a summary of the changes in the investment portfolio for the yearsyear ended December 31, 20242025 and December 31, 2023.2024:
Our portfolio management team uses an ongoing investment risk rating system to characterize and monitor our outstanding loans. Our portfolio management team monitors
and, when appropriate, recommends changes to the investment risk ratings. Our Adviser’s Valuationvaluation Committeecommittee reviews the recommendations and/or changes to the investment risk ratings, which are submitted on a quarterly basis to the Board of
Directors and itsthe Audit Committee.
Revolving Line of Credit
On February 11, 2025, the Company entered into a senior secured revolving credit agreement (the “Credit Agreement”, the "Revolving Line of Credit") by and among the Company, as borrower, Western Alliance Trust Company, N.A. (“WATC”), as administrative agent, Western Alliance Bank, as an issuing bank and as the initial lender, and the other lenders party thereto from time to time.
What changed in the latest 10-Q
Risk Factors
New heading “Sales of shares of our common stock after the completion of the Merger may cause the market price of our common stock to decline.”
New heading “Our shareholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the Merger.”
New heading “The Merger Agreement conditions completion of the Merger on approval by our and REFI’s unaffiliated shareholders who vote at the relevant shareholder meetings, and the failure to obtain such approvals will result in the Merger not being completed.”
New heading “The REFI Special Meeting will be conducted in two sessions, which are expected to occur on the same day, pursuant to a sequencing adjournment, and this meeting structure may be subject to challenge that could delay or prevent the completion of the Merger.”
New heading “We may be unable to realize the benefits anticipated by the Merger, including estimated cost savings, or it may take longer than anticipated to achieve such benefits.”
New heading “The Merger may trigger certain “change of control” provisions and other restrictions in our or REFI’s contracts or of our respective affiliates and the failure to obtain any required consents or waivers could adversely impact the combined company.”
New heading “The Merger is conditioned on the assumption or repayment of REFI’s outstanding indebtedness, and consent from the lenders under REFI’s unsecured notes has not been obtained.”
New heading “The opinion delivered to the special committee of our Board (the “LIEN Special Committee”) by its financial advisor prior to the signing of the Merger Agreement will not reflect changes in circumstances since the date of the opinion.”
New heading “The announcement and pendency of the Merger could adversely affect both our and REFI’s business, financial results and operations.”
New heading “If the Merger does not close, we will benefit from the expenses incurred in its pursuit.”
New heading “The termination of the Merger Agreement could negatively impact us.”
New heading “The Merger Agreement limits our ability to pursue alternatives to the Merger.”
New heading “The Merger is subject to closing conditions, including shareholder approvals, that, if not satisfied or (to the extent legally allowed) waived, will result in the Merger not being completed, which may result in material adverse consequences to our business and operations.”
New heading “Litigation filed against us and REFI in connection with the Merger could result in substantial costs and could delay or prevent the Merger from being completed.”
New heading “We will be subject to operational uncertainties and contractual restrictions while the Merger is pending.”
New heading “We and REFI may waive one or more conditions to the Merger without resoliciting shareholder approval.”
New heading “The market price of our common stock after the Merger may be affected by factors different from those affecting our common stock currently.”
New heading “Our shareholders and REFI’s shareholders do not have appraisal rights in connection with the Merger.”
New heading “The Merger may not be treated as a tax-free reorganization under Section 368(a) of the Code.”
New heading “The combined company may incur adverse tax consequences if either we or REFI have failed or fails to qualify for taxation as a RIC or a REIT, respectively, for United States federal income tax purposes.”
Largest changes
“We and REFI may be subject to legal actions, including securities class action lawsuits and derivative lawsuits, as well as various regulatory, governmental and law enforcement inquiries, investigations and subpoenas in connection with the Merger. These or any similar securities class action lawsuits and derivative lawsuits, regardless of their merits, may result in substantial costs and divert management time and resources. …”see in full comparison
“In addition, the consummation of the Merger may violate, conflict with, result in a breach of provisions of, or the loss of any benefit under, constitute a default (or an event that, with or without notice or lapse of time or both, would constitute a default) under, or result in the termination, cancellation, acceleration or other change of any right or obligation (including any payment obligation) under, certain agreements of us or REFI. …”see in full comparison
“Litigation filed against us and REFI in connection with the Merger could result in substantial costs and could delay or prevent the Merger from being completed.”see in full comparison
“The Merger is subject to closing conditions, including shareholder approvals, that, if not satisfied or (to the extent legally allowed) waived, will result in the Merger not being completed, which may result in material adverse consequences to our business and operations.”see in full comparison
“The REFI Special Meeting will be conducted in two sessions, which are expected to occur on the same day, pursuant to a sequencing adjournment, and this meeting structure may be subject to challenge that could delay or prevent the completion of the Merger.”see in full comparison
“The Merger Agreement conditions completion of the Merger on approval by our and REFI’s unaffiliated shareholders who vote at the relevant shareholder meetings, and the failure to obtain such approvals will result in the Merger not being completed.”see in full comparison
Full comparison: every changed paragraph (55)
There have been no material changes during the threesix months ended MarchJune 31,30, 2026 to the risk factors discussed in “Item 1A. Risk Factors” in our annual report on Form 10-K for the fiscal year ended December 31, 2025. Except for the following related to the Merger:
Sales of shares of our common stock after the completion of the Merger may cause the market price of our common stock to decline.
At the Merger Effective Time, each share of REFI’s common stock issued and outstanding immediately prior to such time (other than shares owned by us or any of our consolidated subsidiaries), will be converted into the right to receive a number of shares of our common stock equal to the Exchange Ratio, plus any cash (without interest) in lieu of fractional shares.
Former REFI shareholders may decide not to hold the shares of our common stock that they will receive pursuant to the Merger Agreement. Certain of REFI’s shareholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the shares of our common stock that they receive pursuant to the Merger Agreement. In addition, our shareholders may decide not to hold their shares of our common stock after completion of the Merger. In each case, such sales of our common stock could have the effect of depressing the market price for our common stock and may take place soon after the completion of the Merger.
Immediately prior to the date and time that REFI elects to be regulated as a BDC under the 1940 Act by filing a Form N-54 with the SEC (the “BDC Election Time”), any vesting conditions applicable to each outstanding share of REFI’s restricted stock will, automatically and without any required action on the part of the holder thereof, accelerate in full and thereafter participate in the Merger along with the other shares of REFI’s common stock. Following the Merger Effective Time, holders of previously restricted shares may sell the shares of our common stock that they receive in the Merger, subject to applicable securities laws.
In addition, on July 9, 2026, REFI entered into a Loan Agreement with Koach Capital Fund I LLC, Koach Capital Fund II LP, Koach Capital Fund III LP and their respective wholly-owned subsidiaries (collectively, “Koach”), pursuant to which REFI issued 4,306,754 shares of REFI’s common stock, at a price of $14.53 per share, in a private placement in exchange for second lien promissory notes issued by Koach in an aggregate principal amount of approximately $62.5 million (collectively, the “Koach Notes” and, such transaction, the “Koach Transaction”). The shares of REFI’s common stock issued to Koach investors in the Koach Transaction will be converted into shares of our common stock in the Merger. These shares are subject to lock-up letters restricting transfers for periods of three months (as to 20% of the shares) and six months (as to the remaining 80% of the shares) following the July 9, 2026 closing of the Koach Transaction. Following expiration of the applicable lock-up periods, the shares of our common stock held by the Koach investors will become freely transferable, and the subsequent sale of these shares could create market overhang and adversely affect the market price of our common stock.
Our shareholders will experience a reduction in percentage ownership and voting power in the combined company as a result of the Merger.
Our shareholders will experience a substantial reduction in their respective percentage ownership interests and effective voting power in respect of the combined company relative to their respective ownership interests in the Company prior to the Merger. Consequently, Our shareholders should expect to exercise less influence over the management and policies of the combined company following the Merger than they currently exercise over the management and policies of the Company.
Prior to completion of the Merger, subject to certain restrictions in the Merger Agreement, and certain restrictions under the 1940 Act for issuances at prices below the then current net asset value per share of our common stock, we may issue additional shares of our common stock, which would further reduce the percentage ownership of the combined company to be held by our shareholders.
The Merger Agreement conditions completion of the Merger on approval by our and REFI’s unaffiliated shareholders who vote at the relevant shareholder meetings, and the failure to obtain such approvals will result in the Merger not being completed.
In addition to the customary shareholder approvals required for the Merger, the Merger Agreement conditions completion of the Merger on approval of the Merger Agreement by at least a majority of the shares of our common stock voted at the special meeting of our shareholders held by the unaffiliated holders of our common stock (the “LIEN Minority Vote”), and on approval of the Merger Agreement by at least a majority of the shares of REFI’s common stock voted at the special meeting of REFI’s shareholders (the “REFI Special Meeting”) held by the unaffiliated holders of REFI’s common stock (the “REFI Minority Vote,” and together with the LIEN Minority Vote, the “Minority Vote Requirements”).
The Minority Vote Requirements are heightened voting standards that were added to the Merger Agreement in response to our affiliation with REFI (as we share a common investment adviser platform) and the potential conflicts of interest presented by the Merger. Because affiliated shares are excluded from both the numerator and the denominator of the Minority Vote Requirements, a relatively small number of unaffiliated shareholder votes can determine whether the Merger is approved. If the Minority Vote Requirements are not obtained on either side, the Merger cannot be completed, notwithstanding Voting and Support Agreements or the affirmative vote of affiliated shareholders.
The Minority Vote Requirements also make the vote outcome more sensitive to shareholder participation. Broker non-votes and abstentions have the effect of votes against the Merger Agreement because approval of the Merger Agreement requires the affirmative vote of at least a majority of the outstanding shares of our common stock and REFI’s common stock. As a result, low shareholder turnout or high broker non-vote levels could result in failure of the Merger even if a substantial majority of unaffiliated shareholders who actually vote support the Merger. However, abstentions will not be counted as votes cast for purposes of the separate majority-of-the-minority-shares-voted requirement.
The REFI Special Meeting will be conducted in two sessions, which are expected to occur on the same day, pursuant to a sequencing adjournment, and this meeting structure may be subject to challenge that could delay or prevent the completion of the Merger.
The REFI Special Meeting is expected to be conducted in two sessions, which are expected to occur on the same day. At the initial session, REFI’s shareholders will vote on REFI’s election to be regulated as a BDC (the “BDC Election”), REFI’s investment advisory agreement with the Adviser (the “New BDC Advisory Agreement”) and a proposal to approve the adjournment of the REFI Special Meeting, from time to time, if necessary or appropriate, including (a) to permit the filing and SEC acceptance of the BDC Election and REFI’s board of director’s consideration and adoption of the approvals required to be made by the board of directors of REFI pursuant to Rule 17a-8 of the 1940 Act (the "Post-BDC Election Approvals") prior to the vote on the Merger Agreement, and (b) to solicit additional proxies if there are insufficient votes to approve the BDC Election, the New BDC Advisory Agreement or the Merger Agreement (such proposal, the "REFI Adjournment Proposal"). Following the vote on the BDC Election and the New BDC Advisory Agreement, the REFI Special Meeting will be adjourned pursuant to the REFI Adjournment Proposal for a short period of time, during which (i) REFI will file its Form N-54A with the SEC and, upon acceptance of such filing, the BDC Election Time will occur, and (ii) the board of directors of REFI (acting on the recommendation of REFI’s special committee) will consider and adopt the Post-BDC Election Approvals. The REFI Special Meeting will thereafter be reconvened, which is expected to occur on the same day, and REFI’s shareholders will vote on the Merger Agreement at the reconvened session.
The two-session meeting structure is designed to accommodate the sequencing required by the Merger Agreement and the 1940 Act. Specifically, REFI’s status must change from a real estate investment trust (“REIT”) to a BDC (and the Post-BDC Election Approvals must be adopted) before REFI’s shareholders vote on the Merger Agreement, because REFI’s shareholders voting on the Merger Agreement at the reconvened session will be voting as shareholders of a BDC rather than a REIT.
In addition, the two-session structure requires that a series of steps be completed within a limited timeframe, including SEC acceptance of the Form N-54A, REFI’s special committee’s recommendation to the board of directors of REFI, and the board of directors of REFI’s adoption of the Post-BDC Election Approvals. Any delay in completing these steps could require an additional adjournment (which could implicate a new record date if not completed within 120 days of the original record date) and could delay or prevent the completion of the Merger.
We may be unable to realize the benefits anticipated by the Merger, including estimated cost savings, or it may take longer than anticipated to achieve such benefits.
The realization of certain benefits anticipated as a result of the Merger will depend in part on the integration of REFI’s investment portfolio with our investment portfolio and the integration of REFI’s business with our business. There can be no assurance that REFI’s investment portfolio or business can be operated profitably or integrated successfully into our operations in a timely fashion or at all. The dedication of management resources to such integration may detract attention from the day-to-day business of the combined company, and there can be no assurance that there will not be substantial costs associated with the transition process or that there will not be other material adverse effects as a result of these integration efforts. Such effects, including incurring unexpected costs or delays in connection with such integration and failure of REFI’s investment portfolio to perform as expected, could have a material adverse effect on the financial results of the combined company.
We also expect to achieve certain cost savings from the Merger when the two companies have fully integrated their portfolios. It is possible that the estimates of the potential cost savings could ultimately be incorrect. The cost savings estimates also assume we will be able to combine the operations of the Company and REFI in a manner that permits those cost savings to be fully realized. If the estimates turn out to be incorrect or if we are not able to combine REFI’s investment portfolio or business with our operations successfully, the anticipated cost savings may not be fully realized or realized at all or may take longer to realize than expected.
The Merger may trigger certain “change of control” provisions and other restrictions in our or REFI’s contracts or of our respective affiliates and the failure to obtain any required consents or waivers could adversely impact the combined company.
Certain of our or REFI’s agreements or contracts of our respective affiliates, which may include agreements governing indebtedness of us or REFI, will or may require the consent or waiver of one or more counterparties in connection with the Merger. The failure to obtain any such consent or waiver may permit such counterparties to terminate, or otherwise increase their rights or our or REFI’s obligations under, any such agreement because the Merger or other transactions contemplated by the Merger Agreement may violate an anti-assignment, change of control or other similar provision relating to any of such transactions. If this occurs, we may have to seek to replace that agreement with a new agreement or seek an amendment to such agreement. We cannot assure you that we will be able to replace or amend any such agreement on comparable terms or at all.
If any such agreement is material, the failure to obtain consents, amendments or waivers under, or to replace on similar terms or at all, any of these agreements could adversely affect the financial performance or results of operations of the combined company following the Merger, including preventing us from operating a material part of REFI’s business.
In addition, the consummation of the Merger may violate, conflict with, result in a breach of provisions of, or the loss of any benefit under, constitute a default (or an event that, with or without notice or lapse of time or both, would constitute a default) under, or result in the termination, cancellation, acceleration or other change of any right or obligation (including any payment obligation) under, certain agreements of us or REFI. Any such violation, conflict, breach, loss, default or other effect could, either individually or in the aggregate, have a material adverse effect on the financial condition, results of operations, assets or business of the combined company following completion of the Merger.
The Merger is conditioned on the assumption or repayment of REFI’s outstanding indebtedness, and consent from the lenders under REFI’s unsecured notes has not been obtained.
It is a condition to the closing of the Merger that the lenders under REFI’s revolving credit facility and unsecured notes shall have either agreed to our assumption of the indebtedness or such indebtedness shall have been repaid prior to the closing of the Merger. As of the date of the Merger Agreement, the agent and lenders under REFI’s revolving credit facility have provided a preliminary consent supporting the Merger, and we and REFI expect to obtain a definitive consent prior to the closing of the Merger. However, the lenders under REFI’s unsecured notes have not provided any consent as of the date of the Merger Agreement, and although REFI expects to obtain their consent (or, alternatively, to repay the notes) prior to the closing of the Merger, there is no assurance that either outcome will occur. If REFI is unable to satisfy the closing condition, we may not be able to consummate the Merger.
The opinion delivered to the special committee of our Board (the “LIEN Special Committee”) by its financial advisor prior to the signing of the Merger Agreement will not reflect changes in circumstances since the date of the opinion.
The opinion of the financial advisor to the LIEN Special Committee was delivered to the LIEN Special Committee on, and dated, June 16, 2026. Changes in our or REFI’s operations and prospects, general market and economic conditions and other factors that may be beyond the control of us or REFI may significantly alter our or REFI’s respective value or the price of shares of our common stock or REFI’s common stock by the time the Merger is completed. The opinion does not speak as of the time the Merger will be completed or as of any date other than the date of such opinion.
The announcement and pendency of the Merger could adversely affect both our and REFI’s business, financial results and operations.
The announcement and pendency of the Merger could cause disruptions in and create uncertainty surrounding both our and REFI’s business, including affecting relationships with existing and future borrowers, which could have a significant negative impact on future revenues and results of operations, regardless of whether the Merger is completed. In addition, we and REFI have diverted, and will continue to divert, management resources towards the completion of the Merger, which could have a negative impact on each of our and REFI’s future revenues and results of operations.
We and REFI are also subject to restrictions on the conduct of each of our and REFI’s businesses prior to the completion of the Merger as provided in the Merger Agreement, generally requiring us and REFI to conduct business only in the ordinary course and subject to specific limitations, including, among other things, certain restrictions on each of our and REFI’s respective ability to make certain investments and acquisitions, sell, transfer or dispose of our and REFI’s respective assets, amend each of our and REFI’s respective organizational documents and enter into or modify certain material contracts. These restrictions could prevent us or REFI from pursuing otherwise attractive business opportunities, industry developments and future opportunities and may otherwise have a significant negative impact on the respective future investment income and results of operations of each of us and/or the combined company following the Merger.
If the Merger does not close, we will benefit from the expenses incurred in its pursuit.
The Merger may not be completed. If the Merger is not completed, we will have incurred substantial expenses for which no ultimate benefit will have been received. We have incurred out-of-pocket expenses in connection with the Merger for investment banking, legal and accounting fees and financial printing and other related charges, much of which will be incurred even if the Merger is not completed.
The termination of the Merger Agreement could negatively impact us.
If the Merger Agreement is terminated, there may be various consequences, including:
our business may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Merger, without realizing any of the anticipated benefits of completing the Merger; and the market price of our common stock might decline to the extent that the market price prior to termination reflects a market assumption that the Merger will be completed.
The Merger Agreement limits our ability to pursue alternatives to the Merger.
The Merger Agreement contains provisions that limit our ability to discuss, facilitate or commit to competing third-party proposals to acquire all or a significant part of us. These provisions, which are typical for transactions of this type, might discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of us from considering or proposing that acquisition even if it were prepared to pay consideration with a higher per share market price than that proposed in the Merger or might result in a potential competing acquirer proposing to pay a lower per share price to acquire us than it might otherwise have proposed to pay. However, unlike many public-company merger agreements, the Merger Agreement does not require us to pay a termination fee to the other party under any circumstance.
The Merger is subject to closing conditions, including shareholder approvals, that, if not satisfied or (to the extent legally allowed) waived, will result in the Merger not being completed, which may result in material adverse consequences to our business and operations.
The Merger is subject to closing conditions, including certain approvals of our and REFI’s respective shareholders that, if not satisfied, will prevent the Merger from being completed. The closing condition that REFI’s shareholders adopt the Merger Agreement and approve the Merger, the BDC Election and the New BDC Advisory Agreement may not be waived under applicable law and must be satisfied for the Merger to be completed. If REFI’s shareholders do not approve the Merger Agreement and the Merger, the BDC Election and the New BDC Advisory Agreement and the Merger is not completed, the resulting failure of the Merger could have a material adverse impact on our business and operations. In addition, the closing condition that our shareholders approve the Merger Agreement, including the Merger and related transactions, and the issuance of shares of our common stock pursuant to the Merger Agreement (the “Merger Stock Issuance Proposal”) may not be waived under applicable law and must be satisfied for the Merger to be completed. If our shareholders do not approve the Merger Stock Issuance Proposal and the Merger Agreement, including the Merger and related transactions, and the Merger is not completed, the resulting failure of the Merger could have a material adverse impact on our business and operations. The Merger is also conditioned on receipt by REFI of the Post-BDC Election Approvals from REFI’s board of directors (upon recommendation of REFI’s special committee) under Rule 17a-8 of the 1940 Act following the BDC Election Time. If the Post-BDC Election Approvals are not obtained on the anticipated schedule, the Merger will not be completed on the anticipated timeline and may not be completed at all. In addition to the required approvals of our and REFI’s shareholders, the Merger is subject to a number of other conditions beyond our control that may prevent, delay or otherwise materially adversely affect completion of the Merger. We cannot predict whether and when these other conditions will be satisfied.
Litigation filed against us and REFI in connection with the Merger could result in substantial costs and could delay or prevent the Merger from being completed.
We and REFI may be subject to legal actions, including securities class action lawsuits and derivative lawsuits, as well as various regulatory, governmental and law enforcement inquiries, investigations and subpoenas in connection with the Merger. These or any similar securities class action lawsuits and derivative lawsuits, regardless of their merits, may result in substantial costs and divert management time and resources. An adverse judgment in such cases could have a negative impact on the liquidity and financial condition of us and/or the combined company following the Merger or could prevent the Merger from being completed.
We will be subject to operational uncertainties and contractual restrictions while the Merger is pending.
Uncertainty about the effect of the Merger may have an adverse effect on us and, consequently, on the combined company following completion of the Merger. These uncertainties may cause those that deal with us to seek to change their existing business relationships with us. In addition, the Merger Agreement restricts us from taking actions that we might otherwise consider to be in our best interests. These restrictions may prevent us from pursuing certain business opportunities that may arise prior to the completion of the Merger.
We and REFI may waive one or more conditions to the Merger without resoliciting shareholder approval.
Certain conditions to our and REFI’s respective obligations to complete the Merger may be waived, in whole or in part, to the extent legally allowed, either unilaterally or by agreement of us and REFI. In the event that any such waiver does not require resolicitation of shareholders, the parties to the Merger Agreement will have the discretion to complete the Merger without seeking further shareholder approval. The conditions requiring the approval of the Merger Stock Issuance Proposal and the Merger Agreement, including the Merger and related transactions, by our shareholders and the BDC Election, the New BDC Advisory Agreement, and the Merger Agreement by REFI’s shareholders, however, cannot be waived.
The market price of our common stock after the Merger may be affected by factors different from those affecting our common stock currently.
Our business and REFI’s business differ in some respects and, accordingly, the results of operations of the combined company and the market price of our common stock after the Merger may be affected by factors different from those currently affecting the independent results of operations of us and REFI and the market prices of our common stock. These factors include a larger shareholder base, differences in the investment strategies and a different capital structure.
Accordingly, our historical trading prices and financial results may not be indicative of these matters for the combined company following the Merger.
Our shareholders and REFI’s shareholders do not have appraisal rights in connection with the Merger.
Appraisal rights are statutory rights that enable shareholders to dissent from certain extraordinary transactions, such as certain mergers, and to demand that the corporation pay the fair value for their shares as determined by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the applicable transaction. Under Maryland law, our shareholders and REFI’s shareholders will not have rights to an appraisal of the fair value of their shares in connection with the Merger.
The Merger may not be treated as a tax-free reorganization under Section 368(a) of the Code.
We and REFI intend that the Merger will qualify as a tax-free reorganization under Section 368(a) of the Code, and each expect to receive a legal opinion to that effect. However, if the Internal Revenue Service or a court determines that the Merger should not be treated as a tax-free reorganization under Section 368(a) of the Code, then a shareholder would generally recognize gains or losses for U.S. federal income tax purposes upon the exchange of REFI’s common stock for our common stock in the Merger.
The combined company may incur adverse tax consequences if either we or REFI have failed or fails to qualify for taxation as a RIC or a REIT, respectively, for United States federal income tax purposes.
REFI has elected to qualify as a REIT and has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes under the Code and intends to continue to so qualify as a REIT at the time of the Merger. We have elected to qualify as a RIC and have operated in a manner that we believe has allowed us to qualify as a RIC for U.S. federal income tax purposes under the Code and intend to continue to do so through and following the Merger. In order to qualify as a RIC or a REIT, a corporation must satisfy numerous requirements relating to, among other things, the nature of its assets, income and distributions. If we or REFI had failed or fails to qualify as a RIC or a REIT, respectively, for U.S. federal income tax purposes, the combined company may have significant tax liabilities, or may have to make significant distributions and pay penalty or excise taxes in order for the combined company to qualify as a RIC. These liabilities could substantially reduce the combined company’s cash available for distribution to its shareholders and the value of our common stock. In addition, if either we or REFI have failed or fail to qualify as a RIC or a REIT, respectively, for U.S. federal income tax purposes, the analysis of the Merger as a tax-free reorganization could be impacted.
Management's Discussion & Analysis (MD&A)
New heading “Recent Developments”
New heading “Proposed Merger with Chicago Atlantic Real Estate Finance, Inc.”
New heading “Shelf Registration Statement”
Largest changes
“On May 11, 2026, the Company filed a registration statement on Form N-2 (the “Shelf Registration Statement”) with the U.S. Securities and Exchange Commission registering the offering, from time to time on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, of up to $500,000,000 in aggregate amount of the Company’s common stock, preferred stock, subscription rights, warrants, debt securities, and units comprising any combination of the foregoing. …”see in full comparison
“On June 17, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Chicago Atlantic Real Estate Finance, Inc. …”see in full comparison
For the three months endedsee in full comparisonMarchJune31,30, 2026 and 2025, total investment income was approximately$16.7$14.0 million and$11.9$13.1 million, respectively, which was attributable to approximately$2.1$0.7 million and$0.6$1.2 million of fee income related to commitment fees, success fees, amendment fees and administrative fees and approximately$ 14.6$13.3 million and$11.3$11.9 million of interest income, respectively. For the six months ended June 30, 2026 and 2025, total investment income was approximately $30.7 million and $25.0 million, which was attributable to approximately, $2.8 million and $1.8 million of fee income related to commitment fees, success fees, amendment fees and administrative fees and approximately $27.9 million and $23.2 million of interest income, respectively. Approximately$0.6$0.5 million and $1.1 million of prepayment premiums were included in interest income for the three and six months endedMarchJune31,30,2026.2026, respectively. There were no prepayment premiums included in interest income for the three and six months endedMarchJune31,30, 2025.
Full comparison: every changed paragraph (35)
We have typically invested in and expect to continue to invest in loans made primarily to private leveraged lower middle-market and middle-market companies with up to $100 million of earnings before interest, taxes, depreciation and amortization, or “EBITDA.” Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. We expect that our investments will generally range between $2 million and $50 million each, although we expect that this investment size will vary proportionately with the size of our capital base. We have an active pipeline of investments and are currently reviewing approximately $810.4$1.1 millionbillion of potential investments in varying stages of underwriting.
Recent Developments
Proposed Merger with Chicago Atlantic Real Estate Finance, Inc.
On June 17, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Chicago Atlantic Real Estate Finance, Inc. (“REFI”) and, for the limited purposes described therein, the Adviser and Chicago Atlantic REIT Manager, LLC (the “REFI Manager”), pursuant to which REFI will elect to be regulated as a business development company and merge with and into the Company, with the Company continuing as the surviving company (the “Merger”) and continuing to trade on Nasdaq under the symbol “LIEN.” REFI’s stockholders will receive shares of our common stock based on the Exchange Ratio. The “Exchange Ratio” equals the net asset value per share of REFI common stock (the “Closing REFI NAV”) divided by the net asset value per share of the Company’s common stock (the “Closing LIEN NAV”) (rounded to the fourth decimal place), in each case calculated in good faith as of a date no earlier than 48 hours (excluding Sundays and holidays) prior to the effective time of the Merger (the “Merger Effective Time”). The Merger, which is subject to stockholder approvals, regulatory approvals, effectiveness of a Form N-14 registration statement and other customary conditions, is expected to close in the fourth quarter of 2026. See Note 14 to the financial statements.
Shelf Registration Statement
On May 11, 2026, the Company filed a registration statement on Form N-2 (the “Shelf Registration Statement”) with the U.S. Securities and Exchange Commission registering the offering, from time to time on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, of up to $500,000,000 in aggregate amount of the Company’s common stock, preferred stock, subscription rights, warrants, debt securities, and units comprising any combination of the foregoing. The specific terms of any offering will be established in one or more prospectus supplements at the time of the offering. As of the date of this Quarterly Report on Form 10-Q, the Shelf Registration Statement had not been declared effective.
As of MarchJune 31,30, 2026, our investment portfolio had an aggregate fair value of approximately $364.0$334.8 million and was comprised of approximately $331.2$299.3 million in first lien, senior secured loans, approximately $28.2$30.9 million in senior secured notes, approximately $1.4 million in second lien, senior secured loans, and approximately $3.2 million in equity securities across fortythirty-seven portfolio companies. As of December 31, 2025, our investment portfolio had an aggregate fair value of approximately $333.3 million and was comprised of approximately $292.7 million in first lien, senior secured loans, approximately $37.5 million in senior secured notes, approximately $1.4 million in second lien, senior secured loans, and approximately $1.7 million in equity securities across thirty-nine portfolio companies.
A summary of the composition of our investment portfolio at amortized cost and fair value as a percentage of total investments as of MarchJune 31,30, 2026 and December 31, 2025 are shown in the following tables.
The following tables show the composition of our investment portfolio by geographic region of the United States at amortized cost and fair value as a percentage of total investments as of MarchJune 31,30, 2026 and December 31, 2025. The geographic composition is determined by the location of the headquarters of the portfolio company.
The tables below present the industry composition of our investment portfolio at amortized cost and fair value as a percentage of total investments as of MarchJune 31,30, 2026 and December 31, 2025.
As of MarchJune 31,30, 2026 and December 31, 2025, we had three portfolio companies that represented 32.5%35.1% and 31.8% respectively, of our investments, at fair value. As of MarchJune 31,30, 2026 and December 31, 2025, our largest portfolio company represented 17.8%19.2% and 15.7%, respectively, of our investments, at fair value.
The following table provides a summary of the changes in the investment portfolio for the threesix months ended MarchJune 31,30, 2026 and 2025:
The following tables show the distribution of our loan investments on the 1 to 5 investment risk rating scale at fair value as of MarchJune 31,30, 2026 and December 31, 2025:
As of MarchJune 31,30, 2026 and December 31, 2025, there were no loans in our portfolio placed on non-accrual status.
As of MarchJune 31,30, 2026, the Company had $54,500,000$27,000,000 in outstanding borrowings and $45,500,000$73,000,000 available under the Revolving Line of Credit. The Revolving Line of Credit is secured by all of the Company's assets pledged as collateral.
The following discussion and analysis of our results of operations encompasses our results for the three and six months ended MarchJune 31,30, 2026 and 2025.
The fair value of the Company’s investment portfolio grew from $289.3$307.5 million as of MarchJune 31,30, 2025, to $364.0$334.8 million as of MarchJune 31,30, 2026. The 26%9% growth in the fair value of our investment portfolio resulting from originations is the main driver for the changes in investment income, operating expenses, net investment income and change in unrealized appreciation (depreciation) for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025.
The following table sets forth the components of investment income for the three and six months ended MarchJune 31,30, 2026 and 2025:
For the three months ended MarchJune 31,30, 2026 and 2025, total investment income was approximately $16.7$14.0 million and $11.9$13.1 million, respectively, which was attributable to approximately $2.1$0.7 million and $0.6$1.2 million of fee income related to commitment fees, success fees, amendment fees and administrative fees and approximately $ 14.6$13.3 million and $11.3$11.9 million of interest income, respectively. For the six months ended June 30, 2026 and 2025, total investment income was approximately $30.7 million and $25.0 million, which was attributable to approximately, $2.8 million and $1.8 million of fee income related to commitment fees, success fees, amendment fees and administrative fees and approximately $27.9 million and $23.2 million of interest income, respectively. Approximately $0.6$0.5 million and $1.1 million of prepayment premiums were included in interest income for the three and six months ended MarchJune 31,30, 2026.2026, respectively. There were no prepayment premiums included in interest income for the three and six months ended MarchJune 31,30, 2025.
Our operating expenses for the threesix months ended MarchJune 31,30, 2026 and 2025 are presented below:
Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the amortized cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period. There were no net realized gains or losses from investments during the three and six months ended MarchJune 31,30, 2026 and 2025.
Net change in unrealized appreciation (depreciation) from investments for the three and six months ended MarchJune 31,30, 2026 and 2025 is comprised of the following:
The following table details net change in unrealized appreciation (depreciation) for our portfolio for the three and six months ended MarchJune 31,30, 2026 and 2025:
In addition, on May 11, 2026, we filed a $500.0 million universal Shelf Registration Statement on Form N-2, which, once effective, would permit us to offer common stock, preferred stock, subscription rights, warrants, debt securities and units from time to time as an additional source of capital, subject to market conditions and the requirements of the 1940 Act.
In accordance with the 1940 Act, we are allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 150% after such borrowings (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). As of MarchJune 31,30, 2026, we had approximately $3.3$0.9 million in cash and $54.5$27.0 million in total aggregate principal amount of outstanding debt. Our asset coverage as of MarchJune 31,30, 2026, was 658%.1220%. Subject to borrowing base and other restrictions, we had approximately $45.5$73.0 million available for additional borrowings under the Revolving Line of Credit as of MarchJune 31,30, 2026.
As of MarchJune 31,30, 2026 and December 31, 2025, we had cash of approximately $3.3$0.9 million and $2.9 million, respectively. During threethe six months ended MarchJune 31,30, 2026, we experienced a net increasedecrease in cash of approximately $0.4$2.0 million. During the period, cash usedprovided inby operating activities was approximately $20.8$12.1 million, primarily driven by the purchase of investments of approximately $92.7$95.4 million, partially offset by proceeds from sales of investments and principal repayments of portfolio investments of $63.4$95.6 million and net investment income of approximately $10$17.6 million. Cash providedused byin financing activities was approximately $21.2$14.2 million, primarily driven by net borrowings and repayments under our Revolving Line of Credit of $29.5$2.0 million, offset by distributions paid of approximately $7.8$15.5 million and financing costs paid of approximately $0.5 million.
All of our investments as of MarchJune 31,30, 2026 and December 31, 2025 were categorized at Level 3, and therefore, 100% of our portfolio requires significant estimates. Our investments may not have readily available market quotations (as such term is defined in Rule 2a-5 under the 1940 Act), and those investments which do not have readily available market quotations are valued at fair value as determined in good faith in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Significant unobservable inputs create uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s investments may vary and may include the debt investments’ yield and volatility fluctuations. Significant increases (decreases) in discount rate in isolation would result in a significantly lower (higher) fair value assessment. Significant increases (decreases) in volatility in isolation would result in a significantly lower (higher) fair value assessment.
Common Stock
The following table lists the net asset value per share of our common stock, the range of high and low closing sales prices of our common stock reported on the Nasdaq Global Market, the closing sale prices as a premium (or discount) to our net asset value per share and dividends per share for each fiscal quarter since our common stock began trading on the Nasdaq Global Market. On MayAugust 13,11, 2026, the last reported closing sales price of our common stock on the Nasdaq Global Market was $9.07$9.78 per share, which represented a discount of approximately 31.96%(26.34%) to our net asset value per share of $13.33$13.26 as of MarchJune 31,30, 2026.
(7) The dividend is payable on JulyOctober 10,9, 2026 to stockholders of record on JuneSeptember 26,25, 2026.
As of MayAugust 13,11, 2026, there were approximately 113103 holders of record of our common stock, which does not include stockholders for whom shares are held in “nominee” or “street name.”
The following table summarizes distributions declared and/or paid by the Company from inception through MarchJune 31,30, 2026:
During the threesix months ended MarchJune 31,30, 2026 and 2025,2026, the Company issued no shares of common stock under the DRIP.
During the six months ended June 30, 2025, the Company issued the following shares of common stock under the DRIP:
We did not repurchase any of our equity securities during the threesix months ended MarchJune 31,30, 2026 or the fiscal year ended December 31, 2025.
LIEN insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 9 Form 4 filings (5 insiders, 11 trade dates, 127,966 shares, about $1.2M) and open-market sales in 0 filings. Net open-market shares: 127,966 (purchases minus sales); net value about $1.2M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-31 | Gordon Scott |
Open-market purchase | 134 | $10.22 | $1.4K |
| 2026-08-31 | Colonna Bernardino |
Open-market purchase | 750 | $10.25 | $7.7K |
| 2026-08-28 | Colonna Bernardino |
Open-market purchase | 250 | $10.18 | $2.5K |
| 2026-08-27 | Colonna Bernardino |
Open-market purchase | 600 | $10.18 | $6.1K |
| 2026-08-27 | Gordon Scott |
Open-market purchase | 5,000 | $10.19 | $51.0K |
| 2026-08-26 | Colonna Bernardino |
Open-market purchase | 600 | $10.16 | $6.1K |
| 2026-08-26 | Gordon Scott |
Open-market purchase | 2,483 | $10.15 | $25.2K |
| 2026-08-25 | Colonna Bernardino |
Open-market purchase | 400 | $10.18 | $4.1K |
| 2026-08-25 | Gordon Scott |
Open-market purchase | 250 | $10.12 | $2.5K |
| 2026-08-24 | Gordon Scott |
Open-market purchase | 1,520 | $10.11 | $15.4K |
| 2026-08-21 | Gordon Scott |
Open-market purchase | 195 | $9.95 | $1.9K |
| 2026-08-20 | Gordon Scott |
Open-market purchase | 7,500 | $9.70 | $72.8K |
| 2026-08-19 | Gordon Scott |
Open-market purchase | 8,200 | $9.57 | $78.5K |
| 2026-08-18 | Gordon Scott |
Open-market purchase | 17,584 | $9.54 | $167.8K |
| 2026-08-17 | Mazarakis John |
Open-market purchase | 60,000 | $9.44 | $566.4K |
| 2026-08-17 | Gordon Scott |
Open-market purchase | 18,300 | $9.54 | $174.6K |
| 2026-08-17 | Fazio Gianni James Lezziere |
Open-market purchase | 200 | $9.55 | $1.9K |
| 2026-08-17 | Mahajan Umesh |
Open-market purchase | 4,000 | $9.60 | $38.4K |
Well-known investors holding LIEN (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 88,149 | $861.2K | 0.0% | Added 46% |
| Millennium Management (Israel Englander) | 2026-06-30 | 23,755 | $232.1K | 0.0% | Added 14% |