QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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(State or other jurisdiction of incorporation or organization)
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||
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(IRS Employer Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Title of Each Class
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Trading Symbol(s)
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Name of each exchange on which registered
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Large accelerated filer
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☐
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Accelerated filer
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☐
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☒
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Smaller reporting company
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Emerging growth company
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TABLE OF CONTENTS
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PAGE
NO.
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||
PART I
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FINANCIAL INFORMATION
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Item 1
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4 |
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4
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||
5
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||
6
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||
7
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||
8
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||
10
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||
Item 2
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21
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Item 3
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31
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Item 4
|
32
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PART II
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OTHER INFORMATION
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Item 1
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32
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Item 1A
|
32
|
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Item 2
|
32
|
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Item 3
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32
|
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Item 4
|
33
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Item 5
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33
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Item 6
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33
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34
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•
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our future operating results and distribution projections;
|
•
|
the ability of Silver Spike Capital, LLC (“SSC”) to attract and retain highly talented professionals;
|
•
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our business prospects and the prospects of our portfolio companies;
|
•
|
the impact of interest and inflation rates on our business prospects and the prospects of our portfolio companies;
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•
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the impact of the investments that we expect to make;
|
•
|
the ability of our portfolio companies to achieve their objectives;
|
•
|
our expected financings and investments and the timing of our investments in our initial portfolio;
|
•
|
changes in regulation impacting the cannabis industry;
|
•
|
the adequacy of our cash resources and working capital;
|
•
|
the current and future effects of the COVID-19 pandemic on us and our portfolio companies; and
|
•
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the timing of cash flows, if any, from the operations of our portfolio companies.
|
•
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our limited operating history;
|
•
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changes or potential disruptions in our operations, the economy, financial markets or political environment;
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•
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risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic;
|
•
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future changes in laws or regulations (including the interpretation of these laws and regulations by regulatory authorities) and conditions in our operating areas, particularly with respect to business
development companies (“BDCs”) or regulated investment companies (“RICs”); and
|
•
|
other considerations that may be disclosed from time to time in our publicly disseminated documents and filings.
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|
March 31, 2023 |
December 31, 2022
|
||||||
|
(unaudited)
|
|||||||
ASSETS
|
||||||||
Investments at fair value:
|
||||||||
Non-control/non-affiliate investments at fair value (amortized cost of $
|
$
|
|
$
|
|
||||
Cash and cash equivalents
|
|
|
||||||
Interest receivable
|
|
|
||||||
Prepaid expenses
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
|
||||||||
LIABILITIES
|
||||||||
|
||||||||
Management fee payable
|
$
|
|
$
|
|
||||
Income-based incentive fee payable
|
||||||||
Capital gains incentive fee payable
|
||||||||
Legal fees payable
|
|
|
||||||
Administrator fees payable
|
|
|
||||||
Valuation fees payables
|
|
|
||||||
Audit fees payable
|
|
|
||||||
Professional fees payable
|
|
|
||||||
Director’s fee payable
|
|
|
||||||
Excise tax payable
|
|
|
||||||
Due to affiliate
|
|
|
||||||
Other payables
|
|
|
||||||
Total liabilities
|
$
|
|
$
|
|
||||
|
||||||||
Commitments and contingencies (Note 6)
|
||||||||
|
||||||||
NET ASSETS
|
||||||||
Common Stock, $
|
$
|
|
$
|
|
||||
Additional paid-in-capital
|
|
|
||||||
Distributable earnings/(Accumulated losses)
|
|
|
||||||
Total net assets
|
$
|
|
$
|
|
||||
NET ASSET VALUE PER SHARE
|
$
|
|
$
|
|
|
For the three
months ended |
For the three
months ended |
||||||
|
March 31, 2023
|
March 31, 2022
|
||||||
INVESTMENT INCOME
|
||||||||
Non-control/non-affiliate investment income
|
||||||||
Interest income
|
$
|
|
$
|
|
||||
Fee income
|
|
|
||||||
Total investment income
|
|
|
||||||
|
||||||||
EXPENSES
|
||||||||
Management fee
|
|
|
||||||
Income-based incentive fee
|
||||||||
Capital gains incentive fee
|
||||||||
Legal expenses
|
|
|
||||||
Audit expense
|
|
|
||||||
Administrator fees
|
|
|
||||||
Valuation fees
|
|
|
||||||
Insurance expense
|
|
|
||||||
Director expenses
|
|
|
||||||
Professional fees
|
|
|
||||||
Custodian fees
|
|
|
||||||
Organizational expenses
|
|
|
||||||
Other expenses
|
|
|
||||||
Total expenses
|
|
|
||||||
|
||||||||
NET INVESTMENT INCOME (LOSS)
|
|
(
|
)
|
|||||
|
||||||||
NET REALIZED GAIN (LOSS) FROM INVESTMENTS
|
|
|
||||||
Net realized gain (loss) from investments
|
|
|
||||||
|
||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS
|
||||||||
Non-controlled/non-affiliate investments
|
|
|
||||||
Net change in unrealized appreciation/(depreciation) on investments
|
|
|
||||||
|
||||||||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
|
$
|
|
$
|
(
|
)
|
|||
|
||||||||
NET INVESTMENT INCOME (LOSS) PER SHARE — BASIC AND DILUTED
|
$
|
|
$
|
(
|
)
|
|||
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE — BASIC AND DILUTED
|
$
|
|
$
|
(
|
)
|
|||
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC AND DILUTED
|
|
|
|
Common Stock
|
|||||||||||||||||||
|
Shares
|
Par Value
|
Additional
paid-in-capital |
Distributable Earnings/
(Accumulated Loss)
|
Total net assets/
(net liabilities)
|
|||||||||||||||
Balance, December 31, 2022
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||
Net increase (decrease) in net assets resulting from operations
|
||||||||||||||||||||
Net investment income (loss)
|
-
|
|
|
|
|
|||||||||||||||
Net realized gain (loss) from investments
|
-
|
|
|
|
|
|||||||||||||||
Net change in unrealized appreciation (depreciation) from investments
|
-
|
|
|
|
|
|||||||||||||||
Total net increase (decrease) in net assets resulting from operations
|
-
|
|
|
|
|
|||||||||||||||
Capital transactions
|
||||||||||||||||||||
Issuance of common stock
|
|
|
|
|
|
|||||||||||||||
Total increase (decrease) in net assets | ||||||||||||||||||||
Effect of permanent adjustments |
- | ( |
) | |||||||||||||||||
Balance, March 31, 2023
|
|
$
|
|
$
|
|
$
|
|
$
|
|
Common Stock
|
||||||||||||||||||||
|
Shares
|
Par value
|
Additional
paid-in-capital |
Distributable Earnings/
(Accumulated Loss) |
Total net assets/
(net liabilities) |
|||||||||||||||
Balance, December 31, 2021
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
|||||||||
Net increase (decrease) in net assets resulting from operations
|
||||||||||||||||||||
Net investment income (loss)
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
Net realized gain (loss) from investments
|
-
|
|
|
|
|
|||||||||||||||
Net change in unrealized appreciation (depreciation) from investments
|
-
|
|
|
|
|
|||||||||||||||
Total net increase (decrease) in net assets resulting from operations
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||
Capital transactions
|
||||||||||||||||||||
Issuance of common stock, net of offering costs of $
|
|
|
|
|
|
|||||||||||||||
Total increase (decrease) in net assets
|
|
|
|
(
|
)
|
|
||||||||||||||
Effect of permanent adjustments
|
-
|
|
(
|
)
|
|
|
||||||||||||||
Balance, March 31, 2022
|
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
|
For the three months ended
|
|||||||
|
March 31, 2023
|
March 31, 2022
|
||||||
Cash flows from operating activities
|
||||||||
Net increase (decrease) in net assets resulting from operations
|
$
|
|
$
|
(
|
)
|
|||
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
|
||||||||
Net change in unrealized (appreciation) depreciation from investments
|
(
|
)
|
|
|||||
Net (accretion of discounts) and amortization of premiums
|
(
|
)
|
|
|||||
Purchase of investments
|
(
|
)
|
|
|||||
PIK interest capitalized
|
( |
) | ||||||
(Increase)/Decrease in operating assets:
|
||||||||
Prepaid expenses
|
(
|
)
|
(
|
)
|
||||
Interest receivable
|
(
|
)
|
(
|
)
|
||||
Deferred offering costs
|
|
|
||||||
Increase/(Decrease) in operating liabilities:
|
||||||||
Management fee payable
|
|
|
||||||
Income-based incentive fee payable
|
||||||||
Capital gains incentive fee payable
|
||||||||
Legal fees payable
|
|
|
||||||
Administrator fees payable
|
|
|
||||||
Valuation fees payables
|
|
|
||||||
Audit fees payable
|
(
|
)
|
|
|||||
Professional fees payable
|
|
|
||||||
Director’s fee payable
|
|
|
||||||
Excise tax payable
|
(
|
)
|
|
|||||
Due to affiliate
|
(
|
)
|
(
|
)
|
||||
Offering cost payable
|
|
(
|
)
|
|||||
Organizational costs payable
|
|
(
|
)
|
|||||
Other payables
|
(
|
)
|
|
|||||
Net cash provided by (used in) operating activities
|
(
|
)
|
(
|
)
|
||||
|
||||||||
Cash flows from financing activities
|
||||||||
Issuance of common stock, net of offering cost
|
|
|
||||||
Net cash provided by (used in) financing activities
|
|
|
||||||
|
||||||||
Net increase (decrease) in cash & cash equivalents
|
(
|
)
|
|
|||||
Cash & cash equivalents, beginning of period
|
|
|
||||||
Cash & cash equivalents, end of period
|
$
|
|
$
|
|
Portfolio Company (1)
|
Type of Investment (2)
|
Investment
Date (3)
|
Maturity
Date
|
Interest Rate (4)
|
Fair Value
Hierarchy (5)
|
Geographic
Region (6) |
Non-
Qualifying
Asset (7)
|
Principal
Amount (8)
|
Amortized
Cost
|
Fair
Value (9)
|
% of Net
Assets
|
|||||||||||||||
Debt Securities - United States
|
||||||||||||||||||||||||||
Wholesale Trade (10)
|
||||||||||||||||||||||||||
|
|
|
|
Fixed interest rate
|
|
|
No
|
$
|
|
$
|
|
$
|
|
|
%
|
|||||||||||
.
|
|
|
|
Fixed interest rate
|
|
|
No
|
|
|
|
|
|||||||||||||||
|
|
|
|
Variable interest rate PRIME(11) +
( |
|
|
No
|
|
|
|
|
|||||||||||||||
|
|
|
|
Fixed interest rate
|
|
|
No
|
|
|
|
|
|||||||||||||||
|
|
|
|
Variable interest rate PRIME(11) +
( |
|
|
No
|
|
|
|
|
|||||||||||||||
|
|
|
|
Variable interest rate PRIME(11) +
( |
|
|
No
|
|
|
|
|
|||||||||||||||
|
$
|
|
|
|
|
|||||||||||||||||||||
|
||||||||||||||||||||||||||
Total: Debt Securities -United States (
|
|
|
|
|||||||||||||||||||||||
|
||||||||||||||||||||||||||
Total: Debt Securities (
|
|
|
|
|||||||||||||||||||||||
|
||||||||||||||||||||||||||
Total Investment in Securities (
|
$
|
|
$
|
|
|
%
|
||||||||||||||||||||
|
||||||||||||||||||||||||||
Cash equivalents
|
||||||||||||||||||||||||||
State Street Institutional U.S. Government Money Market Fund (12)
|
$
|
|
$
|
|
|
%
|
||||||||||||||||||||
Cash equivalents (
|
|
|
|
|||||||||||||||||||||||
|
||||||||||||||||||||||||||
Total Portfolio Investments and Cash equivalents (
|
$
|
|
$
|
|
|
%
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
(6) |
|
(7) |
Under the Investment Company Act of 1940, as amended (the “1940 Act”), a business development company (“BDC”) may not
acquire any “non-qualifying asset” (i.e., an asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as “qualifying assets”), unless, at the time the acquisition is made, qualifying assets
represent at least 70% of the BDC’s total assets.
|
(8) |
|
(9) |
|
(10) |
The Company uses the North American Industry Classification System (“NAICS”) code for classifying the industry
grouping of its portfolio companies.
|
(11) |
As of March 31, 2023 PRIME is
|
(12) |
|
Portfolio Company (1)
|
Type of Investment (2)
|
Investment
Date (3)
|
Maturity
Date
|
Interest Rate (4)
|
Fair Value
Hierarchy (5) |
Geographic
Region (6) |
Non-
Qualifying
Asset (7)
|
Principal
Amount (8)
|
Amortized
Cost
|
Fair
Value (9) |
% of
Net Assets
|
|||||||||||||||
Debt Securities - United States
|
|
|
|
|
|
|||||||||||||||||||||
Wholesale Trade (10)
|
|
|
||||||||||||||||||||||||
|
|
|
|
Fixed interest rate
|
|
|
No
|
$
|
|
$
|
|
$
|
|
|
%
|
|||||||||||
|
|
|
|
Fixed interest rate
|
|
|
No
|
|
|
|
|
|||||||||||||||
|
|
|
|
Fixed interest rate
|
|
|
No
|
|
|
|
|
|||||||||||||||
|
|
|
|
Variable interest rate PRIME(11) +
( |
|
|
No
|
|
|
|
|
|||||||||||||||
|
|
|
|
Variable interest rate PRIME(11) +
( |
|
|
No
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
$
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||
Total: Debt Securities - United States (
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||
Total: Debt Securities (
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||
Total Investment in Securities (
|
|
|
$
|
|
$
|
|
|
%
|
||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||
Cash equivalents
|
|
|
||||||||||||||||||||||||
State Street Institutional U.S. Government Money Market Fund (12)
|
|
|
|
$
|
|
$
|
|
|
%
|
|||||||||||||||||
Cash equivalents (
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||
Total Portfolio Investments and Cash equivalents (
|
|
|
$
|
|
$
|
|
|
%
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
(6) |
|
(7) |
Under the Investment Company Act of 1940, as amended (the “1940 Act”), a business development company (“BDC”) may not
acquire any “non-qualifying asset” (i.e., an asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as “qualifying assets”), unless, at the time the acquisition is made, qualifying assets
represent at least 70% of the BDC’s total assets.
|
(8) |
|
(9) |
|
(10) |
The Company uses the North American Industry Classification System (“NAICS”) code for classifying the industry
grouping of its portfolio companies.
|
(11) |
As of December 31, 2022 PRIME is
|
(12) |
|
• |
With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;
|
• |
With respect to investments for which market quotations are not readily available, the valuation process begins with the Adviser’s valuation committee establishing a preliminary valuation of each investment, which may be based on
valuations, or ranges of valuations, provided by independent valuation firm(s);
|
• |
Preliminary valuations are documented and discussed by the Adviser’s valuation committee and, where appropriate, the independent valuation firm(s); and
|
• |
The Adviser determines the fair value of each investment.
|
• |
Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;
|
• |
Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not
active, or for which all significant inputs are observable, either directly or indirectly; and
|
• |
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
March 31, 2023
|
|||||||||||||||||
Amortized Cost
|
Fair Value
|
||||||||||||||||
Industry
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Wholesale Trade
|
$
|
|
|
%
|
$
|
|
|
%
|
|||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
December 31, 2022
|
|||||||||||||||||
Amortized Cost
|
Fair Value
|
||||||||||||||||
Industry
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Wholesale Trade
|
$
|
|
|
%
|
$
|
|
|
%
|
|||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
March 31, 2023
|
|||||||||||||||||
Amortized Cost
|
Fair Value
|
||||||||||||||||
Geographic Location
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Midwest
|
$
|
|
|
%
|
$
|
|
|
%
|
|||||||||
West
|
|
|
|
|
|||||||||||||
Northeast
|
|
|
|
|
|||||||||||||
Southeast
|
|
|
|
|
|||||||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
December 31, 2022
|
||||||||||||||||
Amortized Cost
|
Fair Value
|
|||||||||||||||
Geographic Location
|
Amount
|
%
|
Amount
|
%
|
||||||||||||
Midwest
|
$
|
|
|
%
|
$
|
|
|
%
|
||||||||
West
|
|
|
|
|
||||||||||||
Northeast
|
|
|
|
|
||||||||||||
Southeast
|
|
|
|
|
||||||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
March 31, 2023
|
|||||||||||||||||
Amortized Cost
|
Fair Value
|
||||||||||||||||
Investment
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Senior Secured First Lien Term Loan
|
$
|
|
|
%
|
$
|
|
|
%
|
|||||||||
Senior Secured Notes
|
|
|
|
|
|||||||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
December 31, 2022
|
|||||||||||||||||
Amortized Cost
|
Fair Value
|
||||||||||||||||
Investment
|
Amount
|
%
|
Amount
|
%
|
|||||||||||||
Senior Secured First Lien Term Loan
|
$
|
|
|
%
|
$
|
|
|
%
|
|||||||||
Senior Secured Notes
|
|
|
|
|
|||||||||||||
Total
|
$
|
|
|
%
|
$
|
|
|
%
|
Fair Value Measurements at March 31, 2023 Using
|
||||||||||||||||
Assets
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs (Level 3)
|
Total
|
||||||||||||
Senior Secured First Lien Term Loan
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Senior Secured Notes
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Fair Value Measurements at December 31, 2022 Using
|
||||||||||||||||
Assets
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
|
Significant
Other
Observable
Inputs (Level 2)
|
Significant
Unobservable
Inputs (Level 3)
|
Total
|
||||||||||||
Senior Secured First Lien Term Loan
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Senior Secured Notes
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Investment Type
|
Fair Value as of
March 31, 2023 |
Valuation Techniques/
Methodologies
|
Unobservable
Input
|
Range
|
Weighted Average (1)
|
||||||||||
|
|
|
|||||||||||||
Senior Secured First Lien Term Loan
|
$
|
|
Discounted Cash Flow
|
Discount Rate
|
|
%
|
|
%
|
|||||||
Senior Secured Notes
|
|
Discounted Cash Flow
|
Discount Rate
|
|
%
|
|
%
|
||||||||
Total
|
$
|
|
Investment Type
|
Fair Value as of
December 31, 2022
|
Valuation Techniques/ Methodologies
|
Unobservable
Input
|
Range
|
Weighted Average (1)
|
||||||||||
|
|
|
|||||||||||||
Senior Secured First Lien Term Loan
|
$
|
|
Discounted Cash Flow
|
Discount Rate
|
|
%
|
|
%
|
|||||||
Volatility
|
|
%
|
|
%
|
|||||||||||
Senior Secured Notes
|
|
Discounted Cash Flow
|
Discount Rate
|
|
%
|
|
%
|
||||||||
Volatility
|
|
%
|
|
%
|
|||||||||||
Total
|
$
|
|
Senior Secured
First Lien Term Loan |
Senior
Secured Notes |
Total
Investments |
||||||||||
Fair Value as of December 31, 2022
|
$
|
|
$
|
|
$
|
|
||||||
Purchases
|
|
|
|
|||||||||
Accretion of discount and fees (amortization of premium), net
|
|
|
|
|||||||||
PIK interest |
||||||||||||
Sales of investments
|
|
|
|
|||||||||
Proceeds from principal repayments
|
|
|
|
|||||||||
Net realized gain (loss) on investments
|
|
|
|
|||||||||
Net change in unrealized appreciation (depreciation) on investments
|
|
|
|
|||||||||
Balance as of March 31, 2023
|
$
|
|
$
|
|
$
|
|
||||||
|
||||||||||||
Net change in unrealized appreciation/depreciation on Level 3 investments still held as of March 31, 2023
|
$
|
|
$
|
|
$
|
|
For the three
months ended |
For the three
months ended |
|||||||
March 31, 2023
|
March 31, 2022
|
|||||||
Net increase (decrease) in net assets resulting from operations
|
$
|
|
$
|
(
|
)
|
|||
Weighted Average Shares Outstanding - basic and diluted
|
|
|
||||||
Net increase (decrease) in net assets resulting from operations per share - basic and diluted
|
$
|
|
$
|
(
|
)
|
March 31, 2023
|
||||
Undistributed ordinary income
|
$
|
|
||
Net unrealized appreciation (depreciation) on investments
|
|
|||
Other temporary differences
|
(
|
)
|
||
Total
|
|
|
March 31, 2023
|
December 31, 2022
|
|||||||
Tax Cost of Investments and Cash Equivalents
|
$
|
|
$
|
|
||||
|
||||||||
Gross unrealized appreciation
|
$
|
|
$
|
|
||||
Gross unrealized depreciation
|
|
(
|
)
|
|||||
Net unrealized appreciation (depreciation) from investments and cash equivalents
|
$
|
|
$
|
(
|
)
|
For the three
months ended |
Period from
February 3, 2022 to |
|||||||
March 31, 2023
|
March 31, 2022*
|
|||||||
Per share data:
|
||||||||
Net asset value at beginning of period
|
$
|
|
$
|
|
||||
Net investment income (loss) (1)
|
|
(
|
)
|
|||||
Net realized and unrealized gains/(losses) on investments(1)
|
|
|
||||||
Net increase/(decrease) in net assets resulting from operations
|
|
(
|
)
|
|||||
Offering costs (2)
|
|
(
|
)
|
|||||
Permanent tax adjustments
|
|
(
|
)
|
|||||
Net asset value at end of period
|
$
|
|
$
|
|
||||
Net assets at end of period
|
$
|
|
$
|
|
||||
Shares outstanding at end of period
|
|
|
||||||
Weighted average net assets
|
$
|
|
$
|
|
||||
|
||||||||
Per share market value at end of period
|
$
|
|
$
|
|
||||
Total return based on market value (3)
|
(
|
)%
|
(
|
)%
|
||||
Total return based on net asset value (3)
|
|
%
|
(
|
)%
|
||||
|
||||||||
Ratio/Supplemental data:
|
||||||||
Ratio of expenses to average net assets(4)
|
|
%
|
|
%
|
||||
Ratio of net investment income (loss) to average net assets(4)
|
|
%
|
(
|
)%
|
||||
Portfolio turnover
|
N/A
|
N/A
|
*
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
• |
the cost of our organization and offerings;
|
• |
the cost of calculating our 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;
|
• |
costs 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.
|
March 31, 2023
|
||||||||
Type
|
Amortized Cost
|
Fair Value
|
||||||
Senior Secured First Lien Term Loan
|
82.3
|
%
|
82.2
|
%
|
||||
Senior Secured Notes
|
17.7
|
17.8
|
||||||
Total
|
100.0
|
%
|
100.0
|
%
|
December 31, 2022
|
||||||||
Type
|
Amortized Cost
|
Fair Value
|
||||||
Senior Secured First Lien Term Loan
|
80.9
|
%
|
80.9
|
%
|
||||
Senior Secured Notes
|
19.1
|
19.1
|
||||||
Total
|
100.0
|
%
|
100.0
|
%
|
March 31, 2023
|
||||||||
Geographic Region
|
Amortized Cost
|
Fair Value
|
||||||
Midwest
|
44.5
|
%
|
44.9
|
%
|
||||
West
|
37.4
|
37.0
|
||||||
Northeast
|
14.8
|
14.9
|
||||||
Southeast
|
3.3
|
3.2
|
||||||
Total
|
100.0
|
%
|
100.0
|
%
|
December 31, 2022
|
||||||||
Geographic Region
|
Amortized Cost
|
Fair Value
|
||||||
Midwest
|
48.4
|
%
|
48.5
|
%
|
||||
West
|
40.5
|
40.3
|
||||||
Northeast
|
7.6
|
7.7
|
||||||
Southeast
|
3.5
|
3.5
|
||||||
Total
|
100.0
|
%
|
100.0
|
%
|
March 31, 2023
|
||||||||
Industry
|
Amortized Cost
|
Fair Value
|
||||||
Wholesale Trade
|
100.0
|
%
|
100.0
|
%
|
||||
Total
|
100.0
|
%
|
100.0
|
%
|
December 31, 2022
|
||||||||
Industry
|
Amortized Cost
|
Fair Value
|
||||||
Wholesale Trade
|
100.0
|
%
|
100.0
|
%
|
||||
Total
|
100.0
|
%
|
100.0
|
%
|
Three Months Ended
March 31, 2023
|
||||
Beginning Portfolio, at fair value
|
$
|
50,254,550
|
||
Purchases
|
4,230,000
|
|||
Accretion of discount and fees (amortization of premium), net
|
140,819
|
|||
PIK interest
|
11,573
|
|||
Principal payments received on investments
|
-
|
|||
Proceeds from principal repayments
|
-
|
|||
Sale of investments
|
-
|
|||
Net realized gain/(loss) on investments
|
-
|
|||
Net change in unrealized appreciation/(depreciation) on investments
|
986,357
|
|||
Ending Portfolio, at fair value
|
$
|
55,623,299
|
Investment
Performance
Risk Rating
|
Summary Description
|
|
Grade 1
|
Investments rated 1 involve the least amount of risk to our initial cost basis. The borrower is performing above expectations, and the trends and risk factors for this investment since origination or
acquisition are generally favorable. Full return of principal, interest and dividend income is expected.
|
|
Grade 2
|
Investment is performing in-line with expectations. Investments rated 2 involve an acceptable level of risk that is similar to the risk at the time of origination or acquisition. Risk factors remain neutral
or favorable compared with initial underwriting. All investments or acquired investments in new portfolio companies are initially assessed a rating of 2.
|
|
Grade 3
|
Investments rated 3 involve a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination or acquisition. Capital impairment or payment delinquency is
not anticipated. The investment may also be out of compliance with certain financial covenants.
|
|
Grade 4
|
Investments rated 4 involve a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination or acquisition. In addition to the borrower
being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due). Delinquency of interest and / or dividend payments in anticipated. No loss of principal is anticipated.
|
|
Grade 5
|
Investments rated 5 involve a borrower performing substantially below expectations and indicates that the loan’s risk has increased substantially since origination or acquisition. It is anticipated that the
Company will not recoup its initial cost and may realize a loss upon exit. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 5 are not anticipated to be repaid in full and we
will reduce the fair market value of the loan to the amount we anticipate will be recovered.
|
March 31, 2023
|
|||||||||
Investment Performance Risk Rating
|
Investments at Fair
Value
|
Percentage of Total
Investments
|
|||||||
1
|
$
|
-
|
-
|
%
|
|||||
2
|
55,623,299
|
100.00
|
|||||||
3
|
-
|
-
|
|||||||
4
|
-
|
-
|
|||||||
5
|
-
|
-
|
|||||||
Total
|
$
|
55,623,299
|
100.00
|
%
|
December 31, 2022
|
|||||||||
Investment Performance Risk Rating
|
Investments at Fair
Value
|
Percentage of Total
Investments
|
|||||||
1
|
$
|
-
|
-
|
%
|
|||||
2
|
50,254,550
|
100.00
|
|||||||
3
|
-
|
-
|
|||||||
4
|
-
|
-
|
|||||||
5
|
-
|
-
|
|||||||
Total
|
$
|
50,254,550
|
100.00
|
%
|
Three Months Ended
March 31, 2023
|
Three Months Ended
March 31, 2022
|
|||||||
Interest income
|
$
|
2,317,020
|
$
|
10,073
|
||||
Accretion of discount and fees (amortization of premium), net
|
140,819
|
-
|
||||||
Other fee income
|
-
|
-
|
||||||
Total investment income
|
$
|
2,457,839
|
$
|
10,073
|
Three Months Ended
March 31, 2023 |
Three Months Ended
March 31, 2022 |
|||||||
Gross unrealized appreciation
|
$
|
986,357
|
$
|
-
|
||||
Gross unrealized depreciation
|
-
|
-
|
||||||
Total net unrealized appreciation (depreciation) on investments
|
$
|
986,357
|
$
|
-
|
|
Three Months Ended
March 31, 2023 |
|||
Verano Holdings Corp.
|
$
|
465,148
|
||
Shryne Group, Inc.
|
273,416
|
|||
Curaleaf Holdings, Inc.
|
156,992
|
|||
PharmaCann, Inc.
|
84,214
|
|||
AYR Wellness, Inc.
|
6,587
|
|||
Total net change in unrealized appreciation (depreciation) on investments
|
$
|
986,357
|
• |
With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;
|
• |
With respect to investments for which market quotations are not readily available, the valuation process begins with the Adviser’s valuation committee establishing a preliminary valuation of each investment, which may be based on
valuations, or ranges of valuations, provided by independent valuation firm(s);
|
• |
Preliminary valuations are documented and discussed by the Adviser’s valuation committee and, where appropriate, the independent valuation firm(s); and
|
• |
The Adviser determines the fair value of each investment.
|
• |
Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;
|
• |
Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not
active, or for which all significant inputs are observable, either directly or indirectly; and
|
• |
Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
|
Price Range
|
||||||||||||||||||||||||
Class and Period
|
Net Asset Value(1)
|
High
|
Low
|
High Sales
Price
Premium (Discount) to
Net Asset
Value(2)
|
Low Sales
Price
Premium (Discount) to
Net Asset
Value(2)
|
Cash
Dividend Per
Share(3)
|
||||||||||||||||||
Year Ended December 31, 2023
|
||||||||||||||||||||||||
Second Quarter (Through May 9, 2023)
|
$
|
*
|
$
|
9.19
|
$
|
7.82
|
*
|
*
|
*
|
|||||||||||||||
First Quarter
|
$
|
14.29
|
$
|
9.98
|
$
|
8.25
|
-30.2
|
%
|
-42.3
|
%
|
-
|
|||||||||||||
Year Ended December 31, 2022(4)
|
||||||||||||||||||||||||
Fourth Quarter
|
$
|
13.91
|
$
|
10.55
|
$
|
9.57
|
-24.2
|
%
|
-31.2
|
%
|
-
|
|||||||||||||
Third Quarter
|
$
|
13.73
|
$
|
10.74
|
$
|
9.00
|
-21.8
|
%
|
-34.5
|
%
|
-
|
|||||||||||||
Second Quarter
|
$
|
13.64
|
$
|
13.50
|
$
|
7.80
|
-1.0
|
%
|
-42.8
|
%
|
-
|
|||||||||||||
First Quarter(5)
|
$
|
13.61
|
$
|
14.41
|
$
|
12.57
|
5.9
|
%
|
-7.6
|
%
|
-
|
Change in Interest Rates
|
Interest Income
|
Interest expense
|
Net Income/(Loss)
|
|||||||||
Up 300 basis points
|
$
|
1,395
|
$
|
-
|
$
|
1,395
|
||||||
Up 200 basis points
|
930
|
-
|
930
|
|||||||||
Up 100 basis points
|
465
|
-
|
465
|
|||||||||
Down 100 basis points
|
(465
|
)
|
-
|
(465
|
)
|
|||||||
Down 200 basis points
|
(866
|
)
|
-
|
(866
|
)
|
|||||||
Down 300 basis points
|
(1,076
|
)
|
-
|
(1,076
|
)
|
Exhibit
Number
|
Description of Exhibit
|
Articles of Amendment and Restatement of the Company(1)
|
|
Amended and Restated Bylaws of the Company(1)
|
|
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
|
|
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
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*
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Filed herewith.
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(1) |
Incorporated by reference to the Company’s annual report on Form 10-K/A, filed on June 30, 2022.
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SILVER SPIKE INVESTMENT CORP.
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By:
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/s/ Scott Gordon
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Scott Gordon
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Chief Executive Officer (Principal Executive Officer)
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By:
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/s/ Umesh Mahajan
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Umesh Mahajan
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Chief Financial Officer (Principal Financial and Accounting Officer)
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Date: May 12, 2023
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By:
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/s/ Scott Gordon
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Scott Gordon
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Chief Executive Officer
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(Principal Executive Officer)
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Date: May 12, 2023
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By:
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/s/ Umesh Mahajan
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Umesh Mahajan
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Chief Financial Officer
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(Principal Financial Officer)
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Date: May 12, 2023
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By:
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/s/ Scott Gordon
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Scott Gordon
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Chief Executive Officer
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(Principal Executive Officer)
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Date: May 12, 2023
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By:
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/s/ Umesh Mahajan
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Umesh Mahajan
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Chief Financial Officer
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(Principal Financial Officer)
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