UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

FORM 10-Q

 
(Mark One)
 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the Quarterly Period Ended June 30, 2023
 
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission file number: 001-40564
 

 
SILVER SPIKE INVESTMENT CORP.
(Exact name of registrant as specified in its charter)



Maryland

86-2872887
(State or other jurisdiction of
incorporation or organization)

(IRS Employer Identification No.)



600 Madison Avenue, Suite 1800

 
New York, NY

 
 
10022
(Address of principal executive offices)

(Zip Code)
 
(212) 905-4923
 (Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, par value $0.01 per share
 
SSIC
  The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 
Yes ☒ No ☐
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
 
Yes ☒ No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act: ☐

Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company

     
Emerging growth company

 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes           No ☒
 
As of August 11, 2023, the registrant had 6,214,672 shares of common stock ($0.01 par value per share) outstanding.



SILVER SPIKE
INVESTMENT CORP.
FORM 10-Q

 
TABLE OF CONTENTS
 
  
PAGE
NO.
PART I
FINANCIAL INFORMATION
 
Item 1
4
 
4
 
5
 
6
 
8
 
9
 
11
Item 2
24
Item 3
34
Item 4
35
PART II
OTHER INFORMATION
 
Item 1
35
Item 1A
35
Item 2
35
Item 3
35
Item 4
36
Item 5
36
Item 6
36
37

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
Except where the context suggests otherwise, the terms “we,” “us,” “our,” “the Company,” and “SSIC” refer to Silver Spike Investment Corp. In addition, the terms “SSC,” “Adviser,” “investment adviser” and “administrator” refer to Silver Spike Capital, LLC, our external investment adviser and administrator.

Some of the statements in this quarterly report on Form 10-Q constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this quarterly report on Form 10-Q may include statements as to:
 
our future operating results and distribution projections;
 
the ability of Silver Spike Capital, LLC (“SSC”) to attract and retain highly talented professionals;
 
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;
 
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
 
the timing of cash flows, if any, from the operations of our portfolio companies.

In addition, words such as “anticipate,” “believe,” “expect,” “seek,” “plan,” “should,” “estimate,” “project” and “intend” indicate forward-looking statements, although not all forward-looking statements include these words. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Item 1A. Risk Factors” in our transition report on Form 10-K for the transition period from April 1, 2022 to December 31, 2022 and elsewhere in this quarterly report on Form 10-Q. Other factors that could cause actual results to differ materially include:
 
our limited operating history;

changes or potential disruptions in our operations, the economy, financial markets or political environment;
 
risks associated with possible disruption in our operations or the economy generally due to terrorism, natural disasters or the COVID-19 pandemic;
 
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.
 
We have based the forward-looking statements included in this quarterly report on Form 10-Q on information available to us on the date of this quarterly report on Form 10-Q, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements contained in this quarterly report on Form 10-Q are excluded from the safe harbor protection provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

PART I: FINANCIAL INFORMATION
 
Item 1.
Financial Statements
SILVER SPIKE INVESTMENT CORP.

Statements of Assets and Liabilities
 
 
  June 30, 2023    
December 31, 2022
 
 
 
(unaudited)
       
ASSETS
           
Investments at fair value:
           
Non-control/non-affiliate investments at fair value (amortized cost of $57,433,276 and $50,527,898, respectively)
 
$
57,669,044
   
$
50,254,550
 
Cash and cash equivalents
   
32,895,660
     
35,125,320
 
Interest receivable
   
591,368
     
1,559,081
 
Prepaid expenses
   
179,657
     
32,323
 
Total assets
 
$
91,335,729
   
$
86,971,274
 
 
               
LIABILITIES
               
Income-based incentive fees payable
 
$
646,494    
$
-  
Management fee payable
    257,489       170,965  
Capital gains incentive fee payable
    5,000       -  
Valuation fees payables
    93,185       -  
Administrator fees payable
    89,978       57,306  
Legal fees payable
    72,464       42,215  
Audit fees payable
    51,183       50,000  
Director’s fee payable
    31,747       32,049  
Professional fees payable
    26,306       28,744  
Due to affiliate
   
2,534
      37  
Excise tax payable
   
-
      80,566  
Other payables
   
15,136
     
33,663
 
Total liabilities
 
$
1,291,516
   
$
495,545
 
 
               
Commitments and contingencies (Note 6)
    -       -  
 
               
 NET ASSETS
               
Common Stock, $0.01 par value, 100,000,000 shares authorized, 6,214,672 and  6,214,672 shares issued and outstanding, respectively
 
$
62,147
   
$
62,147
 
Additional paid-in-capital
   
85,038,887
     
84,917,788
 
Distributable earnings/(Accumulated losses)
   
4,943,179
     
1,495,794
 
Total net assets
 
$
90,044,213
   
$
86,475,729
 
NET ASSET VALUE PER SHARE
 
$
14.49
   
$
13.91
 

 See notes to financial statements.

SILVER SPIKE INVESTMENT CORP.

Statements of Operations
(Unaudited)
 
 
 
Three Months Ended
    Six Months Ended
 
 
 
June 30, 2023
   
June 30, 2022
    June 30, 2023     June 30, 2022  
INVESTMENT INCOME
                       
Non-control/non-affiliate investment income
                       
Interest income
 
$
2,762,449
   
$
399,591
    $ 5,220,288     $ 409,664  
Fee income
   
131,250
     
410,000
      131,250       410,000  
Total investment income
   
2,893,699
     
809,591
      5,351,538       819,664  
 
                               
EXPENSES
                               
Income-based incentive fees
   
442,673
     
-
      646,494       -  
Management fee
    257,489       55,041       495,908       55,041  
Legal expenses
   
87,256
     
222,982
      186,016       257,051  
Audit expense
   
87,500
     
83,750
      185,383       93,750  
Administrator fees
   
87,853
     
62,546
      165,697       109,697  
Insurance expense
   
66,393
     
75,542
      135,475       122,030  
Valuation fees
   
21,000
     
-
      94,065       -  
Director expenses
   
31,746
     
35,747
      67,690       35,747  
Professional fees
   
17,775
     
-
      35,967       40,885  
Custodian fees
   
12,000
     
-
      24,000       24,000  
Organizational expenses
   
-
     
-
      -       34,168  
Capital gains incentive fees
    (137,602 )     -       5,000       -  
Other expenses
   
20,204
     
52,738
      39,708       41,581  
Total expenses
   
994,287
     
588,346
      2,081,403       813,950  
 
                               
NET INVESTMENT INCOME (LOSS)
   
1,899,412
     
221,245
      3,270,135       5,714  
 
                               
NET REALIZED GAIN (LOSS) FROM INVESTMENTS
                               
Non-controlled/non-affiliate investments
    (210,767 )     -       (210,767 )     -  
Net realized gain (loss) from investments
   
(210,767
)
   
-
      (210,767 )     -  

                               
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS
                               
Non-controlled/non-affiliate investments
   
(477,241
)
   
(9,508
)
    509,116       (9,508 )
Net change in unrealized appreciation/(depreciation) on investments
   
(477,241
)
   
(9,508
)
    509,116       (9,508 )
Net realized and unrealized gains (losses)
    (688,008 )     (9,508 )     298,349       (9,508 )
 
                               
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS
 
$
1,211,404
   
$
211,737
    $ 3,568,484     $ (3,794 )
 
                               
NET INVESTMENT INCOME (LOSS) PER SHARE — BASIC AND DILUTED
 
$
0.31
   
$
0.04
    $ 0.53     $ -  
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE — BASIC AND DILUTED
 
$
0.19
   
$
0.03
    $ 0.57     $ -  
WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC AND DILUTED
   
6,214,672
     
6,214,672
      6,214,672       4,893,441  

See notes to financial statements.

SILVER SPIKE INVESTMENT CORP.

Statements of Changes in Net Assets
(Unaudited)

 
 
Common Stock
             
Three Months Ended
June 30, 2023
 
Shares
   
Par Value
   
Additional
paid-in-capital
   
Distributable
Earnings/
(Accumulated
Loss)
   
Total
net assets
 
Balance, March 31, 2023
   
6,214,672
   
$
62,147
   
$
85,038,887
   
$
3,731,775
   
$
88,832,809
 
Net increase (decrease) in net assets resulting from operations
                                       
Net investment income (loss)
   
-
     
-
     
-
     
1,899,412
     
1,899,412
 
Net realized gain (loss) from investments
   
-
     
-
     
-
     
(210,767
)
   
(210,767
)
Net change in unrealized appreciation (depreciation) from investments
   
-
     
-
     
-
     
(477,241
)
   
(477,241
)
Total net increase (decrease) in net assets resulting from operations
   
-
     
-
     
-
     
1,211,404
     
1,211,404
 
Capital transactions
                                       
Issuance of common stock
   
-
     
-
     
-
     
-
     
-
 
Total increase (decrease) in net assets     -       -       -       1,211,404       1,211,404  
Effect of permanent adjustments
    -       -       -       -       -  
Balance, June 30, 2023
   
6,214,672
   
$
62,147
   
$
85,038,887
   
$
4,943,179
   
$
90,044,213
 
 
   
Common Stock
             
Three Months Ended
June 30, 2022
 
Shares
   
Par value
   
Additional
paid-in-capital
   
Distributable Earnings/
(Accumulated Loss)
   
Total
net assets/
(net liabilities)
 
Balance, March 31, 2022
   
6,214,672
   
$
62,147
   
$
84,917,788
   
$
(427,845
)
 
$
84,552,090
Net increase (decrease) in net assets resulting from operations
                                       
Net investment income (loss)
   
-
     
-
     
-
     
221,245
   
221,245
Net realized gain (loss) from investments
   
-
     
-
     
-
     
-
     
-
 
Net change in unrealized appreciation (depreciation) from investments
   
-
     
-
     
-
     
(9,508)
     
(9,508)
 
Total net increase (decrease) in net assets resulting from operations
   
-
     
-
     
-
     
211,737
   
211,737
Capital transactions
                                       
Issuance of common stock, net of offering cost
   
-
     
-
     
-
     
-
     
-
 
Total increase (decrease) in net assets
   
-
     
-
     
-
     
211,737
   
211,737
 
Effect of permanent adjustments
   
-
     
-
     
-
   
-
     
-
 
Balance, June 30, 2022
   
6,214,672
   
$
62,147
   
$
84,917,788
   
$
(216,108
)
 
$
84,763,827
 

See notes to financial statements.

SILVER SPIKE INVESTMENT CORP.

Statements of Changes in Net Assets
(Unaudited)

 
 
Common Stock
             
Six Months Ended
June 30, 2023
 
Shares
   
Par Value
   
Additional
paid-in-capital
   
Distributable
Earnings/
(Accumulated
Loss)
   
Total
net assets
 
Balance, December 31, 2022
   
6,214,672
   
$
62,147
   
$
84,917,788
   
$
1,495,794
   
$
86,475,729
 
Net increase (decrease) in net assets resulting from operations
                                       
Net investment income (loss)
   
-
     
-
     
-
     
3,270,135
     
3,270,135
 
Net realized gain (loss) from investments
   
-
     
-
     
-
     
(210,767
)
   
(210,767
)
Net change in unrealized appreciation (depreciation) from investments
   
-
     
-
     
-
     
509,116
     
509,116
 
Total net increase (decrease) in net assets resulting from operations
   
-
     
-
     
-
     
3,568,484
     
3,568,484
 
Capital transactions
                                       
Issuance of common stock
   
-
     
-
     
-
     
-
     
-
 
Total increase (decrease) in net assets     -       -       -       3,568,484       3,568,484  
Effect of permanent adjustments
    -       -       121,099       (121,099 )     -  
Balance, June 30, 2023
   
6,214,672
   
$
62,147
   
$
85,038,887
   
$
4,943,179
   
$
90,044,213
 

   
Common Stock
             
Six Months Ended
June 30, 2022
 
Shares
   
Par value
   
Additional
paid-in-capital
   
  Distributable
Earnings/
(Accumulated
  Loss)
   
Total
net assets/
(net liabilities)
 
Balance, December 31, 2021
   
386
   
$
4
   
$
5,396
   
$
(507,549
)
 
$
(502,149
)
Net increase (decrease) in net assets resulting from operations
                                       
Net investment income (loss)
   
-
     
-
     
-
     
5,714
     
5,714
 
Net realized gain (loss) from investments
   
-
     
-
     
-
     
-
     
-
 
Net change in unrealized appreciation (depreciation) from investments
   
-
     
-
     
-
     
(9,508
)
   
(9,508
)
Total net increase (decrease) in net assets resulting from operations
   
-
     
-
     
-
     
(3,794
)
   
(3,794
)
Capital transactions
                                       
Issuance of common stock, net of offering costs of $1,609,184
   
6,214,286
     
62,143
     
85,207,627
     
-
     
85,269,770
 
Total increase (decrease) in net assets
   
6,214,286
     
62,143
     
85,207,627
     
(3,794
)
   
85,265,976
 
Effect of permanent adjustments
   
-
     
-
     
(295,235
)
   
295,235
     
-
 
Balance, June 30, 2022
   
6,214,672
   
$
62,147
   
$
84,917,788
   
$
(216,108
)
 
$
84,763,827
 

See notes to financial statements.
SILVER SPIKE INVESTMENT CORP.

Statements of Cash Flows
(Unaudited)
 
 
 
For the six months ended
 
 
 
June 30, 2023
   
June 30, 2022
 
Cash flows from operating activities
           
Net increase (decrease) in net assets resulting from operations
 
$
3,568,484
   
$
(3,794
)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
               
Net realized (gain) loss from investments
    210,767       -  
Net change in unrealized (appreciation) depreciation from investments
   
(509,116
)
   
9,508
 
Net (accretion of discounts) and amortization of premiums
   
(301,558
)
   
(9,508
)
Purchase of investments
   
(8,442,000
)
   
(24,417,500
)
PIK interest capitalized
    (62,587 )     -  
Proceeds from sales of investments and principal repayments
    1,690,000       -  
(Increase)/Decrease in operating assets:
               
Prepaid expenses
   
(147,334
)
   
(207,249
)
Interest receivable
   
967,713
     
(66,090
)
Deferred offering costs
   
-
     
1,395,059
 
Increase/(Decrease) in operating liabilities:
               
Management fee payable
   
86,524
     
55,041
 
Income-based incentive fees payable
    646,494       -  
Capital gains incentive fees payable
    5,000       -  
Legal fees payable
   
30,249
     
204,251
 
Administrator fees payable
   
32,672
     
99,852
 
Valuation fees payables
   
93,185
     
-
 
Audit fees payable
   
1,183
     
62,250
 
Professional fees payable
   
(2,438
)
   
-
 
Director’s fee payable
   
(302
)
   
35,747
 
Excise tax payable
   
(80,566
)
   
-
 
Due to affiliate
   
2,497
     
(383,164
)
Offering cost payable
   
-
     
(1,024,256
)
Organizational costs payable
   
-
     
(430,276
)
Other payables
   
(18,527
)
   
23,406
 
Net cash provided by (used in) operating activities
   
(2,229,660
)
   
(24,656,723
)
 
               
Cash flows from financing activities
               
Issuance of common stock, net of offering cost
   
-
     
85,269,770
 
Net cash provided by (used in) financing activities
   
-
     
85,269,770
 
 
               
Net increase (decrease) in cash & cash equivalents
   
(2,229,660
)
   
60,613,047
 
Cash & cash equivalents, beginning of period
   
35,125,320
     
5,400
 
Cash & cash equivalents, end of period
 
$
32,895,660
   
$
60,618,447
 

See notes to financial statements.

SILVER SPIKE INVESTMENT CORP.

Schedule of Investments
June 30, 2023
(Unaudited)
 (in thousands)

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)
                                         
Curaleaf Holdings, Inc.
Senior Secured Note
10/11/2022
12/15/2026
Fixed interest rate 8.0%
   
3
 
Northeast
Yes
   $
4,500
    $
3,919
    $
4,028
     
4.47
%
Dreamfields Brands, Inc. (d/b/a Jeeter)
Senior Secured First Lien Term Loan
5/3/2023
 5/3/2026
Variable interest rate PRIME(11) + 8.75% (7.5% PRIME Floor)
    3
  West
No    
4,320
      4,217       4,217       4.68  
MariMed Inc.
Senior Secured First Lien Term Loan
1/24/2023
1/24/2026
Variable interest rate PRIME(11) + 5.75% Cash
(6.25% PRIME Floor)
1.40% PIK
   
3
 
Northeast
No
   
4,437
     
4,185
     
4,216
     
4.68
PharmaCann, Inc.
Senior Secured Note
6/30/2022
6/30/2025
Fixed interest rate 12.0%
   
3
 
Midwest
No
   
4,250
     
4,069
     
3,910
     
4.34
STIIIZY, Inc. (f/k/a Shryne Group, Inc.)
Senior Secured First Lien Term Loan
5/26/2022
5/26/2026
Variable interest rate PRIME(11) + 8.5%
(4.0% PRIME Floor) 1.0% PIK
   
3
 
West
No
   
21,035
     
20,588
     
20,718
     
23.01
Verano Holdings Corp.
Senior Secured First Lien Term Loan
10/27/2022
10/30/2026
Variable interest rate PRIME(11) + 6.5%
(6.25% PRIME Floor)
   
3
 
Midwest
Yes
   
21,000
     
20,455
     
20,580
     
22.86
 
                     
$
59,542
     
57,433
     
57,669
     
64.04
 
                                                   
Total: Debt Securities -United States (64.04%):
                         
57,433
     
57,669
     
64.04
 
                                                   
Total: Debt Securities (64.04%):
                         
57,433
     
57,669
     
64.04
 
                                                   
Total Investment in Securities (64.04%):
                       
$
57,433
   
$
57,669
     
64.04
%
 
                                                   
Cash equivalents
                                             
State Street Institutional U.S. Government Money Market Fund (12)
      1
               
$
32,032
   
$
32,032
     
35.57
%
Cash equivalents (35.57%):
                         
32,032
     
32,032
     
35.57
 
                                                   
Total Portfolio Investments and Cash equivalents (99.61%):
                       
$
89,465
   
$
89,701
     
99.61
%


(1)
All portfolio companies are located in the United States, as determined by the location of the portfolio company’s headquarters.

(2)
No debt investment is non-income producing as of June 30, 2023.

(3)
Investment date represents the date of initial investment, at which date interest began accruing.

(4)
Interest rate is the fixed or variable rate of the debt investments.

(5)
See Note 2 – Significant Accounting Policies and Note 4 — Fair Value of Financial Instruments in the accompanying notes to the financial statements.

(6)
Geographic regions are determined by the respective portfolio company’s headquarters’ location.

(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. As of June 30, 2023 the aggregate fair value of non-qualifying assets is $24,608 or 26.9% of the Company’s total assets.

(8)
Principal is net of repayments, if any, as per the terms of the debt instrument’s contract.

(9)
All investments were valued at fair value. See Note 4 — Fair Value of Financial Instruments in the accompanying notes to the financial statements.

(10)
The Company uses the North American Industry Classification System (“NAICS”) code for classifying the industry grouping of its portfolio companies.

(11)
As of June 30, 2023 PRIME is 8.25%.

(12)
The annualized seven-day yield as of June 30, 2023 is 5.03%.

See notes to financial statements.

SILVER SPIKE INVESTMENT CORP.

Schedule of Investments
December 31, 2022
 (in thousands)

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)
 
             
 
                       
AYR Wellness, Inc.
Senior Secured Note
10/11/2022
12/10/2024
Fixed interest rate 12.5%
   
3
 
Southeast
No
 
$
2,000
   
$
1,773
   
$
1,773
     
2.05
%
Curaleaf Holdings, Inc.
Senior Secured Note
10/11/2022
12/15/2026
Fixed interest rate 8.0%
   
3
 
Northeast
No
   
4,500
     
3,854
     
3,854
     
4.46
PharmaCann, Inc.
Senior Secured Note
6/30/2022
6/30/2025
Fixed interest rate 12.0%
   
3
 
Midwest
No
   
4,250
     
4,029
     
3,967
     
4.59
Shryne Group, Inc.
Senior Secured First Lien Term Loan
5/26/2022
5/26/2026
Variable interest rate PRIME(11) + 8.5%
(4.0% PRIME Floor)
   
3
 
West
No
   
21,000
     
20,480
     
20,269
     
23.44
Verano Holdings Corp.
Senior Secured First Lien Term Loan
10/27/2022
10/30/2026
Variable interest rate PRIME(11) + 6.5%
(6.25% PRIME Floor)
   
3
 
Midwest
No
   
21,000
     
20,392
     
20,392
     
23.58
 
 
 
 
 
         
 
 
$
52,750
     
50,528
     
50,255
     
58.12
 
 
 
 
 
         
 
                               
Total: Debt Securities - United States (58.12%):
 
         
 
           
50,528
     
50,255
     
58.12
 
 
 
 
 
         
 
                               
Total: Debt Securities (58.12%):
 
         
 
           
50,528
     
50,255
     
58.12
 
 
 
 
 
         
 
                               
Total Investment in Securities (58.12%):
 
         
 
         
$
50,528
   
$
50,255
     
58.12
%
 
 
 
 
 
         
 
                               
Cash equivalents
 
         
 
                               
State Street Institutional U.S. Government Money Market Fund (12)
 
    1
 
 
 
         
$
35,125
   
$
35,125
     
40.62
%
Cash equivalents (40.62%):
 
         
 
           
35,125
     
35,125
     
40.62
 
 
 
 
 
 
         
 
                               
Total Portfolio Investments and Cash equivalents (98.74%):
 
         
 
         
$
85,653
   
$
85,380
     
98.74
%


(1)
All portfolio companies are located in the United States.

(2)
No debt investment is non-income producing as of December 31, 2022.

(3)
Investment date represents the date of initial investment, at which date interest began accruing.

(4)
Interest rate is the fixed or variable rate of the debt investments.

(5)
See Note 2 – Significant Accounting Policies and Note 4 — Fair Value of Financial Instruments in the accompanying notes to the financial statements.

(6)
Geographic regions are determined by the respective portfolio company’s headquarters’ location.

(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)
Principal is net of repayments, if any, as per the terms of the debt instrument’s contract.

(9)
All investments were valued at fair value. See Note 4 — Fair Value of Financial Instruments in the accompanying notes to the financial statements.

(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 7.50%.

(12)
The annualized seven-day yield as of December 31, 2022 is 4.12%.

See notes to financial statements.

SILVER SPIKE INVESTMENT CORP.

Notes to Financial Statements
(Unaudited)
NOTE 1 — ORGANIZATION
 
Silver Spike Investment Corp. (an emerging growth company) (the “Company”, “we” or “our”) was formed on January 25, 2021 as a Maryland corporation structured as an externally managed, closed-end, non-diversified management investment company. The Company has elected to be treated as a business development company (“BDC”), under the Investment Company Act of 1940, as amended (“1940 Act”). In addition, for U.S. federal income tax purposes the Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for the tax period ended December 31, 2021. The Company adopted the tax year end of March 31, 2022 and elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) for the tax period January 1, 2022 through March 31, 2022, as well as maintain such election in future taxable years. However, there is no guarantee that the Company will qualify to make such an election for any taxable year.
 
On February 4, 2022, the Company’s common stock began trading on the Nasdaq Global Market under the ticker symbol “SSIC,” and we completed our initial public offering of 6,214,286 shares of our common stock, par value $0.01, inclusive of an over-allotment option that was exercised in full on March 1, 2022 (“IPO”), for approximately $87 million.
 
The Company is managed by Silver Spike Capital, LLC (“SSC” or “Adviser”), a registered investment advisor under the Investment Advisers Act of 1940 with the Securities and Exchange Commission. SSC has engaged SS&C Technologies, Inc. and ALPS Fund Services, Inc. (“SS&C”), as sub-administrator, to perform administrative services necessary for the Company to operate.
 
The Company’s investment objective is to maximize risk-adjusted returns on equity for its shareholders. The Company seeks to drive return on equity by generating current income from debt investments and capital appreciation from equity and equity-related investments. The Company intends to achieve its investment objective by investing primarily in secured debt, unsecured debt, equity warrants and direct equity investments in private leveraged middle-market cannabis companies and other companies in the health and wellness sector. The debt investments are often 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 two and six years from the original investment date.
 
On November 8, 2022, the Board of Directors (“Board”) of the Company approved a change in its fiscal year end from March 31 to December 31. Certain prior period information has been reclassified to conform to the current period presentation.
 
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES
 
Basis of Presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), including the requirements under ASC 946, Financial Services—Investment Companies and Articles 6 and 12 of Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair presentation of the financial statements have been made. The current period’s results of operations are not necessarily indicative of results that may be achieved for the year.
 
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions affecting reported amounts of assets and liabilities at the date of the financial statements (i.e. fair value of investments) and the reported amounts of income, expenses, and gains and losses during the reported period. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions and conditions.
 
Investment Valuation
The Company’s investments are recorded at their estimated fair value on the Statement of Assets and Liabilities. Investments for which market quotations are readily available will typically be valued at the bid price of those market quotations. To validate market quotations, we utilize a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith by the Adviser, as the Company’s valuation designee (the “Valuation Designee”), based on inputs that may include valuations, or ranges of valuations, provided by independent third-party valuation firm(s) engaged by the Adviser. Generally, the valuation approach used for debt investments is the income approach. The approach derives a value based on either determining the present value of a projected level of cash flow, including a terminal value, or by the capitalization of a normalized measure of future cash flow. The discounted cash flow (“DCF”) method, one of the methodologies under the income approach, involves estimating future cash flows under various scenarios and discounting them to the measurement date. The discount rate represents a return required by a market participant in order to make an investment in the subject company. Generally, the valuation approach used for debt investments is the income approach.

11


SILVER SPIKE INVESTMENT CORP.

Notes to Financial Statements
(Unaudited)

Alternatively, the market approach or asset approach may be used. The market approach is a way of determining a value indication by using one or more methods that compare the portfolio company to similar businesses. Value indicators are applied to relevant financial information of the entity being valued to estimate its fair value. There are two methodologies to consider under the market approach: the guideline company method (“GCM”) and the controlling transaction method (“CTM”). The GCM is based on the premise that the pricing multiples of comparable publicly traded companies can be used as a tool to value privately held companies. The publicly traded companies’ ratios and business enterprise value provide guidance in the valuation process. Considerations of factors such as size, growth, profitability and return on investment are also analyzed and compared to the subject business. The CTM is based on the same premise as the GCM. Guideline transactions include change-of-control transactions involving public or private businesses for companies engaged in similar lines of business or with similar economic characteristics. The valuation considers the price at which the merger or acquisition took place to other factors in order to create a pricing multiple that can be used to determine an estimate of value for the subject company.

The asset approach provides an indication of the portfolio company’s value by developing a valuation-based balance sheet. This approach requires adjusting the historical as