Q2 2024 Silver Spike Investment Corp Earnings Call

August 9, 2024

Again, enjoy the piano Apache plays.

Operator: Good day, and thank you for standing by.

Operator: Welcome to the Silver Spike Investment Corps 2nd Quarter 2024 earnings conference call. At this time, all participants are in listening-only mode. After the speaker's presentation, it will be a question and answer session. That's a question during session, and you need to press star one one on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded.

Speaker Change: Good day and thank you for standing by. Welcome to the Silver Spike Investment Corp. 2nd Quarter 2024 Earnings Conference Call.

Speaker Change: At this time, all participants are on a listen-only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during a session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker Change: To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded I want to have a kind of conference over to speakers today Umesh Mahajan chief financial officer. Please go ahead

Operator: I want to have a kind of conference over to speakers today.

Mesh: Good morning. This is a commercial margin CFO of Silver Spike Investment Corps. With me here today is Court Gordon, the EO of Silver Spike Investment Corps.

Speaker Change: Good morning. This is Umesh Mahajan, CFO of Silver Spike Investment Corp. With me here today is Scott Gordon, CEO of Silver Spike Investment Corp. Welcome to Silver Spikes today.

Mesh: Welcome to Silver Spike's earnings conference call and live webcast for the 2nd quarter and June 30, 2024. Silver Spike's financial results for the 2nd quarter and a June 30, 2024, will release yesterday and can be accessed from our website at ssic.silverspikecaps.com. A play of this call will also be available on Silver Spike's website.

Speaker Change: Earnings conference call and live webcast for the second quarter ended June 30, 2024.

Speaker Change: Silver Spikes financial results for the second quarter ended June 30, 2024 were released yesterday and can be accessed from our website at ssic.silverspikecap.com. A play of this call will also be available on Silver Spikes website.

Mesh: Before we begin, I would like to remind everyone that certain statements that are not based on historical facts made during this call, including any statements related to financial guidance, may be deemed forward-looking statements under federal securities laws. Because these forward-looking statements involve known and unknown risks and uncertainties that are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. We encourage you to refer to our most recent SEC filings for information on some of these risk factors. Silver Spike assumes no obligation or responsibility to update any forward-looking statements.

Speaker Change: Before we begin, I would like to remind everyone that certain statements that are not based on historical facts made during this call

Speaker Change: Including any statements related to financial guidance may be deemed forward-looking statements under federal securities laws Because this forward-looking statements involve known and unknown risks and uncertainties There are important factors that could cause actual results to differ materially from those expressed or implied by this forward-looking statements

Speaker Change: We encourage you to refer to our most recent SEC filings for information on some of these risk factors.

Speaker Change: Silver Spike assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call speaks only as of today, August 9, 2024. Therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay or draft of reading.

Mesh: Please note that the information reported on this call speaks only as of today, August 9, 2024. Therefore, your advice that time-sensitive information may no longer be accurate at the time of an ear play or draft of reading.

Mesh: Good morning again, and thank you all for joining. We released our results yesterday, and there is a management presentation deck attached to the 8-K that was fine as well. Those who have joined us on this earnings webcast should see a link to the slides. We may refer to some of these slides during the presentation by the slide numbers, just for reference.

Speaker Change: So, good morning again, and thank you all for joining. We released our results yesterday, and there is a management presentation deck attached to the 8K that was filed as well. Those who have joined us on this earnings webcast should see a link to the slides.

Speaker Change: We may refer to some of these slides during our presentation by their slight numbers just for reference.

Mesh: I'll cover the presentation slides and then turn it over to Scott Gordon for his thoughts and remarks.

Speaker Change: I'll cover the presentation slides and then turn it over to Scott Gordon for his thoughts and remarks.

Mesh: Before we get into the key financial highlights for the quarter ended June 30, 2024, a quick update on the loan portfolio acquisition that was announced in the first quarter. On February 20, 2024, the company announced that it entered into a definitive agreement to purchase from Chicago Atlantic Loan Portfolio LLC a portfolio of loans in exchange for newly issued shares of the company's common stock. Subject to certain custom rate closing conditions. On April 15th, the company filed a registration statement on Form N-14 in connection with the loan portfolio acquisition with the SEC. The file pre-effective amendments to the Form N14 on June 20th and July 31st. We are currently anticipating this transaction to close in early fourth quarter, 2024.

Scott Gordon: Before we get into the key financial highlights for the quarter ended June 30, 2024, a quick update on the loan portfolio acquisition that was announced in the first quarter.

Scott Gordon: On February 20, 2024, the company announced that it entered into a definitive agreement to purchase from Chicago Atlantic Loan Portfolio, LLC.

Scott Gordon: A Portfolio of Loans in Exchange for Newly-Issued Shares of the Company's Common Stock, Subject to Certain Custom Rate Closing Conditions.

Scott Gordon: On April 15th, the company filed a registration statement on Form N-14 in connection with the Loan Portfolio Acquisition with the SEC.

Operator: Good day and thank you for standing by.

Operator: Welcome to the Silver Spike Investment Corps 2nd quarter 2024 earnings conference call. At this time all participants are listening only mode.

Scott Gordon: We filed pre-effective amendments to the Form N-14 on June 20th and July 31st. We are currently anticipating this transaction to close in early fourth quarter 2024.

Operator: After the speakers presentation it will be a question and answer session. That's a question during session and you need to press star one one on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question please press star one one again.

Mesh: So, turning to the results and the presentation slides, turning to page 3, financial highlights for the first quarter, 2024, gross investment income was 3.1 million for the quarter compared to 2.9 million in the same quarter last year. Expenses were approximately 1 million, excluding expenses related to the loan portfolio acquisition, so net investment income excluding transaction expenses of 2.1 million compared to 1.9 million last year. We have incurred transaction-related expenses of about 0.6 million in the quarter related to the work on the Form N14 filing. Net investment income for the quarter of 1.5 million. This net investment income would have been higher if we were to exclude the impact of the transaction expenses.

Speaker Change: So, turning to the results and the presentation slides, turning to page 3, Financial Highlights for the First Quarter 2024.

Operator: Please be advised that today's conference is being recorded.

Operator: I want to have a kind of conference over to speakers today. Good morning.

Speaker Change: Go's investment income was $3.1 million for the quarter compared to $2.9 million

Mesh: This is a commercial margin CFO of Silver Spike Investment Corps. With me here today is Court Gordon the EO of Silver Spike Investment Corps.

Speaker Change: In the same quarter last year

Speaker Change: Expenses were approximately 1 million excluding expenses related to the loan portfolio acquisition.

Mesh: Welcome to Silver Spike's earnings conference call and live webcast for the 2nd quarter and a June 30 2024. Silver Spike's financial results for the 2nd quarter and a June 30 2024 will release yesterday and can be accessed from our website at ssic.silverspikecaps.com. A play of this call will also be available on Silver Spike's website.

Speaker Change: So, Net Investment Income Excluding Transaction Expenses.

Speaker Change: of 2.1 million compared to 1.9 million last year. We incurred transaction-related expenses of about 0.6 million in the quarter related to the work on the Form N-14 filings.

Speaker Change: Spike Net Investment Income for the quarter of $1.5 million, this net investment income would have been higher if we were to exclude the impact of the transaction expenses.

Mesh: Before we begin I would like to remind everyone that certain statements that are not based on historical facts made during this call including any statements related to financial guidance may be deemed forward looking statements under federal securities laws because this forward looking statements involved known and unknown risks and uncertainties that are important factors that could cause actual results to defer materially from those expressed or implied by this forward looking statements. We encourage you to refer to our most recent SEC filings for information on some of these risk factors. Silver Spike assumes no obligation or responsibility to update any forward looking statements.

Speaker Change: Net assets at the end of the period.

Speaker Change: 84.3 million done from last year due to the primarily due to the payment of dividends and transaction expenses.

Speaker Change: On a per share basis, investment income excluding transaction expenses was $0.33 per share compared to $0.31 per share.

Speaker Change: Last year, net investment income of $0.25 per share and a net asset value per share at June 30th.

Mesh: Please note that the information reported on this call speaks only as of today August 9 2024. Therefore your advice that time-sensitive information may no longer be accurate at the time of an ear play or draft of reading.

Mesh: Also, the board declared a regular quarterly cash dividend of 25 cents per share, which is in line with the regular dividend paid over the past few quarters. This dividend will be payable on September 27 to stockholders of record on September 19. We will not be covering many of the subsequent slides in detail as most investors are already familiar with our story. HEPA talk more about them in the deadline is robust and going with the excitement and optimism about the rescheduling of cannabis and the positive regulatory developments in a few key states. Many industry operators have started to revisit their growth strategies, both organic expansion as well as opportunistic M&A.

Speaker Change: is $13.56 per share.

Speaker Change: Also, the board declared a regular quarterly cash dividend of $0.25 per share, which is in line with the regular dividend paid over the past few quarters. This dividend will be payable on September 27 to stockholders of record on September 19.

Mesh: Good morning again and thank you all for joining. We released our results yesterday and there is a management presentation deck attached to the 8K that was fine as well. Those who have joined us on this earnings webcast should see a link to the slides. We may refer to some of these slides during the presentation by the slide numbers just for reference. I'll cover the presentation slides and then turn it over to Scott Gordon for his thoughts and remarks.

Speaker Change: We will not be covering many of the subsequent slides in detail as most investors are already familiar with our story and happy to talk more about them in the Q&A session. We are turning to page 9.

Speaker Change: Our deal pipeline is robust and going with the excitement and optimism about the rescheduling of cannabis and the positive regulatory developments in a few key states.

Mesh: Before we get into the key financial highlights for the quarter ended June 30 2024 a quick update on the loan portfolio acquisition that was announced in the first quarter. On February 20 2024 the company announced that it entered into a definitive agreement to purchase from Chicago Atlantic loan portfolio LLC a portfolio of loans in exchange for newly issued shares of the company's common stock. Subject to certain custom rate closing conditions, on April 15th, the company filed a registration statement on Form N14 in connection with the loan portfolio acquisition with the SEC.

Speaker Change: Many industry operators have started to revisit their growth strategies.

Mesh: Our active debt pipeline is an excess of $550 million, and our conversations with cannabis operators on their fundraising plans have picked up over the past couple of months. Also, on February 20, 2024, the company announced that the board unanimously approved an expansion of the company's investment strategy to permit investments in companies outside of the cannabis and health and wellness sectors that would otherwise meet the company's investment criteria. That investment strategy changed, became effective on April 22nd. The D5 round on page 9 does not reflect any non-cannabis prospects as yet.

Speaker Change: both organic expansion as well as opportunistic M&A. Our active deal pipeline is in excess of $550 million, and our conversations with cannabis operators on their fundraising plans have picked up over the past couple of months.

Speaker Change: Also, on February 20th, 2024, the company announced that the board unanimously approved

Mesh: The file pre-effective amendments to the Form N14 on June 20th and July 31st, we are currently anticipating this transaction to close in early fourth quarter, 2024. So, turning to the results and the presentation slides, turning to page 3, financial highlights for the first quarter, 2024, gross investment income was 3.1 million for the quarter compared to 2.9 million in the same quarter last year, expenses were approximately 1 million excluding expenses related to the loan portfolio acquisition, so net investment income excluding transaction expenses of 2.1 million compared to 1.9 million last year, we have incurred transaction related expenses of about 0.6 million in the quarter related to the work on the Form N14 filing, net investment income for the quarter of 1.5 million, this net investment income would have been higher if we were to exclude the impact of the transaction expenses.

Speaker Change: an expansion of the company's investment strategy to permit investments in companies outside of the cannabis and health and wellness sectors that would otherwise meet the company's investment criteria.

Speaker Change: That investment strategy change became effective on April 22nd. The DE pipeline on page 9 does not reflect any non-cannabis prospects as yet.

Mesh: So turning to page 11, we show our portfolio summary as of August 8th, 2024. As we can see at the top of the page, we have or 55 million, almost 57 million invested, then average yield to maturity of almost 18%. In this quarter and at June 30th, 2024, we received a partial paid down from Company D, which was reduced total investment value, but this reduction was offset by a new investment in Company F of Work Box Holdings, a non-cannabis company which offers flexible co-working office locations. We participated in the 13.3 million syndication for this borrower and made the investment in a package of term loans, preferred equity, and bonds.

Speaker Change: So turning to page 11, we show our portfolio summary as of August 8, 2024. As we can see at the top of the page, we have over 55 million, almost 57 million invested with an average yield to maturity of almost 18 percent.

Speaker Change: in this quarter ended June 30th, 2024.

Speaker Change: We received a partial pay down from company D

Speaker Change: which reduced our total investment value. But this reduction was offset by a new investment in company F, Workbox Holdings, a non-cannabis company which offers flexible co-working office locations.

Speaker Change: We participated in the $13.3 million syndication for this borrower and made the investment in a package of term loans, preferred equity, and warrants.

Mesh: Net assets at the end of the period of 84.3 million done from last year due to the primarily due to the payment of dividends and transaction expenses. On a poor share basis, net investment income excluding transaction expenses was 33 cents per share compared to 31 cents last year, net investment income of 25 cents per share, and a net asset value per share at June 30 is $13.56 per share. Also the board declared a regular quarterly cash dividend of 25 cents per share, which is in line with the regular dividend paid over the past few quarters, this dividend will be payable on September 27 to stockholders of record on September 19.

Mesh: That's represented in Company F. Subsequent to the end of the quarter on July 16th, we made another investment in company G, Ascend Wellness, in its 12 and 3 quarters senior secured notes due to 2029. So a few additional points we would like to reiterate about this portfolio: all of our positions in the portfolio are forced loan loans or secured bonds. None of our loans or bonds are in non-acool status, and our gross portfolio yield of 18% compares favorably to the broader listed BTC universe.

Speaker Change: That's represented in company F. Subsequent to the end of the quarter on July 16, we made another investment in company G, Ascend Wellness, in its 12 ¾ senior secured notes due 2029.

Speaker Change: So a few additional points we would like to reiterate about this portfolio. All of our positions in the portfolio are forced lien loans or secured bonds.

Speaker Change: None of our loans or bonds are in non-equal status, and our gross portfolio yield of 18% compares favorably to the broader list of

Scott Gordon: With that, let me pass it on to Scott Gordon for a few remarks. Thank you, Mesh. The overall macro-environment for our cannabis-related lending business remained similar to last quarter. Much of the early excitement around the scheduling has since given way to some confusion and skepticism around timing, implementation, and process risks, particularly in light of the upcoming November election and potential for regime change. On the more positive side, state momentum continues to build. Ohio just recently launched its adult use program, and all eyes are on Florida awaiting the outcome of its vote to allow for adult use was in the state.

Speaker Change: BDC universe.

Speaker Change: With that, let me pass it on to Scott Gordon for a few remarks.

Mesh: We will not be covering many of the subsequent slides in detail as most investors are already familiar with our story, HEPA talk more about them in the deadline is robust and going with the excitement and optimism about the rescheduling of cannabis and the positive regulatory developments in a few key states. Many industry operators have started to revisit their growth strategies, both organic expansion as well as opportunistic M&A. Our active debt pipeline is an excess of $550 million and our conversations with cannabis operators on their fundraising plans have picked up over the past couple of months.

Scott Gordon: Thank you, Mesh. The overall macro environment for our cannabis-related lending business remained similar to last quarter.

Speaker Change: Much of the early excitement around rescheduling has since given way to some confusion and skepticism around timing, implementation, and process risks, particularly in light of the upcoming November election and potential for regime change.

Speaker Change: On the more positive side, state momentum continues to build. Ohio just recently launched its adult use program, and all eyes are on Florida awaiting the outcome of its vote to allow for adult use within the state.

Scott Gordon: Meanwhile, operating trends among the larger operators appear to be stable, if not slightly positive. Capital market activity has picked up as a member of MSOs that successfully refinance some of their maturity burdens. Bigger picture, we do not anticipate any near-term, meaningful change in what has been a challenge than capital-scarce backdrop for the industry. This dynamic, while evolving, continues to afford us a strong position with respect to deal terms and pricing. While our core focus remained centered around opportunities within the broader cannabis ecosystem, we are excited to be building out our pipeline activity outside of that sector.

Speaker Change: Meanwhile, operating trends among the larger operators appear to be stable, if not slightly positive.

Speaker Change: Capital market activity has picked up as a number of MSOs have successfully refinanced some of their maturity burdens.

Speaker Change: Bigger picture, we do not anticipate any near-term meaningful change in what has been a challenged and capital-scarce backdrop for the industry.

Mesh: Also, on February 20, 2024, the company announced that the board unanimously approved an expansion of the company's investment strategy to permit investments in companies outside of the cannabis and health and wellness sectors that would otherwise meet the company's investment criteria. That investment strategy changed became effective on April 22nd. The D5 round on page 9 does not reflect any non-cannabis prospects as yet.

Speaker Change: This dynamic, while evolving, continues to afford us a strong position with respect to deal terms and pricing.

Speaker Change: While our core focus remains centered around opportunities within the broader cannabis ecosystem, we are excited to be building out our pipeline and activity outside of that sector.

Scott Gordon: As we Mesh referenced, we executed on our first non-cannabis loan this past quarter and looked forward to an increasing number of interesting opportunities there going forward.

Speaker Change: As Umesh referenced, we executed on our first non-cannabis loan this past quarter and look forward to an increasing number of interesting opportunities there going forward. With that, I'll pass it back to Umesh.

Mesh: With that, I'll pass it back to you, Mesh. Thank you very much, God.

Mesh: So turning to page 11, we show our portfolio summary as of August 8th, 2024. As we can see at the top of the page we have or 55 million, almost 57 million invested, then average yield to maturity of almost 18%. In this quarter and at June 30th, 2024, we received a partial paid down from company D, which was reduced total investment value, but this reduction was offset by a new investment in company F of work box holdings, a non cannabis company which offers flexible co-working office locations.

Victor: Victor, we are ready for Q&A. Thank you.

Umesh Mahajan: Thank you very much, Scott. Victor, we are ready for Q&A.

Victor: As a reminder, to ask the question, you need to press Star World 1 on your telephone and wait for a name to be announced. To withdraw your question, please press Star World 1 again. I'm not showing any questions at this time.

Victor: Thank you. And as a reminder, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Speaker Change: Please stand by while we compile the Q&A roster.

Speaker Change: Once again, that's star 101 for questions.

Mesh: We'll mesh.

Mesh: I'll turn it back to you for any closure works. Alright, but thank you everyone for joining this call.

Speaker Change: Now, I'm not showing any questions at this time. Umesh, I'll turn it back to you for any closing remarks.

Operator: We look forward to giving you for their updates on the transaction and on the end of speaking with everyone on the next running score. Thank you very much. Thank you for your participation in today's conference.

Mesh: We participated in the 13.3 million syndication for this borrower and made the investment in a package of term loans, preferred equity and bonds. That's represented in company F. Subsequent to the end of the quarter on July 16th, we made another investment in company G, ascend wellness in its 12 and 3 quarters senior secured notes due to 2029.

Umesh Mahajan: Thank you everyone for joining this call. We look forward to giving you further updates on the transaction and speaking with everyone on the next earnings call. Thank you very much.

Operator: This is the program you may know. Disconnect everyone. Have a great day. .

Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.

Mesh: So a few additional points we would like to reiterate about this portfolio, all of our positions in the portfolio are forced loan loans or secured bonds. None of our loans or bonds are in non-acool status and our gross portfolio yield of 18% compares favorably to the broader listed BTC universe.

Scott Gordon: With that, let me pass it on to Scott Gordon for a few remarks. Thank you, Mesh. The overall macro-environment for our cannabis-related lending business remained similar to last quarter. Much of the early excitement around the scheduling has since given way to some confusion and skepticism around timing, implementation and process risks, particularly in light of the upcoming November election and potential for regime change. On the more positive side, state momentum continues to build.

Scott Gordon: Ohio just recently launched its adult use program and all eyes are on Florida awaiting the outcome of its vote to allow for adult use was in the state. Meanwhile, operating trends among the larger operators appear to be stable if not slightly positive. Capital market activity has picked up as a member of MSOs that successfully refinance some of their maturity burdens. Bigger picture, we do not anticipate any near-term, meaningful change in what has been a challenge than capital scarce backdrop for the industry.

Scott Gordon: This dynamic, while evolving, continues to afford us a strong position with respect to deal terms and pricing. While our core focus remained centered around opportunities within the broader cannabis ecosystem, we are excited to be building out our pipeline activity outside of that sector. As we Mesh referenced, we executed on our first non-cannabis loan this past quarter and looked forward to an increasing number of interesting opportunities there going forward. With that, I'll pass it back to you Mesh.

Speaker Change: [music]

Speaker Change: Thanks for watching

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Speaker Change: [inaudible] ¶

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Speaker Change: [music]

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Operator: Good day, and thank you for standing by. Welcome to the Silver Spike Investment Corp. 2nd Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I will now turn the conference over to our speakers today. Umesh Mahajan, Chief Financial Officer. Please go ahead.

Speaker Change: Welcome to the Silver Spike Investment Corp. 2nd Quarter 2024 Earnings Conference Call.

Speaker Change: At this time, all participants are on a listen-only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during a session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

Umesh Mahajan: Good morning. This is Umesh Mahajan, CFO of Silver Spike Investment Corp. With me here today is Scott Gordon, CEO of Silver Spike Investment Corp. Welcome to Silver Spike's earnings conference call and live webcast for the second quarter ended June 30, 2024. Silver Spike's financial results for the second quarter ended June 30, 2024 were released yesterday and can be accessed from our website at ssic.silverspikecap.com. A replay of this call will also be available on Silver Spike's website.

Speaker Change: Good morning. This is Umesh Mahajan, CFO of Silver Spike Investment Corp. With me here today is Scott Gordon, CEO of Silver Spike Investment Corp. Welcome to Silver Spikes

Umesh Mahajan: Before we begin, I would like to remind everyone that certain statements that are not based on historical facts made during this call, including any statements related to financial guidance, may be deemed forward-looking statements under federal securities laws because these forward-looking statements involve known and unknown risks and uncertainties that are important factors that could cause actual results to differ materially from those expressed or implied by this forward-looking statement. We encourage you to refer to our most recent SEC filings for information on some of these risk factors.

Speaker Change: earnings conference call and live webcast for the second quarter and at June 30 2024

Speaker Change: Silver Spike's financial results for the second quarter ended June 30, 2024, were released yesterday and can be accessed from our website at ssic.silverspikecap.com. A replay of this call will also be available on Silver Spike's website.

Speaker Change: Before we begin, I would like to remind everyone that certain statements that are not based on historical facts made during this call

Speaker Change: Including any statements related to financial guidance may be deemed forward-looking statements under federal securities laws because these forward-looking statements involve known and unknown risks and uncertainties that are important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements.

Mesh: We encourage you to refer to our most recent SEC findings for information on some of these risk factors. Silver Spike assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call speaks only as of today, August 9, 2024.

Speaker Change: We encourage you to refer to our most recent SEC filings for information on some of these risk factors.

Mesh: Therefore, your advice that time-sensitive information may no longer be accurate at the time of an area player or transfer free.

Mesh: So, good morning again, and thank you all for joining. We released our results yesterday, and there is a management presentation deck attached to the 8-K that was filed as well. Those who have joined us on this earnings webcast should see a link to the slides. We may refer to some of these slides during the presentation by the slide numbers, just for reference. I'll cover the presentation slides and then turn it over to Scott Gordon for his thoughts and remarks.

Umesh Mahajan: Silver Spike assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call speaks only as of today, August 9, 2024. Therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay or draft. So, good morning again, and thank you all for joining.

Umesh Mahajan: We released our results yesterday, and there is a management presentation deck attached to the 8K that was filed as well. Those who have joined us on this earnings webcast should see a link to the slides. We may refer to some of these slides during our presentation by their slight numbers, just for reference. I'll cover the presentation slides and then turn it over to Scott Gordon for his thoughts and remarks.

Speaker Change: So, good morning again and thank you all for joining. We released our results yesterday and there is a management presentation deck attached to the 8K that was filed as well. Those who have joined us on this earnings webcast should see a link to the slides.

Speaker Change: We may refer to some of these slides during our presentation by their slight numbers just for reference

Speaker Change: I'll cover the presentation slides and then turn it over to Scott Gordon for his thoughts and remarks.

Mesh: Before we get into the key financial highlights for the quarter ended June 30, 2024, a quick update on the loan portfolio acquisition that was announced in the first quarter. On February 20, 2024, the company announced that it entered into a definitive agreement to purchase from Chicago Atlantic Loan Portfolio LLC, a portfolio of loans in exchange for newly issued shares of the company's common stock, subject to certain customary closing conditions. On April 15, the company filed a registration statement on Form N-14 in connection with the loan portfolio acquisition with the SEC. The file pre-effective amendments to the form N-14 on June 20 and July 31. We are currently anticipating this transaction to close in early fourth quarter, 2024.

Umesh Mahajan: Before we get into the key financial highlights for the quarter ended June 30, 2024, a quick update on the loan portfolio acquisition that was announced in the first quarter. On February 20, 2024, the company announced that it entered into a definitive agreement to purchase a portfolio of loans from Chicago Atlantic Loan Portfolio, LLC, in exchange for newly issued shares of the company's common stock, subject to certain customary closing conditions. On April 15, the company filed a registration statement on Form N-14 in connection with the Loan Portfolio Acquisition with the SEC. We filed pre-effective amendments to the Form N-14 on June 20th and July 34th.

Scott Gordon: Before we get into the key financial highlights for the quarter ended June 30, 2024, a quick update on the loan portfolio acquisition that was announced in the first quarter.

Scott Gordon: On February 20, 2024, the company announced that it entered into a definitive agreement to purchase from Chicago Atlantic Loan Portfolio, LLC.

Scott Gordon: A Portfolio of Loans in Exchange for Newly Issued Shares of the Company's Common Stock, Subject to Certain Custom Rate Closing Conditions.

Scott Gordon: On April 15th, the company filed a registration statement on Form N-14 in connection with the Loan Portfolio Acquisition with the SEC.

Scott Gordon: We filed pre-effective amendments to the Form N-14 on June 20th and July 31st. We are currently anticipating this transaction to close in early fourth quarter 2024.

Umesh Mahajan: We are currently anticipating this transaction to close in early the fourth quarter. So turning to the results and the presentation slides, turning to page three, financial highlights for the first quarter of 2024. Gross investment income was $3.1 million for the quarter compared to $2.9 million in the same quarter last year. Spencers were approximately 1 million excluding expenses related to the loan portfolio acquisition.

Mesh: So turning to the results and the presentation slides, turning to page three, financial highlights for the first quarter, 2024, gross investment income was 3.1 million for the quarter compared to 2.9 million in the same quarter last year. Expenses were approximately 1 million, excluding expenses related to the loan portfolio acquisition. So net investment income excluding transaction expenses of 2.1 million compared to 1.9 million last year. We have incurred transaction-related expenses of 0.6 million in the quarter related to the work on the form N-14 findings. Net investment income for the quarter of 1.5 million, and this net investment income would have been higher if we were to exclude the impact of the transaction expenses.

Scott Gordon: So, turning to the results and the presentation slides, turning to page 3, Financial Highlights for the First Quarter 2024.

Scott Gordon: Goa's investment income was $3.1 million for the quarter, compared to $2.9 million

Scott Gordon: In the same quarter last year

Scott Gordon: Expenses were approximately 1 million excluding expenses related to the loan portfolio acquisition.

Umesh Mahajan: So net investment income excluding transaction expenses, of the proposal. Net investment income for the quarter of 1.5 million; this net investment income would have been higher if we were to exclude the impact of the transaction expenses. Net assets at the end of the period were $84.3 million, primarily due to the payment of dividends and transaction expenses. On a per share basis, net investment income excluding transaction expenses was 33 cents per share compared to 31 cents last year, net investment income of $0.25 per share, and a net asset value per share at June 30th.

Scott Gordon: So, Net Investment Income Excluding Transaction Expenses.

Scott Gordon: of $2.1 million compared to $1.9 million last year. We have incurred transaction-related expenses of about $0.6 million in the quarter related to the work on the Form N-14 filings.

Scott Gordon: Net investment income for the quarter of $1.5 million. This net investment income would have been higher if we were to exclude the impact of the transaction expenses.

Mesh: Net assets are the end of the period of 84.3 million done from last year due to the primarily due to the payment of dividends and transaction expense. On a poor share basis, investment income excluding transaction expenses was 33 cents per share compared to 31 cents last year. Net investment income of 25 cents per share and a net asset value per share at June 30 is $13.56 per share. Also, the board declared a regular quarterly cash dividend of 25 cents per share, which is in line with the regular dividend paid over the past few quarters.

Scott Gordon: Net assets at the end of the period.

Scott Gordon: 84.3 million done from last year due to the primarily due to the payment of dividends and transaction expenses.

Scott Gordon: On a per share basis, investment income excluding transaction expenses was $0.33 per share compared to $0.31 per share.

Scott Gordon: Last year, net investment income of $0.25 per share and a net asset value per share at June 30th.

Umesh Mahajan: 15.56 dollars per share. Also, the board declared a regular quarterly cash dividend of $0.25 per share, which is in line with the regular dividend paid over the past few quarters. This dividend will be payable on September 27, to stockholders of record on September 9th.

Scott Gordon: is $13.56 per share.

Scott Gordon: Also the board declared a regular quarterly cash dividend of 25 cents per share which is in line with the regular dividend paid over the past few quarters. This dividend will be payable on September 27 to stockholders of record on September 19.

Mesh: This dividend will be payable on September 27 to stockholders of record on September 19.

Mesh: Thank you very much, God.

Mesh: We will not be covering many of the subsequent slides in detail, as most investors are already familiar with our story. We have to talk more about them in the Q&A session. We are turning to page 9. Our deal pipeline is robust and going with the excitement and optimism about the rescheduling of cannabis and the positive regulatory developments in a few key states. Many industry operators have started to revisit their growth strategies, both organic expansion as well as opportunistic M&A. Our active debt pipeline is an excess of $5.50 million, and our conversations with cannabis operators on their fundraising plans have picked up over the past couple of months.

Umesh Mahajan: We will not be covering many of the subsequent slides in detail as most investors are already familiar with our story and happy to talk more about it in the Q&A session, but turning to page 9, about our deal pipeline. Our deal pipeline is robust and growing with the excitement and optimism about the rescheduling of cannabis and the positive regulatory developments in a few key states. Many industry operators have started to revisit their growth strategies, both organic expansion as well as opportunistic M&A.

Operator: Victor, we are ready for Q&A. Thank you. As a reminder, to ask the question, you need to press Star World 1 on your telephone and wait for a name to be announced. To withdraw your question, please press Star World 1 again. I'm not showing any questions at this time. We'll mesh.

Mesh: I'll turn it back to you for any closure works. Alright, but thank you everyone for joining this call. We look forward to giving you for their updates on the transaction and on the end of speaking with everyone on the next running score. Thank you very much. Thank you for your participation today's conference.

Speaker Change: Our deal pipeline is robust and growing with the excitement and optimism about the rescheduling of cannabis and the positive regulatory developments in a few key states.

Operator: This is the program you may know disconnect everyone.

Operator: Have a great day.

Speaker Change: Many industry operators have started to revisit their growth strategies.

Umesh Mahajan: Our active D pipeline is in excess of 550 million, and our conversations with cannabis operators on their fundraising plans have picked up over the past couple of months. Also, on February 20th, 2024, the company announced that the board unanimously approved an expansion of the company's investment strategy to permit investments in companies outside of the cannabis and health and wellness sectors that would otherwise meet the company's investment criteria. That investment strategy change became effective on April 22nd. The DE pipeline on page nine does not reflect any non-cannabis prospects as yet.

Speaker Change: both organic expansion as well as opportunistic M&A. Our active D pipeline is in excess of $550 million and our conversations with cannabis operators on their fundraising plans have picked up over the past couple of months.

Mesh: Also on February 20, 2024, the company announced that the board unanimously approved an expansion of the company's investment strategy to permit investments in companies outside of the cannabis and health and wellness sectors that work otherwise meet the company's investment criteria. That investment strategy changed, became effective on April 22nd. The D5 round on page 9 does not reflect any non-cannabis prospects as yet.

Mesh: [inaudible] Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv[inaudible] Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv[inaudible] Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv Silver Spike Inv[inaudible] Before we begin, I would like to remind everyone that certain statements that are not based on historical facts made during this call, including any statements related to financial guidance may be deemed forward-looking statements under federal securities laws, because this forward-looking statements involve known and unknown risks and uncertainties, that are important factors that could cause actual results to defer materially from those expressed or implied by this forward-looking statements. We encourage you to refer to our most recent SEC findings for information on some of these risk factors.

Speaker Change: Also, on February 20th, 2024...

Speaker Change: The company announced that the board unanimously approved an expansion of the company's investment strategy to permit investments in companies outside of the cannabis and health and wellness sectors that would otherwise meet the company's investment criteria.

Mesh: Silver Spike assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call speaks only as of today, August 9, 2024. Therefore, your advice that time-sensitive information may no longer be accurate at the time of an area player or transfer free.

Mesh: So, good morning again, and thank you all for joining. We released our results yesterday, and there is a management presentation deck attached to the 8K that was filed as well. Those who have joined us on this earnings webcast should see a link to the slides. We may refer to some of these slides during the presentation by the slide numbers just for reference. I'll cover the presentation slides and then turn it over to Scott Gordon for his thoughts and remarks.

Speaker Change: That investment strategy change became effective on April 22nd. The DE pipeline on page 9 does not reflect any non-cannabis prospects as yet.

Umesh Mahajan: So turning to page 11, we show our portfolio summary as of August 8, 2024. As we can see at the top of the page, we have over 55 million, almost 57 million invested with an average yield to maturity of almost 18 percent. In this quarter ended June 30, 2024, we received a partial paydown from company D, which reduced our total investment value. But this reduction was offset by a new investment in company F, Workbox Holdings, a non-cannabis company that offers flexible co-working office locations.

Mesh: Turning to page 11, we show our portfolio summary as of August 8, 2024. As we can see at the top of the page, we have almost 57 million invested with an average yield to maturity of almost 18%. In this quarter and at June 30, 2024, we received a partial paydown from Company D, which was reduced total investment value. But this reduction was offset by a new investment in Company F of Workbox Holdings, a non-cannabis company which offers flexible co-working office locations. We participated in the 13.3 million syndication for this borrower and made the investment in a package of term loans, preferably, and warrants.

Speaker Change: in this quarter ended June 30th, 2024.

Speaker Change: We received a partial pay down from company D

Umesh Mahajan: We participated in the $13.3 million syndication for this borrower and made the investment in a package of term loans, preferred equity, and warrants. That's represented by company F. Subsequent to the end of the quarter on July 16, we made another investment in company G, Ascend Wellness, in its 12 and three-quarters senior secured notes due 2029. So a few additional points we would like to reiterate about this portfolio. All of our positions in the portfolio are for SLEEM loans or secured bonds, none of our loans or bonds are in non-equal status, and our gross portfolio yield of 18% compares favorably to the broader portfolio.

Speaker Change: We participated in the $13.3 million syndication for this borrower and made the investment in a package of term loans, preferred equity, and warrants.

Mesh: That's represented in Company F. Subsequent to the end of the quarter on July 16, we made another investment in company G, Ascend Wellness, in its 12 and 3 quarters senior secured notes due to 2029.

Speaker Change: That's represented in company F. Subsequent to the end of the quarter on July 16th, we made another investment in company G, Ascent Wellness, in its 12 and three quarters senior secured notes due 2029.

Mesh: A few additional points we would like to reiterate about this portfolio. All of our positions in the portfolio are forced loan loans or secured bonds. None of our loans or bonds are in non-accrual status, and our gross portfolio yield of 18% compares favorably to the broader.

Speaker Change: A few additional points we would like to reiterate about this portfolio. All of our positions in the portfolio are forced lien loans or secured bonds.

Speaker Change: None of our loans or bonds are in non-equal status and our gross portfolio yield of 18% compares favorably to the broader listed

Scott Gordon: Listed BDC Universe. With that, let me pass it on to Scott Gordon for a few remarks. Thank you, Mesh. The overall macro-environment car cannabis-related lending business remained similar to last quarter. Much of the early excitement around the scheduling has since given way to some confusion, skepticism around timing, implementation, and process risks, particularly in light of the upcoming November election and potential for regime change. On the more positive side, state momentum continues to build. Ohio just recently launched its adult use program, and all eyes are on Florida awaiting the outcome of its vote to allow for adult use in the state.

Speaker Change: BDC Universe.

Speaker Change: With that, let me pass it on to Scott Gordon for a few remarks.

Scott Gordon: The overall macro environment for our cannabis-related lending business remained similar to last quarter. However, much of the early excitement around rescheduling has since given way to some confusion and skepticism around timing, implementation, and process risks, particularly in light of the upcoming November election and potential for regime change. On the more positive side, state momentum continues to build. Ohio just recently launched its adult use program, and all eyes are on Florida awaiting the outcome of its vote to allow for adult use within the state.

Scott Gordon: Thank you Mesh. The overall macro environment for our cannabis related lending business remained similar to last quarter.

Scott Gordon: Meanwhile, operating trends among the larger operators appear to be stable, if not slightly positive. Capital market activity has picked up as some members of MSOs have successfully refinanced some of their maturity burdens. But, bigger picture, we do not anticipate any near-term meaningful change in what has been a challenged and capital scarce backdrop for the industry.

Scott Gordon: Meanwhile, operating trends among the larger operators appear to be stable, if not slightly positive. Topical market activity has picked up as a member of MSOs that successfully refinanced some of their maturity burdens. Bigger picture, we do not anticipate any near-term, meaningful change in what has been a challenge than capital-scarce backdrop for the industry. This dynamic, while evolving, continues to afford us a strong position with respect to deal terms and pricing. While our core focus remained centered around opportunities within the broader cannabis ecosystem, we are excited to be building out our pipeline activity outside of that sector.

Speaker Change: Meanwhile, operating trends among the larger operators appear to be stable, if not slightly positive.

Speaker Change: Capital market activity has picked up as a number of MSOs have successfully refinanced some of their maturity burdens.

Speaker Change: Bigger picture, we do not anticipate any near-term meaningful change in what has been a challenged and capital-scarce backdrop for the industry.

Mesh: Before we get into the key financial highlights for the quarter ended June 30, 2024, a quick update on the loan portfolio acquisition that was announced in the first quarter. On February 20, 2024, the company announced that it entered into a definitive agreement to purchase from Chicago Atlantic loan portfolio LLC, a portfolio of loans in exchange for newly issued shares of the company's common stock, subject to certain customary closing conditions. On April 15, the company filed a registration statement on form N-14 in connection with the loan portfolio acquisition with the SEC.

Scott Gordon: This dynamic, while evolving, continues to afford us a strong position with respect to deal terms and price. Meanwhile, our core focus remains centered around opportunities within the broader cannabis ecosystem. We're excited to be building out our pipeline and activity outside of that sector. As Umesh referenced, we executed on our first non-cannabis loan this past quarter and look forward to an increasing number of interesting opportunities there going forward. With that, I'll pass it back to Umesh.

Speaker Change: This dynamic, while evolving, continues to afford us a strong position with respect to deal terms and pricing.

Scott Gordon: As we mesh reference, we actually keep it on our first non-cannabis loan this past quarter and look forward to an increasing number of interesting opportunities there going forward.

Umesh Mahajan: As Umesh referenced, we executed on our first non-cannabis loan this past quarter and look forward to an increasing number of interesting opportunities there going forward. With that, I'll pass it back to Umesh.

Mesh: With that, I'll pass it back to you, Mesh. Thank you very much, Scott.

Umesh Mahajan: Thank you very much, Scott. Victor, we are ready for Q&A. Thank you.

Victor: Victor, we are ready for Q&A. Thank you. As a reminder, to ask a question, you need to press Star World 1 on your telephone and wait for your name to be announced. To withdraw your question, please press Star World 1 again.

Umesh Mahajan: Thank you very much, Scott. Victor, we are ready for Q&A.

Operator: Thank you, and as a reminder to ask a question, you need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Once again, that's star 1 1 for questions. Now, I'm not showing any questions at this time. Umesh, I'll turn it back to you for any closing remarks

Victor: Thank you. And as a reminder, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.

Victor: Please then buy or compile the Q&A roster once again. Let's start one one for questions. I'm not showing any questions at this time.

Speaker Change: Please stand by while we compile the Q&A roster.

Speaker Change: Once again, that's star 1-1 for questions.

Mesh: Mesh, I'll turn it back to you for any closure marks. All right. Well, thank you, everyone, for joining this call. We look forward to giving you further updates on the transaction and speaking with everyone on the next earnings call. Thank you very much. Thank you for your participation in today's conference.

Speaker Change: Now, I'm not showing any questions at this time. Umesh, I'll turn it back to you for any closing remarks.

Umesh Mahajan: All right, well, thank you everyone for joining this call.

Operator: for joining us. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Speaker Change: Thank you everyone for joining this call. We look forward to giving you further updates on the transaction and speaking with everyone on the next earnings call. Thank you very much.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Operator: Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv, Thanks for watching! Hope you enjoy!

Operator: Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv, Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv, Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv Spike Inv

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Operator: This doesn't include a program; you may now disconnect, everyone. Have a great day.

Operator: Good day, and thank you for standing by. Welcome to the Silver Spike Investment Corp. Second Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I will now hand the conference over to your speakers today. Umesh Mahajan, Chief Financial Officer. Please go ahead.

Umesh Mahajan: Good morning, this is Umesh Mahajan, CFO of Silver Spike Investment Corp. With me here today is Scott Gordon, CEO of Silver Spike Investment Corp. Welcome to Silver Spike's Earnings Conference Call and live webcast for the second quarter and June 30, 2024. Silver Spike's financial results for the second quarter and for June 30, 2024 were released yesterday and can be accessed from our website at ssic.silverspikecap.com. A replay of this call will also be available on Silver Spike's website.

Speaker Change: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.

Umesh Mahajan: Silver Spike assumes no obligation or responsibility to update any forward-looking statements. Please note that the information reported on this call applies only as of today, August 9, 2024. Therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay or transfer.

Umesh Mahajan: So, good morning again, and thank you all for joining us. We released our results yesterday, and there is a management presentation deck attached to the 8K that was filed as well. Those who have joined us on this earnings webcast should see a link to the slides. We may refer to some of these slides during our presentation by their slight numbers, just for reference. I'll cover the presentation slides and then turn it over to Scott Gordon for his thoughts and remarks.

Umesh Mahajan: We are currently anticipating this transaction to close in early the fourth quarter 2020. So turning to the results and the presentation slides, turning to page three, financial highlights for the first quarter 2024. Gross investment income was $3.1 million for the quarter compared to $2.9 million in the same quarter last year. Spencers was approximately $1 million, excluding expenses related to the loan portfolio acquisition.

Umesh Mahajan: So net investment income excluding transaction expenses, of the year. Net investment income for the quarter of 1.5 million. This net investment income would have been higher if we were to exclude the impact of transaction expenses. Net assets at the end of the period of 84.3 million, up from last year due to the primarily due to the payment of dividends and transaction expenses. On a per share basis, net investment income excluding transaction expenses was $0.33 per share compared to $0.31 last year, net investment income of $0.25 per share, and a net asset value per share at June 30th.

Umesh Mahajan: We will not be covering many of the subsequent slides in detail, as most investors are already familiar with our story and happy to talk more about it in the Q&A session. But turning to page 9, about our deal pipeline. Our deal pipeline is robust and growing with the excitement and optimism about the rescheduling of cannabis and the positive regulatory developments in a few key states. Many industry operators have started to revisit their growth strategies, both organic expansion as well as opportunistic M&A.

Umesh Mahajan: Our active debt pipeline is in excess of 550 million, and our conversations with cannabis operators on their fundraising plans have picked up over the past couple of months. Also, on February 20th, 2024, the company announced that the board unanimously approved an expansion of the company's investment strategy to permit investments in companies outside of the cannabis and health and wellness sectors that would otherwise meet the company's investment criteria. That investment strategy change became effective on April 22nd. The DE pipeline on page nine does not reflect any non-cannabis prospects as yet.

Umesh Mahajan: So turning to page 11, we show our portfolio summary as of August 8th, 2024. As we can see at the top of the page, we have over 55 million, almost 57 million invested with an average yield to maturity of almost 18%. In this quarter ended June 30, 2024, we received a partial paydown from company D, which reduced our total investment value. But this reduction was offset by a new investment in company F, Workbox Holdings, a non-cannabis company that offers flexible co-working office locations.

Umesh Mahajan: We participated in the $13.3 million syndication for this borrower and made the investment in a package of term loans, preferred equity, and warrants. That's represented by company F. Subsequent to the end of the quarter on July 16, we made another investment in company G, Ascend Wellness, in its 12 and three-quarters senior secured notes due 2029. So a few additional points we would like to reiterate about this portfolio. All of our positions in the portfolio are for SLEEM loans or secured bonds, none of our loans or bonds are in non-accrual status, and our gross portfolio yield of 18% compares favorably to the broader portfolio.

Scott Gordon: The overall macroenvironment for our cannabis-related lending business remained similar to last quarter. However, much of the early excitement around rescheduling has since given way to some confusion and skepticism around timing, implementation, and process risks, particularly in light of the upcoming November election and potential for regime change. On the more positive side, state momentum continues to build. Ohio just recently launched its adult use program, and all eyes are on Florida awaiting the outcome of its vote to allow for adult use within the state.

Scott Gordon: This dynamic, while evolving, continues to afford us a strong position with respect to deal terms and prices. Meanwhile, our core focus remains centered around opportunities within the broader cannabis ecosystem. We're excited to be building out our pipeline and activity outside of that sector. As Umesh referenced, we executed on our first non-cannabis loan this past quarter and look forward to an increasing number of interesting opportunities there going forward. With that, I'll pass it back to you, Mark.

Umesh Mahajan: Thank you very much, Scott. Victor, we are ready for Q&A.

Operator: Thank you, and as a reminder to ask a question, you need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please stand by while we compile the Q&A roster. Once again, that's star 11 for questions. Now, I'm not showing any questions at this time. Umesh, I'll turn it back to you for any closing remarks.

Umesh Mahajan: All right. Well, thank you everyone for joining this call.

Operator: Thank you for joining us.

Mesh: The file pre-effective amendments to the form N-14 on June 20 and July 31, we are currently anticipating this transaction to close in early fourth quarter, 2024. So turning to the results and the presentation slides, turning to page three, financial highlights for the first quarter, 2024, gross investment income was 3.1 million for the quarter compared to 2.9 million in the same quarter last year, expenses were approximately 1 million excluding expenses related to the loan portfolio acquisition.

Mesh: So net investment income excluding transaction expenses of 2.1 million compared to 1.9 million last year, we have incurred transaction related expenses of 0.6 million in the quarter related to the work on the form N-14 findings, net investment income for the quarter of 1.5 million, and this net investment income would have been higher if we were to exclude the impact of the transaction expenses. Net assets are the end of the period of 84.3 million done from last year due to the primarily due to the payment of dividends and transaction expense.

Mesh: On a poor share basis, investment income excluding transaction expenses was 33 cents per share compared to 31 cents last year. Net investment income of 25 cents per share and a net asset value per share at June 30 is $13.56 per share. Also the board declared a regular quarterly cash dividend of 25 cents per share which is in line with the regular dividend paid over the past few quarters. This dividend will be payable on September 27 to stockholders of record on September 19.

Mesh: We will not be covering many of the subsequent slides in detail as most investors are already familiar with our story. We have to talk more about them in the Q&A session. We are turning to page 9. Our deal pipeline is robust and going with the excitement and optimism about the rescheduling of cannabis and the positive regulatory developments in a few key states. Many industry operators have started to revisit their growth strategies both organic expansion as well as opportunistic M&A.

Mesh: Our active debt pipeline is an excess of $5.50 million and our conversations with cannabis operators on their fundraising plans have picked up over the past couple of months. Also on February 20, 2024, the company announced that the board unanimously approved an expansion of the company's investment strategy to permit investments in companies outside of cannabis and health and wellness sectors that work otherwise meet the company's investment criteria. That investment strategy changed became effective on April 22nd.

Mesh: The D5 round on page 9 does not reflect any non-cannabis prospects as yet. Turning to page 11, we show our portfolio summary as of August 8, 2024. As we can see at the top of the page, we have almost 57 million invested with an average yield to maturity of almost 18%. In this quarter and at June 30, 2024, we received a partial paydown from company D, which was reduced total investment value.

Mesh: But this reduction was offset by a new investment in company F of workbox holdings, a non-cannabis company which offers flexible co-working office locations. We participated in the 13.3 million syndication for this borrower and made the investment in a package of term loans, preferably, and warrants. That's represented in company F. Subsequent to the end of the quarter on July 16, we made another investment in company G, ascend wellness in its 12 and 3 quarters senior secured notes due to 2029.

Mesh: A few additional points we would like to reiterate about this portfolio. All of our positions in the portfolio are forced loan loans or secured bonds. None of our loans or bonds are in non-accual status and our gross portfolio yield of 18% compares favorably to the broader.

Scott Gordon: Listed BDC Universe With that, let me pass it on to Scott Gordon for a few remarks. Thank you, Mesh. The overall macro-environment car cannabis-related lending business remained similar to last quarter. Much of the early excitement around the scheduling has since given way to some confusion, skepticism around timing, implementation, and process risks, particularly in light of the upcoming November election and potential for regime change. On the more positive side, state momentum continues to build.

Scott Gordon: Ohio just recently launched its adult use program, and all eyes are on Florida awaiting the outcome of its vote to allow for adult use was in the state. Meanwhile, operating trends among the larger operators appear to be stable, if not slightly positive. Topical market activity has picked up as a member of MSOs that successfully refinanced some of their maturity burdens. Bigger picture, we do not anticipate any near-term, meaningful change in what has been a challenge than capital scarce backdrop for the industry.

Scott Gordon: This dynamic, while evolving, continues to afford us a strong position with respect to deal terms and pricing. While our core focus remained centered around opportunities within the broader cannabis ecosystem, we are excited to be building out our pipeline activity outside of that sector. As we mesh reference, we actually keep it on our first non-cannabis loan this past quarter and look forward to an increasing number of interesting opportunities there going forward. With that, I'll pass it back to you, Mesh. Thank you very much, Scott.

Operator: Victor, we are ready for Q&A. Thank you. As a reminder, to ask a question, you need to press Star World 1 on your telephone and wait for your name to be announced. To withdraw your question, please press Star World 1 again. Please then buy or compile the Q&A roster once again, let's start one one for questions. I'm not showing any questions at this time. Mesh, I'll turn it back to you for any closure marks. All right.

Mesh: Well, thank you, everyone, for joining this call. We look forward to giving you further updates on the transaction and the speaking with everyone on the next earnings call. Thank you very much. Thank you for your participation today's conference. This doesn't include a program you may now disconnect, everyone. Have a great day.

Q2 2024 Silver Spike Investment Corp Earnings Call

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