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INVESTMENTS

12 Months Ended

Dec. 31, 2024

NOTE 3 — INVESTMENTS

The Company’s investments in portfolio companies are primarily in the form of debt investments, but may include equity warrants received in connection with debt investments, direct equity investments and derivative investments.

The following tables summarize the composition of the Company’s portfolio investments by investment type as of December 31, 2024 and December 31, 2023.

	As of December 31, 2024
Investment Type	Principal Balance		Percentage at Principal Balance			Amortized Cost⁽¹⁾		Percentage at Amortized Cost			Fair Value		Percentage at Fair Value
First Lien Senior Secured Loans	$	242,269,725		87.3	%	$	239,036,463		87.1	%	$	239,860,206		87.1	%
Senior Secured Notes		35,147,669		12.7			34,567,422		12.6			34,656,192		12.6
Preferred Stock		-		-			500,000		0.2			500,000		0.2
Warrants		-		-			242,826		0.1			225,000		0.1
Total	$	277,417,394		100.0	%	$	274,346,711		100.0	%	$	275,241,398		100.0	%

⁽¹⁾	The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.

	As of December 31, 2023
Investment Type	Principal Balance		Percentage at Principal Balance			Amortized Cost⁽¹⁾			Percentage at Amortized Cost			Fair Value			Percentage at Fair Value
First Lien Senior Secured Loans		46,322,064		84.0	%		$	45,372,626		84.9	%		$	46,006,000		85.0	%
Senior Secured Notes		8,750,000		16.0				8,098,691		15.1	%			8,114,000		15.0
Total		55,072,064		100.0	%		$	53,471,317		100.0	%		$	54,120,000		100.0	%

⁽¹⁾	The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.

The following tables summarize the composition of the Company’s debt portfolio based on rate characteristics as of December 31, 2024 and December 31, 2023.

	As of December 31, 2024
Rate Type	Principal Balance		Amortized Cost⁽¹⁾		Fair Value		Time to Maturity
Fixed-rate loans	$	56,819,862	$	55,954,923	$	56,158,027	2.6 years
Floating-rate loans (SOFR)		15,543,708		15,134,388		15,209,230	1.4 years
Floating-rate loans (Prime)		205,053,824		202,514,574		203,149,141	1.6 years
Total Debt Investments	$	277,417,394	$	273,603,885	$	274,516,398

⁽¹⁾	The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.

	As of December 31, 2023
Rate Type	Principal Balance		Amortized Cost⁽¹⁾		Fair Value		Time to Maturity
Fixed-rate loans	$	8,750,000	$	8,098,691	$	8,114,000	2.2 years
Floating-rate loans (Prime)		46,322,064		45,372,626		46,006,000	2.6 years
Total Debt Investments	$	55,072,064	$	53,471,317	$	54,120,000

⁽¹⁾	The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.

The Company’s portfolio investments are primarily in companies conducting business in or supporting the cannabis industries. The Company uses NAICS for classifying the industry groupings of its portfolio companies, excluding any portfolio company operating in the cannabis industry. The following tables summarize the composition of the Company’s portfolio investments by industry as of December 31, 2024 and December 31, 2023.

	As of December 31, 2024
Industry	Amortized Cost⁽¹⁾		Percentage at Amortized Cost			Fair Value		Percentage at Fair Value
Cannabis	$	210,144,841		76.6	%	$	211,007,307		76.7	%
Finance and Insurance		30,866,942		11.3			30,907,369		11.2
Information		14,873,810		5.4			14,754,624		5.4
Public Administration		10,273,444		3.7			10,322,928		3.8
Retail Trade		3,285,390		1.2			3,275,125		1.2
Health Care and Social Assistance		2,753,852		1.0			2,796,946		1.0
Real Estate and Rental and Leasing		2,148,432		0.8			2,177,099		0.7
Total	$	274,346,711		100.0	%	$	275,241,398		100.0	%

⁽¹⁾	The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.

	As of December 31, 2023
Industry	Amortized Cost⁽¹⁾			Percentage at Amortized Cost			Fair Value			Percentage at Fair Value
Cannabis		$	53,471,317		100.0	%		$	54,120,000		100.0	%
Total		$	53,471,317		100.0	%		$	54,120,000		100.0	%

⁽¹⁾	The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.

The geographic composition is determined by the location of the principal place of business of each portfolio company. Geographic regions are defined as: West, for the states of WA, OR, ID, MT, WY, CO, AK, HI, UT, NV and CA; Midwest, for the states ND, SD, NE, KS, MO, IA, MN, WI, MI, IL, IN and OH; Northeast, for the states PA, NJ, NY, CT, RI, MA, VT, NH and ME; Southeast, for the states of AR, LA, MS, TN, KY, AL, FL, GA, SC, NC, VA, DE, WV and MD; and Southwest, for the states of AZ, NM, TX and OK.

The following tables summarize the composition of the Company’s portfolio investments by geographic region as of December 31, 2024 and December 31, 2023.

	As of December 31, 2024
Geographic Region	Amortized Cost⁽¹⁾		Percentage at Amortized Cost			Fair Value		Percentage at Fair Value
United States:
Midwest	$	88,999,405		32.4	%	$	89,624,122		32.6	%
West		86,686,279		31.6	%		86,660,218		31.5	%
Northeast		52,963,212		19.3	%		53,223,047		19.3	%
Southwest		21,980,052		8.0	%		22,000,000		8.0	%
Southeast		20,703,496		7.6	%		20,749,887		7.5	%
International:
Canada		3,014,267		1.1	%		2,984,124		1.1	%
Total	$	274,346,711		100.0	%	$	275,241,398		100.0	%

⁽¹⁾	The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.

	As of December 31, 2023
Geographic Region	Amortized Cost⁽¹⁾			Percentage at Amortized Cost			Fair Value			Percentage at Fair Value
United States:
West			24,910,798		46.5	%			25,069,000		46.4	%
Midwest			24,571,197		46.0	%			24,911,000		46.0	%
Northeast			3,989,322		7.5	%			4,140,000		7.6	%
Total		$	53,471,317		100.0	%		$	54,120,000		100.0	%

⁽¹⁾	The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and PIK interest or dividends.

Certain Risk Factors

In the ordinary course of business, the Company manages a variety of risks including market risk, concentration risk, credit risk, liquidity risk, interest rate risk, prepayment risk, risks associated with financial, economic and other global market developments and disruptions, including those arising from war, terrorism, market manipulation, government interventions, defaults and shutdowns, political changes or diplomatic developments, public health emergencies (such as the spread of infectious diseases, pandemics and epidemics) and natural/environmental disasters, which can all negatively impact the securities markets generally. These events can also impair the technology and other operational systems upon which the Company’s service providers rely and could otherwise disrupt the Company’s service providers’ ability to fulfill their obligations to the Company. The Company identifies, measures and monitors risk through various control mechanisms, including trading limits and diversifying exposures and activities across a variety of instruments, markets and counterparties.

Market risk is the risk of potential adverse changes to the value of financial instruments because of changes in market conditions, including as a result of changes in the credit quality of a particular issuer, credit spreads, interest rates, and other movements and volatility in security prices or commodities. In particular, the Company may invest in issuers that are experiencing or have experienced financial or business difficulties (including difficulties resulting from the initiation or prospect of significant litigation or bankruptcy proceedings), which involves significant risks. The Company manages its exposure to market risk through the use of risk management strategies and various analytical monitoring techniques.

Concentration risk is the risk that the Company’s focus on investments in cannabis companies may subject the Company to greater price volatility and risk of loss as a result of adverse economic, business or other developments affecting cannabis companies than funds investing in a broader range of industries or sectors. At times, the performance of investments in cannabis companies will lag the performance of other industries or sectors or the broader market as a whole. Investing in portfolio companies involved in the cannabis industry subjects us to the following risks:

•	The cannabis industry is extremely speculative and raises a host of legality issues, making it subject to inherent risk;

•

The manufacture, distribution, sale, or possession of cannabis that is not in compliance with the U.S. Controlled Substances Act is illegal under U.S. federal law. Strict enforcement of U.S. federal laws regarding cannabis would likely result in our portfolio companies’ inability to execute a business plan in the cannabis industry, and could result in the loss of all or part of any of our loans;

•	The current Presidential Administration’s or specifically the U.S. Department of Justice’s change in policies or enforcement with respect to U.S. federal cannabis laws could negatively impact our portfolio companies’ ability to pursue their prospective business operations and/or generate revenues;

•	U.S. federal courts may refuse to recognize the enforceability of contracts pertaining to any business operations that are deemed illegal under U.S. federal law, including cannabis companies operating legally under state law;

•

Consumer complaints and negative publicity regarding cannabis-related products and services could lead to political pressure on states to implement new laws and regulations that are adverse to the cannabis industry, to not modify existing, restrictive laws and regulations, or to reverse current favorable laws and regulations relating to cannabis;

•	Assets collateralizing loans to cannabis businesses may be forfeited to the U.S. federal government in connection with government enforcement actions under U.S. federal law;

•	U.S. Food and Drug Administration regulation of cannabis and the possible registration of facilities where cannabis is grown could negatively affect the cannabis industry, which could directly affect our financial condition and the financial condition of our portfolio companies;

•

Due to our proposed strategy of investing in portfolio companies engaged in the regulated cannabis industry, our portfolio companies may have a difficult time obtaining the various insurance policies that are needed to operate such businesses, which may expose us and our portfolio companies to additional risks and financial liabilities;

•

The cannabis industry may face significant opposition from other industries that perceive cannabis products and services as competitive with their own, including but not limited to the pharmaceutical industry, adult beverage industry and tobacco industry, all of which have powerful lobbying and financial resources;

•

Many national and regional banks have been resistant to doing business with cannabis companies because of the uncertainties presented by federal law and, as a result, we or our portfolio companies may have difficulty borrowing from or otherwise accessing the service of banks, which may inhibit our ability to open bank accounts or otherwise utilize traditional banking services;

•	Due to our proposed strategy of investing in portfolio companies engaged in the regulated cannabis industry, we or our portfolio companies may have a difficult time obtaining financing in connection with our investment strategy; and

•

Laws and regulations affecting the regulated cannabis industry are varied, broad in scope and subject to evolving interpretations, and may restrict the use of the properties our portfolio companies acquire or require certain additional regulatory approvals, which could materially adversely affect our investments in such portfolio companies.

As of December 31, 2024 and December 31, 2023, we had three portfolio companies that represented 45.1% and 85.0%, respectively, of the fair values of our portfolio. As of December 31, 2024 and December 31, 2023, our largest portfolio company represented 18.9% and 38.7%, respectively, of the total fair values of our investments in portfolio companies.

Any of the foregoing could have an adverse impact on our and our portfolio companies’ businesses, financial condition and results of operations.

Credit risk is the risk that a decline in the credit quality of an investment could cause the Company to lose money. The Company could lose money if the issuer or guarantor of a portfolio security fails to make timely payment or otherwise honor its obligations. Fixed income securities rated below investment grade (high-yield bonds) involve greater risks of default or downgrade and are generally more volatile than investment grade securities. Below investment grade securities involve greater risk of price declines than investment grade securities due to actual or perceived changes in an issuer’s creditworthiness. In addition, issuers of below investment grade securities may be more susceptible than other issuers to economic downturns. Such securities are subject to the risk that the issuer may not be able to pay interest or dividends and ultimately to repay principal upon maturity. Discontinuation of these payments could substantially adversely affect the market value of the security.

The Company’s investments may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.

Interest rate risk refers to the change in earnings that may result from changes in the level of interest rates. To the extent that the Company borrows money to make investments, including under any credit facility, net investment income (loss) will be affected by the difference between the rate at which the Company borrows funds and the rate at which the Company invests these funds. In periods of rising interest rates, the Company’s cost of borrowing funds would increase, which may reduce net investment income (loss). As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on net investment income (loss).

Prepayment risk is the risk that a loan in the Company’s portfolio will prepay due to the existence of favorable financing market conditions that allow the portfolio company the ability to replace existing financing with less expensive capital. As market conditions change, prepayment may be possible for each portfolio company. In some cases, the prepayment of a loan may reduce the Company’s achievable yield if the capital returned cannot be invested in transactions with equal or greater expected yields, which could have a material adverse effect on our business, financial condition and results of operations.