Chicago Atlantic Real Estate Finance Inc

Previous wording

Our loans are secured by real estate and, in addition, when lending to owner-operators in the cannabis industry, other collateral, such as equipment, receivables, licenses or other assets of the borrowers to the extent permitted by applicable laws and regulations. In addition, we seek to impose strict loan covenants and seek personal or corporate guarantees for additional protection. As of March 31, 2024 and December 31, 2023, 26.3% and 27.1%, respectively, of the principal of loans held in our portfolio are backed by personal or corporate guarantees. We aim to maintain a portfolio diversified across jurisdictions and across verticals, including cultivators, processors, dispensaries, as well as ancillary businesses. In addition, we may invest in borrowers that have equity securities that are publicly traded on the Canadian Stock Exchange (“CSE”) in Canada and/or over-the-counter in the United States.

Current wording

Our loans are secured by real estate and, in addition, when lending to owner-operators in the cannabis industry, other collateral, such as equipment, receivables, licenses or other assets of the borrowers to the extent permitted by applicable laws and regulations. In addition, we seek to impose strict loan covenants and seek personal or corporate guarantees for additional protection. As of June 30, 2024 and December 31, 2023, 24.0% and 27.1%, respectively, of the principal of loans held in our portfolio are backed by personal or corporate guarantees. We aim to maintain a portfolio diversified across jurisdictions and across verticals, including cultivators, processors, dispensaries, as well as ancillary businesses. In addition, we may invest in borrowers that have equity securities that are publicly traded on the Canadian Stock Exchange (“CSE”) in Canada and/or over-the-counter in the United States.

Previous wording

We generate revenue primarily in the form of interest income on loans. As of March 31, 2024 and December 31, 2023, approximately 76.6% and 80.5%, respectively, of our portfolio was comprised of floating rate loans, and 23.4% and 19.5% of our portfolio was comprised of fixed rate loans, respectively. The floating rate loans described above are variable based upon the Prime Rate plus an applicable margin, and in many cases, a Prime Rate floor.

Current wording

We generate revenue primarily in the form of interest income on loans. As of June 30, 2024 and December 31, 2023, approximately 76.4% and 80.5%, respectively, of our portfolio was comprised of floating rate loans, and 23.6% and 19.5% of our portfolio was comprised of fixed rate loans, respectively. The floating rate loans described above are variable based upon the Prime Rate plus an applicable margin, and in many cases, a Prime Rate floor.

Previous wording

To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute annually to our stockholders at least 90% of our REIT taxable income prior to the deduction for dividends paid. To the extent that we distribute less than 100% of our REIT taxable income in any tax year (taking into account any distributions made in a subsequent tax year under Sections 857(b)(9) or 858 of the Code), we will pay tax at regular corporate rates on that undistributed portion. Furthermore, if we distribute less than the sum of 1) 85% of our ordinary income for the calendar year, 2) 95% of our capital gain net income for the calendar year, and 3) any undistributed shortfall from our prior calendar year (the “Required Distribution”) to our stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then we are required to pay a non-deductible excise tax equal to 4% of any shortfall between the Required Distribution and the amount that was actually distributed. The 90% distribution requirement does not require the distribution of net capital gains. However, if we elect to retain any of our net capital gain for any tax year, we must notify our stockholders and pay tax at regular corporate rates on the retained net capital gain. Our stockholders must include their proportionate share of the retained net capital gain in their taxable income for the tax year, and they are deemed to have paid the REIT’s tax on their proportionate share of the retained capital gain. Furthermore, such retained capital gain may be subject to the nondeductible 4% excise tax. If it is determined that our estimated current year taxable income will be in excess of estimated dividend distributions (including capital gain dividend) for the current year from such income, we will accrue excise tax on estimated excess taxable income as such taxable income is earned. The annual expense is calculated in accordance with applicable tax regulations. Excise tax expense, if any, is included in the line item, income tax expense. For the three months ended March 31, 2024, we did not incur excise tax expense.

Current wording

To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute annually to our stockholders at least 90% of our REIT taxable income prior to the deduction for dividends paid. To the extent that we distribute less than 100% of our REIT taxable income in any tax year (taking into account any distributions made in a subsequent tax year under Sections 857(b)(9) or 858 of the Code), we will pay tax at regular corporate rates on that undistributed portion. Furthermore, if we distribute less than the sum of 1) 85% of our ordinary income for the calendar year, 2) 95% of our capital gain net income for the calendar year, and 3) any undistributed shortfall from our prior calendar year (the “Required Distribution”) to our stockholders during any calendar year (including any distributions declared by the last day of the calendar year but paid in the subsequent year), then we are required to pay a non-deductible excise tax equal to 4% of any shortfall between the Required Distribution and the amount that was actually distributed. The 90% distribution requirement does not require the distribution of net capital gains. However, if we elect to retain any of our net capital gain for any tax year, we must notify our stockholders and pay tax at regular corporate rates on the retained net capital gain. Our stockholders must include their proportionate share of the retained net capital gain in their taxable income for the tax year, and they are deemed to have paid the REIT’s tax on their proportionate share of the retained capital gain. Furthermore, such retained capital gain may be subject to the nondeductible 4% excise tax. If it is determined that our estimated current year taxable income will be in excess of estimated dividend distributions (including capital gain dividend) for the current year from such income, we will accrue excise tax on estimated excess taxable income as such taxable income is earned. The annual expense is calculated in accordance with applicable tax regulations. Excise tax expense, if any, is included in the line item, income tax expense. For the six months ended June 30, 2024, we did not incur excise tax expense.

Previous wording

the interest expense associated with our borrowings to increase, subject to any applicable ceilings, which could could result in a decline in our net interest spread and net interest margin.

Current wording

the interest expense associated with our borrowings to increase, subject to any applicable ceilings, which could result in a decline in our net interest spread and net interest margin;

Previous wording

These factors could lower our net interest income or cause a net loss during periods of rising interest rates, which would harm our financial condition, cash flows and results of operations. As of March 31, 2024, 76.7% of our floating rate loans, based on principal outstanding have interest rate floors, and one loan is subject to an interest rate cap (Note 3).

Current wording

These factors could lower our net interest income or cause a net loss during periods of rising interest rates, which would harm our financial condition, cash flows and results of operations. As of June 30, 2024, 82.0% of our floating rate loans, based on principal outstanding have interest rate floors, and one loan is subject to an interest rate cap (Note 3).

Previous wording

We believe that favorable market conditions, including an imbalance in supply and demand of credit to cannabis operating companies, have provided attractive opportunities for non-bank lenders, such as us, to finance commercial real estate loans and other loans that exhibit strong fundamentals but also require more customized financing structures and loan products than regulated financial institutions can presently provide. Additionally, to the extent that additional states legalize cannabis, our addressable market will increase. We intend to continue to capitalize on these opportunities and growing the size of our portfolio.

Current wording

We believe that favorable market conditions, including an imbalance in supply and demand of credit to cannabis operating companies, have provided attractive opportunities for non-bank lenders, such as us, to finance commercial real estate loans and other loans that exhibit strong fundamentals but also require more customized financing structures and loan products than regulated financial institutions can presently provide. Additionally, to the extent that additional states legalize cannabis, our addressable market will increase. We intend to continue to capitalize on these opportunities and grow the size of our portfolio.

Previous wording

Updates to Our Loan Portfolio during the First Quarter of 2024

Current wording

Updates to Our Loan Portfolio during the Second Quarter of 2024

Previous wording

In April 2024, we entered into an amendment to Loan #3, which extended the maturity date to June 14, 2024 for the second tranche of the credit facility which has a principal balance of $2.9 million. The remaining $17.9 million of principal retained its original maturity date of November 29, 2024. No other terms of the loan were modified in connection with this amendment.

Current wording

In June 2024, we entered into an amendment to Loan #3, which extended the maturity date to July 31, 2024 of two of the three tranches held. No other terms of the loan were modified in connection with this amendment.

Previous wording

In April 2024, we entered into an amendment to Loan #4, which extended the maturity date to May 17, 2024. No other terms of the loan were modified in connection with this amendment.

Current wording

In the second quarter, we entered into an amendment to Loan #4, which extended the maturity date from May 17, 2024 to June 17, 2026, and decreased the PIK rate from 15% to 0%. The cash interest is fixed at $65,765 per month until May 31, 2025, and $67,738 per month thereafter to maturity.

Previous wording

In February 2024, we entered into an amendment to Loan #6, which extended the maturity date to April 15, 2024. No other terms of the loan were modified in connection with this amendment.

Current wording

In the second quarter, we entered into an amendment to Loan #6, which extended the maturity date from May 31, 2024 to January 30, 2026 and increased the PIK interest rate to the greater of Prime plus 6.5% or 15.0%. Additionally, amortization payments will start on October 31, 2024.

Previous wording

In March 2024, we entered into an amendment to Loan #8 which waived amortization to April 30, 2024 and waives all PIK interest during the first quarter of 2024.

Current wording

In June 2024, we entered into an amendment to Loan #8 which waived amortization from May 1, 2024 to June 30, 2024 and capitalized unpaid accrued interest to PIK interest during the second quarter of 2024. The PIK rate also increased from 2% to 10%.

Previous wording

As described in Note 3, Loan #9 remains on non-accrual status and the Company will continue to cease further recognition of income until such events of default are cured or obligations are repaid. As of March 31, 2024, Loan #9 is held on the consolidated balance sheet as a loan held for investment – related party with a carrying value of approximately $16.5 million and a reserve for current expected credit losses of approximately $1.3 million.

Current wording

As described in Note 3, Loan #9 remains on non-accrual status and the Company will continue to cease further recognition of income until such events of default are cured or obligations are repaid. As of June 30, 2024, Loan #9 is held on the consolidated balance sheet as a loan held for investment – related party with a carrying value of approximately $16.4 million and a reserve for current expected credit losses of approximately $1.7 million.

Previous wording

During the period from April 1, 2024 to May 7, 2024, we funded approximately $0.4 million to the borrower of Loan #18 and $0.2 million to the borrower of Loan #21.

Current wording

During the period from July 1, 2024 to August 7, 2024, we funded approximately $0.7 million to the borrower of Loan #18 and $0.1 million to the borrower of Loan #21. Loan #14 was fully paid off on July 15, 2024.

Previous wording

During the three months ended March 31, 2024, we declared an ordinary cash dividend of $0.47 per share of our common stock, relating to the third quarter of 2023, which was paid on April 15, 2024 to stockholders of record as of the close of business on March 28, 2024. The total amount of the cash dividend payment was approximately $9.0 million.

Current wording

During the three months ended June 30, 2024, we declared an ordinary cash dividend of $0.47 per share of our common stock, relating to the second quarter of 2024, which was paid on July 15, 2024 to stockholders of record as of the close of business on June 28, 2024. The total amount of the cash dividend payment was approximately $9.3 million.

Previous wording

Stock based compensation expense increased by approximately $0.4 million for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase over the comparable period is driven by the incremental expense recognized on the 321,500 restricted stock awards granted to employees of our Manager on June 1, 2023, which had not been granted as of March 31, 2023.

Current wording

Stock based compensation expense increased by approximately $0.6 million for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. The increase over the comparable period is driven by the incremental expense recognized on the 187,335 restricted stock awards granted to employees of our Manager on April 1, 2024.

Previous wording

The current expected credit loss reserve represents approximately 140 basis points of our aggregate loan commitments held at carrying value of approximately $5.4 million as of March 31, 2024, The liability is based on the unfunded portion of loan commitments over the full contractual period over which we are exposed to credit risk through a current obligation to extend credit. Management considered the likelihood that funding will occur, and if funded, the expected credit loss on the funded portion. We continuously evaluate the credit quality of each loan by assessing the risk factors of each loan.

Current wording

We record a reserve liability based on the unfunded portion of loan commitments over the full contractual period over which we are exposed to credit risk through a current obligation to extend credit. Management considered the likelihood that funding will occur, and if funded, the expected credit loss on the funded portion. We continuously evaluate the credit quality of each loan by assessing the risk factors of each loan. There is $6.0 million of unfunded commitments as of June 30, 2024 relating to one borrower, and this unfunded commitment carries a $0 CECL reserve.

Previous wording

Interest income decreased by approximately $1.2 million, or 7%, during the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023. The decrease was driven primarily fewer unscheduled principal repayments during the first quarter of 2024 and 2023. Unscheduled repayments generated approximately $0.1 million and $1.0 million of gross interest income during the three months ended March 31, 2024 and 2023. Additionally, the outstanding principal of the Company's loans which bear a floating rate decreased from 88% at March 31, 2023, to 77% at March 31, 2024, contributing to the sequential decline.

Current wording

Interest income decreased by approximately $0.8 million, or 3%, during the year ended June 30, 2024, compared to the quarter ended June 30, 2023. The decrease was driven primarily of gross interest income during the six months ended June 30, 2024 and 2023. Additionally, the outstanding principal of the Company's loans which bear a floating rate decreased from 87.9% at June 30, 2023 to 76.4% at June 30, 2024, contributing to the sequential decline. Furthermore, as of June 30, 2024, the weighted average yield to maturity of the loan portfolio was 18.7% compared with 19.2% as of June 30, 2023. The decrease results from certain repricing amendments during the six months ended June 30, 2024. Lastly, interest income from prepayment fees were approximately $0.8 million for the six months ended June 30, 2023 compared to $0.1 million for the six months ended June 30, 2024, further contributing to this decrease.

Previous wording

Net interest income decreased approximately $1.7 million, or 11%, over the comparative period. The decrease was attributable to the decrease in interest income described above, and by a corresponding increase in interest expense driven by the timing of borrowings and increase in the outstanding balance on the Revolving Loan, which bears interest at the Prime Rate plus an Applicable Margin. The outstanding balance on the Revolving Loan was approximately $81.3 million and $37.5 million, as of March 31, 2024 and 2023, respectively.

Current wording

Net interest income decreased approximately $2.2 million, or 8%, over the comparative period. The decrease was attributable to the decrease in interest income described above, and by a corresponding increase in interest expense driven by the timing of borrowings and an increase in the outstanding balance on the Revolving Loan, which bears interest at the Prime Rate plus an Applicable Margin. The outstanding balance on the Revolving Loan was approximately $76.8 million and $43.0 million, as of June 30, 2024 and 2023, respectively.

Previous wording

We incurred base management and incentive fees payable to our Manager of approximately $1.8 million for the three months ended March 31, 2024, as compared to approximately $2.1 million for the three months ended March 31, 2023. Management fees were approximately $1.1 million for the three months ended March 31, 2024, as compared to approximately $1.0 million for the three months ended March 31, 2023. The slight increase in management fees was primarily attributable to greater origination fee offsets in the three months ended March 31, 2024 of approximately $16 thousand, compared to approximately $5 thousand for the three months ended March 31, 2023, as well as an increase in weighted average equity as defined by the Management Agreement for the comparable period. Incentive fees were approximately $0.7 million for the three months ended March 31, 2024, as compared to approximately $1.1 million for the three months ended March 31, 2023, primarily driven by higher trailing twelve month Core Earnings in the first quarter of 2023.

Current wording

Management and incentive fees to our Manager was approximately $3.5 million for the six months ended June 30, 2024, as compared to approximately $3.9 million for the six months ended June 30, 2023. Management fees were approximately $2.2 million for the six months ended June 30, 2024, as compared to approximately $2.1 million for the six months ended June 30, 2023. The slight increase in management fees was primarily attributable to fewer origination fee offsets in the six months ended June 30, 2024 of approximately $32 thousand, compared to approximately $130 thousand for the six months ended June 30, 2023, as well as an increase in weighted average equity as defined by the Management Agreement for the comparable period. Incentive fees were approximately $1.4 million for the six months ended June 30, 2024, as compared to approximately $2.0 million for the six months ended June 30, 2023, primarily driven by higher trailing twelve month Core Earnings in the first half of 2023.

Previous wording

General and administrative expenses and professional fees increased by approximately $115 thousand for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase was primarily due to an increase in overhead reimbursements for costs incurred by the Manager on behalf of the Company, which were approximately $1.2 million for the three months ended March 31, 2024, compared to approximately $1.0 million for the three months ended March 31, 2023.

Current wording

General and administrative expenses and professional fees decreased by approximately $159 thousand for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The decrease was primarily due to a decrease in professional fees in 2024 compared to the first half of 2023. Overhead reimbursements for costs incurred by the Manager on behalf of the Company were approximately $2.3 million for the six months ended June 30, 2024, as compared to $2.4 million for the six months ended June 30, 2023.

Previous wording

Provision for current expected credit losses was $380 thousand in the three months ended March 31, 2024, as compared to $96 thousand in the three months ended March 31, 2023.

Current wording

Provision for current expected credit losses was $105 thousand in the six months ended June 30, 2024, as compared to $1.2 million in the six months ended June 30, 2023.

Previous wording

Changes in portfolio risk composition resulting from principal paydowns and new fundings also contributed to the increase, with reserves on new 2024 originations representing a larger portion of the reserve than loans originated as of March 31, 2023. As of March 31, 2024 approximately 59.5% of our loans carry a risk rating of "1" or 2".

Current wording

Changes in portfolio risk composition resulting from principal paydowns and new fundings also contributed to the decrease, with reserves on new 2024 originations representing a larger portion of the reserve than loans originated as of June 30, 2023. As of June 30, 2024 approximately 61.2% of our loans carry a risk rating of "1" or "2". During the six month period ended June 30, 2024, we originated loans with a principal balance of approximately $19.3 million which are secured by strong collateral in forms other than real estate. This contributed to the increase in loans that are less than 1.0x secured by real estate collateral as compared to December 31, 2023. However; due to the strength of the other collateral securing these loans, there was not a material increase in the CECL reserve. Additionally, loans risk rated "3" increased to approximately 26.9% of the portfolio at June 30, 2024 from 18.8% of the portfolio at December 31, 2023, as a result of new originations, while loans risk rated "2" decreased to approximately 50.0% from 58.0% during the same period. Despite these fluctuations, loans risk rated "2" and "3" both generally are expected to result in a full repayment of principal and may not carry materially different CECL reserves based on risk ratings alone.

Previous wording

As of March 31, 2024 and December 31, 2023, our portfolio included 28 and 27 loans held for investment, of approximately $375.8 million and $353.6 million at carrying value, respectively, prior to the reserve for current expected credit losses. The aggregate originated commitment under these loans was approximately $401.3 million and $378.8 million and outstanding principal was approximately $377.6 million and $355.7 million as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024 and December 31, 2023, our loan portfolio had a weighted-average yield-to-maturity internal rate of return (“YTM IRR”) of 19.4%, and was substantially secured by real estate and, with respect to certain of our loans, substantially all assets of the borrowers and certain of their subsidiaries, including equipment, receivables, and licenses. YTM IRR is calculated using various inputs, including (i) cash and paid-in-kind (“PIK”) interest, which is capitalized and added to the outstanding principal balance of the applicable loan, (ii) original issue discount (“OID”), (iii) amortization, (iv) unused fees, and (v) exit fees. Certain of our loans have extension fees, which are not included in our YTM IRR calculations, but may increase YTM IRR if such extension options are exercised by borrowers.

Current wording

As of June 30, 2024 and December 31, 2023, our portfolio included 31 and 27 loans held for investment, of approximately $381.9 million and $353.6 million at carrying value, respectively, prior to the reserve for current expected credit losses. The aggregate originated commitment under these loans was approximately $409.3 million and $378.8 million and outstanding principal was approximately $383.3 million and $355.7 million as of June 30, 2024 and December 31, 2023, respectively. As of June 30, 2024 and December 31, 2023, our loan portfolio had a weighted-average yield-to-maturity internal rate of return (“YTM IRR”) of 18.7% and 19.4%, and was substantially secured by real estate and, with respect to certain of our loans, substantially all assets of the borrowers and certain of their subsidiaries, including equipment, receivables, and licenses. YTM IRR is calculated using various inputs, including (i) cash and paid-in-kind (“PIK”) interest, which is capitalized and added to the outstanding principal balance of the applicable loan, (ii) original issue discount (“OID”), (iii) amortization, (iv) unused fees, and (v) exit fees. Certain of our loans have extension fees, which are not included in our YTM IRR calculations, but may increase YTM IRR if such extension options are exercised by borrowers.

Previous wording

As of March 31, 2024 and December 31, 2023, approximately 76.6% and 80.5%, respectively, of our portfolio was comprised of floating rate loans that pay interest at the Prime Rate plus an applicable margin and were subject to a Prime Rate floor. The Prime Rate was 7.50% on January 1, 2023, increased to 7.75% effective February 2, 2023, increased to 8.00% effective March 23, 2023, increased to 8.25% effective May 4, 2023 and increased again to 8.50% as of December 31, 2023. The below summarizes our portfolio as of March 31, 2024:

Current wording

As of June 30, 2024 and December 31, 2023, approximately 76.4% and 80.5%, respectively, of our portfolio was comprised of floating rate loans that pay interest at the Prime Rate plus an applicable margin and were subject to a Prime Rate floor. The Prime Rate was 7.50% on January 1, 2023, increased to 7.75% effective February 2, 2023, increased to 8.00% effective March 23, 2023, increased to 8.25% effective May 4, 2023 and increased again to 8.50% as of December 31, 2023. The below summarizes our portfolio as of June 30, 2024:

Previous wording

"P" = prime rate and depicts floating rate loans that pay interest at the prime rate plus a specific percentage; "PIK" = paid-in-kind interest; subtotal represents weighted average interest rate.

Current wording

"P" = prime rate and depicts floating rate loans that pay interest at the prime rate plus a specific percentage; "PIK" = paid-in-kind interest.

Previous wording

The aggregate loan commitment to Loan #3 includes a $15.9 million initial commitment which has a base interest rate of 13.625%, 2.75% PIK and a second commitment of $4.2 million which has an interest rate of 15.00%, 2.00% PIK. The statistics presented reflect the weighted average of the terms under all advances for the total aggregate loan commitment.

Current wording

The aggregate principal balance outstanding of Loan #3 is comprised of two tranches. The first tranche has a principal balance $16.6 million, a base interest rate of 13.625% and 2.75% PIK and an original maturity date of July 31, 2024. In July 2024, we entered into an amendment which extended the maturity date of the July 31, 2024 tranche to January 29, 2027. The second tranche has a principal balance of $4.3 million, which has an interest rate of 15.00% and 2.00% PIK, and a maturity date of November 29, 2024. The statistics presented reflect the weighted average of the terms under all advances for the total aggregate loan commitment.

Previous wording

The following tables present changes in loans held for investment at carrying value as of and for the three months ended March 31, 2024 and 2023:

Current wording

The following tables present changes in loans held for investment at carrying value as of and for the six months ended June 30, 2024 and 2023:

Previous wording

One loan was reclassified as held for sale from loans held for investment as the decision was made to sell the loan during the three months ended March 31, 2023 to a syndicate of co-lenders which includes a third party and two affiliates under common control with our Manager. The sale was executed on March 31, 2023.

Current wording

One loan was reclassified as held for sale from loans held for investment as the decision was made to sell the loan during the six months ended June 30, 2023 to a syndicate of co-lenders which includes a third party and two affiliates under common control with our Manager. The sale was executed on March 31, 2023.

Previous wording

The book value per share of our common stock as of March 31, 2024 and December 31, 2023 was approximately $14.97 and $14.94, respectively.

Current wording

The book value per share of our common stock as of June 30, 2024 and December 31, 2023 was approximately $14.92 and $14.94, respectively.

Previous wording

As of March 31, 2024 and December 31, 2023, all of our cash was unrestricted and totaled approximately $6.9 million and $7.9 million, respectively. We believe that our cash on hand, capacity available under our Revolving Loan, and cash flows from operations for the next twelve months will be sufficient to satisfy the operating requirements of our business through at least the next twelve months. The sources of financing for our target investments are described below.

Current wording

As of June 30, 2024 and December 31, 2023, all of our cash was unrestricted and totaled approximately $7.1 million and $7.9 million, respectively. We believe that our cash on hand, capacity available under our Revolving Loan, and cash flows from operations for the next twelve months will be sufficient to satisfy the operating requirements of our business through at least the next twelve months. The sources of financing for our target investments are described below.

Previous wording

As of March 31, 2024 and December 31, 2023, unamortized debt issuance costs related to the Revolving Loan, including all amendments and amendments and restatements thereto, as applicable, of $325,415 and $366,592, respectively, are recorded in other receivables and assets, net on the consolidated balance sheets.

Current wording

As of June 30, 2024 and December 31, 2023, unamortized debt issuance costs related to the Revolving Loan, including all amendments and amendments and restatements thereto, as applicable, of $301,037 and $366,592, respectively, are recorded in other receivables and assets, net on the consolidated balance sheets.

Previous wording

As of and for the three months ended March 31, 2024, the Company had net borrowings of $15.3 million against the Revolving Loan. As of March 31, 2024, the Company had $18.7 million available and $81.3 million outstanding under the Revolving Loan (Note 6).

Current wording

For the six months ended June 30, 2024, the Company had net borrowings of $10.8 million against the Revolving Loan. As of June 30, 2024, the Company had $28.3 million available and $76.8 million outstanding under the Revolving Loan (Note 6).

Previous wording

During the quarter ended March 31, 2024, the Company sold an aggregate of 896,443 shares of the Company’s common stock under the Sales Agreement at a weighted average price of $15.93 per share, generating net proceeds of approximately $13.9 million.

Current wording

For the six months ended June 30, 2024, the Company sold an aggregate of 1,306,803 shares of the Company’s common stock under the Sales Agreement at a weighted average price of $15.88 per share, generating net proceeds of approximately $20.2 million.

Previous wording

The following table sets forth changes in cash and cash equivalents for the three months ended March 31, 2024 and 2023, respectively:

Current wording

The following table sets forth changes in cash and cash equivalents for the six months ended June 30, 2024 and 2023, respectively:

Previous wording

For the three months ended March 31, 2024 and 2023, we reported “Net cash provided by operating activities” of approximately $6.9 million and $1.7 million, respectively. Net cash provided by operating activities increased approximately $5.2 million, primarily attributable to a change in the interest reserve for applied interest payments of approximately $3.1 million, the sale of $0.8 million of debt securities, at fair value, an increase in interest receivable of approximately $3.0 million, a increase in provision for current expected credit losses of approximately $0.3 million, and a increase in accounts payable and accrued expenses of approximately $0.3 million. These changes were offset by a decrease in net income over the comparable period of approximately $2.0 million, an increase in PIK interest of approximately $0.8 million, an increase in related party net payable of approximately $0.1 million, an increase in management and incentive fees payable of approximately $0.3 million, an increase in stock based compensation of approximately $0.4 million, and $0.1 million in unrealized gain relating to the purchase of debt securities, at fair value, over the comparable period.

Current wording

For the six months ended June 30, 2024 and 2023, we reported “Net cash provided by operating activities” of approximately $13.1 million and $11.9 million, respectively. Net cash provided by operating activities increased approximately $1.2 million, primarily attributable to a change in the interest reserve for applied interest payments of approximately $2.9 million, proceeds from the sale of $0.8 million of debt securities, at fair value, an increase in management and incentive fees payable of approximately $27 thousand and an increase in accounts payable and accrued expenses of approximately $0.1 million. These changes were offset by a decrease in net income over the comparable period of approximately $1.4 million, a decrease in interest receivable of approximately $375 thousand, a decrease in related party net payable of approximately $0.8 million, and an increase in stock based compensation of approximately $1.0 million, over the comparable period.

Previous wording

For the three months ended March 31, 2024 and 2023, we reported “Net cash (used in)/provided by investing activities” of approximately ($18.7) million and $25.3 million, respectively.

Current wording

For the six months ended June 30, 2024 and 2023, we reported “Net cash (used in)/provided by investing activities” of approximately $21.6 million and $30.5 million, respectively.

Previous wording

For the three months ended March 31, 2024, cash outflows primarily related to $22.4 million used for the origination and funding of loans held for investment, partially offset by $3.7 million of cash received from the principal repayment of loans held for investment.

Current wording

For the six months ended June 30, 2024, cash outflows primarily related to $43.2 million used for the origination and funding of loans held for investment, partially offset by $21.6 million of cash received from the principal repayment of loans held for investment.

Previous wording

For the three months ended March 31, 2023, cash outflows primarily related to $32.9 million used for the origination and funding of loans held for investment, partially offset by $13.4 million received from the sales of loans and $44.9 million of cash received from the principal repayment of loans held for investment.

Current wording

For the six months ended June 30, 2023, cash outflows primarily related to $34.8 million used for the origination and funding of loans held for investment, partially offset by $13.4 million received from the sales of loans and $51.9 million of cash received from the principal repayment of loans held for investment.

Previous wording

For the three months ended March 31, 2024 and 2023, we reported “Net cash provided by/(used in) financing activities” of approximately $10.8 million and ($28.1) million, respectively.

Current wording

For the six months ended June 30, 2024 and 2023, we reported “Net cash provided by/(used in) financing activities” of approximately $7.6 million and $30.1 million, respectively.

Previous wording

For the three months ended March 31, 2024, cash inflows of approximately $9.8 million related to proceeds received from sales of our common stock through the registered at-the-market offering and $28.0 million related to draw downs on our Revolving Loan, which were offset by approximately $12.8 million in repayments on our Revolving Loan, $13.9 million in dividends paid, approximately $50 thousand in debt issuance costs paid, and approximately $340 thousand in offering costs associated with the registered at-the-market offering.

Current wording

For the six months ended June 30, 2024, cash inflows of approximately $20.8 million related to proceeds received from sales of our common stock through the ATM offering and $44.0 million related to draw downs on our Revolving Loan, which were offset by approximately $33.3 million in repayments on our Revolving Loan, $23.1 million in dividends paid, approximately $113 thousand in debt issuance costs paid, and approximately $667 thousand in offering costs associated with the registered at-the-market offering.