SSIC Silver Spike Investment Corp. - 10-K

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with the consolidated financial statements and the related notes that are included in Item 8 of Part II of this annual report on Form 10-K. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section entitled “Item 1A. Risk Factors.” Please also see the section entitled “Special Note Regarding Forward-Looking Statements.”

Overview

We were formed in January 2021 as a Maryland corporation and are structured as an externally managed, closed-end, non-diversified management investment company. We have elected to be regulated as a business development company ("BDC") under the Investment Company Act of 1940 (the "1940 Act"). In addition, for U.S. federal income tax purposes we have elected to be treated, and intend to qualify annually to be treated, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code (the "Code"), commencing with our taxable year ended March 31, 2022.

We are a specialty finance company focused on investing in companies in highly complex and highly regulated industries typically underserved by other capital providers, including investing across the cannabis ecosystem through investments in the form of direct loans to privately held cannabis companies. Although we primarily focus on investments in the cannabis industry, we may also invest in growth and technology companies, esoteric and asset-based lending opportunities, and liquidity solutions opportunities as described further below.

Our investment objective is to maximize risk-adjusted returns on equity for our shareholders. We seek to capitalize on, among other things, what we believe to be nascent cannabis industry growth, and drive return on equity by generating current income from our debt investments and capital appreciation from our equity and equity-related investments. We intend to achieve our investment objective by investing primarily in secured debt, unsecured debt, equity warrants and direct equity investments in privately held businesses. We intend that our debt investments will often be secured by either a first or second priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and will generally have a term of between three and six years from the original investment date. To date, we have been focused on investing in first lien secured, fixed and floating rate debt with terms of two to four years. We expect our secured loans to be secured by various types of assets of our borrowers. While the types of collateral securing any given secured loan will depend on the nature of the borrower’s business, common types of collateral we expect to secure our loans include real property and certain personal property, including equipment, inventory, receivables, cash, intellectual property rights and other assets to the extent permitted by applicable laws and the regulations governing our borrowers. Certain attractive assets of our cannabis borrowers, such as cannabis licenses and cannabis inventory, may not be able to be used as collateral or transferred to us. In some of our portfolio investments, we expect to receive nominally priced equity warrants and/or make direct equity investments in connection with a debt investment. In addition, a portion of our portfolio may be comprised of derivatives, including total return swaps.

Generally, the loans we invest in have a complete set of financial maintenance covenants, which are used to proactively address materially adverse changes in a portfolio company’s financial performance. However, we may invest in “covenant-lite” loans. We use the term “covenant-lite” to refer generally to loans that do not have a complete set of financial maintenance covenants. Generally, “covenant-lite” loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action of the borrower, rather than by a deterioration in the borrower’s financial condition. Accordingly, to the extent we invest in “covenant-lite” loans, we may have fewer rights against a borrower and may have a greater risk of loss on such investments as compared to investments in or exposure to loans with a complete set of financial maintenance covenants.

The loans in which we tend to invest typically pay interest at rates which are determined periodically on the basis of U.S. Prime Rate (“PRIME”) or Secured Overnight Financing Rate (“SOFR”) plus a premium. The loans in which we have invested and expect to invest are typically made to U.S. and, to a limited extent, non-U.S. (including emerging market) corporations, partnerships and other business entities which operate in various industries and geographical regions. These loans typically are not rated or are rated below investment grade. Securities rated below investment

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grade are often referred to as “high-yield” or “junk” securities, and may be considered a higher risk than debt instruments that are rated above investment grade.

We have typically invested in and expect to continue to invest in loans made primarily to private leveraged lower middle-market and middle-market companies with up to $100 million of earnings before interest, taxes, depreciation and amortization, or “EBITDA.” Our business model is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. We expect that our investments will generally range between $2 million and $50 million each, although we expect that this investment size will vary proportionately with the size of our capital base. We have an active pipeline of investments and are currently reviewing approximately $732 million of potential investments in varying stages of underwriting.

The following describes the four primary current sub-strategies of our principal investment strategy. We are not required to have a minimum investment in any of these sub-strategies.

Cannabis

All of our cannabis investments are designed to be compliant with all applicable laws and regulations within the jurisdictions in which they are made or to which we are otherwise subject, including U.S. federal laws. We will make equity investments only in companies that are compliant with all applicable laws and regulations within the jurisdictions in which they are located or operate, including U.S. federal laws. We may make loans to companies that we determine based on our due diligence are licensed in, and complying with, state-regulated cannabis programs, regardless of their status under U.S. federal law, so long as the investment itself is designed to be compliant with all applicable laws and regulations in the jurisdiction in which the investment is made or to which we are otherwise subject, including U.S. federal law. We are externally managed by Chicago Atlantic BDC Advisers, LLC (the "Adviser") and seek to expand the compliant cannabis investment activities of the Adviser’s leading investment platform in the cannabis industry. We primarily seek to partner with private equity firms, entrepreneurs, business owners and management teams to provide credit and equity financing alternatives to support buyouts, recapitalizations, growth initiatives, refinancings and acquisitions across cannabis companies, including cannabis-enabling technology companies, cannabis-related health and wellness companies, and hemp and cannabidiol (“CBD”) distribution companies. Under normal circumstances, each such cannabis company derives at least 50% of its revenues or profits from, or commits at least 50% of its assets to, activities related to cannabis at the time of our investment in the cannabis company. We are not required to invest a specific percentage of our assets in such cannabis companies, and we may make debt and equity investments in other companies regardless of sector.

The Adviser seeks to invest in cannabis companies that it believes have some or all of the following characteristics:

Growth or EBITDA positive entities

Companies that require capital but do not want to dilute their equity

Companies that are showing strong cash flow performance with low leverage profiles

Transactions that tend to be attractively priced and have better than normal covenants and amortization due to complexity of the industry

Low debt to enterprise value

Growth & Technology

Our growth and technology sub-strategy is focused on industry leaders and disruptive companies that are experiencing strong growth trajectories and typically need capital to support continued revenue growth or expansion of the business. In most cases, these businesses have found a niche in their respective markets, proven their customer value proposition, and have already reached significant revenue milestones. These businesses include both private equity and venture capital backed businesses, as well as non-sponsor backed companies. In most cases, a significant amount of equity capital has been raised, resulting in low overall loan to enterprise value.

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The Adviser seeks to invest in growth and technology focused companies that it believes have some or all of the following characteristics:

Industry leaders and disruptive companies experiencing strong growth

Companies that have raised significant equity capital validating market value

Industry focus typically includes software, hardware, e-commerce, direct to consumer and other fast-growing companies

Liquidity covenants that ensure such company has adequate cash runway

Low debt to enterprise value

Profitable or demonstrated path to near term profitability

Esoteric & Asset-Based Lending

The esoteric and asset-based lending sub-strategy is focused on established companies with strong cash flow profiles in industries that carry idiosyncratic or reputational risks, which limit access to traditional sources of capital. The sub-strategy also includes companies or opportunities that have strong asset collateral coverage, low loan values or other attractive risk-reward features. The lack of access to traditional sources of capital typically enables us to extract lender-friendly terms and covenants from companies with relatively low leverage and overall credit risk.

The Adviser seeks to invest in esoteric industries or companies in need of asset-based loans that it believes have some or all of the following characteristics:

Companies that are showing strong cash flow performance with low leverage profiles, but the industries carry regulatory, reputational or other risks

Companies with attractive assets, including, but not limited to, accounts receivable, equipment or real estate

Transactions that tend to be attractively priced and have better than normal covenants and amortization due to complexity of the industry or situation

Low debt to asset value and/or enterprise value ratios

Liquidity Solutions

The liquidity solutions lending sub-strategy is typically focused on event-driven opportunities including, but not limited to, mergers, acquisitions, refinancings, dividend recaps or other strategically driven liquidity needs to established businesses. These businesses also tend to be in complex industries, have time-sensitive aspects to financing, or require idiosyncratic structuring expertise that enables us to extract relatively lender friendly terms and covenants.

The Adviser seeks to invest in liquidity solutions opportunities that it believes have some or all of the following characteristics:

Financing is typically event driven

Companies that are pursuing a merger, acquisition, refinancing, dividend recap, or other strategic liquidity need

Companies that are showing strong cash flow performance with low leverage profiles

Companies that have multiple areas of value and liquidity in addition to the underlying business

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Low debt to enterprise value ratios

None of our investment policies are fundamental, and thus may be changed without stockholder approval.

We are externally managed by the Adviser. The Adviser also provides the administrative services necessary for us to operate. We believe that our ability to leverage the existing investment management platform of Chicago Atlantic enables us to operate more efficiently and with lower overhead costs than other funds of comparable size.

Revenues

We generate revenues primarily in the form of interest income from the investments we hold. In addition, we may generate income from dividends on either direct equity investments or equity interests obtained in connection with originating loans, such as options, warrants or conversion rights. Our debt investments typically have a term of two to six years. Our loan portfolio will bear interest at a fixed or floating rate, subject to interest rate floors in certain cases. Interest on our debt investments will generally be payable either monthly or quarterly, but may be semi-annually.

Our investment portfolio consists of fixed and floating rate loans, and our revolving credit facility also bears interest at a floating rate, when drawn. Macro trends in base interest rates like PRIME or SOFR may affect our net investment income (loss) over the long term.

We accrete premiums or amortize discounts into interest income using the effective yield method for term instruments. Repayments of our debt investments will reduce interest income in future periods. The frequency or volume of these repayments may fluctuate significantly. We will record prepayment premiums on loans as interest income. We may also generate revenue in the form of commitment, structuring, or due diligence fees, fees for providing managerial assistance to our portfolio companies, and consulting fees.

Dividend income on equity investments, if applicable, will be recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded companies.

Our portfolio activity may also reflect proceeds from sales of investments. We will recognize realized gains or losses on sales of investments based on the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized. We will record current-period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized gains (losses) on investments on the Statements of Operations.

Expenses

Our primary operating expenses are a base management fee and any incentive fees under the investment advisory agreement between the Company and the Adviser (the "Investment Advisory Agreement"). Our base management fee and any incentive fees compensate our Adviser for its work in identifying, evaluating, negotiating, executing, monitoring, servicing and realizing our investments. See “Item 1. Business—Investment Advisory Agreement.”

Except as specifically provided below, all investment professionals and staff of the Adviser, when and to the extent engaged in providing investment advisory and management services to us, the base compensation, bonus and benefits, and the routine overhead expenses of such personnel allocable to such services, are provided and paid for by the Adviser. We may bear our allocable portion of the compensation paid by the Adviser (or its affiliates) to our Chief Financial Officer ("CFO") and Chief Compliance Officer ("CCO") and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs). We may bear any other expenses of our operations and transactions, including (without limitation) fees and expenses relating to:

the cost of our organization and offerings;

the cost of calculating our net asset value ("NAV"), including the cost of any third-party valuation services;

the cost of effecting sales and repurchases of shares of our common stock and other securities;

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fees and expenses payable under any underwriting agreements, if any;

debt service and other costs of borrowings or other financing arrangements;

costs of hedging;

expenses, including travel expenses, incurred by the Adviser, or members of the investment team, or payable to third-parties, performing due diligence on prospective portfolio companies and, if necessary, enforcing our rights;

management and incentive fees payable pursuant to the Investment Advisory Agreement;

fees payable to third-parties relating to, or associated with, making investments and valuing investments (including third-party valuation firms);

costs, including legal fees, associated with compliance under cannabis laws;

transfer agent and custodial fees;

fees and expenses associated with marketing efforts (including attendance at industry and investor conferences and similar events);

federal and state registration fees;

any exchange listing fees and fees payable to rating agencies;

federal, state and local taxes;

independent directors’ fees and expenses, including travel expenses;

cost of preparing financial statements and maintaining books and records and filing reports or other documents with the SEC (or other regulatory bodies) and other reporting and compliance costs, and the compensation of professionals responsible for the preparation of the foregoing;

the cost of any reports, proxy statements or other notices to our stockholders (including printing and mailing costs), the costs of any stockholder or director meetings and the compensation of investor relations personnel responsible for the preparation of the foregoing and related matters;

brokerage commissions and other compensation payable to brokers or dealers;

research and market data;

fidelity bond, directors’ and officers’ errors and omissions liability insurance and other insurance premiums;

direct costs and expenses of administration, including printing, mailing and staff;

fees and expenses associated with independent audits, and outside legal and consulting costs;

costs of winding up;

costs incurred in connection with the formation or maintenance of entities or vehicles to hold our assets for tax or other purposes;

extraordinary expenses (such as litigation or indemnification); and

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costs associated with reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws.

We expect, but cannot ensure, that our general and administrative expenses will increase in dollar terms during periods of asset growth, but will decline as a percentage of total assets during such periods.

Portfolio Composition and Investment Activity

Portfolio Composition

As of December 31, 2025, our investment portfolio had an aggregate fair value of approximately $333.3 million and was comprised of approximately $292.7 million in first lien, senior secured loans, approximately $37.5 million in senior secured notes, approximately $1.4 million in second lien, senior secured loans, and approximately $1.7 million in equity securities across thirty-nine portfolio companies. As of December 31, 2024, our investment portfolio had an aggregate fair value of approximately $275.2 million and was comprised of approximately $239.9 million in first lien, senior secured loans, approximately $34.7 million in senior secured notes and $0.7 million in equity securities across twenty-eight portfolio companies.

A summary of the composition of our investment portfolio at amortized cost and fair value as a percentage of total investments as of December 31, 2025 and December 31, 2024 are shown in the following tables.

As of December 31, 2025

Investment Type

Amortized Cost

Fair Value

First Lien Senior Secured Loans

Senior Secured Notes

Second Lien Senior Secured Loans

Warrants

Preferred Stock

Total

As of December 31, 2024

Investment Type

Amortized Cost

Fair Value

First Lien Senior Secured Loans

Senior Secured Notes

Preferred Stock

Warrants

Total

The following tables show the composition of our investment portfolio by geographic region of the United States at amortized cost and fair value as a percentage of total investments as of December 31, 2025 and December 31, 2024. The geographic composition is determined by the location of the headquarters of the portfolio company.

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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 of ND, SD, NE, KS, MO, IA, MN, WI, MI, IL, IN and OH; Northeast, for the states of 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.

As of December 31, 2025

Geographic Region

Amortized Cost

Fair Value

United States:

Midwest

Northeast

West

Southeast

Southwest

International:

Canada

Total

As of December 31, 2024

Geographic Region

Amortized Cost

Fair Value

United States:

Midwest

West

Northeast

Southwest

Southeast

International:

Canada

Total

The tables below present the industry composition of our investment portfolio at amortized cost and fair value as a percentage of total investments as of December 31, 2025 and December 31, 2024.

As of December 31, 2025

Industry (1)

Amortized Cost

Fair Value

Cannabis

Finance and Insurance

Information

Public Administration

Retail Trade

Manufacturing

Educational Services

Administrative and Support and Waste Management and Remediation Services

Real Estate and Rental and Leasing

Total

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As of December 31, 2024

Industry (1)

Amortized Cost

Fair Value

Cannabis

Finance and Insurance

Information

Public Administration

Retail Trade

Health Care and Social Assistance

Real Estate and Rental and Leasing

Total

The Company uses the North American Industry Classification System (“NAICS”) code for classifying the industry grouping of its portfolio companies, excluding any portfolio company operating in the cannabis industry.

Concentrations of Credit Risk

Credit risk is the risk of default or non-performance by portfolio companies, equivalent to the investment’s carrying amount. Industry and sector concentrations will vary from period to period based on portfolio activity.

As of December 31, 2025 and December 31, 2024, we had three portfolio companies that represented 31.8% and 45.1%, respectively, of our investments, at fair value. As of December 31, 2025 and December 31, 2024, our largest portfolio company represented 15.7% and 18.9%, respectively, of our investments, at fair value.

Investment Activity

The following table provides a summary of the changes in the investment portfolio for the year ended December 31, 2025 and 2024:

For the Years Ended December 31,

Beginning Portfolio, at fair value

Purchases

Accretion of discounts and fees (amortization of premiums), net

PIK interest

Proceeds from sales of investments and principal repayments

Net realized gain (loss) on investments

Net change in unrealized appreciation (depreciation) on investments

Ending Portfolio, at fair value

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Portfolio Asset Quality

Our portfolio management team uses an ongoing investment risk rating system to characterize and monitor our outstanding loans. Our portfolio management team monitors and, when appropriate, recommends changes to the investment risk ratings. Our Adviser’s valuation committee reviews the recommendations and/or changes to the investment risk ratings, which are submitted on a quarterly basis to the Board and the Audit Committee.

Investment

Performance Risk

Rating

Summary Description

Grade 1

Investments rated 1 involve the least amount of risk to our initial cost basis. The borrower is performing above expectations, and the trends and risk factors for this investment since origination or acquisition are generally favorable. Full return of principal, interest and dividend income is expected.

Grade 2

Investment is performing in-line with expectations. Investments rated 2 involve an acceptable level of risk that is similar to the risk at the time of origination or acquisition. Risk factors remain neutral or favorable compared with initial underwriting. All investments or acquired investments in new portfolio companies are initially assessed a rating of 2.

Grade 3

Investments rated 3 involve a borrower performing below expectations and indicates that the loan’s risk has increased somewhat since origination or acquisition. Capital impairment or payment delinquency is not anticipated. The investment may also be out of compliance with certain financial covenants.

Grade 4

Investments rated 4 involve a borrower performing materially below expectations and indicates that the loan’s risk has increased materially since origination or acquisition. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 120 days past due). Delinquency of interest and / or dividend payments in anticipated. No loss of principal is anticipated.

Grade 5

Investments rated 5 involve a borrower performing substantially below expectations and indicates that the loan’s risk has increased substantially since origination or acquisition. It is anticipated that the Company will not recoup its initial cost and may realize a loss upon exit. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Loans rated 5 are not anticipated to be repaid in full and we will reduce the fair market value of the loan to the amount we anticipate will be recovered.

The following tables show the distribution of our loan investments on the 1 to 5 investment risk rating scale at fair value as of December 31, 2025 and December 31, 2024:

As of December 31, 2025

Investment Performance Risk Rating

Investments

at Fair Value

Percentage of

Total Investments

Total

As of December 31, 2024

Investment Performance Risk Rating

Investments

at Fair Value

Percentage of

Total Investments

Total

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Debt Investments on Non-Accrual Status

As of December 31, 2025 and December 31, 2024, there were no loans in our portfolio placed on non-accrual status.

Debt

Revolving Line of Credit

On February 11, 2025, the Company entered into a senior secured revolving credit agreement (the “Credit Agreement”, the "Revolving Line of Credit") by and among the Company, as borrower, Western Alliance Trust Company, N.A. (“WATC”), as administrative agent, Western Alliance Bank, as an issuing bank and as the initial lender, and the other lenders party thereto from time to time.

Under the Credit Agreement, the lenders have agreed to extend credit to the Company on a revolving basis in an initial aggregate amount of up to $100,000,000 with an option for the Company to request additional commitments, in a minimum amount of $5,000,000, at one or more times from existing and/or new lenders. The Credit Agreement also provides for the issuance of letters of credit in an aggregate face amount of up to $5,000,000.

Availability under the Credit Agreement (the “Revolving Period”) will terminate on February 11, 2027, and the Credit Agreement has a scheduled maturity date of March 31, 2028.

As of December 31, 2025, the Company had $25,000,000 in outstanding borrowings and $75,000,000 available under the Revolving Line of Credit. The Revolving Line of Credit is secured by all of the Company's assets pledged as collateral.

Results of Operations

The following discussion and analysis of our results of operations encompasses our results for the years ended December 31, 2025 and 2024.

On October 1, 2024, the Company completed the Loan Portfolio Acquisition and acquired a portfolio of loans with a fair value of $219.6 million. Following the Loan Portfolio Acquisition and subsequent originations, the average fair value of the Company's investment portfolio grew from approximately $109.8 million for the year ended December 31, 2024, to approximately $310.4 million for the year ended December 31, 2025. The 183% growth in the average fair value of the investment portfolio resulting from the Loan Portfolio Acquisition and subsequent originations is the main driver for the changes in investment income, operating expenses, net investment income and change in unrealized appreciation (depreciation) for the year ended December 31, 2025, compared to the year ended December 31, 2024. See "Item 1. Business – Organization."

Investment Income

The following table sets forth the components of investment income for the years ended December 31, 2025 and 2024:

For the Years Ended December 31,

Stated interest income

Accretion of discount and fees (amortization of

premium), net

PIK

Total interest income

Fee income

Total investment income

We generate revenues primarily in the form of investment income from the investments we hold, generally in the form of interest income from our debt securities. We also generate revenues in the form of investment income from the cash

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we hold, generally in the form of interest income from our cash deposits held by our custodian or investment in a money market fund. Stated interest income represents interest income recognized as earned in accordance with the contractual terms of the loan agreement. Stated interest income from original issue discount (“OID”) and market discount represent the accretion into interest income over the term of the loan as a yield enhancement. Interest income from payment-in-kind (“PIK”) represents contractually deferred interest added to the loan balance recorded on an accrual basis to the extent such amounts are expected to be collected.

The Company also recognizes certain fees as one-time fee income, including, but not limited to, structuring fees.

Approximately $2.1 million of repayment premiums were included in interest income for the year ended December 31, 2025. Approximately $0.1 million of prepayment premiums were included in interest income for the year ended December 31, 2024.

Operating Expenses

Our operating expenses for the years ended December 31, 2025 and 2024 are presented below:

For the Years Ended December 31,

$ Change

% Change

Income-based incentive fees

Management fee

General and administrative expenses

Interest expense

Professional fees

Legal expenses

Audit expense

Other expenses

Sub-administrator fees

Excise tax expense

Capital gains incentive fees

Transaction expenses related to the Loan Portfolio Acquisition

Total operating expenses

Waiver of General and administrative expenses (Note 6)

Expense limitation agreement (Note 6)

Net operating expenses

Net Realized Gains and Losses

Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the amortized cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period. Net realized gains or losses from investments was approximately $0 and $(74) thousand for the years ended December 31, 2025 and 2024, respectively.

Net Change in Unrealized Appreciation (Depreciation) from Investments

Net change in unrealized appreciation (depreciation) from investments primarily reflects the net change in the fair value as of the last business day of the reporting period, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period. We record current-period changes in fair value of investments that are measured at fair value as a component of the net change in unrealized appreciation (depreciation) on investments on the Statements of Operations.

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Net change in unrealized appreciation (depreciation) from investments for the years ended December 31, 2025 and 2024, is comprised of the following:

For the Years Ended December 31,

Gross unrealized appreciation

Gross unrealized depreciation

Total net change in unrealized appreciation (depreciation)

from investments

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The following table details net change in unrealized appreciation (depreciation) for our portfolio for the years ended December 31, 2025, and 2024:

For the Years Ended December 31,

Aeriz Holdings Corp

AI Software, LLC (d/b/a Capacity)

AI Software, LLC (d/b/a Capacity) - Warrants

Archos Capital Group, LLC

Ascend Wellness

Aura Home, Inc

Aura Home, Inc - Term D

BeLeaf Medical, LLC

Cresco Labs, LLC

Curaleaf Holdings, Inc.

Deep Roots Harvest, Inc.

Dreamfields Brands, Inc. (d/b/a Jeeter)

Elevation Cannabis, LLC

Engage3 Holdings, Inc.

Engage3 Holdings, Inc. - Warrants

Flowery - Bill's Nursery, Inc.

Fluent Corp. (f/k/a Consortium)

HA-MD, LLC

Hartford Gold Group, LLC: (Maturity: 1/6/2027)

Hartford Gold Group, LLC: (Maturity: 12/17/2025)

Kaleafa, Inc.

Kapple Holdings LLC (Cannabis & Glass)

Minden Holdings, LLC

Nova Farms, LLC

Oasis - AZ GOAT AZ LLC

PharmaCann, Inc.

Portofino Labs, Inc. (dba Because Market)

Portofino Labs, Inc. (dba Because Market) - Warrants

Proper Holdings, LLC

Protect Animals With Satellites LLC (Halo Collar): Incremental Term Loan

Protect Animals With Satellites LLC (Halo Collar): Term Loan

Remedy - Maryland Wellness, LLC

RTCP, LLC

Shangri-La Columbia, LLC

Silver Therapeutics, Inc.

Simspace Corporation

STIIIZY, Inc. (f/k/a Shryne Group Inc.)

Subsero Holdings - Illinois, Inc

Sunny Days Enterprises, LLC

TerrAscend Corporation

TheraTrue, Inc.

Tulip.io Inc.

Verano Holdings Corp.

Wellgreens 2.0, LLC

West Creek Financial Holdings, Inc. dba Koalafi

Workbox Holdings Inc.

Workbox Holdings Inc.: A-3 Warrants

Workbox Holdings Inc.:A-4 Warrants

Youth Opportunity Investments, LLC

Total net change in unrealized appreciation (depreciation)

from investments

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During the year ended December 31, 2025, the net change in unrealized appreciation (depreciation) on our investments was primarily driven by the performance of our loan portfolio. During the year ended December 31, 2024, the net change in unrealized appreciation (depreciation) on our investments was primarily driven by the performance of our loan portfolio and the conversion of unrealized appreciation (depreciation) to realized gain (loss).

Financial Condition, Liquidity and Capital Resources

Our liquidity and capital resources are generated primarily from cash flows from operating activities, including proceeds from sales of investments and principal repayments, and interest and fee income earned on investments, as well as borrowings under our Revolving Line of Credit and potentially from future offerings of our securities. The primary uses of our cash includes (i) investments in portfolio companies, (ii) payment of operating expenses, and (iii) dividend payments to holders of our common stock. We have used, and expect to continue to use, our borrowings, including our Revolving Line of Credit, as well as proceeds from investment income and the turnover of our portfolio, to finance our investment objectives and activities.

In accordance with the 1940 Act, we are allowed to borrow amounts such that our asset coverage, calculated pursuant to the 1940 Act, is at least 150% after such borrowings (i.e., we are able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us). As of December 31, 2025, we had approximately $2.9 million in cash and cash equivalents and $25.0 million in total aggregate principal amount of outstanding debt. Our asset coverage as of December 31, 2025, was 1314%. Subject to borrowing base and other restrictions, we had approximately $75.0 million available for additional borrowings under the Revolving Line of Credit as of December 31, 2025.

The amount of leverage that we employ will depend on our assessment of market conditions and other factors at the time of any proposed borrowing, such as the maturity, covenant package and rate structure of the proposed borrowings, our ability to raise funds through the issuance of shares of our common stock and the risks of such borrowings within the context of our investment outlook. Ultimately, we only intend to use leverage if the expected returns from borrowing to make investments will exceed the cost of such borrowing.

We believe we have sufficient liquidity available to meet our short-term and long-term obligations for at least the next 12 months and for the foreseeable future thereafter. We cannot, however, be certain that these sources of funds will be available at a time and upon terms acceptable to us in sufficient amounts in the future.

As of December 31, 2025 and December 31, 2024, we had cash and cash equivalents of approximately $2.9 million and $23.9 million, respectively. During the twelve months ended December 31, 2025, we experienced a net decrease in cash and cash equivalents of approximately $21 million. During the period, cash used in operating activities was approximately $20.5 million, primarily driven by the purchase of investments of approximately $156.2 million, partially offset by proceeds from sales of investments and principal repayments of portfolio investments of $103.6 million and net investment income of approximately $33.3 million. Cash used in financing activities was approximately $0.5 million, primarily driven by distributions paid of approximately $23.3 million, financing costs paid of approximately $1.2 million, and offering costs paid of approximately $1.1 million, offset by proceeds from net borrowings and repayments under our Revolving Line of Credit of $25 million.

Dividend Reinvestment Plan

Prior to December 31, 2025, we operated an “opt out” Dividend Reinvestment Plan (“DRIP”) for our stockholders. As a result, if we declared a dividend, then stockholders’ cash distributions were automatically reinvested in additional shares of our common stock, unless they specifically chose to “opt out” of the DRIP so as to receive cash distributions. Stockholders who received distributions in the form of shares of our common stock generally were subject to the same U.S. federal income tax consequences as were stockholders who elected to receive their distributions in cash.

On November 26, 2025, in accordance with the terms of the DRIP and by unanimous written consent of our Board, the DRIP was terminated with an effective date of December 31, 2025. Following the termination of the DRIP, all cash dividends or distributions on our common stock with a record date for payment after December 31, 2025 will be paid in cash rather than in shares of our common stock.

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CHICAGO ATLANTIC BDC, INC.

U.S. Federal Income Taxes

We elected to be treated, and intend to qualify annually to be treated, as a RIC under Subchapter M of the Code for federal income tax purposes. To maintain our tax treatment as a RIC, we must meet specified source-of-income requirements and timely distribute to our stockholders for each taxable year at least 90% of our investment company taxable income. Additionally, in order for us not to be subject to U.S. federal excise taxes, we must distribute annually an amount at least equal to the sum of (i) 98% of our net ordinary income for the calendar year, (ii) 98.2% of our capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years.

Critical Accounting Estimates

Basis of Presentation

The Company’s financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”). The Company follows accounting and reporting guidance as determined by the Financial Accounting Standards Board (“FASB”) Topic 946 Financial Services – Investment Companies.

The preparation of financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions affecting amounts reported in our financial statements. We will continuously evaluate our estimates, including those related to the matters described below. These estimates will be based on the information that is currently available to us and on various other assumptions that we believe to be reasonable under the circumstances.Actual results could differ materially from those estimates under different assumptions or conditions. For additional information, please refer to “Note 2 – Significant Accounting Policies” in the notes to the financial statements included with this annual report on Form 10-K. Valuation of investments is considered to be our critical accounting policy and estimates. A discussion of our critical accounting estimates follows.

Investment Valuation

Investments for which market quotations are readily available will typically be valued at the bid price of those market quotations. To validate market quotations, the Adviser utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith by the Adviser, as the Company’s valuation designee (the “Valuation Designee”), based on inputs that may include valuations, or ranges of valuations, provided by independent third-party valuation firm(s) engaged by the Adviser. Pursuant to Rule 2a-5 under the 1940 Act, the Board designated the Adviser as the Valuation Designee to perform the fair value determinations for the Company, subject to the oversight of the Board and certain Board reporting and other requirements.

As part of the valuation process, the Adviser takes into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets that may affect the price at which similar investments may be made in the future. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Adviser considers whether the pricing indicated by the external event corroborates its valuation.

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CHICAGO ATLANTIC BDC, INC.

The Adviser undertakes a multi-step valuation process, which includes, among other procedures, the following:

With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;

With respect to investments for which market quotations are not readily available, the valuation process begins with the Adviser’s valuation committee establishing a preliminary valuation of each investment, which may be based on valuations, or ranges of valuations, provided by independent valuation firm(s);

Preliminary valuations are documented and discussed by the Adviser’s valuation committee and, where appropriate, the independent valuation firm(s); and

The Adviser determines the fair value of each investment.

The Adviser conducts this valuation process on a quarterly basis.

The Adviser applies Accounting Standards Codification ("ASC") 820, Fair Value Measurement (“ASC 820”), which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Adviser considers the principal market to be the market that has the greatest volume and level of activity. ASC 820 specifies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;

Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or for which all significant inputs are observable, either directly or indirectly; and

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

All of our investments as of December 31, 2025 and December 31, 2024 were categorized at Level 3, and therefore, 100% of our portfolio requires significant estimates. Our investments may not have readily available market quotations (as such term is defined in Rule 2a-5 under the 1940 Act), and those investments which do not have readily available market quotations are valued at fair value as determined in good faith in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Significant unobservable inputs create uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s investments may vary and may include the debt investments’ yield and volatility fluctuations. Significant increases (decreases) in discount rate in isolation would result in a significantly lower (higher) fair value assessment. Significant increases (decreases) in volatility in isolation would result in a significantly lower (higher) fair value assessment.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material.

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CHICAGO ATLANTIC BDC, INC.

In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected previously.

Assumptions, or unobservable inputs, fluctuate based on both market and company specific factors. Please refer to “Note 4 – Fair Value of Financial Instruments” in the notes to the financial statements included with this annual report on Form 10-K for specific unobservable inputs.

Quarterly NAV Determination

The Adviser determines the NAV per share of our common stock on a quarterly basis. The NAV per share of our common stock is equal to the value of our total assets minus liabilities divided by the total number of shares of common stock outstanding. Our liabilities include amounts which we have accrued under our Investment Advisory Agreement, including the base management fee and incentive fees owed to the Adviser. See “ Item 1A. Business – Investment Advisory Agreement – Management Fee.”

Valuation Determinations in Connection with Certain Offerings

In connection with certain future offerings of shares of our common stock, our Board will be required to make the determination that we are not selling shares of our common stock at a price below the then current NAV of our common stock, exclusive of any distributing commission or discount (which NAV shall be determined as of a time within 48 hours, excluding Sundays and holidays, next preceding the time of such determination). Our Board will consider the following factors, among others, in making such determination:

the NAV of our common stock disclosed in the most recent periodic report that we filed with the SEC;

our management’s assessment of whether any material change in the NAV of our common stock has occurred (including through the realization of gains on the sale of our portfolio securities) during the period beginning on the date of the most recently disclosed NAV of our common stock and ending as of a time within 48 hours (excluding Sundays and holidays) of the sale of our common stock; and

the magnitude of the difference between (i) a value that our Board has determined reflects the current (as of a time within 48 hours, excluding Sundays and holidays) NAV of our common stock, which is based upon the NAV of our common stock disclosed in the most recent periodic report that we filed with the SEC, as adjusted to reflect our management’s assessment of any material change in the NAV of our common stock since the date of the most recently disclosed NAV of our common stock, and (ii) the offering price of the shares of our common stock in the proposed offering.

Moreover, to the extent that there is a possibility that we may (i) issue shares of common stock at a price per share below the then current NAV per share at the time at which the sale is made or (ii) trigger the undertaking (which we provide in certain registration statements we file with the SEC) to suspend the offering of shares of our common stock if the NAV per share fluctuates by certain amounts in certain circumstances until the prospectus is amended, our Board will elect, in the case of clause (i) above, either to postpone the offering until such time that there is no longer the possibility of the occurrence of such event or to undertake to determine the NAV per share of common stock within two days prior to any such sale to ensure that such sale will not be below our then current NAV per share, and, in the case of clause (ii) above, to comply with such undertaking or to undertake to determine the NAV per share to ensure that such undertaking has not been triggered.

These processes and procedures are part of our compliance policies and procedures. Records will be made contemporaneously with all determinations described in this section and these records will be maintained with other records that we are required to maintain under the 1940 Act.

Other Contractual Obligations

We have certain commitments pursuant to our Investment Advisory Agreement that we have entered into with the Adviser. We have agreed to pay a fee for investment advisory services consisting of two components: a base management fee and an incentive fee. Payments under the Investment Advisory Agreement will be equal to (1) a percentage of the value of our average gross assets and (2) a two-part incentive fee. See “Item 1. Business—Investment

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CHICAGO ATLANTIC BDC, INC.

Advisory Agreement.” We have also entered into a contract with the Adviser to serve as our administrator. Payments under the Administration Agreement will be reimbursements to the Adviser for the costs and expenses incurred by the Adviser in performing its obligations, including but not limited to maintaining and keeping all books and records and providing personnel and facilities. This includes costs and expenses incurred by the Adviser in connection with the delegation of its obligations to a sub-administrator. The Company is not responsible for the compensation of the Adviser’s employees and overhead expenses. See “Item 1. Business—Administration Agreement.”

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CHICAGO ATLANTIC BDC, INC.

Ite m 7A. Quantitative and Qualitative Disclosures About Market Risk.

Uncertainty with respect to the economic effects of political tensions in the United States and around the world (including the current conflicts between Russia and Ukraine and in the Middle East) have introduced significant volatility in the financial markets, and the effect of the volatility could materially impact our market risks, including those listed below. We are subject to financial market risks, including valuation risk, interest rate risk and credit risk.

Valuation Risk

Our investments generally do not have readily available market quotations (as such term is defined in Rule 2a-5 under the 1940 Act), and those investments which do not have readily available market quotations are valued at fair value as determined in good faith in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Because of the inherent uncertainty of valuation, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is possible that the difference could be material.

Interest Rate Risk

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

As of December 31, 2025, 71.8% of our debt investments based on outstanding principal balance represented floating-rate investments based on PRIME or SOFR and approximately 28.2% of our debt investments based on outstanding principal balance represented fixed rate investments. As of December 31, 2024, 79.5% of our debt investments based on outstanding principal balance represented floating-rate investments based on PRIME or SOFR and approximately 20.5% of our debt investments based on outstanding principal balance represented fixed rate investments.

As of December 31, 2025, approximately 63% of our floating-rate investments based on PRIME or SOFR, were at their respective interest rate floors. As of December 31, 2024 approximately 41% of our floating-rate investments based on PRIME or SOFR, were at their respective interest rate floors.

Based on our Statements of Assets and Liabilities as of December 31, 2025, the following table shows the annualized impact on net investment income of hypothetical base rate changes in the benchmark rate on our debt investments (considering interest rate floors/ceilings for floating rate instruments) and hypothetical changes in the SOFR on our Revolving Line of Credit, assuming that there is no change in our investment and borrowing structure (in thousands):

Change in

Interest Rates

Increase

(Decrease)

in Interest

Income

Increase

(Decrease)

in Interest

Expense

Increase

(Decrease)

in Net

Investment

Income

Up 300 basis points

Up 200 basis points

Up 100 basis points

Down 100 basis points

Down 200 basis points

Down 300 basis points

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CHICAGO ATLANTIC BDC, INC.

Based on our Statements of Assets and Liabilities for the year ended December 31, 2024, the following table shows the annualized impact on net income of hypothetical base rate changes in the benchmark rate on our debt investments(considering interest rate floors for floating rate instruments):

Change in

Interest Rates

Increase

(Decrease)

in Interest

Income

Increase

(Decrease)

in Interest

Expense

Increase

(Decrease)

in Net

Investment

Income

Up 300 basis points

Up 200 basis points

Up 100 basis points

Down 100 basis points

Down 200 basis points

Down 300 basis points

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CHICAGO ATLANTIC BDC, INC.

Ite m 8. Financial Statements and Supplementary Data.

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm ( BDO USA, P.C. , New York , NY, PCAOB ID # 243 )

Statements of Assets and Liabilities

Statements of Operations

Statements of Changes in Net Assets

Statements of Cash Flows

Schedules of Investments

Notes to Financial Statements

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Report of Independent Registered Public Acc ounting Firm

Shareholders and Board of Directors

Chicago Atlantic BDC, Inc.

New York, NY

Opinion on the Financial Statements

We have audited the accompanying statements of assets and liabilities of Chicago Atlantic BDC, Inc. (the “Company”), including the schedules of investments, as of December 31, 2025 and 2024, the related statements of operations, changes in net assets, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations, changes in its net assets, and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2025, and 2024, by correspondence with the custodian and the underlying investees or agents. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ BDO USA, P.C.

We have served as the Company’s auditor since 2021.

New York, NY

March 19, 2026

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Chicago Atlantic BDC, Inc.

Statements of Assets and Liabilities

As of December 31,

ASSETS

Investments at fair value:

Non-control/non-affiliate investments at fair value (amortized cost of

$ 332,209,170  and $ 274,346,711 , respectively)

Interest receivable

Cash and cash equivalents

Due from affiliates

Prepaid expenses and other assets

Receivable for investment sold

Total assets

LIABILITIES

Revolving line of credit

Distributions payable

Income-based incentive fees payable

Management fee payable

Due to affiliates

Professional fees payable

Other payables

Capital gains incentive fees payable

Excise tax payable

Unearned interest income

Transaction fees payable related to the Loan Portfolio Acquisition

Offering costs payable

Deferred financing costs payable

Total liabilities

Commitments and contingencies (Note 7)

NET ASSETS

Common stock, $ 0.01  par value, 100,000,000  shares authorized, 22,820,590  and

22,820,386  shares issued and outstanding, respectively

Additional paid-in-capital

Distributable earnings (Accumulated loss)

Total net assets

NET ASSET VALUE PER SHARE

See notes to financial statements.

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Chicago Atlantic BDC, Inc.

Statements of Operations

For the Years Ended December 31,

INVESTMENT INCOME

Non-control/non-affiliate investment income

Interest income

Fee income

Total investment income

EXPENSES

Income-based incentive fees

Management fee

General and administrative expenses

Interest expense

Professional fees

Legal expenses

Audit expense

Other expenses

Sub-administrator fees

Excise tax expense

Capital gains incentive fees

Transaction expenses related to the Loan Portfolio Acquisition

Total expenses

Waiver of general and administrative expenses (Note 6)

Expense limitation agreement (Note 6)

Net expenses

NET INVESTMENT INCOME (LOSS)

NET REALIZED GAIN (LOSS) FROM

INVESTMENTS

Non-controlled non-affiliate investments

Net realized gain (loss) from investments

NET CHANGE IN UNREALIZED APPRECIATION

(DEPRECIATION) ON INVESTMENTS

Non-controlled non-affiliate investments

Net change in unrealized appreciation (depreciation) on

investments

Net realized and unrealized gains (losses)

NET INCREASE (DECREASE) IN NET ASSETS

RESULTING FROM OPERATIONS

NET INVESTMENT INCOME (LOSS) PER SHARE -

BASIC AND DILUTED

NET INCREASE (DECREASE) IN NET ASSETS

RESULTING FROM OPERATIONS PER SHARE -

BASIC AND DILUTED

WEIGHTED AVERAGE SHARES OUTSTANDING -

BASIC AND DILUTED

See notes to financial statements.

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Chicago Atlantic BDC, Inc.

Statements of Changes in Net Assets

Common Stock

Shares

Par Value

Additional

paid-in-

capital

Distributable

Earnings/

(Accumulated

Loss)

Total

Net Assets

Balance, December 31, 2024

Net increase (decrease) in net assets resulting from operations

Net investment income (loss)

Net realized gain (loss) from investments

Net change in unrealized appreciation (depreciation)

from investments

Total net increase (decrease) in net assets resulting

from operations

Distributions to stockholders from:

Investment income-net

Capital transactions

Issuance of common stock, net of offering costs

Reinvestment of stockholder distributions

Total net increase (decrease) in net assets

from capital transactions

Total increase (decrease) in net assets

Effect of permanent adjustments

Balance, December 31, 2025

Common Stock

Shares

Par Value

Additional

paid-in-

capital

Distributable

Earnings/

(Accumulated

Loss)

Total

Net Assets

Balance, December 31, 2023

Net increase (decrease) in net assets resulting from operations

Net investment income (loss)

Net realized gain (loss) from investments

Net change in unrealized appreciation (depreciation)

from investments

Total net increase (decrease) in net assets resulting

from operations

Distributions to stockholders from:

Investment income-net

Capital transactions

Issuance of common stock, net of offering costs

Reinvestment of stockholder distributions

Total net increase (decrease) in net assets

from capital transactions

Total increase (decrease) in net assets

Effect of permanent adjustments

Balance, December 31, 2024

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Chicago Atlantic BDC, Inc.

Statements of Changes in Net Assets

Common Stock

Shares

Par Value

Additional

paid-in-

capital

Distributable

Earnings/

(Accumulated

Loss)

Total

Net Assets

Balance, December 31, 2022

Net increase (decrease) in net assets resulting from operations

Net investment income (loss)

Net realized gain (loss) from investments

Net change in unrealized appreciation (depreciation)

from investments

Total net increase (decrease) in net assets resulting

from operations

Distributions to stockholders from:

Investment income-net

Capital transactions

Issuance of common stock, net of offering costs

Reinvestment of stockholder distributions

Total net increase (decrease) in net assets

from capital transactions

Total increase (decrease) in net assets

Effect of permanent adjustments

Balance, December 31, 2023

See notes to financial statements

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Chicago Atlantic BDC, Inc.

Statements of Cash Flows

For the Years Ended December 31,

Cash flows from operating activities

Net increase (decrease) in net assets resulting from operations

Adjustments to reconcile net increase (decrease) in net assets resulting from

operations to net cash provided by (used in) operating activities:

Net change in unrealized (appreciation) depreciation from investments

Net (accretion of discounts) and amortization of premiums

Purchase of investments

PIK interest capitalized

Proceeds from sales of investments and principal repayments

Amortization of deferred financing costs

Net realized (gain) loss from investments

(Increase) Decrease in operating assets:

Interest receivable

Receivable for investment sold

Due from affiliates

Prepaid expenses and other assets

Increase (Decrease) in operating liabilities:

Income-based incentive fees payable

Management fee payable

Capital gains incentive fees payable

Professional fees payable

Transaction fees payable related to the Loan Portfolio Acquisition

Other payables

Due to affiliates

Excise tax payable

Unearned interest income

Net cash provided by (used in) operating activities

Cash flows from financing activities

Offering costs paid

Distributions paid

Financing costs paid

Proceeds from borrowings on revolving line of credit

Principal payments under revolving line of credit

Proceeds from issuance of common stock

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental disclosures

Excise taxes paid

Interest expense paid

Non-cash operating, financing and investing activity

Accrual for deferred financing costs (Note 2)

Accrual for deferred offering costs (Note 2)

Reinvestment of dividend distribution

Loans acquired for issuances of shares of common stock

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Chicago Atlantic BDC, Inc.

December 31, 2025

Schedule of Investments

(In thousands)

Portfolio Company

Facility

Type

All in

Rate

Benchmark (3)

Spread

PIK

Floor

Initial

Acquisition

Date

Maturity

Par (2)

Amortized

Cost (15)

Fair

Value (4)

Net Assets

Footnotes

Investments at Fair Value

US Corporate Debt

First Lien Senior Secured

U.S. Debt

Administrative and Support and Waste Management

and Remediation Services

Hugo Technologies, Inc.

Term Loan

Total Administrative and Support and Waste Management

and Remediation Services

Cannabis

Aeriz Holdings Corp

Delayed Draw Term Loan

Archos Capital Group, LLC

Delayed Draw Term Loan

BeLeaf Medical, LLC

Term Loan

CO Acquisition Vehicle, LLC

Term Loan

Cresco Labs, LLC

Term Loan

Dreamfields Brands, Inc. (d/b/a Jeeter)

Delayed Draw Term Loan

Elevation Cannabis, LLC

Delayed Draw Term Loan

Flowery - Bill's Nursery, Inc.

Delayed Draw Term Loan

FLUENT Corp.

Term Loan

HA-MD, LLC

Term Loan

Illicit - S1 Enterprises, Inc.

Term Loan

Kaleafa, Inc.

Term Loan

Kapple Holdings LLC (Cannabis & Glass)

Delayed Draw Term Loan

Nova Farms, LLC

Term Loan

Oasis - AZ GOAT AZ LLC

Term Loan

Shangri-La Columbia, LLC

Delayed Draw Term Loan

Silver Therapeutics, Inc.

Delayed Draw Term Loan

Subsero Holdings - Illinois, Inc

Delayed Draw Term Loan

TerrAscend Corporation

Term Loan

TheraTrue, Inc.

Delayed Draw Term Loan

Verano Holdings Corp.

Term Loan

Verano Holdings Corp.

Revolver

Wellgreens 2.0, LLC

Term Loan

Total Cannabis

Educational Services

Energize Holdings, Inc. (d/b/a Exos)

Term Loan

Total Educational Services

Information

AI Software, LLC (d/b/a Capacity)

Delayed Draw Term Loan

Engage3 Holdings, Inc.

Term Loan

Protect Animals With Satellites LLC (Halo Collar)

Term Loan

Protect Animals With Satellites LLC (Halo Collar)

Incremental Term Loan

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Total Information

Manufacturing

Action Target, Inc.

Delayed Draw Term Loan

Ocular Science, Inc.

Term Loan

Total Manufacturing

Public Administration

Youth Opportunity Investments, LLC

Term Loan

Total Public Administration

Real Estate and Rental and Leasing

Workbox Holdings, Inc.

Term Loan

Total Real Estate and Rental and Leasing

Retail Trade

Aura Home, Inc

Term Loan

Aura Home, Inc

Term Loan

Portofino Labs, Inc. (dba Because Market)

Term Loan

Total Retail Trade

Total First Lien Senior Secured U.S. Debt

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Portfolio Company

Facility

Type

All in

Rate

Benchmark (3)

Spread

PIK

Floor

Initial

Acquisition

Date

Maturity

Par (2)

Amortized Cost (15)

Fair

Value (4)

Net Assets

Footnotes

Senior Secured U.S. Notes

Cannabis

Ascend Wellness Holdings, Inc.

S enior Secured Note

Curaleaf Holdings, Inc.

Senior Secured Note

Total Cannabis

Finance and Insurance

RTCP, LLC

Senior Secured Note

West Creek Financial Holdings, Inc. dba Koalafi

Series A Senior Note

Total Finance and Insurance

Total Senior Secured U.S. Notes

Second Lien Senior Secured

Cannabis

Remedy - Maryland Wellness, LLC

Delayed Draw Term Loan

Total Cannabis

Total Second Lien Senior

Secured U.S. Debt

Total U.S. Corporate Debt

First Lien Senior Secured

Canadian Debt

Information

Tulip.io Inc.

Term Loan

Total Information

Total First Lien Senior

Secured Canadian Debt

Total Canadian Corporate

Debt

Total Debt Investments

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Portfolio Company

Class Series

Initial

Acquisition

Date

Shares

Cost

Fair Value

Net Assets

Footnotes

U.S. Preferred Stock

Real Estate and Rental and Leasing

Workbox Holdings, Inc.

A-1 Preferred

Total Real Estate and Rental and Leasing

Total U.S. Preferred Stock

U .S. Warrants

Educational Services

Energize Holdings, Inc. (d/b/a Exos)

Warrants

Total Educational Services

Information

AI Software, LLC (d/b/a Capacity)

Warrants

Engage3 Holdings, Inc.

Warrants

Total Information

Manufacturing

Ocular Science, Inc.

Warrants

Total Manufacturing

Real Estate and Rental and Leasing

Workbox Holdings, Inc.

A-3 Warrants

Workbox Holdings, Inc.

A-4 Warrants

Total Real Estate and Rental and Leasing

Retail Trade

Portofino Labs, Inc. (dba Because Market)

Warrants

Total Retail Trade

Total U.S. Warrants

Canadian Warrants

Information

Tulip.io Inc.

Warrants

Total Information

Total Canadian Warrants

Total Equity Investments

TOTAL INVESTMENTS

Footnote Legend

Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the Financial Accounting Standards Board’s Accounting Standards Codification 820, Fair Value Hierarchy.

Par represents the outstanding principal balance net of repayments, if any, as per the terms of the debt instrument’s contract.

Generally, the interest rate on floating interest rate investments is at benchmark rate plus spread, subject to a benchmark interest rate floor. The benchmark rate is determined via the Credit or Loan Service Agreement, such as the Secured Overnight Financing Rate (“S”) or the U.S. Prime Rate (“P”). The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting period. S loans are typically indexed to 30-day , 90-day or 180-day rates ("1M," "3M" or "6M", respectively) as defined in the Credit or Loan Service Agreement. As of December 31, 2025, rates for 1M S, 3M S and 6M S are 3.79 % , 4.01 % , and 4.20 % , respectively. As of December 31, 2025, the P was 6.75 % . Loans identified as "F" pay interest at the fixed rate listed in the table.

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

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The Company uses the North American Industry Classification System (“NAICS”) code for classifying the industry grouping of its portfolio companies, excluding any portfolio company operating in the cannabis industry.

Indicates a non-income producing investment. As of December 31, 2025 , no debt investments are deemed as non-income producing.

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

The respective portfolio company’s headquarters is located outside of the United States.

Portfolio company located in the Northeast.

Portfolio company located in the Midwest.

Portfolio company located in the West.

Portfolio company located in the Southeast.

Portfolio company located in the Southwest.

The investment is a “non-qualifying asset.” Under the Investment Company Act of 1940, as amended (the “1940 Act”), a business development company (“BDC”) may not acquire any “non-qualifying asset” (i.e., an asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as “qualifying assets”), unless, at the time the acquisition is made, qualifying assets represent at least 70% of the BDC’s total assets. As of December 31, 2025, the aggregate fair value of non-qualifying assets is $ 14,319,903 or 4.19 % of the Company’s total assets.

The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and payment-in-kind ("PIK") interest or dividends.

Under the 1940 Act, as amended, the Company generally is deemed to be an “affiliated person” of a portfolio company if it owns 5% or more of the portfolio company’s voting securities and is generally deemed to “control” a portfolio company if it owns more than 25% of the portfolio company’s voting securities or it has the power to exercise control over the management or policies of such portfolio company. As of December 31, 2025 , the Company did not hold investments in portfolio companies of which it is deemed to be an “affiliated person” or deemed to “control” a portfolio company.

Assets are pledged as collateral for the Revolving Line of Credit (as defined below). See "Note 5 - Debt."

Facility has an all in rate cap of 16.75%

Facility has a prime rate cap of 9.50%.

F - Fixed

P - Prime

PIK - Payment-In-Kind

S - SOFR

See notes to financial statements.

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Chicago Atlantic BDC, Inc.

December 31, 2024

Schedule of Investments

(In thousands)

Portfolio Company

Facility Type

All in

Rate

Benchmark (3)

Spread

PIK

Floor

Initial

Acquisition

Date

Maturity

Par (2)

Amortized

Cost (17)

Fair

Value (4)

Net Assets

Footnote

Investments at Fair Value

U.S. Corporate Debt First

Lien Senior Secured

U.S. Debt Cannabis

Aeriz Holdings Corp

Delayed Draw Term Loan

Archos Capital Group, LLC

Delayed Draw Term Loan

Deep Roots Harvest, Inc.

Delayed Draw Term Loan

Dreamfields Brands, Inc.

(d/b/a Jeeter)

Delayed Draw Term Loan

Elevation Cannabis, LLC

Delayed Draw Term Loan

Flowery - Bill's Nursery, Inc.

Delayed Draw Term Loan

HA-MD, LLC

Term Loan

Kaleafa, Inc.

Term Loan

Nova Farms, LLC

Term Loan

Oasis - AZ GOAT AZ LLC

Term Loan

Proper Holdings, LLC

Delayed Draw Term Loan

Remedy - Maryland Wellness,

LLC

Delayed Draw Term Loan

STIIIZY, Inc. (f/k/a Shryne

Group Inc.)

Term Loan

Subsero Holdings - Illinois,

Inc

Delayed Draw Term Loan

Verano Holdings Corp.

Term Loan

Total Cannabis

Finance and Insurance

Hartford Gold Group, LLC

Term Loan

Hartford Gold Group, LLC

Term Loan

Minden Holdings, LLC

Term Loan

Total Finance and

Insurance

Health Care and Social

Assistance

Sunny Days Enterprises, LLC

Delayed Draw Term Loan

Total Health Care and

Social Assistance

Information

Protect Animals With

Satellites LLC (Halo Collar)

Term Loan

Protect Animals With

Satellites LLC (Halo Collar)

Incremental Term Loan

Simspace Corporation

Term Loan

Total Information

Public Administration

Youth Opportunity

Investments, LLC

Term Loan

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Chicago Atlantic BDC, Inc.

December 31, 2024

Schedule of Investments

(In thousands)

Portfolio Company

Facility Type

All in

Rate

Benchmark (3)

Spread

PIK

Floor

Initial

Acquisition

Date

Maturity

Par (2)

Amortized

Cost (17)

Fair

Value (4)

Net Assets

Footnote

Total Public

Administration

Real Estate and Rental

and Leasing

Workbox Holdings Inc.

Term Loan

Total Real Estate and

Rental and Leasing

Retail Trade

Aura Home, Inc

Term Loan

Total Retail Trade

Total First Lien Senior

Secured U.S. Debt

Senior Secured U.S.

Notes

Cannabis

Ascend Wellness Holdings,

Inc.

Senior Secured Notes

Curaleaf Holdings, Inc.

Senior Secured Notes

Total Cannabis

Finance and Insurance

RTCP, LLC

Senior Secured Notes

West Creek Financial

Holdings, Inc.

dba Koalafi

Series A Senior Note

Total Finance and

Insurance

Total Senior Secured

U.S. Notes

Total U.S. Corporate

Debt

First Lien Senior Secured

Canadian Debt

Information

Tulip.io Inc.

Term Loan

Total Information

Total First Lien Senior

Secured Canadian

Debt

Total Canadian

Corporate Debt

Total Debt Investments

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Chicago Atlantic BDC, Inc.

December 31, 2024

Schedule of Investments

(In thousands)

Portfolio Company

Class Series

Initial

Acquisition

Date

Shares

Amortized

Cost (17)

Fair Value

% of Net Assets

Footnote

U.S. Preferred Stock

Real Estate and Rental and Leasing

Workbox Holdings Inc.

A-1 Preferred

Total Real Estate and Rental and Leasing

Total U.S. Preferred Stock

U .S. Warrants

Real Estate and Rental and Leasing

Workbox Holdings Inc.

A-3 Warrants

Workbox Holdings Inc.

A-4 Warrants

Total Real Estate and Rental and Leasing

Total U.S. Warrants

Canadian Warrants

Information

Tulip.io Inc.

Warrants

Total Information

Total Canadian Warrants

Total Equity Investments

TOTAL INVESTMENTS

Portfolio Company

Yield

Cost

Fair

Value

Net Assets

Footnote

Cash & Cash Equivalents

State Street Institutional US Government Money Market Fund

Total Cash & Cash Equivalents

Total Portfolio Investments and Cash & Cash Equivalents

Footnote Legend

Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the Financial Accounting Standards Board’s Accounting Standards Codification 820's Fair Value Hierarchy.

Par represents the outstanding principal balance net of repayments, if any, as per the terms of the debt instrument’s contract.

Generally, the interest rate on floating interest rate investments is at benchmark rate plus spread, subject to a benchmark interest rate floor. The benchmark rate is determined via the Credit or Loan Service Agreement, such as the Secured Overnight Financing Rate (“S”) or the U.S. Prime Rate (“P”). The terms in the Schedule of Investments disclose the actual interest rate in effect as of the reporting period. S loans are typically indexed to 30 -day, 90 -day or 180 -day rates ("1M," "3M" or "6M," respectively) as defined in the Credit or Loan Service Agreement. As of December 31, 2024 , rates for 1M S, 3M S and 6M S are 4.53 %, 4.69 %, and 5.03 %, respectively. As of December 31, 2024 , the P was 7.50 %.

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

The Company uses the North American Industry Classification System (“NAICS”) code for classifying the industry grouping of its portfolio companies, excluding any portfolio company operating in the cannabis industry.

Indicates a non-income producing investment. As of December 31, 2024 , no debt investments are deemed as non-income producing.

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

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Chicago Atlantic BDC, Inc.

December 31, 2024

Schedule of Investments

(In thousands)

The respective portfolio company’s headquarters is located outside of the United States.

Portfolio company located in the Northeast.

Portfolio company located in the Midwest.

Portfolio company located in the West.

Portfolio company located in the Southeast.

Portfolio company located in the Southwest.

The investment is a “non-qualifying asset.” Under the Investment Company Act of 1940, as amended (the “1940 Act”), a business development company (“BDC”) may not acquire any “non-qualifying asset” (i.e., an asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as “qualifying assets”), unless, at the time the acquisition is made, qualifying assets represent at least 70% of the BDC’s total assets. As of December 31, 2024 the aggregate fair value of non-qualifying assets is $ 59,263,833 or 19.14 % of the Company’s total assets.

The rate shown is the annualized seven-day yield as of December 31, 2024 .

Included within ‘Cash and cash equivalents’ on the Statements of Assets and Liabilities.

The amortized cost represents the original cost adjusted for any accretion of discounts, amortization of premiums and payment-in-kind ("PIK") interest or dividends.

F - Fixed

P - Prime

PIK - Payment-In-Kind

S - SOFR

See notes to financial statements.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

NO TE 1 — ORGANIZATION

Chicago Atlantic BDC, Inc. (an emerging growth company) (the “Company”, “we” or “our”) was formed on January 25, 2021 as a Maryland corporation structured as an externally managed, closed-end, non-diversified management investment company. The Company has elected to be regulated as a business development company (“BDC”), under the Investment Company Act of 1940, as amended (“1940 Act”). In addition, for U.S. federal income tax purposes the Company adopted an initial tax year end of December 31, 2021, and was taxed as a corporation for the tax period ended December 31, 2021. The Company adopted the tax year end of March 31 and elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”) for the tax period January 1, 2022 through March 31, 2022, and has maintained (and intends to continue to maintain) such election in subsequent taxable years. However, there is no guarantee that the Company will qualify to make such an election for any taxable year.

The Company is managed by Chicago Atlantic BDC Advisers, LLC (the “Adviser”), a registered investment adviser under the Investment Advisers Act of 1940 with the Securities and Exchange Commission (“SEC”). The Adviser has engaged SS&C Technologies, Inc. and ALPS Fund Services, Inc. (“SS&C”), as sub-administrator, to perform administrative services necessary for the Company's operations.

The Company is a specialty finance company focused on investing in companies in highly complex and highly regulated industries typically underserved by other capital providers, including investing across the cannabis ecosystem through investments in the form of direct loans to privately held cannabis companies. Although the Company focuses on investments in the cannabis industry, the Company may also invest in growth and technology companies, esoteric and asset-based lending opportunities, and liquidity solutions opportunities.

The Company’s investment objective is to maximize risk-adjusted returns on equity for its shareholders. The Company seeks to capitalize on, among other things, what it believes to be nascent cannabis industry growth, and drive return on equity by generating current income from its debt investments and capital appreciation from its equity and equity-related investments. The Company intends to achieve its investment objective by investing primarily in secured debt, unsecured debt, equity warrants and direct equity investments in privately held businesses. The Company intends that its debt investments will often be secured by either a first or second priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and will generally have a term of between three and six years from the original investment date.

On October 1, 2024, the Company completed its previously announced acquisition of a portfolio of loans (the “Loan Portfolio”) from Chicago Atlantic Loan Portfolio, LLC ("CALP") in exchange for newly issued shares of the Company’s common stock (the “Loan Portfolio Acquisition”), pursuant to the Purchase Agreement, dated as of February 18, 2024, between the Company and CALP (the “Loan Portfolio Acquisition Agreement”). In accordance with the terms of the Loan Portfolio Acquisition Agreement, at the effective time of the Loan Portfolio Acquisition, the Company issued 16,605,372 shares of its common stock to CALP in exchange for the Loan Portfolio, which was determined by the Company to have a fair value of $ 219,621,125 as of September 28, 2024.

On October 1, 2024, the Adviser and Chicago Atlantic BDC Holdings, LLC (together with its affiliates, “Chicago Atlantic”), the investment adviser of CALP, consummated a previously announced transaction pursuant to which a joint venture between Chicago Atlantic and the Adviser was created to combine and jointly operate the Adviser’s, and a portion of Chicago Atlantic’s, investment management businesses (the “Joint Venture”).

In connection with the Loan Portfolio Acquisition and the Joint Venture, the Company was renamed “Chicago Atlantic BDC, Inc.,” and its ticker symbol was changed to “LIEN,” and the Adviser was renamed “Chicago Atlantic BDC Advisers, LLC.” The changes to the Company’s name and ticker symbol became effective in the market at the open of business on October 2, 2024.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company is an investment company following the accounting and reporting requirements set forth in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies ( "ASC 946" ) and Articles 6 and 12 of Regulation S-X. The financial statements reflect all adjustments and reclassification that, in the opinion of management, are necessary for the fair presentation of results of operations and financial condition as of and for the periods presented.

Consolidation

As provided under ASC 946, the Company will not consolidate its investment in a portfolio company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. An investment company’s interests in portfolio companies that are not investment companies are measured at fair value in accordance with ASC 946.

Reclassifications

Certain reclassifications have been made in the presentation of prior year financial statements and accompanying notes to conform to the current year presentation.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions affecting reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income, expenses, and gains and losses during the reported period. These estimates are based on the information that is currently available to the Company and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ materially from those estimates under different assumptions and conditions.

Cash and Cash Equivalents

Cash and cash equivalents consists of funds deposited with financial institutions and short-term (maturity of 90 days or less) liquid investments and money market funds. Funds held in money market funds are considered Level 1 in the fair value hierarchy in accordance with ASC 820, Fair Value Measurement ( " ASC 820"). Cash held in demand deposit accounts may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit. The Company has not incurred any losses on these accounts, and the credit risk exposure is mitigated by the financial strength of the banking institution where the accounts are held. As of December 31, 2025 and December 31, 2024, cash and cash equivalents consisted of $ 2.9 million and $ 23.9 million, respectively, all of which are held with high credit quality financial institutions, which are members of the FDIC.

Investment Transactions

Investment transactions are recorded on the trade date. Realized gains or losses are recognized as the difference between the net proceeds received (excluding prepayment fees, if any) and the amortized cost basis of the investment using the specific identification method without regard to unrealized gains or losses previously recognized, and include investments written off during the period, net of recoveries. Current-period changes in the fair value of investments are reflected as a component of the net change in unrealized appreciation (depreciation) from investments on the Statements of Operations. The net change in unrealized appreciation (depreciation) primarily reflects the change in fair value of investments as of the last business day of the reporting period, including the reversal of previously recorded unrealized gains or losses with respect to investments realized during the period.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

Investments traded but not yet settled, if any, are reported in payable for investments purchased and receivable for investments sold on the Statements of Assets and Liabilities.

Investment Valuation

The Company’s investments are recorded at their fair value on the Statements of Assets and Liabilities.

Investments for which market quotations are readily available will typically be valued at the bid price of those market quotations. To validate market quotations, the Adviser utilizes a number of factors to determine if the quotations are representative of fair value, including the source and number of the quotations. Debt and equity securities that are not publicly traded or whose market prices are not readily available are valued at fair value as determined in good faith by the Adviser, as the Company’s valuation designee (the “Valuation Designee”), based on inputs that may include valuations, or ranges of valuations, provided by independent third-party valuation firm(s) engaged by the Adviser. Generally, the valuation approach used for debt investments is the income approach. The approach derives a value based on either determining the present value of a projected level of cash flow, including a terminal value, or by the capitalization of a normalized measure of future cash flow. The discounted cash flow (“DCF”) method, one of the methodologies under the income approach, involves estimating future cash flows under various scenarios and discounting them to the measurement date. The discount rate represents a return required by a market participant in order to make an investment in the subject company.

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

The asset approach provides an indication of the portfolio company’s value by developing a valuation-based balance sheet. This approach requires adjusting the historical assets and liabilities listed on the U.S. GAAP-based balance sheet to estimated fair values. The excess of assets over liabilities represents the tangible value of the business enterprise. The asset approach does not consider the relevant earnings capacity of a going concern business.

Pursuant to Rule 2a-5 under the 1940 Act, the Board of Directors of the Company (the "Board") designated the Adviser as the Valuation Designee to perform the fair value determinations for the Company, subject to the oversight of the Board and certain Board reporting and other requirements.

As part of the valuation process, the Adviser takes into account relevant factors in determining the fair value of our investments, including: the estimated enterprise value of a portfolio company (i.e., the total fair value of the portfolio company’s debt and equity), the nature and realizable value of any collateral, the portfolio company’s ability to make payments based on its earnings and cash flow, the markets in which the portfolio company does business, a comparison of the portfolio company’s securities to any similar publicly traded securities, and overall changes in the interest rate environment and the credit markets. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, the Adviser considers whether the pricing indicated by the external event corroborates its valuation.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

The Adviser undertakes a multi-step valuation process, which includes, among other procedures, the following:

With respect to investments for which market quotations are readily available, those investments will typically be valued at the bid price of those market quotations;

With respect to investments for which market quotations are not readily available, the valuation process begins with the Adviser’s valuation committee establishing a preliminary valuation of each investment, which may be based on valuations, or ranges of valuations, provided by independent valuation firm(s);

Preliminary valuations are documented and discussed by the Adviser’s valuation committee and, where appropriate, the independent valuation firm(s); and

The Adviser determines the fair value of each investment.

The Adviser conducts this valuation process on a quarterly basis.

The Adviser applies ASC 820, which establishes a framework for measuring fair value in accordance with U.S. GAAP and required disclosures of fair value measurements. ASC 820 determines fair value is the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. Market participants are defined as buyers and sellers in the principal or most advantageous market (which may be a hypothetical market) that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820, the Adviser considers the principal market to be the market that has the greatest volume and level of activity. The Adviser applies a fair value hierarchy that prioritizes and ranks the level of observability of inputs used in determination of fair value. In accordance with ASC 820, these levels are summarized below:

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access at the measurement date;

Level 2 – Valuations based on quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or for which all significant inputs are observable, either directly or indirectly; and

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of such investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that may ultimately be realized. Further, such investments are generally less liquid than publicly traded securities and may be subject to contractual and other restrictions on resale. If we were required to liquidate a portfolio investment in a forced or liquidation sale, it could realize amounts that are different from the amounts presented and such differences could be material. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected previously.

Preferred Stock and Warrants

The Company may be issued preferred stock or warrants by portfolio companies as yield enhancements in connection with a related debt investment. Preferred stock or warrants are recorded as assets at fair value on the grant date. The Adviser determines the cost basis of these equity investments received based upon their respective fair values on the date of receipt in proportion to the total fair value of the debt and equity received.

The Adviser generally utilizes the market approach to estimate the fair value of preferred stock as of the measurement date. As part of its application of the market approach, the Company estimates the enterprise value of a portfolio company utilizing customary pricing multiples, which may include EBITDA multiples, revenue multiples or asset multiples, based on the development stage of the underlying issuers, that are assessed to be indicative of fair value of the respective portfolio company.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

Depending on the facts and circumstances, the Adviser generally utilizes the market approach or a Black-Scholes pricing model to estimate the fair value of warrants as of the measurement date. As part of its application of the market approach, the Adviser estimates the enterprise value of a portfolio company utilizing customary pricing multiples, which may include EBITDA multiples, revenue multiples or asset multiples, based on the development stage of the underlying issuers, that are assessed to be indicative of fair value of the respective portfolio company. When appropriate the Black-Scholes pricing model is used to estimate the fair value of warrants for accounting purposes. This model requires the use of highly subjective inputs including expected volatility and expected life, in addition to variables for the valuation of equity positions in private companies. Significant changes in any of these unobservable inputs may result in a significantly higher or lower fair value estimate.

Earnings per share

Basic earnings per share is computed by dividing net increase (decrease) in net assets resulting from operations by the weighted-average number of common shares outstanding for the period. Other potentially dilutive common shares, and the related impact to earnings are considered when calculating earnings per share on a diluted basis using the treasury stock method.

Revenue Recognition

Interest Income

Interest income is recorded on an accrual basis and includes accretion and amortization of discounts or premiums, respectively. Discounts and premiums to par value on securities purchased are accreted and amortized, respectively, into interest income over the contractual life of the respective security using the effective yield method. The amortized cost of investments includes the original cost adjusted for the accretion and amortization of discounts and premiums, respectively. Upon prepayment of a loan or debt security, any prepayment premiums and unamortized discounts or premiums are recorded as interest income.

Certain investments may have contractual payment-in-kind ("PIK") interest or dividends. PIK interest or dividends represents accrued interest or dividends that is added to the principal amount of the investment on the respective interest or dividend payment dates rather than being paid in cash and generally becomes due at maturity.

Dividend Income

Dividend income on preferred equity securities is recorded on the accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

Fee Income

All transaction fees earned in connection with our investments are recognized as fee income and are generally non-recurring. Such fees typically include fees for services, including administrative, structuring (including with respect to amendments) and advisory services, provided to portfolio companies. We recognize income from fees for providing such structuring and advisory services when the services are rendered or the transactions are completed, and payment is received (generally immediately).

Non-Accrual Policy

When a debt security becomes 90 days or more past due, or if management otherwise does not expect that principal, interest, and other obligations due will be collected in full, the Company will generally place the debt security on non-accrual status and cease recognizing interest income on that debt security until all principal and interest due has been paid or the Company believes the borrower has demonstrated the ability to repay its current and future contractual obligations. Any interest receivable is reversed from income in the period that a loan is placed on non-accrual status. However, the Company may make exceptions to this policy if the investment has sufficient collateral value and is in the process of collection. If PIK interest or dividends are not expected to be realized by the Company, the investment generating PIK interest or dividends will be placed on non-accrual status. When an investment with PIK is placed on

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

non-accrual status, the accrued, uncapitalized interest or dividends are generally reversed through interest or dividend income, respectively. As of December 31, 2025 and December 31, 2024 , there were no investments placed on non-accrual status.

Unearned Revenue

The Company utilizes interest reserves on certain loans which are applied to future interest payments. Such reserves are established at the time of loan origination. The interest reserve is recorded as a liability as it represents unearned interest revenue. The interest reserve is relieved when the interest on the loan is earned, and interest income is recorded in the period when the interest is earned in accordance with the credit agreement. The interest payment is deducted from the interest reserve deposit balance on the date when the interest payment is due.

The decision to establish an interest reserve is made during the underwriting process and considers the creditworthiness and expertise of the borrower, and the debt coverage provided by the pledged collateral. It is the Company’s policy to recognize income for this interest component as long as the subject loan is performing as originally projected and if there has been no deterioration in the financial condition of the borrower. The Company’s standard accounting policies for interest income recognition are applied to all loans, including those with interest reserves. As of December 31, 2025 and December 31, 2024, the Company recorded $ 23,514 and $ 37,752 , respectively, of prepaid interest reserves, which are presented as unearned interest income on the Statements of Assets and Liabilities.

Income Taxes

The Company adopted an initial tax year end of December 31, 2021 and was taxed as a corporation for U.S. federal income tax purposes for the tax period ended December 31, 2021. The Company adopted the tax year end of March 31 and elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code for the tax period January 1, 2022 through March 31, 2022 and in subsequent years. The Company intends to maintain such election in the current and future taxable years. To maintain its tax treatment as a RIC, the Company must meet specified source-of-income and asset diversification requirements and timely distribute to its stockholders for each taxable year at least 90 % of its investment company taxable income. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98 % of its net ordinary income for the calendar year, (ii) 98.2 % of its capital gains in excess of capital losses for the one-year period ending on October 31 of the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion (subject to the requirement to distribute 90 % of its investment company taxable income as described above), may carry forward taxable income in excess of calendar year dividends and pay a 4 % nondeductible U.S. federal excise tax on this income. If the Company chooses to do so, this generally would increase expenses and reduce the amount available to be distributed to stockholders.

For the years ended December 31, 2025, 2024 and 2023 , the Company accrued $ 72,406 , $ 120,024 and $ 10,655 , respectively, of excise taxes. As of December 31, 2025 and December 31, 2024 , $ 69,609 and $ 88,709 , respectively, of accrued excise taxes remained payable.

During the year ended December 31, 2025, the Company determined that it had overpaid its estimated federal excise tax liability for the prior fiscal year by $ 23,850 . This overpayment resulted in an excise tax receivable and is included in prepaid expenses and other assets on the Statements of Assets and Liabilities. The Company has evaluated the realizability of the deferred tax asset and believes it is more likely than not that the benefit will be realized in future periods through either a refund or application against future excise tax liabilities. Accordingly, no valuation allowance has been recorded against this deferred tax asset.

The Company evaluates tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority in accordance with ASC Topic 740, Income Taxes (“ASC 740”). Tax benefits of positions not deemed to meet the more-likely-than-not threshold, or uncertain tax positions, would be recorded as tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

Based on the analysis of the Company’s tax position, the Company had no uncertain tax positions that met the recognition or measurement criteria as of December 31, 2025 and December 31, 2024. The Company does not anticipate any significant increase or decrease in unrecognized tax benefits for the next twelve months. The Company identifies its major tax jurisdiction as the United States. As of December 31, 2025 , the tax years that remain subject to examination by the Internal Revenue Service are from 2022 (commencement of operations) forward.

Distributions

Distributions to common stockholders are recorded on the record date. The amount of taxable income to be paid out as a distribution is determined by our Board on a quarterly basis and is generally based upon the future taxable income estimated by management. Capital gains, if any, are distributed at least annually, although the Company may decide to retain all or some of those capital gains for investment and pay U.S. federal income tax at corporate rates on those retained amounts. If the Company chooses to do so, this generally will increase expenses and reduce the amount available to be distributed to stockholders. Our distributions may exceed our earnings, and therefore, portions of the distributions that we make may be a return of the money originally invested and represent a return of capital distribution to shareholders for tax purposes.

Offering Costs

These costs consist primarily of legal fees and other costs incurred in connection with issuances of the Company’s common stock, including the preparation of the Company’s registration statement, registration fees, transfer agent expenses, and other expenses relating to the offering. Offering costs are capitalized as deferred offering costs and, if any, are included in prepaid expenses and other assets on the Statements of Assets and Liabilities. As of December 31, 2025 and December 31, 2024 , deferred offering costs were $ 151,284 and $ 49,998 , respectively.

The deferred offering costs were charged to capital upon the issuance of shares subsequent to the completion of the Loan Portfolio Acquisition. For the years ended December 31, 2025, 2024, and 2023 , $ 0 , $ 1,214,375 , and $ 0 respectively, of offering costs were charged to capital. As of December 31, 2025 and December 31, 2024, there were $ 0 and $ 989,645 , respectively, of offering costs that remained payable by the Company.

Transaction expenses related to the Loan Portfolio Acquisition

For the years ended December 31, 2025, 2024 and 2023, the Company incurred transaction expenses related to the Loan Portfolio Acquisition of $ 0 , $ 5,341,779 and $ 711,264 , respectively. As of December 31, 2025 and December 31, 2024, $ 0 and $ 2,945,125 , respectively, of transaction expenses related to the Loan Portfolio Acquisition remained payable, and are included in transaction fees payable on the Statements of Assets and Liabilities.

Deferred Financing Costs

Deferred financing costs consist of origination expenses incurred in connection with the closing, or anticipated closing, of a credit facility, and include legal, accounting, and other related expenses. These costs are deferred and amortized as interest expense using the straight-line method over the term of the applicable credit facility. In addition to origination expenses, the Company pays an annual upfront fee related to its credit facility. These fees are deferred and amortized as interest expense using the straight-line method over a one-year term. Deferred financing costs are included in prepaid expenses and other assets on the Statements of Assets and Liabilities. As of December 31, 2025 and December 31, 2024, deferred financing costs payable were $ 0 and $ 47,881 , respectively.

New Accounting Standards

On January 1, 2025 , the Company adopted Accounting Standards Update ("ASU") No. 2023-09 , Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, greater disaggregation of information in the income tax rate reconciliation and for paid income taxes to be disaggregated by jurisdiction. This ASU affects financial statement disclosure only. The Company adopted ASU 2023-09 on a prospective basis and concluded that the application of the guidance did no t have any material impact on its financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU No. 2024-03 requires disaggregated disclosure of

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

certain costs and expenses, including purchase of inventory, employee compensation, depreciation, amortization and depletion, within relevant income statement captions. ASU 2024-03 is effective for annual years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption and retrospective application are permitted. The Company is currently evaluating the impact of adopting ASU No. 2024-03.

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, equity investments and derivative investments.

In the tables presented below for the Company’s debt investments, 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 portfolio investments by investment type as of December 31, 2025 and December 31, 2024.

As of December 31, 2025

Investment Type

Principal

Balance

Percentage

at Principal

Balance

Amortized

Cost

Percentage at

Amortized

Cost

Fair

Value

Percentage

at Fair

Value

First Lien Senior Secured Loans

Senior Secured Notes

Second Lien Senior Secured Loans

Warrants

Preferred Stock

Total

As of December 31, 2024

Investment Type

Principal

Balance

Percentage

at Principal

Balance

Amortized

Cost

Percentage at

Amortized

Cost

Fair

Value

Percentage

at Fair

Value

First Lien Senior Secured Loans

Senior Secured Notes

Preferred Stock

Warrants

Total

The following tables summarize the composition of the Company’s debt portfolio based on rate characteristics as of December 31, 2025 and December 31, 2024.

As of December 31, 2025

Rate Type

Principal

Balance

Amortized

Cost

Fair

Value

Time to

Maturity

Fixed-rate debt

2.7  years

Floating-rate debt (SOFR)

2.5  years

Floating-rate debt (PRIME)

2.0  years

Total Debt Instruments

2.3  years

As of December 31, 2024

Rate Type

Principal

Balance

Amortized

Cost

Fair

Value

Time to

Maturity

Fixed-rate debt

2.6  years

Floating-rate debt (SOFR)

1.5  years

Floating-rate debt (PRIME)

1.8  years

Total Debt Instruments

1.9  years

The Company’s portfolio investments are primarily in companies conducting business in or supporting the cannabis industry. The Company uses the North American Industry Classification System ("NAICS") for classifying the industry groupings of its portfolio companies, excluding any portfolio company operating in the cannabis industry.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

The following tables summarize the composition of the Company’s portfolio investments by industry as of December 31, 2025 and December 31, 2024.

As of December 31, 2025

Industry

Amortized

Cost

Percentage at

Amortized

Cost

Fair

Value

Percentage at

Fair Value

Cannabis

Finance and Insurance

Information

Public Administration

Retail Trade

Manufacturing

Educational Services

Administrative and Support and Waste Management and Remediation Services

Real Estate and Rental and Leasing

Total

As of December 31, 2024

Industry

Amortized

Cost

Percentage at

Amortized

Cost

Fair

Value

Percentage at

Fair Value

Cannabis

Finance and Insurance

Information

Public Administration

Retail Trade

Health Care and Social Assistance

Real Estate and Rental and Leasing

Total

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 of ND, SD, NE, KS, MO, IA, MN, WI, MI, IL, IN and OH; Northeast, for the states of 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, 2025 and December 31, 2024.

As of December 31, 2025

Geographic Region

Amortized

Cost

Percentage at

Amortized

Cost

Fair

Value

Percentage

at Fair

Value

United States:

Midwest

Northeast

West

Southeast

Southwest

International:

Canada

Total

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

As of December 31, 2024

Geographic Region

Amortized

Cost

Percentage at

Amortized

Cost

Fair

Value

Percentage

at Fair

Value

United States:

Midwest

West

Northeast

Southwest

Southeast

International:

Canada

Total

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, government 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 includes 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;

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

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, 2025 and December 31, 2024 , we had three portfolio companies that represented 31.8 % and 45.1 % , respectively, of the fair values of our portfolio. As of December 31, 2025 and December 31, 2024, our largest portfolio company represented 15.7 % and 18.9 % , 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.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

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 its 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.

NOTE 4 — FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820 defines fair value, establishes a framework for measuring fair value, and establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. The Company accounts for its investments at fair value. As of December 31, 2025 and December 31, 2024, the Company’s portfolio investments consisted primarily of investments in senior secured loans and secured notes. The fair value amounts have been measured as of the reporting date and have not been reevaluated or updated for purposes of these financial statements subsequent to that date. As such, the fair values of these financial instruments subsequent to the reporting date may be different than amounts reported.

The fair value determination of each portfolio investment categorized as Level 3 required the use of one or more unobservable inputs.

The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s debt investments may vary and may include debt investments’ yield (i.e. discount rate). The significant unobservable inputs used in the fair value measurement of the Company’s equity and warrant investments may vary and may include EBITDA multiples, revenue multiples and asset multiples.

The Company’s investments measured at fair value by investment type on a recurring basis as of December 31, 2025 and December 31, 2024 were as follows:

Fair Value Measurements at December 31, 2025 Using

Investment Type

Quoted

Prices

in Active

Markets for

Identical

Assets

(Level 1)

Significant

Other

Observable

Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

Total

First Lien Senior Secured Loans

Senior Secured Notes

Second Lien Senior Secured Loans

Warrants

Preferred Stock

Total

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

Fair Value Measurements at December 31, 2024 Using

Investment Type

Quoted

Prices

in Active

Markets for

Identical

Assets

(Level 1)

Significant

Other

Observable

Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

Total

First Lien Senior Secured Loans

Senior Secured Notes

Preferred Stock

Warrants

Total

The following tables provide a summary of the significant unobservable inputs used to fair value the Level 3 portfolio investments as of December 31, 2025 and December 31, 2024. The methodology for the determination of the fair value of the Company’s investments is discussed in “Note 2 – Significant Accounting Policies”. Discount rate ranges are shown as spread over the U.S. Prime Rate ("PRIME"), Secured Overnight Financing Rate ("SOFR") and/or U.S. Treasury Rates, as applicable, for senior secured first lien term loans, as of December 31, 2025 and December 31, 2024.

Investment Type

Fair Value

December 31,

Valuation

Techniques/

Methodologies

Unobservable

Input

Range

Weighted

Average (1)

First Lien Senior Secured Loans

Discounted Cash Flow

Discount Rate

First Lien Senior Secured Loans

Recent Transaction

Senior Secured Notes

Discounted Cash Flow

Discount Rate

Second Lien Senior Secured Loans

Discounted Cash Flow

Discount Rate

Warrants

Enterprise Value

Revenue Multiple

Preferred Stock

Market Approach

Current Value

Warrants

Option Pricing Model

Volatility Factor

Total

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

Investment Type

Fair Value

December 31,

Valuation

Techniques/

Methodologies

Unobservable

Input

Range

Weighted

Average (1)

First Lien Senior Secured Loans

Discounted Cash Flow

Discount Rate

Senior Secured Notes

Discounted Cash Flow

Discount Rate

Preferred Stock

Market Approach

Current Value

Warrants

Option Pricing Model

Volatility Factor

Total

The weighted average is calculated based on the fair value of each investment.

Significant increases (decreases) in discount rate in isolation would result in a significantly lower (higher) fair value assessment. Significant increases (decreases) in volatility in isolation would result in a significantly lower (higher) fair value assessment.

The following tables provide a summary of changes in the fair value of the Company’s Level 3 portfolio investments for the year ended December 31, 2025 and 2024:

First Lien

Senior Secured

Loans

Senior

Secured Notes

Second Lien Senior Secured Loans

Preferred

Stock

Warrants

Total

Fair Value as of December 31, 2024

Purchases

Accretion of discount and fees (amortization

of premium), net

PIK interest

Proceeds from sales of investments and

principal repayments

Net realized gain (loss) on investments

Net change in unrealized appreciation

(depreciation) on investments

Transfers between investment types

Balance as of December 31, 2025

Net change in unrealized  appreciation/depreciation on

Level 3 investments still held as of

December 31, 2025

First Lien

Senior

Secured

Loans

Senior

Secured

Notes

Preferred

Stock

Warrants

Total

Fair Value as of December 31, 2023

Purchases

Accretion of discount and fees

(amortization of premium), net

PIK interest

Proceeds from sales of investments and

principal repayments

Net realized gain (loss) on investments

Net change in unrealized appreciation

(depreciation) on investments

Balance as of December 31, 2024

Net change in unrealized  appreciation/depreciation on

Level 3 investments still held as of

December 31, 2024

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

NOTE 5 – DEBT

Revolving Line of Credit

On February 11, 2025, the Company entered into a senior secured revolving credit agreement (the “Credit Agreement” or the "Revolving Line of Credit") by and among the Company, as borrower, Western Alliance Trust Company, N.A. (“WATC”), as administrative agent, Western Alliance Bank, as an issuing bank and as the initial lender, and the other lenders party thereto from time to time.

Under the Credit Agreement, the lenders have agreed to extend credit to the Company on a revolving basis in an initial aggregate amount of up to $ 100,000,000 with an option for the Company to request additional commitments, in a minimum amount of $ 5,000,000 , at one or more times from existing and/or new lenders. The Credit Agreement also provides for the issuance of letters of credit in an aggregate face amount of up to $ 5,000,000 .

Availability under the Credit Agreement (the “Revolving Period”) will terminate on February 11, 2027, and the Credit Agreement has a scheduled maturity date of March 31, 2028.

Borrowings under the Credit Agreement bear interest at the annual rate of one-month term SOFR plus 3.00 %, subject to a minimum interest rate of 6.00 %, with the all in interest rate on outstanding borrowings under the Revolving Line of Credit as of December 31, 2025 equal to 6.72 %. The Company will pay a commitment fee of 0.50 % per annum on the average daily unused portion of commitments under the Credit Agreement during the Revolving Period. For the years ended December 31, 2025, 2024 and 2023, the company recorded $ 435,792 , $ 0 , and $ 0 respectively, of commitment fees which are included in interest expense on the Statements of Operations. The Company will also be required to pay letter of credit participation fees and a fronting fee on the average daily amount of the lenders’ exposure with respect to any letters of credit issued at the request of the Company under the Credit Agreement.

The Company incurred $ 1,154,310 of financing costs in connection with the origination of the Revolving Line of Credit. As of December 31, 2025 and 2024, $ 525,324 and $ 47,881 , respectively, o f deferred financing costs were included in prepaid expenses and other assets on the Statements of Assets and Liabilities. For the years ended December 31, 2025, 2024 and 2023, $ 628,985 , $ 0 , and $ 0 respectively, of such costs were amortized and included in interest expense on the Statements of Operations.

As of December 31, 2025 , the Company had $ 25,000,000 in outstanding borrowings on the Revolving Line of Credit. The Revolving Line of Credit includes customary affirmative and negative covenants, including certain limitations on the incurrence of additional indebtedness and liens, as well as usual and customary events of default for revolving credit facilities of this nature. The Revolving Line of Credit is secured by all of the Company's assets pledged as collateral.

The fair value of the Revolving Line of Credit is equal to its carrying value because the revolver is a floating rate facility that reprices to a market rate frequently. The fair value is categorized as Level 2 under ASC 820.

The following table presents the components of interest expense for the following periods:

For the Years Ended December 31,

Commitment fee

Amortization of deferred financing costs

Interest expense

Total interest expense

Average interest rate

Average daily borrowings

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Notes to Financial Statements

Senior Securities

Information about our senior securities is shown in the following table as of December 31, 2025 (in thousands except for per unit data).

Class and Period

Total Amount Outstanding Exclusive of Treasury Securities (1)

Asset Coverage Per Unit (2)

Involuntary Liquidating Preference Per Unit (3)

Average Market Value Per Unit (4)

Revolving Credit Facility

December 31, 2025

(1) Total amount of each class of senior securities outstanding at the end of the period presented.

(2) Asset coverage per unit is the ratio of the carrying value of our total assets, less all liabilities excluding indebtedness represented by senior securities in this table, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $ 1,000 of indebtedness and is calculated on a consolidated basis.

(3) The amount to which such class of senior security would be entitled upon our involuntary liquidation in preference to any security junior to it. The “-” in this column indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.

(4) Not applicable because the senior securities are not registered for public trading.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

NOTE 6 — RELATED PARTY TRANSACTIONS

Investment Advisory Agreement

Pursuant to the investment advisory agreement between the Company and the Adviser (the “Investment Advisory Agreement”), fees payable to the Adviser are equal to (a) a base management fee of 1.75 % of the average value of the Company’s gross assets at the end of the two most recent quarters (i.e., total assets held before deduction of any liabilities), which includes investments acquired with the use of leverage and excludes cash and cash equivalents and (b) an incentive fee based on the Company’s performance.

The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears and equals 20 % of the Company’s “Pre-Incentive Fee Net Investment Income” for the quarter, subject to a preferred return, or “hurdle,” of 1.75 % per quarter ( 7 % annualized), and a “catch-up” feature. The second part is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Investment Advisory Agreement) and equals 20 % of the Company’s realized capital gains on a cumulative basis from inception through the end of the fiscal year, if any, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fee (the “Incentive Fee on Capital Gains”). While the Investment Advisory Agreement neither includes nor contemplates the inclusion of unrealized gains in the calculation of the Incentive Fee on Capital Gains, as required by U.S. GAAP, we accrue the Incentive Fee on Capital Gains on unrealized capital appreciation exceeding unrealized depreciation. This accrual reflects the Incentive Fee on Capital Gains that would be payable to the Adviser if the Company’s entire investment portfolio was liquidated at its fair value as of the balance sheet date even though the Adviser is not entitled to an Incentive Fee on Capital Gains with respect to unrealized capital appreciation unless and until such gains are actually realized.

The management fee is payable quarterly in arrears. For the years ended December 31, 2025, 2024 and 2023, the Company incurred management fee expenses of $ 5,452,521 , $ 1,504,239 and $ 1,013,764 , respectively. As of December 31, 2025 and December 31, 2024 , $ 1,446,470 and $ 758,362 , respectively, remained payable.

For the years ended December 31, 2025, 2024 and 2023, the Company incurred income-based incentive fee expenses of $ 8,305,705 , $ 2,327,448 and $ 1,511,253 , respectively. As of December 31, 2025 and December 31, 2024, $ 2,073,319 and $ 1,998,945 , respectively, remained payable.

For the years ended December 31, 2025, 2024 and 2023, the Company incurred capital gains incentive fee expenses of $ 41,586 , $ 34,304 and $ 87,583 , respectively. As of December 31, 2025 and December 31, 2024, $ 163,473 and $ 121,887 , respectively, remained payable.

Expense Limitation Agreement

On October 1, 2024, the Company and the Adviser entered into an expense limitation agreement (the “Expense Limitation Agreement”) pursuant to which the Adviser has agreed to cap the Company’s operating expenses (excluding base management fees, incentive fees, expenses related to the Loan Portfolio Acquisition, and litigation and indemnification expenses) at an annualized rate of 2.15 % of the Company’s net assets through the period ended September 30, 2025.

On February 14, 2025, the Board approved a clarification, as proposed by the Company and the Adviser, of the Expense Limitation Agreement, that any interest expense, fees, and other costs associated with raising debt and/or equity capital for the Company are not subject to, and do not count towards, the expense cap of 2.15 % per annum under the Expense Limitation Agreement.

The Expense Limitation Agreement expired in accordance with its terms on September 30, 2025 and was not renewed.

For the years ended December 31, 2025, 2024 and 2023, $ 1,338,202 , $ 0 , and $ 0 , respectively, of the Company’s operating expenses were waived by the Adviser pursuant to the Expense Limitation Agreement.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

Administration Agreement

Pursuant to the administration agreement between the Company and the Adviser (the “Administration Agreement”), the Company is to reimburse the Adviser for the costs and expenses incurred by the Adviser in performing its obligations, including but not limited to maintaining and keeping all books and records and providing personnel and facilities. This includes costs and expenses incurred by the Adviser in connection with the delegation of its obligations to SS&C, the sub-administrator. The Company is generally not responsible for the compensation of the Adviser’s employees or any overhead expenses. However, the Company may reimburse the Adviser for an allocable portion of the compensation paid by the Adviser to its Chief Compliance Officer ("CCO") and Chief Financial Officer ("CFO") and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs).

License Agreement

The Company has also entered into a license agreement with the Adviser pursuant to which the Adviser has agreed to grant the Company a nonexclusive, royalty-free license to use the name “Chicago Atlantic.” Under this agreement, the Company will have a right to use the “Chicago Atlantic” name, for so long as the Adviser or one of its affiliates remains the Company’s investment adviser. Other than with respect to this limited license, the Company will have no legal right to the “Chicago Atlantic” name.

Related Party Fees & Expenses

The following table summarizes the related parties fees and expenses incurred by the Company f or the years ended December 31, 2025, 2024 and 2023.

For the Years Ended December 31,

Affiliate Payments

Income-based incentive fees

Management fee

Capital gains incentive fees

Total management and incentive fees

General and administrative expenses

Waiver of general and administrative expenses

Expense limitation agreement

General and administrative expenses reimbursable to the

Adviser

Total affiliate payments

General administrative expenses reimbursable to the Adviser are included in due to affiliates on the accompanying Statements of Assets and Liabilities as of December 31, 2025 and December 31, 2024. Due to affiliates as of December 31, 2025 was $ 1,311,604 , of which $ 1,210,993 and $ 100,611 , represented general and administrative expenses reimbursable to the Adviser and amounts due to Chicago Atlantic Advisers, LLC for expenses paid on the Company's behalf, respectively. Total amounts payable to the Adviser and its affiliates as of December 31, 2024 were $ 905,129 , of which $ 820,797 and $ 84,332 , represented general and administrative expenses reimbursable to the Adviser and amounts due to Chicago Atlantic Admin, LLC, respectively.

For the year ended December 31, 2025, the Adviser voluntarily and irrevocably waived $ 658,477 of general and administrative expenses incurred by the Adviser that would have otherwise been reimbursed and payable by the Company. The expenses waived for the year ended December 31, 2025, are not subject to recoupment by the Adviser or future reimbursement by the Company. There were no waived expenses for the years ended December 31, 2024 and 2023.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

Affiliated Loan Administrative and Collateral Agent

Chicago Atlantic Admin, LLC (the “Loan Administrator”), serves as a loan administrator and collateral agent for certain loans within the Company’s investment portfolio. Among other customary responsibilities as described in each respective loan document, the Loan Administrator is responsible for: (a) the collection of interest, loan fees, and principal payments from portfolio companies, and (b) the subsequent disbursement of the allocable portion of such collections to the lender(s), including the Company. The Loan Administrator is a wholly-owned subsidiary of Chicago Atlantic Group, LP.

The Loan Administrator allocated fees to the Company amounting to $ 852,297 and $ 90,399 , recorded as Fee Income by the Company for the years ended December 31, 2025 and December 31, 2024, respectively.

The Loan Administrator allocated PIK to the Company amounting to $ 65,041 and $ 4,755 , recorded as PIK income by the Company for the years ended December 31, 2025 and December 31, 2024, respectively.

Interest and principal payments from our portfolio companies which were received by the Loan Administrator prior to December 31, 2025, but which were not remitted to the Company until after December 31, 2025, are included in due from affiliates on the Statements of Assets and Liabilities. As of December 31, 2025, the due from affiliates balance of $ 1,804,032 consists of $ 1,249,998 and $ 554,034 in interest and principal payments receivable, respectively. The amounts due from affiliates as of December 31, 2025 were collected in January 2026.

Interest and principal payments from our portfolio companies which were received by the Loan Administrator prior to December 31, 2024, but which were not remitted to the Company until after December 31, 2024, are included in due from affiliates on the Statements of Assets and Liabilities. As of December 31, 2024, the due from affiliates balance of $ 2,361,019 consists of $ 1,559,758 and $ 801,261 in interest and principal payments receivable, respectively. The amounts due from affiliates as of December 31, 2024 were collected in January 2025.

Co-Investments

From time to time, the Company may co-invest with other investment vehicles managed by its affiliates, in accordance with the Company’s co-investment exemptive order and the Adviser’s co-investment allocation policies. The Company is not obligated to provide, nor has it provided, any financial support to the other managed investment vehicles. As such, the Company’s risk is limited to the carrying value of its investment in any such co-investment. As of December 31, 2025 and December 31, 2024, $ 280,731,131 and $ 272,816,695 , respectively, of the Company’s investments were co-investments with affiliates of the Company.

Other Related Party Transactions

The Adviser was the seed investor of the Company and provided initial funding to the Company by purchasing approximately 4.5 million shares of the Company’s common stock in the Company’s initial public offering. The Adviser provided this “seed capital” to the Company for the purpose of facilitating the launch and initial operation of the Company, as opposed to for long term investment purposes. Since the Company’s initial public offering, the Adviser has transf erred a substantial portion of these shares to its members and as of December 31, 2025, held approximately 2.9 million shares of the Company’s common stock. The Adviser does not expect to hold the Company’s common stock indefinitely, and may sell the Company’s common stock, or distribute the Company’s common stock to its members ( who may, in turn, sell the Company’s common stock subject to certain holding period requirements), at a future point in time. In order for the Adviser’s sales of the shares of the Company not to be deemed to have been made “on the basis of” material nonpublic information, such sales may be made pursuant to a pre-approved trading plan that complies with Rule 10b5-1 under the Exchange Act and that may obligate the Adviser to make recurring sales of the Company’s common stock on a periodic basis. Sales of substantial amounts of the Company’s common stock, including by the Adviser, its members or other large stockholders, or the availability of such common stock for sale, could adversely affect the prevailing market prices for the Company’s common stock. If this occurs and continues for a sustained period of time, it could impair the Company’s ability to raise additional capital through the sale of securities, should the Company desire to do so.

As of December 31, 2025, the Adviser and its affiliates held approximately 14 % of the Company’s voting stock and have the ability to exert influence over all corporate actions requiring stockholder approval, including the election and

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

removal of directors, certain amendments of the Company’s charter, the Company’s ability to issue its common stock at a price below NAV per share, and the approval of any merger or other extraordinary corporate action.

During the years ended December 31, 2025 and 2024, the Adviser and certain related parties received dividend distributions from the Company relating to their shares held. Refer to “Note 8 – Common Stock” for further details on the distributions declared.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

NOTE 7 — COMMITMENTS AND CONTINGENCIES

Off-Balance Sheet Arrangements

The Company’s commitments and contingencies include unfunded commitments to extend credit, typically in the form of delayed draw term loans to the Company’s portfolio companies. A portion of these unfunded contractual commitments are generally dependent upon the portfolio company reaching certain milestones before the debt commitment becomes available. Furthermore, the Company’s credit agreements with its portfolio companies generally contain customary lending provisions that allow the Company relief from funding obligations for previously made commitments in instances where the underlying portfolio company experiences materially adverse events that affect the financial condition or business outlook of the company. Since a portion of these commitments may expire without being drawn, unfunded contractual commitments do not necessarily represent future cash requirements. As such, the Company’s disclosure of unfunded contractual commitments includes only those commitments that are available at the request of the portfolio company and are unencumbered by milestones or additional lending provisions. As of December 31, 2025 and December 31, 2024, the Company had the following unfunded commitments on existing loans:

As of December 31,

Unfunded delayed draw loan commitments

Undrawn revolver commitments

Total unfunded commitments

The Company did not have any other off-balance sheet commitments or liabilities as of December 31, 2025 or December 31, 2024. The Company will fund its unfunded commitments, if any, from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and the Revolving Line of Credit) and maintains adequate liquidity to fund its unfunded commitments through these sources.

Legal Proceedings

The Company may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to seek to impose liability on the Company in connection with the activities of its portfolio companies. As of December 31, 2025 , there were no material legal matters or material litigation pending of which the Company is aware.

NOTE 8 — COMMON STOCK

As of December 31, 2025 , 100,000,000 shares of $ 0.01 par value common stock were authorized.

Loan Portfolio Acquisition

On October 1, 2024, the Company completed its previously announced Loan Portfolio Acquisition, pursuant to the Loan Portfolio Acquisition Agreement. In accordance with the terms of the Loan Portfolio Acquisition Agreement, at the effective time of the Loan Portfolio Acquisition, the Company issued 16,605,372 shares of its common stock to CALP in exchange for the Loan Portfolio, which was determined by the Company to have a fair value of $ 219,621,125 as of September 28, 2024. Upon the closing of the Loan Portfolio Acquisition, there were 22,820,367 shares of the Company’s common stock outstanding.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

Distributions

The following table summarizes distributions declared by the Company during the year ended December 31, 2025:

Declaration Date

Type

Record Date

Payment Date

Per Share

Amount

Dividends Declared

March 14, 2025

Quarterly

March 28, 2025

April 11, 2025

May 12, 2025

Quarterly

June 27, 2025

July 11, 2025

August 14, 2025

Quarterly

September 29, 2025

October 10, 2025

November 11, 2025

Quarterly

December 31, 2025

January 15, 2026

The following table summarizes distributions declared and paid by the Company during the year ended December 31, 2024:

Declaration Date

Type

Record Date

Payment Date

Per Share

Amount

Dividends Paid

March 8, 2024

Quarterly

March 20, 2024

March 28, 2024

May 9, 2024

Quarterly

June 20, 2024

June 28, 2024

August 8, 2024

Quarterly

September 19, 2024

September 27, 2024

December 9, 2024

Quarterly

December 19, 2024

December 27, 2024

Dividend Reinvestment Plan

Prior to December 31, 2025, the Company operated an “opt out” Dividend Reinvestment Plan (“DRIP”) for its stockholders. As a result, if the Company declared a dividend, then stockholders’ cash distributions were automatically reinvested in additional shares of the Company’s common stock, unless they specifically chose to “opt out” of the DRIP so as to receive cash distributions. Stockholders who received distributions in the form of shares of the Company’s common stock generally were subject to the same U.S. federal income tax consequences as were stockholders who elected to receive their distributions in cash.

On November 26, 2025, in accordance with the terms of the DRIP and by unanimous written consent of the Company’s Board, the DRIP was terminated with an effective date of December 31, 2025. Following the termination of the DRIP, all cash dividends or distributions on the Company’s common stock with a record date for payment after December 31, 2025 will be paid in cash rather than in shares of the Company’s common stock.

During the year ended December 31, 2025, the Company issued the following shares of common stock under the DRIP:

Declaration Date

Type

Record Date

Payment Date

Shares

March 14, 2025

Quarterly

March 28, 2025

April 11, 2025

May 12, 2025

Quarterly

June 27, 2025

July 11, 2025

During the year ended December 31, 2024, the Company issued the following shares of common stock under the DRIP:

Declaration Date

Type

Record Date

Payment Date

Shares

March 8, 2024

Quarterly

March 20, 2024

March 28, 2024

May 9, 2024

Quarterly

June 20, 2024

June 28, 2024

August 8, 2024

Quarterly

September 19, 2024

September 27, 2024

December 9, 2024

Quarterly

December 19, 2024

December 27, 2024

NOTE 9 — INDEMNIFICATION

Under the Company’s organizational documents, the Company’s officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Company. In addition, in the normal course of business the Company enters into contracts that contain a variety of representations which provide general indemnifications.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

The Company’s maximum exposure under these agreements cannot be known; however, the Company expects any risk of loss to be remote.

In the normal course of business, the Company enters into contracts that provide a variety of representations and warranties, and general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.

NOTE 10 — EARNINGS PER SHARE

The following table sets forth the computation of the weighted average basic and diluted net increase (decrease) in net assets per share resulting from operations for the years ended December 31, 2025, 2024 and 2023:

For the Years ended December 31,

Net increase (decrease) in net assets resulting

from operations

Weighted Average Shares Outstanding - basic

and diluted

Net increase (decrease) in net assets resulting from

operations per share - basic and diluted

NOTE 11 — INCOME TAXES

The Company adopted a tax year end of March 31 and elected to be treated as a RIC for U.S. federal income tax purposes under Subchapter M of the Code. However, there is no guarantee that the Company will qualify to maintain its RIC status for any taxable year. As a RIC, the Company generally will not pay corporate-level income tax if it distributes to stockholders at least 90 % of its investment company taxable income (“ICTI”) (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90 % of its tax-exempt income to maintain its RIC status. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of the current year distribution into the next tax year. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI. The amount to be paid out as a distribution is determined by the Board each quarter and is based upon the annual earnings estimated by the management of the Company. To the extent the Company’s earnings fall below the amount of dividend distributions declared, however, a portion of the total amount of the Company’s distributions for the tax year may be deemed a return of capital for tax purposes to the Company’s stockholders.

The amounts and sources of distributions reported are only estimates and are not being provided for U.S. federal income tax reporting purposes. The timing and character of distributions for U.S. federal income tax purposes will be determined in accordance with the U.S. federal tax rules which may differ from U.S. GAAP. The final determination of the source of all distributions in 2025 will be made after the tax year-end and the amounts represented may be materially different from the amounts disclosed in the final Form 1099-DIV notice. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the Company’s investment performance and may be subject to change based on tax regulations.

Because federal income tax regulations differ from U.S. GAAP, distributions in accordance with tax regulations may differ from net investment income (loss) and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary in nature. Permanent differences are reclassified among the capital accounts in the financial statements to reflect their appropriate tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized in different periods for book and tax purposes. The Company had not recorded a liability for any uncertain tax positions pursuant to the provisions of ASC 740 as of December 31, 2025 and December 31, 2024.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

In the normal course of business, the Company is subject to examination by federal and certain state and local tax regulators.

For tax purposes, net realized capital losses may be carried over to offset future capital gains, if any. Funds are permitted to carry forward capital losses for an indefinite period, and such losses will retain their character as either short-term or long-term capital losses. As of March 31, 2025, the Company’s most recent tax year end, the Company had a net short-term capital loss carryforward of $ 210,767 and a net long-term capital loss carryforward of $ 74,483 , each of which may be carried forward for an indefinite period.

The Company’s taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, the final taxable income earned in each year and carried forward for distribution in the following year may be different than this estimate.

For the tax years ended March 31, 2025 and March 31, 2024, the Company reclassified for book purposes amounts arising from permanent book to tax differences primarily related to non-deductible excise tax paid.

March 31, 2025

March 31, 2024

Increase (decrease) in additional paid in capital

Increase (decrease) in distributable earnings (accumulated loss)

For income tax purposes, distributions paid to shareholders are reported as ordinary income, return of capital, long-term capital gains, or a combination thereof. The tax character of distributions paid for the nine months ended December 31, 2025 and the tax year ended March 31, 2025, were as follows:

For the tax period from April 1, 2025

through December 31, 2025

For the tax year

from April 1, 2024

through

March 31, 2025

Ordinary income

Long-term Capital Gain

Return of Capital

Total Distributions

As of March 31, 2025 and March 31, 2024, the components of distributable earnings on a tax basis detailed below differ from the amounts reflected in the Company’s Statements of Assets and Liabilities by temporary book or tax differences primarily arising from the tax treatment of organizational costs, the tax treatment of transaction expenses related to the Loan Portfolio Acquisition, and the tax treatment of uncrystallized capital gain incentive fees, and distributions payable.

March 31, 2025

March 31, 2024

Undistributed ordinary income

Net unrealized appreciation (depreciation) on investments

Capital Gain/(Loss) Carry Forwards

Other temporary differences

Total

The following table sets forth the tax cost basis and the estimated aggregate gross unrealized appreciation and depreciation from investments and cash equivalents for federal income tax purposes as of December 31, 2025 and March 31, 2025:

December 31, 2025

March 31, 2025

Tax cost of investments and cash equivalents

Unrealized appreciation

Unrealized depreciation

Net unrealized appreciation (depreciation) from investments and cash equivalents

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

NO TE 12 — FINANCIAL HIGHLIGHTS

The following presents financial highlights for the following periods:

For the Years Ended December 31,

For the period

from April 1,

2022 through

December 31, 2022*

For the period

from February 3,

2022 through

March 31, 2022

Per share data:

Net asset value at beginning of period

Net investment income (loss) (1)

Net realized and unrealized gains/(losses) on investments (1)

Net increase/(decrease) in net assets resulting from operations (1)

Offering costs  (2)

Permanent tax adjustments

Effect of shares issued

Distributions from net investment income (loss) (3)

Net asset value at end of period

Net assets at end of period

Shares outstanding at end of period

Weighted average net assets

Per share market value at end of period

Total return based on market value (4)

Total return based on net asset value (4)

Ratio/Supplemental data:

Ratio of net investment income (loss) to average net assets

Ratio of expenses to average net assets

Ratio of waived expenses to average net assets  (6)

Ratio of net expenses to average net assets

Portfolio turnover

* On November 8, 2022, our Board approved a change in our fiscal year end from March 31 to December 31.

The per share data was derived by using the weighted average shares outstanding during the periods presented.

The Adviser absorbed the cost of the sales load (i.e., underwriting discounts and commissions) incurred by the Company in connection with the initial public offering of its common stock..

The amount shown may not correspond for the period as it includes the effect of the timing of the distribution and the issuance of common stock.

Total return based on market value is based on the change in market price per share between the beginning and ending market prices per share in each period and assumes that common stock dividends are reinvested in accordance with our common stock dividend reinvestment plan. Total return based on net asset value is based upon the change in net asset value per share between the beginning and ending net asset values per share in each period and assumes that dividends are reinvested in accordance with our common stock dividend reinvestment plan. For periods less than a year, total return is not annualized.

Ratio is not annualized.

Ratio of only voluntarily waived expenses to average net asset is ( 0.22 )%.

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Chicago Atlantic BDC, Inc.

Notes to Financial Statements

NOTE 13 — SEGMENT REPORTING

The Company uses the management approach to determine reportable operating segments. The Company operates through a single operating and reporting segment with an investment objective of maximizing risk-adjusted returns on equity for its shareholders. The management approach considers the internal organization and reporting used by the Co mpany’s Chief Executive Officer, Principal Financial Officer, and Co-Chief Investment Officers, which comprise the chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The CODM assesses the performance of, and makes operating decisions for, the Company primarily based on the Company’s net increase (decrease) in net assets resulting from operations, which is reported on the Statement of Operations. In addition to numerous other factors and metrics, the CODM utilizes net increase (decrease) in net assets resulting from operation as a key metric in determining the amount of dividends to be distributed to the Company’s stockholders.

As the Company’s operations comprise of a single reporting segment, the segment assets are reflected on the accompanying Statements of Assets and Liabilities as “total assets” and the significant segment expenses are listed on the accompanying Statements of Operations.

NOTE 14 — LOAN PORTFOLIO ACQUISITION

On October 1, 2024, the Company completed its previously announced acquisition from Chicago Atlantic Loan Portfolio, LLC (“CALP”) of a portfolio of loans (the “Loan Portfolio”) in exchange for newly issued shares of the Company’s common stock (the “Loan Portfolio Acquisition”), pursuant to the Purchase Agreement, dated as of February 18, 2024, between the Company and CALP (the “Loan Portfolio Acquisition Agreement”). In accordance with the terms of the Loan Portfolio Acquisition Agreement, at the effective time of the Loan Portfolio Acquisition, the Company issued 16,605,372 shares of its common stock to CALP in exchange for the Loan Portfolio, which was determined by the Company to have a fair value of $ 219,621,125 as of September 28, 2024. Upon the closing of the Loan Portfolio Acquisition, there were 22,820,367 shares of the Company’s common stock outstanding.

The Loan Portfolio Acquisition has been accounted for as an asset acquisition by the Company, with the Loan Portfolio accounted for at fair value both at the acquisition date and prospectively. The transaction costs incurred by the Company for the asset acquisition were expensed as incurred, because the acquired assets consist of a loan portfolio that is accounted for prospectively at fair value. In addition to transaction costs, there were deferred offering costs associated with the issuance of equity securities which were capitalized and charged to capital upon the issuance of shares of the Company’s common stock concurrently with the completion of the Loan Portfolio Acquisition.

NOTE 15 — SUBSEQUENT EVENTS

The Company’s management evaluated subsequent events through the date on which the financial statements were issued. Other than the item listed below, there have been no subsequent events that occurred during such period that have required adjustment or disclosure in the financial statements.

On March 18, 2026 the Board approved a cash dividend of $ 0.34 per share. The dividend is payable on April 14, 2026 , to stockholders of record on March 30, 2026 .

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It em 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None

I tem 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

In accordance with Rules 13a-15(b) and 15d-15(b) under the Exchange Act, we, under the supervision and with the participation of our CEO and Interim CFO, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) as of the end of the period covered by this annual report on Form 10-K and determined that our disclosure controls and procedures are effective as of the end of the period covered by this annual report on Form 10- K.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Under the supervision and with the participation of management, including the CEO and Interim CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO Framework). Based on our evaluation under the framework in Internal Control—Integrated Framework (2013), management concluded that our internal control over financial reporting was effective as of December 31, 2025.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Attestation Report of the Independent Registered Public Accounting Firm

This annual report on Form 10-K does not include an attestation report of the Company’s registered public accounting firm pursuant to the rules of the SEC.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It em 9B. Other Information.

During the three months ended December 31, 2025, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”

It em 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

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Chicago Atlantic BDC, Inc.

PART III

It em 10. Directors, Executive Officers and Corporate Governance.

The information required by Item 10 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2026 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission within 120 days following the end of our fiscal year.

The Company has adopted a code of business conduct and ethics that applies to directors, officers and employees. The code of business conduct and ethics is available on the Company’s website at lien.chicagoatlantic.com /corporate-governance/documents-and-charters. The Company will report any amendments to or waivers of a required provision of the code of business conduct and ethics on the Company’s website or in a current report on Form 8-K.

The Company also maintains insider trading policies and procedures governing the purchase, sale, and/or other dispositions of the Company’s securities by directors, officers and the Company, and has implemented processes that it believes are reasonably designed to promote compliance with insider trading laws, rules, and regulations, and any listing standards applicable to the Company. A copy of the Company’s insider trading policies and procedures is filed as Exhibit 19 to this annual report on Form 10-K.

It em 11. Executive Compensation.

The information required by Item 11 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.

It em 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by Item 12 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.

It em 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by Item 13 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.

Ite m 14. Principal Accounting Fees and Services.

The information required by Item 14 is hereby incorporated by reference from our definitive Proxy Statement relating to our 2026 Annual Meeting of Stockholders, to be filed with the SEC within 120 days following the end of our fiscal year.

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Chicago Atlantic BDC, Inc.

PART IV

It em 15. Exhibits, Financial Statement Schedules.

The following financial statements of the “Company” are filed herewith:

Report of Independent Registered Public Accounting Firm

Statements of Assets and Liabilities as of December 31, 2025 and 2024

Statements of Operations for the Years Ended December 31, 2025, 2024, and 2023

Statements of Changes in Net Assets for the Years Ended December 31, 2025, 2024, and 2023

Statements of Cash Flows for the Years Ended December 31, 2025, 2024, and 2023 of this annual report on Form

Notes to Financial Statements

The following exhibits are as filed as part of this annual report on Form 10-K or hereby incorporated by reference to exhibits previously filed with the SEC:

Exhibit

Number

Description of Exhibit

Purchase Agreement by and between Silver Spike Investment Corp. and Chicago Atlantic Loan Portfolio, LLC dated as of February 18, 2024 (1)

Articles of Amendment and Restatement of the Company (2)

Articles of Amendment of the Company (3)

Second Amended and Restated Bylaws of the Company (4)

Description of Securities (5)

Credit Agreement (6)

Investment Advisory Agreement by and between the Company and Chicago Atlantic BDC Advisers, LLC (7)

WATC Custody Agreement (8)

WAB Custody Agreement (9)

Administration Agreement by and between Registrant and Chicago Atlantic BDC Advisers, LLC (10)

License Agreement by and between Registrant and Chicago Atlantic BDC Advisers, LLC (11)

Services Agreement (12)

Expense Limitation Agreement, dated October 1, 2024, between the Company and Chicago Atlantic BDC Advisers, LLC (13)

Code of Ethics of the Company *

Insider Trading Policies and Procedures of the Company (14)

Power of Attorney (included on signature page hereto)

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

Clawback Policy of Chicago Atlantic BDC, Inc (15)

Table of Contents

Chicago Atlantic BDC, Inc.

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH

Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents

Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed herewith.

Incorporated by reference to Exhibit 2.1 of the Company’s current report on Form 8-K filed on February 23, 2024.

Incorporated by reference to Exhibit 3.1 of the Company’s annual report on Form 10-K/A, filed on June 30, 2022.

Incorporated by reference to Exhibit 3.2 of the Company’s quarterly report on Form 10-Q filed on November 8, 2024.

Incorporated by reference to Exhibit 3.3 of the Company’s current report on Form 8-K, filed on December 19, 2025.

Incorporated by reference to Exhibit 4.1 of the Company’s annual report on Form 10-K/A, filed on June 30, 2022.

Incorporated by reference to Exhibit 10.1 of the Company’s current report on Form 8-K, filed on February 18, 2025.

Incorporated by reference to Exhibit 10.1 of the Company’s current report on Form 8-K filed on October 7, 2024.

Incorporated by reference to Exhibit 10.2 of the Company’s current report on Form 8-K filed on February 18, 2025.

Incorporated by reference to Exhibit 10.3 of the Company’s current report on Form 8-K filed on February 18, 2025.

Incorporated by reference to Exhibit 10.4 of the Company’s annual report on Form 10-K/A, filed on June 30, 2022.

Incorporated by reference to Exhibit 10.2 of the Company’s current report on Form 8-K filed on October 7, 2024.

Incorporated by reference to Exhibit 10.6 of the Company’s annual report on Form 10-K/A, filed on June 30, 2022.

Incorporated by reference to Exhibit 10.3 of the Company’s current report on Form 8-K filed on October 7, 2024.

Incorporated by reference to Exhibit 19.1 of the Company’s annual report on Form 10-K filed on March 31, 2025.

Incorporated by reference to Exhibit 79 of the Company’s amended annual report on Form 10-K/A filed on April 18, 2025.

It em 16. Form 10-K Summary

Not Applicable

Table of Contents

Chicago Atlantic BDC, Inc.

SIGNATU RES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CHICAGO ATLANTIC BDC, INC.

Dated: March 19, 2026

/s/ Peter Sack

Peter Sack

Chief Executive Officer

Each person whose signature appears below constitutes and appoints Peter Sack, Scott Gordon, Thomas Geoffroy and Umesh Mahajan, and each of them, such person’s true and lawful attorney-in-fact and agent, with full power of substitution and revocation, for such person and in such person’s name, place and stead, in any and all capacities, to sign one or more Annual Reports on Form 10-K for the year ended December 31, 2025, and any and all amendments thereto, and to file same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents and each of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant in the capacities indicated on March 19, 2026.

Name

Title

/s/ Scott Gordon

Director, Executive Chairman of the

Scott Gordon

Board of Directors, and Co-Chief Investment Officer

/s/ Michael W. Chorske

Director

Michael W. Chorske

/s/ Americo Da Corte

Director

Americo Da Corte

/s/ Patrick McCauley

Director

Patrick McCauley

/s/ Supurna VedBrat

Director

Supurna VedBrat

/s/ Tracey Brophy Warson

Director

Tracey Brophy Warson

/s/ Peter Sack

Chief Executive Officer

Peter Sack

(Principal Executive Officer)

/s/ Thomas Geoffroy

Interim Chief Financial Officer

Thomas Geoffroy

(Principal Financial Officer),