What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-07 compared with 2024-05-01 · 181 added, 176 removed, 484 unchanged (42% of the section changed)

38 unchanged sentences

We expect that our investment portfolio over time will consist of approximately 90.0% debt investments and 10.0% equity investments, at cost.

As of March 31, 2024, our investment portfolio was made up of approximately 90.9% debt investments and 9.1% equity investments, at cost.

As of June 30, 2024, our investment portfolio was made up of approximately 90.4% debt investments and 9.6% equity investments, at cost.

We focus on investing in lower middle market companies (which we generally define as companies with annual earnings before interest, taxes, depreciation and amortization of $3 million to $25 million) in the U.S.

22 unchanged sentences

Often, these equity investments occur in connection with our original investment, recapitalizing a business, or refinancing existing debt.

During the six months ended March 31, 2024, we invested $26.0 million in two new portfolio companies and extended $76.7 million in investments to existing portfolio companies.

In addition, we received a total of $37.2 million in combined net proceeds and principal repayments from portfolio company exits and principal repayments by existing portfolio companies during the six months ended March 31, 2024.

Our overall portfolio consisted of 51 portfolio companies as of March 31, 2024 and increased by $68.3 million at cost since September 30, 2023.

From our initial public offering in August 2001 through March 31, 2024, we have made 654 different loans to, or investments in, 275 companies for a total of approximately $2.7 billion, before giving effect to principal repayments on investments and divestitures.

During the six months ended March 31, 2024, the following significant transactions occurred:

During the nine months ended June 30, 2024, we invested $53.3 million in four new portfolio companies and extended $95.9 million in investments to existing portfolio companies.

In addition, we received a total of $123.6 million in combined net proceeds and principal repayments from portfolio company exits and principal repayments by existing portfolio companies during the nine months ended June 30, 2024.

Our overall portfolio consisted of 51 portfolio companies as of June 30, 2024 and increased by $31.0 million at cost since September 30, 2023.

From our initial public offering in August 2001 through June 30, 2024, we have made 661 different loans to, or investments in, 277 companies for a total of approximately $2.8 billion, before giving effect to principal repayments on investments and divestitures.

During the nine months ended June 30, 2024, the following significant transactions occurred:

Proprietary Investments

16 unchanged sentences

We retain a secured first lien debt investment of $ 0.3 million in Trowbridge.

• In April 2024, we invested $ 7.3 million in Total Access Elevator, LLC (“Total Access”) through secured first lien debt and common equity.

We also extended Total Access a $ 3.0 million line of credit commitment and a $ 2.5 million delayed draw term loan commitment, both of which were unfunded at close.

• In April 2024, our debt investment in Giving Home Healthcare, LLC (“Giving Home”) paid off at par for net cash proceeds of $ 29.7 million including a $ 0.9 million prepayment penalty.

We also exercised our warrant position for common equity in Giving Home, which we continue to hold, and received a $ 2.5 million distribution associated with this investment.

• In May 2024, our debt investment in Gray Matter Systems, LLC paid off at par for net cash proceeds of $ 14.0 million including a $ 0.2 million prepayment penalty.

• In May 2024, our debt investment in Pansophic Learning, Ltd.

(“Pansophic”) paid off at par for net cash proceeds of $ 33.0 million.

• In May 2024, we invested $ 20.0 million in RPM Freight Systems, LLC (“RPM”) through secured second lien debt.

We also extended RPM a $ 5.0 million delayed draw term loan commitment, which was unfunded at close.

• In May 2024, our remaining shares in Funko Acquisition Holdings, LLC (“Funko”), representing an exit of our investment and a return of our equity cost basis of $ 21 thousand and a realized gain of $ 2 thousand.

• In June 2024, we invested an additional $ 7.4 million in Workforce QA, LLC, an existing portfolio company, through secured first lien debt.

Syndicated Investments

9 unchanged sentences

When our common stock trades below net asset value (“NAV”) per common share, our ability to issue equity is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock below NAV per common share without first obtaining approval from our stockholders and our independent directors, other than through sales to our then-existing stockholders pursuant to a rights offering.

On March 31, 2024, the closing market price of our common stock was $ 10.73 per share, an 8.4 % premium to our March 31, 2024 NAV per share of $ 9.90 .

On June 30, 2024, the closing market price of our common stock was $ 23.27 per share, a 15.3 % premium to our June 30, 2024 NAV per share of $ 20.18 .

Regulatory Compliance

1 unchanged sentence

As a result, the Company’s asset coverage requirements for senior securities changed from 200% to 150%, effective April 10, 2019.

As of March 31, 2024, we had total senior securities outstanding of $379.0 million, and our asset coverage on our “senior securities representing indebtedness” was 213.4% and our asset coverage on our “senior securities that are stock” was 212.4%.

As of June 30, 2024, we had total senior securities outstanding of $333.3 million, and our asset coverage on our “senior securities representing indebtedness” was 234.6% and our asset coverage on our “senior securities that are stock” was 230.3%.

Recent Developments

Distributions

On April 9, 2024, our Board of Directors declared the following monthly distributions to common and preferred stockholders:

On July 9, 2024, our Board of Directors declared the following monthly distributions to common and preferred stockholders:

Record Date Payment Date Distribution per Common Share

April 19, 2024 April 30, 2024 $ 0.165

May 17, 2024 May 31, 2024 0.165

June 19, 2024 June 28, 2024 0.165

July 22, 2024 July 31, 2024 $ 0.165

August 21, 2024 August 30, 2024 0.165

September 20, 2024 September 30, 2024 0.165

Total for the Quarter:

Record Date Payment Date Distribution per Preferred Stock

April 22, 2024 May 3, 2024 $ 0.130208

May 23, 2024 June 5, 2024 0.130208

June 25, 2024 July 5, 2024 0.130208

July 25, 2024 August 5, 2024 $ 0.130208

August 26, 2024 September 5, 2024 0.130208

September 25, 2024 October 4, 2024 0.130208

Total for the Quarter:

1 unchanged sentence

We believe the effects of inflation on our historical results of operations and financial condition have not been significant.

During the six months ended March 31, 2024, general inflationary pressures and certain commodity price volatility have impacted our portfolio companies to varying degrees;

During the nine months ended June 30, 2024, general inflationary pressures and certain commodity price volatility have impacted our portfolio companies to varying degrees;

however, the broad based impact of these pricing changes have largely been mitigated by price adjustments without adverse sales implications, and thus, have not materially impacted our portfolio companies’ ability to service their indebtedness, including our loans.

3 unchanged sentences

RESULTS OF OPERATIONS

Comparison of the Three Months Ended March 31, 2024 to the Three Months Ended March 31, 2023

Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

Three Months Ended June 30,

2024 2023 $ Change % Change

34 unchanged sentences

Net unrealized depreciation of other

— 161 (161) NM

Net gain (loss) from investments and other 12,863 2,354 10,509 446.4

— (161) 161 (100.0)

Net gain (loss) from investments and other 6,751 208 6,543 NM

PREFERRED STOCK DIVIDENDS 88 — 88 NM

2 unchanged sentences

Investment Income

Interest income increased by 21.1% for the three months ended March 31, 2024, as compared to the prior year period.

Interest income increased by 6.3% for the three months ended June 30, 2024, as compared to the prior year period.

Generally, the level of interest income from investments is directly related to the principal balance of our interest-bearing investment portfolio outstanding during the period multiplied by the weighted-average yield.

The weighted average principal balance of our interest-bearing investment portfolio for the three months ended March 31, 2024 was $680.4 million, compared to $604.0 million for the three months ended March 31, 2023, an increase of $76.4 million, or 12.6%.

The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which increased to 14.0% for the three months ended March 31, 2024, compared to 13.1% for the three months ended March 31, 2023, inclusive of any allowances on interest receivables made during those periods.

The weighted average principal balance of our interest-bearing investment portfolio for the three months ended June 30, 2024 was $664.6 million, compared to $644.1 million for the three months ended June 30, 2023, an increase of $20.5 million, or 3.2%.

The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which increased to 13.9% for the three months ended June 30, 2024, compared to 13.6% for the three months ended June 30, 2023, inclusive of any allowances on interest receivables made during those periods.

The increase in the weighted average yield was driven mainly by increases in interest rates.

As of March 31, 2024, our loans to Edge Adhesives Holdings, Inc.

As of June 30, 2024, certain of our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc,.

and WB Xcel Holdings, LLC were on non-accrual status with a debt cost basis of $26.4 million, or 3.9% of the cost basis of all debt investments in our portfolio, and a fair value of $13.9 million, or 2.1% of the fair value of all debt investments in our portfolio.

1 unchanged sentence

was on non-accrual status with a debt cost basis of $6.1 million, or 0.9% of the cost basis of all debt investments in our portfolio, and a fair value of $2.9 million, or 0.5% of the fair value of all debt investments in our portfolio.

Other income decreased by 71.3% during the three months ended March 31, 2024, as compared to the prior year period, primarily due to decreases in success fees and dividend income.

As of March 31, 2024 and September 30, 2023, no single investment represented greater than 10% of the total investment portfolio at fair value.

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, increased $2.3 million, or 21.0%, for the three months ended March 31, 2024, as compared to the prior year period.

This increase was primarily due to a $0.9 million increase in the net base management fee earned by the Adviser and a $0.8 million increase in interest expense.

Total interest expense on borrowings and notes payable increased by $0.8 million, or 16.8%, during the three months ended March 31, 2024 driven by a shift in the composition of our debt outstanding and changes in interest rates.

Other income increased by 147.3% during the three months ended June 30, 2024, as compared to the prior year period, primarily due to increases in prepayment fees and dividend income.

As of June 30, 2024 and September 30, 2023, no single investment represented greater than 10% of the total investment portfolio at fair value.

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, increased $2.1 million, or 19.3%, for the three months ended June 30, 2024, as compared to the prior year period.

This increase was primarily due to a $1.7 million increase in the net base management fee earned by the Adviser.

Total interest expense on borrowings and notes payable decreased by $44 thousand, or 0.8%, during the three months ended June 30, 2024 driven by a shift in the composition of our debt outstanding.

Interest expense on notes payable increased by $1.1 million period over period with the issuance of our 2028 Notes in August 2023.

Interest expense on our Credit Facility decreased by $0.3 million due primarily to a decrease in the weighted average balance outstanding which was $90.3 million during the three months ended March 31, 2024, as compared to $125.8 million in the prior year period, a decrease of 28.2%.

The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding the impact of deferred financing costs, was 9.9% during the three months ended March 31, 2024, compared to 8.0% during the prior year period.

The increase in the effective interest rate was driven primarily by a $0.1 million increase in unused commitment fees during the three months ended March 31, 2024 as compared to the prior year period as well as an increase in interest rates.

The net base management fee earned by the Adviser increased by $0.9 million, or 41.7%, for the three months ended March 31, 2024, as compared to the prior year period, resulting from a decrease in credits to the base management fee from the Adviser for new deal origination fees and an increase in average total assets subject to the base management fee.

Interest expense on our Credit Facility decreased by $1.1 million due primarily to a decrease in the weighted average balance outstanding which was $76.8 million during the three months ended June 30, 2024, as compared to $154.3 million in the prior year period, a decrease of 50.2%.

The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding the impact of deferred financing costs, was 10.5% during the three months ended June 30, 2024, compared to 8.2% during the prior year period.

The increase in the effective interest rate was driven primarily by a $0.3 million increase in unused commitment fees during the three months ended June 30, 2024 as compared to the prior year period.

The net base management fee earned by the Adviser increased by $1.7 million, or 142.3%, for the three months ended June 30, 2024, as compared to the prior year period, resulting from a decrease in credits to the base management fee from the Adviser for new deal origination fees and an increase in average total assets subject to the base management fee.

The base management, loan servicing and incentive fees, and associated non-contractual, unconditional and irrevocable credits, are computed quarterly, as described under “Transactions with the Adviser” in Note 4— Related Party Transactions of the Notes to Consolidated Financial Statements and are summarized in the following table:

25 unchanged sentences

Net Realized Gain (Loss) on Investments

For the three months ended March 31, 2024, we recorded a net realized gain on investments of $0.2 million, which resulted primarily from a $0.2 million realized gain recognized on our investment in Trowbridge.

For the three months ended March 31, 2023, we recorded a net realized gain on investments of $0.4 million, which resulted primarily from a $0.5 million realized gain recognized on our investment in Imperative Holdings Corporation, partially offset by a $0.1 million realized loss recognized on the exit of our investment in Chinese Yellow Pages Company.

For the three months ended June 30, 2024, we recorded a net realized gain on investments of $1.4 million, which resulted primarily from a $1.5 million realized gain recognized on our investment in Giving Home.

For the three months ended June 30, 2023, we recorded a net realized gain on investments of $2.9 million, which resulted primarily from a $3.7 million realized gain recognized on our investment in PIC 360, LLC in June 2023, partially offset by a $0.8 million realized loss recognized on the exit of our investment in NetFortris Holdings LLC in June 2023.

Net Unrealized Appreciation (Depreciation) of Investments

During the three months ended March 31, 2024, we recorded net unrealized appreciation of investments in the aggregate amount of $10.7 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the three months ended March 31, 2024 were as follows:

Three Months Ended March 31, 2024

During the three months ended June 30, 2024, we recorded net unrealized appreciation of investments in the aggregate amount of $3.4 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the three months ended June 30, 2024 were as follows:

Three Months Ended June 30, 2024

Portfolio Company Realized Gain

2 unchanged sentences

(Appreciation)

Lonestar EMS, LLC $ — $ 5,729 $ — $ 5,729

Salt & Straw, LLC — 2,958 — 2,958

Giving Home Health Care, LLC — 2,009 — 2,009

MCG Energy Solutions, LLC — 1,381 — 1,381

Antenna Research Associates, Inc.

$ — $ 8,555 $ — $ 8,555

Springfield, Inc.

Encore Dredging Holdings, LLC — 520 — 520

Leadpoint Business Services, LLC — 510 — 510

Lonestar EMS, LLC — 1,357 — 1,357

NeoGraf Solutions, LLC — 973 — 973

Axios Industrial Group, LLC — 493 — 493

8th Avenue Food & Provisions, Inc.

Trowbridge Chicago, LLC 219 43 111 373

TNCP Intermediate HoldCo, LLC — 337 — 337

ENET Holdings, LLC — (530) — (530)

FES Resources Holdings LLC — (828) — (828)

Eegee's LLC — (833) — (833)

Edge Adhesives Holdings, Inc.

— (892) — (892)

Tailwind Smith Cooper Intermediate Corporation — 792 — 792

Quality Environmental Midco, Inc.

Sokol & Company Holdings, LLC — 514 — 514

Giving Home Health Care, LLC 1,465 (1,849) — (384)

Technical Resource Management, LLC — (879) — (879)

HH-Inspire Acquisition, Inc.

— (943) — (943)

Edge Adhesives Holdings, Inc.

— (962) — (962)

WB Xcel Holdings, LLC — (1,125) — (1,125)

Engineering Manufacturing Technologies, LLC — (3,865) — (3,865)

Other, net (<$500) (48) 282 (87) 147

$ 1,417 $ 3,523 $ (87) $ 4,853

The primary driver of net unrealized appreciation of $10.7 million for the three months ended March 31, 2024 was the improvement in the financial and operational performance of Lonestar EMS, LLC, partially offset by the decline in the financial and operational performance of WB Xcel Holdings, LLC.

During the three months ended March 31, 2023, we recorded net unrealized appreciation of investments in the aggregate amount of $1.8 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the three months ended March 31, 2023 were as follows:

Three Months Ended March 31, 2023

The primary driver of net unrealized appreciation of $3.4 million for the three months ended June 30, 2024 was the improvement in the financial and operational performance of Antenna Research Associates, Inc, partially offset by the decline in the financial and operational performance of Engineering Manufacturing Technologies, LLC.

During the three months ended June 30, 2023, we recorded net unrealized depreciation of investments in the aggregate amount of $2.6 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the three months ended June 30, 2023 were as follows:

Three Months Ended June 30, 2023

Portfolio Company Realized Gain

2 unchanged sentences

(Appreciation)

HH-Inspire Acquisition, Inc.

FES Resources Holdings LLC $ — $ 2,718 $ — $ 2,718

Defiance Integrated Technologies, Inc.

— 1,951 — 1,951

Giving Home Health Care, LLC — 1,443 — 1,443

Antenna Research Associates, Inc.

— 1,414 — 1,414

Triple H Food Processors, LLC — 509 — 509

NetFortris Holdings LLC (789) — 526 (263)

PIC 360, LLC 3,700 — (4,262) (562)

Salvo Technologies, Inc.

— (669) — (669)

PIC 360, LLC — 915 — 915

FES Resources Holdings LLC — 901 — 901

Giving Home Health Care, LLC — 742 — 742

Defiance Integrated Technologies, Inc.

MCG Energy Solutions, LLC — 563 — 563

Imperative Holdings Corporation 510 (71) — 439

Encore Dredging Holdings, LLC — (314) — (314)

Café Zupas — (318) — (318)

Sokol & Company Holdings, LLC — (337) — (337)

B+T Group Acquisition Inc.

— (1,225) — (1,225)

DKI Ventures, LLC — (561) — (561)

Engineering Manufacturing Technologies, LLC — (1,969) — (1,969)

NeoGraf Solutions, LLC — (1,957) — (1,957)

WB Xcel Holdings, LLC — (2,672) — (2,672)

1 unchanged sentence

$ 2,911 $ 1,270 $ (3,856) $ 325

The primary driver of net unrealized appreciation of $1.8 million for the three months ended March 31, 2023 was the improvement in the financial and operational performance of HH-Inspire Acquisition, Inc., partially offset by the decline in the financial and operational performance of certain of our other portfolio companies.

The primary driver of net unrealized depreciation of $2.6 million for the three months ended June 30, 2023 was the reversal of unrealized appreciation associated with our investment in PIC 360, LLC and the decline in the financial and operational performance of WB Xcel Holdings, LLC and NeoGraf Solutions, LLC, partially offset by the improvement in the financial and operational performance of FES Resources Holdings LLC and Defiance Integrated Technologies, Inc.

Net Realized Gain on Other

During the three months ended March 31, 2024 and March 31, 2023, we recorded a net realized gain on other of $1.9 million and $25 thousand, respectively.

The current period gain resulted primarily from proceeds received associated with the sale of a legacy investment and the prior period gain was associated with escrows received.

Net Unrealized Depreciation of Other

During the three months ended March 31, 2023, we recorded $0.2 million of unrealized depreciation related to a change in the fair value of our Credit Facility.

No such amounts were recorded during the three months ended March 31, 2024.

Comparison of the Six Months Ended March 31, 2024 to the Six Months Ended March 31, 2023

Six Months Ended March 31,

During the three months ended June 30, 2024 and June 30, 2023, we recorded a net realized gain on other of $1.9 million and $44 thousand, respectively.

The current period gain resulted primarily from proceeds received associated with a legacy investment and the prior period gain was associated with escrows received.

Net Unrealized Appreciation of Other

During the three months ended June 30, 2023, we recorded $0.2 million of unrealized appreciation related to a change in the fair value of our Credit Facility.

No such amounts were recorded during the three months ended June 30, 2024.

Comparison of the Nine Months Ended June 30, 2024 to the Nine Months Ended June 30, 2023

Nine Months Ended June 30,

2024 2023 $ Change % Change

34 unchanged sentences

Net unrealized depreciation of other

— 161 (161) NM

Net gain (loss) from investments and other 27,681 (465) 28,146 NM

3 unchanged sentences

Investment Income

Interest income increased by 23.1% for the six months ended March 31, 2024, as compared to the prior year period.

The weighted average principal balance of our interest-bearing investment portfolio for the six months ended March 31, 2024 was $669.0 million, compared to $596.7 million for the six months ended March 31, 2023, an increase of $72.3 million, or 12.1%.

The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which increased to 13.9% for the six months ended March 31, 2024, compared to 12.7% for the six months ended March 31, 2023, inclusive of any allowances on interest receivables made during those periods.

Interest income increased by 17.0% for the nine months ended June 30, 2024, as compared to the prior year period.

The weighted average principal balance of our interest-bearing investment portfolio for the nine months ended June 30, 2024 was $667.5 million, compared to $612.5 million for the nine months ended June 30, 2023, an increase of $55.0 million, or 9.0%.

The weighted average yield on our interest-bearing investments is based on the current stated interest rate on interest-bearing investments, which increased to 13.9% for the nine months ended June 30, 2024, compared to 13.0% for the nine months ended June 30, 2023, inclusive of any allowances on interest receivables made during those periods.

The increase in the weighted average yield was driven mainly by increases in interest rates.

As of March 31, 2024, our loans to Edge Adhesives Holdings, Inc.

As of June 30, 2024, certain of our loans to B+T Group Acquisition, Inc., Edge Adhesives Holdings, Inc.

1 unchanged sentence

Other income decreased by 73.5% during the six months ended March 31, 2024, as compared to the prior year period, primarily due to decreases in dividend income and success fees.

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, increased $3.0 million, or 14.0%, for the six months ended March 31, 2024, as compared to the prior year period.

This increase was primarily due to a $1.2 million increase in interest expense and a $1.1 million increase in the incentive fee earned by the Adviser.

Total interest expense on borrowings and notes payable increased by $1.2 million, or 12.9%, during the six months ended March 31, 2024 driven by a shift in the composition of our debt outstanding and changes in interest rates.

Other income increased by 2.7% during the nine months ended June 30, 2024, as compared to the prior year period, primarily due to an increase in prepayment fees, partially offset by decreases in dividend income and success fees.

Expenses, net of any non-contractual, unconditional and irrevocable credits to fees from the Adviser, increased $5.2 million, or 15.8%, for the nine months ended June 30, 2024, as compared to the prior year period.

This increase was primarily due to a $1.9 million increase in the net base management fee earned by the Adviser, a $1.2 million increase in interest expense, and a $1.1 million increase in the net incentive fee earned by the Adviser.

Total interest expense on borrowings and notes payable increased by $1.2 million, or 7.8%, during the nine months ended June 30, 2024 driven by a shift in the composition of our debt outstanding.

Interest expense on notes payable increased by $3.3 million period over period with the issuance of our 2028 Notes in August 2023.

Interest expense on our Credit Facility decreased by $1.0 million due primarily to a decrease in the weighted average balance outstanding which was $69.3 million during the six months ended March 31, 2024, as compared to $127.4 million in the prior year period, a decrease of 45.6%.

The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding the impact of deferred financing costs, was 10.9% during the six months ended March 31, 2024, compared to 7.5% during the prior year period.

The increase in the effective interest rate was driven primarily by a $0.4 million increase in unused commitment fees during the six months ended March 31, 2024 as compared to the prior year period as well as an increase in interest rates.

The net base management fee earned by the Adviser increased by $0.2 million, or 3.9%, for the six months ended March 31, 2024, as compared to the prior year period, resulting from an increase in average total assets subject to the base management fee, partially offset by an increase in credits to the base management fee from the Adviser period over period.

Interest expense on our Credit Facility decreased by $2.1 million due primarily to a decrease in the weighted average balance outstanding which was $71.8 million during the nine months ended June 30, 2024, as compared to $136.4 million in the prior year period, a decrease of 47.4%.

The effective interest rate on our Credit Facility, including unused commitment fees incurred, but excluding the impact of deferred financing costs, was 10.7% during the nine months ended June 30, 2024, compared to 7.7% during the prior year period.

The increase in the effective interest rate was driven primarily by a $0.7 million increase in unused commitment fees during the nine months ended June 30, 2024 as compared to the prior year period.

The net base management fee earned by the Adviser increased by $1.9 million, or 32.3%, for the nine months ended June 30, 2024, as compared to the prior year period, resulting from an increase in average total assets subject to the base management fee and a decrease in credits to the base management fee from the Adviser for new deal origination fees.

Six Months Ended

Nine Months Ended

Average total assets subject to base management fee (A)

23 unchanged sentences

Net Realized Gain (Loss) on Investments

For the six months ended March 31, 2024, we recorded a net realized gain on investments of $0.5 million, which resulted from a $0.3 million realized gain recognized on the sale of our investment in PIC 360, LLC and a $0.2 million realized gain recognized on our investment in Trowbridge.

For the six months ended March 31, 2023, we recorded a net realized gain on investments of $9.7 million, which resulted primarily from a $5.9 million realized gain recognized on the sale of our investment in Targus Cayman HoldCo, Ltd.

in October 2022 and a $4.4 million realized gain recognized on our investment in Leeds Novamark Capital I, L.P.

in November 2022.

For the nine months ended June 30, 2024, we recorded a net realized gain on investments of $1.9 million, which resulted primarily from a $1.5 million realized gain recognized on our investment in Giving Home, a $0.3 million realized gain

recognized on the sale of our investment in PIC 360, LLC, and a $0.2 million realized gain recognized on our investment in Trowbridge.

For the nine months ended June 30, 2023, we recorded a net realized gain on investments of $12.6 million, which resulted primarily from a $5.9 million realized gain recognized on the sale of our investment in Targus Cayman HoldCo, Ltd.

in October 2022, a $4.4 million realized gain recognized on our investment in Leeds Novamark Capital I, L.P.

in November 2022, and a $3.7 million realized gain recognized on our investment in PIC 360, LLC in June 2023.

Net Unrealized Appreciation (Depreciation) of Investments

During the six months ended March 31, 2024, we recorded net unrealized appreciation of investments in the aggregate amount of $18.5 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the six months ended March 31, 2024 were as follows:

Six Months Ended March 31, 2024

During the nine months ended June 30, 2024, we recorded net unrealized appreciation of investments in the aggregate amount of $21.9 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the nine months ended June 30, 2024 were as follows:

Nine Months Ended June 30, 2024

Portfolio Company Realized Gain

7 unchanged sentences

Salt & Straw, LLC — 3,132 — 3,132

Engineering Manufacturing Technologies, LLC — 1,993 — 1,993

Giving Home Health Care, LLC 1,465 (376) — 1,089

Café Zupas — 996 — 996

Encore Dredging Holdings, LLC — 856 — 856

TNCP Intermediate HoldCo, LLC — 856 — 856

8th Avenue Food & Provisions, Inc.

Café Zupas — 763 — 763

Ohio Armor Holdings, LLC — 726 — 726

Tailwind Smith Cooper Intermediate Corporation — 683 — 683

Quality Environmental Midco, Inc.

Viva Railings, L.L.C.

Sokol & Company Holdings, LLC — 650 — 650

Leadpoint Business Services, LLC — 611 — 611

OCI, LLC — 590 — 590

Ohio Armor Holdings, LLC — 555 — 555

SpaceCo Holdings, LLC — 554 — 554

Encore Dredging Holdings, LLC — 465 — 465

Canopy Safety Brands, LLC — 535 — 535

Axios Industrial Group, LLC — 450 — 450

Fix-It Group, LLC — 411 — 411

NeoGraf Solutions, LLC — 451 — 451

SpaceCo Holdings, LLC — 432 — 432

OCI, LLC — 405 — 405

Imperative Holdings Corporation — 374 — 374

Fix-It Group, LLC — 334 — 334

ALS Education, LLC — 317 — 317

DKI Ventures, LLC — (662) — (662)

Technical Resource Management, LLC — (939) — (939)

Engineering Manufacturing Technologies, LLC — (1,872) — (1,872)

Edge Adhesives Holdings, Inc.

— (1,920) — (1,920)

HH-Inspire Acquisition, Inc.

— (1,609) — (1,609)

B+T Group Acquisition Inc.

— (2,368) — (2,368)

HH-Inspire Acquisition, Inc.

— (2,552) — (2,552)

WB Xcel Holdings, LLC — (4,454) — (4,454)

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$ 1,895 $ 22,038 $ (102) $ 23,831

The primary driver of net unrealized appreciation of $18.5 million for the six months ended March 31, 2024 was the improvement in the financial and operational performance of Antenna Research Associates, Inc.

The primary driver of net unrealized appreciation of $21.9 million for the nine months ended June 30, 2024 was the improvement in the financial and operational performance of Antenna Research Associates, Inc.

and Lonestar EMS, LLC, partially offset by the decline in the financial and operational performance of FES Resources Holdings LLC and WB Xcel Holdings, LLC.

During the six months ended March 31, 2023, we recorded net unrealized depreciation of investments in the aggregate amount of $10.8 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the six months ended March 31, 2023 were as follows:

Six Months Ended March 31, 2023

During the nine months ended June 30, 2023, we recorded net unrealized depreciation of investments in the aggregate amount of $13.4 million.

The net realized gain (loss) and unrealized appreciation (depreciation) across our investments for the nine months ended June 30, 2023 were as follows:

Nine Months Ended June 30, 2023

Portfolio Company Realized Gain

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(Appreciation)

FES Resources Holdings LLC $ — $ 3,619 $ — $ 3,619

Giving Home Health Care, LLC — 2,324 — 2,324

HH-Inspire Acquisition, Inc.

— 2,439 (200) 2,239

Antenna Research Associates, Inc.

— 2,080 — 2,080

Encore Dredging Holdings, LLC — 1,508 — 1,508

PIC 360, LLC — 1,064 — 1,064

FES Resources Holdings LLC — 901 — 901

Giving Home Health Care, LLC — 881 — 881

Defiance Integrated Technologies, Inc.

— 1,492 — 1,492

Imperative Holdings Corporation 510 327 — 837

Antenna Research Associates, Inc.

Triple H Food Processors, LLC — 654 — 654

TNCP Intermediate HoldCo, LLC — 591 — 591

Circuitronics EMS Holdings LLC (921) — 921 —

PIC 360, LLC 3,700 1,064 (4,262) 502

Targus Cayman HoldCo, Ltd.

5,916 — (5,916) —

Salvo Technologies, Inc.

Circuitronics EMS Holdings LLC (921) — 921 —

NetFortris Holdings LLC (789) (206) 526 (469)

8th Avenue Food & Provisions, Inc.

— (574) — (574)

Eegee's LLC — (500) — (500)

Leeds Novamark Capital I, L.P.

4,406 37 (5,018) (575)

Ohio Armor Holdings, LLC — (548) — (548)

8th Avenue Food & Provisions, Inc.

— (666) — (666)

DKI Ventures, LLC — (1,005) — (1,005)

WB Xcel Holdings, LLC — (1,874) — (1,874)

Salvo Technologies, Inc.

— (1,131) — (1,131)

NeoGraf Solutions, LLC — (1,957) — (1,957)

Engineering Manufacturing Technologies, LLC — (2,590) — (2,590)

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— (3,643) — (3,643)

WB Xcel Holdings, LLC — (4,546) — (4,546)

Other, net (<$500) (189) (339) 385 (143)

$ 12,633 $ 144 $ (13,564) $ (787)

The primary drivers of net unrealized depreciation of $10.8 million for the six months ended March 31, 2023 were the reversal of unrealized depreciation associated with the exit of our investment in Targus Cayman HoldCo, Ltd.

and the sale of underlying assets within Leeds Novamark Capital I, L.P.

The primary drivers of net unrealized depreciation of $13.4 million for the nine months ended June 30, 2023 were the reversal of unrealized appreciation associated with the exit of our investment in Targus Cayman HoldCo, Ltd., the reversal of unrealized appreciation associated with our investment in PIC 360, LLC, and the sale of underlying assets within Leeds Novamark Capital I, L.P.

as well as the decrease in comparable transaction multiples used to estimate the fair value of certain of our other portfolio companies, and the decline in the financial and operational performance of certain of our other portfolio companies.

Net Realized Gain (Loss) on Other

During the six months ended March 31, 2024 and March 31, 2023, we recorded a net realized gain on other of $2.0 million and $0.3 million, respectively.

The current period gain resulted primarily from proceeds received associated with the sale of a legacy investment and the prior period gain was associated with escrows received.

Net Unrealized Depreciation of Other

During the six months ended March 31, 2023, we recorded $0.2 million of unrealized depreciation related to a change in the fair value of our Credit Facility.

No such amounts were recorded during the six months ended March 31, 2024.

During the nine months ended June 30, 2024 and June 30, 2023, we recorded a net realized gain on other of $3.9 million and $0.3 million, respectively.

The current period gain resulted primarily from proceeds received associated with a legacy investment and the prior period gain was associated with escrows received.

LIQUIDITY AND CAPITAL RESOURCES

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our stockholders, pay management and administrative fees to the Adviser and Administrator, and for other operating expenses.

Net cash used in operating activities for the six months ended March 31, 2024 was $45.3 million, as compared to net cash used in operating activities of $12.3 million for the six months ended March 31, 2023.

The change was primarily due to an increase in purchases of investments and an increase in unrealized appreciation of investments.

Purchases of investments were $102.7 million during the six months ended March 31, 2024, compared to $77.5 million during the six months ended March 31, 2023.

Repayments and net proceeds from sales were $39.2 million during the six months ended March 31, 2024 compared to $49.2 million during the six months ended March 31, 2023.

As of March 31, 2024, we had loans to, syndicated participations in or equity investments in 51 companies, with an aggregate cost basis of approximately $790.5 million.

Net cash provided by operating activities for the nine months ended June 30, 2024 was $8.9 million, as compared to net cash used in operating activities of $33.7 million for the nine months ended June 30, 2023.

The change was primarily due to an increase in repayments and net proceeds from sales.

Repayments and net proceeds from sales were $127.5 million during the nine months ended June 30, 2024 compared to $84.5 million during the nine months ended June 30, 2023.

As of June 30, 2024, we had loans to, syndicated participations in or equity investments in 51 companies, with an aggregate cost basis of approximately $753.3 million.

As of September 30, 2023, we had loans to, syndicated participations in or equity investments in 51 companies, with an aggregate cost basis of approximately $722.3 million.

The following table summarizes our total portfolio investment activity during the six months ended March 31, 2024 and 2023:

Six Months Ended

The following table summarizes our total portfolio investment activity during the nine months ended June 30, 2024 and 2023:

Nine Months Ended

Beginning investment portfolio, at fair value

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Net unrealized appreciation (depreciation) of investments

18,515 (1,126)

Reversal of prior period depreciation (appreciation) of investments on realization

(102) (13,564)

Net realized gain (loss) on investments

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(A) PIK interest is a non-cash source of income and is calculated at the contractual rate stated in a loan agreement and added to the principal balance of a loan.

The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of March 31, 2024:

For the remaining six months ending September 30:

The following table summarizes the contractual principal repayment and maturity of our investment portfolio by fiscal year, assuming no voluntary prepayments, as of June 30, 2024:

For the remaining three months ending September 30:

For the fiscal years ending September 30:

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Investments in equity securities 72,401

Investments held as of March 31, 2024 at cost:

(A) Includes debt investments with contractual principal amounts totaling $ 0.2 million for which the maturity date has passed as of March 31, 2024.

Investments held as of June 30, 2024 at cost:

(A) Includes debt investments with contractual principal amounts totaling $ 0.2 million for which the maturity date has passed as of June 30, 2024.

Financing Activities

Net cash provided by financing activities for the six months ended March 31, 2024 was $49.3 million, which consisted primarily of $69.4 million in net borrowings on our Credit Facility, partially offset by $21.5 million in distributions to our common stockholders.

Net cash provided by financing activities for the six months ended March 31, 2023 was $19.3 million, which consisted primarily of $24.7 million in gross proceeds from the issuance of common stock under our equity distribution agreement with Jefferies LLC and $10.8 million in net borrowings on our Credit Facility, partially offset by $15.7 million in distributions to our common stockholders.

Net cash used in financing activities for the nine months ended June 30, 2024 was $9.1 million, which consisted primarily of $32.3 million in distributions to our common stockholders, partially offset by $18.0 million in net borrowings on our Credit Facility and $5.6 million in net proceeds from sales of our Series A Preferred Stock.

Net cash provided by financing activities for the nine months ended June 30, 2023 was $33.4 million, which consisted primarily of $38.3 million in gross proceeds from the issuance of common stock under our equity distribution agreement with Jefferies LLC and $22.0 million in net borrowings on our Credit Facility, partially offset by $24.7 million in distributions to our common stockholders.

Distributions to Stockholders

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Additionally, our Credit Facility has a covenant that generally restricts the amount of distributions to stockholders that we can pay out to be no greater than our aggregate net investment income, net capital gains and amounts elected to have been paid during the prior year in accordance with Section 855(a) of the Code.

In accordance with these requirements, we paid monthly cash distributions of $0.0825 per common share for each month for the six months ended March 31, 2024.

During the six months ended March 31, 2023, we paid monthly cash distributions of $0.07 per common share for each of October, November, and December 2022, and $0.075 per common share for each of January, February, and March 2023.

These distributions totaled an aggregate of $21.5 million and $15.7 million for the six months ended March 31, 2024 and 2023, respectively.

In April 2024, our Board of Directors declared a monthly distribution of $0.165 per common share for each of April, May, and June 2024.

In accordance with these requirements, we paid monthly cash distributions that totaled $32.3 million and $24.7 million for the nine months ended June 30, 2024 and 2023, respectively.

In July 2024, our Board of Directors declared a monthly distribution of $0.165 per common share for each of July, August and September 2024.

The current dividend amount reflects the 1-for-2 reverse stock split completed on April 4, 2024.

Refer to Note 12— Subsequent Events of the notes to our Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding the 1-for-2 reverse stock split.

O ur Board of Directors declared these distributions to our stockholders based on our estimates of our Investment Company Taxable Income for the fiscal year ending September 30, 2024.

From inception through March 31, 2024, we have paid distributions to common stockholders totaling approximately $480.5 million or $23.27 per share.

Refer to Note 2— Summary of Significant Accounting Policies in the notes to our Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding the 1-for-2 reverse stock split.

Our Board of Directors declared these distributions to our stockholders based on our estimates of our Investment Company Taxable Income for the fiscal year ending September 30, 2024.

For the fiscal year ended September 30, 2023, our current and accumulated earnings and profits exceeded common stock distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $5.0 million of the first common distributions paid to common stockholders in the subsequent fiscal year as having been paid in the prior year.

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Preferred Stock Dividends

Our Board of Directors declared and we paid monthly cash dividends of $0.130208 per share to holders of our Series A Preferred Stock for January, February and March 2024.

Aggregate preferred stockholder dividends paid on our Series A Preferred Stock for the six months ended March 31, 2024 were $ 8 thousand.

Our Board of Directors declared and we paid monthly cash dividends of $0.130208 per share to holders of our Series A Preferred Stock for January through June 2024.

In July 2024, our Board of Directors declared monthly cash dividends of

$0.130208 per share to holders of our Series A Preferred Stock for each of July, August and September 2024.

Aggregate preferred stockholder dividends paid on our Series A Preferred Stock for the nine months ended June 30, 2024 were $ 96 thousand.

There was no Series A Preferred Stock issued and outstanding prior to January 2024.

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333-275934) (the “2024 Registration Statement”), which was declared effective on January 17, 2024, permits us to issue, through one or more transactions, up to an aggregate of $ 700.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities and warrants to purchase common stock or preferred stock.

As of March 31, 2024, we had the ability to issue up to $ 700.0 million in securities under the 2024 Registration Statement.

As of June 30, 2024, we had the ability to issue up to $ 700.0 million in securities under the 2024 Registration Statement.

Our shelf registration statement on Form N-2 (File No.

333-261398) (the “2021 Registration Statement”) permits us to issue, through one or more transactions, up to an aggregate of $300.0 million in securities, consisting of common stock, preferred stock, subscription rights, debt securities and warrants to purchase common stock, preferred stock or debt securities.

As of March 31, 2024, we had the ability to issue up to an additional $ 149.3 million in securities under the 2021 Registration Statement.

As of June 30, 2024, we had the ability to issue up to an additional $ 144.8 million in securities under the 2021 Registration Statement.

Refer to Note 6— Cumulative Redeemable Preferred Stock Offering of the notes to our Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding our 2021 Registration Statement.

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To the extent that our common stock trades at a market price below our NAV per share, we will generally be precluded from raising equity capital through public offerings of our common stock, other than pursuant to stockholder and independent director approval or a rights offering to existing common stockholders.

On March 31, 2024, the closing market price of our common stock was $ 10.73 per share, an 8.4 % premium to our March 31, 2024 NAV per share of $ 9.90 .

On June 30, 2024, the closing market price of our common stock was $ 23.27 per share, a 15.3 % premium to our June 30, 2024 NAV per share of $ 20.18 .

Revolving Credit Facility

On May 13, 2021, we, through Business Loan, entered into a sixth amended and restated credit agreement with KeyBank as administrative agent, lead arranger, managing agent and lender, the Adviser, as servicer, and certain other lenders party thereto (the “Credit Facility”).

As of March 31, 2024, our Credit Facility had a total commitment amount of $ 243.7 million with an “accordion” feature that permits us to increase the size of the facility to $ 350.0 million.

As of June 30, 2024, our Credit Facility had a total commitment amount of $ 268.7 million with an “accordion” feature that permits us to increase the size of the facility to $ 350.0 million.

The Credit Facility has a revolving period end date of October 31, 2025, and a final maturity date of October 31, 2027 (at which time all principal and interest will be due and payable if the Credit Facility is not extended by the revolving period end date).

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6 to the Credit Facility to increase the commitment amount from $ 233.7 million to $ 243.7 million.

On June 27, 2024, we, through Business Loan, entered into Amendment No.

7 to the Credit Facility to increase the commitment amount from $ 243.7 million to $ 268.7 million.

Interest is payable monthly during the term of our Credit Facility.

Available borrowings are subject to various constraints imposed under our Credit Facility, based on the aggregate loan balance pledged by Business Loan, which varies as loans

are added and repaid, regardless of whether such repayments are prepayments or made as contractually required.

Our Credit Facility also requires that any interest or principal payments on pledged loans be remitted directly by the borrower into a lockbox account with KeyBank and with The Bank of New York Mellon Trust Company, N.A.

Available borrowings are subject to various constraints imposed under our Credit Facility, based on the aggregate loan balance pledged by Business Loan, which varies as loans are added and repaid, regardless of whether such repayments are prepayments or made as contractually required.

Credit Facility also requires that any interest or principal payments on pledged loans be remitted directly by the borrower into a lockbox account with KeyBank and with The Bank of New York Mellon Trust Company, N.A.

as custodian.

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KeyBank is also the trustee of the account and generally remits the collected funds to us once each month.

Amounts collected in the lockbox account with KeyBank are presented as Due from administrative agent on the accompanying Consolidated Statement of Assets and Liabilities as of March 31, 2024 and September 30, 2023.

Our Credit Facility contains covenants that require Business Loan to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions), and restrict material changes to our credit and collection policies without the lenders’ consent.

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Our Credit Facility further requires Business Loan to comply with other financial and operational covenants, which obligate Business Loan to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of 25 obligors required in the borrowing base.

Additionally, we are required to maintain (i) a minimum net worth (defined in our Credit Facility to include any outstanding mandatorily redeemable preferred stock) of $ 325.0 million plus 50.0 % of all equity and subordinated debt raised after May 13, 2021 less 50 % of any equity and subordinated debt retired or redeemed after May 13, 2021, which equates to $ 409.8 million as of March 31, 2024, (ii) asset coverage with respect to “senior securities representing indebtedness” of at least 150 % (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act), and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code.

As of March 31, 2024, and as defined in our Credit Facility, we had a net worth of $ 683.3 million, asset coverage on our “senior securities representing indebtedness” of 213.4 %, calculated in accordance with the requirements of Section 18 and 61 of the 1940 Act, and an active status as a BDC and RIC.

In addition, we had 36 obligors in our Credit Facility’s borrowing base as of March 31, 2024.

As of March 31, 2024, we were in compliance with all of our Credit Facility covenants.

Additionally, we are required to maintain (i) a minimum net worth (defined in our Credit Facility to include any outstanding mandatorily redeemable preferred stock) of $ 325.0 million plus 50.0 % of all equity and subordinated debt raised after May 13, 2021 less 50 % of any equity and subordinated debt retired or redeemed after May 13, 2021, which equat es to $ 412.0 million as of June 30, 2024, (ii) asset coverage with respect to “senior securities representing indebtedness” of at least 150 % (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act), and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code.

As of June 30, 2024, and as defined in our Credit Facility, we had a net worth of $ 691.8 million, asset coverage on our “senior securities representing indebtedness” of 234.6 %, calculated in accordance with the requirements of Section 18 and 61 of the 1940 Act, and an active status as a BDC and RIC.

In addition, we had 34 obligors in our Credit Facility’s borrowing base as of June 30, 2024.

As of June 30, 2024, we were in compliance with all of our Credit Facility covenants.

Refer to Note 5— Borrowings of the notes to our Consolidated Financial Statements included elsewhere in this Quarterly Report for additional information regarding our Credit Facility.

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The 2028 Notes bear interest at a rate of 7.75 % per year.

Interest is payable quarterly on March 1, June 1, September 1, and December 1 of each year beginning December 1, 2023 (which equates to approximately $ 4.4 million per year).

Interest is payable quarterly on March 1, June 1, September 1, and December 1 of each year (which equates to approximately $ 4.4 million per year).

In November 2021, we completed a private placement of $ 50.0 million aggregate principal amount of 3.75 % Notes due 2027 (the “2027 Notes”) for net proceeds of approximately $ 48.5 million after deducting initial purchasers’ costs, commissions and offering expenses borne by us.

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In April 2022, pursuant to the registration rights agreement we entered into in connection with the 2027 Notes, we conducted an exchange offer through which we offered to exchange all of our then outstanding 2027 Notes (the “Restricted Notes”) that were issued on November 4, 2021, for an equal aggregate principal amount of our new 3.75 % Notes due 2027 (the “Exchange Notes”) that had been registered with the SEC under the Securities Act of 1933, as amended.

the Exchange Notes are identical to those of the Restricted Notes, except that the transfer restrictions and registration rights relating to the Restricted Notes do not apply to the Exchange Notes, and the Exchange Notes do not provide for the payment of additional interest in the event of a registration default.

The terms of the Exchange Notes are identical to those of the Restricted Notes, except that the transfer restrictions and registration rights

relating to the Restricted Notes do not apply to the Exchange Notes, and the Exchange Notes do not provide for the payment of additional interest in the event of a registration default.

In December 2020, we completed an offering of $ 100.0 million aggregate principal amount of 5.125 % Notes due 2026 (the “2026 Notes”) for net proceeds of approximately $ 97.7 million after deducting underwriting discounts, commissions and offering expenses borne by us.

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We generally recognize success fee income when the payment has been received.

As of March 31, 2024 and September 30, 2023, we had off-balance sheet success fee receivables on our accruing debt investments of $5.2 million and $4.0 million (or approximately $0.12 per common share and $0.09 per common share), respectively, that would be owed to us, generally upon a change of control of the portfolio companies.

As of June 30, 2024 and September 30, 2023, we had off-balance sheet success fee receivables on our accruing debt investments of $5.3 million and $4.0 million (or approximately $0.24 per common share and $0.18 per common share), respectively, that would be owed to us, generally upon a change of control of the portfolio companies.

Consistent with GAAP, we generally have not recognized our success fee receivables and related income in our Consolidated Financial Statements until earned.

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Since these commitments have expiration dates and we expect many will never be fully drawn, the total commitment amounts do not necessarily represent future cash requirements.

We estimate the fair value of the combined unused lines of credit, the unused delayed draw term loans, and the uncalled capital commitment as of March 31, 2024 and September 30, 2023 to be immaterial.

The following table shows our contractual obligations as of March 31, 2024, at cost:

We estimate the fair value of the combined unused lines of credit, the unused delayed draw term loans, and the uncalled capital commitment as of June 30, 2024 and September 30, 2023 to be immaterial.

The following table shows our contractual obligations as of June 30, 2024, at cost:

Payments Due by Period

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Total $ 20,340 $ 179,788 $ 182,261 $ — $ 382,389

(A) Excludes our unused line of credit commitments, unused delayed draw term loans, and uncalled capital commitments to our portfolio companies in an aggregate amount of $54.1 million, at cost, as of March 31, 2024.

(A) Excludes our unused line of credit commitments, unused delayed draw term loans, and uncalled capital commitments to our portfolio companies in an aggregate amount of $53.3 million, at cost, as of June 30, 2024.

(B) Principal balance of borrowings outstanding under our Credit Facility, based on the maturity date following the current contractual revolver period end date.

The amount of interest expense calculated for purposes of this table was based upon rates and balances as of March 31, 2024.

The amount of interest expense calculated for purposes of this table was based upon rates and balances as of June 30, 2024.

Critical Accounting Estimates

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The Adviser’s risk rating system covers both qualitative and quantitative aspects of the business and the securities we hold.

The following table reflects risk ratings for all proprietary loans in our portfolio as of March 31, 2024 and September 30, 2023, representing approximately 98.8% and 98.2%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:

The following table reflects risk ratings for all proprietary loans in our portfolio as of June 30, 2024 and September 30, 2023, representing approximately 98.7% and 98.2%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:

September 30,

Weighted Average

The following table reflects the risk ratings for all syndicated loans in our portfolio that were rated by an NRSRO as of March 31, 2024 and September 30, 2023, representing approximately 1.2% and 1.3%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:

The following table reflects the risk ratings for all syndicated loans in our portfolio that were rated by an NRSRO as of June 30, 2024 and September 30, 2023, representing approximately 1.3% and 1.3%, respectively, of the principal balance of all debt investments in our portfolio at the end of each period:

September 30,

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Weighted Average

There were no syndicated loans in our portfolio that were not rated by an NRSRO as of March 31, 2024.

There were no syndicated loans in our portfolio that were not rated by an NRSRO as of June 30, 2024.

We intend to continue to maintain our qualification as a RIC under Subchapter M of the Code for federal income tax purposes.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis