What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-08 compared with 2022-05-09 · 224 added, 172 removed, 547 unchanged (42% of the section changed)

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• the general economy, including interest and inflation rates, and the COVID-19 pandemic on the industries in which we invest;

• the impact of interest rate volatility, including the decommissioning of LIBOR and rising interest rates, on our business and our portfolio companies;

• our future operating results, our business prospects, the adequacy of our cash resources and working capital, and the impact of the COVID-19 pandemic thereon;

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We have elected to be treated, and intend to comply with the requirements to continue to qualify annually, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code").

Since our IPO, and through March 31, 2022, we raised approximately $926.1 million in net proceeds from additional offerings of our common stock.

Since our IPO, and through June 30, 2022, we raised approximately $942.7 million in net proceeds from additional offerings of our common stock.

The Investment Adviser is a wholly-owned subsidiary of New Mountain Capital.

New Mountain Capital is a firm with a track record of investing in the middle market.

New Mountain Capital focuses on investing in defensive growth companies across its private equity, credit and net lease investment strategies.

New Mountain Capital focuses on investing in defensive growth companies

across its private equity, credit and net lease investment strategies.

The Investment Adviser manages our day-to-day operations and provides us with investment advisory and management services.

The Investment Adviser also manages other funds that

may have investment mandates that are similar, in whole or in part, to ours.

The Investment Adviser also manages other funds that may have investment mandates that are similar, in whole or in part, to ours.

New Mountain Finance Administration, L.L.C.

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Our portfolio may be concentrated in a limited number of industries.

As of March 31, 2022, our top five industry concentrations were software, business services, healthcare services, education and investment funds (which includes our investments in our joint ventures).

As of March 31, 2022, our net asset value was approximately $1,349.4 million and our portfolio had a fair value, as determined in good faith by the board of directors, of approximately $3,257.0 million in 107 portfolio companies, with a weighted average yield to maturity at cost for income producing investments ("YTM at Cost") of approximately 9.8% and a weighted average yield to maturity at cost for all investments ("YTM at Cost for Investments") of approximately 9.1%.

As of June 30, 2022, our top five industry concentrations were software, healthcare services, business services, education and investment funds (which includes our investments in our joint ventures).

As of June 30, 2022, our net asset value was approximately $1,351.6 million and our portfolio had a fair value, as determined in good faith by the board of directors, of approximately $3,300.2 million in 107 portfolio companies, with a weighted average yield to maturity at cost for income producing investments ("YTM at Cost") of approximately 10.3% and a weighted average yield to maturity at cost for all investments ("YTM at Cost for Investments") of approximately 9.1%.

The YTM at Cost calculation assumes that all investments, including secured collateralized agreements, not on non-accrual are purchased at cost on the quarter end date and held until their respective maturities with no prepayments or losses and exited at par at maturity.

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Recent Developments

On May 3, 2022, our board of directors declared a second quarter 2022 distribution of $0.30 per share payable on June 30, 2022 to holders of record as of June 16, 2022.

On July 15, 2022, we caused notices to be issued to holders of the 2017A Unsecured Notes regarding the exercise of our option to repay all of the $55.0 million in aggregate principal amount of issued and outstanding 2017A Unsecured Notes, which was repaid on July 14, 2022.

On August 3, 2022, our board of directors declared a third quarter 2022 distribution of $0.30 per share payable on September 30, 2022 to holders of record as of September 16, 2022.

COVID-19 Developments

Our operating results and portfolio companies may be negatively impacted by the COVID-19 pandemic.

While several countries, as well as certain states, counties and cities in the United States, have relaxed initial public health restrictions with the view to partially or fully reopening their economies, many cities have since experienced a surge in the reported number of cases, hospitalizations and deaths related to the COVID-19 pandemic.

These surges have led to the re-introduction of such restrictions and business shutdowns in certain states in the United States and globally and could continue to lead to the re-introduction of such restrictions elsewhere.

Health advisors warn that recurring COVID-19 outbreaks, including outbreaks of new variants such as the delta and omicron variants, as well as any other variants, will continue if reopening is pursued too soon or in the wrong manner, which may lead to the re-introduction or continuation of certain public health restrictions (such as instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools, retail stores and other public venues).

Additionally, travelers from the United States are restricted from visiting many countries including countries in Europe, Asia, Africa and South America.

These continued travel restrictions may prolong the global economic downturn.

In addition, while consumer demand for goods and services has begun to rebound, we continue to see reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both in the United States and globally.

Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter.

Although the Federal Food and Drug Administration authorized vaccines beginning in December 2020 and a significant portion of the U.S.

population have been vaccinated, it remains unclear how quickly the vaccines will continue to be distributed nationwide and globally, or when “herd immunity” will be achieved and the restrictions that were imposed to slow the spread of the virus will be lifted entirely.

Any delay in distributing the vaccines could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time.

Our operating results and portfolio companies may be negatively impacted by the ongoing COVID-19 pandemic.

We have been closely monitoring, and will continue to monitor, the impact of the COVID-19 pandemic, including new variants of COVID-19, on all aspects of our business, including how it will impact our portfolio companies, employees, due diligence, and the financial markets.

Any effects of the COVID-19 pandemic will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter.

The extent of the impact of the COVID-19 pandemic on the financial performance of our current and future investments will depend on future developments, including the duration and spread of the virus, related advisories and restrictions, and the health of the financial markets and economy, all of which are highly uncertain and cannot be predicted.

To the extent our portfolio companies are adversely impacted by the effects of the COVID-19 pandemic, it may have a material adverse impact on our future net investment income, the fair value of our portfolio investments and our financial condition.

While general economic conditions have improved since the beginning of the COVID-19 pandemic, we continue to see reductions in business activity and financial transactions, supply chain interruptions and overall economic and financial market instability both in the United States and globally.

Even after the COVID-19 pandemic subsides, the U.S.

economy and most other major global economies may continue to experience a recession, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the United States and other major markets.

This outbreak is having, and any future outbreaks could have, an adverse impact on the markets and the economy in general, which could have a material adverse impact on, among other things, the ability of lenders to originate loans, the volume and type of loans originated, and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by us and returns to us, among other things.

As of the date of this Quarterly Report on Form 10-Q, it is impossible to determine the scope of this outbreak, or any future outbreaks, how long any such outbreak, market disruption or uncertainties may last, the effect any governmental actions will have or the full potential impact on us and our portfolio companies.

Any potential impact to our results of operations will depend to a large extent on future developments and new information that could emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all of which are beyond our control.

These potential impacts, while uncertain, could adversely affect our and our portfolio companies’ operating results.

An increase in unrealized depreciation of our investment portfolio due to decreases in fair value of investments attributable to the COVID-19 pandemic resulted in a significant reduction in our net asset value from the period of March 31, 2020 through December 31, 2020 as compared to our net asset value as of December 31, 2019.

As of the three months ended March 31, 2022, our net asset value has experienced a recovery from that of the three months ended March 31, 2021.

As of March 31, 2022, we were in compliance with our asset coverage requirements under the 1940 Act.

In addition, we are not in default of any of the asset coverage requirements under any of our credit facilities as of March 31, 2022.

economy and most other major global economies may continue to experience downturns, and we anticipate our business and operations could be materially adversely affected by a prolonged recession in the United States and other major markets.

For additional discussion on our portfolio companies, see “Monitoring of Portfolio Investments”.

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Valuation and Leveling of Portfolio Investments

At all times consistent with GAAP and the 1940 Act, we conduct a valuation of assets, which impacts our net asset value.

At all times consistent with GAAP and the 1940 Act, we conduct a valuation of our assets, which impacts our net asset value.

We value our assets on a quarterly basis, or more frequently if required under the 1940 Act.

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Bond quotes are obtained through independent pricing services.

Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is representative of fair value in accordance with GAAP and, if so, the quote is used.

Internal reviews are performed by the investment professionals of the Investment Adviser to ensure that the quote obtained is

representative of fair value in accordance with GAAP and, if so, the quote is used.

If the Investment Adviser is unable to sufficiently validate the quote(s) internally and if the investment's par value or its fair value exceeds the materiality threshold, the investment is valued similarly to those assets with no readily available quotes (see (3) below);

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Preliminary valuation conclusions will then be documented and discussed with our senior management;

each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our board of directors;

If an investment falls into (3) above for four consecutive quarters and if the investment's par value or its fair value exceeds the materiality threshold, then at least once each fiscal year, the valuation for each portfolio investment for which we do not have a readily available market quotation will be reviewed by an independent valuation firm engaged by our board of directors;

When deemed appropriate by our management, an independent valuation firm may be engaged to review and value investment(s) of a portfolio company, without any preliminary valuation being performed by the Investment Adviser.

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See Item 1.— Financial Statements and Supplementary Data — Note 4.

Fair Value in this Quarterly Report on Form 10-Q for additional information on fair value hierarchy as of March 31, 2022.

Fair Value in this Quarterly Report on Form 10-Q for additional information on fair value hierarchy as of June 30, 2022.

We generally use the following framework when determining the fair value of investments where there are little, if any, market activity or observable pricing inputs.

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Prior to investment, as part of our due diligence process, we evaluate the overall performance and financial stability of the portfolio company.

Post investment, we analyze each portfolio

company's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") growth, margin trends, liquidity position, covenant compliance and changes to its capital structure.

Post investment, we analyze each portfolio company's current operating performance and relevant financial trends versus prior year and budgeted results, including, but not limited to, factors affecting its revenue and earnings before interest, taxes, depreciation, and amortization ("EBITDA") growth, margin trends, liquidity position, covenant compliance and changes to its capital structure.

We also attempt to identify and subsequently track any developments at the portfolio company, within its customer or vendor base or within the industry or the macroeconomic environment, generally, that may alter any material element of our original investment thesis.

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These cash flows are discounted at a rate established utilizing a combination of a yield calibration approach and a comparable investment approach.

The yield calibration approach incorporates changes in the credit quality (as measured by relevant statistics) of the portfolio company, as compared to changes in the yield associated with comparable credit quality market indices, between the date of origination and the valuation date.

valuation date.

The comparable investment approach utilizes an average yield-to maturity of a selected set of high-quality, liquid investments to determine a comparable investment discount rate.

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See Item 1.— Financial Statements and Supplementary Data — Note 4.

Fair Value in this Quarterly Report on Form 10-Q for additional information on unobservable inputs used in the fair value measurement of our Level III investments as of March 31, 2022.

Fair Value in this Quarterly Report on Form 10-Q for additional information on unobservable inputs used in the fair value measurement of our Level III investments as of June 30, 2022.

NMFC Senior Loan Program III LLC

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Any decision by SLP III to call down on capital commitments requires approval by the board of managers of SLP III.

As of March 31, 2022, we and SkyKnight II have committed and contributed $140.0 million and $35.0 million, respectively, of equity to SLP III.

Our investment in SLP III is disclosed on our Consolidated Schedule of Investments as of March 31, 2022 and December 31, 2021.

As of June 30, 2022, we and SkyKnight II have committed and contributed $140.0 million and $35.0 million, respectively, of equity to SLP III.

Our investment in SLP III is disclosed on our Consolidated Schedule of Investments as of June 30, 2022 and December 31, 2021.

On May 2, 2018, SLP III entered into its revolving credit facility with Citibank, N.A., which matures on January 8, 2026.

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Prior to July 8, 2021, the credit facility bore interest at a rate of LIBOR plus 1.70%.

Effective November 23, 2020, SLP III's revolving credit facility has a maximum borrowing capacity

of $525.0 million.

As of March 31, 2022 and December 31, 2021, SLP III had total investments with an aggregate fair value of approximately $695.2 million and $702.1 million, respectively, and debt outstanding under its credit facility of $517.6 million and $510.9 million, respectively.

As of March 31, 2022 and December 31, 2021, none of SLP III's investments were on non-accrual.

Additionally, as of March 31, 2022 and December 31, 2021, SLP III had unfunded commitments in the form of delayed draws of $4.9 million and $4.6 million, respectively.

Below is a summary of SLP III's portfolio as of March 31, 2022 and December 31, 2021:

(in thousands) March 31, 2022 December 31, 2021

Effective November 23, 2020, SLP III's revolving credit facility has a maximum borrowing capacity of $525.0 million.

As of June 30, 2022 and December 31, 2021, SLP III had total investments with an aggregate fair value of approximately $654.6 million and $702.1 million, respectively, and debt outstanding under its credit facility of $514.5 million and $510.9 million, respectively.

As of June 30, 2022 and December 31, 2021, none of SLP III's investments were on non-accrual.

Additionally, as of June 30, 2022 and December 31, 2021, SLP III had unfunded commitments in the form of delayed draws of $4.5 million and $4.6 million, respectively.

Below is a summary of SLP III's portfolio as of June 30, 2022 and December 31, 2021:

(in thousands) June 30, 2022 December 31, 2021

First lien investments (1) $ 697,482 $ 709,517

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See Item 1.— Financial Statements and Supplementary Data—Note 3.

Investments in this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP III's portfolio as of March 31, 2022 and December 31, 2021 and additional information on certain summarized financial information for SLP III as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022 and March 31, 2021.

Investments in this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP III's portfolio as of June 30, 2022 and December 31, 2021 and additional information on certain summarized financial information for SLP III as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and June 30, 2021.

NMFC Senior Loan Program IV LLC

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Upon the effectiveness of the SLP IV Agreement dated May 5, 2021, the members contributed their respective membership interests in NMFC Senior Loan Program I LLC ("SLP I") and NMFC Senior Loan Program II LLC ("SLP II") to SLP IV.

Immediately following the contribution of their membership interests, SLP I and SLP II became wholly-owned subsidiaries of SLP IV.

Immediately following the

contribution of their membership interests, SLP I and SLP II became wholly-owned subsidiaries of SLP IV.

The purpose of the joint venture is to invest primarily in senior secured loans issued by portfolio companies within our core industry verticals.

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SLP IV is capitalized with equity contributions which were transferred and contributed from its members.

As of March 31, 2022, we and SkyKnight Alpha have transferred and contributed $112.4 million and $30.6 million, respectively, of their membership interests in SLP I and SLP II to SLP IV.

Our investment in SLP IV is disclosed on our Consolidated Schedule of Investments as of March 31, 2022 and December 31, 2021.

As of June 30, 2022, we and SkyKnight Alpha have transferred and contributed $112.4 million and $30.6 million, respectively, of their membership interests in SLP I and SLP II to SLP IV.

Our investment in SLP IV is disclosed on our Consolidated Schedule of Investments as of June 30, 2022 and December 31, 2021.

On May 5, 2021, SLP IV entered into a $370.0 million revolving credit facility with Wells Fargo Bank, National Association which matures on May 5, 2026 and bears interest at a rate of LIBOR plus 1.60% per annum.

As of March 31, 2022 and December 31, 2021, SLP IV had total investments with an aggregate fair value of approximately $496.5 million and $504.9 million, respectively, and debt outstanding under its credit facility of $359.6 million and $360.1 million, respectively.

As of March 31, 2022 and December 31, 2021, none of SLP IV’s investments were on non-accrual.

Additionally, as of March 31, 2022 and December 31, 2021, SLP IV had unfunded commitments in the form of delayed draws of $4.8 million and $6.1 million, respectively.

Below is a summary of SLP IV's consolidated portfolio as of March 31, 2022 and December 31, 2021:

(in thousands) March 31, 2022 December 31, 2021

As of June 30, 2022 and December 31, 2021, SLP IV had total investments with an aggregate fair value of approximately $489.8 million and $504.9 million, respectively, and debt outstanding under its credit facility of $364.9 million and $360.1 million, respectively.

As of June 30, 2022 and December 31, 2021, none of SLP IV’s investments were on non-accrual.

Additionally, as of June 30, 2022 and December 31, 2021, SLP IV had unfunded commitments in the form of delayed draws of $4.3 million and $6.1 million, respectively.

Below is a summary of SLP IV's consolidated portfolio as of June 30, 2022 and December 31, 2021:

(in thousands) June 30, 2022 December 31, 2021

First lien investments (1) $ 521,079 $ 513,298

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See Item 1.— Financial Statements and Supplementary Data—Note 3.

Investments in this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP IV's consolidated portfolio as of March 31, 2022 and December 31, 2021 and additional information on certain summarized financial information for SLP IV as of March 31, 2022 and December 31, 2021 and for the three months ended March 31, 2022.

Investments in this Quarterly Report on Form 10-Q for a listing of the individual investments in SLP IV's consolidated portfolio as of June 30, 2022 and December 31, 2021 and additional information on certain summarized financial information for SLP IV as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022.

New Mountain Net Lease Corporation

NMNLC was formed to acquire commercial real estate properties that are subject to "triple net" leases.

NMNLC's investments are disclosed on our Consolidated Schedule of Investments as of March 31, 2022.

NMNLC's investments are disclosed on our Consolidated Schedule of Investments as of June 30, 2022.

On March 30, 2020, an affiliate of the Investment Adviser purchased directly from NMNLC 105,030 shares of NMNLC’s common stock at a price of $107.73 per share, which represented the net asset value per share of NMNLC at the date of purchase, for an aggregate purchase price of approximately $11.3 million.

Immediately thereafter, NMNLC redeemed 105,030 shares of its common stock held by NMFC in exchange for a promissory note with a principal amount of $11.3 million and a 7.0% interest rate, which was repaid by NMNLC to NMFC on March 31, 2020.

Below is certain summarized property information for NMNLC as of March 31, 2022:

Below is certain summarized property information for NMNLC as of June 30, 2022:

Lease Total Fair Value as of

Portfolio Company Tenant Expiration Date Location Square Feet March 31, 2022

Portfolio Company Tenant Expiration Date Location Square Feet June 30, 2022

(in thousands) (in thousands)

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NM CLFX LP Victor Equipment Company 8/31/2033 TX 423 21,067

NM APP US LLC Plasman Corp, LLC / A-Brite LP 9/30/2033 AL / OH 261 17,872

NM GLCR LP Arctic Glacier U.S.A.

2/28/2038 CA 48 16,852

NM APP Canada, Corp.

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9/30/2031 Canada 436 12,314

NM DRVT LLC FMH Conveyors, LLC 10/31/2031 AR 195 9,023

NM YI, LLC Young Innovations, Inc.

10/31/2039 IL / MO 212 8,184

NM JRA LLC J.R.

Automation Technologies, LLC 1/31/2031 MI 88 4,223

NM KRLN LLC None N/A MD 95 60

Collateralized agreements or repurchase financings

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Interest on collateralized agreements is accrued and recognized over the life of the transaction and included in interest income.

As of March 31, 2022 and December 31, 2021, we held one collateralized agreement to resell with a cost basis of $30.0 million and $30.0 million, respectively, and a fair value of $19.4 million and $21.4 million, respectively.

As of June 30, 2022 and December 31, 2021, we held one collateralized agreement to resell with a cost basis of $30.0 million and $30.0 million, respectively, and a fair value of $19.4 million and $21.4 million, respectively.

The collateralized agreement to resell is on non-accrual.

The collateralized agreement to resell is guaranteed by a private hedge fund, PPVA Fund, L.P.

private hedge fund is currently in liquidation under the laws of the Cayman Islands.

The private hedge fund is currently in liquidation under the laws of the Cayman Islands.

Pursuant to the terms of the collateralized agreement, the private hedge fund was obligated to repurchase the collateral from us at the par value of the collateralized agreement.

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During the year ended December 31, 2018, we received a $1.5 million payment from our insurance carrier in respect to the settlement.

As of March 31, 2022 and December 31, 2021, the SPP Agreement has a cost basis of $14.5 million and $14.5 million, respectively, and a fair value of $9.4 million and $10.4 million, respectively, which is reflective of the higher inherent risk in this transaction.

As of June 30, 2022 and December 31, 2021, the SPP Agreement has a cost basis of $14.5 million and $14.5 million, respectively, and a fair value of $9.4 million and $10.4 million, respectively, which is reflective of the higher inherent risk in this transaction.

Revenue Recognition

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The PIK interest and dividends are added to the principal or share balances on the capitalization dates and are generally due at maturity or when redeemed by the issuer.

For the three months ended March 31, 2022 and March 31, 2021, we recognized PIK and non-cash interest from investments of approximately $8.5 million and $5.8 million, respectively, and PIK and non-cash dividends from investments of approximately $5.1 million and $5.2 million, respectively.

For the three and six months ended June 30, 2022, we recognized PIK and non-cash interest from investments of approximately $7.3 million and $15.8 million, respectively, and PIK and non-cash dividends from investments of approximately $5.2 million and $10.3 million, respectively.

For the three and six months ended June 30, 2021, we recognized PIK and non-cash interest from investments of approximately $5.6 million and $11.4 million, respectively, and PIK and non-cash dividends from investments of approximately $5.8 million and $11.0 million, respectively.

Dividend income on common equity is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.

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Delayed compensation is income earned from counterparties on trades that do not settle within a set number of business days after trade date.

income may also include fees from bridge loans.

Other income may also include fees from bridge loans.

We may from time to time enter into bridge financing commitments, an obligation to provide interim financing to a counterparty until permanent credit can be obtained.

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◦ Tier 4 – Business performance is in-line with or above expectations

• Business Characteristics assesses the health of the investment in context of the underlying portfolio company’s business and credit quality, the underlying portfolio company’s current balance sheet, and the level of support from the equity sponsor.

equity sponsor.

The metric is expressed as on a qualitative scale of “A” to “C”, with “A” being the best and “C” being the worst.

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• Green – 4C, 3B, 2A, 4B, 3A, and 4A

The following table shows the Risk Rating of our portfolio companies as of March 31, 2022:

(in millions) As of March 31, 2022

The following table shows the Risk Rating of our portfolio companies as of June 30, 2022:

(in millions) As of June 30, 2022

Risk Rating Cost Percent Fair Value Percent

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$ 3,327.5 100.0 % $ 3,319.6 100.0 %

As of March 31, 2022, all investments in our portfolio had a Green Risk Rating with the exception of five portfolio companies that had a Yellow Risk Rating, eight portfolio companies that had an Orange Risk Rating and three portfolio companies that had a Red Risk Rating.

As of March 31, 2022, our aggregate principal amount of our subordinated position and first lien term loans in American Achievement Corporation ("AAC") was $5.2 million and $29.4 million, respectively.

As of June 30, 2022, all investments in our portfolio had a Green Risk Rating with the exception of nine portfolio companies that had a Yellow Risk Rating, three portfolio companies that had an Orange Risk Rating and three portfolio companies that had a Red Risk Rating.

As of June 30, 2022, our aggregate principal amount of our second lien term loan in Integro Parent Inc.

("Integro") was $10.5 million.

During the second quarter of 2022, we placed an aggregate principal amount of $3.7 million of our second lien position on non-accrual status.

As of June 30, 2022, our position in Integro on non-accrual status had an aggregate cost basis of $3.6 million, an aggregate fair value of $2.4 million, total unearned interest income of $0.1 million and $0.1 million, respectively, for the three and six months then ended and total unearned other income of $36 thousand and $36 thousand , respectively, for the three and six months then ended.

As of June 30, 2022, our Integro portfolio company has a Green Risk Rating.

During the second quarter of 2022, we placed our second lien positions in National HME, Inc.

("National HME") on non-accrual status.

As of June 30, 2022, our second lien positions in National HME had an aggregate cost basis of $36.5 million, an aggregate fair value of $8.5 million, and total unearned interest income of $1.2 million and $1.2 million, respectively, for the three and six months then ended.

As of June 30, 2022, our National HME portfolio company has a Red Risk Rating.

As of June 30, 2022, our aggregate principal amount of our subordinated position and first lien term loans in American Achievement Corporation ("AAC") was $5.2 million and $29.7 million, respectively.

During the first quarter of 2021, we placed an aggregate principal amount of $5.2 million of our subordinated position on non-accrual status.

During the third quarter of 2021, we placed an aggregate principal amount of $12.8 million of our first lien term loans on non-accrual status.

As of March 31, 2022, our positions in AAC on non-accrual status had an aggregate cost basis of $12.7 million, an aggregate fair value of $7.0 million and total unearned interest income of $0.3 million for the three months then ended.

As of March 31, 2022, our AAC portfolio company has a Red Risk Rating.

As of June 30, 2022, our positions in AAC on non-accrual status had an aggregate cost basis of $12.8 million, an aggregate fair value of $7.2 million and total unearned interest income of $0.3 million and $0.6 million, respectively, for the three and six months then ended.

As of June 30, 2022, our AAC portfolio company has a Red Risk Rating.

During the third quarter of 2021, we placed our second lien position in Sierra Hamilton Holdings Corporation ("Sierra") on non-accrual status.

As of March 31, 2022, our second lien position in Sierra had an aggregate cost basis of $0.0 million, an aggregate fair value of $0.0 million and total unearned interest income of $0.0 million for the three months then ended.

As of March 31, 2022, our Sierra portfolio company has a Red Risk Rating.

As of June 30, 2022, our second lien position in Sierra had an aggregate cost basis of $0.0 million, an aggregate fair value of $0.0 million and total unearned interest income of $0.0 million and $0.0 million, respectively, for the three and six months then ended.

As of June 30, 2022, our Sierra portfolio company has a Red Risk Rating.

During the first quarter of 2020, we placed our investment in our junior preferred shares of UniTek Global Services, Inc.

("UniTek") on non-accrual status.

As of March 31, 2022, our junior preferred shares of UniTek had an aggregate cost basis of $34.4 million, an aggregate fair value of $0.0 million and total unearned dividend income of $1.6 million for the three months then ended.

As of June 30, 2022, our junior preferred shares of UniTek had an aggregate cost basis of $34.4 million, an aggregate fair value of $0.0 million and total unearned dividend income of $1.6 million and $3.2 million, respectively, for the three and six months then ended.

During the third quarter of 2021, we placed an aggregate principal amount of $19.8 million of our investment in our senior preferred shares of UniTek on non-accrual status.

As of March 31, 2022, our senior preferred shares of UniTek had an aggregate cost basis of $19.8 million, an aggregate fair value of approximately $3.6 million and total unearned dividend income of approximately $1.1 million for the three months then ended.

As of March 31, 2022, our UniTek portfolio company has a Green Risk Rating.

As of June 30, 2022,

our senior preferred shares of UniTek had an aggregate cost basis of $19.8 million, an aggregate fair value of approximately $7.6 million and total unearned dividend income of approximately $1.1 million and $2.2 million, respectively, for the three and six months then ended.

As of June 30, 2022, our UniTek portfolio company has a Green Risk Rating.

During the first quarter of 2018, we placed our first lien positions in Education Management II LLC on non-accrual status as the portfolio company announced its intention to wind down and liquidate the business.

As of March 31, 2022, our Education Management Corporation portfolio company has an Orange Risk Rating and an aggregate cost basis of $1.4 million, an aggregate fair value of $0.0 million and total unearned interest income of $0.0 million for the three months then ended.

As of March 31, 2022, our investment in NM KRLN LLC has a Red Risk Rating and an aggregate cost basis of $9.3 million and an aggregate fair value of $0.1 million.

As of June 30, 2022, our Education Management Corporation portfolio company has an Orange Risk Rating and an aggregate cost basis of $1.4 million, an aggregate fair value of $0.0 million and total unearned interest income of $0.0 million and $0.0 million, respectively, for the three and six months then ended.

During the year ended December 31, 2019, our security purchased under collateralized agreements to resell was placed on non-accrual.

As of March 31, 2022, our investment in this security has a Yellow Risk Rating and has an aggregate cost basis of $30.0 million and an aggregate fair value of approximately $19.4 million.

As of June 30, 2022, our investment in this security has a Yellow Risk Rating and has an aggregate cost basis of $30.0 million and an aggregate fair value of approximately $19.4 million.

Portfolio and Investment Activity

The fair value of our investments, as determined in good faith by our board of directors, was approximately $3,257.0 million in 107 portfolio companies at March 31, 2022 and approximately $3,174.4 million in 106 portfolio companies at December 31, 2021.

The following table shows our portfolio and investment activity for the three months ended March 31, 2022 and March 31, 2021:

Three Months Ended

(in millions) March 31, 2022 March 31, 2021

The fair value of our investments, as determined in good faith by our board of directors, was approximately $3,300.2 million in 107 portfolio companies at June 30, 2022 and approximately $3,174.4 million in 106 portfolio companies at December 31, 2021.

The following table shows our portfolio and investment activity for the six months ended June 30, 2022 and June 30, 2021:

Six Months Ended

(in millions) June 30, 2022 June 30, 2021

New investments in 38 and 22 portfolio companies, respectively

$ 397.1 $ 300.0

Debt repayments in existing portfolio companies 146.9 262.5

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Change in unrealized depreciation on 79 and 61 portfolio companies, respectively

(92.6) (32.2)

Recent Accounting Standards Updates

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Recent Accounting Standards Updates for details on recent accounting standards updates.

Results of Operations for the Three Months Ended March 31, 2022 and March 31, 2021

Results of Operations for the Three Months Ended June 30, 2022 and June 30, 2021

Three Months Ended

(in thousands) March 31, 2022 March 31, 2021

(in thousands) June 30, 2022 June 30, 2021

Total interest income $ 50,344 $ 47,081

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Total investment income $ 73,110 $ 66,561

Our total investment income increased by approximately $1.3 million, or 2%, for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

For the three months ended March 31, 2022, total investment income of approximately $69.0 million consisted of approximately $38.0 million in cash interest from investments, approximately $8.5 million in PIK and non-cash interest from investments, net amortization of purchase premiums and discounts of approximately $1.4 million, approximately $11.7 million in cash dividends from investments, approximately $5.1 million in PIK and non-cash dividends from investments and approximately $4.3 million in other income.

The increase in interest income of approximately $0.9 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily due to higher LIBOR rates on larger invested balances.

The increase in dividend income for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 was primarily due to an increase in cash dividends from our investment in SLP III and SLP IV and PIK dividends related to new investments.

Other income during the three months ended March 31, 2022, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront, consent and amendment fees received from 17 different portfolio companies.

Our total investment income increased by approximately $6.5 million, or 10%, for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

For the three months ended June 30, 2022, total investment income of approximately $73.1 million consisted of approximately $41.0 million in cash interest from investments, approximately $7.3 million in PIK and non-cash interest from investments, $0.4 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $1.7 million, approximately $10.8 million in cash dividends from investments, approximately $5.2 million in PIK and non-cash dividends from investments and approximately $6.7 million in other income.

The increase in interest income of approximately $3.3 million during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was primarily due to a higher effective interest rate of our portfolio on larger invested balances.

The decrease in dividend income for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 was primarily driven by a decrease in cash dividends from our investments in SLP III, SLP IV and NMNLC.

Other income during the three months ended June 30, 2022, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront, consent and amendment fees received from 21 different portfolio companies.

Operating Expenses

Three Months Ended

(in thousands) March 31, 2022 March 31, 2021

(in thousands) June 30, 2022 June 30, 2021

Management fee $ 11,770 $ 13,725

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Other general and administrative expenses 518 466

Net expenses before income taxes 41,493 37,349

Income tax (benefit) expense (87) 22

Net expenses after income taxes $ 41,406 $ 37,371

Our total net operating expenses increased by approximately $3.8 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

Our management fee increased by approximately $0.7 million, net of a management fee waiver, and our incentive fee increased by approximately $0.6 million for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021.

The increase in management and incentive fees was attributable to higher invested balances.

Interest and other financing expenses increased by approximately $2.8 million during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021, primarily due to larger drawn balances on the Holdings Credit Facility and NMFC Credit Facility, higher interest rates on those facilities and interest costs associated with the 2022A Unsecured Notes, issued on June 15, 2022.

Our total professional fees, administrative expenses and total other general and administrative expenses for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 increased in line with invested capital.

Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)

Three Months Ended

(in thousands) June 30, 2022 June 30, 2021

Net realized gains on investments $ 16,518 $ 180

Net realized gains on foreign currency 40 —

Net change in unrealized (depreciation) appreciation of investments (32,774) 49,808

Net change in unrealized depreciation on foreign currency (193) —

Provision for taxes (155) —

Net realized and unrealized (losses) gains $ (16,564) $ 49,988

Our net realized gains and unrealized losses resulted in a net loss of approximately $16.6 million for the three months ended June 30, 2022 compared to net realized gains and unrealized gains resulting in a net gain of approximately $50.0 million for the same period in 2021.

As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together.

The net loss for the three months ended June 30, 2022 was primarily driven by realized and unrealized losses in NM CLFX LP, NHME Holdings Corp.

and Ansira Holdings, Inc.

which was partially offset by unrealized appreciation in Haven Midstream LLC, UniTek and New Permian Holdco, Inc.

and a realized gain in NM GLCR LP.

The provision for income taxes was attributable to equity investments that are held as of June 30, 2022 in eight of our corporate subsidiaries.

The net gain for the three months ended June 30, 2021 was primarily driven by unrealized appreciation on our investments in TVG-Edmentum Ultimate Holdings, LLC ("Edmentum"), NM CLFX LP and NM GLCR LP.

See Monitoring of Portfolio Investments above for more details regarding the health of our portfolio companies.

Results of Operations for the Six Months Ended June 30, 2022 and June 30, 2021

Six Months Ended

(in thousands) June 30, 2022 June 30, 2021

Total interest income $ 98,222 $ 94,090

Total dividend income 32,794 32,625

Other income 11,057 7,554

Total investment income $ 142,073 $ 134,269

Our total investment income increased by approximately $7.8 million, or 6%, for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

For the six months ended June 30, 2022, total investment income of approximately $142.1 million consisted of approximately $78.9 million in cash interest from investments, approximately $15.8 million in PIK and non-cash interest from investments, $0.4 million in prepayment fees, net amortization of purchase premiums and discounts of approximately $3.1 million, approximately $22.5 million in cash dividends from investments, approximately $10.3 million in PIK and non-cash dividends from investments and approximately $11.1 million in other income.

The increase in interest income of approximately $4.1 million during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was primarily due to higher LIBOR and SOFR rates on larger invested balances.

The dividend income for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 remained relatively flat.

Other income during the six months ended June 30, 2022, which represents fees that are generally non-recurring in nature, was primarily attributable to upfront, consent and amendment fees received from 32 different portfolio companies.

Operating Expenses

Six Months Ended

(in thousands) June 30, 2022 June 30, 2021

Management fee $ 23,323 $ 27,145

management fee waiver (2,234) (7,441)

Total management fee 21,089 19,704

Incentive fee 15,403 14,546

Interest and other financing expenses 39,309 37,256

Administrative expenses 2,141 2,158

Professional fees 1,754 1,490

Other general and administrative expenses 995 908

Total expenses 80,691 76,062

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Net expenses after income taxes $ 80,461 $ 76,085

Our total net operating expenses increased by approximately $0.3 million for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

Our management fee increased by approximately $0.7 million, net of a management fee waiver, and our incentive fee increased by approximately $0.2 million for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021.

Our total net operating expenses increased by approximately $4.4 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

Our management fee increased by approximately $1.4 million, net of a management fee waiver, and our incentive fee increased by approximately $0.9 million for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021.

The increase in management and incentive fees was attributable to higher invested balances.

Interest and other financing expenses decreased by approximately $0.7 million during the three months ended March 31, 2022 as compared to the three months ended March 31, 2021, primarily due to the acceleration of deferred financing costs associated with the repayment of the 5.75% Unsecured Notes in the first quarter of 2021.

Our total professional fees, administrative expenses and total other general and administrative expenses for the three months ended March 31, 2022 as compared to the three months ended March 31, 2021 remained relatively flat.

Net Realized Gains (Losses) and Net Change in Unrealized Appreciation (Depreciation)

Three Months Ended

(in thousands) March 31, 2022 March 31, 2021

Interest and other financing expenses increased by approximately $2.1 million during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, primarily due to larger drawn balances on the Holdings Credit Facility and NMFC Credit Facility and higher LIBOR rates on those facilities.

Our total professional fees, administrative expenses and total other general and administrative expenses for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 remained relatively flat.

Net Realized Gains (Losses) and Net Change in Unrealized (Depreciation) Appreciation

Six Months Ended

(in thousands) June 30, 2022 June 30, 2021

Net realized gains (losses) on investments $ 35,690 $ (10,316)

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Provision for taxes (157) (115)

Net realized and unrealized gains $ 7,139 $ 22,861

Our net realized gains and unrealized losses resulted in a net gain of approximately $7.1 million for the three months ended March 31, 2022 compared to net realized losses and unrealized gains resulting in a net gain of approximately $22.9 million for the same period in 2021.

Net realized and unrealized (losses) gains $ (9,425) $ 72,849

Our net realized gains and unrealized losses resulted in a net loss of approximately $9.4 million for the six months ended June 30, 2022 compared to net realized losses and unrealized gains resulting in a net gain of approximately $72.8 million for the same period in 2021.

As movement in unrealized appreciation or depreciation can be the result of realizations, we look at net realized and unrealized gains or losses together.

The net gain for the three months ended March 31, 2022 was primarily driven by a realized gain in NM GLCR LP and unrealized appreciation in TVG-Edmentum Holdings, LLC, UniTek and Haven Midstream LLC which offset unrealized depreciation in NHME Holdings Corp.

and Integro Parent Inc.

The provision for income taxes was attributable to equity investments that are held as of March 31, 2022 in eight of our corporate subsidiaries.

The net gain for the three months ended March 31, 2021 was primarily driven by the overall increase in market prices of our investments during the period due to the partial recovery of the market from the impact of the COVID-19 pandemic.

The net loss for the six months ended June 30, 2022 was primarily driven by unrealized depreciation in NM CLFX LP, NM APP US LLC, NHME Holdings Corp.

and Ansira Holdings, Inc.

which was partially offset by unrealized appreciation in UniTek, TVG-Edmentum Holdings, LLC, Haven Midstream LLC and New Permian Holdco, Inc.

and a realized gain in NM GLCR LP.

The provision for income taxes was attributable to equity investments that are held as of June 30, 2022 in eight of our corporate subsidiaries.

The net gain for the six months ended June 30, 2021 was primarily driven by unrealized appreciation on our investments in Edmentum, NM CLFX LP and NM GLCR LP.

See Monitoring of Portfolio Investments above for more details regarding the health of our portfolio companies.

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The primary use of existing funds and any funds raised in the future is expected to be for repayment of indebtedness, investments in portfolio companies, cash distributions to our stockholders or for other general corporate purposes.

Since our IPO, and through March 31, 2022, we raised approximately $926.1 million in net proceeds from additional offerings of common stock.

Since our IPO, and through June 30, 2022, we raised approximately $942.7 million in net proceeds from additional offerings of common stock.

Our liquidity is generated and generally available through advances from the revolving credit facilities, from cash flows from operations, and, we expect, through periodic follow-on equity offerings.

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The agreements governing the NMFC Credit Facility, the Convertible Notes and the Unsecured Notes (as defined below) contain certain covenants and terms, including a requirement that we not exceed a debt-to-equity ratio of 1.65 to 1.00 at the time of incurring additional indebtedness and a requirement that we not exceed a secured debt ratio of 0.70 to 1.00 at any time.

As of March 31, 2022, our asset coverage ratio was 181.3%.

At March 31, 2022 and December 31, 2021, we had cash and cash equivalents of approximately $35.4 million and $58.1 million, respectively.

Our cash (used in) provided by operating activities during the three months ended March 31, 2022 and March 31, 2021 was approximately $(45.2) million and $44.3 million, respectively.

As of June 30, 2022, our asset coverage ratio was 178.8%.

At June 30, 2022 and December 31, 2021, we had cash and cash equivalents of approximately $40.7 million and $58.1 million, respectively.

Our cash used in operating activities during the six months ended June 30, 2022 and June 30, 2021 was approximately $79.1 million and $9.3 million, respectively.

We expect that all current liquidity needs will be met with cash flows from operations and other activities.

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The Distribution Agreement provides that we may issue and sell our shares from time to time through the Agents, up to $250.0 million worth of our common stock by means of at-the-market ("ATM") offerings.

For the three months ended March 31, 2022, we sold 1,511,836 shares of common stock under the Distribution Agreement.

For the same period, we received total accumulated net proceeds of approximately $20.5 million, including $0.3 million of offering expenses, from these sales.

For the three and six months ended June 30, 2022, we sold 1,218,366 shares and 2,730,202 shares, respectively, of common stock under the Distribution Agreement.

For the same period, we received total accumulated net proceeds of approximately $16.6 million and $37.1 million, respectively, including $0.1 million and $0.4 million, respectively, of offering expenses from these sales.

We generally use net proceeds from these ATM offerings to make investments, to pay down liabilities and for general corporate purposes.

As of March 31, 2022, shares representing approximately $216.6 million of its common stock remain available for issuance and sale under the Distribution Agreement.

As of June 30, 2022, shares representing approximately $199.9 million of its common stock remain available for issuance and sale under the Distribution Agreement.

Off-Balance Sheet Arrangements

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These instruments may include commitments to extend credit and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet.

As of March 31, 2022 and December 31, 2021, we had outstanding commitments to third parties to fund investments totaling $238.3 million and $215.4 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.

As of June 30, 2022 and December 31, 2021, we had outstanding commitments to third parties to fund investments totaling $280.8 million and $215.4 million, respectively, under various undrawn revolving credit facilities, delayed draw commitments or other future funding commitments.

We may from time to time enter into financing commitment letters or bridge financing commitments, which could require funding in the future.

As of March 31, 2022 and December 31, 2021, we had commitment letters to purchase investments in an aggregate par amount of $54.0 million and $6.8 million, respectively.

As of March 31, 2022 and December 31, 2021, we had not entered into any bridge financing commitments which could require funding in the future.

As of June 30, 2022 and December 31, 2021, we had commitment letters to purchase investments in an aggregate par amount of $62.1 million and $6.8 million, respectively.

As of June 30, 2022 and December 31, 2021, we had not entered into any bridge financing commitments which could require funding in the future.

Holdings Credit Facility —On October 24, 2017, we entered into the Third Amended and Restated Loan and Security Agreement among us, as the Collateral Manager, NMF Holdings, as the Borrower, Wells Fargo Securities, LLC, as the Administrative Agent and Wells Fargo Bank, National Association, as the Lender and Collateral Custodian (as amended from time to time, the "Holdings Credit Facility").

As of the most recent amendment on April 20, 2021, the maturity date of the Holdings Credit Facility is April 20, 2026, and the maximum facility amount is the lesser of $800.0 million and the actual commitments of the lenders to make advances as of such date.

As of March 31, 2022, the maximum amount of revolving borrowings available under the Holdings Credit Facility is $730.0 million.

As of June 30, 2022, the maximum amount of revolving borrowings available under the Holdings Credit Facility is $730.0 million.

Under the Holdings Credit Facility, NMF Holdings is permitted to borrow up to 25.0%, 45.0%, 67.5% or 70.0% of the purchase price of pledged assets, subject to approval by Wells Fargo Bank, National Association.

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The Holdings Credit Facility also charges a non-usage fee, based on the unused facility amount multiplied by the Non-Usage Fee Rate (as defined in the Third Amended and Restated Loan and Security Agreement).

As of March 31, 2022 and December 31, 2021, the outstanding balance on the Holdings Credit Facility was $576.3 million and $545.3 million, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.

As of June 30, 2022 and December 31, 2021, the outstanding balance on the Holdings Credit Facility was $615.5 million and $545.3 million, respectively, and NMF Holdings was in compliance with the applicable covenants in the Holdings Credit Facility on such dates.

See Item 1.— Financial Statements and Supplementary Data—Note 7.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the Holdings Credit Facility for the three months ended March 31, 2022 and March 31, 2021.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the Holdings Credit Facility for the three and six months ended June 30, 2022 and June 30, 2021.

NMFC Credit Facility —The Amended and Restated Senior Secured Revolving Credit Agreement, (as amended from time to time, and together with the related guarantee and security agreement, the "RCA"), dated June 4, 2021, among us, as the Borrower, Goldman Sachs Bank USA, as the Administrative Agent and Collateral Agent, and Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Stifel Bank & Trust and MUFG Union Bank, N.A., as Lenders (the "NMFC Credit Facility"), is structured as a senior secured revolving credit facility.

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As of the most recent amendment on June 4, 2021, the maturity date of the NMFC Credit Facility is June 4, 2026.

As of March 31, 2022, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $198.5 million.

As of June 30, 2022, the maximum amount of revolving borrowings available under the NMFC Credit Facility was $198.5 million.

We are permitted to borrow at various advance rates depending on the type of portfolio investment as outlined in the related RCA.

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Prior to June 4, 2021, the NMFC Credit Facility bore interest at a rate of LIBOR plus 2.50% per annum or the prime rate plus 1.50% per annum, and charged a commitment fee based on the unused facility amount multiplied by 0.375% per annum (as defined in the RCA).

As of March 31, 2022 and December 31, 2021, the outstanding balance on the NMFC Credit Facility was $131.9 million and $127.2 million, which included £17.4 million and £16.4 million, respectively, denominated in British Pound Sterling ("GBP") that has been converted to U.S.

As of June 30, 2022 and December 31, 2021, the outstanding balance on the NMFC Credit Facility was $120.9 million and $127.2 million, which included £18.8 million and £16.4 million, respectively, denominated in British Pound Sterling ("GBP") that has been converted to U.S.

dollars, and NMFC was in compliance with the applicable covenants in the NMFC Credit Facility on such dates.

See Item 1.— Financial Statements and Supplementary Data—Note 7.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the NMFC Credit Facility for the three months ended March 31, 2022 and March 31, 2021.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the NMFC Credit Facility for the three and six months ended June 30, 2022 and June 30, 2021.

Unsecured Management Company Revolver —The Uncommitted Revolving Loan Agreement, dated March 30, 2020, by and between us, as the Borrower, and NMF Investments III, L.L.C., as Lender, an affiliate of the Investment Adviser (the "Unsecured Management Company Revolver"), is structured as a discretionary unsecured revolving credit facility.

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On May 4, 2020, we entered into an Amended and Restated Uncommitted Revolving Loan Agreement with NMF Investments III, L.L.C., which increased the maximum amounts of revolving borrowings available thereunder from $30.0 million to $50.0 million.

As of March 31, 2022, the maximum amount of revolving borrowings available under the Unsecured Management Company Revolver was $50.0 million and no borrowings were outstanding.

For the three months ended March 31, 2022 and March 31, 2021, amortization of financing costs were each less than $50.0 thousand, respectively.

As of June 30, 2022, the maximum amount of revolving borrowings available under the Unsecured Management Company Revolver was $50.0 million and no borrowings were outstanding.

For the three and six months ended June 30, 2022 and June 30, 2021, amortization of financing costs were each less than $50.0 thousand, respectively.

DB Credit Facility —The Loan Financing and Servicing Agreement (the "LFSA") dated December 14, 2018 and as amended from time to time, among NMFDB as the borrower, Deutsche Bank AG, New York Branch ("Deutsche Bank") as the facility agent, Lender and other agent from time to time party thereto and U.S.

Bank National Association, as collateral agent and collateral custodian (the "DB Credit Facility"), is structured as a secured revolving credit facility and matures on March 25, 2026.

As of March 31, 2022, the maximum amount of revolving borrowings available under the DB Credit Facility was $280.0 million.

As of June 30, 2022, the maximum amount of revolving borrowings available under the DB Credit Facility was $280.0 million.

We are permitted to borrow at various advance rates depending on the type of portfolio investment, as outlined in the LFSA.

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We are also charged a non-usage fee, based on the unused facility amount multiplied by the Undrawn Fee Rate (as defined in the LFSA) and a facility agent fee of 0.25% per annum on the total facility amount.

As of March 31, 2022 and December 31, 2021, the outstanding balance on the DB Credit Facility was $224.3 million and $226.3 million, respectively, and NMFDB was in compliance with the applicable covenants in the DB Credit Facility on such date.

As of June 30, 2022 and December 31, 2021, the outstanding balance on the DB Credit Facility was $189.3 million and $226.3 million, respectively, and NMFDB was in compliance with the applicable covenants in the DB Credit Facility on such date.

See Item 1.— Financial Statements and Supplementary Data—Note 7.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the DB Credit Facility for the three months ended March 31, 2022 and March 31, 2021.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the DB Credit Facility for the three and six months ended June 30, 2022 and June 30, 2021.

NMNLC Credit Facility II —The Credit Agreement (together with the related guarantee and security agreement, the "NMNLC CA"), dated February 26, 2021, by and between NMNLC, as the Borrower, and City National Bank, as the Lender (the "NMNLC Credit Facility II"), is structured as a senior secured revolving credit facility.

As of the most recent amendment on December 7, 2021, the NMNLC CA matures on February 25, 2023.

As of the most recent amendment on March 16, 2022, the NMNLC CA matures on February 25, 2023.

The NMNLC Credit Facility II is guaranteed by us and proceeds from the NMNLC Credit Facility II are able to be used for funding of additional acquisition properties.

As of March 31, 2022, the maximum amount of revolving borrowings available under the NMNLC Credit Facility II is $20.0 million.

As of June 30, 2022, the maximum amount of revolving borrowings available under the NMNLC Credit Facility II is $10.0 million.

Prior to the amendment on December 7, 2021, the NMNLC Credit Facility II bore interest at a rate of LIBOR plus 2.75% per annum, and charged a commitment fee, based on the unused facility amount multiplied by 0.05% per annum (as defined in the NMNLC CA).

As of December 7, 2021, the NMNLC Credit Facility II bears interest at a rate of SOFR plus 2.75% per annum with a 0.35% floor, and charges a commitment fee, based on the unused facility amount multiplied by 0.05% per annum (as defined in the NMNLC CA).

As of March 31, 2022 and December 31, 2021, the outstanding balance on the NMNLC Credit Facility II was $15.2 million and $15.2 million, respectively, and NMNLC was in compliance with the applicable covenants in the NMNLC Credit Facility II on such date.

Prior to the amendment on March 16, 2022, the maximum amount of revolving borrowings available under the NMNLC Credit Facility II was $20.0 million.

As of the March 16, 2022 amendment and effective May 1, 2022, the maximum amount of revolving borrowings available under the NMNLC Credit Facility II was $10.0 million.

As of June 30, 2022 and December 31, 2021, the outstanding balance on the NMNLC Credit Facility II was $2.9 million and $15.2 million, respectively, and NMNLC was in compliance with the applicable covenants in the NMNLC Credit Facility II on such date.

See Item 1.— Financial Statements and Supplementary Data—Note 7.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the NMNLC Credit Facility II for the three months ended March 31, 2022 and March 31, 2021.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the NMNLC Credit Facility II for the three and six months ended June 30, 2022 and June 30, 2021.

Convertible Notes —On August 20, 2018, we closed a registered public offering of $100.0 million aggregate principal amount of unsecured convertible notes (the "Convertible Notes"), pursuant to an indenture, dated August 20, 2018, as supplemented by a first supplemental indenture thereto, dated August 20, 2018 (together the “2018A Indenture”).

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These covenants are subject to limitations and exceptions that are described in the 2018A Indenture.

The following table summarizes certain key terms related to the convertible features of our Convertible Notes as of March 31, 2022:

The following table summarizes certain key terms related to the convertible features of our Convertible Notes as of June 30, 2022:

Convertible Notes

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Initial conversion price $ 15.18

Conversion premium at March 31, 2022 10.0 %

Conversion rate at March 31, 2022(1)(2) 65.8762

Conversion price at March 31, 2022(2)(3) $ 15.18

Conversion premium at June 30, 2022 10.0 %

Conversion rate at June 30, 2022(1)(2) 65.8762

Conversion price at June 30, 2022(2)(3) $ 15.18

Last conversion price calculation date August 20, 2021

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(2) Represents conversion rate and conversion price, as applicable, taking into account certain de minimis adjustments that will be made on the conversion date.

(3) The conversion price in effect at March 31, 2022 was calculated on the last anniversary of the issuance and will be calculated again on the next anniversary, unless the exercise price shall have changed by more than 1.0% before the anniversary.

(3) The conversion price in effect at June 30, 2022 was calculated on the last anniversary of the issuance and will be calculated again on the next anniversary, unless the exercise price shall have changed by more than 1.0% before the anniversary.

The conversion rate will be subject to adjustment upon certain events, such as stock splits and combinations, mergers, spin-offs, increases in dividends in excess of $0.34 per share per quarter and certain changes in control.

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Earnings Per Share , the issuance is considered part of the if-converted method for calculation of diluted earnings per share.

As of March 31, 2022 and December 31, 2021, the outstanding balance on the Convertible Notes was $201.2 million and $201.2 million, respectively, and NMFC was in compliance with the terms of the 2018A Indenture on such date.

As of June 30, 2022 and December 31, 2021, the outstanding balance on the Convertible Notes was $201.2 million and $201.2 million, respectively, and NMFC was in compliance with the terms of the 2018A Indenture on such date.

See Item 1.— Financial Statements and Supplementary Data—Note 7.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the Convertible Notes for the three months ended March 31, 2022 and March 31, 2021.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the Convertible Notes for the three and six months ended June 30, 2022 and June 30, 2021.

Unsecured Notes

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On July 5, 2018, we issued $50.0 million in aggregate principal amount of five year unsecured notes that mature on June 28, 2023 (the "2018B Unsecured Notes") pursuant to the NPA and a third supplement to the NPA (the "Third Supplement").

On April 30, 2019, we issued $116.5 million in aggregate principal amount of five year unsecured notes that mature on April 30, 2024 (the "2019A Unsecured Notes") pursuant to the NPA and a fourth supplement to the NPA.

On January 29, 2021, we issued $200.0 million in aggregate principal amount of five year unsecured notes that mature on January 29, 2026 (the "2021A Unsecured Notes") pursuant to the NPA and a fifth supplement to the NPA.

On June 15, 2022, we issued $75.0 million in aggregate principal amount of five year unsecured notes that mature on June 15, 2027 (the

"2022A Unsecured Notes") pursuant to the NPA and a sixth supplement to the NPA (the "Sixth Supplement").

The NPA provides for future issuances of unsecured notes in separate series or tranches.

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The 2021A Unsecured Notes bear interest at an annual rate of 3.875%, payable semi-annually in arrears on January 29 and July 29 of each year, which commenced on July 29, 2021.

The 2022A Unsecured Notes bear interest at an annual rate of 5.900%, payable semi-annually in arrears on June 15 and December 15 of each year.

These interest rates are subject to increase in the event that:

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The NPA contains customary terms and conditions for unsecured notes issued, including, without limitation, an option to offer to prepay all or a portion of the unsecured notes under its governance at par (plus a make-whole amount if applicable), affirmative and negative covenants such as information reporting, maintenance of our status as a BDC under the 1940 Act and a RIC under the Code, minimum stockholders’ equity, minimum asset coverage ratio, and prohibitions on certain fundamental changes at NMFC or any subsidiary guarantor, as well as customary events of default with customary cure and notice, including, without limitation, nonpayment, misrepresentation in a material respect, breach of covenant, cross-default under other indebtedness of NMFC or certain significant subsidiaries, certain judgments and orders, and certain events of bankruptcy.

The Third Supplement includes additional financial covenants related to asset coverage as well as other terms.

On September 25, 2018, we closed a registered public offering of $50.0 million in aggregate principal amount of our 5.75% Unsecured Notes that mature on October 1, 2023 (the "5.75% Unsecured Notes", together with the 2016 Unsecured Notes, 2017A Unsecured Notes, 2018A Unsecured Notes, 2018B Unsecured Notes, 2019A Unsecured Notes and the 2021A Unsecured Notes, the "Unsecured Notes"), pursuant to an indenture, dated August 20, 2018, as supplemented by a second supplemental indenture thereto, dated September 25, 2018 (together, the "2018B Indenture").

The Third Supplement, Fourth Supplement, Fifth Supplement and Sixth Supplement all include additional financial covenants related to asset coverage as well as other terms.

On September 25, 2018, we closed a registered public offering of $50.0 million in aggregate principal amount of our 5.75% Unsecured Notes that mature on October 1, 2023 (the "5.75% Unsecured Notes", together with the 2016 Unsecured Notes, 2017A Unsecured Notes, 2018A Unsecured Notes, 2018B Unsecured Notes, 2019A Unsecured Notes, 2021A Unsecured Notes and the 2022A Unsecured Notes, the "Unsecured Notes"), pursuant to an indenture, dated August 20, 2018, as supplemented by a second supplemental indenture thereto, dated September 25, 2018 (together, the "2018B Indenture").

On October 17, 2018, in connection with the registered public offering, we issued an additional $1.8 million aggregate principal amount of the 5.75% Unsecured Notes pursuant to the exercise of an overallotment option by the underwriters of the 5.75% Unsecured Notes.

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equal in right of payment to our existing and future unsecured indebtedness that is not so subordinated;

effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets

securing such indebtedness;

effectively junior in right of payment to any of our secured indebtedness (including existing unsecured indebtedness that we later secure) to the extent of the value of the assets securing such indebtedness;

and structurally junior to all existing and future indebtedness (including trade payables) incurred by our subsidiaries and financing vehicles.

As of March 31, 2022 and December 31, 2021, the outstanding balance on the Unsecured Notes was $511.5 million and $511.5 million, respectively, and we were in compliance with the terms of the NPA as of such dates, as applicable.

As of June 30, 2022 and December 31, 2021, the outstanding balance on the Unsecured Notes was $586.5 million and $511.5 million, respectively, and we were in compliance with the terms of the NPA as of such dates, as applicable.

See Item 1.— Financial Statements and Supplementary Data—Note 7.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the Unsecured Notes for the three months ended March 31, 2022 and March 31, 2021.

Borrowings in this Quarterly Report on Form 10-Q for additional information on costs incurred on the Unsecured Notes for the three and six months ended June 30, 2022 and June 30, 2021.

SBA-guaranteed debentures —On August 1, 2014 and August 25, 2017, respectively, SBIC I and SBIC II received SBIC licenses from the SBA to operate as SBICs.

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In June 2018, legislation amended the 1958 Act by increasing the individual leverage limit from $150.0 million to $175.0 million, subject to SBA approvals.

As of March 31, 2022 and December 31, 2021, SBIC I had regulatory capital of $75.0 million and $75.0 million, respectively, and SBA-guaranteed debentures outstanding of $150.0 million and $150.0 million, respectively.

As of March 31, 2022 and December 31, 2021, SBIC II had regulatory capital of $75.0 million and $75.0 million, respectively, and $150.0 million and $150.0 million, respectively, of SBA-guaranteed debentures outstanding.

As of June 30, 2022 and December 31, 2021, SBIC I had regulatory capital of $75.0 million and $75.0 million, respectively, and SBA-guaranteed debentures outstanding of $150.0 million and $150.0 million, respectively.

As of June 30, 2022 and December 31, 2021, SBIC II had regulatory capital of $75.0 million and $75.0 million, respectively, and $150.0 million and $150.0 million, respectively, of SBA-guaranteed debentures outstanding.

The SBA-guaranteed debentures incur upfront fees of 3.435%, which consists of a 1.00% commitment fee and a 2.435% issuance discount, which are amortized over the life of the SBA-guaranteed debentures.

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SBICs are subject to an annual periodic examination by an SBA examiner to determine the SBIC's compliance with the relevant SBA regulations and an annual financial audit of its financial statements that are prepared on a basis of accounting other than GAAP (such as ASC 820) by an independent auditor.

As of March 31, 2022 and December 31, 2021, SBIC I and SBIC II were in compliance with SBA regulatory requirements.

As of June 30, 2022 and December 31, 2021, SBIC I and SBIC II were in compliance with SBA regulatory requirements.

See Item 1.— Financial Statements and Supplementary Data—Note 7.

Borrowings in this Quarterly Report on Form 10-Q for additional information on our SBA-guaranteed debentures as of March 31, 2022 and costs incurred on the SBA-guaranteed debentures for the three months ended March 31, 2022 and March 31, 2021.

Borrowings in this Quarterly Report on Form 10-Q for additional information on our SBA-guaranteed debentures as of June 30, 2022 and costs incurred on the SBA-guaranteed debentures for the three and six months ended June 30, 2022 and June 30, 2021.

Contractual Obligations

A summary of our significant contractual payment obligations as of March 31, 2022 is as follows:

A summary of our significant contractual payment obligations as of June 30, 2022 is as follows:

Contractual Obligations Payments Due by Period

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SBA-guaranteed debentures(3) 300.0 — 37.5 84.2 178.3

DB Credit Facility(4) 224.3 — — 224.3 —

Convertible Notes(4) 201.2 — 201.2 — —

DB Credit Facility(5) 189.3 — — 189.3 —

NMFC Credit Facility(6) 120.9 — — 120.9 —

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Total Contractual Obligations $ 2,016.3 $ 197.9 $ 355.2 $ 1,284.9 $ 178.3

(1) Under the terms of the $730.0 million Holdings Credit Facility, all outstanding borrowings under that facility ($576.3 million as of March 31, 2022) must be repaid on or before April 20, 2026.

As of March 31, 2022, there was approximately $153.7 million of possible capacity remaining under the Holdings Credit Facility.

(2) $55.0 million of the 2017A Unsecured Notes will mature on July 15, 2022 unless earlier repurchased, $90.0 million of the 2018A Unsecured Notes will mature on January 30, 2023 unless earlier repurchased, $50.0 million of the 2018B Unsecured Notes will mature on June 28, 2023 unless earlier repurchased, $116.5 million of the 2019A Unsecured Notes will mature on April 30, 2024 unless earlier repurchased and $200.0 million of the 2021A Unsecured Notes will mature on January 29, 2026 unless earlier repurchased.

(1) Under the terms of the $730.0 million Holdings Credit Facility, all outstanding borrowings under that facility ($615.5 million as of June 30, 2022) must be repaid on or before April 20, 2026.

As of June 30, 2022, there was approximately $114.5 million of possible capacity remaining under the Holdings Credit Facility.

Notes will mature on April 30, 2024 unless earlier repurchased, $200.0 million of the 2021A Unsecured Notes will mature on January 29, 2026 unless earlier repurchased and $75.0 million of the 2022A Unsecured Notes will mature on June 15, 2027 unless earlier repurchased.

(3) Our SBA-guaranteed debentures will begin to mature on March 1, 2025.

(4) Under the terms of the $280.0 million DB Credit Facility, all outstanding borrowings under that facility ($224.3 million as of March 31, 2022) must be repaid on or before March 25, 2026.

As of March 31, 2022, there was approximately $55.7 million of possible capacity remaining under the DB Credit Facility.

(4) The Convertible Notes will mature on August 15, 2023 unless earlier converted or repurchased at the holder's option or redeemed by us.

(5) Under the terms of the $280.0 million DB Credit Facility, all outstanding borrowings under that facility ($189.3 million as of June 30, 2022) must be repaid on or before March 25, 2026.

As of June 30, 2022, there was approximately $90.7 million of possible capacity remaining under the DB Credit Facility.

(6) Under the terms of the $198.5 million NMFC Credit Facility, all outstanding borrowings under that facility ($120.9 million, which included £18.8 million denominated in GBP that has been converted to U.S.

dollars as of March 31, 2022) must be repaid on or before June 4, 2026.

As of March 31, 2022, there was approximately $66.6 million of available capacity remaining under the NMFC Credit Facility.

(7) Under the terms of the NMNLC Credit Facility II, all outstanding borrowings under that facility ($15.2 million as of March 31, 2022) must be repaid on or before February 25, 2023.

As of March 31, 2022, there was approximately $4.8 million of available capacity remaining under the NMNLC Credit Facility II.

dollars as of June 30, 2022) must be repaid on or before June 4, 2026.

As of June 30, 2022, there was approximately $77.6 million of available capacity remaining under the NMFC Credit Facility.

(7) Under the terms of the NMNLC Credit Facility II, all outstanding borrowings under that facility ($2.9 million as of June 30, 2022) must be repaid on or before February 25, 2023.

As of June 30, 2022, there was approximately $7.1 million of available capacity remaining under the NMNLC Credit Facility II.

We have entered into an investment management and advisory agreement (the "Investment Management Agreement") with the Investment Adviser in accordance with the 1940 Act.

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Distributions and Dividends

Distributions declared and paid to stockholders for the three months ended March 31, 2022 totaled approximately $29.6 million.

Distributions declared and paid to stockholders for the six months ended June 30, 2022 totaled approximately $59.8 million.

The following table reflects cash distributions, including dividends and returns of capital, if any, per share that have been declared by our board of directors for the two most recent fiscal years and the current fiscal year to date:

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December 31, 2022

Second Quarter May 3, 2022 June 16, 2022 June 30, 2022 $ 0.30

First Quarter February 23, 2022 March 17, 2022 March 31, 2022 0.30

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The Administrator arranges our office space and provides office equipment and administrative services necessary to conduct our respective day-to-day operations pursuant to the Administration Agreement.

We reimburse the Administrator for the allocable portion of overhead and other expenses incurred by it in performing its obligations to us under the Administration Agreement, which includes the fees and expenses associated with performing administrative, finance, and compliance functions, and the compensation of our chief financial officer

and chief compliance officer and their respective staffs.

Pursuant to the Administration Agreement and further restricted by us, the Administrator may, in its own discretion, submit to us for reimbursement some or all of the expenses that the Administrator has incurred on our behalf during any quarterly period.

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The Administrator cannot recoup any expenses that the Administrator has previously waived.

For the three months ended March 31, 2022 approximately $0.8 million, of indirect administrative expenses were included in administrative expenses, of which approximately $0.2 million were waived by the Administrator.

As of March 31, 2022, approximately $1.0 million of indirect administrative expenses were included in payable to affiliates.

For the three months ended March 31, 2022, the reimbursement to the Administrator represented approximately 0.02% of our gross assets.

For the three and six months ended June 30, 2022 approximately $0.6 million and $1.4 million, respectively, of indirect administrative expenses were included in administrative expenses, of which approximately $0 and $0.2 million, respectively, were waived by the Administrator.

As of June 30, 2022, approximately $0.6 million of indirect administrative expenses were included in payable to affiliates.

For the three and six months ended June 30, 2022, the reimbursement to the Administrator represented approximately 0.02% and 0.03%, respectively, of our gross assets.

• We, the Investment Adviser and the Administrator have entered into a royalty-free Trademark License Agreement, as amended, with New Mountain Capital, pursuant to which New Mountain Capital has agreed to grant us, the Investment Adviser and the Administrator a non-exclusive, royalty-free license to use the name "New Mountain" and "New Mountain Finance", as well as the NMF logo.

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On October 8, 2019, the SEC issued an exemptive order (the “Exemptive Order”), which superseded a prior order issued on December 18, 2017, which permits us to co-invest in portfolio companies with certain funds or entities managed by the Investment Adviser or its affiliates in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act, subject to the conditions of the Exemptive Order.

Pursuant to the Exemptive Order, we are permitted to co-invest with our affiliates if a “required majority” (as defined in Section 57(o) of the 1940 Act) of our independent directors make certain conclusions in connection with a co-investment transaction, including, but not limited to, that (1) the terms of the potential co-investment transaction, including the consideration to be paid, are reasonable and fair to us and our stockholders and do not involve overreaching in respect of us or our stockholders on the part of any person concerned, and (2) the potential co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment objective and strategies.

co-investment transaction is consistent with the interests of our stockholders and is consistent with our then-current investment objective and strategies.

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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