Neostellar Capital Corp. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements This quarterly report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our current and prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “will,” “may,” “continue,” “believes,” “seeks,” “estimates,” “would,” “could,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this quarterly report on Form 10-Q involve risks and uncertainties, including, without limitation, statements as to: ● our future operating results; ● our dependence upon our management team and key investment professionals; ● our business prospects and the prospects of our portfolio companies; ● our ability to manage our business and future growth; ● the impact of investments that we expect to make; ● risks related to investments in growth-stage companies, other venture capital-backed companies, and generally U.S. companies; ● our contractual arrangements and relationships with third parties; ● our ability to make distributions; ● the dependence of our future success on the general economy and its impact on the industries in which we invest; ● risks related to the uncertainty of the value of our portfolio investments; ● the ability of our portfolio companies to achieve their objectives; ● change in political, economic or industry conditions; ● our expected financings and investments; ● the impact of changes in laws or regulations (including the interpretation thereof), including tax laws, on our operations and/or the operation of our portfolio companies; ● the adequacy of our cash resources and working capital; ● risks related to market volatility, including general price and volume fluctuations in stock markets; and ● the timing of cash flows, if any, from the operations of our portfolio companies. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including, without limitation: ● an economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies; 45 ● an economic downturn could disproportionately impact the market sectors in which a significant portion of our portfolio is concentrated, causing us to suffer losses in our portfolio; ● a contraction of available credit and/or an inability to access the equity markets could impair our investment activities; ● increases in inflation or an inflationary economic environment could adversely affect our portfolio companies’ operating results, causing us to suffer losses in our portfolio; ● interest rate volatility could adversely affect our results, particularly because we use leverage as part of our investment strategy; and ● the risks, uncertainties and other factors we identify in the sections entitled “Risk Factors” in our quarterly reports on Form 10-Q, our annual report on Form 10-K, and in our other filings with the SEC. Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this quarterly report on Form 10-Q should not be regarded as a representation by us that our plans and objectives will be achieved. These risks and uncertainties include those described or identified in our quarterly reports on Form 10-Q and our annual report on Form 10-K in the “Risk Factors” sections. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this quarterly report on Form 10-Q. The following analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes thereto contained elsewhere in this quarterly report on Form 10-Q. Overview We are an internally managed, non-diversified closed-end management investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”), and has elected to be treated, and intends to qualify annually, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Our investment objective is to maximize our portfolio’s total return, principally by seeking capital gains on our equity and equity-related investments, and to a lesser extent, income from debt investments. We invest principally in the equity securities of what we believe to be rapidly growing venture capital-backed emerging companies. We acquire our investments through direct investments in prospective portfolio companies, secondary marketplaces for private companies, negotiations with selling stockholders, and through investments in special purpose vehicles (“SPVs”) and investment funds that invest directly in the equity or debt of a single private issuer. In addition, we may invest in private credit and in the founders equity, founders warrants, venture capital investment funds, and private investment in public equity (“PIPE”) transactions of special purpose acquisition companies (“SPACs”). We may also invest on an opportunistic basis in select publicly traded equity securities, private equity funds and hedge funds that are excluded from the definition of “investment company” under the 1940 Act by Section 3(c)(1) or 3(c)(7) of the 1940 Act, or certain non-U.S. companies that otherwise meet our investment criteria, subject to applicable requirements of the 1940 Act. In regard to the regulatory requirements for BDCs under the 1940 Act, some of these investments may not qualify as investments in “eligible portfolio companies,” and thus may not be considered “qualifying assets.” “Eligible portfolio companies” generally include U.S. companies that are not investment companies and that do not have securities listed on a national exchange. If at any time less than 70% of our gross assets are comprised of qualifying assets, including as a result of an increase in the value of any non-qualifying assets or decrease in the value of any qualifying assets, we would generally not be permitted to acquire any additional non-qualifying assets until such time as 70% of our then-current gross assets were comprised of qualifying assets. We would not be required, however, to dispose of any non-qualifying assets in such circumstances. Our investment philosophy is based on a disciplined approach of identifying promising investments in high-growth, venture-backed companies across several key industry themes which may include, among others, Software-as-a-Service, Artificial Intelligence Infrastructure & Applications, Consumer Goods & Services, Education Technology, Logistics & Supply Chain, Financial Technology & Services, and SuRo Capital Sports. Our investment decisions are based on a disciplined analysis of available information regarding each potential portfolio company’s business operations, focusing on the portfolio company’s growth potential, the quality of recurring revenues, and path to profitability, as well as an understanding of key market fundamentals. Venture capital funds or other institutional investors have invested in the vast majority of companies we evaluate. 46 We seek to deploy capital primarily in the form of non-controlling equity and equity-related investments, including common stock, warrants, preferred stock and similar forms of senior equity, which may or may not be convertible into a portfolio company’s common equity, and convertible debt securities with a significant equity component. Typically, our preferred stock investments are non-income producing, have different voting rights than our common stock investments and are generally convertible into common stock at our discretion. As our investment strategy is primarily focused on equity positions, our investments generally do not produce current income and therefore we may be dependent on future capital raising to meet our operating needs if no other source of liquidity is available. We seek to create a low-turnover portfolio that includes investments in companies representing a broad range of investment themes. Our History We formed in 2010 as a Maryland corporation and operate as an internally managed, non-diversified closed-end management investment company. Our investment activities are supervised by our Board of Directors and managed by our executive officers and investments professionals, all of which are our employees. Our date of inception was January 6, 2011, which is the date we commenced development stage activities. We commenced operations as a BDC upon completion of our IPO in May 2011 and began our investment operations during the second quarter of 2011. On and effective March 12, 2019, our Board of Directors approved our Internalization, and we began operating as an internally managed non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. Our Board of Directors approved the Internalization in order to better align the interests of our stockholders with its management. As an internally managed BDC, we are managed by our employees, rather than the employees of an external investment adviser, thereby allowing for greater transparency to stockholders through robust disclosure regarding our compensation structure. As a result of the Internalization, we no longer pay any fees or expenses under an investment advisory agreement or administration agreement, and instead pay the operating costs associated with employing investment management professionals including, without limitation, compensation expenses related to salaries, discretionary bonuses and restricted stock grants. Portfolio and Investment Activity Nine Months Ended September 30, 2025 The value of our investment portfolio will change over time due to changes in the fair value of our underlying investments, as well as changes in the composition of our portfolio resulting from purchases of new and follow-on investments and the sales of existing investments. The fair value as of September 30, 2025 of all of our portfolio investments was $252,195,540. During the nine months ended September 30, 2025, we funded investments in an aggregate amount of $11,552,884 (not including capitalized transaction costs) as shown in the following table: Portfolio Company Investment Transaction Date Gross Payments Orchard Technologies, Inc. Senior Preferred Shares, Series 1 1/31/2025 $ 222,210 Orchard Technologies, Inc. Simple Agreement for Future Equity 1/31/2025 80,800 Whoop, Inc. Simple Agreement for Future Equity 2/6/2025 1,000,000 Plaid Inc. (1) Common Shares, Class A 4/4/2025 4,999,874 Supplying Demand, Inc. (d/b/a Liquid Death) 4.12% Convertible Note Due June 2028 7/29/2025 250,000 HL Digital Assets Inc. (2) Preferred Shares 9/18/2025 5,000,000 Total $ 11,552,884 (1) SuRo Capital’s investment in the Class A Common Shares of Plaid Inc. was made through 1789 Capital Nirvana II LP, an SPV in which SuRo Capital is the Sole Limited Partner. SuRo Capital paid a 7% origination fee at the time of investment. (2) HL Digital Assets Inc.’s primary purpose is to invest in HYPE, the digital token of Hyperliquid. 47 During the nine months ended September 30, 2025, we capitalized fees of $490,070. During the nine months ended September 30, 2025, we exited or received proceeds from investments in the amount of $49,066,513, net of transaction costs, and realized a net gain on investments of $26,391,459 (including adjustments to amounts held in escrow receivable) as shown in following table: Portfolio Company Transaction Date Quantity Average Net Share Price (1) Net Proceeds Realized Gain (2) CoreWeave, Inc. (3) Various 222,240 $ 113.99 $ 25,332,125 $ 15,328,543 ServiceTitan, Inc. (4) Various 151,515 $ 105.07 15,919,649 5,911,416 CW Opportunity 2 LP (5) Various N/A N/A 7,154,496 4,659,961 GrabAGun Digital Holdings Inc. - Warrants (6) Various 395,512 $ 1.67 660,243 536,838 Total $ 49,066,513 $ 26,436,758 (1) The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable. (2) Realized gain does not include adjustments to amounts held in escrow receivable. (3) As of June 20, 2025, we had sold the entirety of our directly held CoreWeave, Inc. public common shares. (4) As of June 27, 2025, we had sold our entire position in ServiceTitan, Inc. public common shares. (5) As of September 30, 2025, we continue to hold approximately 83.4% of our investment in CW Opportunity 2, LP. (6) As of September 30, 2025, SuRo Capital held 1,204,488 remaining GrabAGun Digital Holdings Inc. public warrants. During the nine months ended September 30, 2025, we did not write-off any investments. Nine Months Ended September 30, 2024 The value of our investment portfolio will change over time due to changes in the fair value of our underlying investments, as well as changes in the composition of our portfolio resulting from purchases of new and follow-on investments and the sales of existing investments. The fair value as of September 30, 2024 of all of our portfolio investments was $199,302,778. During the nine months ended September 30, 2024, we funded investments in an aggregate amount of $57,500,344 (not including capitalized transaction costs) as shown in the following table: Portfolio Company Investment Transaction Date Gross Payments Supplying Demand, Inc. (d/b/a Liquid Death) Preferred shares, Series F-1 1/18/2024 $ 9,999,996 Canva, Inc. Common shares 4/17/2024 9,999,948 CW Opportunity 2 LP (1) Membership Interest, Class A 5/7/2024 15,000,000 ARK Type One Deep Ventures Fund LLC (2) Membership Interest, Class A 9/25/2024 17,500,000 CoreWeave, Inc. Common shares 9/26/2024 5,000,400 Total $ 57,500,344 (1) CW Opportunity 2 LP is a special purpose vehicle (“SPV”) that is solely invested in the Series C Preferred Shares of CoreWeave, Inc. We are invested in the Series C Preferred Shares of CoreWeave, Inc. through our investment in the Class A Interest of CW Opportunity 2 LP. (2) ARK Type One Deep Ventures Fund LLC is an investment fund for which the Class A Interest is solely invested in the Convertible Equity of OpenAI Global, LLC. We are invested in the Convertible Equity of OpenAI Global, LLC through our investment in the Class A Interest of ARK Type One Deep Ventures Fund LLC. During the nine months ended September 30, 2024, we capitalized fees of $286,411. During the nine months ended September 30, 2024, we exited or received proceeds from investments (not including short-term U.S. Treasury bills) in the amount of $14,941,469, net of transaction costs, and realized a net loss on investments of $14,167,198 (including adjustments to amounts held in escrow receivable) as shown in following table: 48 Portfolio Company Transaction Date Quantity Average Net Share Price (1) Net Proceeds Realized Gain/(Loss) (2) Nextdoor Holdings, Inc. (3) Various 112,420 $ 1.92 $ 215,318 $ (411,151 ) PSQ Holdings, Inc. (d/b/a PublicSquare) - Warrants (4) Various 100,000 1.03 102,998 60,067 Architect Capital PayJoy SPV, LLC (5) 6/28/2024 N/A N/A 10,000,000 (6,745 ) True Global Ventures 4 Plus Pte Ltd (6) 6/28/2024 N/A N/A 233,019 — PSQ Holdings, Inc. (d/b/a PublicSq.) - Public Common Shares (7) Various 359,845 $ 2.82 1,015,184 731,722 Churchill Sponsor VII LLC 8/18/2024 N/A N/A — (300,000 ) YouBet Technology, Inc. (d/b/a FanPower) 8/22/2024 N/A N/A — (752,943 ) OneValley, Inc. (f/k/a NestGSV, Inc.) (8) 8/29/2024 N/A N/A 3,000,000 (6,598,530 ) SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) (9) 9/30/2024 N/A N/A 374,950 (6,786,462 ) Total $ 14,941,469 $ (14,064,042 ) (1) The average net share price is the net share price realized after deducting all commissions and fees on the sale(s), if applicable. (2) Realized gain/(loss) does not include adjustments to amounts held in escrow receivable. (3) As of February 23, 2024, we had sold our remaining Nextdoor Holdings, Inc. public common shares. (4) As of September 30, 2024, we held 2,296,037 remaining PSQ Holdings, Inc. (d/b/a PublicSquare) public warrants. (5) On June 28, 2024, we redeemed the entirety of our Membership Interest in Architect Capital PayJoy SPV, LLC. (6) On June 28, 2024, we received a return of capital distribution from our investment in True Global Ventures 4 Plus Pte Ltd. (7) As of September 30, 2024, we held 1,616,187 remaining PSQ Holdings, Inc. (d/b/a PublicSquare) public common shares. (8) On August 29, 2024, we sold our remaining position in OneValley, Inc. (f/k/a NestGSV, Inc.). (9) On September 20, 2024, SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) dissolved its business and made a final distribution. During the nine months ended September 30, 2024, we wrote-off our investments in Churchill Sponsor VII LLC and YouBet Technology, Inc. (d/b/a FanPower) following their dissolution. Results of Operations Comparison of the three and nine months ended September 30, 2025 and 2024 Operating results for the three and nine months ended September 30, 2025 and 2024 are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Total Investment Income $ 459,269 $ 888,717 $ 1,125,667 $ 3,444,161 Interest income 459,269 722,564 777,220 3,256,133 Dividend income — 166,153 348,447 188,028 Total Operating Expenses $ 3,914,084 $ 4,096,590 $ 11,964,411 $ 13,530,561 Compensation expense 1,678,497 1,916,361 4,918,188 6,300,188 Directors’ fees 246,658 171,661 592,718 510,599 Interest expense 1,276,713 1,153,466 3,812,047 3,582,000 Professional fees 394,173 515,244 1,825,254 1,830,628 Income tax expense — — (215,949 ) 54,894 Other expenses 318,043 339,858 1,032,153 1,252,252 Net Investment Loss $ (3,454,815 ) $ (3,207,873 ) $ (10,838,744 ) $ (10,086,400 ) Net realized gain/(loss) on investments 5,196,799 (13,713,512 ) 26,391,459 (14,167,198 ) Realized loss on partial repurchase of 6.00% Notes due December 30, 2026 — (145,244 ) (15,873 ) (145,244 ) Net change in unrealized appreciation/(depreciation) of investments 5,675,109 11,614,384 53,401,606 (13,769,932 ) Net Change in Net Assets Resulting from Operations $ 7,417,093 $ (5,452,245 ) $ 68,938,448 $ (38,168,774 ) 49 Investment Income Investment income decreased to $459,269 for the three months ended September 30, 2025 from $888,717 for the three months ended September 30, 2024. The net decrease between periods was primarily due to a decrease in interest income received on cash, in addition to no longer receiving interest income from Architect Capital PayJoy SPV, LLC following the redemption of our investment in June 2024, and the cessation of dividend income from CW Opportunity 2 LP. These decreases were offset by an increase in interest accruals on our investment in the Supplying Demand, Inc. (d/b/a Liquid Death) Convertible Note during the three months ended September 30, 2025, relative to the three months ended September 30, 2024. Investment income decreased to $1,125,667 for the nine months ended September 30, 2025 from $3,444,161 for the nine months ended September 30, 2024. The net decrease between periods was primarily due to the cessation of interest income from short-term U.S. Treasury bills and a decrease in interest income received on cash, in addition to no longer receiving interest income from Architect Capital PayJoy SPV, LLC following the redemption of our investment in June 2024. Additional decreases were related to a decrease in interest income from interest accruals on our debt investment in Xgroup Holdings Limited (d/b/a Xpoint), and a decrease in dividend income from Aventine Property Group, Inc. due to the pause placed on their declaration of dividends that began in August 2024. The decreases were offset by an increase in dividend income from CW Opportunity 2 LP and an increase in interest accruals on our investment in the Supplying Demand, Inc. (d/b/a Liquid Death) Convertible Note during the nine months ended September 30, 2025, relative to the nine months ended September 30, 2024. Operating Expenses Total operating expenses decreased to $3,914,084 for the three months ended September 30, 2025 from $4,096,590 for the three months ended September 30, 2024. The decrease in operating expense was primarily due to decreases in compensation expense, professional fees, and other expenses. These decreases were partially offset by increases in interest expense and directors’ fees during the three months ended September 30, 2025, relative to the three months ended September 30, 2024. Total operating expenses decreased to $11,964,411 for the nine months ended September 30, 2025 from $13,530,561 for the nine months ended September 30, 2024. The decrease in operating expense was primarily due to decreases in compensation expense, professional fees, and other expenses, in addition to a decrease in income tax expense due to the receipt of a prior year tax refund. These decreases were partially offset by increases in interest expense and directors’ fees during the nine months ended September 30, 2025, relative to the nine months ended September 30, 2024. Net Investment Loss For the three months ended September 30, 2025, we recognized a net investment loss of $3,454,815 compared to a net investment loss of $3,207,873 for the three months ended September 30, 2024. The change between periods resulted from a decrease in total investment income and operating expenses during the three months ended September 30, 2025, relative to the three months ended September 30, 2024. For the nine months ended September 30, 2025, we recognized a net investment loss of $10,838,744, compared to a net investment loss of $10,086,400 for the nine months ended September 30, 2024. The change between periods resulted from a decrease in total investment income and operating expenses during the nine months ended September 30, 2025, relative to the nine months ended September 30, 2024. Net Realized Gain/(Loss) on Investments For the three months ended September 30, 2025, we recognized a net realized gain on our investments of $5,196,799, compared to a net realized loss of $13,713,512 for the three months ended September 30, 2024. The components of our net realized gains or losses on portfolio investments for the three months ended September 30, 2025 and 2024, excluding short-term U.S. Treasury bills and fluctuations in escrow receivables estimates, are reflected in the tables above, under “—Portfolio and Investment Activity.” For the nine months ended September 30, 2025, we recognized a net realized gain on our investments of $26,391,459, compared to a net realized loss of $14,167,198 for the nine months ended September 30, 2024. The components of our net realized gains or losses on portfolio investments for the nine months ended September 30, 2025 and 2024, excluding short-term U.S. Treasury bills and fluctuations in escrow receivables estimates, are reflected in the tables above, under “—Portfolio and Investment Activity.” 50 Net Change in Unrealized Appreciation/(Depreciation) of Investments For the three months ended September 30, 2025, we had a net change in unrealized appreciation/(depreciation) of $5,675,109. For the three months ended September 30, 2024, we had a net change in unrealized appreciation/(depreciation) of $11,614,384. The following tables summarize, by portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for the three months ended September 30, 2025 and 2024. Portfolio Company Net Change in Unrealized Appreciation/(Depreciation) For the Three Months Ended September 30, 2025 Portfolio Company Net Change in Unrealized Appreciation/(Depreciation) For the Three Months Ended September 30, 2024 Blink Health, Inc. $ 9,937,169 OneValley, Inc. (f/k/a NestGSV, Inc.) (1) $ 6,940,288 Whoop, Inc. 5,043,575 SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) (1) 6,791,412 Neutron Holdings, Inc. (d/b/a/ Lime) 1,743,996 Whoop, Inc. 4,400,611 Canva, Inc. 1,656,013 CW Opportunity 2 LP 2,908,096 Shogun Enterprises, Inc. (d/b/a Hearth) 1,458,197 Trax, Ltd. 2,798,224 FourKites, Inc. (1,037,097 ) FourKites, Inc. 1,419,554 CW Opportunity 2 LP (1) (1,355,298 ) Blink Health, Inc. (2,518,714 ) GrabAGun Digital Holdings Inc. (1) (13,822,034 ) PSQ Holdings, Inc. (d/b/a PublicSquare) (1) (3,225,423 ) Learneo, Inc. (f/k/a Course Hero, Inc.) (8,205,015 ) Other (2) 2,050,588 Other (2) 305,351 Total $ 5,675,109 Total $ 11,614,384 (1) The change in unrealized appreciation/(depreciation) reflected for these investments resulted from the full or partial exit of the investment, which resulted in the reversal of previously accrued unrealized appreciation/(depreciation), as applicable. (2) “Other” represents investments for which individual changes in unrealized appreciation/(depreciation) was less than $1.0 million for the three months ended September 30, 2025 and 2024. For the nine months ended September 30, 2025, we had a net change in unrealized appreciation/(depreciation) of $53,401,606. For the nine months ended September 30, 2024, we had a net change in unrealized appreciation/(depreciation) of $(13,769,932). The following tables summarize, by portfolio company, the significant changes in unrealized appreciation/(depreciation) of our investment portfolio for the nine months ended September 30, 2025 and 2024. Portfolio Company Net Change in Unrealized Appreciation/(Depreciation) For the Nine Months Ended September 30, 2025 Portfolio Company Net Change in Unrealized Appreciation/(Depreciation) For the Nine Months Ended September 30, 2024 CW Opportunity 2 LP (1) $ 21,746,592 OneValley, Inc. (f/k/a NestGSV, Inc.) (1) $ 7,696,978 Whoop, Inc. 12,858,226 SPBRX, INC. (f/k/a GSV Sustainability Partners, Inc.) (1) 6,779,031 ARK Type One Deep Ventures Fund LLC 10,098,367 Blink Health, Inc. 5,660,007 Blink Health, Inc. 5,909,121 Whoop, Inc. 4,219,966 GrabAGun Digital Holdings Inc. (1) 4,875,416 FourKites, Inc. 3,323,577 Shogun Enterprises, Inc. (d/b/a Hearth) 2,930,575 ServiceTitan, Inc. 3,322,322 Canva, Inc. 2,898,908 CW Opportunity 2 LP 2,897,806 Neutron Holdings, Inc. (d/b/a/ Lime) 1,865,975 Trax, Ltd. 2,798,224 PayJoy, Inc. 1,066,839 Varo Money, Inc. (1,057,947 ) PSQ Holdings, Inc. (d/b/a PublicSquare) (1,095,583 ) Orchard Technologies, Inc. (1,186,533 ) Learneo, Inc. (f/k/a Course Hero, Inc.) (1,512,679 ) Forge Global, Inc. (2,429,255 ) ServiceTitan, Inc. (1) (4,019,481 ) StormWind, LLC (3,890,411 ) FourKites, Inc. (4,159,918 ) PSQ Holdings, Inc. (d/b/a PublicSquare) (1) (5,722,756 ) Learneo, Inc. (f/k/a Course Hero, Inc.) (35,149,678 ) Other (2) (60,752 ) Other (2) (1,031,263 ) Total $ 53,401,606 Total $ (13,769,932 ) (1) The change in unrealized appreciation/(depreciation) reflected for these investments resulted from the full or partial exit of the investment, which resulted in the reversal of previously accrued unrealized appreciation/(depreciation), as applicable. (2) “Other” represents investments for which individual changes in unrealized appreciation/(depreciation) was less than $1.0 million for the nine months ended September 30, 2025 and 2024. 51 Liquidity and Capital Resources Our liquidity and capital resources are generated primarily from the sales of our investments and the net proceeds from public offerings of our equity and debt securities, including pursuant to our continuous at-the-market offering of shares of our common stock as discussed below under “Equity Issuances and Debt Capital Activities—At-the-Market Offering”. On December 17, 2021, we issued $75.0 million aggregate principal amount of our 6.00% Notes due 2026 (the “6.00% Notes due 2026”), of which $39.7 million remain outstanding as of September 30, 2025. In addition, on August 14, 2024, we issued $25.0 million in aggregate principal amount of 6.50% Convertible Notes due 2029, and on October 9, 2024 and January 16, 2025, we issued $5.0 million and $5.0 million, respectively, in aggregate principal amount of the Additional Notes (as defined below), all of which remain outstanding. For additional information, see “Equity Issuances and Debt Capital Activities—6.50% Convertible Notes due 2029” below and “Note 10—Debt Capital Activities” to our Condensed Consolidated Financial Statements as of September 30, 2025. Our primary uses of cash are to make investments, pay our operating expenses, and make distributions to our stockholders. For the nine months ended September 30, 2025 and 2024, our operating expenses, including interest payments on our debt obligations, were $11,964,411 and $13,530,561, respectively. Cash Reserves and Liquid Securities September 30, 2025 December 31, 2024 Cash $ 54,549,056 $ 20,035,640 Restricted cash (1) 38,741 — Securities of publicly traded portfolio companies: Unrestricted securities (2) 3,677,992 3,563,407 Subject to other sales restrictions (3) 4,846,400 14,027,713 Securities of publicly traded portfolio companies 8,524,392 17,591,120 Total Cash Reserves and Liquid Securities $ 63,112,189 $ 37,626,760 (1) Restricted Cash consists of amounts that are held in a separate account and are subject to specific contractual restrictions that limit their availability for general corporate use. (2) “Unrestricted securities” represents common stock and warrants of our publicly traded portfolio companies that are not currently subject to any restrictions upon sale. We may incur losses. (3) Securities of publicly traded portfolio companies “subject to other sales restrictions” represents common stock of our publicly traded portfolio companies that are currently subject to certain lock-up restrictions. During the nine months ended September 30, 2025, cash increased to $54,587,797 from $20,035,640 at the beginning of the year. The increase in cash was primarily due to the sale of public securities and proceeds from the sale of our common stock. The increase was offset by payment of our operating expenses and interest expense on the 6.00% Notes due 2026 and 6.50% Convertible Notes due 2029. Currently, we believe we have ample liquidity to support our near-term capital requirements. Consistent with past and current practices, we will continue to evaluate our overall liquidity position and take proactive steps to maintain the appropriate liquidity position based upon the current circumstances. Contractual Obligations A summary of our significant contractual payment obligations as of September 30, 2025 is as follows: Payments Due By Period (in millions) Total Less than 1 year 1–3 years 3–5 years More than 5 years 6.00% Notes due 2026 (1) $ 39.7 $ — $ 39.7 $ — $ — 6.50% Convertible Notes due 2029 (2) 35.0 — — 35.0 — Operating lease liability 0.4 0.1 0.3 — — Total $ 75.1 $ 0.1 $ 40.0 $ 35.0 $ — (1) Reflects the principal balance payable for the 6.00% Notes due 2026 as of September 30, 2025. Refer to “Note 10—Debt Capital Activities” in our Condensed Consolidated Financial Statements as of September 30, 2025 for more information. (2) Reflects the principal balance payable for the 6.50% Convertible Notes due 2029 as of September 30, 2025. Refer to “Note 10—Debt Capital Activities” in our Condensed Consolidated Financial Statements as of September 30, 2025 for more information. 52 Share Repurchase Program During the three and nine months ended September 30, 2025 and 2024, we did not repurchase any shares of our common stock under the discretionary open-market Share Repurchase Program. As of September 30, 2025, the dollar value of shares that remained available to be purchased under the Share Repurchase Program is approximately $25.0 million. Currently, the Share Repurchase Program is authorized until the earlier of (i) October 31, 2025 or (ii) the repurchase of $64.3 million in aggregate amount of our common stock. Under the Share Repurchase Program, we may repurchase our outstanding common stock in the open market, provided that we comply with the prohibitions under our insider trading policies and procedures and the applicable provisions of the 1940 Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules promulgated thereunder. For more information on the Share Repurchase Program, see “Note 5—Common Stock” to our Condensed Consolidated Financial Statements as of September 30, 2025. Off-Balance Sheet Arrangements As of September 30, 2025 and December 31, 2024, we had no off-balance sheet arrangements, including any risk management of commodity pricing or other hedging practices. However, we may employ hedging and other risk management techniques in the future. Equity Issuances and Debt Capital Activities At-the-Market Offering On July 29, 2020, we established an “at-the-market” offering (the “ATM Program”) pursuant to an At-the-Market Sales Agreement dated July 29, 2020 (as amended on September 23, 2020 and November 8, 2024, the “Sales Agreement”) with BTIG LLC, Citizens JMP Securities, LLC (f/k/a JMP Securities LLC), Ladenburg Thalmann & Co. Inc. and Barrington Research Associates, Inc. (collectively, the “Agents”). Under the Sales Agreement, we may, but have no obligation to, issue and sell up to $150.0 million in aggregate amount of shares of our common stock (the “Shares”) from time to time through the Agents or to them as principal for their own account. We intend to use the net proceeds from the ATM Program to make investments in portfolio companies in accordance with our investment objective and strategy and for general corporate purposes. During the three and nine months ended September 30, 2025, the Company sold 1,230,984 Shares under the ATM Program. During the three and nine months ended September 30, 2024, the Company did not issue or sell Shares under the ATM Program. As of September 30, 2025, up to approximately $88.0 million in aggregate amount of the Shares remain available for sale under the ATM Program. The following table summarizes certain information relating to shares sold under the ATM Program: Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Number of shares sold 1,230,984 — 1,230,984 — Gross proceeds received $ 10,813,144 $ — $ 10,813,144 $ — Net proceeds received $ 10,614,761 $ — $ 10,614,761 $ — Weighted average price per share $ 8.78 $ — $ 8.78 $ — Refer to “Note 5—Common Stock” to our Condensed Consolidated Financial Statements as of September 30, 2025 for more information regarding the ATM Program. 6.00% Notes due 2026 - Note Repurchase Program On December 17, 2021, we issued $ 70.0 million aggregate principal amount of 6.00 % Notes due 2026, which bear interest at a fixed rate of 6.00% per year, payable quarterly in arrears on March 30, June 30, September 30, and December 30 of each year, commencing on March 30, 2022. On December 21, 2021, we issued an additional $5.0 million aggregate principal amount of 6.00% Notes due 2026. We received approximately $73.0 million in proceeds from the offering, net of underwriting discounts and commissions and other offering expenses. The 6.00% Notes due 2026 have a maturity date of December 30, 2026, unless previously repurchased or redeemed in accordance with their terms. We have the right to redeem the 6.00% Notes due 2026, in whole or in part, at any time or from time to time, on or after December 30, 2024 at a redemption price of 100% of the aggregate principal amount thereof plus accrued and unpaid interest. 53 On August 6, 2024, our Board of Directors approved a discretionary note repurchase program (the “Note Repurchase Program”) which allows us to repurchase up to $35.0 million of our 6.00% Notes due 2026 through open market purchases, including block purchases, in such manner as will comply with the provisions of the 1940 Act and the Exchange Act. During the year ended December 31, 2024, the Company repurchased and retired $30.3 million of aggregate principal amount of the 6.00% Notes due 2026. During the three and nine months ended September 30, 2025, the Company repurchased and retired $0 and $5.0 million, respectively, of aggregate principal amount of the 6.00% Notes due 2026, resulting in the total use of the authorized amount under the Note Repurchase Program. Refer to “Note 10—Debt Capital Activities” to our Condensed Consolidated Financial Statements as of September 30, 2025 for more information regarding the 6.00% Notes due 2026. 6.50% Convertible Notes due 2029 On August 14, 2024, we issued $25.0 million aggregate principal amount of the 6.50% Convertible Notes due 2029 to a private purchaser (the “Purchaser”), which bear interest at a rate of 6.50% per year, payable quarterly in arrears on March 30, June 30, September 30, and December 30 of each year, commencing on September 30, 2024. We received $24.3 million in proceeds from the issuance, net of underwriting discounts and commissions. Under the purchase agreement governing the 6.50% Convertible Notes due 2029 (the “Notes Purchase Agreement”), upon mutual agreement between the Company and the Purchaser, we may issue additional 6.50% Convertible Notes due 2029 for sale in subsequent offerings to the Purchaser (the “Additional Notes”), or issue additional notes with modified pricing terms (the “New Notes”), in the aggregate for both the Additional Notes and the New Notes, up to a maximum of $50.0 million in one or more private offerings. Pursuant to the Notes Purchase Agreement, on October 9, 2024, we issued $5.0 million of Additional Notes to the Purchaser, and on January 16, 2025, we issued an additional $5.0 million of Additional Notes to the Purchaser, which Additional Notes are treated as a single series with the initial issuance of the 6.50% Convertible Notes due 2029. The 6.50% Convertible Notes due 2029 mature on August 14, 2029, unless previously repurchased, redeemed or converted in accordance with their terms. We do not have the right to redeem the 6.50% Convertible Notes due 2029 prior to August 6, 2027. The 6.50% Convertible Notes due 2029 are convertible into shares of our common stock at the Purchaser’s sole discretion at an initial conversion rate of 129.0323 shares of common stock per $1,000 principal amount of the 6.50% Convertible Notes due 2029, subject to adjustment as provided in the Notes Purchase Agreement. Effective as of July 21, 2025, the conversion rate applicable to the 6.50% Convertible Notes due 2029 was adjusted to $7.53 per share (132.7530 shares of the Company’s common stock per $1,000 principal amount of the 6.50% Convertible Notes due 2029) from the initial conversion price of $7.75 per share (129.0323 shares of the Company’s common stock per $1,000 principal amount of the 6.50% Convertible Notes due 2029), which had been effective since issuance. The adjustment to the conversion rate of the 6.50% Convertible Notes due 2029 was made pursuant to the Note Purchase Agreement governing the 6.50% Convertible Notes due 2029 as a result of the Company’s cash dividend of $0.25 per share, paid on July 31, 2025 to stockholders of record as of the close of business on July 21, 2025. Refer to “Part I. Item 2—Recent Developments” and “Note 10—Debt Capital Activities” to our Condensed Consolidated Financial Statements as of September 30, 2025 for more information regarding the 6.50% Convertible Notes due 2029. 54 Distributions The timing and amount of our distributions, if any, will be determined by our Board of Directors and will be declared out of assets legally available for distribution. The following table lists the distributions, including dividends and returns of capital, if any, per share that we have declared since our formation through September 30, 2025. The table is divided by fiscal year according to record date: Date Declared Record Date Payment Date Amount per Share Fiscal 2015: November 4, 2015 (1) November 16, 2015 December 31, 2015 $ 2.76 Fiscal 2016: August 3, 2016 (2) August 16, 2016 August 24, 2016 0.04 Fiscal 2019: November 5, 2019 (3) December 2, 2019 December 12, 2019 0.20 December 20, 2019 (4) December 31, 2019 January 15, 2020 0.12 Fiscal 2020: July 29, 2020 (5) August 11, 2020 August 25, 2020 0.15 September 28, 2020 (6) October 5, 2020 October 20, 2020 0.25 October 28, 2020 (7) November 10, 2020 November 30, 2020 0.25 December 16, 2020 (8) December 30, 2020 January 15, 2021 0.22 Fiscal 2021: January 26, 2021 (9) February 5, 2021 February 19, 2021 0.25 March 8, 2021 (10) March 30, 2021 April 15, 2021 0.25 May 4, 2021 (11) May 18, 2021 June 30, 2021 2.50 August 3, 2021 (12) August 18, 2021 September 30, 2021 2.25 November 2, 2021 (13) November 17, 2021 December 30, 2021 2.00 December 20, 2021 (14) December 31, 2021 January 14, 2022 0.75 Fiscal 2022: March 8, 2022 (15) March 25, 2022 April 15, 2022 0.11 Fiscal 2025: July 3, 2025 (16) July 21, 2025 July 31, 2025 0.25 Total $ 12.35 (1) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,860,903 shares of common stock issued in lieu of cash, or approximately 14.8% of our outstanding shares prior to the distribution, as well as cash of $26,358,885. The number of shares of common stock comprising the stock portion was calculated based on a price of $9.425 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on December 28, 29 and 30, 2015. None of the $2.76 per share distribution represented a return of capital. (2) Of the total distribution of $887,240 on August 24, 2016, $820,753 represented a distribution from realized gains, and $66,487 represented a return of capital. (3) All of the $3,512,849 distribution paid on December 12, 2019 represented a distribution from realized gains. None of the distribution represented a return of capital. (4) All of the $2,107,709 distribution paid on January 15, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. (5) All of the $2,516,452 distribution paid on August 25, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. (6) All of the $5,071,326 distribution paid on October 20, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. (7) All of the $4,978,504 distribution paid on November 30, 2020 represented a distribution from realized gains. None of the distribution represented a return of capital. (8) All of the $4,381,084 distribution paid on January 15, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital. (9) All of the $4,981,131 distribution paid on February 19, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital. 55 (10) All of the $6,051,304 distribution paid on April 15, 2021 represented a distribution from realized gains. None of the distribution represented a return of capital. (11) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,335,527 shares of common stock issued in lieu of cash, or approximately 9.6% of our outstanding shares prior to the distribution, as well as cash of $29,987,589. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.07 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on May 12, 13, and 14, 2021. None of the $2.50 per share distribution represented a return of capital. (12) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,225,193 shares of common stock issued in lieu of cash, or approximately 8.4% of our outstanding shares prior to the distribution, as well as cash of $29,599,164. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.55 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on August 11, 12, and 13, 2021. None of the $2.25 per share distribution represented a return of capital. (13) The distribution was paid in cash or shares of our common stock at the election of stockholders, although the total amount of cash distributed to all stockholders was limited to approximately 50% of the total distribution to be paid to all stockholders. As a result of stockholder elections, the distribution consisted of 2,170,807 shares of common stock issued in lieu of cash, or approximately 7.5% of our outstanding shares prior to the distribution, as well as cash of $28,494,812. The number of shares of common stock comprising the stock portion was calculated based on a price of $13.39 per share, which equaled the average of the volume weighted-average trading price per share of our common stock on November 11, 12, and 13, 2021. None of the $2.00 per share distribution represented a return of capital. (14) All of the $23,338,915 distribution paid on January 14, 2022 represented a distribution from realized gains. None of the distribution represented a return of capital. (15) All of the $3,441,824 distribution paid on April 15, 2022 represented a distribution from realized gains. None of the distribution represented a return of capital. (16) All of the $5,972,027 distribution paid on July 31, 2025 is expected to represent a distribution from realized gains, with no portion expected to represent a return of capital. The final tax characterization will be determined as of December 31, 2025 and reported on Form 1099-DIV. We intend to focus on making equity investments from which we will derive primarily capital gains. As a consequence, we do not anticipate that we will pay distributions on a quarterly basis or become a predictable distributor of distributions, and we expect that our distributions, if any, will be much less consistent than the distributions of other BDCs that primarily make debt investments. If there are earnings or realized capital gains to be distributed, we intend to declare and pay a distribution at least annually. The amount of realized capital gains available for distribution to stockholders will be impacted by our tax status. Our current intention is to make any future distributions out of assets legally available therefrom in the form of additional shares of our common stock under our dividend reinvestment plan (“DRIP”), except in the case of stockholders who elect to receive dividends and/or long-term capital gains distributions in cash. Under the DRIP, if a stockholder owns shares of common stock registered in its own name, the stockholder will have all cash distributions (net of any applicable withholding) automatically reinvested in additional shares of common stock unless the stockholder opts out of our DRIP by delivering a written notice to our dividend paying agent prior to the record date of the next dividend or distribution. Any distributions reinvested under the plan will nevertheless be treated as received by the U.S. stockholder for U.S. federal income tax purposes, although no cash distribution has been made. As a result, if a stockholder does not elect to opt out of the DRIP, it will be required to pay applicable federal, state and local taxes on any reinvested dividends even though such stockholder will not receive a corresponding cash distribution. Stockholders that hold shares in the name of a broker or financial intermediary should contact the broker or financial intermediary regarding any election to receive distributions in cash. So long as we qualify as a RIC, we generally will not be subject to U.S. federal and state income taxes on any ordinary income or capital gains that we distribute at least annually to our stockholders as dividends. To the extent all our ordinary income and capital gains are timely distributed to our stockholders as dividends, any tax liability related to income earned by the RIC will represent obligations of our investors and will not be reflected in our consolidated financial statements. See “Note 2—Significant Accounting Policies— U.S. Federal and State Income Taxes ” and “Note 9—Income Taxes” to our Consolidated Financial Statements as of September 30, 2025 for more information. The Taxable Subsidiaries included in our Consolidated Financial Statements are subject to U.S. federal income tax imposed at corporate rates on their income, regardless of whether we are taxed as a RIC. The Taxable Subsidiaries are not consolidated for U.S. federal income tax purposes and may generate income tax expenses as a result of their ownership of the portfolio companies. Such income tax expenses and deferred taxes, if any, will be reflected in our Consolidated Financial Statements. 56 Critical Accounting Estimates and Policies Critical accounting policies and practices are the policies that are both most important to the portrayal of our financial condition and results, and require management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. These include estimates of the fair value of our Level 3 investments and other estimates that affect the reported amounts of assets and liabilities as of the date of the Condensed Consolidated Financial Statements and the reported amounts of certain revenues and expenses during the reporting period. It is likely that changes in these estimates will occur in the near term. Our estimates are inherently subjective in nature and actual results could differ materially from such estimates. See “Note 2—Significant Accounting Policies” to our Condensed Consolidated Financial Statements as of September 30, 2025 for further detail regarding our critical accounting policies and recently issued or adopted accounting pronouncements. Related-Party Transactions See “Note 3—Related-Party Arrangements” to our Condensed Consolidated Financial Statements as of September 30, 2025 for more information. Recent Developments Share Repurchase Program On October 29, 2025, our Board of Directors authorized an extension of the Share Repurchase Program until the earlier of (i) October 31, 2026 or (ii) the repurchase of $64.3 million in aggregate amount of our common stock. The timing and number of shares to be repurchased pursuant to the Share Repurchase Program will depend on a number of factors, including market conditions and alternative investment opportunities. The Share Repurchase Program may be suspended, terminated or modified at any time for any reason and does not obligate us to acquire any specific number of shares of its common stock. Under the Share Repurchase Program, we may repurchase our outstanding common stock in the open market, provided that we comply with the prohibitions under our insider trading policies and procedures and the applicable provisions of the 1940 Act and the Exchange Act. As of November 5, 2025, the dollar value of shares that remained available to be purchased under the Share Repurchase Program was approximately $25.0 million. 6.00% Notes Due 2026 - Note Repurchase Program On October 29, 2025, our Board of Directors approved an extension of the discretionary note repurchase program (the “Note Repurchase Program”), which allows us to repurchase up to an additional $40.0 million or the remaining aggregate principal amount, of our 6.00% Notes due 2026 through open market purchases, including block purchases, in such manner as will comply with the provisions of the 1940 Act and the Exchange Act. As of November 5, 2025, the dollar value of 6.00% Notes due 2026 that remained available to be purchased under the Note Repurchase Program was approximately $39.7 million. Dividends On November 3, 2025, the Company’s Board of Directors declared a dividend of $0.25 per share payable on December 5, 2025 to the Company’s common stockholders of record as of the close of business on November 21, 2025. The dividend will be paid in cash. Portfolio Activity Please refer to “Note 12—Subsequent Events” to our Condensed Consolidated Financial Statements as of September 30, 2025 for details regarding activity in our investment portfolio from October 1, 2025 through November 5, 2025. We are frequently in negotiations with various private companies with respect to investments in such companies. Investments in private companies are generally subject to satisfaction of applicable closing conditions. In the case of secondary market transactions, such closing conditions may include approval of the issuer, waiver or failure to exercise rights of first refusal by the issuer and/or its stockholders and termination rights by the seller or us. Equity investments made through the secondary market may involve making deposits in escrow accounts until the applicable closing conditions are satisfied, at which time the escrow accounts will close and such equity investments will be effectuated.