What changed in this filing

/stocks — the workspaceLOADING

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2021-12-20 compared with 2020-12-11 · 2278 added, 2253 removed, 236 unchanged (95% of the section changed)

Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates.

Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments and cash and cash equivalents.

Our investment income will be affected by changes in various interest rates, including LIBOR, to the extent our debt investments include floating interest rates.

In the future, we expect other loans in our portfolio will have floating interest rates.

are subject to financial market risks, including changes in interest rates.

Changes in interest rates may affect both our cost of funding

and our interest income from portfolio investments and cash and cash equivalents.

Our investment income will be affected by changes in

various interest rates, including LIBOR, to the extent our debt investments include floating interest rates.

In the future, we expect

other loans in our portfolio will have floating interest rates.

In addition, U.S.

and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets.

We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act.

and global capital markets and credit markets have

experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility

across such markets.

We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and

forward contracts subject to the requirements of the 1940 Act.

For the year ended September 30, 2021, we did not engage in hedging activities.

As of September 30, 2020, 87.4% of our income-bearing investment portfolio bore interest based on floating rates.

of September 30, 2021, 58.1% of our income-bearing investment portfolio bore interest based on floating rates based upon fair value.

In connection with the COVID-19 pandemic, the U.S.

Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased.

A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in our operating expenses, including with respect to any income incentive fee, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR.

In contrast, a rise in the general level of interest rates can be expected to lead to higher interest rates applicable to any variable rate investments we hold and to declines in the value of any fixed rate investments we hold.

In addition, a rise in interest rates may increase the likelihood that a portfolio company defaults on a loan.

However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from increasing until benchmark interest rates increase beyond a threshold amount.

The composition of our floating rate debt investments by cash interest rate LIBOR floor as of September 30, 2020 was as follows (dollars in thousands):

September 30, 2020

LIBOR Floor Fair Value % of Floating

Rate Portfolio

Under 1% $ — — %

Federal Reserve and other central banks have reduced certain interest rates and LIBOR

has decreased.

A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our

net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on

any portfolio investments, a decrease in our operating expenses, including with respect to any income incentive fee, or a decrease in

the interest rate of our floating interest rate liabilities tied to LIBOR.

In contrast, a rise in the general level of interest rates

can be expected to lead to higher interest rates applicable to any variable rate investments we hold and to declines in the value of

any fixed rate investments we hold.

In addition, a rise in interest rates may increase the likelihood that a portfolio company defaults

However, many of our variable rate investments provide for an interest rate floor, which may prevent our interest income from

increasing until benchmark interest rates increase beyond a threshold amount.

The composition of our floating rate debt investments by

cash interest rate LIBOR floor as of September 30, 2021 was as follows (dollars in thousands):

of Floating Rate Portfolio

1% to under 2%

2% to under 3%

Total $ 90,958 100.0 %

Based on our Consolidated Statements of Assets and Liabilities as of September 30, 2020, the following table (dollars in thousands) shows the approximate increase/(decrease) in components of net assets resulting from operations of hypothetical LIBOR base rate changes in interest rates, assuming no changes in our investment and capital structure.

Basis point increase/(decrease) Interest Income (1)

Interest Expense Net Increase/

300 $ 2,200 $ — $ 2,200

200 1,300 — 1,300

100 300 — 300

(1) Assumes no defaults or prepayments by portfolio companies over the next twelve months.

on our Consolidated Statements of Assets and Liabilities as of September 30, 2021, the following table (dollars in thousands) shows the

approximate increase/(decrease) in components of net assets resulting from operations of hypothetical LIBOR base rate changes in interest

rates, assuming no changes in our investment and capital structure.

Interest Rates

Up 300 basis points

Up 200 basis points

Up 100 basis points

Down 100 basis points

Down 200 basis points

Down 300 basis points

no defaults or prepayments by portfolio companies over the next twelve months.

Consolidated Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm F- 1

Consolidated Statements of Assets and Liabilities as of September 30, 2020 and 2019 F- 2

Consolidated Statements of Operations for the years ended September 30, 2020, 2019 and 2018 F- 3

Consolidated Statements of Changes in Net Assets for the years ended September 30, 2020, 2019 and 2018 F- 5

Consolidated Statements of Cash Flows for the years ended September 30, 2020, 2019 and 2018 F- 6

Consolidated Schedules of Investments as of September 30, 2020 and 2019 F- 7

Notes to Consolidated Financial Statements F- 18

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Medley Capital Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated statements of assets and liabilities of Medley Capital Corporation (the Company), including the consolidated schedules of investments, as of September 30, 2020 and 2019, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended September 30, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2020 and 2019, and the results of its operations, changes in its net assets, and its cash flows for each of the three years in the period ended September 30, 2020 in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent

Registered Public Accounting Firm

Consolidated Statements

of Assets and Liabilities as of September 30, 2021 and 2020

Consolidated Statements

of Operations for the years ended September 30, 2021, 2020 and 2019

Consolidated Statements

of Changes in Net Assets for the years ended September 30, 2021, 2020 and 2019

Consolidated Statements

of Cash Flows for the years ended September 30, 2021, 2020 and 2019

Consolidated Schedules

of Investments as of September 30, 2021 and 2020

Notes to Consolidated

Financial Statements

of Independent Registered Public Accounting Firm

the Shareholders and the Board of Directors of PhenixFIN Corporation

on the Financial Statements

have audited the accompanying consolidated statements of assets and liabilities of PhenixFIN Corporation (the Company), including the

consolidated schedules of investments, as of September 30, 2021 and 2020, the related consolidated statements of operations, changes

in net assets, and cash flows for each of the three years in the period ended September 30, 2021, and the related notes (collectively

referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly,

in all material respects, the financial position of the Company at September 30, 2021 and 2020, and the results of its operations, changes

in its net assets, and its cash flows for each of the three years in the period ended September 30, 2021 in conformity with U.S.

accepted accounting principles.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent

with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities

and Exchange Commission and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our procedures included confirmation of investments owned as of September 30, 2020 and 2019, by correspondence with the custodians, directly with designees of the portfolio companies, debt agents and brokers, as applicable, or by other appropriate auditing procedures where replies were not received.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error

or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our procedures included confirmation of investments owned as of September 30,

2021 and 2020, by correspondence with the custodians, directly with designees of the portfolio companies, debt agents and brokers, as

applicable, or by other appropriate auditing procedures where replies were not received.

Our audits also included evaluating the accounting

principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2010

New York, New York

December 11, 2020

Medley Capital Corporation

Consolidated Statements of Assets and Liabilities

September 30, 2020 September 30, 2019

critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated

or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial

statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter

does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the

critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosures to which it relates.

of investments using significant unobservable inputs and assumptions

of the Matter

September 30, 2021, the fair value of the Company’s investments categorized as Level 3 within the fair value hierarchy (Level

3 investments) totaled $115.8 million.

further described in Notes 2 and 4 to the Company’s consolidated financial statements, management determines the fair value

of Level 3 investments by using valuation methodologies (e.g., market or income approach) and associated techniques including, among

others, valuations of comparable public companies, recent sales of private and public comparable companies, discounted cash flows,

and/or enterprise value analysis.

These techniques require management to make judgments about the significant unobservable inputs

and assumptions including, among others, market yields, EBITDA multiples, and revenue multiples.

the fair value of the Company’s Level 3 investments is complex, as the unobservable inputs and assumptions used by the Company

require significant management judgment or estimation and have a significant effect on the fair value measurements of such investments.

Also, applying audit procedures to address the estimation uncertainty involves a high degree of auditor subjectivity.

We Addressed the Matter in Our Audit

audit procedures performed to test the fair value of the Company’s Level 3 investments included, among others and on a sample

basis, evaluating the Company’s valuation methodologies and significant unobservable inputs and assumptions used in the valuations,

as well as testing the mathematical accuracy of the Company’s valuation models utilized to calculate the fair value.

a sample of Level 3 investments, we obtained and reviewed management’s valuation models and compared the significant portfolio

company-specific inputs used in the models to credit agreements, underlying source documents, and/or portfolio company financial

information provided to the Company by the investees, as applicable.

We assessed whether the significant unobservable inputs and

assumptions used by the Company were developed in a manner consistent with its valuation policies.

We also evaluated the appropriateness

of the inputs and assumptions used in the fair value estimates by comparing them to portfolio company financial information and/or

available market information and evaluated the appropriateness of any significant adjustments.

Additionally,

for a sample of Level 3 investments and with the assistance of our valuation specialists, we developed independent fair value estimates

to compare to the Company’s fair value measurements by using market information from third-party sources, such as market multiples

and market yields, and/or portfolio company financial information, as applicable.

searched for and evaluated information that corroborated or contradicted the Company's significant unobservable inputs and assumptions.

We also evaluated subsequent events and transactions and considered whether they corroborated or contradicted the Company's year-end

Ernst & Young LLP

have served as the Company’s auditor since 2010.

York, New York

Statements of Assets and Liabilities

September 30,

Investments at fair value

Non-controlled/non-affiliated investments (amortized cost of $117,360,954 and $204,736,370, respectively) $ 114,321,948 $ 189,895,466

Affiliated investments (amortized cost of $92,898,755 and $108,310,029, respectively) 84,873,023 99,539,605

Controlled investments (amortized cost of $117,874,821 and $154,601,177, respectively) 47,548,578 107,453,927

Total investments at fair value 246,743,549 396,888,998

Cash and cash equivalents 56,522,148 68,245,213

Restricted cash (see Note 2) — 16,038,690

Other assets 2,093,559 2,973,731

Interest receivable 624,524 1,592,406

Receivable for dispositions and investments sold — 419,299

Fees receivable 119,028 108,305

Total assets $ 306,102,808 $ 486,266,642

Notes payable (net of debt issuance costs of $905,624 and $5,274,164, respectively) $ 150,960,662 $ 251,731,729

Accounts payable and accrued expenses 2,108,225 11,956,755

Interest and fees payable 801,805 2,904,748

Management and incentive fees payable (see Note 6) 1,392,022 2,231,175

Administrator expenses payable (see Note 6) 156,965 861,785

Deferred revenue 10,529 103,583

Due to affiliate 53,083 44,337

Total liabilities $ 155,483,291 $ 269,834,112

Guarantees and Commitments (see Note 8)

Common stock, par value $0.001 per share, 5,000,000 common shares authorized, 2,723,709 and 2,723,709 common shares issued and outstanding, respectively (1)

Non-controlled,

non-affiliated investments (amortized cost of $92,214,167 and $117,360,954, respectively)

$ 114,321,948

Capital in excess of par value 672,381,617 673,584,467

Total distributable earnings/(loss) (521,764,824) (457,154,661)

Total net assets 150,619,517 216,432,530

Total liabilities and net assets $ 306,102,808 $ 486,266,642

NET ASSET VALUE PER SHARE (1)

investments (amortized cost of $75,963,427 and $92,898,755, respectively)

investments (amortized cost of $39,490,097 and $117,874,821, respectively)

Investments at fair value

and cash equivalents

$ 225,092,287

(1) Authorized, issued and outstanding common shares and net asset value per share have been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.

See accompanying notes to consolidated financial statements.

Medley Capital Corporation

Consolidated Statements of Operations

For the years ended September 30

$ 306,102,808

INVESTMENT INCOME

payable (net of debt issuance costs of $412,795 and $905,624, respectively)

$ 150,960,662

payable and accrued expenses

Administrator

expenses payable (see Note 6)

and incentive fees payable (see Note 6)

and fees payable

and Contingencies (see Note 8)

Common Shares, $0.001 par

5,000,000 shares authorized;

2,723,709 shares issued;

2,517,221 and 2,723,709 common shares outstanding, respectively

Capital in excess of par

distributable earnings (loss)

(545,175,178 )

(521,764,824 )

Liabilities and Net Assets

$ 225,092,287

$ 306,102,808

Asset Value Per Common Share

accompanying notes to consolidated financial statements.

Statements of Operations

the Years Ended September 30

Interest Income:

Interest from investments

Non-controlled, non-affiliated investments:

Cash $ 9,137,394 $ 25,368,027 $ 39,636,027

Payment in-kind

Affiliated investments:

Cash 1,182,294 2,197,555 2,177,167

Payment in-kind

Controlled investments:

Cash 84,505 337,956 1,521,820

Payment in-kind

Total interest income

Dividend income (net of provisional taxes of $0, $0 and $(437,584), respectively) 6,256,250 8,218,480 7,991,444

Dividend income

Interest from cash and cash equivalents

3 unchanged sentences

Interest and financing expenses

Professional fees (see Note 8) (4,768,050) 19,323,082 4,430,233

General and administrative 3,285,259 7,398,534 2,170,904

General and administrative expenses

Salaries and benefits

Administrator expenses (see Note 6)

Insurance expenses

Directors fees

Insurance 1,463,391 623,064 542,314

Expenses before expense support reimbursement and management and incentive fee waivers 24,952,275 67,166,178 54,638,337

Professional fees, net (see Note 8)

Expenses before expense

support reimbursement and management and incentive fee waivers

Expense support reimbursement (see Note

Management fee waiver (see Note 6) — — (380,000)

Total expenses net of expense support reimbursement and management and incentive fee waivers 24,241,981 67,166,178 54,258,337

Net investment income before excise taxes (2,720,405) (20,867,427) 12,562,261

Excise tax expense — — (157,922)

NET INVESTMENT INCOME/(LOSS) (2,720,405) (20,867,427) 12,404,339

REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS

Net realized gain/(loss) from investments

Non-controlled/non-affiliated investments (9,973,416) (24,762,224) (89,221,587)

Affiliated investments (928,990) (7,670,970) —

Controlled investments (39,076,425) (79,739,742) —

Net realized gain/(loss) from investments (49,978,831) (112,172,936) (89,221,587)

Net unrealized appreciation/(depreciation) on investments

Total expenses net of

expense support reimbursement and management and incentive fee waivers

Net Investment Income

(20,867,427 )

Realized and unrealized

gains (losses) on investments

Net realized gains (losses):

Non-controlled, non-affiliated investments

(24,762,224 )

Affiliated investments

(10,088,405 )

Controlled investments

Net unrealized appreciation/(depreciation) on investments (10,632,403) 38,497,951 (32,194,149)

Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments — — 474,352

Loss on extinguishment of debt (see Note 5) (2,481,374) (2,032,655) (2,386,957)

Net realized and unrealized gain/(loss) on investments (63,092,608) (75,707,640) (123,328,341)

NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (65,813,013) $ (96,575,067) $ (110,924,002)

WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE (1)

(40,144,795 )

WEIGHTED AVERAGE - BASIC AND DILUTED NET INVESTMENT INCOME PER COMMON SHARE (1)

(39,076,425 )

WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED (SEE NOTE 11) (1)

(79,739,742 )

DIVIDENDS DECLARED PER COMMON SHARE (2)

Total net realized gains

(42,485,528 )

(1) Basic and diluted shares has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.

(2) Dividends declared per common share has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.

See accompanying notes to consolidated financial statements.

Medley Capital Corporation

Consolidated Statements of Changes in Net Assets

Common Stock Total Distributable Earnings/(Loss) Total Net Assets

Par Amount Capital in Excess of Par Value

Balance at September 30, 2017 2,723,709 $ 2,724 $ 705,097,848 $ (244,671,255) $ 460,429,317

Net investment income/(loss) — — — 12,404,339 12,404,339

Net realized gain/(loss) from investments — — — (89,221,587) (89,221,587)

Net unrealized appreciation/(depreciation) on investments — — — (32,194,149) (32,194,149)

Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments — — — 474,352 474,352

Net loss on extinguishment of debt — — — (2,386,957) (2,386,957)

SHAREHOLDER DISTRIBUTIONS

Distributions from earnings — — — (22,025,185) (22,025,185)

Return of Capital (6,301,403) — (6,301,403)

Tax reclassification of shareholders' equity in accordance with generally accepted accounting principals — — (157,925) 157,925 —

Total increase/(decrease) in net assets — — (6,459,328) (132,791,262) (139,250,590)

Balance at September 30, 2018 2,723,709 2,724 698,638,520 (377,462,517) 321,178,727

Net investment income/(loss) — — — (20,867,427) (20,867,427)

Net realized gain/(loss) from investments — — — (112,172,936) (112,172,936)

Net unrealized appreciation/(depreciation) on investments — — — 38,497,951 38,497,951

Net loss on extinguishment of debt — — — (2,032,655) (2,032,655)

SHAREHOLDER DISTRIBUTIONS

Return of capital — — (8,171,130) — (8,171,130)

Tax reclassification of shareholders' equity in accordance with generally accepted accounting principals — — (16,882,923) 16,882,923 —

Total increase/(decrease) in net assets — — (25,054,053) (79,692,144) (104,746,197)

Balance at September 30, 2019 2,723,709 2,724 673,584,467 (457,154,661) 216,432,530

Net investment income/(loss) — — — (2,720,405) (2,720,405)

Net realized gain/(loss) from investments — — — (49,978,831) (49,978,831)

Net unrealized appreciation/(depreciation) on investments — — — (10,632,403) (10,632,403)

Net loss on extinguishment of debt — — — (2,481,374) (2,481,374)

SHAREHOLDER DISTRIBUTIONS

Tax reclassification of shareholders' equity in accordance with generally accepted accounting principals — — (1,202,850) 1,202,850 —

Total increase/(decrease) in net assets — — (1,202,850) (64,610,163) (65,813,013)

Balance at September 30, 2020 2,723,709 $ 2,724 $ 672,381,617 $ (521,764,824) $ 150,619,517

(1) Shares of Common Stock have been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.

See accompanying notes to consolidated financial statements.

Medley Capital Corporation

Consolidated Statements of Cash Flows

For the years ended September 30

(49,978,831 )

Cash flows from operating activities

NET INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS $ (65,813,013) $ (96,575,067) $ (110,924,002)

ADJUSTMENTS TO RECONCILE NET INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS TO NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES:

Investment increases due to Payment-in-kind interest (4,211,154) (9,606,292) (9,545,703)

Net amortization of premium/(discount) on investments (118,290) (286,665) (959,112)

Amortization of debt issuance costs 2,870,483 3,022,516 3,583,158

Net realized (gain)/loss from investments 49,978,831 112,172,936 89,221,587

Net deferred income taxes — — (911,936)

Net unrealized (appreciation)/depreciation on investments 10,632,403 (38,497,951) 32,194,149

Proceeds from sale and settlements of investments 110,627,326 261,233,495 267,611,933

Purchases, originations and participations (16,763,667) (66,474,607) (196,961,869)

Loss on extinguishment of debt 2,481,374 2,032,655 2,386,957

(Increase)/decrease in operating assets:

Other assets 880,172 446,711 (98,620)

Interest receivable 967,883 4,784,670 2,993,972

Receivable for dispositions and investments sold 419,299 (259,042) 71,638

Fees receivable (10,723) 78,971 578,480

Increase/(decrease) in operating liabilities:

Accounts payable and accrued expenses (9,848,530) 9,020,922 1,072,287

Interest and fees payable (2,102,943) (375,270) (479,873)

Management and incentive fees payable, net (839,153) (1,116,499) (964,330)

Administrator expenses payable (704,820) 53,239 (51,248)

Deferred revenue (93,054) (88,569) (67,400)

Due to affiliate 8,746 5,286 (42,296)

NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES 78,361,170 179,571,439 78,707,772

Cash flows from financing activities

Borrowings on debt — — 140,775,690

Paydowns on debt (106,122,925) (163,122,780) (217,500,000)

Debt issuance costs paid — (14,361) (6,515,112)

Payments of cash dividends — (8,171,130) (28,326,588)

Offering costs paid — 354,754 (47,739)

NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES (106,122,925) (170,953,517) (111,613,749)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (27,761,755) 8,617,922 (32,905,977)

CASH, RESTRICTED CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 84,283,903 75,665,981 108,571,958

CASH, RESTRICTED CASH AND CASH EQUIVALENTS, END OF YEAR $ 56,522,148 $ 84,283,903 $ 75,665,981

Supplemental Information:

Interest paid during the year $ 14,167,477 $ 21,402,239 $ 24,676,749

Supplemental non-cash information:

Non-cash purchase of investments $ 12,950,924 $ 20,576,235 $ 7,443,658

Non-cash sale of investments $ 12,950,924 $ 20,528,752 $ 7,443,658

For the years ended September 30

(112,172,936 )

Cash $ 56,522,148 $ 68,245,213 $ 75,665,981

Restricted Cash — 16,038,690 —

Total cash and restricted cash shown in the statement of cash flows $ 56,522,148 $ 84,283,903 $ 75,665,981

See accompanying notes to consolidated financial statements.

Medley Capital Corporation

Consolidated Schedule of Investments

September 30, 2020

Industry Type of Investment Maturity Par Amount (2)

Fair Value (6)

Net Assets (4)

Net change in unrealized gains (losses):

Non-controlled, non-affiliated investments

Alpine SG, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13)

11/16/2022 4,715,809 4,715,809 4,466,815 3.0 %

Senior Secured Incremental First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13)

11/16/2022 472,087 472,087 472,087 0.3 %

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13)

11/16/2022 2,277,293 2,277,293 2,157,052 1.4 %

Revolving Credit Facility (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13)(15)

11/16/2022 1,000,000 1,000,000 947,200 0.6 %

8,465,189 8,465,189 8,043,154

American Dental Partners, Inc.

Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13)

9/25/2023 4,387,500 4,387,500 3,948,750 2.6 %

Affiliated investments

(10,342,450 )

Autosplice, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor) (13)

Controlled investments

(23,178,993 )

Total net change in unrealized

gains (losses)

(10,632,403 )

Avantor, Inc.

Wholesale Equity - 545,931 Common Units (16)

Loss on extinguishment

of debt (see Note 5)

realized and unrealized gains (losses)

(17,244,811 )

(63,092,608 )

Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units — 416,250 — 0.0 %

CM Finance SPV, LLC Banking, Finance, Insurance & Real Estate Unsecured Debt 6/24/2021 101,463 101,463 101,463 0.1 %

(75,707,640 )

CPI International, Inc.

Aerospace & Defense Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor) (12)

Increase (Decrease) in Net Assets Resulting from Operations

$ (65,813,013 )

$ (96,575,067 )

Crow Precision Components, LLC Aerospace & Defense Equity - 350 Common Units — 700,000 723,131 0.5 %

Weighted Average Basic and diluted earnings per common share

Weighted Average Basic and diluted net investment

income (loss) per common share

Weighted Average Common Shares Outstanding

- Basic and Diluted (see Note 11)

Dividends Declared per Common Share

accompanying notes to consolidated financial statements.

Statements of Changes in Net Assets

in Excess of Par Value

Distributable

Earnings/(Loss)

at September 30, 2018

$ 698,638,520

CT Technologies Intermediate Holdings, Inc.

Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13)

$ (377,462,517 )

$ 321,178,727

DataOnline Corp.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)

investment income (loss)

(20,867,427 )

Revolving Credit Facility (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)(15)

(20,867,427 )

realized gains (losses) on investments

(112,172,936 )

Dream Finders Homes, LLC Construction & Building Preferred Equity (8.00% PIK) 4,531,472 4,531,472 3,928,786 2.6 %

Industry Type of Investment Maturity Par Amount (2)

Fair Value (6)

Net Assets (4)

(112,172,936 )

Footprint Acquisition, LLC Services:

Business Preferred Equity (8.75% PIK) 3,969,998 3,969,998 3,969,998 2.6 %

Equity - 150 Common Units — — 1,960,830 1.3 %

change in unrealized appreciation (depreciation) on investments

loss on extinguishment of debt

DISTRIBUTIONS

Return of Capital

reclassification of shareholders’

equity in accordance with generally accepted accounting principles

(16,882,923 )

Global Accessories Group, LLC (11)

Consumer goods:

Non-durable Equity - 3.8% Membership Interest — 151,337 — 0.0 %

Impact Group, LLC Services:

Business Senior Secured First Lien Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor) (13)

Increase (Decrease) in Net Assets

(25,054,053 )

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor) (13)

(79,692,144 )

(104,746,197 )

InterFlex Acquisition Company, LLC Containers, Packaging & Glass Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12)

at September 30, 2019

(457,154,661 )

investment income (loss)

realized gains (losses) on investments

(49,978,831 )

Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.62% of Outstanding Equity (17)

(49,978,831 )

Manna Pro Products, LLC Consumer goods:

Non-durable Senior Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12)

change in unrealized appreciation (depreciation) on investments

(10,632,403 )

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12)

(10,632,403 )

loss on extinguishment of debt

DISTRIBUTIONS

reclassification of shareholders’

equity in accordance with generally accepted accounting principles

Increase (Decrease) in Net Assets

(64,610,163 )

Point.360 Services:

Business Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK) (9)(14)(21)

(65,813,013 )

at September 30, 2020

(521,764,824 )

RateGain Technologies, Inc.

Hotel, Gaming & Leisure Unsecured Debt (18)

investment income (loss)

realized gains (losses) on investments

(42,485,528 )

Unsecured Debt (18)

(42,485,528 )

change in unrealized appreciation (depreciation) on investments

loss on extinguishment of debt

CAPITAL SHARE TRANSACTIONS

Repurchase of common shares

reclassification of shareholders’

equity in accordance with generally accepted accounting principles

(24,688,262 )

Redwood Services Group, LLC (7)

Business Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12 )(15)

Increase (Decrease) in Net Assets

(23,410,354 )

at September 30, 2021

$ 688,866,642

Sendero Drilling Company, LLC Energy:

Oil & Gas Unsecured Debt (8.00% Cash) (9)

$ (545,175,178 )

$ 143,693,981

Seotowncenter, Inc.

Business Equity - 3,434,169.6 Common Units — 566,475 686,834 0.5 %

accompanying notes to consolidated financial statements.

Statements of Cash Flows

For the Years Ended

Cash Flows from Operating Activities:

Net increase (decrease) in net assets resulting from operations

$ (65,813,013 )

SFP Holding, Inc.

Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)

$ (96,575,067 )

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:

Investment increases due to payment-in-kind interest

Net amortization of premium (discount) on investments

Amortization of debt issuance cost

Net realized (gain) loss from investments

Net unrealized (appreciation) depreciation on investments

(25,363,072 )

Equity - 101,165.93 Common Units in CI (Summit) Investment Holdings LLC — 1,067,546 657,578 0.4 %

(38,497,951 )

Industry Type of Investment Maturity Par Amount (2)

Fair Value (6)

Net Assets (4)

SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units — 700,000 343,000 0.2 %

Proceeds from sale and settlements of investments

Purchases, originations and participations

(45,340,354 )

Stancor, Inc.

Business Equity - 263,814.43 Class A Units — 263,814 150,374 0.1 %

(16,763,667 )

Starfish Holdco, LLC High Tech Industries Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12)

(66,474,607 )

Loss on extinguishment of debt

(Increase) decrease in operating assets:

Other assets (1)

Interest receivable

Receivable for dispositions and investments sold

Receivable for paydowns

Fees receivable

Dividends receivable

Increase (decrease) in operating liabilities:

Accounts payable and accrued expenses

Interest and fees payable

Management and incentive fees payable, net

Administrator expenses payable

Deferred revenue

Due to affiliate

Due to broker

Net cash provided by (used in) operating activities

Paydowns on debt

(74,012,825 )

URT Acquisition Holdings Corporation Services:

Business Unsecured Debt (10.00% PIK) 6/23/2021 2,567,929 2,567,929 2,567,929 1.7 %

(106,122,925 )

Velocity Pooling Vehicle, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 11.00% PIK, 1.00% LIBOR Floor) (13)

(163,122,780 )

Equity - 5,441 Class A Units — 302,464 12,841 0.0 %

Warrants - 0.65% of Outstanding Equity 3/30/2028 — 361,667 15,354 0.0 %

Debt issuance costs paid

Payments of cash dividends

Offering costs paid

Repurchase of common shares

Net cash provided by (used in) financing activities

(82,216,269 )

Walker Edison Furniture Company LLC Consumer goods:

Durable Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)

(106,122,925 )

Equity - 1,500 Common Units — 1,500,000 6,000,000 4.0 %

(170,953,517 )

Watermill-QMC Midco, Inc.

Automotive Equity - 1.3% Partnership Interest (8)

Net increase (decrease) in cash and cash equivalents

(27,761,755 )

Subtotal Non-Controlled/Non-Affiliated Investments $ 101,082,417 $ 117,360,954 $ 114,321,948

Affiliated Investments :

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

Supplemental information:

Interest paid during the year

Supplemental non-cash information:

Non-cash purchase of investments

Non-cash sale of investments

Restricted Cash

Total cash and restricted cash shown in the statement of cash flows

(1) Excludes non-cash recognition of a right of

use asset of $613,534.

accompanying notes to consolidated financial statements.

Schedule of Investments

of Investment

Non-Controlled/Non-Affiliated

Investments :

Tech Industries

Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (14)

Secured Incremental First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (14)

Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (14)

Secured Incremental First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (14)

Secured First Lien Term Loan (LIBOR + 8.00% Cash & 2.00% PIK, 1.00% LIBOR Floor) (14)

Green Packaging, LLC

Packaging & Glass

- 417 Common Units

Investment Corp.

Finance, Insurance & Real Estate

- 117,310 Class C Preferred Units (17)(20)

Cleaver-Brooks,

Manufacturing

Senior Secured Notes (18)

Finance SPV, LLC

International, Inc.

Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor) (13)

Tech Industries

Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (14)

Credit Facility (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (14)(16)

and Income Fund (11)

Finance, Insurance & Real Estate

- 87,483 Common Units (17)

Finders Homes, LLC (11)

Equity (8.00% PIK)

of Investment

Acquisition, LLC

Equity (8.75% PIK) (10)

- 150 Common Units

Accessories Group, LLC

- 3.8% Membership Interest

Finance, Insurance & Real Estate

- 253,651 Common Units (17)

Mortgage Capital, Inc.

Finance, Insurance & Real Estate

- 205,000 Class C Preferred Units (17)(21)

Science Group Corporation

Packaging & Glass

- 0.62% of Outstanding Equity (18)

Financial, Inc.

Finance, Insurance & Real Estate

- 31,692 Class C Preferred Units (17)(24)

Residential Investment Corp.

Finance, Insurance & Real Estate

- 206,684 Class B Preferred Units (17)(22)

York Mortgage Trust, Inc.

Finance, Insurance & Real Estate

- 165,000 Class E Preferred Units (17)(23)

Secured First Lien Term Loan (LIBOR + 6.00% PIK) (10)(15)

Technologies, Inc.

Gaming & Leisure

Debt (4.50% Cash) (12)

Services Group, LLC (8)

Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (13)(16)

Drilling Company, LLC

Debt (9.00% Cash) (10)

Seotowncenter,

- 3,434,169.6 Common Units

of Investment

Financial Operations, LLC

- 700,000 Class A Preferred Units

- 263,814.43 Class A Units

Holdings, Inc.

Secured First Lien Term Loan B (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13)

Pooling Vehicle, LLC

- 5,441 Class A Units

- 0.65% of Outstanding Equity

Edison Furniture Company LLC

- 10,244 Common Units

Watermill-QMC

- 1.3% Partnership Interest (9)

Holdings, Inc.

(f/k/a Crow Precision Components, LLC)

- 350 Common Units

Non-Controlled/Non-Affiliated Investments

Investments :

Industrial Services, LLC (8)

Oil & Gas Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor) (9)(13)

9/30/2021 9,946,741 9,473,067 — 0.0 %

Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor) (9)(13)

9/30/2021 25,937,520 19,468,870 — 0.0 %

Senior Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor) (9)(13)

9/30/2021 1,231,932 1,191,257 1,166,763 0.8 %

Revolving Credit Facility (LIBOR + 5.00% PIK, 1.00% LIBOR Floor) (13)(15)

9/30/2021 3,554,069 3,554,069 3,554,069 2.4 %

Equity - 17,493.63 Class A Units — — — 0.0 %

40,670,262 33,687,263 4,720,832

Access Media Holdings, LLC Media:

Broadcasting & Subscription Senior Secured First Lien Term Loan (10.00% PIK) (9)(21)

7/22/2020 11,105,630 8,446,385 1,110,563 0.7 %

Preferred Equity Series A 1,600,000 1,600,000 — 0.0 %

Preferred Equity Series AA 800,000 800,000 — 0.0 %

Preferred Equity Series AAA 971,200 971,200 — 0.0 %

Equity - 16 Common Units — — — 0.0 %

14,476,830 11,817,585 1,110,563

Black Angus Steakhouses, LLC Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12)

12/31/2020 758,929 758,929 758,929 0.5 %

Senior Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor) (9)(12)

12/31/2020 8,412,596 7,767,532 5,047,557 3.4 %

Industry Type of Investment Maturity Par Amount (2)

Fair Value (6)

Net Assets (4)

Equity - 17.9% Membership Interest — — — 0.0 %

9,171,525 8,526,461 5,806,486

Caddo Investors Holdings 1 LLC (10)

Forest Products & Paper Equity - 6.15% Membership Interest (19)

— 2,528,826 2,990,776 2.0 %

— 2,528,826 2,990,776 —

Dynamic Energy Services International LLC Energy:

Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK) (9)(14)

12/31/2021 12,930,235 7,824,974 905,116 0.6 %

Equity - 12,350,000 Class A Units — — — 0.0 %

12,930,235 7,824,974 905,116

JFL-NGS Partners, LLC Construction & Building Preferred Equity - A-2 Preferred (3.00% PIK) 1,795,034 1,795,034 1,795,034 1.2 %

Preferred Equity - A-1 Preferred (3.00% PIK) 232,292 232,292 232,292 0.2 %

Equity - 57,300 Class B Units — 57,300 38,780,067 25.7 %

2,027,326 2,084,626 40,807,393 —

JFL-WCS Partners, LLC Environmental Industries Preferred Equity - Class A Preferred (6.00% PIK) 1,310,649 1,310,649 1,310,649 0.9 %

Equity - 129,588 Class B Units — 129,588 4,535,580 3.0 %

1,310,649 1,440,237 5,846,229 —

Kemmerer Operations, LLC (7)

Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK) 6/21/2023 2,051,705 — 2,051,705 — 2,051,705 1.4 %

Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK) 6/21/2023 515,699 — 515,699 — 515,699 0.4 %

Equity - 6.7797 Common Units — — 962,717 — 962,717 0.6 %

2,567,404 3,530,121 3,530,121

Path Medical, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor) (12)

10/11/2021 5,905,080 — 5,905,080 — 5,905,080 3.9 %

Senior Secured First Lien Term Loan B (LIBOR + 13% PIK, 1.00% LIBOR Floor) (9)(12)

10/11/2021 7,783,840 — 6,599,918 — 6,794,514 4.5 %

Warrants - 7.68% of Outstanding Equity 1/9/2027 — — 499,751 — — 0.0 %

13,688,920 13,004,749 12,699,594

US Multifamily, LLC (10)

Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (10.00% Cash) 6/17/2021 5,123,913 5,123,913 5,123,913 3.4 %

Equity - 33,300 Preferred Units — 3,330,000 1,332,000 0.9 %

Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor) (10)(14)

9/30/2021 (25)

Subtotal Affiliated Investments $ 101,967,064 $ 92,898,755 $ 84,873,023

Controlled Investments :

MCC Senior Loan Strategy JV I LLC (10)

Multisector Holdings Equity - 87.5% ownership of MCC Senior Loan Strategy JV I LLC — 79,887,500 41,018,500 27.2 %

Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor) (10)(14)

9/30/2021 (25)

Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (9)(12)

Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor) (14)

9/30/2021 (25)

Senior Secured First Lien Super Priority DDTL (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (9)(12)

Credit Facility (LIBOR +5.00% PIK, 1.00% LIBOR Floor) (14)(16)

9/30/2021 (25)

Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor) (9)(12)

- 17,493.63 Class A Units

Angus Steakhouses, LLC (8)

Gaming & Leisure

Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13)

Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor) (10)(13)

Secured First Lien Super Priority DDTL (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13)(16)

of Investment

Investors Holdings 1 LLC (11)

Products & Paper

- 6.15% Membership Interest (19)

Energy Services International LLC

Secured First Lien Term Loan (LIBOR + 13.50% PIK) (10)(15)

- 12,350,000 Class A Units

Partners, LLC

- 57,300 Class B Units

Partners, LLC

Environmental

- 129,588 Class B Units

Operations, LLC (8)

Secured First Lien Term Loan (15.00% PIK)

Secured First Lien Delayed Draw Term Loan (15.00% PIK) (16)

- 6.7797 Common Units

& Pharmaceuticals

Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor) (10)(13)

Secured First Lien Term Loan B (LIBOR + 13.00% PIK, 1.00% LIBOR Floor) (10)(13)

- 7.68% of Outstanding Equity

Acquisition Holdings Corporation

Multifamily, LLC (11)

Finance, Insurance & Real Estate

Secured First Lien Term Loan (10.00% Cash)

- 33,300 Preferred Units

Affiliated Investments

Investments :

Gaming & Leisure

Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (10)(13)(16)

Secured First Lien Super Priority DDTL (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (13)(16)

Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor) (10)(13)

of Investment

Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor) (10)(13)

- 787.4 Class A Units

Control Investments

Investments, September 30, 2021

$ 217,192,285

Industry Type of Investment Maturity Par Amount (2)

Fair Value (6)

Net Assets (4)

Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor) (9)(12)

$ 207,667,691

Equity - 787.4 Class A Units — 9,550,922 — 0.0 %

$ 151,639,783

Subtotal Control Investments $ 33,543,293 $ 117,874,821 $ 47,548,578

Total Investments, September 30, 2020 $ 236,592,774 $ 328,134,530 $ 246,743,549 163.8 %

(1) All of our investments are domiciled in the United States.

accompanying notes are an integral part of these consolidated financial statements.

investments are domiciled in the United States.

Certain investments also have international operations.

(2) Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments.

(3) Gross unrealized appreciation, gross unrealized depreciation, and net unrealized depreciation for U.S.

federal income tax purposes totaled $53,757,923, $134,877,746, and $81,119,823, respectively.

Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments.

Net unrealized depreciation for U.S.

federal income tax purposes totaled $55,318,330.

The tax cost basis of investments is $206,958,113 as of September 30, 2021.

(4) Percentage is based on net assets of $150,619,517 as of September 30, 2020.

(5) Control Investments are defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.

Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy (see Note 4).

(7) The investment has an unfunded commitment as of September 30, 2020 (see Note 8), and includes an analysis of the value of any unfunded commitments.

Percentage is based on net assets of $143,693,981 as of September 30, 2021.

Affiliated Investments are defined by the 1940 Act as investments in companies in which the Company owns between 5% and 25% outstanding voting securities or is under common control with such portfolio company.

Control Investments are defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.

The investment has an unfunded commitment as of September 30, 2021 (see Note 8), and fair value includes the value of any unfunded commitments.

Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP.

1 unchanged sentence

The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part.

As of September 30, 2020, 25.4% of the Company's portfolio investments were non-qualifying assets.

(11) A portion of this investment was sold via a participation agreement.

The amount stated is the portion retained by the Company (see Note 3).

(12) The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate.

As of September 30, 2021, 20.18% of the Company’s portfolio investments were non-qualifying assets.

Security is non-income producing.

The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate.

The 1 month LIBOR as of September 30, 2021 was 0.08%.

6 unchanged sentences

This investment represents a Level 2 security in the ASC 820 table as of September 30, 2021 (see Note 4).

(18) Security is non-income producing.

(19) As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment.

(20) Affiliated Investments are defined by the 1940 Act as investments in companies in which the Company owns between 5% and 25% outstanding voting securities or is under common control with such portfolio company.

(21) The investment was past due as of September 30, 2020.

See accompanying notes to consolidated financial statements.

Medley Capital Corporation

Consolidated Schedule of Investments

September 30, 2019

Industry Type of Investment (6)

Maturity Par Amount (2)

Fair Value % of

Net Assets (4)

As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment.

The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 4.743% spread on 9/30/2025.

The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 5.29% spread on 9/27/2027.

The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 5.64% spread on 8/15/2024.

The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 6.429% spread on 1/15/2025.

The interest rate on this preferred equity is fixed-to-floating and will shift to 3 month LIBOR plus a 5.345% spread on 3/31/2025.

The maturity date was extended to May 1, 2023 subsequent to September 30, 2021.

Schedule of Investments

of Investment

Non-Controlled/Non-Affiliated

Tech Industries

Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13)

Secured Incremental First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13)

Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13)

Credit Facility (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13)(15)

Dental Partners, Inc.

& Pharmaceuticals

Secured Second Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13)

Tech Industries

Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor) (13)

- 545,931 Common Units (16)

Green Packaging, LLC

Packaging & Glass

- 417 Common Units

Finance SPV, LLC

Finance, Insurance & Real Estate

International, Inc.

Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor) (12)

Precision Components, LLC

- 350 Common Units

Technologies Intermediate Holdings, Inc.

& Pharmaceuticals

Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13)

Tech Industries

Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)

Credit Facility (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)(15)

Finders Homes, LLC

Equity (8.00% PIK)

of Investment

Acquisition, LLC

Equity (8.75% PIK)

- 150 Common Units

Accessories Group, LLC (11)

- 3.8% Membership Interest

Secured First Lien Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor) (13)

Secured First Lien Delayed Draw Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor) (13)

Acquisition Company, LLC

Packaging & Glass

Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12)

Science Group Corporation

Packaging & Glass

- 0.62% of Outstanding Equity (17)

Pro Products, LLC

Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12)

Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12)

Secured First Lien Term Loan (LIBOR + 6.00% PIK) (9)(14)(21)

Technologies, Inc.

Gaming & Leisure

Services Group, LLC (7)

Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12 )(15)

Drilling Company, LLC

Debt (8.00% Cash) (9)

Seotowncenter,

- 3,434,169.6 Common Units

Holding, Inc.

Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)

Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)

- 101,165.93 Common Units in CI (Summit) Investment Holdings LLC

of Investment

Financial Operations, LLC

- 700,000 Class A Preferred Units

- 263,814.43 Class A Units

Tech Industries

Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12)

Acquisition Holdings Corporation

Debt (10.00% PIK)

Pooling Vehicle, LLC

Secured First Lien Term Loan (LIBOR + 11.00% PIK, 1.00% LIBOR Floor) (13)

- 5,441 Class A Units

- 0.65% of Outstanding Equity

Edison Furniture Company LLC

Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)

- 1,500 Common Units

Watermill-QMC

- 1.3% Partnership Interest (8)

Non-Controlled/Non-Affiliated Investments

Alpine SG, LLC (7)

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.50% Cash, 1.00% LIBOR Floor) (13)(22)

$ 101,082,417

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.50% Cash, 1.00% LIBOR Floor) (13)(22)

$ 117,360,954

Revolving Credit Facility (LIBOR + 5.50% Cash, 1.00% LIBOR

Floor) (13)(16)

$ 114,321,948

7,506,100 7,506,100 7,446,350

American Dental Partners, Inc.

Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13)

9/25/2023 4,387,500 4,387,500 4,274,741 2.0 %

4,387,500 4,387,500 4,274,741

Autosplice, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor) (13)

6/17/2020 13,336,018 13,336,018 13,252,001 6.1 %

13,336,018 13,336,018 13,252,001

Avantor, Inc.

Wholesale Equity - 942,160 Common Units (17)

— 16,487,800 13,849,752 6.4 %

— 16,487,800 13,849,752

Barry's Bootcamp Holdings, LLC Services:

Consumer Senior Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (13)(23)

7/14/2022 7,609,499 7,609,499 7,609,499 3.5 %

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (13)

7/14/2022 1,268,251 1,268,251 1,268,251 0.6 %

Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR

Floor) (13)(16)(22)

7/14/2022 4,400,000 4,400,000 4,400,000 2.0 %

13,277,750 13,277,750 13,277,750

Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units — 416,250 — 0.0 %

Black Angus Steakhouses, LLC (7)

Hotel, Gaming & Leisure Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13)(23)

4/24/2020 7,341,518 7,341,518 7,307,747 3.4 %

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13)

4/24/2020 — — (4,107) 0.0 %

Revolving Credit Facility (LIBOR + 9.00% Cash, 1.00% LIBOR

Floor) (13)(16)

4/24/2020 892,857 892,857 890,804 0.4 %

8,234,375 8,234,375 8,194,444

Capstone Nutrition Development, LLC Healthcare & Pharmaceuticals Equity - 13,833.1916 Common Units — 1,383,319 1,383,319 0.6 %

— 1,383,319 1,383,319

CPI International, Inc.

Aerospace & Defense Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor) (12)

7/28/2025 3,010,025 2,998,111 2,937,483 1.4 %

3,010,025 2,998,111 2,937,483

Crow Precision Components, LLC Aerospace & Defense Equity - 350 Common Units — 700,000 666,998 0.3 %

Industry Type of Investment (6)

Maturity Par Amount (2)

Fair Value % of

Net Assets (4)

— 700,000 666,998

CT Technologies Intermediate Holdings, Inc.

Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12)

12/1/2022 7,500,000 7,500,000 6,345,750 2.9 %

7,500,000 7,500,000 6,345,750

DataOnline Corp.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) (13)(22)

7/31/2025 15,840,000 15,840,000 15,607,152 7.2 %

Revolving Credit Facility (LIBOR + 5.75% Cash, 1.00% LIBOR

Floor) (13)(16)

7/31/2024 — — (18,900) 0.0 %

15,840,000 15,840,000 15,588,252

Dermatologists of Southwestern Ohio, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (12)(23)

4/20/2022 1,065,457 1,065,457 1,056,614 0.5 %

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (12)(23)

4/20/2022 404,248 404,248 400,893 0.2 %

1,469,705 1,469,705 1,457,507

Dream Finders Homes, LLC Construction & Building Senior Secured First Lien Term Loan B (10.00% Cash) 4/1/2020 1,613,455 1,613,455 1,613,455 0.7 %

Preferred Equity (8.00% PIK) 4,185,480 4,185,480 3,315,319 1.5 %

5,798,935 5,798,935 4,928,774

FKI Security Group, LLC Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor) (13)(23)

3/30/2020 10,906,250 10,906,250 10,680,491 4.9 %

10,906,250 10,906,250 10,680,491

Footprint Acquisition, LLC Services:

Business Preferred Equity (8.75% PIK) 7,281,664 7,281,664 7,281,664 3.4 %

Equity - 150 Common Units — — 3,347,965 1.5 %

7,281,664 7,281,664 10,629,629

Freedom Powersports, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 10.00% Cash, 1.50% LIBOR Floor) (13)

11/11/2019 9,450,000 9,450,000 9,450,000 4.4 %

9,450,000 9,450,000 9,450,000

Global Accessories Group, LLC (11)

Consumer goods:

Non-durable Equity - 3.8% Membership Interest — 151,337 151,339 0.1 %

— 151,337 151,339

The Imagine Group, LLC Media:

Advertising, Printing & Publishing Senior Secured Second Lien Term Loan (LIBOR + 8.75% Cash, 1.00% LIBOR Floor) (12)

6/21/2023 3,000,000 2,968,775 1,715,100 0.8 %

3,000,000 2,968,775 1,715,100

Impact Group, LLC Services:

Business Senior Secured First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (13)(23)

6/27/2023 3,254,623 3,254,623 3,104,911 1.4 %

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (13)(23)

6/27/2023 9,430,010 9,430,010 8,996,229 4.2 %

12,684,633 12,684,633 12,101,140

InterFlex Acquisition Company, LLC Containers, Packaging & Glass Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12)(23)

8/18/2022 13,259,175 13,259,175 12,637,320 5.8 %

13,259,175 13,259,175 12,637,320

L & S Plumbing Partnership, Ltd.

Construction & Building Senior Secured First Lien Term Loan (LIBOR + 7.50% Cash, 1.00% LIBOR Floor) (13)(22)

2/15/2022 5,345,754 5,345,754 5,345,754 2.5 %

5,345,754 5,345,754 5,345,754

Industry Type of Investment (6)

Maturity Par Amount (2)

Fair Value % of

Net Assets (4)

Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.56% of Outstanding Equity (18)

2/19/2024 — 955,680 — 0.0 %

Manna Pro Products, LLC Consumer goods:

Non-durable Senior Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12)

12/8/2023 5,398,622 5,398,622 5,132,470 2.4 %

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor) (12)

12/8/2023 1,096,209 1,096,209 1,042,166 0.5 %

6,494,831 6,494,831 6,174,636

Point.360 Services:

Business Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK) (9)(15)

7/8/2020 2,563,464 2,103,712 590,366 0.3 %

2,563,464 2,103,712 590,366

Quantum Spatial, Inc.

Aerospace & Defense Senior Secured First Lien Term Loan (LIBOR + 5.25% Cash, 1.00% LIBOR Floor) (12)

9/5/2024 5,000,000 5,000,000 5,000,000 2.3 %

5,000,000 5,000,000 5,000,000

RateGain Technologies, Inc.

Hotel, Gaming & Leisure Unsecured Debt (19)(23)

7/31/2020 761,905 761,905 761,905 0.4 %

Unsecured Debt (19)(23)

7/31/2021 761,905 761,905 761,905 0.4 %

1,523,810 1,523,810 1,523,810

Redwood Services Group, LLC (7)

Business Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR

Floor) (13)(16)

6/6/2023 875,000 875,000 860,475 0.4 %

875,000 875,000 860,475

Sendero Drilling Company, LLC Energy:

Oil & Gas Unsecured Debt (8.00% Cash) 8/31/2021 850,000 850,000 850,000 0.4 %

850,000 850,000 850,000

Seotowncenter, Inc.

Business Equity - 3,434,169.6 Common Units — 566,475 1,236,301 0.6 %

— 566,475 1,236,301

SFP Holding, Inc.

Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)(23)

9/1/2022 4,820,605 4,820,605 4,775,291 2.2 %

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) (13)(23)

9/1/2022 1,871,234 1,871,234 1,853,644 0.9 %

Equity - 94,393.87 Common Units in CI (Summit) Investment Holdings LLC (23)

— 985,673 849,545 0.4 %

6,691,839 7,677,512 7,478,480

Ship Supply Acquisition Corporation Services:

Business Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor) (9)(13)(23)

7/31/2020 7,433,740 7,239,798 — 0.0 %

7,433,740 7,239,798 —

SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units — 700,000 532,000 0.2 %

— 700,000 532,000

Stancor, Inc.

Business Equity - 263,814.43 Class A Units — 263,815 274,367 0.1 %

— 263,815 274,367

Starfish Holdco, LLC High Tech Industries Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12)(22)

8/18/2025 2,000,000 1,975,691 1,977,000 0.9 %

2,000,000 1,975,691 1,977,000

Industry Type of Investment (6)

Maturity Par Amount (2)

Fair Value % of

Net Assets (4)

Velocity Pooling Vehicle, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 11.00% PIK, 1.00% LIBOR Floor) (13)

4/28/2023 894,050 832,281 789,715 0.4 %

Equity - 5,441 Class A Units — 302,464 20,893 0.0 %

Warrants - 0.65% of Outstanding Equity 3/30/2028 — 361,667 24,983 0.0 %

894,050 1,496,412 835,591

Walker Edison Furniture Company LLC Consumer goods:

Durable Senior Secured First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) (13)(23)

9/26/2024 3,611,900 3,611,900 3,611,900 1.7 %

Equity - 1,500 Common Units — 1,500,000 2,557,657 1.2 %

3,611,900 5,111,900 6,169,557

Watermill-QMC Midco, Inc.

Automotive Equity - 1.3% Partnership Interest (8)

— 518,283 88,989 0.0 %

— 518,283 88,989

Subtotal Non-Controlled/Non-Affiliated Investments $ 180,226,518 $ 204,736,370 $ 189,905,466

Investments :

Industrial Services, LLC (7)

Secured First Lien Term Loan A (LIBOR + 5.00% PIK,

LIBOR Floor) (9)(13)

Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor) (9)(13)

Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor) (9)(13)

Credit Facility (LIBOR + 5.00% PIK, 1.00% LIBOR Floor) (13)(15)

- 17,493.63 Class A Units

Media Holdings, LLC

Broadcasting & Subscription

Secured First Lien Term Loan (10.00% PIK) (9)(21)

Equity Series A

Equity Series AA

Equity Series AAA

- 16 Common Units

Angus Steakhouses, LLC

Gaming & Leisure

Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (12)

Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor) (9)(12)

- 17.9% Membership Interest

of Investment

Investors Holdings 1 LLC (10)

Products & Paper

- 6.15% Membership Interest (19)

Energy Services International LLC

Secured First Lien Term Loan (LIBOR + 13.50% PIK) (9)(14)

- 12,350,000 Class A Units

Partners, LLC

Equity - A-2 Preferred (3.00% PIK)

Equity - A-1 Preferred (3.00% PIK)

- 57,300 Class B Units

Partners, LLC

Environmental

Equity - Class A Preferred (6.00% PIK)

- 129,588 Class B Units

Operations, LLC (7)

Secured First Lien Term Loan (15.00% PIK)

Secured First Lien Delayed Draw Term Loan (15.00% PIK)

- 6.7797 Common Units

& Pharmaceuticals

Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor) (12)

Secured First Lien Term Loan B (LIBOR + 13% PIK, 1.00% LIBOR Floor) (9)(12)

- 7.68% of Outstanding Equity

Multifamily, LLC (10)

Finance, Insurance & Real Estate

Secured First Lien Term Loan (10.00% Cash)

- 33,300 Preferred Units

Affiliated Investments

1888 Industrial Services, LLC Energy:

Oil & Gas Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor) (13)

$ 101,967,064

Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor) (9)(13)

9/30/2021 23,547,567 19,468,870 5,886,892 2.7 %

Senior Secured First Lien Term Loan C (LIBOR + 5.00% PIK, 1.00% LIBOR Floor) (13)

6/30/2021 1,170,014 1,170,014 1,170,014 0.5 %

Senior Secured First Lien Term Loan D (LIBOR + 5.00% PIK, 1.00% LIBOR Floor) (13)

9/18/2020 224,456 224,456 224,456 0.1 %

Revolving Credit Facility (LIBOR + 5.00% PIK, 1.00% LIBOR

Floor) (13)(16)

9/30/2021 4,387,025 4,387,025 4,387,025 2.0 %

Equity - 21,562.16 Class A Units — — — 0.0 %

38,633,207 34,554,510 20,972,532

Access Media Holdings, LLC (7)

Broadcasting & Subscription Senior Secured First Lien Term Loan (10.00% PIK) (9)

7/22/2020 10,036,355 8,446,385 2,509,089 1.2 %

Preferred Equity Series A 1,600,000 1,600,000 — 0.0 %

Preferred Equity Series AA 800,000 800,000 — 0.0 %

Preferred Equity Series AAA 971,200 971,200 (100,800) 0.0 %

Equity - 16 Common Units — — — 0.0 %

13,407,555 11,817,585 2,408,289

Caddo Investors Holdings 1 LLC (10)

Forest Products & Paper Equity - 6.15% Membership Interest (21)

— 2,526,373 2,830,051 1.3 %

— 2,526,373 2,830,051

Dynamic Energy Services International LLC (7)

Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK) (9)(15)

12/31/2021 11,124,375 7,824,974 1,264,841 0.6 %

Revolving Credit Facility (12.00% Cash) 12/31/2019 545,103 545,103 545,103 0.2 %

Equity - 12,350,000 Class A Units — — — 0.0 %

11,669,478 8,370,077 1,809,944

JFL-NGS Partners, LLC Construction & Building Preferred Equity - A-2 Preferred (3.00% PIK) 20,150,684 20,150,684 20,150,684 9.3 %

Preferred Equity - A-1 Preferred (3.00% PIK) 2,607,661 2,607,661 2,607,661 1.2 %

Equity - 57,300 Class B Units — 57,300 19,096,371 8.8 %

22,758,345 22,815,645 41,854,716

Industry Type of Investment (6)

Maturity Par Amount (2)

Fair Value % of

Net Assets (4)

JFL-WCS Partners, LLC Environmental Industries Preferred Equity - Class A Preferred (6.00% PIK) 1,236,269 1,236,269 1,236,269 0.6 %

Equity - 129,588 Class B Units — 129,588 2,755,041 1.3 %

1,236,269 1,365,857 3,991,310

Kemmerer Operations, LLC (7)

Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK) 6/21/2023 1,766,511 1,766,511 1,766,511 0.8 %

Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK) 6/21/2023 706,604 706,604 706,604 0.3 %

Equity - 6.7797 Common Units — 962,717 962,717 0.4 %

2,473,115 3,435,832 3,435,832

Path Medical, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 9.50% PIK, 1.00% LIBOR Floor) (13)

10/11/2021 9,534,512 9,294,959 8,845,167 4.1 %

Senior Secured First Lien Term Loan A (LIBOR + 9.50% PIK, 1.00% LIBOR Floor) (13)

10/11/2021 3,284,977 3,284,977 3,047,473 1.4 %

Senior Secured First Lien Term Loan C (LIBOR + 10.00% Cash, 1.00% LIBOR Floor) (13)

10/11/2021 344,463 344,463 344,291 0.2 %

Warrants - 7.68% of Outstanding Equity 1/9/2027 — 499,751 — 0.0 %

13,163,952 13,424,150 12,236,931

US Multifamily, LLC (10)

Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (10.00% Cash) (22)

6/17/2021 6,670,000 6,670,000 6,670,000 3.1 %

Equity - 33,300 Preferred Units — 3,330,000 3,330,000 1.5 %

6,670,000 10,000,000 10,000,000

Subtotal Affiliated Investments $ 110,011,921 $ 108,310,029 $ 99,539,605

Controlled Investments :

MCC Senior Loan Strategy JV I LLC (10)

Multisector Holdings Equity - 87.5% ownership of MCC Senior Loan Strategy JV I LLC (21)

— 78,575,000 69,948,970 32.3 %

— 78,575,000 69,948,970

NVTN LLC Hotel, Gaming & Leisure Senior Secured First Lien Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (12)

11/9/2020 4,255,990 4,255,990 4,255,990 2.0 %

Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor) (9)(12)

11/9/2020 13,436,693 12,305,096 7,152,352 3.3 %

Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor) (9)(12)

11/9/2020 8,747,134 7,570,054 — 0.0 %

Equity - 787.4 Class A Units — 9,550,922 — 0.0 %

26,439,817 33,682,062 11,408,342

TPG Plastics LLC Chemicals, Plastics & Rubber Senior Secured Second Lien Term Loan (Prime + 10.00% Cash) (14)

12/31/2019 352,984 352,984 352,984 0.2 %

Unsecured Debt (10.00% Cash) (20)

278,810 278,810 278,810 0.1 %

Equity - 35 Class B Units — 3,317,149 1,644,751 0.8 %

Investments :

Senior Loan Strategy JV I LLC (10)

- 87.5% ownership of MCC Senior Loan Strategy JV I LLC

of Investment

Gaming & Leisure

Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (9)(12)

Secured First Lien Super Priority DDTL (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (9)(12)

Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor) (9)(12)

Senior Secured

First Lien Term Loan C (LIBOR + 12.00%

PIK, 1.00% LIBOR Floor) (9)(12)

- 787.4 Class A Units

Control Investments

$ 117,874,821

URT Acquisition Holdings Corporation Services:

Business Senior Secured Second Lien Term Loan (LIBOR + 8.00% PIK, 2.00% LIBOR Floor) (13)

Investments, September 30, 2020

$ 236,592,774

Preferred Equity (12.00% PIK) (9)

$ 328,134,530

Equity - 397,466 Common Units — 12,936,879 — 0.0 %

$ 246,743,549

Subtotal Control Investments $ 52,529,904 $ 154,601,177 $ 107,453,927

Industry Type of Investment (6)

Maturity Par Amount (2)

Fair Value % of

Net Assets (4)

Total Investments, September 30, 2019 $ 342,768,343 $ 467,647,576 $ 396,898,998 183.4 %

(1) All of our investments are domiciled in the United States.

Certain investments also have international operations.

(2) Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments.

(3) Gross unrealized appreciation, gross unrealized depreciation, and net unrealized depreciation for U.S.

of our investments are domiciled in the United States.

Certain investments also have international

amount includes accumulated payment-in-kind (“PIK”) interest, as applicable,

and is net of repayments.

unrealized appreciation, gross unrealized depreciation, and net unrealized depreciation for

federal income tax purposes totaled $53,757,923, $134,877,746, and $81,119,823, respectively.

The tax cost basis of investments is $327,863,372 as of September 30, 2020.

(4) Percentage is based on net assets of $216,432,530 as of September 30, 2019.

(6) Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy (see Note 4).

(7) The investment has an unfunded commitment as of September 30, 2019 (see Note 8), and includes an analysis of the value of any unfunded commitments.

(8) Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP.

(9) The investment was on non-accrual status as of September 30, 2019.

(10) The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part.

As of September 30, 2019, 24.3% of the Company's portfolio investments were non-qualifying assets.

(11) A portion of this investment was sold via a participation agreement.

The amount stated is the portion retained by Medley Capital Corporation (see Note 3).

(12) The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate.

The 1 month LIBOR as of September 30, 2019 was 2.04%.

(13) The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate.

The 3 month LIBOR as of September 30, 2019 was 2.10%.

(14) These loans bear interest at an alternate base rate, or in the case of these particular investments the Prime Rate set by the Federal Reserve, plus a given spread.

The Prime Rate in effect at September 30, 2019 was 5.00%.

(15) The interest rate on these loans is subject to 3 month LIBOR plus a base rate.

(4) Percentage

is based on net assets of $150,619,517 as of September 30, 2020.

Investments are defined by the Investment Company Act of 1940, as amended (the “1940

Act”), as investments in companies in which the Company owns more than 25% of the voting

securities or maintains greater than 50% of the board representation.

otherwise indicated, all securities are valued using significant unobservable inputs, which

are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy (see

investment has an unfunded commitment as of September 30, 2020 (see Note 8),and includes

an analysis of the value of any unfunded commitments.

(8) Represents

1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP.

investment was on non-accrual status as of September 30, 2020.

investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole,

As of September 30, 2020, 25.4% of the Company’s portfolio investments were non-qualifying

portion of this investment was sold via a participation agreement.

The amount stated is the

portion retained by the Company (see Note 3).

interest rate on these loans is subject to the greater of a London Interbank Offering Rate

(“LIBOR”) floor, or 1 month LIBOR plus a base rate.

The 1 month LIBOR as of September

30, 2020 was 0.15%.

interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR

plus a base rate.

The 3 month LIBOR as of September 30, 2020 was 0.23%.

(16) This investment earns 0.50% commitment fee on all unused commitment as of September 30, 2019, and is recorded as a component of interest income on the Consolidated Statements of Operations.

(17) This investment represents a Level 1 security in the ASC 820 table as of September 30, 2019 (see Note 4).

(18) This investment represents a Level 2 security in the ASC 820 table as of September 30, 2019 (see Note 4).

(19) Security is non-income producing.

(20) This investment is scheduled to repay a percentage of the outstanding principal on a quarterly basis.

Upon TPG Plastics, LLC obtaining all environmental and product testing authorizations, licenses and permits from all applicable governmental authorities, the remaining outstanding principal is expected to be repaid in full.

(21) As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment.

(22) All or a portion of this investment is held in Medley SLF Funding I LLC (see Note 5).

(23) All or a portion of this investment is held in Medley Small Business Fund, LP (see Note 5).

See accompanying notes to consolidated financial statements.

MEDLEY CAPITAL CORPORATION

Notes to Consolidated Financial Statements

September 30, 2020

Medley Capital Corporation (the “Company,” “we” and “us”) is a non-diversified closed end management investment company incorporated in Delaware that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

We completed our initial public offering (“IPO”) and commenced operations on January 20, 2011.

The Company has elected, and intends to qualify annually, to be treated, for U.S.

federal income tax purposes, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

We are externally managed and advised by MCC Advisors LLC (“MCC Advisors”), which is registered with the Securities and Exchange Commission (the “SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), pursuant to an investment management agreement.

MCC Advisors is a wholly owned subsidiary of Medley LLC, which is controlled by Medley Management Inc.

MDLY), a publicly traded asset management firm (“MDLY”), which in turn is controlled by Medley Group LLC, an entity wholly owned by the senior professionals of Medley LLC.

We use the term “Medley” to refer collectively to the activities and operations of Medley Capital LLC, Medley LLC, MDLY, Medley Group LLC, MCC Advisors, associated investment funds and their respective affiliates.

On March 26, 2013, our wholly owned subsidiary, Medley SBIC, LP (“SBIC LP”), a Delaware limited partnership that we own directly and through our wholly owned subsidiary, Medley SBIC GP, LLC, received a license from the Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Company Act of 1958, as amended.

Effective July 1, 2019, SBIC LP surrendered its SBIC license and changed its name to Medley Small Business Fund, LP (“Medley Small Business Fund”).

interest rate on these loans is subject to 3 month LIBOR plus a base rate.

The 3 month LIBOR

as of September 30, 2020 was 0.24%.

investment earns 0.50% commitment fee on all unused commitment as of September 30, 2020,

and is recorded as a component of interest income on the Consolidated Statements of Operations.

investment represents a Level 1 security in the ASC 820 table as of September 30, 2020 (see

investment represents a Level 2 security in the ASC 820 table as of September 30, 2020 (see

(18) Security

is non-income producing.

a practical expedient, the Company uses net asset value (“NAV”) to determine

the fair value of this investment.

(20) Affiliated

Investments are defined by the 1940 Act as investments in companies in which the Company

owns between 5% and 25% outstanding voting securities or is under common control with such

portfolio company.

investment was past due as of September 30, 2020.

accompanying notes to consolidated financial statements.

to Consolidated Financial Statements

Corporation (“PhenixFIN.”

the “Company,”

“we”

and “us”) is an internally-managed non-diversified

closed end management investment company incorporated in Delaware that has elected to be regulated as a business development company

(“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

We completed our initial public

offering (“IPO”) and commenced operations on January 20, 2011.

The Company has elected, and intends to qualify annually,

to be treated, for U.S.

federal income tax purposes, as a regulated investment company (“RIC”) under Subchapter M of the

Internal Revenue Code of 1986, as amended (the “Code”).

On November 18, 2020, the board of directors of the Company approved

the adoption of an internalized management structure, effective January 1, 2021.

Until close of business on December 31, 2020 we were

externally managed and advised by MCC Advisors LLC (“MCC Advisors”), pursuant to an investment management agreement.

Advisors is a wholly owned subsidiary of Medley LLC, which is controlled by Medley Management Inc.

MDLY), a publicly traded asset

management firm (“MDLY”), which in turn is controlled by Medley Group LLC, an entity wholly owned by the senior professionals

of Medley LLC.

We use the term “Medley”

to refer collectively to the activities and operations of Medley Capital LLC, Medley

LLC, MDLY, Medley Group LLC, MCC Advisors, associated investment funds and their respective affiliates.

Since January 1, 2021 the Company

has been managed pursuant to an internalized management structure.

March 26, 2013, our wholly owned subsidiary, Medley SBIC, LP (“SBIC LP”), a Delaware limited partnership that we own directly

and through our wholly owned subsidiary, Medley SBIC GP, LLC, received a license from the Small Business Administration (“SBA”)

to operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Company

Act of 1958, as amended.

Effective July 1, 2019, SBIC LP surrendered its SBIC license and changed its name to Medley Small Business Fund,

In addition, Medley SBIC GP, LLC changed its name to Medley Small Business Fund GP, LLC.

See Note 5 for further information.

The Company has formed and expects to continue to form certain taxable subsidiaries (the “Taxable Subsidiaries”), which are taxed as corporations for federal income tax purposes.

These Taxable Subsidiaries allow us to hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy the requirements of a RIC under the Code.

The Company’s investment objective is to generate current income and capital appreciation by lending to privately-held middle market companies, primarily through directly originated transactions, to help these companies fund acquisitions, growth or refinancing.

The portfolio generally consists of senior secured first lien term loans and senior secured second lien term loans.

Occasionally, we will receive warrants or other equity participation features which we believe will have the potential to increase the total investment returns.

Reverse Stock Split;

Medley Small Business Fund, LP and Medley

Small Business Fund GP, LLC have since changed their names to PhenixFIN Small Business Fund, LP and PhenixFIN Small Business Fund GP,

LLC, respectively.

Company has formed and expects to continue to form certain taxable subsidiaries (the “Taxable Subsidiaries”), which are taxed

as corporations for federal income tax purposes.

These Taxable Subsidiaries allow us to, among other things, hold equity securities of

portfolio companies organized as pass-through entities while continuing to satisfy the requirements of a RIC under the Code.

Company’s investment objective is to generate current income and capital appreciation.

The management team seeks to achieve this

objective primarily through making loans, private equity or other investments in privately-held companies.

The Company may also make

debt, equity or other investments in publicly-traded companies.

(These investments may also include investments in other BDCs, closed-end

funds or REITs.) We may also pursue other strategic opportunities and invest in other assets or operate other businesses to achieve our

investment objective, such as operating and managing an asset-based lending business.

The portfolio generally consists of senior secured

first lien term loans, senior secured second lien term loans, senior secured bonds, preferred equity and common equity.

Occasionally,

we will receive warrants or other equity participation features which we believe will have the potential to increase total investment

Our loan and other debt investments are primarily rated below investment grade or are unrated.

Investments in below investment

grade securities are considered predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal

Authorized Share Reduction

At the Company’s 2020 Annual Meeting of Stockholders held on June 30, 2020 (the “Annual Meeting”), stockholders approved a proposal to grant discretionary authority to the Company’s board of directors to amend the Company’s Certificate of Incorporation (the “Certificate of Incorporation”) to effect a reverse stock split of its common stock, of 1-20 (the “Reverse Stock Split”) and with the Reverse Stock Split to be effective at such time and date, if at all, as determined by the board of directors, but not later than 60 days after stockholder approval thereof and, if and when the reverse stock split is effected, reduce the number of authorized shares of common stock by the approved reverse stock split ratio (the “Authorized Share Reduction”).

Following the Annual Meeting, on July 7, 2020, the board of directors determined that it was in the best interests of the Company and its stockholders to implement the Reverse Stock Split and the Authorized Share Reduction.

Accordingly, on July 13, 2020, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split and the Authorized Share Reduction.

Pursuant to the Certificate of Amendment, effective as of 5:00 p.m., Eastern Time, on July 24, 2020 (the “Effective Time”), each twenty (20) shares of common stock issued and outstanding, immediately prior to the Effective Time, automatically and without any action on the part of the respective holders thereof, were combined and converted into one (1) share of common stock.

In connection with the Reverse Stock Split, the Certificate of Amendment provided for a reduction in the number of authorized shares of common stock from 100,000,000 to 5,000,000 shares of common stock.

the Company’s 2020 Annual Meeting of Stockholders held on June 30, 2020 (the “Annual Meeting”), stockholders approved

a proposal to grant discretionary authority to the Company’s board of directors to amend the Company’s Certificate of Incorporation

(the “Certificate of Incorporation”) to effect a reverse stock split of its common stock, of 1-20 (the “Reverse Stock

Split”) and with the Reverse Stock Split to be effective at such time and date, if at all, as determined by the board of directors,

but not later than 60 days after stockholder approval thereof and, if and when the reverse stock split is effected, reduce the number

of authorized shares of common stock by the approved reverse stock split ratio (the “Authorized Share Reduction”).

the 2020 Annual Meeting, on July 7, 2020, the board of directors determined that it was in the best interests of the Company and its

stockholders to implement the Reverse Stock Split and the Authorized Share Reduction.

Accordingly, on July 13, 2020, the Company filed

a Certificate of Amendment (the “Certificate of Amendment”) to the Certificate of Incorporation with the Secretary of State

of the State of Delaware to effect the Reverse Stock Split and the Authorized Share Reduction.

to Consolidated Financial Statements (continued)

to the Certificate of Amendment, effective as of 5:00 p.m., Eastern Time, on July 24, 2020 (the “Effective Time”), each twenty

(20) shares of common stock issued and outstanding, immediately prior to the Effective Time, automatically and without any action on

the part of the respective holders thereof, were combined and converted into one (1) share of common stock.

In connection with the Reverse

Stock Split, the Certificate of Amendment provided for a reduction in the number of authorized shares of common stock from 100,000,000

to 5,000,000 shares of common stock.

No fractional shares were issued as a result of the Reverse Stock Split.

Instead, any stockholder who would have been entitled to receive a fractional share as a result of the Reverse Stock Split received cash payments in lieu of such fractional shares (without interest and subject to backup withholding and applicable withholding taxes).

The common stock began trading on a split-adjusted basis on the NYSE at the market open on July 27, 2020.

The trading symbol for the common stock remains “MCC.”

The Reverse Stock Split was intended to bring the Company into compliance with the $1.00 minimum average closing share price requirement (the “Minimum Share Price Requirement”) for continued listing on the NYSE.

On August 3, 2020, the Company received written notice from the NYSE that the Company has regained compliance with the Minimum Share Price Requirement after the Company’s average closing price over the 30 consecutive trading day period ending on July 31, 2020 was above $1.00 per share as required under Section 802.01C of the NYSE Listed Company Manual.

Termination of Agreements and Plan of Mergers

On July 29, 2019, the Company entered into the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MCC Merger Agreement”), by and between the Company and Sierra Income Corporation (“Sierra”), pursuant to which the Company would, on the terms and subject to the conditions set forth in the Amended MCC Merger Agreement, merge with and into Sierra, with Sierra as the surviving

company in the merger (the “MCC Merger”).

In addition, on July 29, 2019, Sierra and MDLY entered into the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MDLY Merger Agreement”), by and among MDLY, Sierra, and Sierra Management, Inc., a wholly owned subsidiary of Sierra (“Merger Sub”), pursuant to which MDLY would, on the terms and subject to the conditions set forth in the Amended MDLY Merger Agreement, merge with and into Merger Sub, with Merger Sub as the surviving company in the merger (the “MDLY Merger”).

On May 1, 2020, the Company received a notice of termination from Sierra of the Amended MCC Merger Agreement.

Under the Amended MCC Merger Agreement, either party could have, subject to certain conditions, terminated the Amended MCC Merger Agreement if the MCC Merger had not been consummated by March 31, 2020.

Representatives of Sierra informed the Company that in determining to terminate the Amended MCC Merger Agreement, Sierra considered a number of factors, including, among other factors, changes in the relative valuation of the Company and Sierra, the changed circumstances and the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic, and the uncertainty regarding the parties’ ability to satisfy the conditions to closing the MCC Merger in a timely manner.

In addition, on May 1, 2020, MDLY received a notice of termination from Sierra of the Amended MDLY Merger Agreement.

Under the Amended MDLY Merger Agreement, either party could have, subject to certain conditions, terminate the Amended MDLY Merger Agreement if the MDLY Merger had not been consummated by March 31, 2020.

Representatives of Sierra informed MDLY that in determining to terminate the Amended MDLY Merger Agreement, Sierra considered a number of factors, including, among other factors, changes in the relative valuation of MDLY and Sierra, the changed circumstances and the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic, and the uncertainty regarding the parties’ ability to satisfy the conditions to closing the MDLY Merger in a timely manner.

Instead, any stockholder

who would have been entitled to receive a fractional share as a result of the Reverse Stock Split received cash payments in lieu of such

fractional shares (without interest and subject to backup withholding and applicable withholding taxes).

December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of

its shares of common stock to the NASDAQ Global Market.

The listing and trading of the common stock on the NYSE ceased at the close of

trading on December 31, 2020.

Since January 4, 2021, the common stock trades on the NASDAQ Global Market under the trading symbol “PFX.”

October 8, 2020, the Company, Great American Life Insurance Company (“GALIC”), MCC Senior Loan Strategy JV I LLC (the “MCC

JV”), and an affiliate of Golub Capital LLC (“Golub”) entered into a Membership Interest Purchase Agreement pursuant

to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in the MCC JV and all

of GALIC’s interest in the MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price

(which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily

for principal and interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds

(before transaction expenses) of $41.0 million and $6.6 million for the Company and GALIC, respectively.

COVID-19 pandemic continues to have adverse consequences on the U.S.

and global economies, as well as on the Company (including certain

portfolio companies) in particular.

The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets,

industries and individual portfolio companies, remains uncertain.

The Company’s performance (including that of certain of its portfolio

companies) was negatively impacted during the pandemic.

The longer-term impact of COVID-19 on the operations and the performance of the

Company (including certain portfolio companies) is difficult to predict, but may continue to be adverse.

The longer-term potential impact

on such operations and performance could depend to a large extent on future developments and actions taken by authorities and other entities

to mitigate COVID-19 and its economic impact.

The impacts, as well as the uncertainty over impacts to come, of COVID-19 (including the

Delta variant) have adversely affected the performance of the Company (including certain portfolio companies) and may continue to do

so in the future.

Further, the potential exists for additional variants of COVID-19, including the Omicron variant ,

to impede the global economic recovery and exacerbate geographic differences in the spread of, and response to, COVID-19.

to Consolidated Financial Statements (continued)

Significant Accounting Policies

Basis of Presentation

The Company follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 946 (“ASC 946”).

The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S.

generally accepted accounting principles (“GAAP”) and include the consolidated accounts of the Company and its wholly owned subsidiaries Medley Small Business Fund and Medley SLF Funding I LLC (“Medley SLF”), and its wholly owned Taxable Subsidiaries.

All references made to the “Company,” “we,” and “us” herein include Medley Capital Corporation and its consolidated subsidiaries, except as stated otherwise.

Additionally, the accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-K and Article 10 of Regulation S-X of the Securities Act of 1933.

All intercompany balances and transactions have been eliminated.

Cash, Restricted Cash and Cash Equivalents

The Company considers cash equivalents to be highly liquid investments with original maturities of three months or less.

Cash and cash equivalents include deposits in a money market account.

The Company deposits its cash in financial institutions and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits.

As of September 30, 2020, we had $56.5 million in cash and cash equivalents.

As of September 30, 2019, we had $68.2 million in cash and cash equivalents, and $16.0 million of restricted cash, which was restricted for the purposes of repaying principal and interest on our Series A Israeli Notes (the “Israeli Notes”).

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

of Presentation

Company is an investment company following the accounting and reporting guidance in Financial Accounting Standards Board (“FASB”)

Accounting Standards Codification 946 (“ASC 946”), Financial Services –

Investment Companies.

The accompanying consolidated

financial statements have been prepared on the accrual basis of accounting in conformity with U.S.

generally accepted accounting principles

(“GAAP”) and include the consolidated accounts of the Company and its wholly owned subsidiaries PhenixFIN Small Business

Fund, LP (“PhenixFIN Small Business Fund”) and PhenixFIN SLF Funding I LLC (“PhenixFIN SLF”), and its wholly

owned Taxable Subsidiaries.

All references made to the “Company,”

“we,”

and “us”

herein include PhenixFIN

Corporation and its consolidated subsidiaries, except as stated otherwise.

Additionally, the accompanying consolidated financial statements

of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-K and Article

10 of Regulation S-X of the Securities Act of 1933.

Restricted Cash and Cash Equivalents

Company considers cash equivalents to be highly liquid investments with original maturities of three months or less.

Cash and cash equivalents

include deposits in a money market account.

The Company deposits its cash in financial institutions and, at times, such balances may

be in excess of the Federal Deposit Insurance Corporation insurance limits.

As of September 30, 2021 and 2020, we had $69.4 million and

$56.5 million in cash and cash equivalents, respectively.

of Estimates in the Preparation of Financial Statements

preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements

and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Debt Issuance Costs

Debt issuance costs, incurred in connection with any credit facilities, unsecured notes and SBA-guaranteed debentures (the "SBA Debentures") (see Note 5) are deferred and amortized over the life of the respective credit facility or instrument.

Issuance Costs

issuance costs incurred in connection with any credit facilities and unsecured notes (see Note 5) are deferred and amortized over the

life of the respective credit facility or instrument.

Indemnification

In the normal course of business, the Company enters into contractual agreements that provide general indemnifications against losses, costs, claims and liabilities arising from the performance of individual obligations under such agreements.

The Company has had no material claims or payments pursuant to such agreements.

The Company’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred.

However, based on management’s experience, the Company expects the risk of loss to be remote.

Reclassification

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

Revenue Recognition

Interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis.

Dividend income, which represents dividends from equity investments and distributions from Taxable Subsidiaries, is recorded on the ex-dividend date and when the distribution is received, respectively.

The Company holds debt investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision.

PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is recorded on the accrual basis to the extent such amounts are expected to be collected.

PIK interest is not accrued if the Company does not expect the issuer to be able to pay all principal and interest when due.

For the years ended September 30, 2020, 2019 and 2018, the Company earned approximately $3.8 million, $7.2 million, and $10.8 million in PIK interest, respectively.

Origination/closing, amendment and transaction break-up fees associated with investments in portfolio companies are recognized as income when we become entitled to such fees.

Prepayment penalties received by the Company for debt instruments paid back to the Company prior to the maturity date are recorded as income upon repayment of debt.

Administrative agent fees received by the Company are capitalized as deferred revenue and recorded as fee income when the services are rendered.

For the years ended September 30, 2020, 2019 and 2018, fee income was approximately $0.7 million, $2.3 million and $4.5 million, respectively (see Note 9).

Investment transactions are accounted for on a trade date basis.

Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized.

During the years ended September 30, 2020, 2019 and 2018, $0.9 million, $47.8 million and $73.0 million, respectively , of the Company's realized losses were related to certain non-cash restructuring transactions, which are recorded on the Consolidated Statements of Operations as a component of net realized gain/(loss) from investments.

The Company reports changes in fair value of investments as a component of the net unrealized appreciation/(depreciation) on investments in the Consolidated Statements of Operations.

Management reviews all loans that become 90 days or more past due on principal or interest or when there is reasonable doubt that principal or interest will be collected for possible placement on management’s designation of non-accrual status.

Interest receivable is analyzed regularly and may be reserved against when deemed not collectible.

Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability.

Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection.

At September 30, 2020, certain investments in eight portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $21.7 million, or 8.8% of the fair value of our portfolio.

At September 30, 2019, certain investments in seven portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $22.3 million, or 5.6% of the fair value of our portfolio.

At September 30, 2018, certain investments in nine portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $48.1 million, or 7.3% of the fair value of our portfolio.

Investment Classification

The Company classifies its investments in accordance with the requirements of the 1940 Act.

Under the 1940 Act, we would be deemed to “control” a portfolio company if we owned more than 25% of its outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company.

We refer to such investments in portfolio companies that we “control” as “Control Investments.” Under the 1940 Act, we would be deemed to be an “Affiliated Person” of a portfolio company if we own between 5% and 25% of the portfolio company’s outstanding voting securities or we are under common control with such portfolio company.

We refer to such investments in Affiliated Persons as “Affiliated Investments.”

Valuation of Investments

The Company applies fair value accounting to all of its financial instruments in accordance with the 1940 Act and ASC Topic 820 - Fair Value Measurements and Disclosures (“ASC 820”).

ASC 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements.

In accordance with ASC 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as discussed in Note 4.

Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure.

Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date.

Investments for which market quotations are readily available are valued at such market quotations, which are generally obtained from an independent pricing service or multiple broker-dealers or market makers.

We weight the use of third-party broker quotations, if any, in determining fair value based on our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer.

However, debt investments with remaining maturities within 60 days that are not credit impaired are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value.

Investments for which market quotations are not readily available are valued at fair value as determined by the Company’s board of directors based upon input from management and third party valuation firms.

Because these investments are illiquid and because there may not be any directly comparable companies whose financial instruments have observable market values, these loans are valued using a fundamental valuation methodology, consistent with traditional asset pricing standards, that is objective and consistently applied across all loans and through time.

Investments in investment funds are valued at fair value.

Fair values are generally determined utilizing the NAV supplied by, or on behalf of, management of each investment fund, which is net of management and incentive fees or allocations charged by the investment fund and is in accordance with the “practical expedient”, as defined by FASB Accounting Standards Update (“ASU”) 2009-12, Investments in Certain Entities that Calculate Net Asset Value per Share .

NAVs received by, or on behalf of, management of each investment fund are based on the fair value of the investment funds’ underlying investments in accordance with policies established by management of each investment fund, as described in each of

their financial statements and offering memorandum.

If the Company is in the process of the sale of an investment fund, fair value will be determined by actual or estimated sale proceeds.

The methodologies utilized by the Company in estimating the fair value of its investments categorized as Level 3 generally fall into the following two categories:

• The “Market Approach” uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business.

• The “Income Approach” converts future amounts (for example, cash flows or income and expenses) to a single current (that is, discounted) amount.

When the Income Approach is used, the fair value measurement reflects current market expectations about those future amounts.

The Company uses third-party valuation firms to assist the board of directors in the valuation of its portfolio investments.

The valuation reports generated by the third-party valuation firms consider the evaluation of financing and sale transactions with third parties, expected cash flows and market based information, including comparable transactions, performance multiples, and movement in yields of debt instruments, among other factors.

The Company uses a market yield analysis under the Income Approach or an enterprise model of valuation under the Market Approach, or a combination thereof.

In applying the market yield analysis, the value of the Company’s loans is determined based upon inputs such as the coupon rate, current market yield, interest rate spreads of similar securities, the stated value of the loan, and the length to maturity.

In applying the enterprise model, the Company uses a waterfall analysis, which takes into account the specific capital structure of the borrower and the related seniority of the instruments within the borrower’s capital structure into consideration.

To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional market valuation methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value.

The methodologies and information that the Company utilizes when applying the Market Approach for performing investments include, among other things:

• valuations of comparable public companies (“Guideline Comparable Approach”);

• recent sales of private and public comparable companies (“Guideline Comparable Approach”);

• recent acquisition prices of the company, debt securities or equity securities (“Recent Arms-Length Transaction”);

• external valuations of the portfolio company, offers from third parties to buy the company (“Estimated Sales Proceeds Approach”);

• subsequent sales made by the company of its investments (“Expected Sales Proceeds Approach”);

• estimating the value to potential buyers.

The methodologies and information that the Company utilizes when applying the Income Approach for performing investments include:

• discounting the forecasted cash flows of the portfolio company or securities (Discounted Cash Flow (“DCF”) Approach);

• Black-Scholes model or simulation models or a combination thereof (Income Approach - Option Model) with respect to the valuation of warrants.

For non-performing investments, we may estimate the liquidation or collateral value of the portfolio company’s assets and liabilities using an expected recovery model (Market Approach - Expected Recovery Analysis or Estimated Liquidation Proceeds).

We undertake a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available, as described below:

• our quarterly valuation process begins with each portfolio investment being internally valued by the valuation professionals;

• preliminary valuation conclusions are then documented and discussed with senior management;

• an independent valuation firm engaged by our board of directors reviews approximately one third of these preliminary valuations each quarter on a rotating quarterly basis on non-fiscal year-end quarters, such that each of these investments will be valued by independent valuation firms at least twice per annum when combined with the fiscal year-end review of all the investments by independent valuation firms.

In addition, all of our investments are subject to the following valuation process:

• the audit committee of our board of directors reviews the preliminary valuations of the valuation professionals, senior management and independent valuation firms;

• our board of directors discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of MCC Advisors, the respective independent valuation firms and the audit committee.

Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

In addition, changes in the market environment (including the impact of COVID-19 on the financial market), portfolio company performance, and other events may occur over the lives of the investments that may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned.

Fair Value of Financial Instruments

The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to their short-term nature.

The carrying amounts and fair values of our long-term obligations are discussed in Note 5.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU 2020-04, "Reference rate reform (Topic 848)—Facilitation of the effects of reference rate reform on financial reporting." The amendments in this update provide optional expedients and exceptions for applying U.S.

GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform and became effective upon issuance for all entities.

The Company has agreements that have LIBOR as a reference rate with certain portfolio companies and also with certain lenders.

Many of these agreements include language for choosing an alternative successor rate if LIBOR reference is no longer considered to be appropriate.

Contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts.

The standard is effective as of March 12, 2020 through December 31, 2022 and the Company plans to apply the amendments in this update to account for contract modifications due to changes in reference rates.

The Company does not believe that it will have a material impact on its consolidated financial statements and disclosures.

In May 2020, the SEC adopted rule amendments that will impact the requirement of investment companies, including BDCs, to disclose the financial statements of certain of their portfolio companies or certain acquired funds (the “Final Rules”).

The Final Rules adopted a new definition of “significant subsidiary” set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act.

Rules 3-09 and 4-08(g) of Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in such investment company’s periodic reports for any portfolio company that meets the definition of “significant subsidiary.” The Final Rules adopt a new definition of “significant subsidiary” applicable only to investment companies that (i) modifies the investment test and the income test, and (ii) eliminates the asset test currently in the definition of “significant subsidiary” in Rule 1-02(w) of Regulation S-X.

The new Rule 1-02(w)(2) of Regulation S-X is intended to more accurately capture those portfolio companies that are more likely to materially impact the financial condition of an investment company.

The Final Rules will be effective on January 1, 2021, but voluntary compliance is permitted in advance of the effective date.

The Company has evaluated the impact of the Final Rule and has determined its impact not to be material, and as such, has adopted it for the quarter ended June 30, 2020.

Federal Income Taxes

The Company has elected, and intends to qualify annually, to be treated as a RIC under Subchapter M of the Code.

In order to continue to qualify as a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute to its stockholders at least 90% of the sum of investment company taxable income (“ICTI”) including PIK, as defined by the Code, and net tax exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) for each taxable year in order to be eligible for tax treatment under Subchapter M of the Code.

Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year.

Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.

the normal course of business, the Company enters into contractual agreements that provide general indemnifications against losses, costs,

claims and liabilities arising from the performance of individual obligations under such agreements.

The Company has had no material

claims or payments pursuant to such agreements.

The Company’s individual maximum exposure under these arrangements is unknown,

as this would involve future claims that may be made against the Company that have not yet occurred.

However, based on management’s

experience, the Company expects the risk of loss to be remote.

income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis.

Dividend income, which represents

dividends from equity investments and distributions from Taxable Subsidiaries, is recorded on the ex-dividend date and when the distribution

is received, respectively.

Company holds debt investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision.

PIK interest,

which represents contractually deferred interest added to the investment balance that is generally due at maturity, is recorded on the

accrual basis to the extent such amounts are expected to be collected.

PIK interest is not accrued if the Company does not expect the

issuer to be able to pay all principal and interest when due.

For the years ended September 30, 2021, 2020 and 2019, the Company earned

approximately $0.9 million, $3.8 million, and $7.2 million in PIK interest, respectively.

to Consolidated Financial Statements (continued)

Origination/closing,

amendment and transaction break-up fees associated with investments in portfolio companies are recognized as income when we become entitled

to such fees.

Prepayment penalties received by the Company for debt instruments paid back to the Company prior to the maturity date are

recorded as income upon repayment of debt.

Administrative agent fees received by the Company are capitalized as deferred revenue and

recorded as fee income when the services are rendered.

For the years ended September 30, 2021, 2020 and 2019, fee income was approximately

$2.6 million, $0.7 million and $2.3 million, respectively (see Note 9).

transactions are accounted for on a trade date basis.

Realized gains or losses on investments are measured by the difference between

the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously

During the years ended September 30, 2020 and 2019, $0.9 million and $47.8 million, respectively, of the Company’s realized losses

were related to certain non-cash restructuring transactions, which are recorded on the Consolidated Statements of Operations as a component

of net realized gain/(loss) from investments.

The Company reports changes in fair value of investments as a component of the net unrealized

appreciation/(depreciation) on investments in the Consolidated Statements of Operations.

reviews all loans that become 90 days or more past due on principal or interest or when there is reasonable doubt that principal or interest

will be collected for possible placement on management’s designation of non-accrual status.

Interest receivable is analyzed regularly

and may be reserved against when deemed not collectible.

Interest payments received on non-accrual loans may be recognized as income

or applied to principal depending upon management’s judgment regarding collectability.

Non-accrual loans are restored to accrual

status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may

make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection.

At September 30,

2021, certain investments in 9 portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately

$13.9 million, or 9.2% of the fair value of our portfolio.

At September 30, 2020, certain investments in eight portfolio companies held

by the Company were on non-accrual status with a combined fair value of approximately $21.7 million, or 8.8% of the fair value of our

Classification

Company classifies its investments in accordance with the requirements of the 1940 Act.

Under the 1940 Act, we would be deemed to “control”

a portfolio company if we owned more than 25% of its outstanding voting securities and/or had the power to exercise control over the

management or policies of such portfolio company.

We refer to such investments in portfolio companies that we “control”

“Control Investments.”

Under the 1940 Act, we would be deemed to be an “Affiliated Person”

of a portfolio company

if we own between 5% and 25% of the portfolio company’s outstanding voting securities or we are under common control with such

portfolio company.

We refer to such investments in Affiliated Persons as “Affiliated Investments.”

of Investments

Company applies fair value accounting to all of its financial instruments in accordance with the 1940 Act and ASC Topic 820 - Fair Value

Measurements and Disclosures (“ASC 820”).

ASC 820 defines fair value, establishes a framework used to measure fair value

and requires disclosures for fair value measurements.

In accordance with ASC 820, the Company has categorized its financial instruments

carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as discussed in Note

Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument

rather than an entity specific measure.

Therefore, when market assumptions are not readily available, the Company’s own assumptions

are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement

for which market quotations are readily available are valued at such market quotations, which are generally obtained from an independent

pricing service or multiple broker-dealers or market makers.

We weight the use of third-party broker quotations, if any, in determining

fair value based on our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote

was an indicative price or binding offer.

However, debt investments with remaining maturities within 60 days that are not credit impaired

are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value.

Investments for which market quotations

are not readily available are valued at fair value as determined by the Company’s board of directors based upon input from management

and third-party valuation firms.

Because these investments are illiquid and because there may not be any directly comparable companies

whose financial instruments have observable market values, these loans are valued using a fundamental valuation methodology, consistent

with traditional asset pricing standards, that is objective and consistently applied across all loans and through time.

in investment funds are valued at fair value.

Fair values are generally determined utilizing the NAV supplied by, or on behalf of, management

of each investment fund, which is net of management and incentive fees or allocations charged by the investment fund and is in accordance

with the “practical expedient”, as defined by FASB Accounting Standards Update (“ASU”) 2009-12, Investments

in Certain Entities that Calculate Net Asset Value per Share .

NAVs received by, or on behalf of, management of each investment fund

are based on the fair value of the investment funds’

underlying investments in accordance with policies established by management

of each investment fund, as described in each of their financial statements and offering memorandum.

If the Company is in the process

of the sale of an investment fund, fair value will be determined by actual or estimated sale proceeds.

to Consolidated Financial Statements (continued)

methodologies utilized by the Company in estimating the fair value of its investments categorized as Level 3 generally fall into the

following two categories:

“Market Approach”

uses prices and other relevant information generated by market

transactions involving identical or comparable (that is, similar) assets, liabilities, or

a group of assets and liabilities, such as a business.

“Income Approach”

converts future amounts (for example, cash flows or income

and expenses) to a single current (that is, discounted) amount.

When the Income Approach

is used, the fair value measurement reflects current market expectations about those future

Company has engaged third-party valuation firms (the “Valuation Firms”) to assist it and its board of directors in the valuation

of its portfolio investments.

The valuation reports generated by the Valuation Firms consider the evaluation of financing and sale transactions

with third parties, expected cash flows and market-based information, including comparable transactions, performance multiples, and movement

in yields of debt instruments, among other factors.

The Company uses a market yield analysis under the Income Approach or an enterprise

model of valuation under the Market Approach, or a combination thereof.

In applying the market yield analysis, the value of the Company’s

loans is determined based upon inputs such as the coupon rate, current market yield, interest rate spreads of similar securities, the

stated value of the loan, and the length to maturity.

In applying the enterprise model, the Company uses a waterfall analysis, which

takes into account the specific capital structure of the borrower and the related seniority of the instruments within the borrower’s

capital structure into consideration.

To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional

market valuation methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise

methodologies and information that the Company utilizes when applying the Market Approach for performing investments include, among other

of comparable public companies (“Guideline Comparable Approach”);

sales of private and public comparable companies (“Guideline Comparable Approach”);

acquisition prices of the company, debt securities or equity securities (“Recent Arms-Length

Transaction”);

valuations of the portfolio company, offers from third parties to buy the company (“Estimated

Sales Proceeds Approach”);

sales made by the company of its investments (“Expected Sales Proceeds Approach”);

the value to potential buyers.

methodologies and information that the Company utilizes when applying the Income Approach for performing investments include:

● discounting

the forecasted cash flows of the portfolio company or securities (Discounted Cash Flow (“DCF”)

● Black-Scholes

model or simulation models or a combination thereof (Income Approach - Option Model) with

respect to the valuation of warrants.

non-performing investments, we may estimate the liquidation or collateral value of the portfolio company’s assets and liabilities

using an expected recovery model (Market Approach - Expected Recovery Analysis or Estimated Liquidation Proceeds).

undertake a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available,

as described below:

quarterly valuation process generally begins with each portfolio investment being internally valued

by a Valuation Firm;

● preliminary

valuation conclusions are then documented and discussed with senior management;

audit committee of the board of directors reviews the preliminary valuations with management

and the Valuation Firms;

board of directors discusses the valuations and determines the fair value of each investment

in the Company’s portfolio in good faith based on the input of management, the respective

Valuation Firms and the audit committee.

to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair

value of our investments may differ from the values that would have been used had a readily available market value existed for such investments,

and the differences could be material.

In addition, changes in the market environment (including the impact of COVID-19 on financial

markets), portfolio company performance, and other events may occur over the lives of the investments that may cause the gains or losses

ultimately realized on these investments to be materially different than the valuations currently assigned.

to Consolidated Financial Statements (continued)

of Financial Instruments

carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts payable and accrued expenses,

approximate fair value due to their short-term nature.

The carrying amounts and fair values of our long-term obligations are discussed

Accounting Pronouncements

March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848)—Facilitation of the effects of reference rate

reform on financial reporting.”

The amendments in this update provide optional expedients and exceptions for applying U.S.

to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference

rate reform and became effective upon issuance for all entities.

The Company has agreements that have LIBOR as a reference rate with

certain portfolio companies and also with certain lenders.

Many of these agreements include language for choosing an alternative successor

rate if LIBOR reference is no longer considered to be appropriate.

Contract modifications are required to be evaluated in determining

whether the modifications result in the establishment of new contracts or the continuation of existing contracts.

In January 2021, the

FASB issued ASU 2021-01, “Reference rate reform (Topic 848),”

which expanded the scope of Topic 848.

ASU 2020-04 and ASU

2021-01 are effective through December 31, 2022 when the Company plans to apply the amendments in this update to account for contract

modifications due to changes in reference rates.

The Company does not believe the adoption of ASU 2020-04 and ASU 2021-01 will have a

material impact on its consolidated financial statements and disclosures.

May 2020, the SEC adopted rule amendments that impacted the requirement of investment companies, including BDCs, to disclose the financial

statements of certain of their portfolio companies or certain acquired funds (the “Final Rules”).

The Final Rules adopted

a new definition of “significant subsidiary”

set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act.

3-09 and 4-08(g) of Regulation S-X require investment companies to include separate financial statements or summary financial information,

respectively, in such investment company’s periodic reports for any portfolio company that meets the definition of “significant

subsidiary.”

The Final Rules adopt a new definition of “significant subsidiary”

applicable only to investment companies

that (i) modifies the investment test and the income test, and (ii) eliminates the asset test currently in the definition of “significant

subsidiary”

in Rule 1-02(w) of Regulation S-X.

The new Rule 1-02(w)(2) of Regulation S-X is intended to more accurately capture

those portfolio companies that are more likely to materially impact the financial condition of an investment company.

The Final Rules

became effective on January 1, 2021.

The Company evaluated the impact of the Final Rules and determined its impact not to be material

and began voluntary compliance with the Final Rules since the quarter ended June 30, 2020.

Company has elected, and intends to qualify annually, to be treated as a RIC under Subchapter M of the Code.

In order to continue to

qualify as a RIC and be eligible for tax treatment under Subchapter M of the Code, among other things, the Company is required to meet

certain source of income and asset diversification requirements and timely distribute to its stockholders at least 90% of the sum of

investment company taxable income (“ICTI”), as defined by the Code, including PIK interest, and net tax exempt interest income

(which is the excess of gross tax exempt interest income over certain disallowed deductions) for each taxable year.

Depending on the

level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into

the next tax year.

Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior

to filing the final tax return related to the year which generated such ICTI.

The Company is subject to a nondeductible U.S.

federal excise tax of 4% on undistributed income if it does not distribute at least 98% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31 of such calendar year.

To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

There is no provision for federal excise tax for the calendar year ended 2019 accrued at September 30, 2020.

For the calendar year ended December 31, 2018, there was no excise tax expense as the Company distributed at least 98% of its ordinary income and 98.2% of its capital gains.

For the calendar year ended December 31, 2017, the Company did not distribute at least 98% of its ordinary income and 98.2% of its capital gains.

Accordingly, with respect to the calendar year ended December 31, 2017 an excise tax expense of $0.2 was recorded in the fiscal year ended September 30, 2018.

The Company’s Taxable Subsidiaries accrue income taxes payable based on the applicable corporate rates on the unrealized gains generated by the investments held by the Taxable Subsidiaries.

As of September 30, 2020 and 2019, the Company did not record a deferred tax liability on the Consolidated Statements of Assets and Liabilities.

The change in provision for deferred taxes is included as a component of net realized and unrealized gain/(loss) on investments in the Consolidated Statements of Operations.

For the years ended September 30, 2020 and 2019, the Company did not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments.

For the year ended September 30, 2018, the change in provision for deferred taxes on the unrealized depreciation on investments was $0.5.

As of September 30, 2020 and 2019, the Company has a net deferred tax asset of $22.8 million and $20.9 million, respectively, consisting primarily of net operating losses offset by net unrealized gains on the investments held within its Taxable Subsidiaries.

As of September 30, 2020 and 2019, the Company booked a valuation allowance of $22.8 million and $20.9 million, respectively, against its net deferred tax asset.

ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses.

federal excise tax of 4% on undistributed income if it does not distribute at least 98% of its ordinary income in any calendar year and

98.2% of its capital gain net income for each one-year period ending on October 31 of such calendar year and any income realized, but

not distributed, in preceding years and on which it did not pay federal income tax.

To the extent that the Company determines that its

estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes,

the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned.

There was no provision for federal

excise tax for the calendar year ended 2020 accrued at September 30, 2021 and the calendar year ended 2019 accrued at September 30, 2020.

For the calendar year ended December 31, 2018, there was no excise tax expense as the Company distributed at least 98% of its ordinary

income and 98.2% of its capital gains.

The Company’s Taxable Subsidiaries accrue

income taxes payable based on the applicable corporate rates on the unrealized gains generated by the investments held by the Taxable

Subsidiaries.

As of September 30, 2021 and 2020, the Company did not record a deferred tax liability on the Consolidated Statements of

Assets and Liabilities.

The change in provision for deferred taxes is included as a component of net realized and unrealized

gain/(loss) on investments in the Consolidated Statements of Operations.

For the years ended September 30, 2021, 2020 and 2019, the Company

did not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments.

As of September 30, 2021 and 2020, the Company

had a deferred tax asset of $22.2 million and $22.8 million, respectively, consisting primarily of net operating losses and net unrealized

losses on the investments held within its Taxable Subsidiaries.

As of September 30, 2021 and 2020, the Company has booked a valuation

allowance of $22.2 million and $22.8 million, respectively, against its deferred tax asset.

generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition

of income and expenses.

The Company may be required to recognize ICTI in certain circumstances in which it does not receive cash.

For example, if the Company holds debt obligations that are treated under applicable tax rules as having original issue discount, the Company must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by the Company in the same taxable year.

The Company may also have to include in ICTI other amounts that it has not yet received in cash,

such as 1) PIK interest income and 2) interest income from investments that have been classified as non-accrual for financial reporting purposes.

Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI.

Because any original issue discount or other amounts accrued will be included in the Company’s ICTI for the year of accrual, the Company may be required to make a distribution to its stockholders in order to satisfy the minimum distribution requirements, even though the Company will not have received and may not ever receive any corresponding cash amount.

ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

Permanent differences between ICTI and net investment income for financial reporting purposes are reclassified among capital accounts in the financial statements to reflect their tax character.

Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes.

During the years ended September 30, 2020, 2019 and 2018, the Company reclassified for book purposes amounts arising from permanent book/tax differences related to the different tax treatment of net operating losses as follows:

For the years ended September 30

2020 2019 2018

example, if the Company holds debt obligations that are treated under applicable tax rules as having original issue discount, the Company

must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether

cash representing such income is received by the Company in the same taxable year.

The Company may also have to include in ICTI other

amounts that it has not yet received in cash, such as 1) PIK interest income and 2) interest income from investments that have been classified

as non-accrual for financial reporting purposes.

Interest income on non-accrual investments is not recognized for financial reporting

purposes, but generally is recognized in ICTI.

Because any original issue discount or other amounts accrued will be included in the Company’s

ICTI for the year of accrual, the Company may be required to make a distribution to its stockholders in order to satisfy the minimum

distribution requirements, even though the Company will not have received and may not ever receive any corresponding cash amount.

also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they

are realized.

to Consolidated Financial Statements (continued)

differences between ICTI and net investment income for financial reporting purposes are reclassified among capital accounts in the

financial statements to reflect their tax character.

Differences in classification may also result from the treatment of short-term

gains as ordinary income for tax purposes.

During the years ended September 30, 2021, 2020 and 2019, the Company reclassified for

book purposes amounts arising from permanent book/tax differences related to the different tax treatment of net operating losses and

investments in wholly-owned subsidiaries as follows:

the years ended September 30

Capital in excess of par value

1 unchanged sentence

Accumulated net realized gain/(loss) from investments

For income tax purposes, distributions paid to stockholders are reported as ordinary income, return of capital, long term capital gains or a combination thereof.

The tax character of distributions paid for the years ended September 30, 2020, 2019 and 2018 were as follows:

For the years ended September 30

2020 2019 2018

For income tax purposes, distributions paid to

stockholders are reported as ordinary income, return of capital, long term capital gains or a combination thereof.

The tax character of

distributions paid for the years ended September 30, 2021, 2020 and 2019 were as follows:

the years ended September 30

Ordinary income

Distributions of long-term capital gains

Return of capital — 8,171,130 6,301,403

Distributions on a tax basis $ — $ 8,171,130 $ 28,326,588

For federal income tax purposes, the cost of investments owned at September 30, 2020, 2019 and 2018 were approximately $327.9 million, $464.9 million, and $757.9 million, respectively.

At September 30, 2020, 2019 and 2018, the components of distributable earnings/(accumulated deficits) on a tax basis detailed below differ from the amounts reflected in the Company’s Consolidated Statements of Assets and Liabilities by temporary and other book/tax differences, primarily relating to the tax treatment of certain fee income and organizational expenses, as follows:

For the years ended September 30

2020 2019 2018

Distributions on a tax

federal income tax purposes, the cost of investments owned at September 30, 2021, 2020 and 2019 were approximately $206.9 million, $327.9

million, and $464.9 million, respectively.

September 30, 2021, 2020 and 2019, the components of distributable earnings/(accumulated deficits) on a tax basis detailed below differ

from the amounts reflected in the Company’s Consolidated Statements of Assets and Liabilities by temporary and other book/tax differences,

primarily relating to the tax treatment of certain fee income and organizational expenses, as follows:

the years ended September 30

Undistributed ordinary income

Accumulated capital and other losses (1)

(440,538,935) (389,066,323) (268,569,450)

Accumulated capital

and other losses (1)

Other temporary differences

Unrealized appreciation/(depreciation) (81,119,823) (67,966,064) (102,463,301)

Components of distributable earnings/(accumulated deficits) at year end $ (521,764,824) $ (457,154,661) $ (377,462,517)

(1) Under the Regulated Investment Company Modernization Act of 2010, net capital losses recognized for tax years beginning after December 22, 2010, may be carried forward indefinitely, and their character is retained as short-term or long-term losses.

As of September 30, 2020, the Company a had long-term capital loss carryforward available to offset future realized capital gains of $440,538,935.

The Company accounts for income taxes in conformity with ASC Topic 740 - Income Taxes (“ASC 740”).

ASC 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements.

ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority.

Tax positions deemed to meet a “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current period.

The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Consolidated Statements of Operations.

There were no material uncertain income tax positions at September 30, 2020.

appreciation/(depreciation)

of distributable earnings/(accumulated deficits) at year end

the Regulated Investment Company Modernization Act of 2010, net capital losses recognized

for tax years beginning after December 22, 2010, may be carried forward indefinitely, and

their character is retained as short-term or long-term losses.

As of September 30, 2021,

the Company had a long-term capital loss carryforward available to offset future realized

capital gains of $488,446,626 and a short-term capital loss carryforward of $1,586,162.

The Company accounts for income taxes in conformity

with ASC Topic 740 - Income Taxes (“ASC 740”).

ASC 740 provides guidelines for how uncertain tax positions should be recognized,

measured, presented and disclosed in financial statements.

ASC 740 requires the evaluation of tax positions taken or expected to be taken

in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not”

of being sustained by the applicable tax authority.

Tax positions deemed to meet a “more-likely-than-not”

threshold would

be recorded as a tax benefit or expense in the current period.

The Company recognizes interest and penalties, if any, related to unrecognized

tax benefits as income tax expense in the Consolidated Statements of Operations.

There were no material uncertain income tax positions

at September 30, 2021.

Although we file federal and state tax returns, our major tax jurisdiction is federal.

The Company’s federal and state tax returns for the prior three fiscal years remain open, subject to examination by the Internal Revenue Service.

Retroactive Adjustments for Reverse Stock Split and the Authorized Share Reduction

The per share amount of the common stock and the authorized shares of common stock in the audited financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split effected on July 24, 2020.

See Note 1 for more information regarding the Reverse Stock Split and the Authorized Share Reduction.

The Company invests in various industries.

The Company’s

federal and state tax returns for the prior three fiscal years remain open, subject to examination by the Internal Revenue Service and

applicable state tax authorities.

Adjustments for Reverse Stock Split and the Authorized Share Reduction

per share amount of the common stock and the authorized shares of common stock in the audited financial statements and notes thereto

have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split effected on July 24, 2020.

1 for more information regarding the Reverse Stock Split and the Authorized Share Reduction.

Company invests in various industries.

The Company separately evaluates the performance of each of its investment relationships.

However, because each of these investment relationships has similar business and economic characteristics, they have been aggregated into a single investment

All applicable segment disclosures are included in or can be derived from the Company’s financial statements.

because each of these investment relationships has similar business and economic characteristics, they have been aggregated into a single

investment segment.

All applicable segment disclosures are included in or can be derived from the Company’s financial statements.

See Note 3 for further information.

Company Investment Risk, Concentration of Credit Risk, and Liquidity Risk

MCC Advisors has broad discretion in making investments for the Company.

Investments will generally consist of debt instruments that may be affected by business, financial market or legal uncertainties.

Prices of investments may be volatile, and a variety of factors that are inherently difficult to predict, such as domestic or international economic and political developments, may significantly affect the results of the Company’s activities and the value of its investments.

In addition, the value of the Company’s portfolio may fluctuate as the general level of interest rates fluctuate.

The value of the Company’s investments in loans may be detrimentally affected to the extent, among other things, that a borrower defaults on its obligations, there is insufficient collateral and/or there are extensive legal and other costs incurred in collecting on a defaulted loan, observable secondary or primary market yields for similar instruments issued by comparable companies increase materially or risk premiums required in the market between smaller companies, such as our borrowers, and those for which market yields are observable increase materially.

MCC Advisors may attempt to minimize this risk by maintaining low loan-to-liquidation values with each loan and the collateral underlying the loan.

The Company’s assets may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult.

Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately.

The composition of our investments as of September 30, 2020 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands):

Amortized Cost Percentage Fair Value Percentage

Senior Secured First Lien Term Loans $ 178,843 54.5 % $ 106,463 43.2 %

Senior Secured Second Lien Term Loans 15,476 4.7 13,927 5.6

Unsecured Debt 4,601 1.4 2,669 1.1

MCC Senior Loan Strategy JV I LLC 79,888 24.4 41,019 16.6

to Consolidated Financial Statements (continued)

Investment Risk, Concentration of Credit Risk, and Liquidity Risk

Company has broad discretion in making investments.

Investments generally consist of debt instruments that may be affected by business,

financial market or legal uncertainties.

Prices of investments may be volatile, and a variety of factors that are inherently difficult

to predict, such as domestic or international economic and political developments, may significantly affect the results of the Company’s

activities and the value of its investments.

In addition, the value of the Company’s portfolio may fluctuate as the general level

of interest rates fluctuate.

value of the Company’s investments in loans may be detrimentally affected to the extent, among other things, that a borrower defaults

on its obligations, there is insufficient collateral and/or there are extensive legal and other costs incurred in collecting on a defaulted

loan, observable secondary or primary market yields for similar instruments issued by comparable companies increase materially or risk

premiums required in the market between smaller companies, such as our borrowers, and those for which market yields are observable increase

Company’s assets may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly

traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult.

the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments

performance (including that of certain of its portfolio companies) has been and may continue to be negatively impacted by the COVID-19

pandemic’s effects.

The COVID-19 pandemic has adversely impacted economies and capital markets around the world in ways that may

continue and may change in unforeseen ways for an indeterminate period.

The pandemic has also adversely affected various businesses,

including some in which we are invested.

The COVID-19 pandemic may exacerbate pre-existing business performance, political, social and

economic risks affecting certain companies and countries generally.

The impacts, as well as the uncertainty over impacts to come, of

COVID-19 (including the Delta variant) have adversely affected the performance of the Company (including certain portfolio companies)

and may continue to do so in the future.

Further, the potential exists for additional variants of COVID-19, including the Omicron variant,

to impede the global economic recovery and exacerbate geographic differences in the spread of, and response to, COVID-19.

composition of our investments as of September 30, 2021 as a percentage of our total portfolio, at amortized cost and fair value were

as follows (dollars in thousands):

Secured First Lien Term Loans

Secured Second Lien Term Loans

Secured Notes

Equity/Warrants

Total $ 328,135 100.0 % $ 246,744 100.0 %

The composition of our investments as of September 30, 2019 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands):

Amortized Cost Percentage Fair Value Percentage

Senior Secured First Lien Term Loans $ 243,342 52.0 % $ 192,770 48.6 %

Senior Secured Second Lien Term Loans 39,089 8.4 36,508 9.2

Unsecured Debt 2,653 0.6 2,653 0.7

MCC Senior Loan Strategy JV I LLC 78,575 16.8 69,949 17.6

composition of our investments as of September 30, 2020 as a percentage of our total portfolio, at amortized cost and fair value were

as follows (dollars in thousands):

Secured First Lien Term Loans

Secured Second Lien Term Loans

Senior Loan Strategy JV I LLC

Equity/Warrants

Total $ 467,648 100.0 % $ 396,889 100.0 %

In connection with certain of the Company’s investments, the Company receives warrants that are obtained for the objective of increasing the total investment returns and are not held for hedging purposes.

At September 30, 2020 and 2019, the total fair value of warrants was $15,354 and $24,983, respectively, and were included in investments at fair value on the Consolidated Statements of Assets and Liabilities.

connection with certain of the Company’s investments, the Company receives warrants that are obtained for the objective of increasing

the total investment returns and are not held for hedging purposes.

At September 30, 2021 and 2020, the total fair value of warrants

was $996.7 thousand and $15.3 thousand, respectively, and were included in investments at fair value on the Consolidated Statements of

Assets and Liabilities.

During the year ended September 30, 2021, the Company acquired additional warrants in one existing portfolio

During the year ended September 30, 2020, the Company had no warrant activity.

During the year ended September 30, 2019, the Company exercised its warrant positions in one portfolio company in exchange for common stock in Avantor, Inc., forfeited its warrant positions in another portfolio company, and acquired additional warrants in one existing portfolio company.

Total unrealized depreciation related to warrants for the years ended September 30, 2020, 2019, and 2018 was $9,628, $0.5 million, and $1.3 million, respectively, and was recorded on the Consolidated Statements of Operations as net unrealized appreciation/(depreciation) on investments.

unrealized depreciation related to warrants for the years ended September 30, 2021, 2020, and 2019 was $981.4 thousand, $9.6 thousand,

and $0.5 million, respectively, and was recorded on the Consolidated Statements of Operations as net unrealized appreciation/(depreciation)

on investments.

The warrants are received in connection with individual investments and are not subject to master netting arrangements.

The following table shows the portfolio composition by industry grouping at fair value at September 30, 2020 (dollars in thousands):

Fair Value Percentage

Construction & Building $ 51,964 21.1 %

Multisector Holdings 41,019 16.6

High Tech Industries 26,165 10.6

Healthcare & Pharmaceuticals 23,481 9.5

Business 21,841 8.9

Hotel, Gaming & Leisure 12,337 5.0

Wholesale 12,278 5.0

Containers, Packaging & Glass 11,987 4.8

Consumer goods:

Durable 9,520 3.8

Banking, Finance, Insurance & Real Estate 6,557 2.7

Consumer goods:

Non-durable 6,164 2.5

Environmental Industries 5,846 2.4

Oil & Gas 5,626 2.3

Metals & Mining 3,530 1.4

Forest Products & Paper 2,991 1.2

Aerospace & Defense 2,942 1.2

Broadcasting & Subscription 1,110 0.5

Automotive 1,043 0.4

Retail 343 0.1

Total $ 246,744 100.0 %

The following table shows the portfolio composition by industry grouping at fair value at September 30, 2019 (dollars in thousands):

Fair Value Percentage

Multisector Holdings $ 69,949 17.6 %

Construction & Building 59,608 15.0

Business 49,512 12.5

High Tech Industries 38,254 9.6

Healthcare & Pharmaceuticals 25,698 6.5

Oil & Gas 23,632 6.0

Hotel, Gaming & Leisure 21,127 5.3

Wholesale 13,850 3.5

Consumer 13,278 3.3

Containers, Packaging & Glass 12,637 3.2

Capital Equipment 10,680 2.7

Automotive 10,375 2.6

Banking, Finance, Insurance & Real Estate 10,000 2.5

Aerospace & Defense 8,604 2.2

Consumer goods:

Non-durable 6,326 1.6

Consumer goods:

Durable 6,170 1.6

Environmental Industries 3,991 1.0

Metals & Mining 3,436 0.9

Forest Products & Paper 2,830 0.7

to Consolidated Financial Statements (continued)

following table shows the portfolio composition by industry grouping at fair value at September 30, 2021 (dollars in thousands):

Finance, Insurance & Real Estate

Tech Industries

Gaming & Leisure

Manufacturing

Environmental

Products & Paper

& Pharmaceuticals

following table shows the portfolio composition by industry grouping at fair value at September 30, 2020 (dollars in thousands):

Tech Industries

& Pharmaceuticals

Gaming & Leisure

Packaging & Glass

Finance, Insurance & Real Estate

Environmental

Products & Paper

Broadcasting & Subscription

Chemicals, Plastics & Rubber 2,277 0.6

Advertising, Printing & Publishing 1,715 0.4

Retail 532 0.1

Total $ 396,889 100.0 %

The Company invests in portfolio companies principally located in North America.

The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business.

The following table shows the portfolio composition by geographic location at fair value at September 30, 2020 (dollars in thousands):

Fair Value Percentage

Northeast $ 98,555 39.9 %

West 55,400 22.5

Southeast 42,321 17.1

Midwest 27,574 11.2

Mid-Atlantic 13,334 5.4

Southwest 9,560 3.9

Total $ 246,744 100.0 %

The following table shows the portfolio composition by geographic location at fair value at September 30, 2019 (dollars in thousands):

Fair Value Percentage

Northeast $ 143,795 36.2 %

West 88,412 22.3

Midwest 76,001 19.2

Southeast 48,089 12.1

Southwest 24,658 6.2

Mid-Atlantic 15,934 4.0

Total $ 396,889 100.0 %

Transactions With Affiliated/Controlled Companies

The Company had investments in portfolio companies designated as Affiliated Investments and Controlled Investments under the 1940 Act.

Transactions with Affiliated Investments and Controlled Investments during the years ended September 30, 2020 and 2019 were as follows:

Name of Investment (3)

Type of Investment Fair Value at September 30, 2019 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2020 Income Earned

to Consolidated Financial Statements (continued)

Company invests in portfolio companies principally located in North America.

The geographic composition is determined by the location

of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s

following table shows the portfolio composition by geographic location at fair value at September 30, 2021 (dollars in thousands):

following table shows the portfolio composition by geographic location at fair value at September 30, 2020 (dollars in thousands):

to Consolidated Financial Statements (continued)

With Affiliated/Controlled Companies

Company had investments in portfolio companies designated as Affiliated Investments and Controlled Investments under the 1940 Act.

with Affiliated Investments and Controlled Investments during the years ended September 30, 2021 and 2020 were as follows:

of Investment (3)

September 30,

(Sales) of or

(Distributions)

September 30,

Affiliated Investments

1888 Industrial Services, LLC Senior Secured First Lien Term Loan A $ 9,304,145 $ 168,923 $ — $ (9,473,068) $ — $ — $ 167,086

Senior Secured First Lien Term Loan B 5,886,892 — — (5,886,892) — — —

Senior Secured First Lien Term Loan C 1,170,014 21,242 — (24,493) — 1,166,763 21,012

Senior Secured First Lien Term Loan D 224,456 (224,456) — — — — 15,103

Senior Secured First Lien Term Loan E — — — — — — 53,342

Revolving Credit Facility 4,387,025 (832,956) — — — 3,554,069 246,271

Equity — — — — — — —

Access Media Holdings, LLC Senior Secured First Lien Term Loan 2,509,089 — — (1,398,526) — 1,110,563 —

Preferred Equity Series A — — — — — — —

Preferred Equity Series AA — — — — — — —

Preferred Equity Series AAA (100,800) — — 100,800 — — —

Equity — — — — — — —

Black Angus Steakhouses, LLC Senior Secured First Lien Delayed Draw Term Loan — — 758,929 — — 758,929 11,148

Senior Secured First Lien Term Loan — — 5,863,872 (816,315) — 5,047,557 —

Equity — — — — — — —

Caddo Investors Holdings 1 LLC Equity 2,830,051 2,452 — 158,273 — 2,990,776 —

Dynamic Energy Services International LLC Senior Secured First Lien Term Loan 1,264,841 — — (359,725) — 905,116 —

Revolving Credit Facility 545,103 (545,103) — — — — 6,692

Equity — — — — — — —

JFL-NGS Partners, LLC Preferred Equity A-2 20,150,684 (18,355,650) — — — 1,795,034 352,315

Preferred Equity A-1 2,607,661 (2,375,369) — — — 232,292 45,592

Equity 19,096,371 — — 19,683,696 — 38,780,067 —

JFL-WCS Partners, LLC Preferred Equity Class A 1,236,269 74,380 — — — 1,310,649 77,412

Equity 2,755,041 — — 1,780,539 — 4,535,580 —

Kemmerer Operations, LLC Senior Secured First Lien Term Loan 1,766,511 285,194 — — — 2,051,705 285,313

Senior Secured First Lien Delayed Draw Term Loan 706,604 (190,905) — — — 515,699 80,201

Equity 962,717 — — — — 962,717 —

Name of Investment (3)

Path Medical, LLC Senior Secured First Lien Term Loan 8,845,167 (8,639,959) — 449,792 (655,000) — 1,203,692

Senior Secured First Lien Term Loan A 3,047,473 (3,010,987) — 237,504 (273,990) — 380,499

Senior Secured First Lien Term Loan C 344,291 (344,463) — 172 — — 17,776

Senior Secured First Lien Term Loan A — 5,905,080 — — — 5,905,080 51,670

Senior Secured First Lien Term Loan B — 6,599,918 — 194,596 — 6,794,514 —

Equity — — — — — — —

US Multifamily, LLC Senior Secured First Lien Term Loan 6,670,000 (1,546,087) — — — 5,123,913 592,727

Equity 3,330,000 — — (1,998,000) — 1,332,000 —

Total Affiliated Investments $ 99,539,605 $ (23,008,746) $ 6,622,801 $ 2,648,353 $ (928,990) $ 84,873,023 $ 3,607,851

Controlled Investments

MCC Senior Loan Strategy JV I LLC (1)(2)

Equity 69,948,970 1,312,500 — (30,242,970) — 41,018,500 6,256,250

NVTN LLC Senior Secured First Lien Term Loan 4,255,990 2,309,885 — (2,035,797) — 4,530,078 62,840

Super Priority Senior Secured First Lien Term Loan — 1,995,374 — 4,626 — 2,000,000 1,983

Senior Secured First Lien Term Loan B 7,152,352 — — (7,152,352) — — —

Senior Secured First Lien Term Loan C — — — — — — —

Equity — — — — — — —

TPG Plastics LLC Senior Secured Second Lien Term Loan 352,984 (352,984) — — — — 12,806

Unsecured Debt 278,810 (278,810) — — — — 6,876

Unsecured Debt 1,644,751 (1,630,312) — 1,672,398 (1,686,837) — —

URT Acquisition Holdings Corporation Senior Secured Second Lien Term Loan 18,905,403 1,594,416 — — (20,499,819) — 500,767

Preferred Equity 4,914,667 (2,533,622) — 1,638,223 (4,019,268) — —

Equity — (66,378) — 12,936,879 (12,870,501) — —

Total Controlled Investments $ 107,453,927 $ 2,350,069 $ — $ (23,178,993) $ (39,076,425) $ 47,548,578 $ 6,841,522

Name of Investment (3)

Type of Investment Fair Value at September 30, 2018 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at September 30, 2019 Income Earned

Industrial Services, LLC

Secured First Lien Term Loan A

Secured First Lien Term Loan B

Secured First Lien Term Loan C

Credit Facility

Media Holdings, LLC

Secured First Lien Term Loan

Equity Series A

Equity Series AA

Equity Series AAA

Angus Steakhouses,LLC

Secured First Lien Delayed Draw Term Loan

Secured First Lien Term Loan

Secured First Lien Super Priority DDTL

Investors Holdings 1 LLC

Energy Services International LLC

Secured First Lien Term Loan

Partners, LLC

(11,917,254 )

Partners, LLC

Equity Class A

Operations, LLC

Secured First Lien Term Loan

Secured First Lien Delayed Draw Term Loan

Secured First Lien Term Loan A

Secured First Lien Term Loan B

Acquisition Holdings Corporation

Multifamily, LLC

Secured First Lien Term Loan

Affiliated Investments

1888 Industrial Services, LLC Senior Secured First Lien Term Loan A $ 8,984,232 $ 319,913 $ — $ — $ — $ 9,304,145 $ 688,498

Senior Secured First Lien Term Loan B 19,725,217 142,757 — (13,981,082) — 5,886,892 752,483

$ (9,414,852 )

$ (10,342,450 )

$ (10,088,405 )

to Consolidated Financial Statements (continued)

Name of Investment (3)

Senior Secured First Lien Term Loan C — 1,170,014 — — — 1,170,014 22,203

Senior Secured First Lien Term Loan D — 224,456 — — — 224,456 546

Revolving Credit Facility 3,593,693 793,332 — — — 4,387,025 247,920

Equity — — — — — — —

Access Media Holdings, LLC Senior Secured First Lien Term Loan 5,876,279 — — (3,367,190) — 2,509,089 (25,391)

Preferred Equity Series A — — — — — — —

Preferred Equity Series AA — — — — — — —

Preferred Equity Series AAA (172,800) 72,000 — — — (100,800) —

Equity — — — — — — —

Brantley Transportation LLC Senior Secured First Lien Term Loan 2,882,800 (1,329,030) — 6,117,200 (7,670,970) — —

Senior Secured First Lien Delayed Draw Term Loan 503,105 (503,105) — — — — 35,561

Equity — — — — — — —

Caddo Investors Holdings 1 LLC Equity 2,500,000 26,373 — 303,678 — 2,830,051 (61,927)

Dynamic Energy Services International LLC Senior Secured First Lien Term Loan — — 7,824,975 (6,560,134) — 1,264,841 (393,474)

Revolving Credit Facility — (776,898) 1,322,001 — — 545,103 65,754

Equity — — — — — — —

JFL-NGS Partners, LLC Preferred Equity A-2 31,468,755 (11,318,071) — — — 20,150,684 924,898

Preferred Equity A-1 4,072,311 (1,464,650) — — — 2,607,661 119,689

Equity 9,825,804 — — 9,270,567 — 19,096,371 —

JFL-WCS Partners, LLC Preferred Equity Class A 1,166,292 69,977 — — — 1,236,269 72,830

Equity 215,116 — — 2,539,925 — 2,755,041 —

Kemmerer Operations, LLC Senior Secured First Lien Term Loan — 1,766,511 — — — 1,766,511 72,332

Senior Secured First Lien Delayed Draw Term Loan — 706,604 — — — 706,604 28,932

Equity — 962,717 — — — 962,717 —

Path Medical, LLC Senior Secured First Lien Term Loan — 1,473,135 7,821,824 (449,792) — 8,845,167 1,148,712

Senior Secured First Lien Term Loan A — 476,477 2,808,500 (237,504) — 3,047,473 364,754

Senior Secured First Lien Term Loan C — 344,463 — (172) — 344,291 70,514

Equity — — 499,751 (499,751) — — —

US Multifamily, LLC Senior Secured First Lien Term Loan 6,670,000 — — — — 6,670,000 667,000

Equity 3,330,000 — — — — 3,330,000 —

Total Affiliated Investments $ 100,640,804 $ (6,843,025) $ 20,277,051 $ (6,864,255) $ (7,670,970) $ 99,539,605 $ 4,801,834

Fair Value at

September 30,

(Sales) of or

(Distributions)

Fair Value at

September 30,

Controlled Investments

Name of Investment (3)

Capstone Nutrition Senior Secured First Lien Term Loan $ 12,657,663 $ (1,884,717) $ — $ 8,188,908 $ (18,961,854) $ — $ (34,719)

Senior Secured First Lien Delayed Draw Term Loan 5,692,096 (847,549) — 3,994,770 (8,839,317) — —

Senior Secured First Lien Incremental Delayed Draw Term Loan 2,242,721 (2,242,721) — — — — 488,373

Equity - Class B and C Units — — — 12 (12) — —

Equity - Common Units — — — 400,003 (400,003) — —

Equity Interest

MCC Senior Loan Strategy JV I LLC(1)(2)

Equity 78,370,891 — — (8,421,921) — 69,948,970 8,050,000

NVTN LLC Senior Secured First Lien Term Loan 4,005,990 250,000 — — — 4,255,990 270,259

Senior Secured First Lien Term Loan B 11,837,367 467,729 — (5,152,744) — 7,152,352 352,280

Senior Secured First Lien Term Loan C 7,479,397 90,657 — (7,570,054) — — —

Equity — — — — — — —

OmniVere, LLC Senior Secured First Lien Term Loan — — — 22,880,599 (22,880,599) — (2,822)

Senior Secured First Lien Term Loan

Unsecured Debt — — — 22,727,575 (22,727,575) — (2,205)

Equity — — — 872,698 (872,698) — —

TPG Plastics LLC Senior Secured Second Lien Term Loan 401,346 (48,362) — — — 352,984 38,253

Unsecured Debt 360,000 (21,780) — — (59,410) 278,810 27,281

Unsecured Debt 646,996 (646,996) — — — — 2,163

Equity 2,670,154 646,996 — (1,672,399) — 1,644,751 —

URT Acquisition Holdings Corporation Senior Secured Second Lien Term Loan 15,112,754 3,792,649 — — — 18,905,403 1,824,940

Preferred Equity 5,850,795 702,095 — (1,638,223) — 4,914,667 175,043

Equity 12,937,518 — — (12,937,518) — — —

Super Priority Senior Secured First Lien Term Loan

Total Controlled Investments

(1) The Company and Great American Life Insurance Company (“GALIC”) are the members of MCC Senior Loan Strategy JV I LLC (“MCC JV”), a joint venture formed as a Delaware limited liability company that is not consolidated by either member for financial reporting purposes.

The members of MCC JV make capital contributions as investments by MCC JV are completed, and all portfolio and other material decisions regarding MCC JV must be submitted to MCC JV’s board of managers, which is comprised of an equal number of members appointed by each of the Company and GALIC.

Approval of MCC JV’s board of managers requires the unanimous approval of a quorum of the board of managers, with a quorum consisting of equal representation of members appointed by each of the Company and GALIC.

Because management of MCC JV is shared equally between the Company and GALIC, the Company does not have operational control over the MCC JV for purposes of the 1940 Act or otherwise.

(2) Amount of income earned represents distributions from MCC JV to the Company and is a component of dividend income, net of provisional taxes in the Consolidated Statements of Operations.

(3) The par amount and additional detail are shown in the consolidated schedule of investments.

Purchases/(sales) of or advances to/(distributions) from Affiliated Investments and Controlled Investments represent the proceeds from sales and settlements of investments, purchases, originations and participations, investment increases due to PIK interest as well as net amortization of premium/(discount) on investments and are included in the purchases and sales presented on the Consolidated Statements of Cash Flows for the years ended September 30, 2020, 2019 and 2018.

Transfers in/(out) of Affiliated Investments and Controlled Investments represent the fair value for the month an investment became or was removed as an Affiliated Investment or a Controlled Investment.

Income received from Affiliated Investments and Controlled Investments is included in total investment income on the Consolidated Statements of Operations for the years ended September 30, 2020, 2019 and 2018.

Loan Participation Sales

The Company may sell portions of its investments via participation agreements to a managed account, managed by an affiliate and non-affiliate of the Company.

At September 30, 2020, there were two participation agreements outstanding with an aggregate fair value of $6.8 million.

At September 30, 2019, there were two participation agreements outstanding with an aggregate fair value of $6.5 million.

The transfer of the participated portion of the investments met the criteria set forth in ASC 860, Transfers and Servicing for treatment as a sale.

In each case, the Company’s loan participation agreements satisfy the following conditions:

• transferred investments have been isolated from the Company, and put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership,

• each participant has the right to pledge or exchange the transferred investments it received, and no condition both constrains the participant from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the Company;

• the Company, its consolidated affiliates or its agents do not maintain effective control over the transferred investments through either:

(i) an agreement that entitles and/or obligates the Company to repurchase or redeem the assets before maturity, or (ii) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.

Such investments where the Company has retained proportionate interests are included in the consolidated schedule of investments.

All of these investments are classified within Level 3 of the fair value hierarchy, as defined in Note 4.

During the years ended September 30, 2020, 2019 and 2018, the Company collected interest and principal payments on behalf of the participant in aggregate amounts of $2.7 million, $3.7 million and $21.8 million, respectively.

Under the terms of the participation agreements, the Company will collect and remit periodic payments to the participant equal to the participant's proportionate share of any principal and interest payments received by the Company from the underlying investee companies.

MCC Senior Loan Strategy JV I LLC

On March 27, 2015, the Company and GALIC entered into a limited liability company operating agreement to co-manage MCC JV.

All portfolio and other material decisions regarding MCC JV must be submitted to MCC JV’s board of managers, which is comprised of four members, two of whom are selected by the Company and the other two of whom are selected by GALIC.

The Company has concluded that it does not operationally control MCC JV.

As the Company does not operationally control MCC JV, it does not consolidate the operations of MCC JV within the consolidated financial statements.

Subsequent to the year ended September 30, 2020, the Company, MCC JV, GALIC, and an affiliate of Golub Capital LLC (“Golub”) entered into a Membership Interest Purchase Agreement pursuant to which a private fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in MCC JV and all of GALIC’s interest in the MCC JV.

In connection therewith, MCC JV repaid in full all outstanding borrowings under, and terminated, the JV Facility (defined below).

See “Note 15” for more information.

Because of the aforementioned transaction, the Company determined the value of MCC JV using the proceeds from the sale.

Historically, as a practical expedient, the Company had used NAV to determine the value of its investment in MCC JV;

therefore, this investment had been presented as a reconciling item within the fair value hierarchy (see Note 4).

Investments held by MCC JV are measured at fair value using the same valuation methodologies as described in Note 2.

As of September 30, 2020, MCC JV had total capital commitments of $100.0 million, with the Company providing $87.5 million and GALIC providing $12.5 million.

Approximately $89.8 million was funded as of September 30, 2020 relating to these commitments, of which $78.6 million

was from the Company.

As of September 30, 2020, MCC JV’s board of managers had approved advances of capital of up to $0.3 million of the remaining capital commitments, of which $0.2 million is from the Company.

On August 4, 2015, MCC JV entered into a senior secured revolving credit facility (the “JV Facility”) led by Credit Suisse, AG (“CS”) with commitments of $100 million subject to leverage and borrowing base restrictions.

On March 30, 2017, the Company amended the JV Facility previously administered by CS and facilitated the assignment of all rights and obligations of CS under the JV Facility to Deutsche Bank AG, New York Branch (“DB”), and increased the total loan commitments to $200 million.

The JV Facility bears interest at a rate of LIBOR (with no minimum + 2.50% per annum.

On March 29, 2019, the JV Facility reinvestment period was extended to June 28, 2019 from March 30, 2019.

On June 28, 2019, the JV Facility reinvestment period was extended to October 28, 2019.

The stated maturity date was not impacted by the JV Facility reinvestment period extension and remained March 30, 2022.

As of September 30, 2020 and 2019, there was approximately $111.3 million and $179.3 million outstanding under the JV Facility, respectively.

On March 31, 2020, the JV Facility ended its reinvestment period and entered its amortization period, during which time the interest rate was increased to LIBOR (with a 0.00% floor) + 3.00% per annum.

On April 20, 2020, the JV Facility was amended to (i) during each 12-month period during the amortization period, permit the sale of investments below a price of 97% as long as the sale is approved by DB and the balance of all such investments sold is not greater than 30% of the adjusted balance of all loans as of the first date of each 12-month period and (ii) establish a target effective advance rate at various measurement dates during the amortization period.

All principal collections will be swept to amortize the amount outstanding under the JV Facility and interest collections will be swept, as applicable, in order to meet the target effective advance rate for the applicable period.

At September 30, 2020 and 2019, MCC JV had total investments at fair value of $163.1 million and $249.3 million, respectively.

As of September 30, 2020 and 2019, MCC JV’s portfolio was comprised of senior secured first lien term loans to 45 and 61 borrowers, respectively.

As of September 30, 2020 and 2019, certain investments in one portfolio company held by MCC JV were on non-accrual status.

Below is a summary of MCC JV’s portfolio, excluding equity investments, followed by a listing of the individual investments in MCC JV’s portfolio as of September 30, 2020 and 2019:

September 30, 2020 September 30, 2019

Senior secured loans (1)

$ 182,514,110 $ 261,170,437

Weighted average current interest rate on senior secured loans (2)

6.02 % 7.17 %

Number of borrowers in MCC JV 45 61

Largest loan to a single borrower (1)

$ 10,653,501 $ 10,884,644

Total of five largest loans to borrowers (1)

$ 39,191,213 $ 43,626,877

(1) At par value.

(2) Computed as the (a) annual stated interest rate on accruing senior secured loans, divided by (b) total senior secured loans at par.

MCC JV Loan Portfolio as of September 30, 2020

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

4Over International, LLC Media:

Advertising, Printing & Publishing Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

6/7/2022 $ 10,653,501 $ 10,653,501 $ 9,995,115 16.8 %

10,653,501 10,653,501 9,995,115

Cardenas Markets LLC Retail Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor) (1)

11/29/2023 5,293,750 5,269,829 5,287,398 8.9 %

5,293,750 5,269,829 5,287,398

CHA Consulting, Inc.

Construction & Building Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

4/10/2025 1,340,389 1,336,046 1,274,308 2.1 %

Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

4/10/2025 592,500 592,500 563,290 0.9 %

1,932,889 1,928,546 1,837,598

Covenant Surgical Partners, Inc.

Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.00%) (1)

7/1/2026 4,950,187 4,909,373 4,435,496 7.4 %

4,950,187 4,909,373 4,435,496

CT Technologies Intermediate Holdings, Inc.

Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1)

12/1/2021 5,086,116 5,005,862 4,875,042 8.2 %

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

5,086,116 5,005,862 4,875,042

Envision Healthcare Corporation Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor) (1)

10/10/2025 1,940,438 1,888,530 1,397,503 2.3 %

1,940,438 1,888,530 1,397,503

GC EOS Buyer, Inc.

Automotive Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

8/1/2025 1,420,440 1,404,814 1,304,532 2.2 %

1,420,440 1,404,814 1,304,532

GK Holdings, Inc.

Business Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

1/20/2021 2,877,863 2,876,803 2,142,856 3.6 %

2,877,863 2,876,803 2,142,856

Glass Mountain Pipeline Holdings, LLC Energy:

Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

12/23/2024 4,850,625 4,839,587 2,601,390 4.4 %

4,850,625 4,839,587 2,601,390

Golden West Packaging Group LLC Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

6/20/2023 4,069,771 4,069,771 3,968,027 6.7 %

4,069,771 4,069,771 3,968,027

High Ridge Brands Co.

Consumer Goods:

Non-Durable Senior Secured First Lien Term Loan (LIBOR + 7.00%, 1.00% LIBOR Floor) (1)(4)

6/30/2022 1,732,439 1,724,570 593,187 1.0 %

1,732,439 1,724,570 593,187

Highline Aftermarket Acquisitions, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor) (1)

4/26/2025 4,025,000 4,016,286 3,597,545 6.0 %

4,025,000 4,016,286 3,597,545

Infogroup, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1)

4/3/2023 4,825,000 4,804,770 4,224,770 7.1 %

4,825,000 4,804,770 4,224,770

Intermediate LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor) (1)

7/1/2026 2,722,500 2,708,089 2,513,684 4.2 %

2,722,500 2,708,089 2,513,684

Isagenix International, LLC Wholesale Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor) (1)

6/16/2025 2,626,629 2,616,715 1,337,742 2.2 %

2,626,629 2,616,715 1,337,742

IXS Holdings, Inc.

Automotive Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

3/5/2027 994,874 985,714 981,543 1.6 %

994,874 985,714 981,543

Keystone Acquisition Corp.

Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

5/1/2024 6,099,815 6,040,757 5,505,083 9.2 %

6,099,815 6,040,757 5,505,083

KNB Holdings Corporation Consumer Goods:

Durable Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor) (1)

4/26/2024 4,743,170 4,694,643 1,992,131 3.3 %

4,743,170 4,694,643 1,992,131

Liason Acquisition, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

12/20/2026 3,466,288 3,458,579 3,372,351 5.7 %

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

3,466,288 3,458,579 3,372,351

LifeMiles Ltd.

Consumer Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor) (1)

8/18/2022 4,229,263 4,220,573 3,880,349 6.5 %

of Investment (3)

September 30,

(Sales) of or

(Distributions)

September 30,

Industrial Services, LLC

Secured First Lien Term Loan A

$ (9,473,068 )

Manna Pro Products, LLC Consumer Goods:

Non-Durable Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

Secured First Lien Term Loan B

Secured First Lien Term Loan C

Secured First Lien Term Loan D

Secured First Lien Term Loan E

Credit Facility

Media Holdings, LLC

Secured First Lien Term Loan

Equity Series A

Equity Series AA

Equity Series AAA

Angus Steakhouses, LLC

Secured First Lien Delayed Draw Term Loan

Secured First Lien Term Loan

Investors Holdings 1 LLC

Energy Services International LLC

Secured First Lien Term Loan

Credit Facility

Partners, LLC

(18,355,650 )

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

Partners, LLC

Equity Class A

Operations, LLC

Secured First Lien Term Loan

Secured First Lien Delayed Draw Term Loan

to Consolidated Financial Statements (continued)

of Investment (3)

September 30,

(Sales) of or

(Distributions)

September 30,

Secured First Lien Term Loan

Secured First Lien Term Loan A

Secured First Lien Term Loan C

Secured First Lien Term Loan A

Secured First Lien Term Loan B

Multifamily, LLC

Secured First Lien Term Loan

Affiliated Investments

$ (23,008,746 )

of Investment (3)

September 30,

(Sales) of or

(Distributions)

September 30,

Senior Loan Strategy JV I LLC (1)(2)

$ (30,242,970 )

Mileage Plus Holdings, LLC Transportation:

Consumer Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

Secured First Lien Term Loan

Priority Senior Secured First Lien Term Loan

Secured First Lien Term Loan B

Secured First Lien Term Loan C

Secured Second Lien Term Loan

Acquisition Holdings Corporation

Secured Second Lien Term Loan

(20,499,819 )

(12,870,501 )

NGS US Finco, LLC Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1)

Controlled Investments

$ 107,453,927

$ (23,178,993 )

Northern Star Industries, Inc.

Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

$ (39,076,425 )

Company and GALIC were the members of MCC JV, a joint venture formed as a Delaware limited

liability company that was not consolidated by either member for financial reporting purposes.

The members of MCC JV made capital contributions as investments by MCC JV were completed,

and all portfolio and other material decisions regarding MCC JV were submitted to MCC JV’s

board of managers, which was comprised of an equal number of members appointed by each of

the Company and GALIC.

Approval of MCC JV’s board of managers required the unanimous

approval of a quorum of the board of managers, with a quorum consisting of equal representation

of members appointed by each of the Company and GALIC.

Because management of MCC JV was shared

equally between the Company and GALIC, the Company did not have operational control over

MCC JV for purposes of the 1940 Act or otherwise.

On October 8, 2020, the Company, GALIC,

MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant

to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s

interest in MCC JV and all of GALIC’s interest in MCC JV.

of income earned represented distributions from MCC JV to the Company and is a component

of dividend income, net of provisional taxes in the Consolidated Statements of Operations.

par amount and additional detail are shown in the Consolidated Schedule of Investments.

(4) Securities

with a zero value at the beginning and end of the period, and those that had no transaction

activity were excluded from the roll forward.

to Consolidated Financial Statements (continued)

Purchases/(sales)

of or advances to/(distributions) from Affiliated Investments and Controlled Investments represent the proceeds from sales and settlements

of investments, purchases, originations and participations, investment increases due to PIK interest as well as net amortization of premium/(discount)

on investments and are included in the purchases and sales presented on the Consolidated Statements of Cash Flows for the years ended

September 30, 2021, 2020 and 2019.

Transfers in/(out) of Affiliated Investments and Controlled Investments represent the fair value for

the month an investment became or was removed as an Affiliated Investment or a Controlled Investment, as applicable.

Income received

from Affiliated Investments and Controlled Investments is included in total investment income on the Consolidated Statements of Operations

for the years ended September 30, 2021, 2020 and 2019.

Loan Participation

Company may sell portions of its investments via participation agreements to a managed account, managed by an affiliate and non-affiliate

of the Company.

At September 30, 2021, there were no participation agreements outstanding.

At September 30, 2020, there were two participation

agreements outstanding with an aggregate fair value of $6.8 million.

The transfer of the participated portion of the investments met

the criteria set forth in ASC 860, Transfers and Servicing for treatment as a sale.

In each case, the Company’s loan participation

agreements satisfy the following conditions:

● transferred

investments have been isolated from the Company, and put presumptively beyond the reach of

the Company and its creditors, even in bankruptcy or other receivership,

participant has the right to pledge or exchange the transferred investments it received,

and no condition both constrains the participant from taking advantage of its right to pledge

or exchange and provides more than a trivial benefit to the Company;

Company, its consolidated affiliates or its agents do not maintain effective control over

the transferred investments through either:

(i) an agreement that entitles and/or obligates

the Company to repurchase or redeem the assets before maturity, or (ii) the ability to unilaterally

cause the holder to return specific assets, other than through a cleanup call.

investments where the Company has retained proportionate interests are included in the Consolidated Schedule of Investments.

investments are classified within Level 3 of the fair value hierarchy, as defined in Note 4.

the year ended September 30, 2021, the Company did not collect interest and principal payments on behalf of any participant, since there

were no participation agreements outstanding.

During the years ended September 30, 2020 and 2019, the Company collected interest and

principal payments on behalf of the participants in aggregate amounts of $2.7 million and $3.7 million, respectively.

Under the terms

of the participation agreements, the Company collected and remitted periodic payments to the participants equal to the participant’s

proportionate share of any principal and interest payments received by the Company from the underlying investee companies.

Loan Strategy JV I LLC

March 27, 2015, the Company and GALIC entered into a limited liability company operating agreement to co-manage MCC JV.

All portfolio

and other material decisions regarding MCC JV were submitted to MCC JV’s board of managers, which was comprised of four members,

two of whom were selected by the Company and the other two of whom were selected by GALIC.

The Company concluded that it did not operationally

control MCC JV.

As the Company did not operationally control MCC JV, it did not consolidate the operations of MCC JV within the consolidated

financial statements.

August 4, 2015, MCC JV entered into a senior secured revolving credit facility (the “JV Facility”) led by Credit Suisse AG,

Cayman Islands Branch (“CS”) with commitments of $100 million subject to leverage and borrowing base restrictions.

30, 2017, the Company amended the JV Facility previously administered by CS and facilitated the assignment of all rights and obligations

of CS under the JV Facility to Deutsche Bank AG, New York Branch (“DB”) and increased the total loan commitments to $200

On March 29, 2019, the JV Facility reinvestment period was extended from March 30, 2019 to June 28, 2019.

On June 28, 2019,

the JV Facility reinvestment period was further extended from June 28, 2019 to October 28, 2019.

On October 28, 2019, the JV Facility

reinvestment period was further extended from October 28, 2019 to March 31, 2020 and the interest rate was modified from bearing an interest

rate of LIBOR (with a 0.00% floor) + 2.50% per annum to LIBOR (with a 0.00% floor) + 2.75% per annum.

Effective as of March 31, 2020,

the maturity date of the JV Facility was extended to March 31, 2023.

As of September 30, 2020, there was approximately $111.3 million

outstanding under the JV Facility.

March 31, 2020, the JV Facility ended its reinvestment period and entered its amortization period, during which time the interest rate

was increased to LIBOR (with a 0.00% floor) + 3.00% per annum.

April 20, 2020, the JV Facility was amended to (i) during each 12-month period during the amortization period permit the sale of investments

below a price of 97% as long as the sale was approved by DB and the balance of all such investments sold is not greater than 30% of the

adjusted balance of all loans as of the first date of each 12-month period and (ii) establish a target effective advance rate at various

measurement dates during the amortization period.

All principal collections were to be swept to amortize the amount outstanding under

the JV Facility and interest collections were to be swept, as applicable, in order to meet the target effective advance rate for the

applicable period.

to Consolidated Financial Statements (continued)

October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant

to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in MCC JV and all of

GALIC’s interest in MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which

constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily for principal

and interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before

transaction expenses) of $41.0 million and $6.6 million for the Company and GALIC, respectively.

to the sale transaction on October 8, 2020, the Company no longer held an investment in MCC JV at September 30, 2021.

At September 30,

2020, MCC JV had total investments at fair value of $163.1 million.

As of September 30, 2020, MCC JV’s portfolio was comprised

of senior secured first lien term loans of 45 borrowers.

As of September 30, 2020, certain investments in one portfolio company held

by MCC JV were on non-accrual status.

is a summary of MCC JV’s portfolio, excluding equity investments, as of September 30, 2020, followed by a listing of the individual

investments in MCC JV’s portfolio as of September 30, 2020:

September 30,

secured loans (1)

$ 182,514,110

average current interest rate on senior secured loans (2)

of borrowers in MCC JV

loan to a single borrower (1)

of five largest loans to borrowers (1)

as the (a) annual stated interest rate on accruing senior secured loans, divided by (b) total

senior secured loans at par.

JV Loan Portfolio as of September 30, 2020

of Investment

of Net Assets (3)

International, LLC

Advertising, Printing &

Secured First Lien Term Loan (LIBOR + 6.00%,

LIBOR Floor) (1)

Secured First Lien Term Loan (LIBOR + 5.75%,

LIBOR Floor) (1)

Consulting, Inc.

Secured First Lien Term Loan (LIBOR + 4.50%,

LIBOR Floor) (1)

Secured First Lien Term Loan (LIBOR + 4.50%,

LIBOR Floor) (1)

Surgical Partners, Inc.

& Pharmaceuticals

Secured First Lien Term Loan (LIBOR + 4.00%) (1)

Technologies Intermediate

& Pharmaceuticals

Secured First Lien Term Loan (LIBOR + 4.25%,

LIBOR Floor) (1)

to Consolidated Financial Statements (continued)

of Investment

of Net Assets (3)

Healthcare Corporation

& Pharmaceuticals

Secured First Lien Term Loan (LIBOR + 3.75%, 1.00%

EOS Buyer, Inc.

Secured First Lien Term Loan (LIBOR + 4.50%,

LIBOR Floor) (1)

Holdings, Inc.

Secured First Lien Term Loan (LIBOR + 6.00%,

LIBOR Floor) (1)

Mountain Pipeline Holdings,

Secured First Lien Term Loan (LIBOR + 4.50%,

LIBOR Floor) (1)

West Packaging Group LLC

Products & Paper

Secured First Lien Term Loan (LIBOR + 5.25%,

LIBOR Floor) (1)

Ridge Brands Co.

Secured First Lien Term Loan (LIBOR + 7.00%,

LIBOR Floor) (1)(4)

Aftermarket Acquisitions,

Secured First Lien Term Loan (LIBOR + 3.50%,

LIBOR Floor) (1)

Tech Industries

Secured First Lien Term Loan (LIBOR + 6.50%,

LIBOR Floor) (1)

Tech Industries

Secured First Lien Term Loan (LIBOR + 4.00%,

LIBOR Floor) (1)

International, LLC

Secured First Lien Term Loan (LIBOR + 5.75%,

LIBOR Floor) (1)

Holdings, Inc.

Secured First Lien Term Loan (LIBOR + 5.00%,

LIBOR Floor) (1)

Acquisition Corp.

& Pharmaceuticals

Secured First Lien Term Loan (LIBOR + 5.25%,

LIBOR Floor) (1)

Holdings Corporation

Secured First Lien Term Loan (LIBOR + 5.50%,

LIBOR Floor) (1)

Acquisition, LLC

Tech Industries

Secured First Lien Term Loan (LIBOR + 4.50%,

LIBOR Floor) (1)

to Consolidated Financial Statements (continued)

of Investment

of Net Assets (3)

Secured First Lien Term Loan (LIBOR + 5.50%,

1.00% LIBOR Floor) (1)

Pro Products, LLC

Secured First Lien Term Loan (LIBOR + 6.00%,

1.00% LIBOR Floor) (1)

Secured First Lien Delayed Draw Term Loan

(LIBOR + 6.00%, 1.00%

LIBOR Floor) (1)

Plus Holdings, LLC

Transportation:

Cargo Senior Secured First Lien Term Loan (LIBOR + 5.00%) (1)

6/22/2026 3,626,659 3,596,886 3,494,880 5.9 %

3,626,659 3,596,886 3,494,880

Patriot Rail Company LLC Transportation:

Cargo Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

10/19/2026 1,741,250 1,711,104 1,730,454 2.9 %

1,741,250 1,711,104 1,730,454

PetroChoice Holdings, Inc.

Chemicals, Plastics and Rubber Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

8/19/2022 6,279,803 6,270,073 5,418,842 9.1 %

6,279,803 6,270,073 5,418,842

Port Townsend Holdings Company, Inc.

Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

4/3/2024 2,945,600 2,928,240 2,632,777 4.4 %

2,945,600 2,928,240 2,632,777

PT Network, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor, 2% PIK) (1)(5)

11/30/2023 4,955,627 4,638,237 4,460,064 7.5 %

Class C Common Stock 1 — —

4,955,628 4,638,237 4,460,064

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

PVHC Holding Corp Containers, Packaging and Glass Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

8/5/2024 1,952,427 1,946,107 1,850,511 3.1 %

1,952,427 1,946,107 1,850,511

Quartz Holding Company High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor) (1)

4/2/2026 3,936,357 3,924,382 3,847,789 6.5 %

3,936,357 3,924,382 3,847,789

RB Media, Inc.

Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

8/29/2025 5,651,270 5,620,482 5,605,495 9.4 %

5,651,270 5,620,482 5,605,495

Salient CRGT Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

2/28/2022 2,533,036 2,518,601 2,343,058 3.9 %

2,533,036 2,518,601 2,343,058

SFP Holding, Inc.

Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor) (1)

9/1/2022 4,776,954 4,739,017 4,733,961 7.9 %

Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor) (1)

9/1/2022 1,852,521 1,852,521 1,835,849 3.1 %

6,629,475 6,591,538 6,569,810

Shift4 Payments, LLC Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

11/29/2024 7,304,819 7,283,042 7,255,877 12.2 %

7,304,819 7,283,042 7,255,877

Simplified Logistics, LLC Services:

Business Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1)

2/27/2022 3,447,500 3,447,500 3,358,899 5.6 %

3,447,500 3,447,500 3,358,899

Syniverse Holdings, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

3/9/2023 2,905,253 2,891,007 2,229,200 3.7 %

2,905,253 2,891,007 2,229,200

The Octave Music Group, Inc.

Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

5/29/2025 5,896,552 5,844,063 5,071,034 8.5 %

5,896,552 5,844,063 5,071,034

ThoughtWorks, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor) (1)

10/11/2024 2,627,704 2,620,849 2,585,136 4.3 %

2,627,704 2,620,849 2,585,136

Vero Parent, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

8/16/2024 3,875,924 3,856,982 3,813,522 6.4 %

3,875,924 3,856,982 3,813,522

Wawona Delaware Holdings, LLC Beverage & Food Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

9/11/2026 945,350 937,295 912,358 1.5 %

945,350 937,295 912,358

Wheels Up Partners LLC Aerospace & Defense Senior Secured First Lien Term Loan (LIBOR + 8.55%, 1.00% LIBOR Floor) (1)

10/15/2021 1,509,917 1,497,761 1,509,917 2.5 %

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

1,509,917 1,497,761 1,509,917

Wok Holdings Inc.

Retail Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1)

3/1/2026 6,550,249 6,505,809 4,864,216 8.2 %

6,550,249 6,505,809 4,864,216

Wrench Group LLC Services:

Consumer Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1)

4/30/2026 2,942,820 2,920,082 2,834,231 4.8 %

2,942,820 2,920,082 2,834,231

Xebec Global Holdings, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

2/12/2024 8,053,168 8,053,168 8,053,168 13.5 %

8,053,168 8,053,168 8,053,168

Z Medica, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor) (1)

9/29/2022 2,566,500 2,566,500 2,528,002 4.3 %

2,566,500 2,566,500 2,528,002

Total Investments, September 30, 2020 $ 182,514,111 $ 181,365,360 $ 163,133,421 273.5 %

(1) Represents the annual current interest rate as of September 30, 2020.

All interest rates are payable in cash, unless otherwise noted.

(2) Represents the fair value in accordance with ASC 820 as reported by MCC JV.

The determination of such fair value is not included in the Company’s board of directors’ valuation process described elsewhere herein.

(3) Percentage is based on MCC JV's net assets of $59,617,800 as of September 30, 2020.

(4) This investment was on non-accrual status as of September 30, 2020.

(5) Par amount includes accumulated PIK interest and is net of repayments.

MCC JV Loan Portfolio as of September 30, 2019

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

4Over International, LLC Media:

Advertising, Printing & Publishing Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

6/7/2022 $ 10,884,644 $ 10,884,644 $ 10,635,385 13.3 %

10,884,644 10,884,644 10,635,385

Acrisure, LLC Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1)

11/22/2023 724,217 722,980 720,162 0.9 %

724,217 722,980 720,162

AL Midcoast Holdings, LLC Energy:

Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor) (1)

8/1/2025 4,330,542 4,297,473 4,246,963 5.3 %

4,330,542 4,297,473 4,246,963

Brightspring Health Services Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.50%) (1)

3/5/2026 3,990,000 3,941,288 3,990,000 5.0 %

3,990,000 3,941,288 3,990,000

Callaway Golf Company Consumer Goods:

Durable Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

1/4/2026 2,774,187 2,724,326 2,801,929 3.5 %

2,774,187 2,724,326 2,801,929

Cardenas Markets LLC Retail Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor) (1)

11/29/2023 5,348,750 5,316,921 5,172,776 6.5 %

5,348,750 5,316,921 5,172,776

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

CHA Consulting, Inc.

Construction & Building Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

4/10/2025 1,354,100 1,348,742 1,324,581 1.7 %

Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

4/10/2025 598,500 598,500 584,908 0.7 %

1,952,600 1,947,242 1,909,489

Covenant Surgical Partners, Inc.

Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.00%) (1)

7/1/2026 5,000,000 4,951,590 4,940,000 6.2 %

5,000,000 4,951,590 4,940,000

CT Technologies Intermediate Holdings, Inc.

Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1)

12/1/2021 4,131,900 4,067,981 3,770,359 4.7 %

4,131,900 4,067,981 3,770,359

Envision Healthcare Corporation Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor) (1)

10/10/2025 1,960,188 1,897,299 1,594,220 2.0 %

1,960,188 1,897,299 1,594,220

GC EOS Buyer, Inc.

Automotive Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

8/1/2025 3,445,086 3,399,335 3,400,989 4.3 %

3,445,086 3,399,335 3,400,989

GK Holdings, Inc.

Business Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

1/20/2021 2,908,397 2,903,827 2,641,697 3.3 %

2,908,397 2,903,827 2,641,697

Glass Mountain Pipeline Holdings, LLC Energy:

Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

12/23/2024 4,900,375 4,886,582 4,618,604 5.8 %

4,900,375 4,886,582 4,618,604

Golden West Packaging Group LLC Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

6/20/2023 4,188,348 4,188,348 4,163,637 5.2 %

4,188,348 4,188,348 4,163,637

High Ridge Brands Co.

Consumer Goods:

Non-Durable Senior Secured First Lien Term Loan (LIBOR + 7.00%, 1.00% LIBOR Floor) (1)(4)

6/30/2022 1,818,750 1,805,750 1,421,353 1.8 %

1,818,750 1,805,750 1,421,353

Highline Aftermarket Acquisitions, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor) (1)

4/26/2025 4,066,176 4,055,443 3,601,412 4.5 %

4,066,176 4,055,443 3,601,412

The Imagine Group, LLC Media:

Advertising, Printing & Publishing Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

6/21/2022 7,800,000 7,757,145 5,187,780 6.5 %

7,800,000 7,757,145 5,187,780

Infogroup, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1)

4/3/2023 4,875,000 4,846,330 4,748,738 5.9 %

4,875,000 4,846,330 4,748,738

Intermedia Holdings, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

7/21/2025 2,977,500 2,952,588 2,973,034 3.7 %

2,977,500 2,952,588 2,973,034

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

Intermediate LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor) (1)

7/1/2026 2,750,000 2,732,906 2,732,400 3.4 %

2,750,000 2,732,906 2,732,400

Isagenix International, LLC Wholesale Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor) (1)

6/16/2025 2,788,268 2,775,502 2,115,738 2.6 %

2,788,268 2,775,502 2,115,738

Jackson Hewitt Tax Service Inc.

Consumer Senior Secured First Lien Term Loan (LIBOR + 6.25%) (1)

5/31/2023 5,850,000 5,850,000 5,811,390 7.3 %

5,850,000 5,850,000 5,811,390

Jordan Health Products I, Inc.

Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

5/15/2025 5,181,776 5,118,971 4,378,601 5.5 %

5,181,776 5,118,971 4,378,601

Keystone Acquisition Corp.

Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

5/1/2024 6,162,699 6,086,349 5,972,888 7.5 %

6,162,699 6,086,349 5,972,888

KNB Holdings Corporation Consumer Goods:

Durable Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor) (1)

4/26/2024 4,871,364 4,807,569 3,975,033 5.0 %

4,871,364 4,807,569 3,975,033

LifeMiles Ltd.

Consumer Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor) (1)

8/18/2022 4,836,393 4,821,161 4,759,978 6.0 %

4,836,393 4,821,161 4,759,978

Manna Pro Products, LLC Consumer Goods:

Non-Durable Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

12/8/2023 3,029,375 3,029,375 2,880,027 3.6 %

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

12/8/2023 615,125 615,125 584,799 0.7 %

3,644,500 3,644,500 3,464,826

New Media Holdings II LLC Media:

Advertising, Printing & Publishing Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor) (1)

7/14/2022 2,446,853 2,443,556 2,442,205 3.1 %

2,446,853 2,443,556 2,442,205

NGS US Finco, LLC Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1)

10/1/2025 2,977,500 2,964,722 2,903,360 3.6 %

2,977,500 2,964,722 2,903,360

Northern Star Industries, Inc.

Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

3/28/2025 4,186,250 4,169,745 3,984,054 5.0 %

4,186,250 4,169,745 3,984,054

Nuvei Technologies Corp.

Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

9/29/2025 3,543,616 3,512,593 3,477,350 4.3 %

Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

9/29/2025 519,107 519,107 509,399 0.6 %

Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

9/29/2025 716,005 716,005 702,616 0.9 %

4,778,728 4,747,705 4,689,365

Secured First Lien Term Loan (LIBOR + 5.25%,

1.00% LIBOR Floor) (1)

US Finco, LLC

Secured First Lien Term Loan (LIBOR + 4.25%,

1.00% LIBOR Floor) (1)

Star Industries, Inc.

Secured First Lien Term Loan (LIBOR + 4.50%,

1.00% LIBOR Floor) (1)

Transportation:

Cargo Senior Secured First Lien Term Loan (LIBOR + 5.00%) (1)

6/22/2026 3,663,385 3,628,046 3,613,477 4.5 %

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

3,663,385 3,628,046 3,613,477

Peraton Corp.

Aerospace and Defense Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

4/29/2024 3,406,439 3,395,256 3,384,979 4.2 %

3,406,439 3,395,256 3,384,979

PetroChoice Holdings, Inc.

Chemicals, Plastics and Rubber Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

8/19/2022 6,345,900 6,333,392 6,092,064 7.6 %

6,345,900 6,333,392 6,092,064

Port Townsend Holdings Company, Inc.

Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

4/3/2024 3,041,842 3,018,790 2,992,564 3.7 %

3,041,842 3,018,790 2,992,564

PT Network, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor, 2% PIK) (1)(5)

11/30/2023 4,880,028 4,562,638 4,562,338 5.7 %

Class C Common Stock 1 — —

4,880,029 4,562,638 4,562,338

PVHC Holding Corp Containers, Packaging and Glass Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

8/5/2024 1,972,350 1,964,300 1,912,137 2.4 %

1,972,350 1,964,300 1,912,137

Quantum Spatial, Inc.

Aerospace & Defense Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

9/5/2024 5,000,000 5,000,000 5,000,000 6.3 %

5,000,000 5,000,000 5,000,000

Quartz Holding Company High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor) (1)

4/2/2026 6,982,500 6,957,391 6,885,443 8.6 %

6,982,500 6,957,391 6,885,443

RB Media, Inc.

Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

8/29/2025 3,960,000 3,926,377 3,960,000 5.0 %

3,960,000 3,926,377 3,960,000

Rough Country, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor) (1)

5/25/2023 4,080,727 4,063,983 4,014,619 5.0 %

4,080,727 4,063,983 4,014,619

Safe Fleet Holdings LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 3.00%, 1.00% LIBOR Floor) (1)

2/3/2025 3,422,875 3,417,582 3,297,255 4.1 %

Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor) (1)

2/3/2025 1,335,880 1,288,373 1,288,055 1.6 %

4,758,755 4,705,955 4,585,310

Salient CRGT Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

2/28/2022 2,645,536 2,619,767 2,503,471 3.1 %

2,645,536 2,619,767 2,503,471

SCS Holdings I Inc.

Wholesale Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1)

7/1/2026 2,244,375 2,238,962 2,249,986 2.8 %

2,244,375 2,238,962 2,249,986

SFP Holding, Inc.

Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor) (1)

9/1/2022 4,820,605 4,762,317 4,775,291 6.0 %

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor) (1)

9/1/2022 1,871,234 1,871,234 1,853,644 2.3 %

6,691,839 6,633,551 6,628,935

Shift4 Payments, LLC Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

11/29/2024 9,825,000 9,788,662 9,825,000 12.3 %

9,825,000 9,788,662 9,825,000

Sierra Enterprises, LLC Beverage & Food Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor) (1)

11/11/2024 3,918,993 3,909,644 3,821,018 4.8 %

3,918,993 3,909,644 3,821,018

Simplified Logistics, LLC Services:

Business Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1)

2/27/2022 3,482,500 3,482,500 3,482,500 4.4 %

3,482,500 3,482,500 3,482,500

SMB Shipping Logistics, LLC Transportation:

Cargo Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor) (1)

2/5/2024 2,465,807 2,446,381 2,453,478 3.1 %

2,465,807 2,446,381 2,453,478

Syniverse Holdings, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

3/9/2023 3,935,050 3,907,819 3,695,799 4.6 %

3,935,050 3,907,819 3,695,799

The Octave Music Group, Inc.

Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

5/28/2021 4,348,644 4,348,644 4,325,596 5.4 %

4,348,644 4,348,644 4,325,596

ThoughtWorks, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor) (1)

10/11/2024 6,674,943 6,659,353 6,674,943 8.3 %

6,674,943 6,659,353 6,674,943

Tortoise Borrower LLC Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor) (1)

1/31/2025 2,437,875 2,428,557 2,392,287 3.0 %

2,437,875 2,428,557 2,392,287

Company Industry Type of Investment Maturity Par

Amount Cost Fair

Net Assets (3)

United Road Services, Inc.

Secured First Lien Term Loan (LIBOR + 5.00%) (1)

Rail Company LLC

Transportation:

Cargo Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor) (1)

9/2/2024 3,759,999 3,746,467 3,699,087 4.6 %

3,759,999 3,746,467 3,699,087

Vero Parent, Inc.

High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

8/16/2024 3,915,475 3,891,393 3,886,109 4.9 %

3,915,475 3,891,393 3,886,109

Wawona Delaware Holdings, LLC Beverage & Food Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

9/11/2026 4,975,000 4,925,465 4,925,250 6.2 %

4,975,000 4,925,465 4,925,250

Wheels Up Partners LLC Aerospace & Defense Senior Secured First Lien Term Loan (LIBOR + 8.55%, 1.00% LIBOR Floor) (1)

10/15/2021 3,633,328 3,575,903 3,569,381 4.5 %

3,633,328 3,575,903 3,569,381

Wok Holdings Inc.

Retail Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1)

3/1/2026 6,616,750 6,563,551 5,599,756 7.0 %

6,616,750 6,563,551 5,599,756

Wrench Group LLC Services:

Consumer Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1)

4/30/2026 2,225,672 2,208,221 2,225,672 2.8 %

2,225,672 2,208,221 2,225,672

Xebec Global Holdings, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

2/12/2024 8,134,734 8,134,734 8,114,397 10.1 %

Secured First Lien Term Loan (LIBOR + 5.25%,

1.00% LIBOR Floor) (1)

Holdings, Inc.

Plastics and Rubber

Secured First Lien Term Loan (LIBOR + 5.00%,

1.00% LIBOR Floor) (1)

Townsend Holdings Company,

Products & Paper

Secured First Lien Term Loan (LIBOR + 4.75%,

1.00% LIBOR Floor) (1)

& Pharmaceuticals

Secured First Lien Term Loan (LIBOR + 5.50%,

LIBOR Floor, 2% PIK) (1)(5)

C Common Stock

to Consolidated Financial Statements (continued)

of Investment

of Net Assets (3)

Packaging and Glass

Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

Holding Company

Tech Industries

Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor) (1)

Diversified & Production

Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

Tech Industries

Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor) (1)

Holding, Inc.

Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor) (1)

Payments, LLC

Finance, Insurance & Real Estate

Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

Logistics, LLC

Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1)

Holdings, Inc.

Tech Industries

Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor) (1)

Octave Music Group, Inc.

Diversified & Production

Secured First Lien Term Loan (LIBOR + 4.75%,1.00% LIBOR Floor) (1)

ThoughtWorks,

Tech Industries

Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor) (1)

Tech Industries

Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor) (1)

Delaware Holdings, LLC

Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor) (1)

Up Partners LLC

Secured First Lien Term Loan (LIBOR + 8.55%, 1.00% LIBOR Floor) (1)

to Consolidated Financial Statements (continued)

of Investment

Net Assets (3)

Holdings Inc.

Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor) (1)

Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor) (1)

Global Holdings, LLC

Tech Industries

Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor) (1)

& Pharmaceuticals

Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor) (1)

Investments, September 30, 2020

$ 182,514,111

Z Medica, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor) (1)

$ 181,365,360

$ 163,133,421

Total Investments, September 30, 2019 $ 261,170,438 $ 259,371,480 $ 249,342,871 311.9 %

(1) Represents the annual current interest rate as of September 30, 2019.

All interest rates are payable in cash, unless otherwise noted.

(2) Represents the fair value in accordance with ASC 820 as reported by MCC JV.

The determination of such fair value is not included in the Company’s board of directors’ valuation process described elsewhere herein.

(3) Percentage is based on MCC JV's net assets of $79,941,680 as of September 30, 2019.

(4) This investment was on non-accrual status as of September 30, 2019.

(5) Par amount includes accumulated PIK interest and is net of repayments.

Below is certain summarized financial Information for MCC JV as of September 30, 2020 and 2019, and for the years ended September 30, 2020, 2019 and 2018:

September 30, 2020 September 30, 2019

Selected Consolidated Statement of Assets and Liabilities Information:

Investments in loans at fair value (amortized cost of $181,365,360 and $259,371,480, respectively) $ 163,133,421 $ 249,342,871

Cash 6,055,178 8,007,466

Other assets 1,148,102 1,466,352

Total assets $ 170,336,701 $ 258,816,689

Line of credit (net of debt issuance costs of $1,574,115 and $1,552,067, respectively) $ 109,745,367 $ 177,694,223

(1) Represents

the annual current interest rate as of September 30, 2020.

All interest rates are payable

in cash, unless otherwise noted.

(2) Represents

the fair value in accordance with ASC 820 as reported by MCC JV.

The determination of such

fair value is not included in the Company’s board of directors’

valuation process

described elsewhere herein.

(3) Percentage

is based on MCC JV’s net assets of $59,617,800 as of September 30, 2020.

investment was on non-accrual status as of September 30, 2020.

amount includes accumulated PIK interest and is net of repayments.

is certain summarized financial Information for MCC JV as of September 30, 2020, and for the years ended September 30, 2020 and 2019:

September 30,

Selected Consolidated

Statement of Assets and Liabilities Information:

in loans at fair value (amortized cost of $181,365,360)

Line of credit (net

of debt issuance costs of $1,574,115)

Other liabilities

Interest payable 549,439 708,049

Total liabilities

Members' capital 59,617,800 79,941,680

Total liabilities and members' capital $ 170,336,701 $ 258,816,689

For the years ended September 30

2020 2019 2018

Selected Consolidated Statement of Operations Information:

Members’

liabilities and members’

the Years Ended

Selected Consolidated Statement of Operations

Total revenues

Total expenses

(10,962,484 )

Net unrealized appreciation/(depreciation)

Net realized gain/(loss)

(12,851,425 )

Net income/(loss)

$ (14,673,880 )

to Consolidated Financial Statements (continued)

Unconsolidated

Significant Subsidiaries

Company evaluated and determined that it had no significant subsidiaries as of September 30, 2021.

Fair Value Measurements

The Company follows ASC 820 for measuring the fair value of portfolio investments.

Fair value is the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters.

Where observable prices or inputs are not available, valuation models are applied.

These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments.

Financial investments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value.

The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the investment as of the measurement date.

Investments which are valued using NAV as a practical expedient are excluded from this hierarchy, and certain prior period amounts have been reclassified to conform to the current period presentation.

The three levels are defined below:

• Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date.

• Level 2 - Valuations based on inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable at the measurement date.

This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non-active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities.

• Level 3 - Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date.

The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities.

These investments include debt and equity investments in private companies or assets valued using the Market or Income Approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments.

The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples.

The information may also include pricing information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction.

The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.

In addition to using the above inputs in investment valuations, the Company continues to employ the valuation policy approved by the board of directors that is consistent with ASC 820 (see Note 2).

Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value.

During the year ended September 30 2020, one of our investments transferred into Level 3.

The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of September 30, 2020 (dollars in thousands):

Level 1 Level 2 Level 3 Total

Senior Secured First Lien Term Loans $ — $ — $ 106,463 $ 106,463

Company follows ASC 820 for measuring the fair value of portfolio investments.

Fair value is the price that would be received in the

sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

available, fair value is based on observable market prices or parameters, or derived from such prices or parameters.

Where observable

prices or inputs are not available, valuation models are applied.

These valuation models involve some level of management estimation

and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’

The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments.

Financial investments recorded

at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated

with the inputs used to measure their value.

The valuation hierarchical levels are based upon the transparency of the inputs to the valuation

of the investment as of the measurement date.

Investments which are valued using NAV as a practical expedient are excluded from this

hierarchy, and certain prior period amounts have been reclassified to conform to the current period presentation.

The three levels are

defined below:

1 - Valuations based on quoted prices in active markets for identical assets or liabilities

at the measurement date.

2 - Valuations based on inputs other than quoted prices in active markets included in Level

1, which are either directly or indirectly observable at the measurement date.

This category

includes quoted prices for similar assets or liabilities in active markets, quoted prices

for identical or similar assets or liabilities in non-active markets including actionable

bids from third parties for privately held assets or liabilities, and observable inputs other

than quoted prices such as yield curves and forward currency rates that are entered directly

into valuation models to determine the value of derivatives or other assets or liabilities.

3 - Valuations based on inputs that are unobservable and where there is little, if any, market

activity at the measurement date.

The inputs for the determination of fair value may require

significant management judgment or estimation and are based upon management’s assessment

of the assumptions that market participants would use in pricing the assets or liabilities.

These investments include debt and equity investments in private companies or assets valued

using the Market or Income Approach and may involve pricing models whose inputs require significant

judgment or estimation because of the absence of any meaningful current market data for identical

or similar investments.

The inputs in these valuations may include, but are not limited to,

capitalization and discount rates, beta and EBITDA multiples.

The information may also include

pricing information or broker quotes which include a disclaimer that the broker would not

be held to such a price in an actual transaction.

The non-binding nature of consensus pricing

and/or quotes accompanied by disclaimer would result in classification as Level 3 information,

assuming no additional corroborating evidence.

addition to using the above inputs in investment valuations, the Company continues to employ a valuation policy approved by the board

of directors that is consistent with ASC 820 (see Note 2).

Consistent with our valuation policy, we evaluate the source of inputs, including

any markets in which our investments are trading, in determining fair value.

following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of

September 30, 2021 (dollars in thousands):

Value Hierarchy as of September 30, 2021

Senior Secured First Lien Term

Senior Secured Second Lien Term Loans

Unsecured Debt — — 2,669 2,669

MCC Senior Loan Strategy JV I LLC (1)

— — 41,019 41,019

Senior Secured Notes

Equity/Warrants

Total $ 12,278 $ — $ 231,475 $ 243,753

Investments measured at net asset value (2)

Total Investments, at fair value $ 246,744

The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of September 30, 2019 (dollars in thousands):

Level 1 Level 2 Level 3 Total

Senior Secured First Lien Term Loans $ — $ — $ 192,770 $ 192,770

Senior Secured Second Lien Term Loans — — 36,508 36,508

Investments measured

at net asset value (1)

Total Investments, at

investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy.

The fair value amounts

presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated

Statements of Assets and Liabilities.

to Consolidated Financial Statements (continued)

following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of

September 30, 2020 (dollars in thousands):

Senior Secured

First Lien Term Loans

Senior Secured Second Lien

Unsecured Debt

MCC Senior Loan Strategy

Equity/Warrants

Total $ 13,850 $ — $ 310,260 $ 324,110

Investments measured at net asset value (2)

Total Investments, at fair value $ 396,889

(1) MCC Senior Loan Strategy JV I LLC was sold on October 8, 2020 and as such fair value was measured as a Level 3 investment as of September 30, 2020.

Previously fair value had been measured using NAV.

(2) Certain investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy.

The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets and Liabilities.

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended September 30, 2020 (dollars in thousands):

Loans Unsecured

Debt MCC Senior Loan Strategy JV I LLC Equities/Warrants Total

Balance as of September 30, 2019 $ 192,770 $ 36,508 $ 2,653 $ — $ 78,329 $ 310,260

Purchases and other adjustments to cost 1,820 655 168 — 1,259 3,902

Originations 28,085 945 2,500 — 182 31,712

Sales (186) (1,237) — — (5,714) (7,137)

Settlements (86,048) (613) (721) — (24,881) (112,263)

Net realized gains/(losses) from investments (929) (23,362) — — (18,577) (42,868)

Net transfers in and/or out of Level 3 — — — 41,019 — 41,019

Net unrealized gains/(losses) (29,049) 1,031 (1,931) — 36,799 6,850

Balance as of September 30, 2020 $ 106,463 $ 13,927 $ 2,669 $ 41,019 $ 67,397 $ 231,475

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended September 30, 2019 (dollars in thousands):

Notes Unsecured

Debt Equities/Warrants Total

Balance as of September 30, 2018 $ 395,015 $ 48,890 $ 19,268 $ 3,381 $ 107,955 $ 574,509

Purchases and other adjustments to cost 7,116 1,801 — (647) (9,783) (1,513)

Originations 58,386 2,000 — — 387 60,773

Sales (144,081) (11,828) — — — (155,909)

Settlements (56,346) (2,161) (20,000) (22) (25,501) (104,030)

Net realized gains/(losses) from investments (97,534) 114 — (22,787) 7,333 (112,874)

Net transfers in and/or out of Level 3 — — — — — —

Net unrealized gains/(losses) 30,214 (2,308) 732 22,728 (2,062) 49,304

Balance as of September 30, 2019 $ 192,770 $ 36,508 $ — $ 2,653 $ 78,329 $ 310,260

Net change in unrealized loss included in earnings related to investments still held as of September 30, 2020 and 2019 was approximately $42.6 million and $43.4 million, respectively.

Purchases and other adjustments to cost include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK.

Sales represent net proceeds received from investments sold.

Settlements represent principal paydowns received.

A review of the fair value hierarchy classifications is conducted on a quarterly basis.

Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities.

Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur.

During the year ended September 30, 2020 MCC JV transferred into the Level 3 category as the investment was sold subsequently to September 30, 2020 (see Note 3).

In previous periods, as a practical expedient the Company had used the net asset value of MCC JV to determine the fair value of the investment.

During the year ended September 30, 2019, none of our investments transferred in or out of Level 3.

The following table presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2020 (dollars in thousands):

Fair Value Valuation Technique Unobservable Input Range (Weighted Average)

Senior Secured First Lien Term Loans $ 50,135 Income Approach (DCF) Market yield 7.52% - 15.27% (10.34%)

Senior Secured First Lien Term Loans 55,856 Market Approach (Guideline Comparable)//Income Approach (DCF)/ Enterprise Value Analysis Revenue Multiple (1)

measured at net asset value (2)

Investments, at fair value

Senior Loan Strategy JV I LLC was sold on October 8, 2020 and as such fair value was measured

as a Level 3 investment as of September 30, 2020.

Previously fair value had been measured

investments that are measured at fair value using NAV have not been categorized in the fair

value hierarchy.

The fair value amounts presented in the table are intended to permit reconciliation

of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets

and Liabilities.

following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended

September 30, 2021 (dollars in thousands):

Secured First Lien Term Loans

Secured Second Lien Term Loans

Senior Loan Strategy JV I LLC

as of September 30, 2020

and other adjustments to cost

realized gains/(losses) from investments

unrealized gains/(losses)

as of September 30, 2021

following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the year ended

September 30, 2020 (dollars in thousands):

as of September 30, 2019

and other adjustments to cost

realized gains/(losses) from investments

transfers in and/or out of Level 3

unrealized gains/(losses)

as of September 30, 2020

to Consolidated Financial Statements (continued)

change in unrealized gain (loss) for the years ended September 30, 2021 and 2020 included in earnings related to investments still held

as of September 30, 2021 and 2020 was approximately $(24.3) million and $(42.6) million, respectively.

and other adjustments to cost include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization

of income from discount/premium on debt securities, and PIK.

represent net proceeds received from investments sold.

represent principal paydowns received.

A review of the fair value hierarchy classifications

is conducted on a quarterly basis.

Changes in the observability of valuation inputs may result in a reclassification for certain financial

assets or liabilities.

Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3

category as of the beginning of the quarter in which the reclassifications occur.

During the year ended September 30, 2021, none of our

investments transferred into or out of Level 3.

During the year ended September 30, 2020 MCC JV transferred into the Level 3 category

as the investment was sold subsequently to September 30, 2020 (see Note 3).

In previous periods, as a practical expedient the Company

had used the net asset value of MCC JV to determine the fair value of the investment.

following table presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2021

(dollars in thousands):

Valuation Methodology

Unobservable Input

(Weighted Average)

Senior Secured First Lien Term Loans

Market Approach

7.50% - 102.38% (32.78% )

Senior Secured First Lien Term Loans

Market Approach

Arms Length Transaction

Senior Secured First Lien Term Loans

Market Approach (Guideline Comparable)

5.00% - 8.00% (5.55% )

Senior Secured First Lien Term Loans

Market Approach

EBITDA Multiple (1)

Capitalization Rate

Discount Rate

Expected Proceeds

4.50x - 5.50x (5.00x )

2.50x - 8.50x (5.73x)

Senior Secured First Lien Term Loans

Enterprise Value Analysis

Revenue Multiple (1)

0.40x - 0.50x (0.45x )

Senior Secured First Lien Term Loans

Market Approach

Capitalization Rate

4.50% - 5.50% (5.00% )

Estimated Proceeds

$1.04 - $8.10 ($4.57 )

Senior Secured First Lien Term Loans 472 Recent Arms-Length Transaction Recent Arms Length Transaction N/A

Senior Secured Second Lien Term Loan 9,978 Income Approach (DCF) Market yield 12.01% - 14.82% (14.01%)

Senior Secured Second Lien Term Loans 3,949 Market Approach (Guideline Comparable)/Income Approach (DCF) EBITDA Multiple (1)

Discount Rate

Senior Secured First Lien Term Loans

Market Approach

Revenue Multiple (1)

0.25x - 0.40x (0.33x )

21.00% - 21.00% (21.00%)

Unsecured Debt — Market Approach (Guideline Comparable) EBITDA Multiple (1)

Senior Secured Second Lien Term Loans

Market Approach (Guideline Comparable)

EBITDA Multiple (1)

9.75x - 10.75x (10.25x )

Unsecured Debt 2,669 Recent Arms-Length Transaction Recent Arms Length Transaction N/A

MCC Senior Loan Strategy JV I LLC 41,019 Recent Arms-Length Transaction Recent Arms Length Transaction N/A

Equity 63,468 Market Approach (Guideline Comparable)/Income Approach/Enterprise Value Analysis Revenue Multiple (1)

Cost Approach

Replacement Cost

Equity/Warrants

Market Approach

EBITDA Multiple (1)

Capitalization Rate

Discount Rate

Expected Proceeds

1.25x - 12.75x (12.31x )

Equity/Warrants

Market Approach

10.50% - 12.00% (11.25% )

Equity/Warrants

Market Approach

Revenue Multiple (1)

0.11x - 0.40x (0.16x )

Equity/Warrants

Market Approach

Capitalization Rate

4.50% - 5.50% (5.00% )

Estimated Proceeds

$1.04 - $8.10 ($4.57 )

(1) Represents

inputs used when the Company has determined that market participants would use such multiples

when measuring the fair value of these investments.

to Consolidated Financial Statements (continued)

following table presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2020

(dollars in thousands):

(Weighted Average)

Secured First Lien Term Loans

Approach (DCF)

- 15.27% (10.34%)

Equity 3,929 Income Approach (DCF) Market Yield 15.40% - 15.40% (15.40%)

Total $ 231,475

The following table has been modified to conform to the current year presentation, and presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2019 (dollars in thousands):

Fair Value Valuation Technique Unobservable Input Range (Weighted Average)

Senior Secured First Lien Term Loans $ 141,337 Income Approach (DCF) Market yield 6.38% - 16.98% (10.49%)

Senior Secured First Lien Term Loans 43,960 Market Approach (Guideline Comparable)/Market Approach (Comparable Transactions)/Income Approach (DCF)/ Enterprise Value Analysis Revenue Multiple (1)

EBITDA Multiple (1)

Discount rate

Expected Proceeds

0.25x - 0.25x (0.25x)

3.50x - 6.00x (4.95x)

Secured First Lien Term Loans

Approach (Guideline

- 0.50x (0.49x)

Comparable)//Income

Approach (DCF)/

- 8.50x (5.73x)

Enterprise Value

Capitalization

- 5.50x (5.50x)

- 17.90% (17.90%)

$9.0M - $16.2M ($9.0M)

Senior Secured First Lien Term Loans 7,473 Recent Arms-Length Transaction Recent Arms Length Transaction N/A

Senior Secured Second Lien Term Loan 17,250 Income Approach (DCF) Market yield 9.78% - 29.76% (14.66%)

Senior Secured Second Lien Term Loans 19,258 Market Approach (Guideline Comparable)/Income Approach (DCF) EBITDA Multiple (1)

Discount Rate

4.50x - 6.00x (5.97x)

- $52.00 ($45.65)

Unsecured Debt 850 Income Approach (DCF) Market yield 7.43%

Unsecured Debt 1,803 Market Approach (Guideline Comparable) EBITDA Multiple (1)

4.00x - 7.00x (6.54x)

Equity 75,983 Market Approach (Guideline Comparable)/Market Approach (Comparable Transactions)/Income Approach (DCF)/Enterprise Value Analysis Revenue Multiple (1)

EBITDA Multiple (1)

Discount rate

Expected Proceeds

0.88x - 0.88x (0.69x)

3.50x - 9.50x (8.72x)

Secured First Lien Term Loans

Arms-Length Transaction

Arms Length Transaction

Secured Second Lien Term Loan

Approach (DCF)

- 14.82% (14.01%)

$16.2M - $47.5M ($53.1M)

Equity 2,346 Recent Arms-Length Transaction Recent Arms Length Transaction N/A

Total $ 310,260

(1) Represents inputs used when the Company has determined that market participants would use such multiples when measuring the fair value of these investments.

The significant unobservable inputs used in the fair value measurement of the Company’s debt and derivative investments are market yields.

Secured Second Lien Term Loans

Approach (Guideline

- 8.00x (8.00x)

Comparable)/Income

Approach (DCF)

- 21.00% (21.00%)

Approach (Guideline Comparable)

- 4.50x (3.50x)

Arms-Length Transaction

Arms Length Transaction

Senior Loan Strategy JV I LLC

Arms-Length Transaction

Arms Length Transaction

Approach (Guideline

- 0.88x (0.69x)

Comparable)/Income

Approach/Enterprise

- 9.50x (8.25x)

Value Analysis

Capitalization

- 5.50% (5.50%)

- 14.50% (14.50%)

- $52.00 ($38.00)

Approach (DCF)

- 15.40% (15.40%)

(1) Represents

inputs used when the Company has determined that market participants would use such multiples

when measuring the fair value of these investments.

to Consolidated Financial Statements (continued)

significant unobservable inputs used in the fair value measurement of the Company’s debt and derivative investments are market

Increases in market yields would result in lower fair value measurements.

The significant unobservable inputs used in the fair value measurement of the Company’s equity/warrants investments are comparable company multiples of revenue or EBITDA for the latest twelve months (“LTM”), next twelve months (“NTM”) or a reasonable period a market participant would consider.

significant unobservable inputs used in the fair value measurement of the Company’s equity/warrants investments are comparable

company multiples of revenue or EBITDA for the latest twelve months (“LTM”), next twelve months (“NTM”) or a

reasonable period a market participant would consider.

Increases in EBITDA multiples in isolation would result in higher fair value measurement.

In September 2017, the Company entered into an agreement with Global Accessories Group, LLC (“Global Accessories”), in which the Company exchanged its full position in Lydell Jewelry Design Studio, LLC for a 3.8% membership interest in Global Accessories, which is included in the Consolidated Schedule of Investments.

As part of the agreement, the Company is entitled to contingent consideration in the form of cash payments (“Earnout”), as well as up to an additional 5% membership interest (“AMI”), provided Global Accessories achieves certain financial benchmarks through calendar year ended 2022.

The Earnout and AMI were initially recorded an aggregate fair value of $2.4 million on the transaction date using the Income Approach and were included on the Consolidated Statements of Assets and Liabilities in other assets.

The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved.

September 2017, the Company entered into an agreement with Global Accessories Group, LLC (“Global Accessories”), in which

the Company exchanged its full position in Lydell Jewelry Design Studio, LLC for a 3.8% membership interest in Global Accessories, which

is included in the Consolidated Schedule of Investments.

As part of the agreement, the Company is entitled to contingent consideration

in the form of cash payments (“Earnout”), as well as up to an additional 5% membership interest (“AMI”), provided

Global Accessories achieves certain financial benchmarks through calendar year ended 2022.

The Earnout and AMI were initially recorded

with an aggregate fair value of $2.4 million on the transaction date using the Income Approach and were included on the Consolidated

Statements of Assets and Liabilities in other assets.

The contingent consideration is remeasured to fair value at each reporting date

until the contingency is resolved.

Any changes in fair value will be recognized in earnings.

As of September 30, 2020, the Company deemed the contingent consideration to be not collectible, and, as such, placed a full reserve against its fair value.

As of September 30, 2019, the fair value of the contingent consideration was $1.8 million.

As a BDC, we are generally only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200% after giving effect to such leverage.

The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing.

However, in March 2018, the Small Business Credit Availability Act modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from 200% to 150%, if certain requirements under the 1940 Act are met.

Under the 1940 Act, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when a quorum is present, approve a proposal to do so.

As of September 30, 2021 and September 30,

2020, the Company deemed the contingent consideration to be uncollectible.

a BDC, we are generally only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at

least 200% after giving effect to such leverage.

The amount of leverage that we employ at any time depends on our assessment of the market

and other factors at the time of any proposed borrowing.

in March 2018, the Small Business Credit Availability Act modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage

it may incur from 200% to 150%, if certain requirements under the 1940 Act are met.

Under the 1940 Act, we are allowed to increase our

leverage capacity if stockholders representing at least a majority of the votes cast, when a quorum is present, approve a proposal to

If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval.

Alternatively, the 1940 Act allows the majority of our independent directors to approve an increase in our leverage capacity, and such approval would become effective after the one-year anniversary of such approval.

In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage.

As of September 30, 2020, the Company’s asset coverage was 199.2% after giving effect to leverage and therefore the Company’s asset coverage is below 200%, the minimum asset coverage requirement under the 1940 Act.

As a result, the Company is prohibited from making distributions to stockholders, including the payment of any dividend, and may not employ further leverage until the Company’s asset coverage is at least 200% after giving effect to such leverage.

The Company’s outstanding debt excluding debt issuance costs as of September 30, 2020 and 2019 was as follows (dollars in thousands):

September 30, 2020 September 30, 2019

Available Principal

Outstanding Carrying

Value Aggregate

Available Principal

Outstanding Carrying (1)

2021 Notes $ 74,013 $ 74,013 $ 73,803 $ 73,095 $ 74,013 $ 74,013 $ 73,172 $ 72,473

2023 Notes 77,847 77,847 77,158 72,460 77,847 77,847 76,881 74,453

Israeli Notes — — — — 105,137 105,137 101,679 104,604

Total $ 151,860 $ 151,860 $ 150,961 $ 145,555 $ 256,997 $ 256,997 $ 251,732 $ 251,530

(1) Modified to conform to the current year presentation.

Credit Facilities

Term Loan Facility

The Company had a Senior Secured Term Loan Credit Agreement, as amended (the ‘‘Term Loan Facility’’), that was scheduled to mature on July 28, 2020.

On September 1, 2017, the Company reduced the Term Loan Facility commitment to $102.0 million from $174.0 million.

The reduction was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.6 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

On January 31, 2018, the Company voluntarily prepaid the remaining $102.0 million outstanding on the Term Loan Facility in accordance with its terms.

The payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

Revolving Credit Facility

The Company had a Senior Secured Revolving Credit Agreement, as amended (the ‘‘Revolving Credit Facility’’ and collectively with the Term Loan Facility, the ‘‘Facilities’’), with ING Capital LLC, as Administrative Agent, in order to borrow funds to make additional investments.

The pricing on the Revolving Credit Facility was LIBOR (with no minimum) plus 2.75% and had a revolving period that was to end July 28, 2019, followed by a one year amortization period and a final maturity on July 28, 2020.

On February 14, 2017, the Company elected to reduce the total commitment of the Revolving Credit Facility to $200.0 million from $343.5 million.

The reduction was accounted for as a debt modification to a line-of credit or revolving-debt arrangement in accordance with ASC 470-50, Modifications and Extinguishments, which attributed to an acceleration of debt issuance costs in the amount of $1.3 million and recorded on the Consolidated Statements of Operations as a component of interest and financing expenses.

On February 12, 2018, the Company elected to reduce the total commitment of the Revolving Credit Facility to $150.0 million from $200.0 million.

The reduction was accounted for as a debt modification to a line-of credit or revolving-debt arrangement in accordance with ASC 470-50, Modifications and Extinguishments, which attributed to an acceleration of debt issuance costs in the amount of $0.4 million and recorded on the Consolidated Statements of Operations as a component of interest and financing expenses.

On September 28, 2018, the Company voluntarily satisfied and terminated the commitments under the Revolving Credit Facility in accordance with its terms.

The termination was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $1.0 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

The following table shows the components of interest expense, commitment fees related to the Facilities, amortized debt issuance costs, weighted average stated interest rate and weighted average outstanding debt balance for the Facilities for the years ended September 30, 2020, 2019 and 2018 (dollars in thousands):

For the years ended September 30

2020 2019 2018

Revolving Facility interest $ — $ — $ 729

Revolving Facility commitment fee — — 1,521

Term Facility interest — — 1,505

Amortization of debt issuance costs — — 1,087

Agency and other fees — — 138

Total $ — $ — $ 4,980

Weighted average stated interest rate — % — % 4.4 %

Weighted average outstanding balance $ — $ — $ 50,900

Unsecured Notes

On December 17, 2015, the Company issued $70.8 million in aggregate principal amount of 6.50% unsecured notes that mature on January 30, 2021 (the “2021 Notes”).

On January 14, 2016, the Company closed an additional $3.25 million in aggregate principal amount of the 2021 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes.

The 2021 Notes became redeemable in whole or in part at any time or from time to time at the Company’s option on or after January 30, 2019.

The 2021 Notes bore interest at a rate of 6.50% per year, payable quarterly on January 30, April 30, July 30 and October 30 of each year, beginning January 30, 2016.

The 2021 Notes were listed on the NYSE and traded thereon under the trading symbol “MCX”.

Subsequent to fiscal year ended September 30, 2020, the Company redeemed the issued and outstanding 2021 Notes.

See “Note 15” for more information.

On March 18, 2013, the Company issued $60.0 million in aggregate principal amount of 6.125% unsecured notes that mature on March 30, 2023 (the “2023 Notes,” and together with the 2021 Notes, the "U.S.

On March 26, 2013, the Company closed an additional $3.5 million in aggregate principal amount of the 2023 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes.

As of March 30, 2016, the 2023 Notes may be redeemed in whole or in part at any time or from time to time at the Company's option.

The 2023 Notes bear interest at a rate of 6.125% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, beginning June 30, 2013.

The 2023 Notes are listed on the NYSE and trade thereon under the trading symbol “MCV”.

On December 12, 2016, the Company entered into an “At-The-Market” (“ATM”) debt distribution agreement with FBR Capital Markets & Co., through which the Company could offer for sale, from time to time, up to $40.0 million in aggregate principal amount of the 2023 Notes.

The Company sold 1,573,872 of the 2023 Notes at an average price of $25.03 per note, and raised $38.6 million in net proceeds, through the ATM debt distribution agreement.

On March 10, 2018, the Company redeemed $13.0 million in aggregate principal amount of the 2023 Notes.

The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.3 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

On December 31, 2018, the Company redeemed $12.0 million in aggregate principal amount of the 2023 Notes.

The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.2 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

Secured Notes

Israeli Notes

Effective as of April 14, 2020, the Company had repaid all of its outstanding Israeli Notes.

Below is a description of the terms of the Israeli Notes, including covenants related thereto, that the Company was subject to during the years ended September 30, 2020 and 2019 prior to the full repayment of the Israeli Notes.

On January 26, 2018, the Company priced a debt offering in Israel of $121.3 million of Israeli Notes.

The Israeli Notes were listed on the Tel Aviv Stock Exchange (the "TASE") and denominated in New Israeli Shekels, but linked to the US Dollar at a fixed exchange rate which mitigates any currency exposure to the Company.

The Israeli Notes were not registered under the Securities Act of 1933, and could not be offered or sold in the United States absent registration under the Securities Act or in transactions exempt from, or not subject to, such registration requirements.

In connection with this offering, we were dually listed our common stock on the TASE.

On August 12, 2019, the Company and its wholly owned subsidiaries, Medley Small Business Fund, LP (formerly known as Medley SBIC, LP) and Medley SLF, on the one hand, and the Trustee, on the other hand, entered into an amendment to the deed of trust (the “Deed”) governing the Israeli Notes (the “Amendment” together with the Deed, the “Deed of Trust”).

The Amendment amended the Deed by, among other things:

(a) modifying Section 2.2 of the Deed to provide for full repayment of the Israeli Notes in eight (8) equal installments, each comprising twelve and one-half percent (12.5%) of the principal amount of the Israeli Notes, beginning on August 12, 2019 (the “Effective Date”) and ending on January 31, 2021, rather than four (4) equal annual installments, each comprising twenty five percent (25%) of the principal amount of the Israeli Notes, that were payable on February 27 of each of the years 2021-2024 (inclusive);

(b) changing the interest payment dates for the Israeli Notes from semi-annual to quarterly except for the initial interest payment, which was paid on the Effective Date, and the final interest payment, which will be paid on January 31, 2021;

(c) decreasing the annual interest rate on the Israeli Notes by 0.25% per annum on the Effective Date and further decreasing the annual interest rate on the Israeli Notes by 0.50% per annum if the mergers of the Company, Sierra, and MDLY (the “Mergers”) close, which further decrease will be effective upon the closing of the Mergers;

(d) decreasing the minimum Total Net Asset covenant in Section 6.1.1 of the Deed from $275 million to $215 million;

(e) modifying the acceleration event in Section 10.1.25 of the Deed to provide that it will occur if the credit rating on the Israeli Notes drops below (i) il/B of Maalot before November 30, 2019, (ii) il/BB- of Maalot during the period between December 1, 2019 and April 1, 2020, and (iii) il/BBB- of Maalot on or after April 1, 2020;

(f) waiving the make-whole and market value payment requirements of Section 9.1.7 of the Deed for all early redemption payments on the Israeli Notes within eighteen (18) months following the Effective Date;

(g) requiring each of Medley Small Business Fund and Medley SLF to guarantee all of the Company’s obligations under the Deed (including the Amendment) and the Israeli Notes and to grant security interests on all of their assets (the “Collateral”) to secure such guaranties and providing for the termination of the Medley SLF guaranty and release of the security interests in Medley SLF’s assets upon the closing of the Mergers, subject to certain limitations;

(h) that the Company use principal collections from the Collateral to make early redemption payments on the Israeli Notes, which payments will be applied in inverse order of the maturity of the required principal installment payments on the Israeli Notes;

(i) providing for a waiver by the Trustee and the holders of the Israeli

Notes of any right to accelerate the full balance of the amount due to the holders of the Israeli Notes based on any claims, allegations, actions, and/or rights that were raised, and/or resulting or deriving from certain claims or allegations as set forth in Section 19.1 of the Amendment;

(j) providing for a waiver by the Trustee and the holders of the Israeli Notes of certain claims, demands, rights, and/or actions against and/or relating to the Company, its subsidiaries and/or affiliates and their respective employees (including their respective directors, officers, members of the Company’s board of directors, employees, stockholders, stakeholders and advisors);

and (k) adding other definitions, representations and covenants to the Deed and making related conforming changes to the Deed.

Pursuant to the Amendment, no prepayment penalties were due or payable in connection with the payment of principal made by the Company on the Effective Date.

The Deed (including the Amendment) includes certain customary covenants, including minimum net assets of $215 million and a maximum debt to total assets ratio of 70%.

The date for determining compliance with these financial covenants is the date that the Company publishes its financial statements (i.e., in a quarterly report on Form 10-Q or an annual report on Form 10-K) with the SEC.

If the Company did not satisfy these financial covenants for two consecutive quarters, it would be an event of default under the Deed.

If this event of default would have occurred, the Company had the right to request the trustee for the Israeli Notes (the “Trustee”) to appoint an emergency committee of the three largest noteholders for the purpose of obtaining a one-quarter extension of time to satisfy the financial covenants.

If the Company did not make this request and the breach occurred, or if the emergency committee did not grant the extension, then the Trustee would be required to convene a meeting of the noteholders as described below.

In addition to not complying with the financial covenants as described above, the events of default include:

(i) a change of control of the Company (defined in the Deed as MCC Advisors’ ceasing to provide investment management or advisory services to the Company);

(ii) the Company not publishing a tender offer for the purchase of all of the Israeli Notes within 45 days;

(iii) the Company not paying any amount due and payable to the holders of the Israeli Notes within seven business days after the payment due date;

(iv) certain insolvency and receivership events with respect to the Company or with respect to all or substantially all of its assets, and (v) the Israeli Notes being delisted from the TASE or the TASE’s suspension of trading of the Israeli Notes for more than 60 days.

If an event of default occurs under the Deed, there is no automatic acceleration or mandatory redemption of the Israeli Notes.

Rather, the Trustee is required to convene a meeting of the noteholders for a vote on whether to accelerate the Israeli Notes.

Noteholders holding at least 50% of the principal amount of the Israeli Notes must be present at the meeting for a quorum to exist, and if a quorum exists, then the vote of a majority of the noteholders present at the meeting controls.

The foregoing description of the terms of Israeli Notes, the Deed, and the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of each of the Deed and the Amendment incorporated by reference as an exhibit to this annual report on Form 10-K.

On June 5, 2018, the Company announced that on June 1, 2018, its board of directors authorized the Company to repurchase and retire up to $20 million of the Company’s outstanding Israeli Notes on the TASE.

Execution of the repurchase plan was subject to an open trading window for the Company and continued liquidity at that time and was expected to continue until the full authorized amount was purchased or market conditions changed.

The repurchase of the Israeli Notes was not expected to result in any material tax consequences to the Company or its note holders.

During the quarter ended December 31, 2018, the Company exchanged $1.0 million United States Dollars to New Israeli Shekels at a rate of 3.73 USD/NIS in order to repurchase the Israeli Notes on the TASE.

As the Israeli Notes were trading below par at the time of the repurchase and the USD/NIS (foreign currency) spot rate was higher than the fixed exchange rate agreed upon in the deed of trust, the Company was able to repurchase and retire 3,812,000 units, which resulted in $1,119,201 aggregate principal amount of the Israeli Notes being retired.

The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized gain of $0.1 million and was recorded on the Consolidated Statements of Operations as a gain on extinguishment of debt.

On December 31, 2019, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by Medley SLF and Medley Small Business Fund to pre-pay an additional $19.1 million of the Israeli Notes.

The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a net loss on extinguishment of debt.

On March 31, 2020, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by Medley SLF and Medley Small Business Fund to pre-pay an additional $19.8 million of the Israeli Notes.

On April 14, 2020, the Company repaid the remaining $21.1 million of Israeli Notes outstanding, and as such is no longer subject to any covenants relating thereto.

The Israeli Notes were redeemed at 100% of their principal amount, plus the accrued interest thereon, through April 14, 2020.

On September 13, 2020, in connection with to the redemption of the Israeli Notes, the Company delisted its common stock from the TASE.

The fair values of our debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.

Alternatively, the 1940 Act allows the majority of our independent directors to approve an increase in our leverage capacity, and such

approval would become effective after the one-year anniversary of such approval.

In either case, we would be required to make certain

disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage

capacity and usage, and risks related to leverage.

of September 30, 2021, the Company’s asset coverage was 285.6% after giving effect to leverage and therefore the Company’s

asset coverage was greater than 200%, the minimum asset coverage requirement applicable presently to the Company under the 1940 Act.

of September 30, 2020, the Company’s asset coverage was 199.2% after giving effect to leverage and therefore the Company’s

asset coverage was below 200%, the minimum asset coverage requirement under the 1940 Act.

As a result, the Company was prohibited from

making distributions to stockholders, including the payment of any dividend, and could not employ further leverage until the Company’s

asset coverage was at least 200% after giving effect to such leverage.

to Consolidated Financial Statements (continued)

Company’s outstanding debt excluding debt issuance costs as of September 30, 2021 and 2020 was as follows (dollars in thousands):

Principal Available

December 17, 2015, the Company issued $70.8 million in aggregate principal amount of 6.50% unsecured notes that mature on January 30,

2021 (the “2021 Notes”).

On January 14, 2016, the Company closed an additional $3.25 million in aggregate principal amount

of the 2021 Notes, pursuant to the partial exercise of the underwriters’

option to purchase additional notes.

The 2021 Notes bore

interest at a rate of 6.50% per year, payable quarterly on January 30, April 30, July 30 and October 30 of each year, beginning January

October 21, 2020, the Company caused notices to be issued to the holders of the 2021 Notes regarding the Company’s exercise of

its option to redeem, in whole, the issued and outstanding 2021 Notes, pursuant to Section 1104 of the Indenture dated as of February

7, 2012, between the Company and U.S.

Bank National Association, as trustee, and Section 101(h) of the Third Supplemental Indenture dated

as of December 17, 2015.

The Company redeemed $74,012,825 in aggregate principal amount of the issued and outstanding 2021 Notes on November

20, 2020 (the “Redemption Date”).

The 2021 Notes were redeemed at 100% of their principal amount ($25 per 2021 Note), plus

the accrued and unpaid interest thereon from October 31, 2020, through, but excluding, the Redemption Date.

The Company funded the redemption

of the 2021 Notes with cash on hand.

March 18, 2013, the Company issued $60.0 million in aggregate principal amount of 6.125% unsecured notes that mature on March 30, 2023

(the “2023 Notes”).

On March 26, 2013, the Company closed an additional $3.5 million in aggregate principal amount of the

2023 Notes, pursuant to the partial exercise of the underwriters’

option to purchase additional notes.

As of March 30, 2016, the

2023 Notes may be redeemed in whole or in part at any time or from time to time at the Company’s option.

The 2023 Notes bear interest

at a rate of 6.125% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, beginning June 30, 2013.

December 12, 2016, the Company entered into an “At-The-Market”

(“ATM”) debt distribution agreement with FBR Capital

Markets & Co., through which the Company could offer for sale, from time to time, up to $40.0 million in aggregate principal amount

of the 2023 Notes.

The Company sold 1,573,872 of the 2023 Notes at an average price of $25.03 per note, and raised $38.6 million in net

proceeds, through the ATM debt distribution agreement.

March 10, 2018, the Company redeemed $13.0 million in aggregate principal amount of the 2023 Notes.

On December 31, 2018, the Company

redeemed $12.0 million in aggregate principal amount of the 2023 Notes.

The redemption was accounted for as a debt extinguishment in

accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.3 million and was recorded on

the Consolidated Statements of Operations as a loss on extinguishment of debt.

December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of

the 2023 Notes to the NASDAQ Global Market.

The listing and trading of the 2023 Notes on the NYSE ceased at the close of trading on December

Effective January 4, 2021, the 2023 Notes began trading on the NASDAQ Global Market under the trading symbol “PFXNL.”

to Consolidated Financial Statements (continued)

January 26, 2018, the Company priced a debt offering in Israel of $121.3 million of Israeli Notes (as defined below).

The Israeli Notes

were listed on the TASE and denominated in New Israeli Shekels, but linked to the US Dollar at a fixed exchange rate which mitigates

any currency exposure to the Company.

June 5, 2018, the Company announced that on June 1, 2018, its board of directors authorized the Company to repurchase and retire up to

$20 million of the Company’s outstanding Israeli Notes on the TASE.

the quarter ended December 31, 2018, the Company exchanged $1.0 million United States Dollars to New Israeli Shekels at a rate of 3.73

USD/NIS in order to repurchase the Israeli Notes on the TASE.

As the Israeli Notes were trading below par at the time of the repurchase,

and the USD/NIS (foreign currency) spot rate was higher than the fixed exchange rate agreed upon in the deed of trust, the Company was

able to repurchase and retire 3,812,000 units, which resulted in $1,119,201 aggregate principal amount of the Israeli Notes being retired.

The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted

in a realized gain of $0.1 million and was recorded on the Consolidated Statements of Operations as a gain on extinguishment of debt.

December 31, 2019, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments

in assets held by PhenixFIN SLF and PhenixFIN Small Business Fund to pre-pay an additional $19.1 million of the Israeli Notes.

The pre-payment

was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized

loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a net loss on extinguishment of debt.

March 31, 2020, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments

in assets held by PhenixFIN SLF and PhenixFIN Small Business Fund to pre-pay an additional $19.8 million of the Israeli Notes.

The pre-payment

was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized

loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

April 14, 2020, the Company repaid the remaining $21.1 million of Israeli Notes outstanding, and as such is no longer subject to any

covenants relating thereto.

The Israeli Notes were redeemed at 100% of their principal amount, plus the accrued interest thereon, through

April 14, 2020.

Value of Debt Obligations

fair values of our debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would

be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.

The fair value of the Notes, which are publicly traded, is based upon closing market quotes as of the measurement date.

As of September 30, 2020 and 2019, the Notes would be deemed to be Level 1 in the fair value hierarchy, as defined in Note 4.

In accordance with ASU 2015-03, the debt issuance costs related to the Notes are reported on the Consolidated Statements of Assets and Liabilities as a direct deduction from the face amount of the Notes.

As of September 30, 2020 and 2019, debt issuance costs related to the Notes were as follows (dollars in thousands):

September 30, 2020 September 30, 2019

Notes Israeli

Notes Total 2021

Notes Israeli

As of September

30, 2021 and September 30, 2020, the Notes would be deemed to be Level 1 in the fair value hierarchy, as defined in Note 4.

accordance with ASU 2015-03, the debt issuance costs related to the Notes are reported on the Consolidated Statements of Assets and Liabilities

as a direct deduction from the face amount of the Notes.

As of September 30, 2021 and September 30, 2020, debt issuance costs related

to the Notes were as follows (dollars in thousands):

Total debt issuance costs

Amortized Debt Issuance Costs 3,016 2,406 — 5,422 2,385 2,127 2,829 7,341

Unamortized Debt Issuance Costs $ 210 $ 696 $ — $ 906 $ 841 $ 975 $ 3,458 $ 5,274

For the years ended September 30, 2020, 2019 and 2018, the components of interest expense, amortized debt issuance costs, weighted average stated interest rate and weighted average outstanding debt balance for the Notes were as follows (dollars in thousands):

For the years ended September 30

2020 2019 2018

Amortized debt issuance

debt issuance costs

to Consolidated Financial Statements (continued)

the years ended September 30, 2021, 2020 and 2019, the components of interest expense, amortized debt issuance costs, weighted average

stated interest rate and weighted average outstanding debt balance for the Notes were as follows (dollars in thousands):

the Years Ended September 30

Notes Interest

1 unchanged sentence

Notes Premium

Israeli Notes interest 2,486 6,817 4,366

Amortization of debt issuance costs 2,873 2,735 1,936

Total $ 14,935 $ 19,314 $ 16,967

Weighted average stated interest rate 6.4 % 6.1 % 6.0 %

Weighted average outstanding balance $ 189,039 $ 273,211 $ 251,924

SBA Debentures

On March 26, 2013, SBIC LP received a SBIC license from the SBA.

The SBIC license allowed SBIC LP to obtain leverage by issuing SBA Debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures.

SBA Debentures were non-recourse, interest only debentures with interest payable semi-annually and had a ten year maturity.

The principal amount of SBA Debentures were not required to be paid prior to maturity but may be prepaid at any time without penalty.

The interest rate of SBA Debentures were fixed on a semi-annual basis at a market-driven spread over U.S.

Treasury Notes with 10-year maturities.

The SBA, as a creditor, had a superior claim to the SBIC LP’s assets over our stockholders in the event we liquidated the SBIC LP or the SBA exercised its remedies under the SBA Debentures issued by the SBIC LP upon an event of default.

On September 1, 2018, the Company repaid $15.0 million in aggregate principal amount of the SBA Debentures.

The repayment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.2 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

SBIC LP received a letter from the SBA (the “SBA Letter”), dated March 14, 2019, informing SBIC LP of certain alleged regulatory issues constituting a default under the terms of the SBIC LP’s outstanding SBA Debentures.

The SBA Letter stated that SBIC LP had until March 29, 2019, fifteen (15) days from the date of the SBA Letter, to provide the SBA with certain additional information regarding the alleged regulatory issues, unless extended by the SBA.

SBIC LP’s management submitted an orderly wind-down plan to the SBA to prepay the remaining $135.0 million of outstanding SBA Debentures using available cash at SBIC LP as well as the sale of assets to third parties or affiliates of SBIC LP.

On March 28, 2019, SBIC LP agreed and made a repayment of $50.0 million of outstanding SBA Debentures by April 3, 2019 using available cash at SBIC LP and the cure period was extended to April 19, 2019.

On April 18, 2019, SBIC LP agreed and made a repayment of $20.0 million of outstanding SBA Debentures on April 23, 2019 and an additional $30.0 million of outstanding SBA Debentures on April 30, 2019 using proceeds from the sale of certain assets and the cure period was extended to May 10, 2019.

On May 10, 2019, SBIC LP made the final repayment of the remaining $35.0 million of outstanding SBA Debentures using proceeds from the sale of certain assets.

In connection therewith, effective July 1, 2019, SBIC LP surrendered its SBIC license and operates as Medley Small Business Fund.

The $135.0 million in aggregate repayments made in connection with the orderly wind-down plan was accounted for as debt extinguishments in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a cumulative realized loss of $1.8 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.

As of September 30, 2020 and 2019, Medley Small Business Fund did not have any SBA Debentures outstanding.

For the years ended September 30, 2020, 2019 and 2018, the components of interest, amortized debt issuance costs, weighted average stated interest rate and weighted average outstanding debt balance for the SBA Debentures were as follows (dollars in thousands):

For the years ended September 30

2020 2019 2018

SBA Debentures interest $ — $ 4,445 $ 5,408

Amortization of debt issuance costs — 290 563

Total $ — $ 4,735 $ 5,971

Weighted average stated interest rate — % 5.9 % 3.6 %

Weighted average outstanding balance $ — $ 74,781 $ 148,767

Investment Management Agreement

We entered into an investment management agreement with MCC Advisors (the “Investment Management Agreement”).

Brook Taube, our Chairman and Chief Executive Officer, is a managing partner and senior portfolio manager of MCC Advisors, and Mr.

Seth Taube, one of our directors, is a managing partner of MCC Advisors.

Under the terms of the Investment Management Agreement, MCC Advisors:

• determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;

• identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies);

• executes, closes, monitors and administers the investments we make, including the exercise of any voting or consent rights.

MCC Advisors’ services under the Investment Management Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to us are not impaired.

Pursuant to the Investment Management Agreement, we pay MCC Advisors a fee for investment advisory and management services consisting of a base management fee and a two-part incentive fee.

On December 3, 2015, MCC Advisors recommended and, in consultation with the Board, agreed to reduce fees under the Investment Management Agreement.

Notes Interest

of debt issuance costs

Weighted average stated

interest rate

Weighted average outstanding

Management Agreement

had entered into an investment management agreement with MCC Advisors on January 11, 2011 (the “Investment Management Agreement”),

which expired on December 31, 2020.

terms of the Investment Management Agreement, MCC Advisors:

the composition of our portfolio, the nature and timing of the changes to our portfolio and

the manner of implementing such changes;

● identified,

evaluated and negotiated the structure of the investments we made (including performing due

diligence on our prospective portfolio companies);

closed, monitored and administered the investments we made, including the exercise of any

voting or consent rights.

Advisors’

services under the Investment Management Agreement were not exclusive, and it was free to furnish similar services to

other entities so long as its services to us were not impaired.

to the Investment Management Agreement, we paid MCC Advisors a fee for investment advisory and management services consisting of a base

management fee and a two-part incentive fee.

December 3, 2015, MCC Advisors recommended and, in consultation with the Board, agreed to reduce fees under the Investment Management

Beginning January 1, 2016, the base management fee was reduced to 1.50% on gross assets above $1 billion.

In addition, MCC Advisors reduced its incentive fee from 20% on pre-incentive fee net investment income over an 8% hurdle, to 17.5% on pre-incentive fee net investment income over a 6% hurdle.

Moreover, the revised incentive fee includes a netting mechanism and is subject to a rolling three-year look back from January 1, 2016 forward.

Under no circumstances will the new fee structure result in higher fees to MCC Advisors than fees under the prior investment management agreement.

The following discussion of our base management fee and two-part incentive fee reflect the terms of the fee waiver agreement executed by MCC Advisors on February 8, 2016 (the “Fee Waiver Agreement”).

The terms of the Fee Waiver Agreement are effective as of January 1, 2016, and are a permanent reduction in the base management fee and incentive fee on net investment income payable to MCC Advisors for the investment advisory and management services it provides under the Investment Management Agreement.

The Fee Waiver Agreement does not change the second component of the incentive fee, which is the incentive fee on capital gains.

On January 15, 2020, the Company’s board of directors, including all of the independent directors, approved the renewal of the Investment Management Agreement through the later of April 1, 2020 or so long as the Amended MCC Merger Agreement was in effect, but no longer than a year;

provided that, if the Amended MCC Merger Agreement were to be terminated by Sierra, then the termination of the Investment Management Agreement would be effective on the 30th day following receipt of Sierra’s notice of such termination to the Company.

In that regard, on May 1, 2020, the Company received a notice of termination of the Amended MCC Merger Agreement from Sierra.

Under the Amended MCC Merger Agreement, either party was permitted, subject to certain conditions, to terminate the Amended MCC Merger Agreement if the merger was not consummated by March 31, 2020.

As result of the termination by Sierra of the Amended MCC Merger Agreement on May 1, 2020, the Investment Management Agreement would have been terminated effective as of May 31, 2020, without further action by the board of directors.

On May 21, 2020, the board of directors, including all of the independent directors, extended the term of the Investment Management Agreement through the end of the quarter ended June 30, 2020.

On June 15, 2020, the board of directors, including all of the independent directors, extended the term of the Investment Management Agreement through the end of the quarter ended September 30, 2020.

On September 29, 2020, the Board, including all of the independent directors, extended the term of the Investment Management Agreement through the end of the quarter ending December 31, 2020.

See "Note 15" for more information.

Base Management Fee

For providing investment advisory and management services to us, MCC Advisors receives a base management fee.

The base management fee is calculated at an annual rate of 1.75% (0.4375% per quarter) of up to $1.0 billion of the Company’s gross assets and 1.50% (0.375% per quarter) of any amounts over $1.0 billion of the Company’s gross assets, and is payable quarterly in arrears.

The base management fee will be calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters and will be appropriately pro-rated for any partial quarter.

On May 4, 2018, MCC Advisors voluntarily elected to waive $380,000 of the base management fee payable for the quarter ended March 31, 2018, which is shown on the Consolidated Statements of Operations.

Incentive Fee

The incentive fee has two components, as follows:

Incentive Fee Based on Income

The first component of the incentive fee is payable quarterly in arrears and is based on our pre-incentive fee net investment income earned during the calendar quarter for which the incentive fee is being calculated.

MCC Advisors is entitled to receive the incentive fee on net investment income from us if our Ordinary Income (as defined below) exceeds a quarterly “hurdle rate” of 1.5%.

The hurdle amount is calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter.

Beginning with the calendar quarter that commenced on January 1, 2016, the incentive fee on net investment income is determined and paid quarterly in arrears at the end of each calendar quarter by reference to our aggregate net investment income, as adjusted as described below, from the calendar quarter then ending and the eleven preceding calendar quarters (or if shorter, the number of quarters that have occurred since January 1, 2016).

We refer to such period as the “Trailing Twelve Quarters.”

The hurdle amount for the incentive fee on net investment income is determined on a quarterly basis, and is equal to 1.5% multiplied by the Company’s net asset value at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters.

The incentive fee for any partial period will be appropriately pro-rated.

Any incentive fee on net investment income will be paid to MCC Advisors on a quarterly basis, and will be based on the amount by which (A) aggregate net investment income (“Ordinary Income”) in respect of the relevant Trailing Twelve Quarters exceeds (B) the hurdle amount for such Trailing Twelve Quarters.

The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the “Excess Income Amount.” For the avoidance of doubt, Ordinary Income is net of all fees and expenses, including the reduced base management fee but excluding any incentive fee on Pre-Incentive Fee net investment income or on the Company’s capital gains.

Determination of Quarterly Incentive Fee Based on Income

The incentive fee on net investment income for each quarter is determined as follows:

• No incentive fee on net investment income is payable to MCC Advisors for any calendar quarter for which there is no Excess Income Amount;

• 100% of the Ordinary Income, if any, that exceeds the hurdle amount, but is less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by the Company’s net assets at the beginning of each applicable calendar quarter, as adjusted as noted above, comprising the relevant Trailing Twelve Quarters is included in the calculation of the incentive fee on net investment income;

• 17.5% of the Ordinary Income that exceeds the Catch-up Amount is included in the calculation of the incentive fee on net investment income.

The amount of the incentive fee on net investment income that will be paid to MCC Advisors for a particular quarter will equal the excess of the incentive fee so calculated minus the aggregate incentive fees on net investment income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters but not in excess of the Incentive Fee Cap (as described below).

The incentive fee on net investment income that is paid to MCC Advisors for a particular quarter is subject to a cap (the “Incentive Fee Cap”).

The Incentive Fee Cap for any quarter is an amount equal to (a) 17.5% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters minus (b) the aggregate incentive fees on net investment income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters.

“Cumulative Net Return” means (x) the Ordinary Income in respect of the relevant Trailing Twelve Quarters minus (y) any Net Capital Loss (as described below), if any, in respect of the relevant Trailing Twelve Quarters.

If, in any quarter, the Incentive Fee Cap is zero or a negative value, the Company will pay no incentive fee on net investment income to MCC Advisors for such quarter.

If, in any quarter, the Incentive Fee Cap for such quarter is a positive value but is less than the incentive fee on net investment income that is payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company will pay an incentive fee on net investment income to MCC Advisors equal to the Incentive Fee Cap for such quarter.

If, in any quarter, the Incentive Fee Cap for such quarter is equal to or greater than the incentive fee on net investment income that is payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company will pay an incentive fee on net investment income to MCC Advisors, calculated as described above, for such quarter without regard to the Incentive Fee Cap.

“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, and dilution to the Company’s net assets due to capital raising or capital actions, in such period and (ii) aggregate capital gains, whether realized or unrealized and accretion to the Company’s net assets due to capital raising or capital action, in such period.

Dilution to the Company’s net assets due to capital raising is calculated, in the case of issuances of common stock, as the amount by which the net asset value per share was adjusted over the transaction price per share, multiplied by the number of shares issued.

Accretion to the Company’s net assets due to capital raising is calculated, in the case of issuances of common stock (including issuances pursuant to our dividend reinvestment plan), as the excess of the transaction price per share over the amount by which the net asset value per share was adjusted, multiplied by the number of shares issued.

Accretion to the Company’s net assets due to other capital action is calculated, in the case of repurchases by the Company of its own common stock, as the excess of the amount by which the net asset value per share was adjusted over the transaction price per share multiplied by the number of shares repurchased by the Company.

Incentive Fee Based on Capital Gains

The second component of the incentive fee is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement as of the termination date) and equals 20.0% of our cumulative aggregate realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the investment adviser.

Under GAAP, the Company calculates the second component of the incentive fee as if the Company had realized all assets at their fair values as of the reporting date.

Accordingly, when applicable, the Company accrues a provisional capital gains incentive fee taking into account any unrealized gains or losses.

As the provisional capital gains incentive fee is subject to the performance of investments until there is a realization event, the amount of the provisional capital gains incentive fee accrued at a reporting date may vary from the capital gains incentive that is ultimately realized and the differences could be material.

Base Management Fee - Prior to Fee Waiver Agreement

Prior to January 1, 2016, the base management fee was calculated at an annual rate of 1.75% of our gross assets (which is defined as all the assets of the Company, including those acquired using borrowings for investment purposes), and was payable quarterly in arrears.

The base management fee was based on the average value of our gross assets at the end of the two most recently completed calendar quarters.

Incentive Fee - Prior to Fee Waiver Agreement

Prior to January 1, 2016, the incentive fee based on net investment income was calculated as 20.0% of the amount, if any, by which our pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets calculated as of the end of the calendar quarter immediately preceding the calendar quarter for which the incentive fee is being calculated, exceeds a 2.0% (which is 8.0% annualized) hurdle rate but also includes a “catch-up” provision.

Under this provision, in any calendar quarter, our investment adviser receives no incentive fee until our net investment income equals the hurdle rate of 2.0%, but then receives, as a “catch-up”, 100% of our pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5%.

The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, our investment adviser will receive 20% of our pre-incentive fee net investment income as if the hurdle rate did not apply.

For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies accrued during the calendar quarter, minus our operating expenses for the quarter including the base management fee, expenses payable under the administration agreement, and any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee.

Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash.

For the avoidance of doubt, the purpose of the new incentive fee calculation under the Fee Waiver Agreement is to permanently reduce aggregate fees payable to MCC Advisors by the Company, effective as of January 1, 2016.

In order to ensure that the Company will pay MCC Advisors lesser aggregate fees on a cumulative basis, as calculated beginning January 1, 2016, we will, at the end of each quarter, also calculate the base management fee and incentive fee on net investment income owed by the Company to MCC Advisors based on the formula in place prior to January 1, 2016.

If, at any time beginning January 1, 2016, the aggregate fees on a cumulative basis, as calculated based on the formula in place after January 1, 2016, would be greater than the aggregate fees on a cumulative basis, as calculated based on the formula in place prior to January 1, 2016, MCC Advisors shall only be entitled to the lesser of those two amounts.

For the years ended September 30, 2020, 2019 and 2018, the Company incurred base management fees to MCC Advisors of $6.4 million, $11.2 million, and $14.7 million, respectively.

For the years ended September 30, 2020 and 2019 the Company did not waive any management fees under the Fee Waiver Agreement.

For the year ended September 30, 2018, base management fees, net of the voluntary $0.4 million waiver, was $14.3 million.

The incentive fees shown in the Consolidated Statements of Operations are calculated using the fee structure set forth in the Investment Management Agreement, and then adjusted to reflect the terms of the Fee Waiver Agreement.

Pursuant to the Investment Management Agreement, pre-incentive fee net investment income is compared to a hurdle rate of 2.0% of the net asset value at the beginning of the period and is calculated as follows:

1) No incentive fee is recorded during the quarter in which our pre-incentive fee net investment income does not exceed the hurdle rate;

2) 100% of pre-incentive fee net investment income that exceeds the hurdle rate but is less than 2.5% in the quarter;

3) 20.0% of the amount of pre-incentive fee net investment income, if any, that exceeds 2.5% of the hurdle rate.

For purposes of implementing the fee waiver under the Fee Waiver Agreement, we calculate the incentive fee based upon the formula that exists under the Investment Management Agreement, and then apply the terms of waiver set forth in the Fee Waiver Agreement, if applicable.

For the years ended September 30, 2020, 2019 and 2018, the Company did not incur any incentive fees on net investment income because pre-incentive fee net investment income did not exceed the hurdle amount under the formula set forth in the Investment Management Agreement.

As of September 30, 2020 and 2019, $1.4 million and $2.2 million, respectively, were included in “management and incentive fees payable” in the accompanying Consolidated Statements of Assets and Liabilities.

Administration Agreement

On January 19, 2011, the Company entered into an administration agreement with MCC Advisors.

Pursuant to the administration agreement, MCC Advisors furnishes us with office facilities and equipment, clerical, bookkeeping, recordkeeping and other administrative services related to the operations of the Company.

We reimburse MCC Advisors for our allocable portion of overhead and other expenses incurred by it performing its obligations under the administration agreement, including rent and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs.

From time to time, our administrator may pay amounts owed by us to third-party service providers and we will subsequently reimburse our administrator for such amounts paid on our behalf.

For the years ended September 30, 2020, 2019 and 2018, we incurred $2.2 million, $3.3 million, and $3.6 million in administrator expenses, respectively.

As of September 30, 2020 and 2019, $0.2 million and $0.9 million, respectively, were included in “administrator expenses payable” in the accompanying Consolidated Statements of Assets and Liabilities.

Expense Support Agreement

On June 12, 2020, the Company entered into an expense support agreement (the “Expense Support Agreement”) with MCC Advisors and Medley LLC, pursuant to which MCC Advisors and Medley LLC agreed (jointly and severally) to cap the management fee and all of the Company’s other operating expenses (except interest expenses, certain extraordinary strategic transaction expenses and other expenses approved by the Special Committee (as defined in Note 10)) at $667,000 per month (the “Cap”).

Under the Expense Support Agreement, the Cap became effective on June 1, 2020 and expires on September 30, 2020.

On September 29, 2020, the board of directors, including all of the independent directors, extended the term of the Expense Support Agreement through the end of quarter ending December 31, 2020.

For the year ended September 30, 2020, the total management fee and the other operating expenses subject to the Cap (as described above) were $3.1 million, which resulted in $0.7 million of expense support due from MCC Advisors.

The $0.7 million of expense support due has been netted against Administrator expenses payable in the accompanying Consolidated Statements of Assets and Liabilities.

See "Note 15" for more information.

In addition, MCC

Advisors reduced its incentive fee from 20% on pre-incentive fee net investment income over an 8% hurdle, to 17.5% on pre-incentive fee

net investment income over a 6% hurdle.

Moreover, the revised incentive fee includes a netting mechanism and is subject to a rolling

three-year look back from January 1, 2016 forward.

Under no circumstances would the new fee structure result in higher fees to MCC Advisors

than fees under the prior investment management agreement.

to Consolidated Financial Statements (continued)

following discussion of our base management fee and two-part incentive fee reflect the terms of the fee waiver agreement executed by

MCC Advisors on February 8, 2016 (the “Fee Waiver Agreement”).

The terms of the Fee Waiver Agreement were effective as of

January 1, 2016 and were a permanent reduction in the base management fee and incentive fee on net investment income payable to MCC Advisors

for the investment advisory and management services it provided under the Investment Management Agreement.

The Fee Waiver Agreement did

not change the second component of the incentive fee, which was the incentive fee on capital gains.

January 15, 2020, the Company’s board of directors, including all of the independent directors, approved the renewal of the Investment

Management Agreement through the later of April 1, 2020 or so long as the Amended and Restated Agreement and Plan of Merger, dated as

of July 29, 2019 (the “Amended MCC Merger Agreement”), by and between the Company and Sierra (the “Amended MCC Merger

Agreement”) was in effect, but no longer than a year;

provided that, if the Amended MCC Merger Agreement was terminated by Sierra,

then the termination of the Investment Management Agreement would be effective on the 30th day following receipt of Sierra’s notice

of termination to the Company.

On May 1, 2020, the Company received a notice of termination of the Amended MCC Merger Agreement from

Under the Amended MCC Merger Agreement, either party was permitted, subject to certain conditions, to terminate the Amended MCC

Merger Agreement if the merger was not consummated by March 31, 2020.

Sierra elected to do so on May 1, 2020.

As result of the termination

by Sierra of the Amended MCC Merger Agreement on May 1, 2020, the Investment Management Agreement would have been terminated effective

as of May 31, 2020.

On May 21, 2020, the Board, including all of the independent directors, extended the term of the Investment Management

Agreement through the end of the then-current quarter, June 30, 2020.

On June 12, 2020, the Board, including all of the independent directors,

extended the term of the Investment Management Agreement through September 30, 2020.

On September 29, 2020, the Board, including all

of the independent directors, extended the term of the Investment Management Agreement through December 31, 2020.

Brook Taube, our

Chairman and Chief Executive Officer through December 31, 2020 and one of our directors through January 21, 2021 and Mr.

one of our directors through January 21, 2021 are both affiliated with MCC Advisors and Medley.

November 18, 2020, the Board approved the adoption of an internalized management structure effective January 1, 2021.

The new management

structure replaces the current Investment Management and Administration Agreements with MCC Advisors LLC, which expired on December 31,

To lead the internalized management team, the Board approved the appointment of David Lorber, who had served as an independent

director of the Company since April 2019, as interim Chief Executive Officer, and Ellida McMillan as Chief Financial Officer of the Company,

each effective January 1, 2021.

In connection with his appointment, Mr.

Lorber stepped down from the Compensation Committee of the Board,

the Nominating and Corporate Governance Committee of the Board, and the Special Committee of the Board.

Base Management

December 31, 2020, for providing investment advisory and management services to us, MCC Advisors received a base management fee.

base management fee was calculated at an annual rate of 1.75% (0.4375% per quarter) of up to $1.0 billion of the Company’s gross

assets and 1.50% (0.375% per quarter) of any amounts over $1.0 billion of the Company’s gross assets and was payable quarterly

The base management fee was calculated based on the average value of the Company’s gross assets at the end of the two

most recently completed calendar quarters.

For the years ended September 30, 2021, 2020 and 2019, the Company incurred base management

fees to MCC Advisors of $1.1 million, $6.4 million and $11.2 million, respectively.

Since January 1, 2021, the Company no longer incurs

management fees under its current internalized structure.

to Consolidated Financial Statements (continued)

Through December

31, 2020, the incentive fee had two components, as follows:

Fee Based on Income

first component of the incentive fee was payable quarterly in arrears and was based on our pre-incentive fee net investment income earned

during the calendar quarter for which the incentive fee was being calculated.

MCC Advisors was entitled to receive the incentive fee

on net investment income from us if our Ordinary Income (as defined below) exceeded a quarterly “hurdle rate”

hurdle amount was calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning

of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances

by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of

its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter.

second component of the incentive fee was determined and payable in arrears as of the end of each calendar year (or upon termination

of the Investment Management Agreement as of the termination date) and equaled 20.0% of our cumulative aggregate realized capital gains

less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment

basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments

were previously made to the investment adviser.

the years ended September 30, 2021, 2020, and 2019, the Company did not incur any incentive fees on net investment income because pre-incentive

fee net investment income did not exceed the hurdle amount under the formula set forth in the Investment Management Agreement.

The Investment

Management Agreement terminated as of December 31, 2020, and the Company no longer incurs incentive fees under the Investment Management

Agreement as a result.

of September 30, 2021 and 2020, $0 and $1.4 million, respectively, were included in “management and incentive fees payable”

in the accompanying Consolidated Statements of Assets and Liabilities.

of September 30, 2020 and 2019, $1.4 million and $2.2 million, respectively, were included in “management and incentive fees payable”

in the accompanying Consolidated Statements of Assets and Liabilities.

Administration

January 19, 2011, the Company entered into an administration agreement with MCC Advisors.

Pursuant to the administration agreement, MCC

Advisors furnished us with office facilities and equipment, clerical, bookkeeping, recordkeeping and other administrative services related

to the operations of the Company.

We reimbursed MCC Advisors for our allocable portion of overhead and other expenses incurred by it

performing its obligations under the administration agreement, including rent and our allocable portion of the cost of our Chief Financial

Officer and Chief Compliance Officer and their respective staffs.

From time to time, our administrator was able to pay amounts owed by

us to third-party service providers and we would subsequently reimburse our administrator for such amounts paid on our behalf.

In connection

with the adoption by the board of directors of an internalized management structure, on November 19, 2020, the Company entered into a

Fund Accounting Servicing Agreement and an Administration Servicing Agreement on customary terms with U.S.

Bancorp Fund Services, LLC

Bank Global Fund Services (“U.S.

Bancorp”).

The administration agreement with MCC Advisors terminated by its terms

on December 31, 2020.

Effective January 1, 2021, US Bancorp serves as custodian and provides us with fund accounting and financial reporting

services pursuant to the Fund Accounting Servicing Agreement and Administration Servicing Agreement.

For the years ended September 30,

2021, 2020 and 2019, we incurred $0.6 million, $2.2 million, and $3.3 million in administrator expenses, respectively.

As of September

30, 2021 and 2020, $0.1 million and $0.2 million, respectively, were included in “administrator expenses payable”

accompanying Consolidated Statements of Assets and Liabilities.

to Consolidated Financial Statements (continued)

Support Agreement

June 12, 2020, the Company entered into an expense support agreement (the “Expense Support Agreement”) with MCC Advisors

and Medley LLC, pursuant to which MCC Advisors and Medley LLC agreed (jointly and severally) to cap the management fee and all of the

Company’s other operating expenses (except interest expenses, certain extraordinary strategic transaction expenses and other expenses

approved by the Special Committee (as defined in Note 10)) at $667,000 per month (the “Cap”).

Under the Expense Support Agreement,

the Cap became effective on June 1, 2020.

On September 29, 2020, the board of directors, including all of the independent directors,

extended the term of the Expense Support Agreement through the end of quarter ending December 31, 2020.

The Expense Support Agreement

expired by its terms at the close of business on December 31, 2020, in connection with the adoption of the internalized management structure

by the board of directors.

Related Party Transactions

Due to affiliate

Due to affiliate consists of certain general and administrative expenses paid by an affiliate on behalf of the Company.

Other Related Party Transactions

Opportunities for co-investments may arise when MCC Advisors or an affiliated investment adviser becomes aware of investment opportunities that may be appropriate for the Company, other clients, or affiliated funds.

On November 25, 2013, the Company obtained an exemptive order from the SEC that permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is Medley, LLC or an investment adviser controlled by Medley, LLC in a manner consistent with our investment objective, strategies and restrictions, as well as regulatory requirements and other pertinent factors (the “Prior Exemptive Order”).

On March 29, 2017, the Company, MCC Advisors and certain other affiliated funds and investment advisers received an exemptive order (the “Exemptive Order”) that supersedes the Prior Exemptive Order and allows affiliated registered investment companies to participate in co-investment transactions with us that would otherwise have been prohibited under Section 17(d) and 57(a)(4) of the 1940 Act and Rule 17d-1 thereunder.

On October 4, 2017, the Company, MCC Advisors and certain of our affiliates received an exemptive order that supersedes the Exemptive Order (the “Current Exemptive Order”) and allows, in addition to the entities already covered by the Exemptive Order, Medley LLC and its subsidiary, Medley Capital LLC, to the extent they hold financial assets in a principal capacity, and any direct or indirect, wholly or majority owned subsidiary of Medley LLC that is formed in the future, to participate in co-investment transactions with us that would otherwise be prohibited by either or both of Sections 17(d) and 57(a)(4) of the 1940 Act.

Co-investment under the Current Exemptive Order is subject to certain conditions therein, including the condition that, in the case of each co-investment transaction, the board of directors determines that it would be in the Company’s best interest to participate in the transaction.

However, neither we nor the affiliated funds are obligated to invest or co-invest when investment opportunities are referred to us or them.

The Company has a guarantee to issue up to $5.7 million in standby letters of credit through a financial intermediary on behalf of a certain portfolio company.

Under this arrangement, if the standby letters of credit were to be issued, the Company would be required to make payments to third parties if the portfolio company was to default on its related payment obligations.

The guarantee will renew annually until cancellation.

As of September 30, 2020 and 2019, the Company had not issued any standby letters of credit under the commitment on behalf of the portfolio company.

Insurance Reimbursements Related to Professional Fees

During the year ended September 30, 2020, the Company has received insurance proceeds under its insurance policy relating to the legal expenses associated with the dismissed stockholder class action, captioned as FrontFour Capital Group LLC, et al.

consists of certain general and administrative expenses paid by an affiliate on behalf of the Company.

Reimbursements Related to Professional Fees

Company has received insurance proceeds under its insurance policy primarily relating to the legal expenses associated with the dismissed

stockholder class action, captioned as FrontFour Capital Group LLC, et al.

v Brook Taube et al.

During the year ended September 30, 2020, the Company received $6.1 million of insurance proceeds.

The reimbursement has been recorded as an offset or reduction in professional fees and expenses on the Consolidated Statements of Operations.

Unfunded commitments

As of September 30, 2020 and 2019, we had commitments under loan and financing agreements to fund up to $3.9 million to five portfolio companies and $8.9 million to seven portfolio companies, respectively.

These commitments are primarily composed of senior secured term loans and revolvers, and the determination of their fair value is included in the Consolidated Schedule of Investments.

The commitments are generally subject to the borrowers meeting certain criteria such as compliance with covenants and certain operational metrics.

The terms of the borrowings and financings subject to commitment are comparable to the terms of other loan and equity securities in our portfolio.

A summary of the composition of the unfunded commitments as of September 30, 2020 and 2019 is shown in the table below (dollars in thousands):

September 30, 2020 September 30, 2019

During the year ended September 30, 2021,

the Company received $2.1 million of insurance proceeds.

During the year ended September 30, 2020, the Company received $6.1 million

of insurance proceeds.

The reimbursements have been recorded as an offset or reduction in professional fees and expenses on the Consolidated

Statements of Operations.

of September 30, 2021 and 2020, we had commitments under loan and financing agreements to fund up to $4.9 million to six portfolio companies

and $3.9 million to five portfolio companies, respectively.

These commitments are primarily composed of senior secured term loans and

revolvers, and the determination of their fair value is included in the Consolidated Schedule of Investments.

The commitments are generally

subject to the borrowers meeting certain criteria such as compliance with covenants and certain operational metrics.

The terms of the

borrowings and financings subject to commitment are comparable to the terms of other loan and equity securities in our portfolio.

of the composition of the unfunded commitments as of September 30, 2021 and 2020 is shown in the table below (dollars in thousands):

Redwood Services Group, LLC - Revolver

1888 Industrial Services, LLC - Revolver

Kemmerer Operations, LLC - Delayed Draw Term Loan 908 908

Alpine SG - Revolver

Kemmerer Operations, LLC - Delayed Draw Term

NVTN LLC - DDTL

NVTN LLC - Super Priority DDTL 500 —

Redwood Services Group, LLC - Revolver 1,050 875

Black Angus Steakhouses, LLC - Super Priority

DataOnline Corp.

- Revolver 179 1,890

Access Media Holdings, LLC - Series AAA Preferred Equity — 101

Dynamic Energy Services International LLC - Revolver — 3,255

Alpine SG, LLC - Revolver — 1,000

Black Angus Steakhouses, LLC - Delayed Draw Term Loan — 893

Total $ 3,935 $ 8,922

Fee income consists of origination/closing fee, amendment fee, prepayment penalty, administrative agent fee, and other miscellaneous fees which are non-recurring in nature as well as administrative agent fees, which are recurring in nature.

The following tables summarize the Company’s fee income for the years ended September 30, 2020, 2019 and 2018 (dollars in thousands):

NVTN LLC - Super Priority

Total unfunded commitments

to Consolidated Financial Statements (continued)

Effective January 1, 2019, ASC 842 required

that a lessee evaluate its leases to determine whether they should be classified as operating or financing leases.

PhenixFIN identified

one operating lease for its office space.

The lease commenced September 1, 2021 and expires November 30, 2026.

Upon entering into the lease on September 1,

2021, PhenixFIN recorded a right-of-use asset and a lease liability as of that date.

Total operating lease cost incurred by PhenixFIN

for the year ended September 30, 2021 was $84,000.

As of September 30, 2021, the asset related to the operating lease was $613,500 and is included in the Other assets balance on the Consolidated Balance Sheet.

The lease liability was $(613,500) and is

included in the Other liabilities balance on the Consolidated Balance Sheet.

As of September 30, 2021, the remaining lease term was five

years and the implied borrowing rate was 5.25%.

following table shows future minimum payments under PhenixFIN’s operating lease as of September 30, 2021:

For the Years Ended September 30,

2020 2019 2018

Prepayment fee $ 139 $ 1,281 $ 220

Origination fee 101 345 2,780

Administrative agent fee 192 316 610

Amendment fee 171 306 579

Other fees 90 56 285

Fee income $ 693 $ 2,304 $ 4,474

Difference between undiscounted and discounted cash flows

income consists of origination/closing fees, amendment fees, prepayment penalty and other miscellaneous fees which are non-recurring

in nature, as well as administrative agent fees, which are recurring in nature.

The following table summarizes the Company’s fee

income for the years ended September 30, 2021, 2020 and 2019 (dollars in thousands):

the Years Ended September 30

Administrative

to Consolidated Financial Statements (continued)

Directors Fees

The Company's independent directors each receive an annual fee of $90,000.

They also receive $3,000, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting, and $2,500, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each Audit Committee, Nominating and Corporate Governance Committee, and Compensation Committee meeting.

The chair of the Audit Committee receives an annual fee of $25,000 and the chair of the Nominating and Corporate Governance Committee and the Compensation Committee receives an annual fee of $10,000 for their additional services in these capacities.

In addition, other members of the Audit Committee receive an annual fee of $12,500, and other members of the Nominating and Corporate Governance Committee and the Compensation Committee receive an annual fee of $6,000.

On January 26, 2018, the board of directors established the special committee of the Board, comprised solely of directors who are not “interested persons” of the Company as such term is defined in Section 2(a)(19) of the 1940 Act (the “Special Committee”), for the purpose of assessing the merits of various proposed strategic transactions.

As compensation for serving on the Special Committee, each independent director received a one-time retainer of $25,000 plus reimbursement of out-of-pocket expenses, consistent with the Company’s policies for reimbursement of members of the board of directors.

In addition, the chairman of the Special Committee receives a monthly fee of $15,000 and other members receive a monthly fee of $10,000.

Pursuant to the Settlement Term Sheet, on April 15, 2019, the board of directors appointed David A.

Lorber and Lowell W.

Robinson to the Board to fill the vacancies on the Board created by the resignations of Mark Lerdal and John E.

Mack, respectively.

In addition, the board of directors added:

Lorber and Robinson to the Special Committee, with Mr.

Lorber serving as Chair of the Special Committee;

Lorber to the Nominating and Corporate Governance Committee and the Compensation Committee;

Robinson to the Audit Committee.

In addition to the compensation

described above, each of Mr.

Lorber and Mr.

Robinson received the one-time retainer of $25,000 plus reimbursement of out-of-pocket expenses, consistent with the Company's policies for reimbursement of members of the board of directors.

On August 19, 2020, Jeffrey Tonkel notified the Board that he was resigning voluntarily from the Board, effective August 19, 2020.

On August 19, 2020, the Board appointed Howard Amster to the Board to fill the vacancy created by the resignation of Mr.

Tonkel, effective August 19, 2020.

In addition to the compensation described above, Mr.

Amster received the one-time retainer of $25,000 plus reimbursement of out-of-pocket expenses, consistent with the Company's policies for reimbursement of independent members of the board of directors.

No compensation is paid to directors who are ‘‘interested persons’’ of the Company (as such term is defined in the 1940 Act).

For the years ended September 30, 2020, 2019 and 2018, we accrued $1.5 million, $1.3 million, and $1.3 million for independent directors’ fees expense, respectively.

calendar year 2021, the Company’s independent directors each receive an annual fee of $100,000.

In addition, the lead independent

director receives an annual retainer of $30,000;

the chair of the Audit Committee receives an annual retainer of $25,000, and each of

its other members receives an annual retainer of $12,500;

and the chairs of the Nominating and Corporate Governance Committee and of

the Compensation Committee each receive an annual retainer of $15,000 and each of the other members of these committees receive annual

retainers of $8,000.

The Company’s independent directors also receive a fee of $3,000 for each board meeting and $2,500 for each

committee meeting that they attend.

Prior to calendar year 2021, the Company’s independent directors each received an annual fee

They also received $3,000, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending

each board meeting, and $2,500, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each Audit

Committee, Nominating and Corporate Governance Committee, Transition Committee and Compensation Committee meeting.

The chair of the Audit

Committee received an annual fee of $25,000 and the chair of the Nominating and Corporate Governance Committee and the Compensation Committee

received an annual fee of $10,000 for their additional services in these capacities.

In addition, other members of the Audit Committee

received an annual fee of $12,500, and other members of the Nominating and Corporate Governance Committee and the Compensation Committee

received an annual fee of $6,000.

January 26, 2018, the board of directors established the special committee of the Board, comprised solely of directors who are not “interested

persons”

of the Company as such term is defined in Section 2(a)(19) of the 1940 Act (the “Special Committee”), for

the purpose of assessing the merits of various proposed strategic transactions.

As compensation for serving on the Special Committee,

each independent director received a one-time retainer of $25,000 plus reimbursement of out-of-pocket expenses, consistent with the Company’s

policies for reimbursement of members of the board of directors.

In addition, the chairman of the Special Committee received a monthly

fee of $15,000 and other members received a monthly fee of $10,000.

The Special Committee as well as the Transition Committee have each

been dissolved and are each no longer in operation.

board service compensation is paid to directors who are “interested persons”

of the Company (as such term is

defined in the 1940 Act).

For the years ended September 30, 2021, 2020 and 2019, we accrued $1.0 million, $1.5 million, and $1.3 million

for directors’

fees expense, respectively.

Earnings Per Share

In accordance with the provisions of ASC Topic 260 - Earnings per Share, basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period.

Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

The Company does not have any potentially dilutive common shares as of September 30, 2020.

The following information sets forth the computation of the weighted average basic and diluted net increase/(decrease) in net assets per share from operations for the September 30, 2020, 2019 and 2018 (dollars in thousands, except share and per share amounts):

For the years ended September 30

2020 2019 2018

Basic and diluted:

Net increase/(decrease) in net assets from operations $ (65,813) $ (96,575) $ (110,924)

Weighted average common shares outstanding 2,723,709 2,723,709 2,723,709

Earnings per common share-basic and diluted $ (24.16) $ (35.46) $ (40.73)

accordance with the provisions of ASC Topic 260 - Earnings per Share, basic earnings per share is computed by dividing earnings available

to common stockholders by the weighted average number of shares outstanding during the period.

Other potentially dilutive common shares,

and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

The Company does not have

any potentially dilutive common shares as of September 30, 2021, 2020 and 2019.

following information sets forth the computation of the weighted average basic and diluted net increase/(decrease) in net assets per

share from operations for the years ended September 30, 2021, 2020 and 2019 (dollars in thousands, except share and per share amounts):

the Years Ended September 30

increase (decrease) in net assets resulting from operations

average shares of common stock outstanding - basic and diluted

(loss) per share of common stock - basic and diluted

to Consolidated Financial Statements (continued)

Financial Highlights

The following is a schedule of financial highlights for the years ended September 30, 2020, 2019, 2018, 2017 and 2016:

For the years ended September 30

2020 2019 2018 2017 2016

The following

is a schedule of financial highlights for the years ended September 30, 2021, 2020, 2019, 2018 and 2017:

the Years Ended September 30

Per share data

Net asset value per share at beginning of year $ 79.46 $ 117.92 $ 169.04 $ 189.78 $ 220.08

Net investment income/(loss) (2)

(1.00) (7.66) 4.55 13.35 19.35

Net realized gains/(losses) on investments (18.35) (41.18) (32.76) (26.83) (14.22)

Net unrealized appreciation/(depreciation) on investments (3.90) 14.13 (11.82) 7.95 (15.26)

Change in provision for deferred taxes on unrealized appreciation/(depreciation) on investments — — 0.17 0.40 0.03

Net Asset Value

per share at Beginning of Period

Results of Operations:

Investment Income/(Loss) (1)

Realized Gain/(Loss) on Investments

Unrealized Gain/(Loss) on Investments

in provision for deferred taxes on unrealized appreciation/(depreciation) on investments

loss on extinguishment of debt

Net increase/(decrease) in net assets (24.16) (35.46) (40.73) (5.53) (10.10)

Distributions from net investment income — (3.00) (10.40) (15.20) (22.40)

Repurchase of common stock under stock repurchase program — — — — 2.20

— — 0.01 (0.01) —

Net asset value per share at end of year $ 55.30 $ 79.46 $ 117.92 $ 169.04 $ 189.78

Net assets at end of year $ 150,619,517 $ 216,432,530 $ 321,178,727 $ 460,429,317 $ 516,919,142

Shares outstanding at end of year 2,723,709 2,723,709 2,723,709 2,723,709 2,723,709

Per share market value at end of year $ 17.83 $ 51.80 $ 76.40 $ 119.40 $ 152.60

Total return based on market value (3)

(65.58) % (29.91) % (27.82) % (12.73) % 19.37 %

Total return based on net asset value (4)

(30.41) % (29.47) % (21.29) % (0.68) % 0.42 %

Portfolio turnover rate 5.66 % 11.93 % 26.46 % 26.01 % 8.86 %

The following is a schedule of ratios and supplemental data for the years ended September 30, 2020, 2019, 2018, 2017, and 2016:

For the years ended September 30

2020 2019 2018 2017 2016

Ratio of net investment/(loss) income to average net assets after waivers (6)

(1.64) % (7.96) % 3.37 % 7.50 % 9.97 %

Ratio of total expenses to average net assets after waivers (6)

Increase (Decrease) in Net Assets Resulting from Operations

Capital Share Transactions

Distributions

from net investment income

of common stock under stock repurchase program

Increase (Decrease) Resulting from Capital Share Transactions

Asset Value per share at End of Period

at End of Period

$ 150,619,517

Ratio of incentive fees to average net assets after waivers (6)

$ 216,432,530

Supplemental Data:

Ratio of net operating expenses and credit facility related expenses to average net assets (6)(13)

$ 321,178,727

Percentage of non-recurring fee income (7)

$ 460,429,317

Shares Outstanding at End

Per share market value

at end of period

return based on market value (2)

return based on net asset value (3)

turnover rate

to Consolidated Financial Statements (continued)

The following

is a schedule of ratios and supplemental data for the years ended September 30, 2021, 2020, 2019, 2018 and 2017:

the Years Ended September 30

of net investment/(loss) income to average net assets after waivers, discounts and reimbursements (5)

of total expenses to average net assets after waivers, discounts and reimbursements (5)

of incentive fees to average net assets after waivers (5)

of net operating expenses and credit facility related expenses to average net assets (5)(12)

of non-recurring fee income (6)

debt outstanding (7)

Average debt outstanding

$ 189,038,998 $ 347,991,878 $ 451,590,779 $ 514,726,703 $ 553,012,824

Average debt outstanding per common share $ 69.40 $ 127.76 $ 165.80 $ 188.98 $ 203.04

Asset coverage ratio per unit (9)

1,992 1,842 2,126 2,327 2,414

Total Debt Outstanding (14) :

Revolving Credit Facility $ — $ — $ — $ 68,000,000 $ 14,000,000

Term Loan Facility $ — $ — $ — $ 102,000,000 $ 174,000,000

2019 Notes $ — $ — $ — $ — $ 40,000,000

2021 Notes $ 74,012,825 $ 74,012,825 $ 74,012,825 $ 74,012,825 $ 74,012,825

per common share

coverage ratio per unit (8)

Debt Outstanding (13)

Credit Facility

Loan Facility

2021 Notes (11)

Israeli Notes (12)

$ — $ 105,136,927 $ 121,275,690 $ — $ —

SBA Debentures

Average market value per unit:

Facilities (10)

N/A N/A N/A N/A N/A

SBA debentures (10)

N/A N/A N/A N/A N/A

2019 Notes (11)

N/A N/A N/A $ 25.39 $ 25.44

Average market value per

2019 Notes (9)

2021 Notes (11)

$ 21.68 $ 24.28 $ 25.02 $ 25.18 $ 25.19

Israeli Notes N/A $ 254.43 $ 273.95 N/A N/A

(1) Table may not foot due to rounding.

(2) Net investment income/(loss) excluding management and incentive fee waivers based on total weighted average common stock outstanding equals $(3.35), $ (7.66), $4.41, $13.32, and $18.03 per share for the years ended September 30, 2020, 2019, 2018, 2017 and 2016, respectively.

(3) Total return is historical and assumes changes in share price, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period.

(4) Total return is historical and assumes changes in NAV, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period.

(5) Represents the impact of the different share amounts used in calculating per share data as a result of calculating certain per share data based upon the weighted average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

(6) For the year ended September 30, 2020, excluding management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is (5.94)%, 18.94%, 0.00%, and 18.94%, respectively.

For the year ended September 30, 2019, excluding management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is (7.96)%, 25.62%, 0.00%, and 25.62%, respectively.

For the year ended September 30, 2018, excluding management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is 3.26%, 14.88%, 0.00%, and 14.88%, respectively.

For the year ended September 30, 2017, excluding management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is 7.48%, 12.37%, 0.18%, and 12.18%, respectively.

For the year ended September 30, 2016, excluding management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is 9.29%, 13.17%, 2.14%, and 11.03%, respectively.

(7) Represents the impact of the non-recurring fees as a percentage of total investment income.

(8) Based on daily weighted average carrying value of debt outstanding during the period.

(9) Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness.

to Consolidated Financial Statements (continued)

Net investment income/(loss) excluding management and incentive fee

waivers, discounts and reimbursements based on total weighted average common stock outstanding equals $6.92, $(3.35), $(7.66), $4.41,

and $13.32 per share for the years ended September 30, 2021, 2020, 2019, 2018, and 2017, respectively.

Total return is historical and assumes changes in share price, reinvestments

of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for

Total return is historical and assumes changes in NAV, reinvestments

of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for

Represents the impact of the different share amounts used in calculating

per share data as a result of calculating certain per share data based upon the weighted average basic shares outstanding during

the period and certain per share data based on the shares outstanding as of a period end or transaction date.

For the year ended September 30, 2021, prior to the effect of Expense

Support Agreement, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility

related expenses to average net assets is 12.44%, 9.26%, 0.00%, and 9.26%, respectively.

For the year ended September 30, 2020, excluding

management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses

and credit facility related expenses to average net assets is (5.94)%, 18.94%, 0.00%, and 18.94%, respectively.

For the year ended September 30, 2019, excluding

management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses

and credit facility related expenses to average net assets is (7.96)%, 25.62%, 0.00%, and 25.62%, respectively.

For the year ended September 30, 2018, excluding

management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses

and credit facility related expenses to average net assets is 3.26%, 14.88%, 0.00%, and 14.88%, respectively.

For the year ended September 30, 2017, excluding

management and incentive fee waivers, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses

and credit facility related expenses to average net assets is 7.48%, 12.37%, 0.18%, and 12.18%, respectively.

Represents the impact of the non-recurring fees as a percentage of

total investment income.

Based on daily weighted average carrying value of debt outstanding

during the period.

Asset coverage per unit is the ratio of the carrying value of our total

consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior

securities representing indebtedness.

Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.

As of September 30, 2020, the Company’s asset coverage was 199.2% after giving effect to leverage and therefore the Company’s asset coverage was below 200%, the minimum asset coverage requirement under the 1940 Act.

result, the Company is prohibited from making distributions to stockholders, including the payment of any dividend, and may not employ further leverage until the Company’s asset coverage is at least 200% after giving effect to such leverage.

(10) The Facilities and SBA Debentures were not registered for public trading.

(11) During the year ended September 30, 2017, the 2019 Notes were redeemed in full and ceased trading on February 17, 2017.

The average price for the year ended September 30, 2017 reflects the period from October 1, 2016 through February 17, 2017.

(12) During the year ended September 30, 2020, the Israeli Notes were redeemed in full and ceased trading on the TASE on April 14, 2020.

As of September 30, 2021, the Company’s asset coverage was 285.6%

after giving effect to leverage and therefore the Company’s asset coverage was above 200%, the minimum asset coverage requirement

under the 1940 Act.

During the year ended September 30, 2017, the 2019 Notes were redeemed

in full and ceased trading on February 17, 2017.

The average price for the year ended September 30, 2017 reflects the period from

October 1, 2016 through February 17, 2017.

During the year ended September 30, 2020, the Israeli Notes were redeemed

in full and ceased trading on the TASE on April 14, 2020.

During the year ended September 30, 2021, the 2021 Notes were redeemed

in full and ceased trading on November 20, 2020.

The average price for the year ended September 30, 2021 reflects the period from

October 1, 2020 through November 20, 2020.

Excludes incentive fees.

(14) Total amount of each class of senior securities outstanding at the end of the period excluding debt issuance costs.

(15) Per share data has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1.

Dividends and distributions to common stockholders are recorded on the ex-dividend date.

The amount to be paid out as a dividend is determined by our board of directors.

We have adopted an “opt out” dividend reinvestment plan for our common stockholders.

As a result, if we declare a cash dividend or other distribution, each stockholder that has not “opted out” of our dividend reinvestment plan will have its dividends automatically reinvested in additional shares of our common stock rather than receiving cash dividends.

Stockholders who receive distributions in the form of shares of common stock will be subject to the same federal, state and local tax consequences as if they received cash distributions.

The Company did not make any distributions during the year ended September 30, 2020.

The following table summarizes the Company’s distributions during the year ended September 30, 2019:

Date Declared Record Date Payment Date Amount Per Share (1)

During the year ended September 30, 2019

11/16/2018 12/5/2018 12/20/2018 $ 2.00

2/10/2019 2/22/2019 3/12/2019 1.00

(1) Amount per share has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive bases, as described in Note 1.

Selected Quarterly Financial Data (Unaudited)

The following tables represent selected unaudited quarterly financial data for the Company during the years ended September 30, 2020, 2019, and 2018 (dollars in thousands, except per share amounts):

September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019

Consolidated Statement of Operations data:

Total investment income $ 4,420 $ 4,309 $ 5,301 $ 7,491

Net investment income/(loss) (858) (719) (4,216) 3,073

Net realized and unrealized gain/(loss) 2,082 8,984 (73,663) 1,986

Change in provision for deferred taxes on unrealized gain/(loss) on investments 50 36 (86) —

Loss on extinguishment of debt — (697) (895) (889)

Net increase/(decrease) in net assets resulting from operations 1,274 7,604 (78,860) 4,170

Earnings per share (1)

Total amount of each class of senior securities outstanding at the

end of the period excluding debt issuance costs.

to Consolidated Financial Statements (continued)

and distributions to common stockholders are recorded on the ex-dividend date.

The amount to be paid out as a dividend is determined

by our board of directors.

have adopted an “opt out”

dividend reinvestment plan for our common stockholders.

As a result, if we declare a cash dividend

or other distribution, each stockholder that has not “opted out”

of our dividend reinvestment plan will have its dividends

automatically reinvested in additional shares of our common stock rather than receiving cash dividends.

Stockholders who receive distributions

in the form of shares of common stock will be subject to the same federal, state and local tax consequences as if they received cash

distributions.

did not make any distributions during the years ended September 30, 2021 and 2020.

Share Transactions

January 11, 2021, the Company announced that its board of directors approved a share repurchase program.

following table sets forth the number of shares of common stock repurchased by the Company at an average price of $33.94 per share under

its share repurchase program from February 10, 2021 through September 30, 2021:

Shares Repurchased

Repurchase Price Per Share

Aggregate Consideration for Repurchased Shares

February 2021

$30.25 - $34.42

Net asset value per common share at period end (1)

$33.11 - $34.89

September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018

Consolidated Statement of Operations data:

Total investment income $ 8,116 $ 11,394 $ 12,587 $ 14,202

Net investment income/(loss) (8,209) (3,823) (10,595) 1,759

Net realized and unrealized gain/(loss) (23,335) (24,612) (14,014) (11,714)

Change in provision for deferred taxes on unrealized gain/(loss) on investments — — — —

Loss on extinguishment of debt (104) (1,806) — (123)

Net increase/(decrease) in net assets resulting from operations (31,648) (30,241) (24,609) (10,078)

Earnings per share (1)

$34.56 - $39.93

Net asset value per common share at period end (1)

$41.03 - $42.28

September 30, 2018 June 30, 2018 March 31, 2018 December 31, 2017

Consolidated Statement of Operations data:

Total investment income $ 15,210 $ 13,945 $ 17,035 $ 20,631

Net investment income 741 904 3,580 7,179

Net realized and unrealized gain/(loss) (23,059) (27,753) (31,391) (39,213)

Change in provision for deferred taxes on unrealized gain/(loss) on investments — 194 190 90

Loss on extinguishment of debt (1,218) (11) (1,158) —

Net increase/(decrease) in net assets resulting from operations (23,536) (26,666) (28,779) (31,944)

Company’s net asset value per share was increased by approximately $1.31 as a result of the share repurchases.

Selected Quarterly Financial Data (Unaudited)

following tables represent selected unaudited quarterly financial data for the Company during the years ended September 30, 2021 and

2020 (dollars in thousands, except per share amounts):

September 30,

Statement of Operations data:

investment income

Net investment

realized and unrealized gains/(losses)

on extinguishment of debt

Net increase/(decrease)

in net assets resulting from operations

Earnings per share

(8.64) (9.79) (10.57) (11.73)

Net asset value per common share at period end (1)

$ 118.00 $ 128.60 $ 140.40 $ 154.20

(1) Amount per share has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive bases, as described in Note 1.

Net asset value per common

share at period end

to Consolidated Financial Statements (continued)

September 30,

Statement of Operations data:

investment income

Net investment

income/(loss)

and unrealized gain/(loss)

in provision for deferred taxes on unrealized gain/(loss) on investments

extinguishment of debt

Net increase/(decrease)

in net assets resulting from operations

value per common share at period end

Subsequent Events

Management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein.

There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-K or would be required to be recognized in the Consolidated Financial Statements as of and for the year ended September 30, 2020, except as disclosed below.

Subsequent to year ended September 30, 2020, the global outbreak of the COVID-19 pandemic has adversely affected some of the Company’s investments and continues to have adverse consequences on the U.S.

and global economies.

The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual portfolio companies, remains uncertain.

At the time of this filing, there is no indication of a reportable subsequent event impacting the Company’s financial statements for the year ended September 30, 2020.

The Company cannot predict the extent to which its financial condition and results of operations will be adversely affected at this time.

The potential impact to our results will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19.

The Company continues to observe and respond to the evolving COVID-19 environment and its potential impact on areas across its business.

On October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub Capital LLC (“Golub”) entered into a Membership Interest Purchase Agreement (the “Agreement”) pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in MCC JV and all of GALIC’s interest in MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily for principal and

interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before transaction expenses) of $41.0 million and $6.6 million for the Company and GALIC, respectively, on the terms and subject to the conditions set forth in the Agreement, including the representations, warranties, covenants and indemnities contained therein.

The Company estimates that transaction expenses will be approximately $1.6 million resulting in net proceeds (including estimated transaction expenses) of $39.5 million.

The Company is expected to record a realized loss for the quarter ending December 31, 2020 of approximately $40.3 million on its investment in MCC JV and a corresponding change in unrealized appreciation/depreciation of $38.9 million in order to reverse the previously recorded unrealized depreciation with respect to the investment.

In connection with the closing of the transaction on October 8, 2020, MCC JV repaid in full all outstanding borrowings under, and terminated, the JV Facility.

On November 18, 2020, the board of directors approved adoption of an internalized management structure effective January 1, 2021.

The new management structure will replace the current Investment Management Agreement and the Administration Agreement, each of which expire on December 31, 2020.

In further connection with the adoption by the board of directors of an internalized management structure, the board of directors appointed David Lorber as interim Chief Executive Officer of the Company, effective January 1, 2021, and Ellida McMillan as Chief Financial Officer of the Company, effective January 1, 2021.

David Lorber’s base annual salary will be $425,000, with a discretionary annual bonus of up to 100% of the base annual salary.

Ellida McMillan’s base annual salary will be $300,000, with a discretionary annual bonus of up to $200,000.

Also, in connection with the adoption of an internalized management structure, the Company entered into a Fund Accounting Servicing Agreement and an Administration Servicing Agreement on customary terms with U.S.

Bancorp Fund Services, LLC d/b/a U.S.

Bank Global Fund Services.

In addition, effective January 1, 2021, the name of the Company will be changed to PhenixFIN Corporation.

On November 20, 2020 (the “Redemption Date”), the Company redeemed $74,012,825 in aggregate principal amount of the issued and outstanding 2021 Notes.

The 2021 Notes were redeemed at 100% of their principal amount ($25 per 2021 Note), plus accrued and unpaid interest thereon from October 31, 2020, through, but excluding, the Redemption Date.

The redemption will be accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments.

has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein.

Other than the

items disclosed herein, there have been no subsequent events that occurred during such period that would require disclosure in this Form

10-K or would be required to be recognized in the Consolidated Financial Statements as of and for the year ended September 30, 2021.

On November 9, 2021, the Company entered into

an underwriting agreement, by and between the Company and Oppenheimer & Co.

Inc., as representative of the several underwriters, in

connection with the issuance and sale (the “Offering”) of $57,500,000 (including the underwriters’

option to purchase

up to $7,500,000 aggregate principal amount) in aggregate principal amount of its 5.25% Notes due 2028 (the “2028 Notes”).

The Offering occurred on November 15, 2021, pursuant to the Company’s effective shelf registration statement on Form N-2 previously

filed with the SEC, as supplemented by a preliminary prospectus supplement dated November 8, 2021, the pricing term sheet dated November

9, 2021 and a final prospectus supplement dated November 9, 2021.

Effective November 16, 2021, the 2028 Notes began trading on the NASDAQ

Global Market under the trading symbol “PFXNZ.”

November 15, 2021, the Company and U.S.

Bank National Association, as trustee entered into a Fourth Supplemental Indenture to its base

Indenture, dated February 7, 2012, between the Company and the Trustee.

The Fourth Supplemental Indenture relates to the Offering of

the 2028 Notes.

15, 2021, the Company caused notices to be issued to the holders of the 2023 Notes regarding the Company’s exercise of its option

to redeem $55,325,000 in aggregate principal amount of the issued and outstanding 2023 Notes on December 16, 2021.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk