What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-12-12 compared with 2024-12-17 · 281 added, 257 removed, 501 unchanged (52% of the section changed)

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including statements as to:

introduction, withdrawal, success and timing of business initiatives and strategies;

in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets,

which could result in changes in the value of our assets;

impact of increased competition;

impact of future acquisitions and divestitures;

business prospects and the prospects of our portfolio companies;

impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies

relating to us;

contractual arrangements and relationships with third parties;

future financings by us;

in foreign currency exchange rates;

impact of changes to tax legislation and, generally, our tax position;

ability to locate suitable investments for us and to monitor and administer our investments;

ability to attract and retain highly talented professionals;

conditions and our ability to access alternative debt markets and additional debt and equity capital;

unfavorable resolution of legal proceedings;

uncertainties

associated with the effect of pandemics and other future market disruptions on our business prospects and the operational and financial

performance of our portfolio companies, including our and their ability to achieve their respective objectives;

and the effect of

disruptions on our ability to continue to effectively manage our business;

and uncertainties relating to the possibility that the Company may explore strategic alternatives, including, but are not limited

the timing, benefits and outcome of any exploration of strategic alternatives by the Company;

potential disruptions in the Company’s

business and stock price as a result of our exploration of any strategic alternatives;

the ability to realize anticipated efficiencies,

or strategic or financial benefits;

the introduction,

withdrawal, success and timing of business initiatives and strategies;

changes in political, economic

or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result

in changes in the value of our assets;

the impact of increased

the impact of future acquisitions

and divestitures;

our business prospects

and the prospects of our portfolio companies;

the impact of legislative

and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us;

our contractual arrangements

and relationships with third parties;

any future financings by

fluctuations in foreign

currency exchange rates;

the impact of changes to

tax legislation and, generally, our tax position;

our ability to locate suitable

investments for us and to monitor and administer our investments;

our ability to attract

and retain highly talented professionals;

market conditions and our

ability to access alternative debt markets and additional debt and equity capital;

the unfavorable resolution

of legal proceedings;

uncertainties associated

with the effect of pandemics and other future market disruptions on our business prospects and the operational and financial performance

of our portfolio companies, including our and their ability to achieve their respective objectives;

and the effect of disruptions

on our ability to continue to effectively manage our business;

and uncertainties relating to the possibility that the Company may explore strategic alternatives,

including, but are not limited to:

the timing, benefits and outcome of any exploration of strategic

alternatives by the Company;

potential disruptions in the Company’s business and stock price

as a result of our exploration of any strategic alternatives;

the ability to realize anticipated

efficiencies, or strategic or financial benefits;

potential transaction costs and risks;

and the risk that any exploration of strategic alternatives

may have an adverse effect on our existing business arrangements or relationships, including our ability to retain or hire key personnel.

There is no assurance that any exploration of strategic alternatives will result in a transaction or other strategic change or outcome.

risk that any exploration of strategic alternatives may have an adverse effect on our existing business

arrangements or relationships, including our ability to retain or hire key personnel.

assurance that any exploration of strategic alternatives will result in a transaction or other strategic

change or outcome.

See “Item 1A.

Risk Factors.”

forward-looking statements may include statements preceded by, followed by or that otherwise include the words “trend,” “opportunity,”

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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

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

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

total investment returns.

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

in below investment grade securities are considered predominantly speculative with respect to the issuer’s capacity to pay interest

and repay principal when due.

a BDC, we are required to comply with certain regulatory requirements.

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our internally managed structure, we bear all costs and expenses of our operations and transactions, including those relating to:

organization and continued corporate existence;

our net asset value (“NAV”) (including the cost and expenses of any independent valuation firms);

including travel expense, incurred by our professionals or payable to third parties performing due diligence on prospective portfolio

companies, monitoring our investments and, if necessary, enforcing our rights;

payable on debt incurred to finance our investments;

costs of all offerings of common shares and other securities;

costs associated with employing investment professionals and other staff;

distributions

on our shares;

administration

fees payable under our administration agreement;

fees related to our assets

payable to third parties relating to, or associated with, making investments;

agent and custodial fees;

registration and listing fees;

federal, state and local taxes;

directors’ fees and expenses;

of preparing and filing reports or other documents with the SEC or other regulators;

costs of any reports, proxy statements or other notices to our stockholders, including printing costs;

fidelity bond;

operating lease of our office space;

and officers/errors and omissions liability insurance, and any other insurance premiums;

indemnification

costs and expenses of administration, including audit and legal costs.

our organization and continued

corporate existence;

calculating our net asset

value (“NAV”) (including the cost and expenses of any independent valuation firms);

expenses, including travel

expense, incurred by our professionals or payable to third parties performing due diligence on prospective portfolio companies, monitoring

our investments and, if necessary, enforcing our rights;

interest payable on debt

incurred to finance our investments;

the costs of all offerings

of common shares and other securities;

operating costs associated

with employing investment professionals and other staff;

distributions on our shares;

administration fees payable

under our administration agreement;

custodial fees related

to our assets

amounts payable to third

parties relating to, or associated with, making investments;

transfer agent and custodial

all registration and listing

federal, state and

independent directors’

fees and expenses;

costs of preparing and

filing reports or other documents with the SEC or other regulators;

the costs of any reports,

proxy statements or other notices to our stockholders, including printing costs;

our fidelity bond;

the operating lease of

our office space;

directors and officers/errors

and omissions liability insurance, and any other insurance premiums;

indemnification payments;

and expenses of administration, including audit and legal costs.

Cash Incentive Plan

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Each participant is eligible to receive

an amount of cash equal to 0%-200% of the target award set forth in the table below (“Target Performance Award”), based on

the achievement of net asset value (“NAV”) and NAV per share goals (weighted at 30% and 70%, respectively) as of the end

of the performance period (the “Performance Goals”).

Performance is evaluated separately for each Performance Goal.

is made with respect to a Performance Goal if a threshold level of performance is not achieved.

Each Performance Goal is subject to (i)

a threshold level of performance at which a percentage of the Target Performance Award attributable to that Performance Goal may be paid

and below which no payment is made pursuant to an award, (ii) a target level of performance at which 100% of the Target Performance Award

attributable to that Performance Goal may be paid and (iii) a maximum level of performance, at which 200% of the Target Performance Award

attributable to that Performance Goal may be paid, in each case subject to such other terms and conditions of an award.

Between threshold,

target and maximum performance levels for each Performance Goal, the portion of that award attributed to the Performance Goals shall

be interpolated in a linear progression.

an amount of cash equal to a percentage of the target award amount set forth above based on the factors described above.

The Compensation

Committee, in approving the awards, evaluated each Performance Goal separately.

December 2022, pursuant to the CIP, the Compensation Committee approved awards for Mr.

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The Compensation Committee, in approving the awards, evaluated each Performance Goal separately.

The Target Performance Award for each executive officer for the 2022

LTIP Plan, the 2023 LTIP Plan, and the 2024 LTIP Plan is set forth in the table below:

Name and Title

Dollar Value of Target Award

David Lorber, Chairman of the Board and Chief Executive Officer

December 2024, pursuant to the CIP, the Compensation Committee approved awards for Mr.

Lorber and Ms.

McMillan for the three-year performance

period commencing on October 1, 2024 and ending on September 30, 2027 (the “2025 LTIP Plan”).

Each participant is eligible

to receive an amount of cash equal to a percentage of their target award amount set forth above based on the factors described above.

The threshold, target, and maximum performance levels are structured similar to those of the 2022 LTIP Plan.

The Compensation Committee,

in approving the awards, evaluated each Performance Goal separately.

Target Performance Award for each executive officer for the 2023 LTIP Plan, the 2024 LTIP Plan, and the 2025 LTIP Plan is set forth in

the tables below:

David Lorber, Chairman of the Board

and Chief Executive Officer

Ellida McMillan, Chief Financial Officer

the years ended September 30, 2024 and September 30, 2023, the Company recorded an accrual of $2,798,437 and $317,000, respectively,

David Lorber, Chairman of the Board

and Chief Executive Officer

Ellida McMillan, Chief Financial Officer

David Lorber, Chairman of the Board

and Chief Executive Officer

Ellida McMillan, Chief Financial Officer

the years ended September 30, 2025 and September 30, 2024, the Company recorded an expense of $1,425,922 and $2,798,437, respectively,

for these awards.

During the year ended September 30, 2022 the Company did not record an accrual.

To date, no amounts have been paid

under these awards.

During the year ended September 30, 2025, the Company paid out $2,002,790 for the 2022 LTIP plan based on achievement

of the Performance Goals.

During the year ended September 30, 2024, the Company did not pay out anything for these awards.

and Investment Activity

of September 30, 2025 and 2024, our portfolio had a fair market value of approximately $302.3 million and $227.9 million, respectively.

During the year ended September 30, 2024, we received proceeds excluding

non-cash items from sale and settlements of investments of $112.5 million, including principal and dividend proceeds, realized net gains

on investments of $7.3 million, and invested $99.3 million.

the year ended September 30, 2025, we received proceeds excluding non-cash items from sale and settlements of investments of $100.3 million,

including principal and dividend proceeds, realized net losses on investments of $11.5 million, and invested $76.5 million.

including principal and dividend proceeds, realized net losses on investments of

million, and invested $173.9 million.

the year ended September 30, 2024, we received proceeds excluding non-cash items from sale and settlements of investments of $112.5 million,

including principal and dividend proceeds, realized net gains on investments of $7.3 million, and invested $99.3 million.

following table summarizes the amortized cost and the fair value of our average portfolio company:

September 30, 2024

September 30, 2023

Amortized Cost

Average portfolio company

Largest portfolio company by amortized

cost and fair value, respectively

following table summarizes the amortized cost and the fair value of investments as of September 30, 2024 (dollars in thousands):

Amortized Cost

Largest portfolio company by amortized cost

and fair value, respectively

The following

table summarizes the amortized cost and the fair value of investments as of September 30, 2025 (dollars in thousands):

Senior Secured First Lien Term

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Equity/Warrants

As of September 30, 2024, our income-bearing investment portfolio based

upon cost represented 84.5% of our total portfolio of which 57.9% bore interest based on floating rates, such as SOFR or LIBOR, 17.0%

bore interest at fixed rates, and 25.1% are income-producing equity investments.

As of September 30, 2023, our income-bearing investment

portfolio based upon cost represented 88.2% of our total portfolio of which 59.5% bore interest based on floating rates, such as LIBOR

or SOFR, while 13.9% bore interest at fixed rates and 26.6% are income-producing equity investments.

As of September 30, 2024, the Company

had a weighted average yield of 12.3% on debt and other income producing investments.

As of September 30, 2023, the Company had a weighted

average yield of 13.3% on debt and other income producing investments.

The weighted average yield of our total portfolio does not represent

the total return to our stockholders.

of September 30, 2025, our income-bearing investment portfolio based upon cost represented 64.8% of our total portfolio of which 58.8%

bore interest based on floating rates, such as SOFR, 14.9% bore interest at fixed rates, and 26.3% are income-producing equity investments.

As of September 30, 2024, our income-bearing investment portfolio based upon cost represented 84.5% of our total portfolio of which 57.9%

bore interest based on floating rates, such as LIBOR or SOFR, while 17.0% bore interest at fixed rates and 25.1% are income-producing

equity investments.

As of September 30, 2025, the Company had a weighted average yield of 12.8% on debt and other income producing investments.

As of September 30, 2024, the Company had a weighted average yield of 12.3% on debt and other income producing investments.

average yield of our total portfolio does not represent the total return to our stockholders.

rate the risk profile of each of our debt investments based on the following categories:

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above expectations.

Investments that are performing

within expectations, with risks that are neutral or favorable compared to risks at the time of origination.

All new loans are rated

Investments that are performing

below expectations and that require closer monitoring, but where no loss of interest, dividend or principal is expected.

rated ‘3’ may be out of compliance with financial covenants, however, loan payments are generally not past due.

Investments that are performing

below expectations and for which risk has increased materially since origination.

Some loss of interest or dividend is expected but

no loss of principal.

In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past

due (but generally not more than 180 days past due).

Investments that are performing

substantially below expectations and whose risks have increased substantially since origination.

Most or all of the debt covenants

are out of compliance and payments are substantially delinquent.

that are performing within expectations, with risks that are neutral or favorable compared to risks at the time of origination.

new investments are rated ‘2’.

that are performing below expectations and that require closer monitoring, but where no loss of interest, dividend or principal is

Companies rated ‘3’ may be out of compliance with financial covenants, however, loan payments are generally

not past due.

that are performing below expectations and for which risk has increased materially since origination.

Some loss of interest or dividend

is expected but no loss of principal.

In addition to the borrower being generally out of compliance with debt covenants, loan payments

may be past due (but generally not more than 180 days past due).

that are performing substantially below expectations and whose risks have increased substantially since origination.

of the debt covenants are out of compliance and payments are substantially delinquent.

Some loss of principal is expected.

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30, 2025 and 2024 (dollars in thousands):

September 30, 2024

September 30, 2023

of Operations

results for the years ended September 30, 2025, 2024 and 2023 are as follows (dollars in thousands):

For the Years Ended September 30,

the Year Ended September 30,

Total investment income

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Net realized gains (losses) on investments

Net change in unrealized gains (losses) on investments

Loss on extinguishment of debt

Deferred tax benefit (expense)

Net increase (decrease) in net assets resulting from operations

Net change in unrealized gains (losses) on

Deferred tax benefit

increase (decrease) in net assets resulting from operations

the year ended September 30, 2025, investment income totaled $25.3 million, of which $16.6 million was attributable to portfolio interest,

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the year ended September 30, 2023, investment income totaled $20.1 million, of which $12.1 million was attributable to portfolio interest,

approximately $5.5 million was attributable to dividend income, and $0.7 million was attributable to fee and other income.

Dividend income

was received from 12 investments during the year ended September 30, 2022.

approximately $6.9 million was attributable to dividend income, $0.7 million was attributable to fee and other income, and $0.4 million

was attributable to interest on cash and cash equivalents.

Dividend income was received from 11 investments during the year ended September

expenses for the years ended September 30, 2025, 2024 and 2023 are as follows (dollars in thousands):

For the Years Ended September 30,

the Year Ended September 30,

Interest and financing expenses

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Directors fees

Insurance expenses

Administrator expenses

Insurance expenses

Total Expenses

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and financing expenses for the year ended September 30, 2024 increased by $1.1 million, or 19.5%, compared to the year ended September

The increase in interest and financing expenses was primarily due to interest expense on the Credit Facility which was issued

on December 15, 2022, partially offset by a decrease due to the full repayment of the 2023 Notes on January 17, 2023.

Salaries and Benefits

Salaries and benefits expenses for the year ended

September 30, 2024 increased by $2.7 million, or 63.6%, compared to the year ended September 30, 2023.

The increase in salaries and benefits

expenses was primarily due to increased bonus accruals during the year.

Interest and financing expenses for the year

ended September 30, 2023 increased by $1.2 million, or 41.8%, compared to the year ended September 30, 2022.

The increase in salaries

and benefits expenses was primarily due to increased bonus accruals during the year.

The increase in interest and financing expenses was primarily due to increased interest expense on the Credit Facility from

increased borrowings during the year.

and benefits expenses for the year ended September 30, 2025 decreased by $1.8 million, or 26.0%, compared to the year ended September

The decrease in salaries and benefits expenses was primarily due to decreased bonus accruals during the year.

and benefits expenses for the year ended September 30, 2024 increased by $2.7 million, or 63.6%, compared to the year ended September

The increase in salaries and benefits expenses was primarily due to increased bonus accruals during the year.

Fees and General and Administrative Expenses

fees and general and administrative expenses for the year ended September 30, 2024 decreased by $0.2 million, or 7.1%, compared to the

fees and general and administrative expenses for the year ended September 30, 2025 increased by $0.7 million, or 25.8%, compared to the

year ended September 30, 2024.

This resulted primarily from a decrease in miscellaneous expenses.

This resulted primarily from an increase in taxes and increased miscellaneous expenses.

fees and general and administrative expenses for the year ended September 30, 2024 decreased by $0.2 million, or 7.1%, compared to the

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without regard to unrealized gains or losses previously recognized.

During the year ended September 30, 2024, we recognized

$7.3 million of net realized gains on our portfolio investments.

The realized gains were primarily due to a realized gain on Maritime

Wireless Holdings for $7.0 million and a realized gain on Kemmerer Operations, LLC for $8.5 million, offset by a loss on the sale of 1888

Industrial Services for $8.8 million.

During the year ended September 30, 2023, we recognized

$11.5 million of net realized losses on our portfolio investments.

The realized losses were primarily due to the restructuring of one

investment and the full repayments of two investments.

During the year ended September 30, 2022, we

recognized $5.2 million of net realized gains on our portfolio investments.

The realized gains were primarily due to the partial and

full repayments of two investments and the restructuring of three investments, offset by realized losses due to the sale of three investments

and the repayment of four investments.

loss on extinguishment of debt

the event that we modify or extinguish our debt prior to maturity, we account for it in accordance with ASC 470-50, Modifications and

Extinguishments, in which we measure the difference between the reacquisition price of the debt and the net carrying amount of the debt,

which includes any unamortized debt issuance costs.

the year ended September 30, 2024 and 2023, the Company did not recognize a net loss on extinguishment of debt.

the year ended September 30, 2022, the Company recognized a net loss on extinguishment of debt of $0.3 million, which was due to the

Company’s $55.3 million repayment of the 2023 Notes on December 16, 2021.

the year ended September 30, 2025, we recognized $11.9 million of realized losses on our portfolio investments.

The realized losses were

primarily due to a realized loss on Black Angus Steakhouses, LLC for $10.3 million.

the year ended September 30, 2024, we recognized $7.3 million of realized gains on our portfolio investments.

The realized gains were

primarily due to a realized gain on Maritime Wireless Holdings for $7.0 million and a realized gain on Kemmerer Operations, LLC for $8.5

million, offset by a loss on the sale of 1888 Industrial Services for $8.8 million

the year ended September 30, 2023, we recognized $11.5 million of net realized losses on our portfolio investments.

The realized losses

were primarily due to the restructuring of one investment and the full repayments of two investments.

Unrealized Appreciation/Depreciation on Investments

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The net unrealized appreciation

resulted from the reversal of the unrealized loss from the sale of Black Angus Steakhouses, LLC and unrealized appreciation primarily

on Altisource S.A.R.L.

and ECC Capital Corp.

the year ended September 30, 2024, we had $5.7 million of net change in unrealized appreciation on investments.

The net unrealized appreciation

resulted from the reversal of the unrealized loss on 1888 Industrial Services and unrealized appreciation primarily on Chimera Investment

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from the reversal of previously recorded unrealized depreciation on investments that were realized, partially sold, or written-off during

the year ended September 30, 2022, we had $14.5 million of net change in unrealized depreciation on investments.

The net unrealized depreciation

was comprised of $21.3 million of net unrealized depreciation on investments and $6.9 million of net unrealized appreciation that resulted

from the reversal of previously recorded unrealized depreciation on investments that were realized, partially sold, or written-off during

for Deferred Taxes

Certain consolidated subsidiaries of ours are subject to U.S.

and state income taxes.

These taxable subsidiaries are not consolidated with the Company for income tax purposes, but are consolidated

for GAAP purposes, and may generate income tax liabilities or assets from temporary differences in the recognition of items for financial

reporting and income tax purposes at the subsidiaries.

For the year ended September 30, 2024, the Company recorded a change in provision

for deferred taxes of $0.9 million.

For the years ended September 30, 2023 and 2022, the Company did not record a change in provision

for deferred taxes.

consolidated subsidiaries of ours are subject to U.S.

federal and state income taxes.

These taxable subsidiaries are not consolidated

with the Company for income tax purposes, but are consolidated for GAAP purposes, and may generate income tax liabilities or assets from

temporary differences in the recognition of items for financial reporting and income tax purposes at the subsidiaries.

For the years

ended September 30, 2025 and 2024 the Company recorded a change in provision for deferred taxes on the unrealized (appreciation)/depreciation

on investments of $0.2 million and $0.9 million, respectively.

For the year ended September 30, 2023, the Company did not record

a change in provision for deferred taxes.

in Net Assets from Operations

the year ended September 30, 2024, we recorded a net increase in net assets resulting from operations of $18.6 million compared to a

net increase in net assets resulting from operations of $26.9 million for the year ended September 30, 2023, and a net decrease in net

assets resulting from operations of $6.1 million for the year ended September 30, 2022 as a result of the factors discussed above.

on 2,040,253, 2,092,326 and 2,323,601 weighted average common shares outstanding for the years ended September 30, 2024, 2023 and 2022,

the year ended September 30, 2025, we recorded a net increase in net assets resulting from operations of $4.2 million compared to a net

increase in net assets resulting from operations of $18.6 million for the year ended September 30, 2024, and a net increase in net assets

resulting from operations of $26.9 million for the year ended September 30, 2023 as a result of the factors discussed above.

2,015,157, 2,040,253 and 2,092,326 weighted average common shares outstanding for the years ended September 30, 2025, 2024, and 2023,

respectively, our per share net increase (decrease) in net assets resulting from operations was $2.07, $9.13, and $12.87 for the years

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Condition, Liquidity and Capital Resources

a RIC, we distribute substantially all of our net income to our stockholders and have an ongoing need to raise additional capital for

investment purposes.

a RIC, we distribute substantially all of our taxable net income to our stockholders and have an ongoing need to raise additional capital

for investment purposes.

To fund growth, we have a number of alternatives available to increase capital, including raising equity, increasing

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Our primary use of funds is investments in our targeted asset classes, cash distributions to our stockholders, and other general corporate

As of September

30, 2024 and 2023, we had $67.6 million and $6.0 million in cash and cash equivalents, respectively.

of September 30, 2025 and 2024, we had $7.3 million and $67.6 million in cash and cash equivalents, respectively.

order to maintain our RIC tax treatment under the Code, we intend to distribute to our stockholders substantially all of our taxable

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2025 was approximately $6.1 million.

On December 15, 2022, the Company and its wholly-owned

subsidiaries executed a three-year, $50 million revolving credit facility (the “Credit Facility”) with WoodForest Bank, N.A.

December 15, 2022, the Company and its wholly-owned subsidiaries executed a three-year, $50 million revolving credit facility (the “Credit

Facility”) with WoodForest Bank, N.A.

(“WoodForest”), Valley National Bank, and Axiom Bank, (collectively, the “Lenders”).

WoodForest is the administrative

agent, sole bookrunner and sole lead arranger.

As of September 30, 2024, there was $78.1 million outstanding borrowings by the Company

under the Credit Facility.

WoodForest is the administrative agent, sole bookrunner and sole lead arranger.

As of September 30, 2025, there was $90.0 million outstanding

borrowings by the Company under the Credit Facility.

loans under the Credit Facility bear a monthly interest rate at Term SOFR + 2.90%.

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other material terms of the Credit Facility remain unchanged.

April 17, 2025 (the “Third Amendment Effective Date”), in order to extend the term and increase the size of the Credit Facility,

the parties to the Credit Facility amended the terms of the Credit Facility, effective as of the Third Amendment Effective Date (the

“Third Amendment”).

The Third Amendment increased the principal amount of the loan available under the Credit Facility by

$12.5 million to $100.0 million (with potential access to up to an additional $50,000,000 pursuant to an uncommitted accordion provision)

and appointed BankUnited, N.A.

to assume all agency and syndication responsibilities from the prior agent and lenders.

Outstanding loans

under the terms of the Amendment bear a monthly interest rate ranging from ABR + 1.35% to ABR + 1.75% for any alternative base rate loans

and from Term SOFR + 2.35% to Term SOFR + 2.75% for any term benchmark loans based on the total debt to tangible net worth ratio.

Amendment also extended the term of the credit facility to April 17, 2030, five years from the Effective Date.

Other material terms remain

substantially unchanged.

March 18, 2013, the Company issued $60.0 million in aggregate principal amount of 2023 Notes.

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Obligations and Off-Balance Sheet Arrangements

of September 30, 2024 and 2023, we had commitments under loan and financing agreements to fund up to $1.6 million to two portfolio companies

and $3.4 million to four portfolio companies, respectively.

of September 30, 2025 and 2024, we had commitments under loan and financing agreements to fund up to $5.5 million to six portfolio companies

and $1.6 million to two portfolio companies, respectively.

These commitments are primarily composed of senior secured delayed draw term

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September 30,

Secure Acquisition Inc.

(dba Paragon Films) - Senior Secured First Lien Delayed Draw Term Loan

NVTN LLC - Senior Secured First Lien Delayed Draw Term Loan

Deer Management Systems LLC - Senior Secured First Lien Delayed Draw

XYZ Roofco, LLC (dba SMC Roofing Solutions LLC) - First Out Delayed Draw Term Loan

XYZ Roofco, LLC (dba SMC Roofing Solutions LLC) - Last Out Delayed Draw Term Loan

MB Precision Investment Holdings

LLC - Senior Secured First Lien Revolver

MB Precision Investment Holdings LLC - Senior

Secured Delayed Draw Term Loan

PREIT Associates - Revolver

PSB Group, LLC - Revolver

SS Acquisition, LLC (dba Soccer Shots Franchising)

Tamarix Capital Partners II, L.P.

- Fund Investment

Total unfunded commitments

On October 1, 2024, the Company consummated the acquisition of approximately

80% of the equity of The National Security Group, an Alabama based insurance holding company (“NSG”).

NSG is a nationwide

underwriter of life, accident, and health insurance.

In addition, NSG is a specialty underwriter of property and casualty insurance throughout

the southeast, other than Florida and Louisiana.

The Company has entered into a contract with NSG to manage a portion of its investment

The following table shows our payment obligations

by calendar year for repayment of debt and other contractual obligations at September 30, 2024 (dollars in thousands):

Payments Due by Period

Revolving Credit Facility

WHI Global, LLC - Revolver

XYZ Roofco, LLC (dba SMC Roofing Solutions

LLC) - First Out Delayed Draw Term Loan

XYZ Roofco, LLC (dba

SMC Roofing Solutions LLC) - Last Out Delayed Draw Term Loan

unfunded commitments

following table shows our payment obligations by calendar year for repayment of debt and other contractual obligations at September 30,

2025 (dollars in thousands):

Due by Period

Credit Facility

$ (89,991,619 )

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Promissory Note

Operating Lease Obligation (1)

Total contractual obligations

Lease Obligation (1)

contractual obligations

$ (59,499,023 )

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$ (1,817,021 )

$ (152,606,740 )

Lease Obligation means a rent payment obligation under a lease classified as an operating lease and disclosed pursuant to ASC

21 unchanged sentences

an amount equal to the sum of:

least 98.0% of our ordinary income (not taking into account any capital gains or losses) for the calendar year;

least 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year

period ending on October 31st of the calendar year;

realized, but not distributed, in preceding years and on which we did not pay federal income tax.

at least 98.0% of our ordinary

income (not taking into account any capital gains or losses) for the calendar year;

at least 98.2% of the amount

by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year period ending on October

31st of the calendar year;

income realized, but not

distributed, in preceding years and on which we did not pay federal income tax.

we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S.

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distributions.

On May 9, 2024, the Board of Directors declared a special dividend

in the amount of $2,645,925.

This dividend was paid on June 10, 2024 to stockholders of record as of May 27, 2024.

During the year ended

September 30, 2022, a special dividend was declared in the amount of $265,798 on June 24, 2022 payable on July 13, 2022 to Stockholders

of record on July 5, 2022.

The Company did not declare any regular distribution payments during the years ended September 30, 2024,

2023 and 2022.

May 9, 2024, the Board of Directors declared a special dividend in the amount of $2,645,925.

This dividend was paid on June 10, 2024

to stockholders of record as of May 27, 2024.

On February 6, 2025, the Board of Directors declared a special dividend in the amount of

$2,888,283 for a record date of February 17, 2025 and paid on February 19, 2025.

The Company did not declare any regular distribution

payments during the years ended September 30, 2025, 2024 and 2023.

Party Transactions

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under our Code of Business Conduct and Ethics must be considered by the disinterested directors.

year ended September 30, 2024, the Company entered into a related party transaction with NVTN LLC whereby the $11.9 million of equity

Company has entered into contracts with its affiliated portfolio companies, The National Security Group (and certain of its affiliates)

and ECC Capital Corporation, pursuant to which the Company (and/or certain of its subsidiaries) provide such affiliated portfolio companies

certain services, including managing a portion of their investment assets.

During the year ended September 30, 2025, the Company recognized

$0.7 million of income related to these contracts.

the year ended September 30, 2024, the Company entered into a related party transaction with NVTN LLC whereby the $11.9 million of equity

of Maritime Wireless Holdings LLC was transferred to NVTN LLC.

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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 quoted prices in markets that are not active or for which all significant inputs are observable, either directly

or indirectly.

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

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 quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

Level 3 - Valuations based

on inputs that are unobservable and significant to the overall fair value measurement.

value investments for which market quotations are readily available at their market quotations, which are generally obtained from an

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a multi-step valuation process each quarter, as described below:

quarterly valuation process generally begins with each investment being initially valued by a Valuation Firm.

third-party market data will be reviewed by Company personnel designated by the Valuation Designee (“Fair Value Personnel”)

and the Valuation Firm.

portfolio company data and general industry data is then reviewed by the Fair Value Personnel.

valuation conclusions are then documented by the Valuation Firm and discussed with the Fair Value Personnel.

Valuation Designee then determines the fair value of each investment in the Company’s portfolio in good faith based on such

discussions, the Company’s Valuation Policy and the Valuation Firms’ final estimated valuations.

The Valuation Designee’s report is then presented to the Board of Directors and the Audit Committee.

Our quarterly valuation

process generally begins with each investment being initially valued by a Valuation Firm.

Available third-party market

data will be reviewed by Company personnel designated by the Valuation Designee (“Fair Value Personnel”) and the Valuation

Available portfolio company

data and general industry data is then reviewed by the Fair Value Personnel.

Preliminary valuation conclusions

are then documented by the Valuation Firm and discussed with the Fair Value Personnel.

The Valuation Designee

then determines the fair value of each investment in the Company’s portfolio in good faith based on such discussions, the Company’s

Valuation Policy and the Valuation Firms’ final estimated valuations.

The Valuation Designee’s report is then presented to the Board

of Directors and the Audit Committee.

following these approaches, the types of factors that are taken into account in fair value pricing investments include available current

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are likely to remain current.

At September 30, 2024, certain investments in three portfolio companies held by the Company were

on non-accrual status with a combined fair value of approximately $2.4 million, or 1.1% of the fair value of our portfolio.

30, 2023, certain investments in four portfolio companies held by the Company were on non-accrual status with a combined fair value of

approximately $6.5 million, or 2.9% of the fair value of our portfolio.

At September 30, 2025, a certain investment in one portfolio company held by the Company was on non-accrual

status with a combined fair value of approximately $0.0 million, or 0.0% of the fair value of our portfolio, and a cost of $7.6 million.

At September 30, 2024, certain investments in three portfolio companies held by the Company were on non-accrual status with a combined

fair value of approximately $2.4 million, or 1.1% of the fair value of our portfolio, and a cost of $20.2 million.

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

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result from the treatment of short-term gains as ordinary income for tax purposes.

On October 1, 2024, the Company consummated the acquisition of approximately

80% of the equity of The National Security Group, an Alabama based insurance holding company (“NSG”).

NSG is a nationwide

underwriter of life, accident, and health insurance.

In addition, NSG is a specialty underwriter of property and casualty insurance throughout

the southeast, other than Florida and Louisiana.

The Company has entered into a contract with NSG to manage a portion of its investment

December 8, 2025, the Company redeemed in aggregate its principal amount of the issued and outstanding 2028 Promissory Note, comprising

all issued and outstanding 2028 Promissory Notes, at a price equal to the closing market price of the 2028 Notes on December 5,

2025, plus accrued and unpaid interest thereon from November 1, 2025, through, but excluding, December 8, 2025 in accordance with the

terms of the indenture governing the 2028 Promissory Note.

The redemption was completed on December 8, 2025.

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 7. Management’s Discussion and Analysis