What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 311 added, 246 removed, 1361 unchanged (29% of the section changed)

Financial Statements

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Statements of Assets and Liabilities

June 30, 2021

September 30, 2021

December 31, 2020

6 unchanged sentences

Cash and cash equivalents

Subscriptions receivable

Accrued interest receivable

Other accounts receivable

Deferred offering costs

Prepaid and deferred expenses

17 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Statements of Operations

1 unchanged sentence

Three Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Investment income

6 unchanged sentences

Other income from non-investment sources

From control/affiliate:

Interest income

Payment in-kind interest income

Total investment income

8 unchanged sentences

Directors’ fees

Consulting fees

Insurance expense

General and administrative expenses

Other expenses

13 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Statements of Changes in Net Assets

1 unchanged sentence

Three Months Ended

Six Months Ended

June 30, 2021

June 30, 2020

June 30, 2021

June 30, 2020

Nine Months Ended

September 30, 2021

September 30, 2020

September 30, 2021

September 30, 2020

Net increase in net assets from operations

22 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Statements of Cash Flows

Six Months Ended

June 30, 2021

June 30, 2020

Nine Months Ended

September 30, 2021

September 30, 2020

Cash flows from operating activities

6 unchanged sentences

Treasury Bills

(115,000,509)

(179,998,299)

Payment in-kind interest

2 unchanged sentences

Treasury Bills

Proceeds from U.S.

Treasury Bills sold short

Realized loss on investments, including U.S.

8 unchanged sentences

Prepaid and deferred expenses

Deferred revenue

Accrued incentive fees

4 unchanged sentences

Cash flows from financing activities

Deferred offering costs

Deferred credit facility fees

1 unchanged sentence

Repayments under credit facilities

(119,000,000)

(110,500,000)

Proceeds from reverse repurchase agreements

1 unchanged sentence

(114,424,914)

(195,117,913)

Dividends paid to stockholders

9 unchanged sentences

Non-cash dividend reinvestments

Subscriptions receivable

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments (Unaudited)

June 30, 2021

September 30, 2021

Portfolio Companies

10 unchanged sentences

LIBOR+12.00% PIK, 12.00% floor, 5% ETP, due 10/31/2021 (4)

Pivot3 Holdings, Inc.

Data Processing & Outsourced Services

LIBOR+8.50% PIK, 11.00% floor, 4.00% ETP, due 11/15/2022 (4)

Total Senior Secured Term Loans

2 unchanged sentences

Series A-1 Preferred Stock

Pivot3 Holdings, Inc.

Data Processing & Outsourced Services

Series 1 Preferred Stock

Total Preferred Stocks

Application Software

6 unchanged sentences

Senior Secured Term Loans (8)

Aria Systems, Inc.

Application Software

LIBOR+9.00%, 11.35% floor, 4.50% ETP, due 12/15/2021

LIBOR+9.00%, 11.35% floor, due 12/15/2021

Allurion Technologies, Inc.

1 unchanged sentence

LIBOR+9.00%, 9.50% floor, 3.00% ETP, due 3/30/2025

Bombora, Inc.

1 unchanged sentence

LIBOR+5.00%, 5.50% floor, 3.75% PIK, 2.00% ETP, due 3/31/2025 (4)

Brilliant Earth, LLC

Internet Retail

LIBOR+8.25%, 9.25% floor, 4.50% ETP, due 10/15/2023

LIBOR+8.25%, 9.25% floor, 0.75% ETP, due 10/15/2023

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments (Unaudited) — (continued)

June 30, 2021

September 30, 2021

Portfolio Companies

3 unchanged sentences

Senior Secured Term Loans (8) (continued)

Brilliant Earth, LLC

Internet Retail

LIBOR+7.75%, 8.25% floor, 4.50% ETP, due 10/15/2023

LIBOR+7.75%, 8.25% floor, 0.75% ETP, due 10/15/2023

Circadence Corporation

1 unchanged sentence

LIBOR+9.50%, 12.00% floor, 7.50% ETP, due 12/15/2022

CloudPay Solutions Ltd.

CloudPay, Inc.

Human Resource & Employment Services

LIBOR+9.50%, 1.25% PIK, 11.25% floor, 3.00% ETP, due 12/15/2023 (3),(4),(13)

LIBOR+8.75%, 9.25% floor, 2.00% ETP, due 8/17/2025 (3)(13)

Credit Sesame, Inc.

17 unchanged sentences

LIBOR+9.25%, 9.75% floor, 5.00% ETP, due 8/21/2023

Gynesonics, Inc.

10 unchanged sentences

LIBOR+9.50%, 11.75% floor, .25% PIK, 10.00% ETP, due 8/15/2022 (4)

Pivot3 Holdings, Inc.

Data Processing & Outsourced Services

LIBOR+8.50% PIK, 11.00% floor, 4.00% ETP, due 11/15/2022 (4)

LIBOR+8.50% PIK, 11.00% floor, due 11/15/2022 (4)

Tranched III:

LIBOR+8.50% PIK, 11.00% floor, 4.00% ETP, due 11/15/2022 (4)

Porch Group, Inc.

Application Software

Route 92 Medical, Inc.

Health Care Technology

LIBOR+8.48%, 8.98% floor, 3.95% ETP, due 7/1/2026

SetPoint Medical Corporation

Health Care Technology

LIBOR+8.75%, 9.25% floor, 4.00% ETP, due 12/1/2025

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments (Unaudited) — (continued)

June 30, 2021

September 30, 2021

Portfolio Companies

3 unchanged sentences

Senior Secured Term Loans (8) (continued)

SetPoint Medical Corporation

Health Care Technology

LIBOR+8.75%, 9.25% floor, 4.00% ETP, due 12/1/2025

ShareThis, Inc.

4 unchanged sentences

LIBOR+8.25%, 10.60% floor, 3.00% ETP, due 7/15/2023

Snagajob.com, Inc.

Human Resource & Employment Services

LIBOR+8.50%, 9.00% floor, 2.75% ETP, due 9/1/2025

The Kairn Corporation

14 unchanged sentences

11% Series A Cumulative Redeemable Perpetual Preferred Stock (16)(19)

Pivot3 Holdings, Inc.

Data Processing & Outsourced Services

Series 1 Preferred Stock (7)

Total Preferred Stocks

Common Stocks (7)

Porch Group, Inc.

Application Software

Brilliant Earth, LLC

Internet Retail

Class P Units (18)

Technology Hardware, Storage & Peripherals

Common Stock (16)(19)

Quantum Corporation

Technology Hardware, Storage & Peripherals

3 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments (Unaudited) — (continued)

June 30, 2021

September 30, 2021

Portfolio Companies

17 unchanged sentences

Warrant for Common Stock, exercise price $3.29/share, expires 3/31/2031

Brilliant Earth, LLC

Internet Retail

Warrant for Class P Units, exercise price $5.25/share, expires 9/30/2029

Warrant for Class P Units, exercise price $10.00/share, expires 12/17/2030

CareCloud, Inc.

6 unchanged sentences

Warrant for Series A-6 Preferred Stock, exercise price $1.17/share, expires 10/31/2029

CloudPay Solutions Ltd.

CloudPay, Inc.

Human Resource & Employment Services

Warrant for Series B Preferred Stock, exercise price $66.53/share, expires 6/30/2030 (3),(13)

Warrant for Series D Preferred Stock, exercise price $171.3182/share, expires 8/17/2031 (3)(13)

Credit Sesame, Inc.

12 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments (Unaudited) — (continued)

June 30, 2021

September 30, 2021

Portfolio Companies

39 unchanged sentences

Warrant for Series A Preferred Stock, exercise price $6.78/share, expires 6/27/2029

Route 92 Medical, Inc.

Health Care Technology

Success fee, expires 8/17/2031 (14)

Scale Computing, Inc.

System Software

Warrant for Common Stock, exercise price $0.80/share, expires 3/29/2029

Warrant for Series F-1 Preferred Stock, exercise price $0.80/share, expires 3/29/2029

SetPoint Medical Corporation

Health Care Technology

Warrant for Class B Preferred Stock, exercise price $1.00/share, expires 6/29/2031 (3),(7)

Warrant for Series B' Preferred Stock, exercise price $1.00/share, expires 6/29/2031

ShareThis, Inc.

1 unchanged sentence

Warrant for Series D-3 Preferred Stock, exercise price $2.4320/share, expires 12/3/2028

STN Video Inc.

Warrant for Class B Non-Voting Stock, exercise price $0.67/share, expires 6/30/2027 (3),(7)

The Kairn Corporation

Application Software

Warrant for Common Stock, exercise price $0.01/share, expires 3/9/2030

Snagajob.com, Inc.

Human Resource & Employment Services

Warrant for Series B-1 Preferred Stock, exercise price $1.30/share, expires 9/29/31

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments (Unaudited) — (continued)

June 30, 2021

September 30, 2021

Portfolio Companies

3 unchanged sentences

Warrants (7) (continued)

STN Video Inc.

Warrant for Class B Non-Voting Stock, exercise price $0.67/share, expires 6/30/2027 (3),(11)

The Kairn Corporation

Application Software

Warrant for Common Stock, exercise price $0.01/share, expires 3/9/2030

VERO Biotech LLC

4 unchanged sentences

Treasury Bill, 0.033%, due 10/12/2021 (9)

Treasury Bill, 0.005%, due 07/06/2021

Total U.S.Treasury

Total Investments

1 unchanged sentence

Unless otherwise indicated, all of the Company’s variable rate debt investments bear interest at a rate that is determined by reference to the 3-Month London Interbank Offered Rate (“LIBOR”) or the U.S.

At June 30, 2021, the 3-Month LIBOR was 0.15% and the U.S.

At September 30, 2021, the 3-Month LIBOR was 0.13% and the U.S.

Prime Rate was 3.25%.

(2) All investments in portfolio companies, which as of June 30, 2021 represented 123.00% of the Company’s net assets, are restricted as to resale and were valued at fair value as determined in good faith by the Company’s Board of Directors.

(2) The Company’s investments are generally acquired in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) and, therefore, except as otherwise noted, are subject to limitation on resale, may be deemed to be “restricted securities” under the Securities Act, and were valued at fair value as determined in good faith by the Company’s Board of Directors.

(3) Investment is not a qualifying asset as defined under Section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”).

Non-qualifying assets at fair value represent 16.00% of total assets as of June 30, 2021.

Non-qualifying assets at fair value represent 21.61% of total assets as of September 30, 2021.

Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

6 unchanged sentences

(7) Investments are non-income producing.

(8) The Credit Agreement (as defined in Note 10) is secured by a perfected first priority security interest in each of the Company’s senior secured term loan investments, except for the Mojix, Inc., Pivot3 Holdings, Inc., and The Kairn Corporation senior secured term loans.

(9) Treasury bill with $20,000,000 par value was purchased pursuant to a 0.30% reverse repurchase agreement with Goldman Sachs dated June 30, 2021, due July 8, 2021, with a repurchase price of $19,900,000 collateralized by a 0.025% U.S.

Treasury Bill due July 8, 2021 with a par value of 20,000,000 and fair value of $19,999,889.

(8) The Credit Agreement (as defined in Note 10) is secured by a perfected first priority security interest in each of the Company’s senior secured term loan investments, except for the Marley Spoon AG, Mojix, Inc., Pivot3 Holdings, Inc., and The Kairn Corporation senior secured term loans.

(9) Treasury bill with $60,000,000 par value was purchased pursuant to a 0.25% reverse repurchase agreement with Goldman Sachs dated September 30, 2021, due October 7, 2021, with a repurchase price of $59,699,461 collateralized by a 0.033% U.S.

Treasury Bill due October 10, 2021 with a par value of $60,000,000 and fair value of $60,000,660.

(10) All investments are domiciled in the United States, unless otherwise noted.

6 unchanged sentences

(17) The warrant count is based upon a percentage of ownership of Fidelis Cybersecurity, Inc.

(18) As a result of Brilliant Earth Group Inc.'s (the Public Company) IPO through an Up-C structure, the Company received a share of Class B common stock in Brilliant Earth Group, Inc.

for every Class P unit it held in Brilliant Earth, LLC.

On a one-to-one basis, both the Class B common stock and Class P unit can be surrendered for Class A common stock in the Public Company.

(19) Investment is not a “restricted security” under the Securities Act.

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments (Unaudited) — (continued)

June 30, 2021

The following table shows the fair value of the portfolio company investments in which we are deemed to exercise a controlling influence over the management or policies of the portfolio company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the portfolio company as of June 30, 2021, along with the transactions during the six months ended June 30, 2021:

For the Six Months Ended June 30, 2021

September 30, 2021

The following table shows the fair value of the portfolio company investments in which we are deemed to exercise a controlling influence over the management or policies of the portfolio company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the portfolio company as of September 30, 2021, along with the transactions during the nine months ended September 30, 2021:

For the nine months ended September 30, 2021

Net Change in

5 unchanged sentences

(Depreciation)

June 30, 2021 (3)

September 30, 2021 (3)

Senior Secured Term Loans

5 unchanged sentences

LIBOR+12.00% PIK, 12.00% floor, 5% ETP, due 10/31/2021

LIBOR+12.00% PIK, 12.00% floor, 5% ETP, due 4/30/2021

Pivot3 Holdings, Inc.

LIBOR+8.50% PIK, 11.00% floor, 4.00% ETP, due 11/15/2022

LIBOR+8.50% PIK, 11.00% floor, due 11/15/2022

LIBOR+8.50% PIK, 11.00% floor, 4.00% ETP, due 11/15/2022

Total Senior Secured Term Loans

1 unchanged sentence

Series A-1 Preferred Stock

Pivot3 Holdings, Inc.

Series 1 Preferred Stock

Total Preferred Stocks

Warrant for Common Stock, exercise price $1.286/share, expires 12/13/2030

3 unchanged sentences

Total Control/affiliate investments

(1) Gross additions includes increases in the basis of investments resulting from new portfolio investments, PIK interest, accretion of OID, the exchange of one or more existing investments for one or more new investments and the movement of an existing portfolio company into this category from a different category.

(1) Gross additions includes increases in the basis of investments resulting from new portfolio investments, PIK interest, accretion of original issue discount (“OID”), the exchange of one or more existing investments for one or more new investments and the movement of an existing portfolio company into this category from a different category.

(2) Gross reductions include decreases in the basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing investments for one or more new investments and the movement of an existing portfolio company out of this category into a different category.

(3) All investments in the portfolio company, which as of June 30, 2021 represented 2.52% of the Company’s net assets, are restricted as to resale and were valued at fair value as determined in good faith by the Company’s Board of Directors.

(4) The Company earned no investment income from control investments.

(3) All investments in the portfolio companies, which as of September 30, 2021 represented 4.73% of the Company’s net assets, are restricted as to resale and were valued at fair value as determined in good faith by the Company’s Board of Directors.

(4) The Company earned no investment income from control investments, except for $117,340 from Pivot3 Holdings, Inc.

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments (Unaudited) — (continued)

June 30, 2021

September 30, 2021

The following tables show the fair value of our portfolio of investments (excluding any U.S.

Treasury Bills held) by geographic region and industry as of June 30, 2021:

June 30, 2021

Treasury Bills held) by geographic region and industry as of September 30, 2021:

September 30, 2021

Investments at

3 unchanged sentences

Northeastern United States

Northwestern United States

Southeastern United States

United Kingdom

Northwestern United States

South Central United States

June 30, 2021

September 30, 2021

Investments at

Percentage of

Application Software

Healthcare Technology

Application Software

Internet Retail

Human Resource & Employment Services

Internet Software & Services

1 unchanged sentence

Data Processing & Outsourced Services

Human Resource & Employment Services

Education Services

3 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments

33 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments — (continued)

49 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments — (continued)

40 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments — (continued)

47 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments — (continued)

47 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments — (continued)

17 unchanged sentences

Treasury Bill, 0.40%, due 01/12/2021 (9)

Total U.S.Treasury

Total Investments

26 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments — (continued)

30 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Schedule of Investments — (continued)

28 unchanged sentences

See notes to financial statements.

RUNWAY GROWTH CREDIT FUND INC.

RUNWAY GROWTH FINANCE CORP.

Notes to Financial Statements

Note 1 – Organization

Runway Growth Credit Fund Inc.

(the “Company”) is a Maryland corporation that was formed on August 31, 2015.

The Company is an externally managed, non-diversified, closed-end investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

Runway Growth Finance Corp.

(formerly known as Runway Growth Credit Fund Inc.) (the “Company”), is a Maryland corporation that was formed on August 31, 2015.

On August 18, 2021, the Company changed its name to “Runway Growth Finance Corp.” from “Runway Growth Credit Fund Inc.” The Company is an externally managed, non-diversified, closed-end investment company that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).

In addition, the Company has elected to be treated, has qualified, and intends to continue to qualify annually as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

7 unchanged sentences

Between December 2016 and December 2017, the Company completed its first private offering of shares of common stock to investors (the “Initial Private Offering”) in reliance on exemptions from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), and other applicable securities laws.

As of June 30, 2021, in connection with the Initial Private Offering, the Company had issued 18,241,157 shares of its common stock for a total purchase price of $275,000,000.

As of June 30, 2021, the Company has completed multiple closings under its second private offering (the “Second Private Offering”) and had accepted aggregate capital commitments of $181,473,500.

As of June 30, 2021, the Company has issued 8,352,251 shares of its common stock for a total purchase price of $125,283,766 in connection with the Second Private Offering and $56,189,734 of capital commitments remain undrawn.

As of June 30, 2021, the Company has issued 22,564 shares as an additional direct investment by Runway Growth Holdings LLC, an affiliate of RGC, at a per-share price of $15.00 for total proceeds of $338,453.

As of June 30, 2021, the Company has issued an additional 6,072,815 shares as part of the dividend reinvestment program.

As of September 30, 2021, in connection with the Initial Private Offering, the Company had issued 18,241,157 shares of its common stock for a total purchase price of $275,000,000.

As of September 30, 2021, the Company has completed multiple closings under its second private offering (the “Second Private Offering”) and had accepted aggregate capital commitments of $181,673,500.

As of September 30, 2021, the Company has issued 9,617,379 shares of its common stock for a total purchase price of $144,260,683 in connection with the Second Private Offering and $37,412,817 of capital commitments remain undrawn.

As of September 30, 2021, the Company has issued 22,564 shares as an additional direct investment by Runway Growth Holdings LLC, an affiliate of RGC, at a per-share price of $15.00 for total proceeds of $338,453.

As of September 30, 2021, the Company has issued an additional 6,647,847 shares as part of the dividend reinvestment program.

Refer to Note 6 for further detail.

On October 25, 2021, the Company closed its initial public offering ("IPO"), issuing 6,850,000 shares of its common stock at a public offering price of $14.60 per share.

Net of underwriting fees and offering costs, the Company received net cash proceeds of $92.0 million.

The Company has granted the underwriters an option to purchase up to an additional 1,027,500 shares of common stock at the public offering price, less the sales load payable by the Company, on or before November 19, 2021.

The Company’s common stock began trading on the Nasdaq Global Select Market under the symbol “RWAY” on October 21, 2021.

Note 2 – Summary of Significant Accounting Policies

5 unchanged sentences

In the opinion of management, all adjustments, all of which were of a normal recurring nature, considered necessary for the fair presentation of financial statements for the interim period have been included.

The results of operations for the current interim period are not necessarily indicative of results that ultimately may be achieved for any other interim period or for the year ending December 31, 2021, including the impact of the novel strain of coronavirus (“COVID-19”) pandemic thereon.

The interim unaudited financial statements and notes hereto should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s annual report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 11, 2021.

Certain items in the June 30, 2020 financial statements have been reclassified to conform to the June 30, 2021 presentation with no net effect on the net increase in net assets resulting from operations.

Certain items in the September 30, 2020 financial statements have been reclassified to conform to the September 30, 2021 presentation with no net effect on the net increase in net assets resulting from operations.

Use of Estimates

6 unchanged sentences

Cash and cash equivalents are held at large, established, high credit-quality financial institutions, and management believes that risk of loss associated with any uninsured balance is remote.

Subscriptions receivable

Subscriptions receivable represents amounts due from investors when capital is called under subscription agreements and not yet received;

and dividend amounts to be reinvested into the Company under the Company’s dividend reinvestment plan and not yet paid.

As of September 30, 2021, $1,139,528 represented shares to be issued to investors for called capital.

There were no subscriptions receivable as of December 31, 2020.

As of November 4, 2021, there were no subscriptions receivable outstanding.

Deferred Credit Facility Fees

The fees and expenses associated with opening the KeyBank loan facilities or Credit Agreement (as defined below) and Credit Facilities (as defined below) are being deferred and amortized as part of interest expense using the effective interest method over the term of the Credit Agreement and the Credit Facilities in accordance with ASC 470, Debt.

The fees and expenses associated with opening the KeyBank loan facilities or Credit Agreement (as defined below) are being deferred and amortized as part of interest expense using the effective interest method over the term of the Credit Agreement and the Credit Facilities in accordance with ASC 470, Debt .

Debt issuance costs associated with the Credit Agreement and the Credit Facilities are classified as a direct reduction of the carrying amount of borrowings with the Credit Agreement and the Credit Facilities, unless there are no outstanding borrowings, in which case the debt issuance costs are presented as an asset.

Reverse Repurchase Agreement

The Company has, and may in the future, enter into reverse repurchase agreements, under the terms of a Master Repurchase Agreement, with selected commercial banks and broker-dealers, under which the Company acquires securities as collateral (debt obligation) subject to an obligation of the counterparty to repurchase and the Company to resell the securities (obligation) at an agreed upon time and price.

The Company has, and may in the future, enter into reverse repurchase agreements, under the terms of a Master Repurchase Agreement (the “Master Repurchase Agreement”), with selected commercial banks and broker-dealers, under which the Company acquires securities as collateral (debt obligation) subject to an obligation of the counterparty to repurchase and the Company to resell the securities (obligation) at an agreed upon time and price.

The Company, through the custodian or a sub-custodian, receives delivery of the underlying securities collateralizing reverse repurchase agreements.

4 unchanged sentences

If the seller defaults or enters an insolvency proceeding, realization of the collateral by the Company may be delayed, limited or wholly denied.

Pursuant to a reverse repurchase agreement with Goldman Sachs, which expired on July 7, 2021, the Company purchased a U.S.

Treasury Bill, due July 8, 2021.

The fair value of the related collateral that the Company received for this agreement was $19,999,889 at June 30, 2021.

Pursuant to a reverse repurchase agreement with Goldman Sachs, which expired on October 7, 2021, the Company purchased a U.S.

Treasury Bill, due October 12, 2021.

The fair value of the related collateral that the Company received for this agreement was $60,000,660 at September 30, 2021.

Pursuant to a reverse repurchase agreement with Goldman Sachs which expired on January 6, 2021, the Company purchased a U.S.

1 unchanged sentence

The value of the related collateral that the Company received for this agreement was $70,002,060 at December 31, 2020.

At June 30, 2021 and December 31, 2020, the repurchase liability was $19,900,000 and $69,650,000, respectively, which is reflected as Reverse repurchase agreement on the Statement of Assets and Liabilities.

At September 30, 2021 and December 31, 2020, the repurchase liability was $59,699,461 and $69,650,000, respectively, which is reflected as “Reverse repurchase agreement” on the Statement of Assets and Liabilities.

Investment Transactions and Related Investment Income

2 unchanged sentences

The amortized cost basis of investments represents the original cost adjusted for the accretion/amortization of discounts and premiums and upfront loan origination fees.

The Company reports changes from

the prior period in fair value of investments that are measured at fair value as a component of net change in unrealized appreciation (depreciation) on investments on the Statements of Operations.

The Company reports changes from the prior period in fair value of investments that are measured at fair value as a component of net change in unrealized appreciation (depreciation) on investments on the Statements of Operations.

Dividends are recorded on the applicable ex-dividend date.

Interest income, if any, adjusted for amortization of market premium and accretion of market discount, is recorded on an accrual basis to the extent that the Company expects to collect such amounts.

Original issue discount, principally representing the estimated fair value of detachable equity, warrants or contractual success fees obtained in conjunction with the Company’s debt investments, loan origination fees, end of term payments, and market discount or premium are capitalized and accreted or amortized into interest income over the life of the respective security using the effective interest method.

Original issue discount (“OID”), principally representing the estimated fair value of detachable equity, warrants or contractual success fees obtained in conjunction with the Company’s debt investments, loan origination fees, end of term payments, and market discount or premium are capitalized and accreted or amortized into interest income over the life of the respective security using the effective interest method.

Loan origination fees received in connection with the closing of investments are reported as unearned income, which is included as amortized cost of the investment;

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Generally, when current cash interest and/or principal payments on a loan become past due, or if the Company otherwise does not expect the borrower to be able to service its debt and other obligations, the Company will place the investment on non-accrual status and will generally cease recognizing PIK interest and dividend income on that loan for financial reporting purposes until all principal and interest have been brought current through payment or through a restructuring such that the interest and dividend income is deemed to be collectible.

As of June 30, 2021, and December 31, 2020, the Company has not written off any accrued and uncollected PIK interest and dividends.

As of June 30, 2021, the Company had six loans to Mojix, Inc.

representing an aggregate principal funded of $11,000,000 at a fair value of $10,913,998, on non-accrual status, which represents 2.28% of the Company’s net assets.

The non-accrual loans as of June 30, 2021 had total interest of $2,561,665 that would have been accrued into income.

Had the loans not been on non-accrual status, $2,039,925 would be payable, and $521,740 would be original issue discount.

As of September 30, 2021, and December 31, 2020, the Company has not written off any accrued and uncollected PIK interest and dividends.

As of September 30, 2021, the Company had six loans to Mojix, Inc.

and one loan to Pivot3 Holdings, Inc., representing an aggregate principal funded of $30,383,707 at a fair value of $23,147,803, on non-accrual status, which represents 4.59% of the Company’s net assets.

The non-accrual loans as of September 30, 2021 had total interest of $3,683,193 that would have been accrued into income.

Had the loans not been on non-accrual status, $3,070,280 would be payable, and $612,913 would be OID.

As of December 31, 2020, the Company had six loans to Mojix, Inc.

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Had the loan not been on non-accrual status, $1,213,861 would be payable, and $413,864 would be original issue discount.

For the three and six months ended June 30, 2021, approximately 5.6% and 5.7%, respectively, of the Company’s total investment income was attributable to non-cash PIK interest and dividend income.

For the three and six months ended June 30, 2020, approximately 2.1% and 2.9%, respectively, of the Company’s total investment income was attributable to non-cash PIK interest and dividend income.

For the three and nine months ended September 30, 2021, approximately 2.4% and 4.5%, respectively, of the Company’s total investment income was attributable to non-cash PIK interest and dividend income.

For the three and nine months ended September 30, 2020, approximately 11.0% and 5.7%, respectively, of the Company’s total investment income was attributable to non-cash PIK interest and dividend income.

Valuation of Investments

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These investments are considered Level 3 assets under ASC Topic 820 because there is no known or accessible market or market indices for these types of debt instruments and, thus, RGC’s senior investment team must estimate the fair value of these investment securities based on models utilizing unobservable inputs.

Rule 2a-5 under the 1940 Act was recently adopted by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act.

Rule 2a-5 under the 1940 Act was adopted by the SEC in December 2020 and establishes requirements for determining fair value in good faith for purposes of the 1940 Act.

The Company is evaluating the impact of adopting Rule 2a-5 on the financial statements and intends to comply with the new rule’s requirements on or before the compliance date in September 2022.

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Such techniques take into account the rights and preferences of the portfolio company’s securities, expected exit scenarios, and volatility associated with such outcomes to allocate the fair value to the specific class of stock held in the portfolio.

Such techniques include Option Pricing Models, or “OPM,” including back-solve techniques, Probability Weighted Expected Return Models, or “PWERM,” and other techniques as determined to be appropriate.

Such techniques include Option Pricing Models, or

“OPM,” including back-solve techniques, Probability Weighted Expected Return Models, or “PWERM,” and other techniques as determined to be appropriate.

● Volatility, or the amount of uncertainty or risk about the size of the changes in the warrant price, is based on comparable publicly traded companies within indices similar in nature to the underlying company issuing the warrant.

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The risk-free interest rates are calculated based on a weighted average of the risk-free interest rates that correspond closest to the expected remaining life of the warrant.

increases (decreases) in this unobservable input could result in a significantly higher (lower) fair value, but a significantly higher or lower fair value measurement of any of the Company’s portfolio investments may occur regardless of whether there is a significant increase or decrease in this unobservable input.

Significant increases (decreases) in this unobservable input could result in a significantly higher (lower) fair value, but a significantly higher or lower fair value measurement of any of the Company’s portfolio investments may occur regardless of whether there is a significant increase or decrease in this unobservable input.

● Other adjustments, including a marketability discount on private company warrants, are estimated based on judgment about the general industry environment.

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Control is generally deemed to exist when a company or individual possesses, or has the right to acquire within 60 days or less, beneficial ownership of more than 25.0% of the voting securities of a company.

Affiliated investments and affiliated companies are defined by a lesser degree of influence and are deemed to exist through

the possession outright, or via the right to acquire within 60 days or less, beneficial ownership of 5.0% or more of the outstanding voting securities of a company.

Affiliated investments and affiliated companies are defined by a lesser degree of influence and are deemed to exist through the possession outright, or via the right to acquire within 60 days or less, beneficial ownership of 5.0% or more of the outstanding voting securities of a company.

Investments are recognized when the Company assumes an obligation to acquire a financial instrument and assumes the risks for gains or losses related to that instrument.

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The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statements of Operations.

There were no material uncertain income tax positions at June 30, 2021 or December 31, 2020.

There were no material uncertain income tax positions at September 30, 2021 or December 31, 2020.

Although we file federal and state tax returns, our major tax jurisdiction is federal.

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federal excise tax equal to 4% of the amount by which the Minimum Distribution Amount exceeds the distributions for the 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 from such taxable income, the Company accrues excise taxes, if any, on estimated excess taxable income as taxable income is earned using an annual effective excise tax rate.

effective excise tax rate.

The annual effective U.S.

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If the Company fails to requalify as a RIC for a period greater than two taxable years, it may be subject to regular corporate-level U.S.

federal income tax on any net built-in gains with respect to certain of its assets (i.e., the excess of the aggregate gains, including

items of income, over aggregate losses that would have been realized with respect to such assets if the Company had been liquidated) that it elects to recognize on requalification or when recognized over the next five years.

federal income tax on any net built-in gains with respect to certain of its assets (i.e., the excess of the aggregate gains, including items of income, over aggregate losses that would have been realized with respect to such assets if the Company had been liquidated) that it elects to recognize on requalification or when recognized over the next five years.

Per Share Information

Basic and diluted earnings per common share is calculated using the weighted-average number of common shares outstanding for the period presented.

For the three and six months ended June 30, 2021 and 2020, basic and diluted earnings per share of common stock were the same because there were no potentially dilutive securities outstanding.

For the three and nine months ended September 30, 2021 and 2020, basic and diluted earnings per share of common stock were the same because there were no potentially dilutive securities outstanding.

Per share data is based on the weighted-average shares outstanding.

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The Company generally intends to distribute, out of assets legally available for distribution, substantially all of its available earnings, on a quarterly basis, subject to the discretion of the Board of Directors.

For the three and six months ended June 30, 2021, the Company declared and paid dividends in the amount of $11,859,731 and $23,482,930, respectively, of which $2,449,360 and $4,889,338, respectively, was distributed in cash and the remainder distributed in shares to stockholders pursuant to the Company’s dividend reinvestment plan.

For the threeand six months ended June 30, 2020, the Company declared dividends in the amount of $9,242,578 and $19,567,064, respectively, of which $1,704,037 and $3,643,100, respectively, was distributable in cash and the remainder distributable in shares to stockholders pursuant to the Company’s dividend reinvestment plan.

For the three and nine months ended September 30, 2021, the Company declared and paid dividends in the amount of $11,114,754 and $34,597,684, respectively, of which $2,713,539 and $7,602,878, respectively, was distributed in cash and the remainder distributed in shares to stockholders pursuant to the Company’s dividend reinvestment plan.

For the three and nine months ended September 30, 2020, the Company declared dividends in the amount of $9,697,099 and $29,264,163, respectively, of which $1,762,387 and $5,405,487, respectively, was distributable in cash and the remainder distributable in shares to stockholders pursuant to the Company’s dividend reinvestment plan.

Organization and Offering Costs

Organization costs include, among other things, the cost of organizing as a Maryland corporation, including the cost of legal services and other fees pertaining to the Company’s organization, all of which are expensed as incurred.

Offering costs include, among other things, legal fees and other costs pertaining to the preparation of the Company’s private placement memorandum and other offering documents, including travel-related expenses related to the Initial Private Offering.

Offering costs include, among other things, legal fees and other costs pertaining to the preparation of the Company’s public and private offering materials as well as travel-related expenses related to the Company’s public and private offerings.

Pursuant to the investment advisory agreement in place between the Company and RGC at the time of the Initial Private Offering, the Company and RGC agreed that organization and offering costs incurred in connection with the Initial Private Offering would be borne by the Company up to a maximum amount of $1,000,000, provided that the amount of such costs in excess of $1,000,000 would be paid by RGC.

As of December 31, 2016, the Company had already incurred the maximum amount of $1,000,000 in organization and offering costs incurred in connection with the Initial Private Offering.

As a result, for the three and six months ended June 30, 2021 and 2020, the Company did not incur any organization or offering expenses in connection with the Initial Private Offering.

As a result, for the three and nine months ended September 30, 2021 and 2020, the Company did not incur any organization or offering expenses in connection with the Initial Private Offering.

Offering costs related to new or follow-on offerings, including the Second Private Offering, were accumulated and charged to additional paid in capital at the time of closing beginning in 2019.

These offering costs related to the Second Private Offering are subject to a cap of $600,000, excluding placement agent fees which have no cap, of which the Company will bear the cost.

As of June 30, 2021 and December 31, 2020, respectively, the Company had accumulated and recorded $613,820 and $608,989 of offering costs related to the Second Private Offering.

As of each of June 30, 2021 and December 31, 2020, respectively, $154,738 and $123,009 in placement agent fees had been incurred.

As of September 30, 2021 and December 31, 2020, respectively, the Company had accumulated and recorded $646,362 and $608,989 of offering costs related to the Second Private Offering.

As of each of September 30, 2021 and December 31, 2020, respectively, $186,198 and $123,009 in placement agent fees had been incurred.

Under the terms of the Second Private Offering, offering costs in excess of $600,000, excluding placement agent fees, will be reimbursed by RGC.

As of September 30, 2021 and December 31, 2020, respectively, we had accumulated and recorded $439,929 and $0 of deferred offering costs related to the Company’s initial public offering.

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.

These agreements include language for choosing an alternative successor rate if LIBOR reference is no longer considered to be appropriate.

Such 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 new guidance is effective as of March 12, 2020 through December 21, 2022.

The Company is currently evaluating its effective date for adoption and the impact the adoption of this new accounting standard will have on its financial statements, however the impact of the adoption is not expected to be material.

In March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848),” which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts, hedging relationships, and other transactions that reference London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform.

In January 2021, the FASB issued ASU No.

2021-01, “Reference Rate Reform (Topic 848),” which expanded the scope of Topic 848 to include derivative instruments impacted by discounting transition.

ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022.

2021-01 provides increased clarity as the Company continues to evaluate the transition of reference rates and is currently evaluating the impact of adopting ASU No.

2020-04 and 2021-01 on the consolidated financial statements.

Note 3 – Commitments and Contingencies

In the normal course of business, the Company may enter into investment agreements under which it commits to make an investment in a portfolio company at some future date or over a specified period of time.

At June 30, 2021, the Company had $122,560,569 in unfunded loan commitments to provide debt financing to its portfolio companies.

The balance of unfunded commitments to extend financing as of June 30, 2021 was as follows:

At September 30, 2021, the Company had $165,345,185 in unfunded loan commitments to provide debt financing to its portfolio companies.

The balance of unfunded commitments to extend financing as of September 30, 2021 was as follows:

Portfolio Company

Investment Type

June 30, 2021

September 30, 2021

Allurion Technologies, Inc.

Senior Secured Term Loan

Credit Sesame, Inc.

CloudPay, Inc.

Senior Secured Term Loan

Credit Sesame, Inc.

Revolving Line

CrossRoads Extremity Systems, LLC

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Senior Secured Term Loan

Fidelis Cybersecurity, Inc.

Senior Secured Term Loan

Gynesonics, Inc.

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Senior Secured Term Loan

Porch Group, Inc.

Route 92 Medical, Inc.

Senior Secured Term Loan

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Senior Secured Term Loan

Snagajob.com, Inc.

Senior Secured Term Loan

VERO Biotech LLC

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Total unused commitments to extend financing

The Company’s management believes that its available cash balances, availability under the Credit Agreement and/or ability to drawdown capital from investors provides sufficient funds to cover its unfunded commitments as of June 30, 2021.

The Company has evaluated the expected net future cash flows related to unfunded commitments and determined the fair value to be zero as of June 30, 2021 and December 31, 2020.

The Company has evaluated the expected net future cash flows related to unfunded commitments and determined the fair value to be zero as of September 30, 2021 and December 31, 2020.

The Company is currently not subject to any material legal proceedings, nor, to its knowledge, is any material proceeding threatened against the Company.

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Note 5 – Net Increase in Net Assets Resulting from Operations per Common Share

The following information sets forth the computation of basic income per common share for the three and six months ended June 30, 2021 and 2020:

The following information sets forth the computation of basic income per common share for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net increase in net assets resulting from operations

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The Company has the authority to issue 100,000,000 shares of common stock, $0.01 par value per share.

During the three months ended June 30, 2021, the Company issued 637,127 shares for $9,410,371 in connection with the reinvestment of dividends.

The following table summarizes capital activity during the three months ended June 30, 2021:

During the three months ended September 30, 2021, the Company issued 575,032 shares for $8,401,215 in connection with the reinvestment of dividends.

The following table summarizes capital activity during the three months ended September 30, 2021:

Distributable

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Balance, end of period

During the six months ended June 30, 2021, the Company issued 1,255,942 shares for $18,593,591 in connection with the reinvestment of dividends.

The following table summarizes capital activity during the six months ended June 30, 2021:

During the nine months ended September 30, 2021, the Company issued 1,830,974 shares for $26,994,806 in connection with the reinvestment of dividends.

The following table summarizes capital activity during the nine months ended September 30, 2021:

Distributable

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Balance, end of period

During the three months ended June 30, 2020, the Company issued 529,020 shares for $7,538,541 in connection with the reinvestment of dividends.

The following table summarizes capital activity during the three months ended June 30, 2020:

During the three months ended September 30, 2020, the Company issued 550,639 shares for $7,934,712 in connection with the reinvestment of dividends.

The following table summarizes capital activity during the three months ended September 30, 2020:

Distributable

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Balance, end of period

During the six months ended June 30, 2020, the Company issued 1,104,152 shares for $15,923,964 in connection with the reinvestment of dividends.

The following table summarizes capital activity during the six months ended June 30, 2020:

During the nine months ended September 30, 2020, the Company issued 1,654,791 shares for $23,858,677 in connection with the reinvestment of dividends.

The following table summarizes capital activity during the nine months ended September 30, 2020:

Distributable

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Balance, end of period

The shares of common stock issued, the price per share and the proceeds raised, from inception through June 30, 2021, are detailed in the following table:

The shares of common stock issued, the price per share and the proceeds raised, from inception through September 30, 2021, are detailed in the following table:

Issuance Date

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May 13, 2021 (1)

August 12, 2021 (1)

September 29, 2021

Shares were issued as part of the dividend reinvestment plan.

In connection with the Initial Private Offering, the Company issued 18,241,157 shares of its common stock to stockholders for a total purchase price of $275,000,000.

Between June 14, 2019 and June 30, 2021, the Company accepted $181,473,500 in capital commitments under its Second Private Offering.

As of June 30, 2021 and December 31, 2020, respectively, the Company issued 8,352,251 and 8,352,251 shares of its common stock for aggregate proceeds of $125,283,766 and $125,283,766 under the Second Private Offering.

As of June 30, 2021, the Company has issued 22,564 shares as an additional direct investment by Runway Growth Holdings LLC, an affiliate of RGC, at $15.00 per share for total proceeds of $338,453.

Between June 14, 2019 and September 30, 2021, the Company accepted $181,673,500 in capital commitments under its Second Private Offering.

As of September 30, 2021 and December 31, 2020, respectively, the Company issued 9,617,379 and 8,352,251 shares of its common stock for aggregate proceeds of $144,260,683 and $125,283,766 under the Second Private Offering.

As of September 30, 2021, the Company has issued 22,564 shares as an additional direct investment by Runway Growth Holdings LLC, an affiliate of RGC, at $15.00 per share for total proceeds of $338,453.

For more information, see “Recent Developments.”

Capital commitments may be drawn down from investors by the Company on a pro rata basis, as needed, upon not less than ten (10) days’ prior written notice for the purposes of funding the Company’s investments (including follow-on investments), paying the Company’s expenses, including fees under the second amended and restated investment advisory agreement, by and between the Company and RGC (the “Advisory Agreement”), and/or maintaining a reserve account for the payment of future expenses or liabilities.

On September 15, 2021, the Company delivered an optional capital drawdown notice (the “Option Notice”) to its investors relating to the investors remaining unfunded capital commitments.

The Option Notice provided investors with the ability to elect to either (i) fund their remaining unfunded capital commitment in full or (ii) not fund their remaining unfunded capital commitment without being considered in default under the terms of the subscription agreement, in either case by returning the Option Notice to the Company no later than September 20, 2021.

Pursuant to the Option Notice, the Company sold 1,265,128 shares of common stock, par value $0.01 per share for an aggregate offering price of $18,976,917.

The sale closed on September 29, 2021.

As of September 30, 2021 the Company had $37,412,817 remaining in unfunded capital commitments.

Note 7 – Related Party Agreements and Transactions

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The base management fee will be an amount equal to 0.40% (1.60% annualized) of the Company’s average daily Gross Assets (defined below) during the most recently completed calendar quarter for so long as the aggregate amount of Gross Assets of the Company as of the end of the most recently completed calendar quarter is equal or greater than $500,000,000 but less than $1,000,000,000.

For purposes of the Advisory Agreement, “Gross Assets” is defined as the Company’s gross assets, including assets purchased with borrowed funds or other forms of leverage, as well as any paid-in-kind interest, as of the end of the most recently completed fiscal quarter.

For purposes of the Advisory

Agreement, “Gross Assets” is defined as the Company’s gross assets, including assets purchased with borrowed funds or other forms of leverage, as well as any paid-in-kind interest, as of the end of the most recently completed fiscal quarter.

If the aggregate amount of the Company’s Gross Assets as of the end of the most recently completed calendar quarter is less than $500,000,000 the base management fee will be an amount equal to 0.4375% (1.75% annualized) of the Company’s average daily Gross Assets during the most recently completed calendar quarter.

If the aggregate amount of the Company’s Gross Assets as of the end of the most recently completed calendar quarter is equal to or greater than $1,000,000,000, the base management fee will be an amount equal to 0.375% (1.50% annualized) of the Company’s average daily Gross Assets during the most recently completed calendar quarter.

RGC earned base management fees of $2,276,341 and $4,345,550 for the three and six months ended June 30, 2021, respectively, and $1,758,729 and $3,295,677 for the three and six months ended June 30, 2020, respectively.

RGC earned base management fees of $2,301,656 and $6,647,207 for the three and nine months ended September 30, 2021, respectively, and $1,721,913 and $5,017,590 for the three and nine months ended September 30, 2020, respectively.

Incentive Fee

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and (3) 20.0% of the amount of the Company’s Pre-Incentive Fee net investment income, if any, that exceeds 2.667% in any calendar quarter (10.668% annualized) payable to RGC (once the hurdle is reached and the catch-up is achieved, 20.0% of all Pre-Incentive Fee net investment income thereafter is allocated to RGC).

Until the consummation of a Spin-Off transaction, in the event that (a) the sum of the Company’s cumulative net realized losses since the date of the Company’s election to be regulated as a BDC exceeds 2.0% of the total non-control/non-affiliate investments made by the Company since the date of the Company’s election to be regulated as a BDC through the end of the quarter and (b) the Pre-Incentive Fee net investment income adjusted to include any realized capital gains and losses (“Adjusted Pre-Incentive Fee net investment income”), expressed as an annualized rate of return on the value of the Company’s average daily net assets (defined as total assets less liabilities), since the Company’s election to be regulated as a BDC through the end of the quarter is less than 10.0%, no Income Incentive Fee will be payable for such quarter until the first subsequent quarter in which either (x) the sum of the Company’s cumulative net realized losses since the date of the Company’s election to be regulated as a BDC is equal to or less than 2.0% of the total non-control/non-affiliate investments made by the Company since the date of the Company’s election to be regulated as a BDC through the end of such subsequent quarter or (y) the Adjusted Pre-Incentive Fee net investment income, expressed as an annualized rate of return on the value of the Company’s average daily net assets (defined as total assets less liabilities), since the Company’s election to be regulated as a BDC through the of the end of the quarter equals or exceeds 10.0%;

provided, however, that in no event will any Income Incentive Fee be payable for any prior quarter after the three-year anniversary of the end of such quarter.

Income Incentive Fee would be payable for such quarter until the first subsequent quarter in which either (x) the sum of the Company’s cumulative net realized losses since the date of the Company’s election to be regulated as a BDC was equal to or less than 2.0% of the total non-control/non-affiliate investments made by the Company since the date of the Company’s election to be regulated as a BDC through the end of such subsequent quarter or (y) the Adjusted Pre-Incentive Fee net investment income, expressed as an annualized rate of return on the value of the Company’s average daily net assets (defined as total assets less liabilities), since the Company’s election to be regulated as a BDC through the of the end of the quarter equals or exceeds 10.0%;

provided, however, that in no event would any Income Incentive Fee be payable for any prior quarter after the three-year anniversary of the end of such quarter.

Under the capital-gains component of the incentive fee (the “Capital Gains Fee”), the Company will pay RGC, as of the end of each calendar year, 20.0% of the Company’s aggregate cumulative realized capital gains, if any, from the date of the Company’s election to be regulated as a BDC through the end of that calendar year, computed net of the Company’s aggregate cumulative realized capital losses and aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid Capital Gains Fee.

1 unchanged sentence

If such amount is negative, then no Capital Gains Fee will be payable for such year.

RGC earned incentive fees of $2,836,303 and $3,812,007, respectively, for the three and six months ended June 30, 2021;

$2,229,639 and $2,968,870, respectively, of the incentive fees for the three and six months ended June 30, 2021 were earned, payable in cash, and $606,664 and $843,137, respectively, of the incentive fees for the three and six months ended June 30, 2021 were accrued and generated from deferred interest (i.e., PIK interest and certain discount accretion) and are not payable pending receipt of cash by the Company.

RGC earned incentive fees for the three and six months ended June 30, 2020 of $905,858 and $3,220,976, respectively;

$686,221 and $2,532,754, respectively, of the incentive fees for the three and six months ended June 30, 2020 were earned, payable in cash, and $219,637 and $688,222, respectively, of the incentive fees for the three and six months ended June 30, 2020 were accrued and deferred (i.e., PIK interest and certain discount accretion) and are not payable pending receipt of cash by the Company.

RGC earned incentive fees of $2,686,475 and $6,498,482, respectively, for the three and nine months ended September 30, 2021;

$2,171,245 and $5,140,115, respectively, of the incentive fees for the three and nine months ended September 30, 2021 were earned, payable in cash, and $515,230 and $1,358,367, respectively, of the incentive fees for the three and nine months ended September 30, 2021 were accrued and generated from deferred interest (i.e., PIK interest and certain discount accretion) and are not payable pending receipt of cash by the Company.

RGC earned incentive fees for the three and nine months ended September 30, 2020 of $1,650,930 and $4,871,907, respectively;

$1,126,379 and $3,659,134, respectively, of the incentive fees for the three and nine months ended September 30, 2020 were earned, payable in cash, and $524,551 and $1,212,773, respectively, of the incentive fees for the three and nine months ended September 30, 2020 were accrued and deferred (i.e., PIK interest and certain discount accretion) and are not payable pending receipt of cash by the Company.

The capital gains incentive fee consists of fees related to realized gains, realized capital losses and unrealized capital depreciation.

1 unchanged sentence

GAAP requires that the capital gains invective fee accrual consider the cumulative aggregate unrealized appreciation in the calculation, as a capital gains incentive fee would be payable if such unrealized appreciation were realized even though such unrealized appreciation is not permitted to be considered in calculating the fee actually payable under the Advisory Agreement.

As of each of June 30, 2021 and December 31, 2020, there was no capital gains incentive fee accrued, earned or payable to RGC under the Advisory Agreement.

As of each of September 30, 2021 and December 31, 2020, there was no capital gains incentive fee accrued, earned or payable to RGC under the Advisory Agreement.

Spin-Off Incentive Fee

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In addition, the Company reimburses the Administrator for the fees and expenses associated with performing compliance functions, and the Company’s allocable portion of the compensation of certain of its officers, including the Company’s Chief Financial Officer, Chief Compliance Officer and any administrative support staff.

The Company reimbursed the Administrator $163,842 and $479,382, respectively, during the three and six months ended June 30, 2021.

As of June 30, 2021, the Company had accrued a net payable to the Administrator of $116,544.

Of the total amount reimbursed and accrued during the three and six months ended June 30, 2021, $151,524 and $437,439, respectively, was related to overhead allocation expense.

The Company reimbursed the Administrator $144,206 and $306,329, respectively, during the three and six months ended June 30, 2020.

As of June 30, 2020, the Company accrued a net payable to the Administrator of $84,432.

Of the total amount reimbursed and accrued during the three and six months ended June 30, 2020, $141,901 and $274,694, respectively, was related to overhead allocation expense.

The Company reimbursed the Administrator $261,630 and $741,012, respectively, during the three and nine months ended September 30, 2021.

As of September 30, 2021, the Company had accrued a net payable to the Administrator of $227,038.

Of the total amount reimbursed and accrued during the three and nine months ended September 30, 2021, $206,167 and $643,606, respectively, was related to overhead allocation expense.

The Company reimbursed the Administrator $127,095 and $433,424, respectively, during the three and nine months ended September 30, 2020.

As of September 30, 2020, the Company accrued a net payable to the Administrator of $124,215.

Of the total amount reimbursed and accrued during the three and nine months ended September 30, 2020, $136,826 and $411,520, respectively, was related to overhead allocation expense.

As of December 31, 2020, the Company had accrued a net payable to the Administrator of $143,515.

Administration fees, which include fees payable by the Administrator to third-party service providers who provide additional administration services for the Company, were $92,760 and $240,860 for the three and six months ended June 30, 2021, respectively.

Administration fees, which include fees payable by the Administrator to third-party service providers who provide additional administration services for the Company, were $121,369 and $245,680 for the three and six months ended June 30, 2020, respectively.

Administration fees, which include fees payable by the Administrator to third-party service providers who provide additional administration services for the Company, were $179,500 and $420,360 for the three and nine months ended September 30, 2021, respectively.

Administration fees, which include fees payable by the Administrator to third-party service providers who provide additional administration services for the Company, were $132,715 and $378,395 for the three and nine months ended September 30, 2020, respectively.

License Agreement

The Company has entered into a license agreement with RGC (the “License Agreement”) pursuant to which RGC has granted the Company a personal, non-exclusive, royalty-free right and license to use the name “Runway Growth Credit Fund”.

Under the License Agreement, the Company has the right to use the “Runway Growth Credit Fund” name for so long as RGC or one of its affiliates remains the Company’s investment adviser.

Other than with respect to this limited license, the Company has no legal right to the “Runway Growth Credit Fund” name.

Under the License Agreement, the Company has the right to use the “Runway Growth Finance” name for so long as RGC or one of its affiliates remains the Company’s investment adviser.

Other than with respect to this limited license, the Company has no legal right to the “Runway Growth Finance” name.

Oaktree Strategic Relationship

2 unchanged sentences

On September 14, 2019, in connection with the Second Private Offering, the Company accepted a capital commitment from OCM in the amount of $112.5 million (the “Subsequent OCM Commitment and, together with the Initial OCM Commitment, the “OCM Commitment”).

As of June 30, 2021, OCM owns 18,763,829 shares of our common stock or 57% of our total issued and outstanding shares.

As of September 30, 2021, OCM owned 19,200,496 shares of our common stock or 56% of our total issued and outstanding shares.

Pursuant to an irrevocable proxy, the shares of the Company’s common stock held by OCM must be voted in the same manner that our other stockholders vote their shares.

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OCM also holds a minority interest in RGC and has the right to appoint a member of RGC’s board of managers and a member of RGC’s investment committee.

Brian Laibow is OCM’s appointee to RGC’s board of managers and investment committee.

Laibow is OCM’s appointee to RGC’s board of managers and investment committee.

In connection with the Subsequent OCM Commitment, OCM also purchased additional equity in RGC.

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See Note 2 for discussion of the Company’s valuation policies.

The following tables present information about the Company’s assets and liabilities measured at fair value as of June 30, 2021 and December 31, 2020, respectively:

As of June 30, 2021

The following tables present information about the Company’s assets and liabilities measured at fair value as of September 30, 2021 and December 31, 2020, respectively:

As of September 30, 2021

Portfolio Investments

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The Company recognizes transfers into and out of the levels indicated above at the end of each reporting period.

During the period ended June 30, 2021, the Company had a warrant investment converted to a common stock investment, resulting in an asset transfer out of Level 3 and into Level 2 at the fair value of $9,492,345.

During the period ended September 30, 2021, the Company had warrant investments converted to common stock investments, resulting in an asset transfer out of Level 3 and into Level 2 at the fair value of $15,305,039.

There were no transfers into or out of the levels during the year ended December 31, 2020.

The following table presents a rollforward of Level 3 assets measured at fair value as of June 30, 2021:

The following table presents a rollforward of Level 3 assets measured at fair value as of September 30, 2021:

Senior Secured

3 unchanged sentences

Sales or repayments of investments (1)

(202,045,467)

(202,132,301)

Transfers out of Level 3

1 unchanged sentence

Change in unrealized appreciation (depreciation)

Fair value at June 30, 2021

Change in unrealized appreciation (depreciation) on Level 3 investments still held as of June 30, 2021

Fair value at September 30, 2021

Change in unrealized appreciation (depreciation) on Level 3 investments still held as of September 30, 2021

(1) Includes PIK interest, net of reorganization and restructuring of investments.

The following table presents a rollforward of Level 3 assets measured at fair value as of June 30, 2020:

The following table presents a rollforward of Level 3 assets measured at fair value as of September 30, 2020:

Senior Secured

5 unchanged sentences

Change in unrealized appreciation (depreciation)

Fair value at June 30, 2020

Change in unrealized appreciation (depreciation) on Level 3 investments still held as of June 30, 2020

Fair value at September 30, 2020

Change in unrealized appreciation (depreciation) on Level 3 investments still held as of September 30, 2020

(1) Includes PIK interest, net of reorganization and restructuring of investments.

The following table provides quantitative information regarding Level 3 fair value measurements as of June 30, 2021:

The following table provides quantitative information regarding Level 3 fair value measurements as of September 30, 2021:

Valuation Technique

18 unchanged sentences

Estimated time to exit

0.0-5.0 (1.4) years

0.3-5.0 yrs (1.9 yrs)

Revenue multiples

39 unchanged sentences

However, a significantly higher or lower fair value measurement of any of the Company’s portfolio investments may occur regardless of whether there is a significant increase or decrease in the unobservable inputs.

The significant unobservable inputs used in the fair value measurement of the Company’s warrant and equity-related securities are inputs used in the option pricing model (“OPM”), which include industry volatility, risk free interest rate and estimated time to exit.

The Equity Allocation model and the Black Scholes model were the main OPMs used during the period ended June 30, 2021 and the year ended December 31, 2020.

The significant unobservable inputs used in the fair value measurement of the Company’s warrant and equity-related securities are inputs used in the OPM, which include industry volatility, risk free interest rate and estimated time to exit.

The Equity Allocation model and the Black Scholes model were the main OPMs used during the period ended September 30, 2021 and the year ended December 31, 2020.

Probability Weighted Expected Return Models (“PWERM”) and other techniques were used as determined appropriate.

14 unchanged sentences

The Company’s volume of warrant investment activity is closely correlated to its primary senior secured loans to portfolio companies.

For the three and six months ended June 30, 2021, the Company had a net realized loss of $273,798 and $490,408, respectively, and a net change in unrealized appreciation of $2,875,080 and $612,468, respectively, from its investments in warrants.

For the three and six months ended June 30, 2020, the Company had net realized gains of $0 and $1,179,751, respectively, and a net change in unrealized appreciation of $3,445,598 and $1,815,431, respectively, from its investments in warrants.

For the three and nine months ended September 30, 2021, the Company had a net realized gain (loss) of $72,371 and $(418,037), respectively, and a net

change in unrealized depreciation of $2,463,752 and $3,076,220, respectively, from its investments in warrants.

For the three and nine months ended September 30, 2020, the Company had net realized gains of $2,900 and $1,182,651, respectively, and a net change in unrealized appreciation of $1,796,815 and $3,612,246, respectively, from its investments in warrants.

Realized loss from warrants is included in Realized gain (loss) on non-control/non-affiliate investments, including U.S.

6 unchanged sentences

Note 10 – Credit Facilities

On May 31, 2019, the Company entered into a Credit Agreement (the “Credit Agreement”) by and among the Company, as borrower, KeyBank National Association, as administrative agent, syndication agent, and a lender, CIBC Bank USA (“CIBC”), as documentation agent and a lender, U.S.

On May 31, 2019, the Company entered into a Credit Agreement, as subsequently amended (the “Credit Agreement”) by and among the Company, as borrower, KeyBank National Association, as administrative agent, syndication agent, and a lender, CIBC Bank USA (“CIBC”), as documentation agent and a lender, U.S.

Bank National Association, as paying agent, the guarantors from time to time party thereto, and the other lenders from time to time party thereto.

10 unchanged sentences

The stated maturity date under the Credit Agreement is May 31, 2024.

On November 10, 2020, Company entered into an amendment (the "November Credit Facility Amendment") to the Credit Agreement.

On November 10, 2020, Company entered into an amendment to the Credit Agreement, as well as a corresponding amendment to the fee letter dated May 31, 2019 (collectively, the “November Credit Facility Amendment”).

The November Credit Facility Amendment amended the Credit Agreement to, among other things:

10 unchanged sentences

(i) increase the size of the aggregate commitments under the Credit Facility to $215 million from $175 million;

(ii) increase the accordion amount under the Credit Facility from a $200 million maximum aggregate commitment amount to a $300 million maximum aggregate commitment amount;

(ii) increase the accordion amount under the Credit Facility

from a $200 million maximum aggregate commitment amount to a $300 million maximum aggregate commitment amount;

and (iii) add Bank of Hope and First Foundation Bank as new Lenders and Managing Agents under the Credit Agreement.

5 unchanged sentences

and (iii) amend certain other terms of the Credit Agreement.

On August 3, 2021, the Company further amended the fee letter (the “Second Amended and Restated Fee Letter”) to amend the first payment date of the minimum earnings fee, which will be payable annually starting on May 31, 2022.

Under the Second Amended and Restated Fee Letter, the Company will also pay a supplemental fee on the 15th calendar day of each month beginning August 16, 2021 and ending July 15, 2022 in an aggregate amount equal to $66,367, which is paid pro rata to the lenders listed in Schedule A of the Second Amended and Restated Fee Letter.

The Credit Agreement is secured by a perfected first priority security interest in substantially all of the Company’s assets and portfolio investments.

3 unchanged sentences

maintenance of a minimum liquidity amount as of the last day of each fiscal quarter;

income not being negative for two consecutive fiscal quarters or any trailing 12-month period;

net income not being negative for two consecutive fiscal quarters or any trailing 12-month period;

a limitation on incurring additional indebtedness without the prior written consent of the administrative agent (subject to limited exceptions);

6 unchanged sentences

and certain bankruptcy and liquidation events.

For the three and six months ended June 30, 2021, the weighted average outstanding debt balance was $86,010,989 and $84,359,116, respectively, and the weighted average effective interest rate under the Credit Agreement and Credit Facilities was 3.5% and 3.5%, respectively.

For the three and six months ended June 30, 2020, the weighted average outstanding debt balance was $274,725 and $3,906,593, respectively, and the weighted average effective interest rate under the Credit Agreement and Credit Facilities was 3.98% and 4.88%, respectively.

As of June 30, 2021, the Company had $117,000,000 outstanding under the Credit Agreement with maturity as follows:

For the three and nine months ended September 30, 2021, the weighted average outstanding debt balance was $90,673,913 and $86,487,179, respectively, and the weighted average effective interest rate under the Credit Agreement and Credit Facilities was 3.5% and 3.5%, respectively.

For the three and nine months ended September 30, 2020, the weighted average outstanding debt balance was $47,657,609 and $18,596,715, respectively, and the weighted average effective interest rate under the Credit Agreement and Credit Facilities was 3.30% and 3.60%, respectively.

As of September 30, 2021, the Company had $80,000,000 outstanding under the Credit Agreement with maturity as follows:

Loan Facility

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Per Share Data (1) :

3 unchanged sentences

Change in unrealized appreciation (depreciation)

Offering costs

Accretion (Dilution) (4)

10 unchanged sentences

The total returns are not annualized.

(3) Return from investment operations was 2.37% and 2.11% for the three months ended June 30, 2021 and 2020, respectively.

Return from investment operations was 4.78% and 4.60% for the six months ended June 30, 2021 and 2020, respectively.

(3) Return from investment operations was 2.19% and 2.43% for the three months ended September 30, 2021 and 2020, respectively.

Return from investment operations was 7.01% and 7.00% for the nine months ended September 30, 2021 and 2020, respectively.

Return from investment operations represents returns on net investment income (loss) from operations.

(4) Return from accretion was 0.00% and (0.07)% for the three months ended June 30, 2021 and 2020, respectively.

Return from accretion was 0.00% and (0.06)% for the six months ended June 30, 2021 and 2020, respectively.

(5) The annualized ratio of net investment income to average net assets was 11.22% and 8.97% for the three months ended June 30, 2021 and 2020, respectively.

The annualized ratio of net investment income to average net assets was 10.45% and 10.03% for the six months ended June 30, 2021 and 2020, respectively.

(6) The annualized ratio of net operating expenses excluding incentive fees, to average net assets was 3.81% and 3.17% for the three months ended June 30, 2021 and 2020, respectively.

The annualized ratio of net operating expenses excluding incentive fees, to average net assets was 3.60% and 3.09% for the six months ended June 30, 2021 and 2020, respectively

(4) Return from accretion was 0.21% and 0.07% for the three months ended September 30, 2021 and 2020, respectively.

Return from accretion was 0.13% and (0.06)% for the nine months ended September 30, 2021 and 2020, respectively.

(5) The annualized ratio of net investment income to average net assets was 10.48% and 10.83% for the three months ended September 30, 2021 and 2020, respectively.

The annualized ratio of net investment income to average net assets was 9.82% and 9.74% for the nine months ended September 30, 2021 and 2020, respectively.

(6) The annualized ratio of net operating expenses excluding incentive fees, to average net assets was 4.26% and 3.06% for the three months ended September 30, 2021 and 2020, respectively.

The annualized ratio of net operating expenses excluding incentive fees, to average net assets was 3.83% and 3.08% for the nine months ended September 30, 2021 and 2020, respectively

(7) Incentive fees are not annualized .

Note 12 - Subsequent Events

The Company evaluated events subsequent to June 30, 2021 through August 5, 2021.

Effective July 1, 2021, the Company placed three loans to Pivot3 Holdings, Inc.

on non-accrual status, representing an aggregate principal funded of $26,201,092 at a fair market value of $13,797,915 and comprises 2.89% of the investment portfolio as of June 30, 2021.

On July 20, 2021, the Company also received cash proceeds of $5,000,000 from the sale of a portion of assets held by Pivot3 Holdings, Inc.

On July 1, 2021, Aria Systems, Inc.

The Company evaluated events subsequent to September 30, 2021 through November 4, 2021.

On October 18, 2021, Credit Sesame, Inc.

prepaid its outstanding principal balance of $41,047,728.

In addition, the Company received cash proceeds of $2,140,678 in conjunction with ETP, prepayment fees, and interest for total proceeds of $43,188,406.

On July 19, 2021, the Company declared a dividend of $0.34 per share payable on August 12, 2021 to shareholders of record as of July 20, 2021.

The Company set June 30, 2021 as the valuation date for shares issued in connection with the dividend pursuant to the Company’s dividend reinvestment plan.

On August 4, 2021, the Company entered into an amendment (the “August Amendment”) to the Credit Agreement to clarify the fee payment schedule and to amend certain other terms of the Credit Agreement.

On October 19, 2021, the Company entered into an amendment to the Credit Agreement to make certain immaterial clarifications to the terms of the Credit Agreement.

On October 25, 2021, the Company closed its IPO, issuing 6,850,000 shares of its common stock at a public offering price of $14.60 per share.

Net of underwriting fees, the Company received total net cash proceeds of $94.0 million, before expenses.

The Company’s common stock began trading on the Nasdaq Global Select Market under the symbol “RWAY” on October 21, 2021.

In connection with IPO, the Board approved an amended and restated dividend reinvestment plan (the “New DRIP”), which became effective on October 25, 2021, concurrent with the IPO.

Pursuant to the New DRIP, among other changes, with respect to each cash dividend or distribution, the Board reserves the right to either issue new shares of common stock or purchase shares of common stock in the open market for the accounts of Participants (as defined in the New DRIP).

If newly issued shares are used to implement the New DRIP, the number of shares to be issued to a shareholder will be determined by dividing the total dollar amount of the distribution payable to such Participant by the market price per share of the Company’s Common Stock at the close of regular trading of the Nasdaq Global Select Market on the Payment Date (as defined in the New DRIP), or if no sale is reported for such day, the average of the reported bid and asked prices.

However, if the market price per share on the Payment Date exceeds the most recently computed net asset value per share, the Company will issue shares at the greater of (i) the most recently computed net asset value per share and (ii) 95% of the current market price per share (or such lesser discount to the current market price per share that still exceeds the most recently computed net asset value per share).

If shares are purchased in the open market to implement the New DRIP, the number of shares to be issued to a Participant shall be determined by dividing the dollar amount of the distribution payable to such Participant by the weighted average price per share for all shares of common stock purchased by the plan administrator in the open market in connection with the dividend or distribution.

On October 26, 2021, the Company funded an investment of $8,775,000 to Marley Spoon AG.

On October 28, 2021, the Company declared a dividend of $0.25 per share payable on November 22, 2021 to shareholders of record as of November 8, 2021.

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

What changed 10-Q

Item 1. Financial Statements