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Item 2. Management’s Discussion and Analysis

2024-08-14 compared with 2024-05-15 · 33 added, 27 removed, 84 unchanged (42% of the section changed)

27 unchanged sentences

PORTFOLIO AND INVESTMENT ACTIVITY

During the three months ended March 31, 2024, we made $73,438 of investment purchases and had $308,797 of redemptions and repayments, resulting in net investments at amortized cost of $18,366,616 as of March 31, 2024.

During the three months ended March 31, 2023, we made $6,900,500 of investment purchases and had $3,945,000 of redemptions and repayments, resulting in net investments at amortized cost of $19,715,304 as of March 31, 2023.

Our portfolio composition by major class, based on fair value at March 31, 2024, was as follows:

During the six months ended June 30, 2024, we made $973,438 of investment purchases and had $5,461,479 of redemptions and repayments, resulting in net investments at amortized cost of $14,460,679 at the end of the period.

During the six months ended June 30, 2023, we made $8,900,500 of investment purchases and had $9,149,194 of redemptions and repayments, resulting in net investments at amortized cost of $16,552,481 at the end of that period.

Our portfolio composition by major class, based on fair value at June 30, 2024, was as follows:

Investments at

2 unchanged sentences

RESULTS OF OPERATIONS

Our operating results for the three months ended March 31, 2024 and March 31, 2023 were as follows:

Our operating results for the three and six months ended June 30, 2024 and June 30, 2023 were as follows:

For the Three Months Ended June 30,

For the Six Months Ended

Investment Income:

1 unchanged sentence

Net Investment Gain (Loss)

$ (1,025,767 )

Investment Income

4 unchanged sentences

On occasion, we may also generate revenue from dividends and capital gains on equity investments we make, if any, or on warrants or other equity interests that we may acquire.

For the three months ended March 31, 2024 and 2023, our total investment income was $832,667 and $864,028, respectively.

For the three and six months ended June 30, 2024, our total investment income was $888,629 and $1,721,296, respectively.

For the three and six months ended June 30, 2023 our total investment income was $907,502 and $1,771,530, respectively.

Our loan portfolio generates interest income, with an average rate on the loans of 14.4%.

Professional Fees

For the three months ended March 31, 2024 and 2023, we had $138,371 and $129,851 of professional fees expense, respectively.

For the three and six months ended June 30, 2024, we had $174,098 and $312,469 professional fees expense, respectively.

For the three and six months ended June 30, 2023, we had $287,325 and $417,176 professional fees expense, respectively.

The decrease is due to the decrease in loan activity during the current year.

Payroll and Directors Fees

For the three months ended March 31, 2024 and 2023, we had $151,066 and $1,130,439 of payroll expense, respectively.

In addition, director fees were $30,000 and $532,968 for the three months ended March 31, 2024 and 2023, respectively.

For the three and six months ended June 30, 2024, we had $145,859 and $296,925 of payroll expense, respectively, and we had $30,000 and $60,000 of directors fees, respectively.

For the three and six months ended June 30, 2023, we had $147,161 and $1,277,600 of payroll expense, respectively, and we had $30,000 and $562,968 of directors fees, respectively.

The increase in 2023 over 2024 is due to a stock option issuance recognized in January 2023.

Interest Expense

For the three months ended March 31, 2024 and 2023, we had $320 and $34,667 of interest expense, respectively.

The decrease is due to the termination of the line of credit agreement at the end of 2023.

For the three and six months ended June 30, 2024, we had $0 and $320 of interest expense, respectively.

For the three and six months ended June 30, 2023, we had $43,333 and $78,000 of interest expense, respectively.

The decrease is due to the termination of the line of credit agreement in January 2024.

Net Realized Gain (Loss) from Investments

For the three months ended March 31, 2024, we had $308,797 of proceeds from sale of investments, resulting in $24,495 of realized gains.

For the three months ended March 31, 2023, we had $3,945,000 of proceeds from sale of investments, resulting in $600,000 of realized losses.

For the three and six months ended June 30, 2024, we had $5,152,682 and $5,461,479, respectively, of sales of investments resulting in $346,745 and $371,240 of realized gains, respectively.

For the three and six months ended June 30, 2023, we had $5,204,194 and $9,149,194, respectively, of sales of investments resulting in $41,371 of realized gains and $558,629 of realized losses, respectively.

Net Change in Unrealized Appreciation (Depreciation) on Investments

For the three months ended March 31, 2024, our investments included $51,751 of unrealized appreciation.

For the three months ended March 31, 2023, our investments included $648,423 of unrealized appreciation.

For the three and six months ended June 30, 2024, our investments had $289,641 and $237,890 of unrealized depreciation, respectively.

For the three and six months ended June 30, 2023, our investments had $21,107 of unrealized depreciation and $627,316 of unrealized appreciation, respectively.

The decrease is due to the sale of appreciated stock during the current year.

Changes in Net Assets from Operations

For the three months ended March 31, 2024, we recorded a net increase in net assets from operations of $382,103.

Based on the weighted-average number of shares of common stock outstanding for the three months ended March 31, 2024, our per-share net increase in net assets from operations was $0.06.

For the three months ended March 31, 2023, we recorded a net decrease in net assets from operations of $718,044.

Based on the weighted-average number of shares of common stock outstanding for the three months ended March 31, 2023, our per-share net decrease in net assets from operations was $0.12.

Cash Flows for the Three Months Ended March 31, 2024 and 2023

The level of cash flows used in or provided by operating activities is affected by the timing of purchases, redemptions and repayments of portfolio investments, among other factors.

For the three months ended March 31, 2024, net cash provided in operating activities was $128,701.

Cash flows used in operating activities for the three months ended March 31, 2024 were primarily related to redemptions and repayments of investments totaling $308,797.

For the three months ended March 31, 2023, net cash used in operating activities was $3,399,812.

Cash flows provided in operating activities for the three months ended March 31, 2023 were primarily related to purchases of investments totaling $6,900,500, offset by redemptions and repayments totaling $3,945,000.

For the three and six months ended June 30, 2024, we recorded a net increase in net assets from operations of $412,936 and $795,039, respectively.

Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2024, our per-share net increase in net assets from operations was $0.06 and $0.12, respectively.

For the three and six months ended June 30, 2023, we recorded a net increase in net assets from operations of $70,721 and a net decrease in net assets from operations of $647,323, respectively.

Based on the weighted-average number of shares of common stock outstanding for the three and six months ended June 30, 2023, our per-share net increase in net assets from operations was $0.01 and our per share net decrease in net assets from operations was $0.10, respectively.

Cash Flows for the Six Months Ended June 30, 2024 and 2023

The level of cash flows used in or provided by operating activities is affected primarily by our provision of short-term loans, purchases of other investments, redemptions and repayments of our loans or investments, and other related factors.

For the six months ended June 30, 2024, net cash provided in operating activities was $5,048,587.

Cash flows provided in operating activities for the six months ended June 30, 2024 were primarily related to the funding of our short-term loans and purchases of investments aggregating $973,438, offset mostly by redemptions and repayments of short-term loans and investments totaling $5,461,479.

For the six months ended June 30, 2023, net cash provided in operating activities was $11,886.

Cash flows used in operating activities for the six months ended June 30, 2023 were primarily related to the funding of our short-term loans and purchases of investments aggregating $8,900,500, offset mostly by redemptions and repayments of short-term loans and investments totaling $9,149,194.

FINANCIAL CONDITION

As of March 31, 2024, we had cash of $504,725, an increase of $128,701 from December 31, 2023.

As of June 30, 2024, we had cash and cash equivalents of $5,424,611, an increase of $5,048,587 from December 31, 2023.

The primary use of our existing funds and any funds raised in the future is expected to be for our investments in portfolio companies or for other general corporate purposes, including paying for operating expenses or debt service to the extent we borrow or issue senior securities.

13 unchanged sentences

OFF-BALANCE-SHEET ARRANGEMENTS

During the three months ended March 31, 2024, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.

During the six months ended June 30, 2024, we did not engage in any off-balance sheet arrangements as described in Item 303(a)(4) of Regulation S-K.

FORWARD-LOOKING STATEMENTS

18 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis