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TABLE OF CONTENTS
Item 8. Consolidated Financial Statements and Supplementary Data
PART IV

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)


þ



ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the fiscal year ended December 31, 20182021


OR


o



TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For the transition period fromfrom:             to             

Commission File Number: 001-33723

Main Street Capital Corporation

(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of
of incorporation or organization)

41-2230745
(I.R.S. Employer
Identification No.)


1300 Post Oak Boulevard, 8th8th Floor
Houston, TX
(Address of principal executive offices)

77056


77056
(Zip Code)

(713) 350-6000

(Registrant'sRegistrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which
Registered

Common Stock, par value $0.01 per share

MAIN

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o   No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o   No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes o No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company"company” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o


Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The aggregate market value of the registrant'sregistrant’s common stock held by non-affiliates of the registrant as of June 30, 2018,2021, was approximately $2,178.0$1,948.5 million based upon the last sale price for the registrant'sregistrant’s common stock on that date.

The number of shares outstanding common shares of the registrantissuer’s common stock as of February 28, 201925, 2022 was 61,847,438.71,692,388.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants'registrants’ definitive Proxy Statement for its 20192022 Annual Meeting of Stockholders, to be filed with the Securities and Exchange Commission, are incorporated by reference in this Annual Report on Form 10-K in response to Part III.



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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements regarding the plans and objectives of management for future operations.operations and which relate to future events or our future performance or financial condition. Any such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend"“may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or "project"“project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including, without limitation, the factors discussed in Item 1A entitled "Risk Factors"“Risk Factors” in Part I of this Annual Report on Form 10-K and elsewhere in this Annual Report on Form 10-K.10-K and in other filings we may make with the Securities and Exchange Commission (“SEC”) from time to time. Other factors that could cause actual results to differ materially include changes in the economy and future changes in laws or regulations and conditions in our operating areas.

We have based the forward-looking statements included in this Annual Report on Form 10-K on information available to us on the date of this Annual Report on Form 10-K, and we assume no obligation to update any such forward-looking statements, unless we are required to do so by applicable law. However, you are advised to refer to any additional disclosures that we may make directly to you or through reports that we in the future may file with the Securities and Exchange Commission ("SEC"),SEC, including subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

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PART I

Item 1. BusinessBusiness

ORGANIZATION

Main Street Capital Corporation ("MSCC"(“MSCC”) is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM"(“LMM”) companies and debt capital to middle market ("(“Middle Market"Market”) companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop"“one stop” financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC"(“BDC”) under the Investment Company Act of 1940, as amended (the "1940 Act"“1940 Act”). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF"), Main Street Capital II, LP ("MSC II"(“MSMF”) and Main Street Capital III, LP ("(“MSC III"III” and, collectivelytogether with MSMF, and MSC II, the "Funds"“Funds”), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC"(“SBIC”) by the United States Small Business Administration ("SBA"(“SBA”). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

MSC Adviser I, LLC (the "External“External Investment Manager"Manager”) was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("(“External Parties"Parties”) and receives fee income for such services. MSCC has been granted no-action relief by the SEC to allow the External Investment Manager to


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register as a registered investment adviser under the Investment Advisers Act of 1940, as amended (the "Advisers Act"“Advisers Act”). Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC'sMSCC’s consolidated financial statements.

MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC"(“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"“Code”). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"“Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through"“pass-through” entities for tax purposes.

Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our,"“we,” “us,” “our,” the "Company"“Company” and "Main Street"“Main Street” refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

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The following diagram depicts our organizational structure:

Main Street Capital Corporation ("MSCC")

100%

100%

100%

Main Mezzanine Management, L.L.C. ("MSMF GP")

Main Street Capital III GP, L.L.C. ("MSC III GP")

Other Holding Companies*

99.6%

0.4%

1%

99%

100%

Main Street Mezzanine Fund, LP ("MSMF")

Main Street Capital III, LP ("MSC III")

MSC Adviser 1, L.L.C. ("External Investment Manager")**


*

Other Holding Companies includes the Taxable Subsidiaries and other entities formed for operational purposes. Each of these companies is directly or indirectly wholly owned by MSCC.

**

The External Investment Manager is accounted for as a portfolio investment at fair value, as opposed to a consolidated subsidiary, and is indirectly wholly owned by MSCC.

GRAPHIC


*
Other Holding Companies includes the Taxable Subsidiaries and other entities formed for operational purposes. Each of these companies is directly or indirectly wholly owned by MSCC.

**
The External Investment Manager is accounted for as a portfolio investment at fair value, as opposed to a consolidated subsidiary, and is indirectly wholly owned by MSCC.

CORPORATE INFORMATION

Our principal executive offices are located at 1300 Post Oak Boulevard, 8th Floor, Houston, Texas 77056. We maintain a Web sitewebsite on the Internet atwww.mainstcapital.com. We make available free of charge on our Web sitewebsite our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Information contained on our Web sitewebsite is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider that information to be part of this Annual Report on Form 10-K. Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports and other public filings are also available free of charge on the EDGAR Database on the SEC's Web siteSEC’s website atwww.sec.gov.

OVERVIEW OF OUR BUSINESS

Our principal investment objective is to maximize our portfolio'sportfolio’s total return by generating current income from our debt investments and current income and capital appreciation from our equity and equity-related investments,


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including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We seek to achieve our investment objective through our LMM, Private Loan, and Middle Market investment strategies. Our LMM investment strategy involves investments in companies that generally have annual revenues between $10 million and $150 million and our LMM portfolio investments generally range in size from $5 million to $50$75 million. Our Middle Market investment strategy involves investments are made in businessescompanies that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20$25 million. Our private loan ("(“Private Loan"Loan”) portfolioinvestment strategy involves investments in companies that are primarily debt securitiesconsistent with the size of the companies in privately held companies which have been originated through strategic relationships with otherour LMM and Middle Market investment funds on a collaborative basis.strategies, and our Private Loan investments are typically similargenerally range in size structure, terms and conditionsfrom $10 million to investments we hold in our LMM portfolio and Middle Market portfolio.$75 million.

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We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies while also negotiating favorable transaction terms and equity participations. Our ability to invest across a company'scompany’s capital structure, from secured loans to equity securities, allows us to offer portfolio companies a comprehensive suite of financing options, or a "one stop"“one stop” financing solution. Providing customized, "one stop"“one stop” financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien on the assets of the portfolio company and typically have a term of between five and seven years from the original investment date.

       Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

       Our Private Loan portfolio investments are primarily debt securities in privately held companies whichconsist generally of loans that have been originated directly by us or through strategic relationships with other investment funds on a collaborative basis and are often referred to in the debt markets as "club“club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing syndicated loans or debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by a first priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

Our other portfolio ("(“Other Portfolio"Portfolio”) investments primarily consist of investments whichthat are not consistent with the typical profiles for our LMM, Private Loan or Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

Subject to changes in our cash and overall liquidity, our Investment Portfolio (as defined below) may also include short-term portfolio investments that are atypical of our LMM, Middle Market and Private Loan portfolio investments in that they are intended to be a short-term deployment of capital. These assets are typically expected to be liquidated in one year or less and are not expected to be a significant portion of the overall Investment Portfolio.

Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities.

Our portfolio investments are generally made through MSCC, the Taxable Subsidiaries and the Funds. MSCC, the Taxable Subsidiaries and the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes (see "Regulation"“Regulation”). An investor'sinvestor’s return in MSCC will depend, in part, on the Funds'Taxable Subsidiaries’ and the Funds’ investment returns as they are wholly owned subsidiaries of MSCC.


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The level of new portfolio investment activity will fluctuate from period to period based upon our view of the current economic fundamentals, our ability to identify new investment opportunities that meet our investment criteria, and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating results may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gains or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changes in realized gains and losses and unrealized appreciation or depreciation could have a material impact on our operating results.

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Because we are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a better alignment of interests between our management team and our employees and our shareholders and a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio.Portfolio (as defined below). For the years ended December 31, 2021 and 2020, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.5% and 1.3%, respectively. The ratio of our total operating expenses, including interest expense, as a percentage of our quarterly average total assets was 3.4% and 3.2%, respectively, for the years ended December 31, 2021 and 2020. For further information on our expense ratio refer to Note F to the consolidated financial statements included in “Item 8.– Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

       During May 2012,Through the External Investment Manager, we serve as the sole investment adviser and administrator to MSC Income pursuant to an Investment Advisory and Administrative Services Agreement entered into between the External Investment Manager and MSC Income (the “Advisory Agreement”). Under the Advisory Agreement, the External Investment Manager earns a 1.75% annual base management fee and a 20% incentive fee on MSC Income’s pre-investment fee net investment income above a specified hurdle rate in exchange for providing advisory services to MSC Income.

Additionally, the External Investment Manager has entered into an Investment Management Agreement with MS Private Loan Fund I, LP, a private investment sub-advisory agreementfund with HMS Adviser, LP ("HMS Adviser"a strategy to co-invest with Main Street in Private Loan portfolio investments (the “Private Loan Fund”), pursuant to which is the investment advisor to HMS Income, a non-listed BDC, to provide certainExternal Investment Manager provides investment advisory and management services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SECPrivate Loan Fund in exchange for an asset-based fee and certain incentive fees.

The External Investment Manager earns management fees based on the assets of the funds and accounts under management and may earn incentive fees, or a carried interest, based on the performance of the funds and accounts managed. The total contribution of the External Investment Manager to allow us to own a registeredour net investment adviser, we assignedincome consists of the sub-advisory agreementcombination of the expenses allocated to the External Investment Manager sinceand the fees receiveddividend income earned from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. UnderExternal Investment Manager. For the investment sub-advisory agreement,years ended December 31, 2021, 2020 and 2019, the total contribution of the External Investment Manager is entitled to 50% ofour net investment income was $16.5 million, $9.9 million and $11.7 million, respectively. During the year ended December 31, 2021, the External Investment Manager earned $17.7 million in base management fee income and the$0.6 million in incentive fees earned by HMS Adviser under itscompared to $10.7 million of base management fees and no incentive fees in 2020 and $11.1 million of base management fees and $2.0 million in incentive fees in 2019 for the investment advisory services provided to MSC Income, the Private Loan Fund and other clients.

We have entered into an agreement with HMS Income.the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with MSC Income and its other clients. Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities, and we allocate the related expenses to the External Investment Manager pursuant to the sharing agreement. Our total expenses for the years ended December 31, 2021, 2020 and 2019 are net of expenses allocated to the External Investment Manager of $10.3 million, $7.4 million and $6.7 million, respectively.

       During April 2014, weWe have received an exemptive order from the SEC permitting co-investments among us, MSC Income and other funds and clients advised by us and HMS Incomethe External Investment Manager in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made co-investments with, and in the future intend to continue to make such co-investments with HMSMSC Income, the Private Loan Fund and other clients advised by the External Investment Manager, in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Incomeus and the External Investment Manager’s advised clients, as applicable, and if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income.such parties. Because the External Investment Manager may receive performance-based fee compensation from HMS Income,funds and clients advised by the External Investment Manager, this may provide itthe

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Company and the External Investment Manager an incentive to allocate opportunities to HMS Incomeother participating funds and clients instead of us. However, both we and the External Investment Manager have policies and procedures in place to manage this conflict.

RECENT DEVELOPMENTS

       In January 2019, we led a new portfolio investment to facilitateconflict, including oversight by the minority recapitalization of Centre Technologies, Inc. ("Centre"), a premier provider of IT hardware, software and service solutions. We, along with our co-investors, partnered with Centre's founder and Chief Executive Officer and management team to facilitate the transaction, with us funding $18.1 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in Houston, Texas, and founded in 2006, Centre has established itself as a mission critical IT solutions provider offering a full suite of solutions including managed and hosted services, value-added sourcing and integration, and project services.

       In January 2019, we led a new portfolio investment to facilitate the management buyout of CompareNetworks Inc. ("CompareNetworks"), a leading provider of media, marketing and technology


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solutions that drive revenue for life science and healthcare product manufacturers. We, along with our co-investors, partnered with CompareNetworks' founders and management team to facilitate the transaction, with us funding $10.7 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in South San Francisco, California, and founded in 2000, CompareNetworks provides life scientists, researchers, lab-based professionals, pharmaceutical professionals and healthcare professionals with digital tools and information resources to research, identify and determine which products and technologies to use.

       In January 2019, we fully exited our equity investment in Boss Industries, LLC ("Boss"). Boss markets, designs and manufacturers vehicle-mounted, and portable air compressor and generator systems utilized in municipal and utility services, energy product and industrial services. We realized a gain of approximately $4.0 million on the exitindependent members of our equity investmentBoard of Directors.

RECENT DEVELOPMENTS

In February 2022, we declared a supplemental cash dividend of $0.075 per share payable in Boss.March 2022. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the first quarter of 2022 of $0.215 per share for each of January, February and March 2022.

During February 2019,2022, we declared regular monthly dividends of $0.200$0.215 per share for each month of April, May and June 2019.of 2022. These regular monthly dividends equal a total of $0.600$0.645 per share for the second quarter of 2019 and represent2022, representing a 5.3%4.9% increase from the regular monthly dividends paid in the second quarter of 2021. Including the supplemental dividends declared for March 2022 and the regular monthly dividends declared for the first quarter and second quarter of 2018. Including the dividends declared for the second quarter of 2019,2022, we will have paid $25.420$33.540 per share in cumulative dividends since our October 2007 initial public offering.

On February 23, 2022, our Board of Directors unanimously approved the application to the Company of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the 1940 Act. As a result, the minimum asset coverage ratio applicable to the Company will be reduced from 200% to 150%, effective as of February 23, 2023, unless approved earlier by a vote of our stockholders, in which case the 150% minimum asset coverage ratio will be effective on the day after such approval. The Board also authorized the submission of a proposal for stockholders to accelerate the application of the 150% minimum asset coverage ratio to the Company at the 2022 Annual Meeting of Stockholders.

BUSINESS STRATEGIES

Our principal investment objective is to maximize our portfolio'sportfolio’s total return by generating current income from our debt investments and current income and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. We have adopted the following business strategies to achieve our investment objective:

      Deliver Customized Financing Solutions in the Lower Middle Market. We offer LMM portfolio companies customized debt and equity financing solutions that are tailored to the facts and circumstances of each situation. We believe our ability to provide a broad range of customized financing solutions to LMM companies sets us apart from other capital providers that focus on providing a limited number of financing solutions. Our ability to invest across a company's capital structure, from senior secured loans to subordinated debt to equity securities, allows us to offer LMM portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution.

      Focus on Established Companies. We generally invest in companies with established market positions, experienced management teams and proven revenue streams. We believe that those companies generally possess better risk-adjusted return profiles than newer companies that are building their management teams or are in the early stages of building a revenue base. We also believe that established companies in our targeted size range also generally provide opportunities for capital appreciation.

      Leverage the Skills and Experience of Our Investment Team. Our investment team has significant experience in lending to and investing in LMM and Middle Market companies. The members of our investment team have broad investment backgrounds, with prior experience at private investment funds, investment banks and other financial services companies and currently include seven certified public accountants and three Chartered Financial Analyst® charter holders. The expertise of our investment team in analyzing, valuing, structuring, negotiating and closing transactions should provide us with competitive advantages by allowing us to consider customized financing solutions and non-traditional or complex structures for our portfolio companies. Also, the reputation of our investment team has and should continue to enable us to generate additional revenue in the form of management and incentive fees in connection with us providing advisory services to other investment funds.

      Invest Across Multiple Companies, Industries, Regions and End Markets. We seek to maintain a portfolio of investments that is appropriately balanced among various companies, industries, geographic regions and end markets. This portfolio balance is intended to mitigate the potential effects of negative economic events for particular companies, regions, industries and end markets.
Deliver Customized Financing Solutions in the Lower Middle Market. We offer LMM portfolio companies customized debt and equity financing solutions that are tailored to the facts and circumstances of each situation. We believe our ability to provide a broad range of customized financing solutions to LMM companies sets us apart from other capital providers that focus on providing a limited number of financing solutions. Our ability to invest across a company’s capital structure, from senior secured loans to subordinated debt to equity securities, allows us to offer LMM portfolio companies a comprehensive suite of financing options, or a “one stop” financing solution.
Focus on Established Companies. We generally invest in companies with established market positions, experienced management teams and proven revenue streams. We believe that those companies generally possess better risk-adjusted return profiles than newer companies that are building their management teams or are in the early stages of building a revenue base. We also believe that established companies in our targeted size range also generally provide opportunities for capital appreciation.
Leverage the Skills and Experience of our Investment Team. Our investment team has significant experience in lending to and investing in LMM and Middle Market companies. The members of our investment team have broad investment backgrounds, with prior experience at private investment funds, investment banks and other financial services companies and currently include six certified public accountants and two Chartered Financial Analyst® charter holders. The expertise of our investment team in analyzing, valuing, structuring, negotiating and closing transactions should provide us with competitive advantages by allowing us to consider customized financing solutions and non-traditional or complex structures for our portfolio companies. Also, the reputation of our investment team has and should continue

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to enable us to generate additional revenue in the form of management and incentive fees in connection with us providing advisory services to other investment funds.
Invest Across Multiple Companies, Industries, Regions and End Markets. We seek to maintain a portfolio of investments that is appropriately balanced among various companies, industries, geographic regions and end markets. This portfolio balance is intended to mitigate the potential effects of negative economic events for particular companies, regions, industries and end markets.
Capitalize on Strong Transaction Sourcing Network. Our investment team seeks to leverage its extensive network of referral sources for portfolio company investments. We have developed a reputation in our marketplace as a responsive, efficient and reliable source of financing, which has created a growing stream of proprietary deal flow for us.
Grow our Asset Management Business. Our asset management business provides us with a recurring source of income, additional income diversification from sources of income directly tied to invested capital and the opportunity for greater stockholder returns through the utilization of our existing investment expertise, strong historical track record and favorable reputation.  We seek to grow our asset management business within our internally managed BDC structure in order to increase the value of this unique benefit to our stakeholders.  We expect such growth to come organically through the expansion of the investment capital that we manage for third parties and the potential extension of our asset management business to new investment strategies, and potentially through mergers and acquisition activities.
Benefit from Lower, Fixed, Long-Term Cost of Capital. The SBIC licenses held by the Funds have allowed them to issue SBA-guaranteed debentures. SBA-guaranteed debentures carry long-term fixed interest rates that are generally lower than interest rates on comparable bank loans and other debt. Because lower-cost SBA leverage is, and will continue to be, a significant part of our capital base through the Funds, our relative cost of debt capital should be lower than many of our competitors. In addition, the SBIC leverage that we receive through the Funds represents a stable, long-term component of our capital structure with proper matching of duration and cost compared to our LMM portfolio investments. We also maintain an investment grade rating from Standard & Poor’s Ratings Services which provides us the opportunity and flexibility to obtain additional, attractive long-term financing options to supplement our capital structure, including the unsecured notes with fixed interest rates we issued in 2017, 2019, 2020 and 2021.

INVESTMENT CRITERIA

Our investment team has identified the following investment criteria that it believes are important in evaluating prospective portfolio companies. Our investment team uses these criteria in evaluating investment opportunities. However, not all of these criteria have been, or will be, met in connection with each of our investments:

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Table of each LMM portfolio company to have meaningful equity ownership in the portfolio company to better align our respective economic interests. We believe management teams with these attributes are more likely to manage the companies in a manner that both protects our debt investment and enhances the value of our equity investment.

Established Companies with Positive Cash Flow. We seek to invest in established companies with sound historical financial performance. We typically focus on LMM companies that have historically generated EBITDA of $3 million to $20 million and commensurate levels of free cash flow. We also pursue investments in debt securities of Middle Market companies that are generally established companies with sound historical financial performance that are generally larger in size than LMM companies. We generally do not invest in start-up companies or companies with speculative business plans.

Defensible Competitive Advantages/Favorable Industry Position. We primarily focus on companies having competitive advantages in their respective markets and/or operating in industries with barriers to entry, which may help to protect their market position and profitability.

Exit Alternatives. We exit our debt investments primarily through the repayment of our investment from internally generated cash flow of the portfolio company and/or a refinancing. In addition, we seek to invest in companies whose business models and expected future cash flows may provide alternate methods of repaying our investment, such as through a strategic acquisition by other industry participants or a recapitalization.
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Defensible Competitive Advantages/Favorable Industry Position. We primarily focus on companies having competitive advantages in their respective markets and/or operating in industries with barriers to entry, which may help to protect their market position and profitability.
Exit Alternatives. We exit our debt investments primarily through the repayment of our investment from internally generated cash flow of the portfolio company and/or a refinancing. In addition, we seek to invest in companies whose business models and expected future cash flows may provide alternate methods of repaying our investment, such as through a strategic acquisition by other industry participants or a recapitalization.

INVESTMENT PORTFOLIO

The Investment Portfolio,“Investment Portfolio”, as used herein, refers to all of our investments in LMM portfolio companies, Private Loan portfolio investments, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments and theour investment in the External Investment Manager. Our LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments and equity warrants in privately held, LMM


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companies based in the United States. Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of the companies in our LMM portfolio and Middle Market portfolio, but are investments that we originate directly at Main Street or on a collaborative basis with other investment funds, and are often referred to in the debt markets as “club deals.” Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments that we originate on a collaborative basis with other investment funds, and are often referred to in the debt markets as "club deals." Our Other Portfolio investments primarily consist of investments whichthat are not consistent with the typical profiles for our LMM, Private Loan and Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

    Debt Investments

Historically, we have made LMM debt investments principally in the form of single tranche debt. Single tranche debt financing involves issuing one debt security that blends the risk and return profiles of both first lien secured and subordinated debt. We believe that single tranche debt is more appropriate for many LMM companies given their size in order to reduce structural complexity and potential conflicts among creditors.

Our LMM debt investments generally have a term of five to seven years from the original investment date, with limited required amortization prior to maturity, and provide for monthly or quarterly payment of interest at interest rates generally between 10% and 14% per annum, payable currently in cash. Interest rate terms can include either fixed or floating rate terms. In addition, certain LMM debt investments may have a form of interest that is not paid currently but is accrued and added to the loan balance and paid at maturity. We refer to this form of interest as payment-in-kind, or PIK, interest. We typically structure our LMM debt investments with the maximum seniority and collateral that we can reasonably obtain while seeking to achieve our total return target. In most cases, our LMM debt investment will be collateralized by a first priority lien on substantially all the assets of the portfolio company. In addition to seeking a senior lien position in the capital structure of our LMM portfolio companies, we seek to limit the downside potential of our LMM debt investments by negotiating covenants that are designed to protect our LMM debt investments while affording our portfolio companies as much flexibility in managing their businesses as is reasonable. Such restrictions may include affirmative and negative covenants, default penalties, lien protection, change of control or change of management provisions, key-man life insurance, guarantees, equity pledges, personal guaranties, where appropriate, and put rights. In addition, we typically seek board representation or observation rights in all of our LMM portfolio companies. Interest rate terms can include either fixed or floating rate terms.

While we will continue to focus our LMM debt investments primarily on single tranche debt investments, we also anticipate structuring some of our debt investments as mezzanine loans. We anticipateexpect that these mezzanine loans will be primarily junior secured or unsecured, subordinated loans that provide for relatively high interest rates, payable currently in cash, thatand will provide us with significant interest income plusincome. We also anticipate that these mezzanine loans will

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afford us the additional opportunity for income and gains through PIK interest and equity warrants and other similar equity instruments issued in conjunction with these mezzanine loans. These loans typically will have interest-only payments in the early years, with amortization of principal deferred to the later years of the mezzanine loan term. Typically, our mezzanine loans will have maturities of three to five years. We will generally target interest rates of 12% to 14%, payable currently in cash, for our mezzanine loan investments with higher targeted total returns from equity warrants or PIK interest.

Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments which have been originated directly by Main Street or through strategic relationships with other investment funds on a collaborative basis. Our Private Loan portfolio debt investments are generally secured by a first priority lien and typically have a term of between three and seven years from the original investment date.

We also pursue debt investments in Middle Market companies. Our Middle Market portfolio investments primarily consist of direct investments or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date. The debt investments in our Middle Market portfolio have rights and protections that are similar to those in our LMM debt investments, which may include affirmative


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and negative covenants, default penalties, lien protection, change of control provisions, guarantees and equity pledges. The Middle Market debt investments generally have floating interest rates at the London Interbank Offered Rate ("LIBOR"(“LIBOR”) plus a margin, and are typically subject to LIBOR floors.

       Our Private Loan portfolio investments primarily consist of investments in interest-bearing debt securities in companies that are consistent with the size of companies in our LMM portfolio or our Middle Market portfolio, but are investments which have been originated through strategic relationships with other investment funds on a collaborative basis. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien and typically have a term of between three and seven years from the original investment date.Warrants

    Warrants

In connection with our LMM debt investments, we occasionally receive equity warrants to establish or increase our equity interest in the portfolio company. Warrants we receive in connection with a debt investment typically require only a nominal cost to exercise, and thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We typically structure the warrants to provide provisions protecting our rights as a minority-interest holder, as well as secured or unsecured put rights, or rights to sell such securities back to the portfolio company, upon the occurrence of specified events. In certain cases, we also may obtain registration rights in connection with these equity interests, which may include demand and "piggyback"“piggyback” registration rights.

    Direct Equity Investments

We also will seek to make direct equity investments in situations where it is appropriate to align our interests with key management and stockholders of our LMM portfolio companies, and to allow for participation in the appreciation in the equity values of our LMM portfolio companies. We usually make our direct equity investments in connection with debt investments in our LMM portfolio companies. In addition, we may have both equity warrants and direct equity positions in some of our LMM portfolio companies. We seek to maintain fully diluted equity positions in our LMM portfolio companies of 5% to 50%, and may have controlling equity interests in some instances. We have a value orientation toward our direct equity investments and have traditionally been able to purchase our equity investments at reasonable valuations.

INVESTMENT PROCESS

Our management team'steam’s investment committee is responsible for all aspects of our LMM investment process.processes. The current members of our investment committee are Dwayne L. Hyzak, our Chief Executive Officer, and Senior Managing Director, David Magdol, our President and Chief Investment Officer, and Senior Managing Director, Vincent D. Foster, our ExecutiveSenior Advisor and Chairman and Curtis L. Hartman, our Vice-Chairman, Chief Credit Officer and Senior Managing Director.

       Our management team's credit committee is responsible for all aspects of our Middle Market portfolio investment process. The current members of our credit committee are Messrs. Hyzak, Foster, Hartman and Nicholas T. Meserve, Managing Director of our Middle Market investment team.

       Investment process responsibility for each Private Loan portfolio investment is delegated to either the investment committee or the credit committee based upon the nature of the investment and the manner in which it was originated. Similarly, theBoard.

The investment processes for eachLMM, Private Loan portfolio investment, from origination to close and to eventual exit, will follow the processes for our LMM portfolio investments or our Middle Market portfolio investments asare outlined below, or a combination thereof.

below. Our investment strategy involves a "team"“team” approach, whereby potential transactions are screened by several members of our investment team before being presented to the investment committee or the credit


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committee, as applicable.committee. Our investment committee and credit committee each meetmeets on an as neededas-needed basis depending on transaction volume. We generally categorize our investment process into seven distinct stages:

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    Deal Generation/Origination

    Deal generation and origination is maximized through long-standing and extensive relationships with industry contacts, brokers, commercial and investment bankers, entrepreneurs, service providers such as lawyers, financial advisors and accountants, and current and former portfolio companies and investors. Our investment team has focused its deal generation and origination efforts on LMM, Private Loan and Middle Market companies,investments, and we have developed a reputation as a knowledgeable, reliable and active source of capital and assistance in these markets.

    During the screening process, if a transaction initially meets our investment criteria, we will perform preliminary due diligence, taking into consideration some or all of the following information:

    a comprehensive financial model based on quantitative analysis of historical financial performance, projections and pro forma adjustments to determine the estimated internal rate of return;
    a brief industry and market analysis;
    direct industry expertise imported from other portfolio companies or investors;
    preliminary qualitative analysis of the management team’s competencies and backgrounds;
    potential investment structures and pricing terms; and
    regulatory compliance.

    Upon successful screening of a proposed LMM transaction, the investment team makes a recommendation to our investment committee. If our investment committee concurs with moving forward on the proposed LMM transaction, we typically issue a non-binding term sheet or letter of intent to the company. Upon successful screening of a proposed Private Loan transaction, the investment team makes a recommendation to our investment committee. If our investment committee concurs with moving forward on the proposed Private Loan transaction, we typically issue a non-binding term sheet to the company. For Middle Market portfolio investments, the initial term sheet is typically issued by the borrower, through the syndicating bank, and is screened by the investment team which makes a recommendation to our creditinvestment committee.

    For proposed LMM transactions, the non-binding term sheet or letter of intent will include the key economic terms based upon our analysis performed during the screening process, as well as a proposed timeline and our qualitative expectation for the transaction. While the term sheet or letter of intent for LMM investments is non-binding, we typically receive an expense deposit in order to move the transaction to the due diligence phase. Upon execution of a term sheet, we begin our formal due diligence process.

    For proposed Private Loan transactions, the non-binding term sheet will include the key economic terms based upon our analysis performed during the screening process, as well as a proposed timeline and our qualitative expectation for the transaction. Upon execution of a term sheet, we begin our formal due diligence process.

    For proposed Middle Market transactions, the initial term sheet will include key economic terms and other conditions proposed by the borrower and its representatives and the proposed timeline for the investment, which are reviewed by our investment team to determine if such terms and conditions are in agreement with our investment objectives.

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    Due Diligence

    Due diligence on a proposed LMM investment is performed by a minimum of twothree of our investment professionals, whom we refer to collectively as the investment team, and certain external resources, who together conduct due diligence to understand the relationships among the prospective portfolio company's


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    company’s business plan, operations and financial performance. Our LMM due diligence review includes some or all of the following:

        site visits with management and key personnel;

        detailed review of historical and projected financial statements;

        operational reviews and analysis;

        interviews with customers and suppliers;

        detailed evaluation of company management, including background checks;

        review of material contracts;

        in-depth industry, market and strategy analysis;

        regulatory compliance analysis; and

        review by legal, environmental or other consultants, if applicable.
    site visits with management and key personnel;
    detailed review of historical and projected financial statements;
    operational reviews and analysis;
    interviews with customers and suppliers;
    detailed evaluation of company management, including background checks;
    review of material contracts;
    in-depth industry, market and strategy analysis;
    regulatory compliance analysis; and
    review by legal, environmental or other consultants, if applicable.

    Due diligence on a proposed Private Loan or Middle Market investment is generally performed on materials and information obtained from certain external resources and assessed internally by a minimum of twothree of our investment professionals, who work to understand the relationships among the prospective portfolio company'scompany’s business plan, operations and financial performance using the accumulated due diligence information. Our typical Private Loan and Middle Market due diligence review includes some or all of the following:

        detailed review of historical and projected financial statements;

        in-depth industry, market, operational and strategy analysis;

        regulatory compliance analysis; and

        detailed review of the company's management team and their capabilities.
    detailed review of historical and projected financial statements;
    site visits or other discussions with management and key personnel;
    in-depth industry, market, operational and strategy analysis;
    regulatory compliance analysis; and
    detailed review of the company’s management team and their capabilities.

    During the due diligence process, significant attention is given to sensitivity analyses and how the company might be expected to perform given downside, base-case and upside scenarios. In certain cases, we may decide not to make an investment based on the results of the diligence process.

      Document and Close

    Upon completion of a satisfactory due diligence review of a proposed LMM portfolio investment, the investment team presents the findings and a recommendation to our investment committee. The presentation contains information which can include, but is not limited to, the following:

        company history and overview;

        transaction overview, history and rationale, including an analysis of transaction strengths and risks;

        analysis of key customers and suppliers and key contracts;

        a working capital analysis;

        an analysis of the company's business strategy;

        a management and key equity investor background check and assessment;

        third-party accounting, legal, environmental or other due diligence findings;

        investment structure and expected returns;

        anticipated sources of repayment and potential exit strategies;

        pro forma capitalization and ownership;
    company history and overview;

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    transaction overview, history and rationale, including an analysis of transaction strengths and risks;
    analysis of key customers and suppliers and key contracts;
    a working capital analysis;
    an analysis of the company’s business strategy;
    a management and key equity investor background check and assessment;
    third-party accounting, legal, environmental or other due diligence findings;
    investment structure and expected returns;
    anticipated sources of repayment and potential exit strategies;
    pro forma capitalization and ownership;
    an analysis of historical financial results and key financial ratios;
    sensitivities to management’s financial projections;
    regulatory compliance analysis findings; and
    detailed reconciliations of historical to pro forma results.

    Upon completion of a satisfactory due diligence review of a proposed Private Loan or Middle Market portfolio investment, the investment team presents the findings and a recommendation to our creditinvestment committee. The presentation contains information which can include, but is not limited to, the following:

    company history and overview;
    transaction overview, history and rationale, including an analysis of transaction strengths and risks;
    analysis of key customers and suppliers;
    an analysis of the company’s business strategy;
    investment structure and expected returns;
    anticipated sources of repayment and potential exit strategies;
    pro forma capitalization and ownership;
    regulatory compliance analysis findings; and
    an analysis of historical financial results and key financial ratios.

    If any adjustments to the transaction terms or structures are proposed by the investment committee, or credit committee, as applicable, such changes are made and applicable analyses are updated prior to approval of the transaction. Approval for the transaction must be made by the affirmative vote from a majority of the members of the investment committee, or credit committee, as applicable, with the committee

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    member managing the transaction, if any, abstaining from the vote. Upon receipt of transaction approval, the investment team will re-confirm regulatory compliance, process and finalize all required legal documents, and fund the investment.

    We continuously monitor the status and progress of the portfolio companies. We generally offer managerial assistance to our portfolio companies, giving them access to our investment experience, direct industry expertise and contacts. The same investment team that was involved in the investment process will continue its involvement in the portfolio company post-investment. This provides for continuity of knowledge and allows the investment team to maintain a strong business relationship with key management of our portfolio companies for post-investment assistance and monitoring purposes.

    As part of the monitoring process of LMM portfolio investments, the investment team will analyze monthly and quarterly financial statements versus the previous periods and year, review financial projections, meet and discuss issues or opportunities with management, attend board meetings and review all compliance certificates and covenants. While we maintain limited involvement in the ordinary course operations of our LMM portfolio companies, we maintain a higher level of involvement in non-ordinary course financing or strategic activities and any non-performing scenarios. We also monitor

    As part of the performancemonitoring process of our Private Loan and Middle Market portfolio investments;investments, the investment team will analyze monthly and quarterly financial statements versus the previous periods and year, review financial projections and review all compliance certificates and covenants. Depending upon the nature of our Private Loan portfolio investments, our investment team may also attend board meetings, and meet and discuss issues or opportunities with the portfolio company’s management team or private equity owners, however, due to the larger size and higher sophistication levelnature of our “lender only” relationship with these Private Loan and Middle Market companies in comparison to our LMM portfolio companies, it is not necessary or practical to have as much direct management interface.

    We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including, but not limited to, each investment'sinvestment’s expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company'scompany’s future outlook and other factors that are deemed to be significant to the portfolio company.


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    While we generally exit most investments through the refinancing or repayment of our debt and redemption or sale of our equity positions, we typically assist our LMM portfolio companies in developing and planning exit opportunities, including any sale or merger of our portfolio companies. We may also assist in the structure, timing, execution and transition of the exit strategy. The refinancing or repayment of Private Loan investments and Middle Market debt investments typically doesdo not require our assistance due to the additional resources available to these larger Private Loan and Middle Market companies.

    DETERMINATION OF NET ASSET VALUE AND INVESTMENT PORTFOLIO VALUATION PROCESS

    We determine the net asset value per share of our common stock on a quarterly basis. The net asset value per share is equal to our total assets minus total liabilities divided by the total number of shares of common stock outstanding.

    We are required to report our investments at fair value. As a result, the most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We follow the provisions of the Financial Accounting Standards Board Accounting Standards Codification ("ASC"(“ASC”) 820,Fair Value Measurements and Disclosures (" (“ASC 820"820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the

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    quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

    We determine in good faith the fair value of our Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by our Board of Directors and in accordance with the 1940 Act. Our valuation policies and processes are intended to provide a consistent basis for determining the fair value of our Investment Portfolio. See "Note“Note B.1. — Valuation of the Investment Portfolio"Portfolio” in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

    Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

           As described below,The 1940 Act requires valuation of a portfolio security at “market value” if market quotations for the security are “readily available.” Portfolio securities for which market quotations are not readily available must be valued at fair value as determined in good faith by the board of directors. In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which sets forth the specific requirements for determining fair value in good faith. Specifically, Rule 2a-5, among other things, permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board.

    Our Board of Directors adopted policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and designated a group of our executive officers to serve as the Board’s valuation designee thereunder (the “Valuation Committee”) effective April 1, 2021. Pursuant to Valuation Procedures we undertake a multi-step valuation process each quarter in connection with determining the fair value of our investments, with our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of the fair value for our Investment Portfolio andinvestments.

    The following outlines our valuation procedures, consistent with 1940 Act requirements. In addition,process as established under the Audit Committee of our Board of Directors periodically evaluates the performance and methodologies of the financial advisory services firm that we consult in connection with valuing our LMM and Private Loan portfolio company investments.Valuation Procedures:

    Our quarterly valuation process begins with an initial valuation of each portfolio investment performed by the valuation team consisting of several professionals who apply the appropriate valuation methodology depending on the type of investment.
    Each valuation model is then reviewed by the investment team responsible for monitoring the portfolio investment for accuracy, with any recommended changes reviewed by the valuation team.
    Updated valuation conclusions are then reviewed by and discussed with the Valuation Committee at quarterly valuation meetings. Valuation meetings are generally attended by the Valuation Committee, the valuation team, members of investment team responsible for each investment and members of the compliance team. Valuation models and valuation conclusions are adjusted as necessary following such meetings.
    A nationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the determinations of the fair value for the majority of our portfolio companies on a rotational basis.
    After incorporating commentary by the Valuation Committee and review of recommendations provided by the independent financial advisory services firm, valuation results are finalized and approved by the Valuation Committee.

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    The Board of Directors oversees the valuation process through its Audit Committee in accordance with Rule 2a-5 pursuant to the Valuation Procedures.

    which are initially reviewed by the investment professionals responsible for monitoring the portfolio investment;

    Preliminary valuation conclusions are then reviewed by and discussed with senior management, and the investment team considers and assesses, as appropriate, any changes that may be required to the preliminary valuations to address any comments provided by senior management;

    A nationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the Company's determinations of the fair value for its LMM and Private Loan portfolio companies;

    The Audit Committee of our Board of Directors reviews management's valuations, and the investment team and senior management consider and assess, as appropriate, any changes that may be required to management's valuations to address any comments provided by the Audit Committee; and

    The Board of Directors assesses the valuations and ultimately approves the fair value of each investment in our portfolio in good faith.

    Determination of fair value involves subjective judgments and estimates. The notes to our consolidated financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our financial results and financial condition.

    COMPETITION

    We compete for investments with a number of investment funds (including private equity funds, mezzanine funds, BDCs, and SBICs), as well as traditional financial services companies such as commercial banks and other sources of financing. Many of the entities that compete with us are larger and have more resources available to them. We believe we are able to be competitive with these entities primarily on the basis of our focus toward the underserved LMM, the experience and contacts of our management team, our responsive and efficient investment analysis and decision-making processes, our comprehensive suite of customized financing solutions and the investment terms we offer.

    We believe that some of our competitors make senior secured loans, junior secured loans and subordinated debt investments with interest rates and returns that are comparable to or lower than the rates and returns that we target. Therefore, we do not seek to compete primarily on the interest rates and returns that we offer to potential portfolio companies. For additional information concerning the competitive risks we face, see "Risk“Risk Factors — Risks RelatingRelated to Our Business and Structure — We may face increasing competition for investment opportunities."

    EMPLOYEESHUMAN CAPITAL

    Our employees are vital to our success as a principal investment firm. As a human-capital intensive business, the long-term success of our company depends on our people. We strive to attract, develop and retain our employees by offering unique employment opportunities, superior advancement and promotion opportunities, attractive compensation and benefit structures and a close-knit culture. The departure of our key investment and other personnel could cause our operating results to suffer.

    Our LMM business segment depends heavily on the business owners and management teams of our portfolio companies and their respective employees, contractors and service providers. In our investment process for LMM portfolio investments, the analysis of these individuals is a critical part of our overall investment underwriting process and as a result we carefully review the qualifications and experience of the portfolio company’s business owners and management team and their employment practices. We strive to partner with business owners and management teams whose business practices reflect our core values.

    We strive to recruit talented and driven individuals who share our values. We have competitive programs dedicated to attracting and retaining new talent and enhancing the skills of our employees. Our recruiting efforts utilize strong relationships with a variety of sources from which we recruit. Among other opportunities, we offer selected students investment analyst internships, which are expected to lead to permanent roles for high performing and high potential interns. Through our internship program, individuals who want to become investment analysts have the opportunity to see the full investment process from origination to closing, as well as post-closing portfolio management activities. We routinely recruit from within, promoting current employees who have shown the technical ability, attitude, interest and the initiative to take on greater responsibility.

    We have designed a compensation structure, including an array of benefit plans and programs, that we believe is attractive to our current and prospective employees. We also offer formal and informal training and mentorship programs that provide employees with access to senior level executives. Through our annual goal setting and performance review processes, our employees are annually evaluated by supervisors and our senior management team to ensure employees continue to develop and advance as expected. We are committed to having a diverse workforce, and an inclusive work environment is a natural extension of our culture. We also maintain a Women’s Initiative that provides employees with opportunities to network internally at Main Street and externally with other women in the financial

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    services industry. Our employees have access to several programs designed to enable our employees to balance work, family and family-related situations including flexible working arrangements and parental leave for birth and adoption placement. We are committed to creating and maintaining an atmosphere where all employees feel welcomed, valued, respected and heard so that they feel motivated and encouraged to contribute fully to their careers, our company and our communities.

    We seek to maintain a close-knit culture, which we believe is an important factor in employee retention, which is reinforced by our Community Building Committee. Our Community Building Committee, which is composed of a substantial cross section of employees across our organization, develops programs and initiatives that promote an open and inclusive atmosphere and encourage employee outreach with our community, in each case based upon feedback received from our employees. Initiatives generated by our Community Building Committee include employee wellbeing and engagement activities along with volunteer and donation opportunities with local charitable organizations. We encourage you to visit our website for more information about charitable organizations receiving our ongoing support. Nothing on our website, however, shall be deemed incorporated by reference into this Annual Report on Form 10-K.

    We monitor and evaluate various turnover and attrition metrics throughout our management team. Our annualized voluntary turnover is relatively low, a record which we attribute to our strong corporate culture, commitment to career development and attractive compensation and benefit programs.

    As of December 31, 2018,2021, we had 66 employees. Theseapproximately 80 employees, include46 of whom we characterize as investment and portfolio management professionals, and the others include operations professionals and administrative staff. None of our employees are represented by a collective bargaining agreement. As necessary, we will hire additional investment professionals and administrative personnel. All but two of our employees are located in our Houston, Texas office.

    REGULATION

    We have elected to be regulated as a BDC under the 1940 Act. The 1940 Act contains prohibitions and restrictions relating to transactions between BDCs and their affiliates, principal underwriters and affiliates of those affiliates or underwriters. The 1940 Act requires that a majority of the members of the board of directors of a BDC be persons other than "interested“interested persons," as that term is defined in the 1940 Act. In addition, the 1940 Act provides that we may not change the nature of our business so as to cease to be, or to withdraw our election as, a BDC unless approved by a majority of our outstanding voting securities.


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    The 1940 Act defines "a“a majority of the outstanding voting securities"securities” as the lesser of (i) 67% or more of the voting securities present at a meeting if the holders of more than 50% of our outstanding voting securities are present or represented by proxy or (ii) more than 50% of our outstanding voting securities.

      Qualifying Assets

    Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in Section 55(a) of the 1940 Act, which are referred to as qualifying assets, unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company'scompany’s total assets. The principal categories of qualifying assets relevant to our business are any of the following:

      (1)
      (1)Securities purchased in transactions not involving any public offering from the issuer of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company (as defined below), or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC.
      (2)Securities of any eligible portfolio company that we control.

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    Table of such securities, which issuer (subject to certain limited exceptions) is an eligible portfolio company (as defined below), or from any person who is, or has been during the preceding 13 months, an affiliated person of an eligible portfolio company, or from any other person, subject to such rules as may be prescribed by the SEC.

    (2)
    Securities of any eligible portfolio company that we control.

    (3)
    Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.

    (4)
    Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.

    (5)
    Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities.

    (6)
    Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment.
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    (3)Securities purchased in a private transaction from a U.S. issuer that is not an investment company or from an affiliated person of the issuer, or in transactions incident thereto, if the issuer is in bankruptcy and subject to reorganization or if the issuer, immediately prior to the purchase of its securities was unable to meet its obligations as they came due without material assistance other than conventional lending or financing arrangements.
    (4)Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.
    (5)Securities received in exchange for or distributed on or with respect to securities described in (1) through (4) above, or pursuant to the exercise of warrants or rights relating to such securities.
    (6)Cash, cash equivalents, U.S. government securities or high-quality debt securities maturing in one year or less from the time of investment.

    In addition, a BDC must have been organized and have its principal place of business in the United States and must be operated for the purpose of making investments in the types of securities described in (1), (2) or (3) above.

    An eligible portfolio company is defined in the 1940 Act as any issuer which:

    (a)is organized under the laws of, and has its principal place of business in, the United States;
    (b)is not an investment company (other than a small business investment company wholly owned by the BDC) or a company that would be an investment company but for certain exclusions under the 1940 Act; and
    (c)satisfies any of the following:

    (i)does not have any class of securities that is traded on a national securities exchange or has a class of securities listed on a national securities exchange but has an aggregate market value of outstanding voting and non-voting common equity of less than $250 million;
    (ii)is controlled by a BDC or a group of companies including a BDC and the BDC has an affiliated person who is a director of the eligible portfolio company; or
    (iii)is a small and solvent company having total assets of not more than $4 million and capital and surplus of not less than $2 million.

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      Managerial Assistance to Portfolio Companies

    As noted above, a BDC must be operated for the purpose of making investments in the type of securities described in (1), (2) or (3) above under the heading entitled "—“— Qualifying Assets." In addition, BDCs must generally offer to make available to such issuer of the securities (other than small and solvent companies described above) significant managerial assistance; except that, where we purchase such securities in conjunction with one or more other persons acting together, one of the other persons in the group may make available such managerial assistance. Making available managerial assistance means, among other things, any arrangement whereby the BDC, through its directors, officers or employees, offers to provide, and, if accepted, does so provide, significant guidance and counsel concerning the management, operations or business objectives and policies of a portfolio company.

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      Temporary Investments

      Pending investment in "qualifying“qualifying assets," as described above, our investments may consist of cash, cash equivalents, U.S. government securities and high-quality debt securities maturing in one year or less from time of investment therein, so that 70% of our assets are qualifying assets.

      Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% of all debt and/or senior stock immediately after each such issuance. However, recent2018 legislation has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. We are permitted to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so. If we receive such stockholder approval, we would be permitted to increase our leverage capacity on the first day after such approval. Alternatively, we may increase the maximum amount of leverage we may incur to an asset coverage ratio of 150% if the "required majority"“required majority” of our independent directors as defined in Section 57(o) of the 1940 Act approve such increase with such approval becoming effective after one year. In either case, weOn February 23, 2022, our Board of Directors unanimously approved the application of the modified asset coverage requirements set described above. As a result, our asset coverage requirement for senior securities will be changed from 200% to 150%, effective February 23, 2023. The Board has also recommended that a proposal to approve the application of the 150% minimum asset coverage requirement be submitted for approval at our 2022 Annual Meeting of Stockholders. If stockholders approve this proposal, the Company would become subject to the 150% minimum asset coverage ratio the day after the 2022 Annual Meeting of Stockholders.

      We have received exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures of the Funds from our 200% asset coverage test under the 1940 Act. As such, our ratio of total consolidated assets to outstanding indebtedness may be required to make certain disclosures onless than 200%. This provides us with increased investment flexibility but also increases our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage.

      In addition, while any senior securities remain outstanding (other than senior securities representing indebtedness issued in consideration of a privately arranged loan which is not intended to be publicly distributed), we must makegenerally include provisions in the documents governing new senior securities to prohibit any cash distribution to our stockholders or the repurchase of such securities or shares unless we meet the applicable asset coverage ratios at the time of the distribution or repurchase. We may also borrow amounts up to 5% of the value of our total assets for temporary or emergency purposes without regard to asset coverage. For a discussion of the risks associated with leverage, see "Risk“Risk Factors — Risks RelatingRelated to Our Business and Structure,"Leverage,” including, without limitation, "—“— Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us."

             We have previously received an exemptive order from the SEC to exclude debt securities issued by MSMF and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to Main Street. The exemptive order provides for the exclusion of all debt securities issued by the Funds, including the $345.8 million of outstanding debt as of December 31, 2018, issued pursuant to the SBIC program. This exemptive order provides us with expanded capacity and flexibility in obtaining future sources of capital for our investment and operational objectives.

      We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, warrants, options or rights to acquire our common stock, at a price below the current net asset value of the common stock if our Board of Directors determines that such sale is


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      in our best interests and that of our stockholders, and our stockholders approve such sale. In any such case, the price at which our securities are to be issued and sold may not be less than a price which, in the determination of our Board of Directors, closely approximates the market value of such securities (less any distributing commission or discount). We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2018 annual meeting2021 Annual Meeting of stockholdersStockholders, and have not sought such stockholder authorization since 2012, because our common stock price had been trading significantly above the net asset value per share of our common stock since 2011. Our stockholders have previously approved a proposal that authorizes us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. We may also make rights offerings to our stockholders at prices per share less than the net asset value per share, subject to applicable requirements of the 1940 Act. See "Risk“Risk Factors — Risks RelatingRelated to Our Business and Structureour Securities — Stockholders may incur dilution if we sell

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      shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock."

      We have adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act that establishes procedures for personal investments and restricts certain personal securities transactions. Personnel subject to the code may invest in securities for their personal investment accounts, including securities that may be purchased or held by us, so long as such investments are made in accordance with the code'scode’s requirements. In addition, theThe code of ethics is available on the EDGAR Database on the SEC's Web siteSEC’s website athttp://www.sec.gov.www.sec.gov.

      We vote proxies relating to our portfolio securities in a manner in which we believe is consistent with the best interest of our stockholders. We review on a case-by-case basis each proposal submitted to a stockholder vote to determine its impact on the portfolio securities held by us. Although we generally vote against proposals that we expect would have a negative impact on our portfolio securities, we may vote for such a proposal if there exists compelling long-term reasons to do so.

      Our proxy voting decisions are made by the investment team which is responsible for monitoring each of our investments. To ensure that our vote is not the product of a conflict of interest, we require that anyone involved in the decision-making process discloses to our chief compliance officer any potential conflict regarding a proxy vote of which he or she is aware.

      Stockholders may obtain information, without charge, regarding how we voted proxies with respect to our portfolio securities by making a written request for proxy voting information to: Chief Compliance Officer, 1300 Post Oak Boulevard, 8th8th Floor, Houston, Texas 77056.

      We are also prohibited under the 1940 Act from knowingly participating in certain transactions with our affiliates without the prior approval of our Board of Directors who are not interested persons and, in some cases, prior approval by the SEC.

      We are required to provide and maintain a bond issued by a reputable fidelity insurance company to protect us against larceny and embezzlement. Furthermore, as a BDC, we are prohibited from protecting any director or officer against any liability to us or our stockholders arising from willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person'sperson’s office.

      We are required to adopt and implement written policies and procedures reasonably designed to prevent violation of the federal securities laws, review these policies and procedures no less frequently than annually for their adequacy and the effectiveness of their implementation, and to designate a chief compliance officer to be responsible for administering the policies and procedures.

      We may be periodically examined by the SEC for compliance with the 1940 Act.


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        Small Business Investment Company Regulations

      Each of the Funds is licensed by the SBA to operate as a SBIC under Section 301(c) of the Small Business Investment Act of 1958. MSMF obtained its SBIC license in 2002 MSC II obtained its license in 2006 and MSC III obtained its license in 2016.

      SBICs are designed to stimulate the flow of private capital to eligible small businesses. Under SBIC regulations, SBICs may make loans to eligible small businesses, invest in the equity securities of such businesses and

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      provide them with consulting and advisory services. Each of the Funds has typically invested in secured debt, acquired warrants and/or made equity investments in qualifying small businesses.

      The Funds are subject to regulation and oversight by the SBA, including requirements with respect to reporting financial information, such as the extent of capital impairment if applicable, on a regular basis and annual examinations conducted by the SBA. The SBA, as a creditor, will have a superior claim to the Funds'Funds’ assets over our securities holders in the event the Funds are liquidated or the SBA exercises its remedies under the SBA-guaranteed debentures issued by the Funds upon an event of default.

             We have received exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures of the Funds from our 200% asset coverage test under the 1940 Act. As such, our ratio of total consolidated assets to outstanding indebtedness may be less than 200%. This provides us with increased investment flexibility but also increases our risks related to leverage. See "Risk Factors — Risks Relating to Our Business and Structure — Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us."

      Under present SBIC regulations, eligible small businesses generally include businesses that (together with their affiliates) have a tangible net worth not exceeding $19.5 million or have average annual net income after U.S. federal income taxes not exceeding $6.5 million (average net income to be computed without benefit of any carryover loss) for the two most recent fiscal years. In addition, an SBIC must devote 25% of its investment activity to "smaller"“smaller” enterprises as defined by the SBA. A smaller enterprise generally includes businesses that have a tangible net worth not exceeding $6 million and have average annual net income after U.S. federal income taxes not exceeding $2 million (average net income to be computed without benefit of any net carryover loss) for the two most recent fiscal years. SBIC regulations also provide alternative size standard criteria to determine eligibility for designation as an eligible small business or smaller enterprise, which criteria depend on the primary industry in which the business is engaged and are based on such factors as the number of employees and gross revenue. However, once an SBIC has invested in a company, it generally may continue to make follow-on investments in the company, regardless of the size of the portfolio company at the time of the follow-on investment, up to the time of the portfolio company'scompany’s initial public offering.

      The SBA prohibits an SBIC from providing funds to small businesses for certain purposes, such as relending and investment outside the United States, to businesses engaged in certain prohibited industries, and to certain "passive"“passive” (non-operating) companies. In addition, without prior SBA approval, an SBIC may not invest an amount equal to more than approximately 30% of the SBIC'sSBIC’s regulatory capital, as defined by the SBA, in any one portfolio company and its affiliates.

      The SBA places certain limitations on the financing terms of investments by SBICs in portfolio companies (such as limiting the permissible interest rate on debt securities held by an SBIC in a portfolio company). Included in such limitations are SBASBIC regulations which allow an SBIC to exercise control over a small business for a period of seven years from the date on which the SBIC initially acquires its control position. This control period may be extended for an additional period of time with the SBA'sSBA’s prior written approval.

      The SBA restricts the ability of an SBIC to lend money to any of its officers, directors and employees or to invest in affiliates thereof. The SBA also prohibits, without prior SBA approval, a "change“change of control"control” of an SBIC or transfers that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of equity of a licensed SBIC. A "change“change of control"control” is any event which would result in the


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      transfer of the power, direct or indirect, to direct the management and policies of an SBIC, whether through ownership, contractual arrangements or otherwise.

      The SBIC licenses allow the Funds to incur leverage by issuing SBA-guaranteed debentures, subject to the issuance of a capital commitment and certain approvals by the SBA and customary procedures. SBA-guaranteed debentures carry long-term fixed rates that are generally lower than rates on comparable bank and other debt. Under applicable regulations, an SBIC may generally have outstanding debentures guaranteed by the SBA in amounts up to twice the amount of the privately raised funds of the SBIC. Debentures guaranteed by the SBA have a maturity of ten years, require semiannual payments of interest, do not require any principal payments prior to maturity, and are not subject to prepayment penalties. As of December 31, 2018,2021, we, through the Funds, had $345.8$350.0 million of outstanding SBA-guaranteed debentures, which had an annual weighted-average interest rate of approximately 3.7%2.9%.

      SBICs must invest idle funds that are not being used to make loans in investments permitted under SBIC regulations in the following limited types of securities: (i) direct obligations of, or obligations guaranteed as to principal and interest by, the United States government, which mature within 15 months from the date of the investment; (ii) repurchase agreements with federally insured institutions with a maturity of seven days or less (and the securities

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      underlying the repurchase obligations must be direct obligations of or guaranteed by the federal government); (iii) certificates of deposit with a maturity of one year or less, issued by a federally insured institution; (iv) a deposit account in a federally insured institution that is subject to a withdrawal restriction of one year or less; (v) a checking account in a federally insured institution; or (vi) a reasonable petty cash fund.

      SBICs are periodically examined and audited by the SBA'sSBA’s staff to determine their compliance with SBIC regulations and are periodically required to file certain financial information and other documents with the SBA.

      Neither the SBA nor the U.S. government or any of its agencies or officers has approved any ownership interest to be issued by us or any obligation that we or any of our subsidiaries may incur.

      We are subject to the reporting and disclosure requirements of the Securities Exchange Act of 1934 (the "Exchange Act"“Exchange Act”), including the filing of quarterly, annual and current reports, proxy statements and other required items. In addition, we are subject to the Sarbanes-Oxley Act of 2002, which imposes a wide variety of regulatory requirements on publicly-held companies and their insiders. For example:

      The New York Stock Exchange ("NYSE"(“NYSE”) has adopted corporate governance regulations that listed companies must comply with. We believe we are in compliance with such corporate governance listing


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      standards. We intend to monitor our compliance with all future listing standards and to take all necessary actions to ensure that we stay in compliance.

        Investment Adviser Regulations

      The External Investment Manager, which is wholly owned by us, is subject to regulation under the Advisers Act. The Advisers Act establishes, among other things, recordkeeping and reporting requirements, disclosure requirements, limitations on transactions between the adviser'sadviser’s account and an advisory client'sclient’s account, limitations on transactions between the accounts of advisory clients, and general anti-fraud prohibitions. The External Investment Manager may be examined by the SEC from time to time for compliance with the Advisers Act.

        Taxation as a Regulated Investment Company

      MSCC has elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code. MSCC'sMSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, weMSCC generally will not pay corporate-level

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      U.S. federal income taxes on any income that we distribute to our stockholders as dividends. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements (as described below). In addition, in order to obtain RIC tax treatment, we must distribute to our stockholders, for each taxable year, at least 90% of our "investment“investment company taxable income," which is generally our net ordinary taxable income plus the excess of realized net short-term capital gains over realized net long-term capital losses, and 90% of our tax-exempt income (the "Annual“Annual Distribution Requirement"Requirement”). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

      For any taxable year in which we qualify as a RIC and satisfy the Annual Distribution Requirement, we will not be subject to U.S. federal income tax on the portion of our income or capital gains we distribute (or are deemed to distribute) to stockholders. We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gains not distributed (or deemed distributed) to our stockholders.

      We are subject to a 4% non-deductible U.S. federal excise tax on certain undistributed income unless we distribute in a timely manner an amount at least equal to the sum of (1) 98% of our net ordinary taxable income for each calendar year, (2) 98.2% of our capital gain net income for the one-year period ending December 31 in that calendar year and (3) any taxable income recognized, but not distributed, in preceding years on which we paid no U.S. federal income tax (the "Excise“Excise Tax Avoidance Requirement"Requirement”). Dividends declared and paid by us in a year will generally differ from taxable income for that year as such dividends may include the distribution of current year taxable income, exclude amounts carried over into the following year, and include the distribution of prior year taxable income carried over into and distributed in the current year. For amounts we carry over into the following year, we will be required to pay the 4% U.S. federal excise tax on the excess of 98% of our annual investment company taxable income and 98.2% of our capital gain net income over our distributions for the year.

      In order to qualify as a RIC for U.S. federal income tax purposes, we must, among other things:

      continue to qualify as a BDC under the 1940 Act at all times during each taxable year;
      derive in each taxable year at least 90% of our gross income from dividends, interest, payments with respect to certain securities, loans, gains from the sale of stock or other securities, net income from certain “qualified publicly traded partnerships,” or other income derived with respect to our business of investing in such stock or securities (the “90% Income Test”); and
      diversify our holdings so that at the end of each quarter of the taxable year:

      at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and
      no more than 25% of the value of our assets is invested in the securities, other than U.S. government securities or securities of other RICs, (i) of one issuer, (ii) of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) of certain “qualified publicly traded partnerships” (collectively, the “Diversification Tests”).

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          diversify our holdings so that at the end of each quarter of the taxable year:

          at least 50% of the value of our assets consists of cash, cash equivalents, U.S. government securities, securities of other RICs, and other securities if such other securities of any one issuer do not represent more than 5% of the value of our assets or more than 10% of the outstanding voting securities of the issuer; and

          no more than 25% of the value of our assets is invested in the securities, other than U.S. government securities or securities of other RICs, (i) of one issuer, (ii) of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) of certain "qualified publicly traded partnerships" (collectively, the "Diversification Tests").

      In order to comply with the 90% Income Test, we formed the Taxable Subsidiaries as wholly owned taxable subsidiaries for the primary purpose of permitting us to own equity interests in portfolio companies which are "pass-through"“pass-through” entities for tax purposes. Absent the taxable status of the Taxable Subsidiaries, a portion of the gross income from such portfolio companies would flow directly to us for purposes of the 90% Income Test. To the extent such income did not consist of income derived from securities, such as dividends and interest, it could jeopardize our ability

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      to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. The Taxable Subsidiaries are consolidated with Main Street for generally accepted accounting principles in the United States of America ("(“U.S. GAAP"GAAP”) purposes and are included in our consolidated financial statements, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated financial statements. The Taxable Subsidiaries are not consolidated with Main StreetMSCC for income tax purposes and may generate income tax expense, or benefit, as a result of their ownership of the portfolio investments. The income tax expense, or benefit, if any, and any related tax assets and liabilities, are reflected in our consolidated financial statements.

      The External Investment Manager is accounted for as a portfolio investment for U.S. GAAP purposes and is an indirect wholly owned subsidiary of MSCC, owned through a Taxable Subsidiary. The External Investment Manager is owned by a Taxable Subsidiary in order to comply with the 90% Income Test, since the External Investment Manager'sManager’s income would likely not consist of income derived from securities, such as dividends and interest, and as result, it could jeopardize our ability to qualify as a RIC and, therefore, cause us to incur significant U.S. federal income taxes. As a result of its ownership by a Taxable Subsidiary, the External Investment Manager is a disregarded entity for tax purposes. The External Investment Manager has also entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC'sMSCC’s consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager'sManager’s separate financial statements.

      We may be required to recognize taxable income in circumstances in which we do not receive cash. For example, if we hold debt obligations that are treated under applicable tax rules as having original issue discount (such as debt instruments issued with warrants and debt securities invested in at a discount to par), we must include in income each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by us in the same taxable year. We may also have to include in income other amounts that we have not yet received in cash such as PIK interest, cumulative dividends or amounts that are received in non-cash compensation such as warrants or stock. Because any original issue discount or other amounts accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.


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      Although we do not presently expect to do so, we are authorized to borrow funds and to sell assets in order to satisfy distribution requirements. However, under the 1940 Act, we are not permitted to make distributions to our stockholders in certain circumstances while our debt obligations and other senior securities are outstanding unless certain "asset coverage"“asset coverage” tests are met. See "Regulation“Regulation — Regulation as a Business Development Company — Senior Securities." Moreover, our ability to dispose of assets to meet our distribution requirements may be limited by (1) the illiquid nature of our portfolio and/or (2) other requirements relating to our status as a RIC, including the Diversification Tests. If we dispose of assets in order to meet the Annual Distribution Requirement or the Excise Tax Avoidance Requirement, we may make such dispositions at times that, from an investment standpoint, are not advantageous.

      We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the U.S. Department of the Treasury ("Treasury"(“Treasury”) regulations, distributions payable by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued guidance indicating that this rule will apply even where the total amount of cash that may be distributed is limited to no more than 20% of the total distribution. According to this guidance, if too many stockholders elect to receive their distributions in cash, each such stockholder would receive a pro rata share of the total cash to be distributed and would receive the remainder of their distribution in shares of stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or a combination thereof) as (i) ordinary income (including any qualified dividend income that, in the case of a noncorporate stockholder, may be eligible for the same reduced maximum tax rate applicable to long-term capital gains to the extent such distribution is properly reported by us as qualified dividend income and such stockholder satisfies certain minimum

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      holding period requirements with respect to our stock) or (ii) long-term capital gain (to the extent such distribution is properly reported as a capital gain dividend), to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

      If we fail to satisfy the 90% Income Test or the Diversification Tests for any taxable year, we may nevertheless continue to qualify as a RIC for such year if certain relief provisions are applicable (which may, among other things, require us to pay certain corporate-level U.S. federal taxes or to dispose of certain assets).

      If we were unable to qualify for treatment as a RIC and the foregoing relief provisions are not applicable, we would be subject to tax on all of our taxable income at regular corporate rates. We would not be able to deduct distributions to stockholders, nor would they be required to be made. If we were subject to tax on all of our taxable income at regular corporate rates, then distributions we make after being subject to such tax would be taxable to our stockholders and, provided certain holding period and other requirements were met, could qualify for treatment as "qualified“qualified dividend income"income” eligible for the maximum 20% rate (plus a 3.8% Medicare surtax, if applicable) applicable to qualified dividends to the extent of our current and accumulated earnings and profits. Subject to certain limitations under the Code, corporate taxpayers would be eligible for a dividends-received deduction on distributions they receive. Distributions in excess of our current and accumulated earnings and profits would be treated first as a return of capital to the extent of the stockholder'sstockholder’s tax basis, and any remaining distributions would be treated as a capital gain. To requalify as a RIC in a subsequent taxable year, we would be required to satisfy the RIC qualification requirements for that year and dispose of any earnings and profits from any year in which we failed to qualify as a RIC. Subject to a


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      limited exception applicable to RICs that qualified as such under Subchapter M of the Code for at least one year prior to disqualification and that requalify as a RIC no later than the second year following the nonqualifying year, we could be subject to tax on any unrealized net built-in gains in the assets held by us during the period in which we failed to qualify as a RIC that are recognized within the subsequent five years, unless we made a special election to pay corporate-level U.S. federal income tax on such built-in gain at the time of our requalification as a RIC.

      Item 1A. Risk Factors

      Investing in our securities involves a number of significant risks. In addition to the other information contained in this Annual Report on Form 10-K, you should consider carefully the following information before making an investment in our securities. The risks set out below are not the only risks we face. Additional risks and uncertainties not presently known to us or not presently deemed material by us might also impair our operations and performance. If any of the following events occur, our business, financial condition and results of operations could be materially and adversely affected. In such case, our net asset value, the trading price of our common stock and the value of our other securities could decline, and you may lose all or part of your investment.

      RISKS RELATING TO ECONOMIC CONDITIONSSUMMARY OF RISK FACTORS

        DeteriorationThe following is a summary of the principal risk factors associated with an investment in our securities. Further details regarding each risk included in the economybelow summary list can be found further below.

        Risks Related to our Business and financial markets increases the likelihood of adverse effects on our financial position and results of operations. Such economic adversity could impair our portfolio companies' financial positions and operating results and affect the industries in which we invest, which could, in turn, harm our operating results.Structure

      Because our Investment Portfolio is recorded at fair value, there is and will continue to be uncertainty as to the value of our portfolio investments.
      Our financial condition and results of operations depends on our ability to effectively manage and deploy capital.
      We face increasing competition for investment opportunities.

             The broader fundamentals of the United States economy remain mixed. In the event that the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements and an increase in defaults. In addition, a decline in oil and natural gas prices would adversely affect the credit quality of our debt investments and the underlying operating performance of our equity investments in energy-related businesses. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by economic cycles, industry cycles or other conditions, which could also have a negative impact on our future results.24


             Although we have been able to secure access to additional liquidity, including through our multi-year revolving credit facility (the "Credit Facility"), public debt issuances, leverage available through the SBIC program and equity offerings, the potential for volatility in the debt and equity capital markets provides no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all. Further, if the price of our common stock falls below our net asset value per share, we will be limited in our ability to sell new shares if we do not have stockholder authorization to sell shares at a price below net asset value per share. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2018 annual meeting of stockholders because our common stock price had been trading significantly above the net asset value per share of our common stock since 2011.

             The U.S. and global capital markets have, from time to time, experienced periods of disruption characterized by the freezing of available credit, a lack of liquidity in the debt capital markets, significant losses in the principal value of investments, the re-pricing of credit risk in the broadly syndicated credit


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      We are dependent upon our key investment personnel for our future success.
      Our success depends on attracting and retaining qualified personnel in a competitive environment.
      Our business model depends to a significant extent upon strong referral relationships.
      Our Board of Directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse.
      We may not be able to pay distributions to our stockholders, our distributions may not grow over time, and a portion of distributions paid to our stockholders may be a return of capital, which is a distribution of the stockholders’ invested capital.

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      market, the failureRisks Related to our Investments

      Our investments in portfolio companies involve higher levels of risk, and we could lose all or part of our investment.
      We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest.
      The lack of liquidity in our investments may adversely affect our business.
      We may not have the funds or ability to make additional investments in our portfolio companies.
      There may be circumstances where our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.
      We generally will not control our portfolio companies.
      Defaults by our portfolio companies will harm our operating results.
      Any unrealized depreciation we experience in our portfolio may be an indication of future realized losses, which could reduce our income and gains available for distribution.
      Prepayments of our debt investments by our portfolio companies could adversely impact our results of operations and reduce our return on equity.
      Changes relating to the LIBOR calculation process, the phase-out of LIBOR and the use of replacement rates for LIBOR may adversely affect the value of our portfolio securities.
      We are subject to risks associated with the current interest rate environment and changes in interest rates will affect our cost of capital and net investment income and the value of our investments.
      We may be subject to risks associated with “covenant-lite” loans.
      Changes in interest rates may affect our cost of capital, net investment income.
      We may not realize gains from our equity investments.

      Risks Related to Leverage

      Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us.
      All of our assets are subject to security interests under our senior securities and if we default on our obligations under our senior securities, we may suffer adverse consequences, including foreclosure on our assets.
      We have received Board approval that will allow us to incur additional leverage, which could increase the risk of investing in our securities.

      Risks Related to our Investment Management Activities

      Our executive officers and employees, through the External Investment Manager, may manage other investment funds that operate in the same or a related line of business as we do, and may invest in such funds, which may result in significant conflicts of interest.
      We, through the External Investment Manager, derive revenues from managing third-party funds pursuant to management agreements that may be terminated.

      Risks Related to BDCs

      Failure to comply with applicable laws or regulations and changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.
      Operating under the constraints imposed on us as a BDC and RIC may hinder the achievement of our investment objectives.

      Risks Related to our Securities

      Investing in our securities may involve a high degree of risk.
      Shares of closed-end investment companies, including BDCs, may trade at a discount to their net asset value.
      Our outstanding unsecured notes (the “Notes”) are unsecured and therefore effectively subordinated to any current or future secured indebtedness.
      If we default on our obligations to pay our other indebtedness, we may not be able to make payments on the Notes.

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      Table of major financial institutions and general volatility in the financial markets. During these periods of disruption, general economic conditions deteriorated with material and adverse consequences for the broader financial and credit markets, and the availability of debt and equity capital for the market as a whole, and financial services firms in particular, was reduced significantly. These conditions may reoccur for a prolonged period of time or materially worsen in the future. In addition, continuing uncertainty arising from the United Kingdom's decisionContents

      Risks Related to leave the European Union (the so called "Brexit") could lead to further market disruptions and currency volatility, potentially weakening consumer, corporate and financial confidence and resulting in lower economic growth for companies that rely significantly on Europe for their business activities and revenues. We may in the future have difficulty accessing debt and equity capital markets, and a severe disruption in the global financial markets, deterioration in credit and financing conditions or uncertainty regarding U.S. government spending and deficit levels, Brexit or other global economic conditions could have a material adverse effect on our business, financial condition and results of operations.SBIC Funds

      We, through the Funds, issue debt securities guaranteed by the SBA and sold in the capital markets. As a result of its guarantee of the debt securities, the SBA has fixed dollar claims on the assets of the Funds that are superior to the claims of our securities holders.

      Federal Income Tax Risks

      We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code.
      We may have difficulty paying the distributions required to maintain RIC tax treatment under the Code if we recognize income before or without receiving cash representing such income.

      General Risk Factors

      Deterioration in the economy and financial markets could impair our portfolio companies’ financial positions and operating results and affect the industries in which we invest, which could, in turn, harm our operating results.
      We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.

      RISKS RELATINGRELATED TO OUR BUSINESS AND STRUCTURE

      Under the 1940 Act, we are required to carry our portfolio investments at market value or, if there is no readily available market value, at fair value as determined by us withpursuant to procedures established and overseen by our Board of Directors having final responsibility for overseeing, reviewing and approving, in good faith, our determination of fair value and our valuation procedures.Directors. Typically, there is not a public market for the securities of the privately held LMM or Private Loan companies in which we have invested and will generally continue to invest. As a result, we value these securities quarterly at fair value based on inputs from management and a nationally recognized independent financial advisory services firm (on a rotational basis) and our audit committee with the oversight, review and approval ofpursuant to Valuation Procedures approved by our Board of Directors. In addition, the market for investments in Middle Market companies is generally not a liquid market, and therefore, we primarily use a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs, which are reviewed bypursuant to our audit committee with the oversight, review and approval of our Board of Directors.Valuation Procedures. See "Note“Note B.1. — Valuation of the Investment Portfolio"Portfolio” in the notes to consolidated financial statements for a more detailed description of our investment portfolio valuation process and procedures.

      The determination of fair value and consequently, the amount of unrealized gains and losses in our portfolio, are to a certain degree, subjective and dependent on a valuation process approved by our Board of Directors. Certain factors that may be considered in determining the fair value of our investments include external events, such as private mergers, sales and acquisitions involving comparable companies. Because such valuations, and particularly valuations of securities in privately held companies, are inherently uncertain, may fluctuate over short periods of time and may be based on estimates, our determinations of fair value may differ materially from the values that would have been used if a ready market for these securities existed. Due to this uncertainty, our fair value determinations may cause our net asset value on a given date to materially understate or overstate the value that we may ultimately realize on one or more of our investments. As a result, investors purchasing our securities based on an overstated net asset value would pay a higher price than the value of our investments might warrant. Conversely, investors selling our securities during a period in which the net asset value understates the value of our investments may receive a lower price for their securities than the value of our investments might warrant.


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        Our financial condition and results of operations depends on our ability to effectively manage and deploy capital.

      Our ability to achieve our investment objective of maximizing our portfolio'sportfolio’s total return by generating current income from our debt investments and current income and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company, depends on our ability to effectively manage and deploy capital, which depends, in turn, on our investment team's

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      team’s ability to identify, evaluate and monitor, and our ability to finance and invest in, companies that meet our investment criteria.

      Accomplishing our investment objective on a cost-effective basis is largely a function of our investment team'steam’s handling of the investment process, its ability to provide competent, attentive and efficient services and our access to investments offering acceptable terms. In addition to monitoring the performance of our existing investments, members of our investment team are also called upon, from time to time, to provide managerial assistance to some of our portfolio companies. These demands on their time may distract them or slow the rate of investment.

      Even if we are able to grow and build upon our investment operations, any failure to manage our growth effectively could have a material adverse effect on our business, financial condition, results of operations and prospects. The results of our operations will depend on many factors, including the availability of opportunities for investment, readily accessible short and long-term funding alternatives in the financial markets and economic conditions. Furthermore, if we cannot successfully operate our business or implement our investment policies and strategies as described herein, it could negatively impact our ability to pay dividends.

      We compete for investments with other investment funds (including private equity funds, debt funds, mezzanine funds, collateralized loan obligation funds, or CLOs, BDCs and SBICs), as well as traditional financial services companies such as commercial banks and other sources of funding. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. For example, some competitors may have a lower cost of capital and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments than we have. These characteristics could allow our competitors to consider a wider variety of investments, establish more relationships and offer better pricing and more flexible structuring than we are able to do. We may lose investment opportunities if we do not match our competitors'competitors’ pricing, terms and structure. If we are forced to match our competitors'competitors’ pricing, terms and structure, we may not be able to achieve acceptable returns on our investments or may bear substantial risk of capital loss. A significant part of our competitive advantage stems from the fact that the market for investments in LMM companies is underserved by traditional commercial banks and other financing sources. A significant increase in the number and/or the size of our competitors in this target market could force us to accept less attractive investment terms. Furthermore, many of our competitors are not subject to the regulatory restrictions that the 1940 Act imposes on us as a BDC.

      We depend on the members of our investment team, particularly Dwayne L. Hyzak, David L. Magdol, Vincent D. Foster, Curtis L. Hartman,Jesse E. Morris, K. Colton Braud, III, NicholasDamian T. Meserve,Burke, Samuel A. Cashiola, Diego Fernandez and Watt R. Matthews,Nicholas T. Meserve for the identification, review, final selection, structuring, closing and monitoring of our investments. These employees have significant investment expertise and relationships that we rely on to implement our business plan. Although we have entered into a non-compete agreement with Mr. Foster and non-compete arrangements with all of our executive officers and other key employees, in connection with their restricted stock grants, we have nocannot guarantee that he or any other employees will remain employed with us. If


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      we lose the services of thesethe individuals mentioned above, we may not be able to operate our business as we expect, and our ability to compete could be harmed, which could cause our operating results to suffer.

        Our success depends on attracting and retaining qualified personnel in a competitive environment.

      Our growth will require that we retain new investment and administrative personnel in a competitive market. Our ability to attract and retain personnel with the requisite credentials, experience and skills depends on several factors including, but not limited to, our ability to offer competitive wages, benefits and professional growth opportunities. Many of the entities, including investment funds (such as private equity funds, debt funds and mezzanine funds) and traditional financial services companies, with which we compete for experienced personnel have greater resources than we have.

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      The competitive environment for qualified personnel may require us to take certain measures to ensure that we are able to attract and retain experienced personnel. Such measures may include increasing the attractiveness of our overall compensation packages, altering the structure of our compensation packages through the use of additional forms of compensation, or other steps. The inability to attract and retain experienced personnel would have a material adverse effect on our business.

      We expect that members of our management team will maintain their relationships with intermediaries, financial institutions, investment bankers, commercial bankers, financial advisors, attorneys, accountants, consultants and other individuals within our network, and we will rely to a significant extent upon these relationships to provide us with potential investment opportunities. If our management team fails to maintain its existing relationships or develop new relationships with sources of investment opportunities, we will not be able to grow our Investment Portfolio. In addition, individuals with whom members of our management team have relationships are not obligated to provide us with investment opportunities, and, therefore, there is no assurance that such relationships will generate investment opportunities for us.

             Our executive officers and employees, through the External Investment Manager, may manage other investment funds that operate in the same or a related line of business as we do. Accordingly, they may have obligations to such other entities, the fulfillment of which obligations may not be in the best interests of us or our stockholders. During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, which is the investment advisor to HMS Income, a non-listed BDC, to provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. The sub-advisory relationship requires us to commit resources to achieving HMS Income's investment objective, while such resources were previously solely devoted to achieving our investment objective. Our investment objective and investment strategies are very similar to those of HMS Income and it is likely that an investment appropriate for us or HMS Income would be appropriate for the other entity. As a result, we and HMS Income requested an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where our co-investing would otherwise be prohibited under the 1940 Act. The SEC granted the exemptive order in April 2014, and we have made, and in the future intend to continue to make, such co-investments with HMS Income in


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      accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. As a consequence, it may be more difficult for us to maintain or increase the size of our Investment Portfolio in the future. Although we will endeavor to allocate investment opportunities in a fair and equitable manner, including in accordance with the conditions set forth in the exemptive order issued by the SEC when relying on such order, we may face conflicts in allocating investment opportunities between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide an incentive to allocate opportunities to HMS Income instead of us. We have implemented an allocation policy to ensure the equitable distribution of investment opportunities and, as a result, may be unable to participate in certain investments based upon such allocation policy.

        We, through the External Investment Manager, derive revenues from managing third party funds pursuant to management agreements that may be terminated pursuant to the terms of such agreements or requirements under the 1940 Act.

             The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed, including HMS Income. The terms of fund investment management agreements generally give the manager of the fund and the fund itself the right to terminate the management agreement in certain circumstances. With respect to funds that are not exempt from regulation under the 1940 Act, the fund's investment management agreement must be approved annually by (a) such fund's board of directors or by the vote of a majority of such fund's stockholders and (b) the majority of the independent members of such fund's board of directors and, in certain cases, by its stockholders, as required by law. The funds' investment management agreements can also be terminated by the majority of such fund's stockholders. Termination of any such management agreements would reduce the fees we earn from the relevant funds through the External Investment Manager, which could have a material adverse effect on our results of operations. Currently, HMS Income, an investment company that has elected to be regulated as a business development company under the 1940 Act, is subject to these provisions of the 1940 Act.

        Regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital.

             Our business will require capital to operate and grow. We may acquire such additional capital from the following sources:

               Senior Securities.    We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as senior securities. As a result of issuing senior securities, we will be exposed to additional risks, including the following:

            Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if certain requirements are met) immediately after each issuance of senior securities. We have received exemptive relief from the SEC to permit us to exclude the SBA-guaranteed debentures of the Funds from our asset coverage test under the 1940 Act. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we will be prohibited from issuing debt securities or preferred stock and/or borrowing money from banks or other financial institutions and may not be permitted to declare a dividend or make any distribution to stockholders or repurchase shares until such time as we satisfy this test.

            Any amounts that we use to service our debt or make payments on preferred stock will not be available for dividends to our common stockholders.

            It is likely that any senior securities or other indebtedness we issue will be governed by an indenture or other instrument containing covenants restricting our operating flexibility.

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              Additionally, some of these securities or other indebtedness may be rated by rating agencies, and in obtaining a rating for such securities and other indebtedness, we may be required to abide by operating and investment guidelines that further restrict operating and financial flexibility.

            We and, indirectly, our stockholders will bear the cost of issuing and servicing such securities and other indebtedness.

            Preferred stock or any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock, including separate voting rights and could delay or prevent a transaction or a change in control to the detriment of the holders of our common stock.

            Any unsecured debt issued by us would rank (i) pari passu with our current and future unsecured indebtedness and effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and (ii) structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including the SBA-guaranteed debentures issued by the Funds.

               Additional Common Stock.    The 1940 Act prohibits us from selling shares of our common stock at a price below the current net asset value per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below current net asset value per share provided that our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2018 annual meeting of stockholders because our common stock price had been trading significantly above the net asset value per share of our common stock since 2011. We may, however, sell our common stock, warrants, options or rights to acquire our common stock, at a price below the current net asset value of the common stock if our Board of Directors determines that such sale is in the best interests of our stockholders, and our stockholders approve such sale. See "— Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock" for a discussion of the risks related to us issuing shares of our common stock below net asset value. Our stockholders have authorized us to issue warrants, options or rights to subscribe for, convert to, or purchase shares of our common stock at a price per share below the net asset value per share, subject to the applicable requirements of the 1940 Act. There is no expiration date on our ability to issue such warrants, options, rights or convertible securities based on this stockholder approval. If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, the percentage ownership of our stockholders at that time would decrease, and they may experience dilution. Moreover, we can offer no assurance that we will be able to issue and sell additional equity securities in the future, on favorable terms or at all.

        The Funds are licensed by the SBA, and therefore subject to SBA regulations.

             The Funds, our wholly owned subsidiaries, are licensed to act as SBICs and are regulated by the SBA. The SBA also places certain limitations on the financing terms of investments by SBICs in portfolio companies and prohibits SBICs from providing funds for certain purposes or to businesses in a few prohibited industries. Compliance with SBA requirements may cause the Funds to forego attractive investment opportunities that are not permitted under SBA regulations.

             Further, the SBA regulations require, among other things, that a licensed SBIC be periodically examined by the SBA and audited by an independent auditor, in each case to determine the SBIC's compliance with the relevant SBA regulations. The SBA prohibits, without prior SBA approval, a "change of control" of an SBIC or transfers that would result in any person (or a group of persons acting in concert) owning 10% or more of a class of capital stock of a licensed SBIC. If the Funds fail to comply with applicable SBIC regulations, the SBA could, depending on the severity of the violation, limit or prohibit their use of SBIC debentures, declare outstanding SBIC debentures immediately due and payable, and/or limit them from making new investments.


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      In addition, the SBA can revoke or suspend a license for willful or repeated violation of, or willful or repeated failure to observe, any provision of the Small Business Investment Act of 1958 or any rule or regulation promulgated thereunder. Such actions by the SBA would, in turn, negatively affect us.

        Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us.

             Borrowings, also known as leverage, magnify the potential for loss on investments in our indebtedness and gain or loss on investments in our equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. We, through the Funds, issue debt securities guaranteed by the SBA and sold in the capital markets. As a result of its guarantee of the debt securities, the SBA has fixed dollar claims on the assets of the Funds that are superior to the claims of our securities holders. We may also borrow from banks and other lenders, including under our Credit Facility, and may issue debt securities or enter into other types of borrowing arrangements in the future. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital Resources" for a discussion regarding our outstanding indebtedness. If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any decrease in our income would cause net investment income to decline more sharply than it would have had we not leveraged our business. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to our securities. Use of leverage is generally considered a speculative investment technique.

             As of December 31, 2018, we, through the Funds, had $345.8 million of outstanding indebtedness guaranteed by the SBA, which had a weighted-average annualized interest cost of approximately 3.7%. The debentures guaranteed by the SBA have a maturity of ten years, with a current weighted-average remaining maturity of 5.6 years as of December 31, 2018, and require semiannual payments of interest. We will need to generate sufficient cash flow to make required interest payments on the debentures. If we are unable to meet the financial obligations under the debentures, the SBA, as a creditor, will have a superior claim to the assets of the Funds over our securities holders in the event we liquidate or the SBA exercises its remedies under such debentures as the result of a default by us.

             In addition, as of December 31, 2018, we had $301.0 million outstanding under our Credit Facility. Borrowings under the Credit Facility bear interest, subject to our election, on a per annum basis at a rate equal to the applicable LIBOR rate (2.5% as of December 31, 2018) plus (i) 1.875% (or the applicable base rate (Prime Rate of 5.5% as of December 31, 2018) plus 0.875%), as long as we meet certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the applicable base rate plus 1.0%) otherwise. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. If we are unable to meet the financial obligations under the Credit Facility, the Credit Facility lending group will have a superior claim to the assets of MSCC and its subsidiaries (excluding the assets of the Funds) over our stockholders in the event we liquidate or the lending group exercises its remedies under the Credit Facility as the result of a default by us.

             In April 2013, we issued $92.0 million, including the underwriters' full exercise of their over-allotment option, in aggregate principal amount of the 6.125% Notes (the "6.125% Notes"). The 6.125% Notes bore interest at a rate of 6.125% per year payable quarterly on January 1, April 1, July 1 and October 1 of each year. The total net proceeds to us from the 6.125% Notes, after underwriting discounts and estimated offering expenses payable, were approximately $89.0 million. On April 2, 2018, we redeemed the entire principal amount of the issued and outstanding 6.125% Notes effective April 1, 2018 (the "Redemption Date"). The 6.125% Notes were redeemed at par value, plus the accrued and unpaid interest thereon from January 1, 2018, through, but excluding, the Redemption Date. As part of the redemption, we recognized a realized loss on extinguishment of debt of $1.5 million in the second quarter of 2018 related to the write-off of the related unamortized deferred financing costs.


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             In November 2014, we issued $175.0 million in aggregate principal amount of 4.50% unsecured notes due 2019 (the "4.50% Notes due 2019") at an issue price of 99.53%. As of December 31, 2018, the outstanding balance of the 4.50% Notes due 2019 was $175.0 million. The 4.50% Notes due 2019 are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2019; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2019 mature on December 1, 2019, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions.

             In November 2017, we issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due 2022 (the "4.50% Notes due 2022," together with the 4.50% Notes due 2019, the "Notes") at an issue price of 99.16%. As of December 31, 2018, the outstanding balance of the 4.50% Notes due 2022 was $185.0 million. The 4.50% Notes due 2022 are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2022 mature on December 1, 2022, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions.

               Illustration.    The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below.


      Assumed Return on Our Portfolio(1)
      (net of expenses)

       
       (10.0)% (5.0)% 0.0% 5.0% 10.0% 

      Corresponding net return to common stockholder(2)

        (20.2)%  (11.5)%  (2.9)%  5.8%  14.4% 

      (1)
      Assumes $2,553.4 million in total assets, $1,006.8 million in debt outstanding, $1,476.0 million in net assets, and a weighted-average interest rate of 4.2%. Actual interest payments may be different.

      (2)
      In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2018 total assets of at least 1.7%.

             Our ability to achieve our investment objective may depend in part on our ability to access additional leverage on favorable terms by issuing debentures guaranteed by the SBA through the Funds, by borrowing from banks or insurance companies or by issuing other debt securities and there can be no assurance that such additional leverage can in fact be achieved.

        All of our assets are subject to security interests under our secured Credit Facility or subject to a superior claim over our stockholders by the SBA and if we default on our obligations under the Credit Facility or with respect to our SBA-guaranteed debentures, we may suffer adverse consequences, including foreclosure on our assets.

             Substantially all of our assets are currently pledged as collateral under our Credit Facility or are subject to a superior claim over our stockholders by the SBA. If we default on our obligations under the Credit Facility or our SBA-guaranteed debentures, the lenders and/or the SBA may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claim. In such event, we may be forced to sell our investments to raise funds to repay our outstanding borrowings in order to


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      avoid foreclosure and these forced sales may be at times and at prices we would not consider advantageous. Moreover, such deleveraging of our company could significantly impair our ability to effectively operate our business in the manner in which we have historically operated. As a result, we could be forced to curtail or cease new investment activities and lower or eliminate the dividends that we have historically paid to our stockholders. In addition, if the lenders exercise their right to sell the assets pledged under our Credit Facility, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under the Credit Facility.

        Recent legislation may allow us to incur additional leverage.

             The 1940 Act generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). However, legislation passed in March 2018 has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur by lowering the required asset coverage ratio of 200% to an asset coverage ratio of 150% (i.e., the amount of debt may not exceed 662/3% of the value of our assets), if certain requirements are met. Under the legislation, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when a quorum is met, approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval. Alternatively, the legislation allows a "required majority" (as defined in Section 57(o) of the 1940 Act) of the members of our board of directors to approve an increase in our leverage capacity, and such approval would become effective after one year from the date of approval. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. As a result of this legislation, we may be able to increase our leverage up to an amount that reduces our asset coverage ratio from 200% to 150% (i.e., the amount of debt may not exceed 662/3% of the value of our assets). See "Risk Factors — Risks Relating to Our Business and Structure — Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us" for a discussion of the risks associated with leverage.

        Further downgrades of the U.S. credit rating, automatic spending cuts or another government shutdown could negatively impact our liquidity, financial condition and earnings.

             Recent U.S. debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns, or a recession in the U.S. Although U.S. lawmakers passed legislation to raise the federal debt ceiling on multiple occasions, ratings agencies have lowered or threatened to lower the long-term sovereign credit rating on the United States. The impact of this or any further downgrades to the U.S. government's sovereign credit rating or its perceived creditworthiness could adversely affect the U.S. and global financial markets and economic conditions. Absent further quantitative easing by the Federal Reserve, these developments could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access the debt markets on favorable terms. In addition, disagreement over the federal budget has caused the U.S. federal government to shut down for periods of time. Continued adverse political and economic conditions could have a material adverse effect on our business, financial condition and results of operations.

        The interest rates of our floating-rate loans to our portfolio companies that extend beyond 2021 might be subject to change based on recent regulatory changes

             LIBOR is the basic rate of interest used in lending transactions between banks on the London interbank market and is widely used as a reference for setting the interest rate on loans globally. We typically use LIBOR as a reference rate in floating-rate loans we extend to portfolio companies such that the interest due to us pursuant to a term loan extended to a portfolio company is calculated using LIBOR. The terms of our debt investments generally include minimum interest rate floors which are calculated based on LIBOR.


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             On July 27, 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. It is unclear if at that time whether LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. As such, the potential effect of any such event on our net investment income cannot yet be determined. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index calculated by short term repurchase agreements, backed by Treasury securities. If LIBOR ceases to exist, we may need to renegotiate the credit agreements extending beyond 2021 with our portfolio companies that utilize LIBOR as a factor in determining the interest rate to replace LIBOR with the new standard that is established. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR, which could have an adverse impact on the market value for or value of any LIBOR-linked securities, loans and other financial obligations or extensions of credit held by or due to us and could have a material adverse effect on our business, financial condition and results of operations.

        We may experience fluctuations in our operating results.

             We could experience fluctuations in our operating results due to a number of factors, including our ability or inability to make investments in companies that meet our investment criteria, the interest rate payable on the debt securities we acquire, the level of portfolio dividend and fee income, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, operating results for any period should not be relied upon as being indicative of performance in future periods.

        Our Board of Directors may change our operating policies and strategies without prior notice or stockholder approval, the effects of which may be adverse.

      Our Board of Directors has the authority to modify or waive our current operating policies, investment criteria and strategies without prior notice and without stockholder approval. We cannot predict the effect any changes to our current operating policies, investment criteria and strategies would have on our business, net asset value, operating results and value of our stock. However, the effects might be adverse, which could negatively impact our ability to pay interest and principal payments to holders of our debt instruments and dividends to our stockholders and cause our investors to lose all or part of their investment in us.

        We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code.

             To maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset diversification requirements:

          The Annual Distribution Requirement for a RIC will be satisfied if we distribute to our stockholders on an annual basis at least 90% of our net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% U.S. federal excise tax on such income. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. For more information regarding tax treatment, see "Business — Regulation — Taxation as a Regulated Investment Company." Because we use debt financing, we are subject to certain asset coverage ratio requirements under the 1940 Act and are (and may in the future become) subject to certain financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. In addition, because we receive non-cash sources of income such as PIK interest which involves us recognizing taxable income without receiving the cash representing

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            such income, we may have difficulty meeting the distribution requirement. If we are unable to obtain cash from other sources, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.

          The source-of-income requirement will be satisfied if we obtain at least 90% of our gross income for each year from distributions, interest, gains from the sale of stock or securities or similar sources.

          The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. To satisfy this requirement, at least 50% of the value of our assets must consist of cash, cash equivalents, U.S. government securities, securities of other RICs, and other acceptable securities; and no more than 25% of the value of our assets can be invested in the securities, other than U.S. government securities or securities of other RICs, (i) of one issuer, (ii) of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) of certain "qualified publicly traded partnerships."

             Failure to meet these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments are in privately held companies, and therefore illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. Moreover, if we fail to maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.

        We may not be able to pay distributions to our stockholders, our distributions may not grow over time, and a portion of distributions paid to our stockholders may be a return of capital, which is a distribution of the stockholders'stockholders’ invested capital.

      We intend to pay distributions to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to pay a specified level of cash distributions, previously projected distributions for future periods, or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by, among other things, the impact of one or more of the risk factors described herein. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions. All distributions will be paid at the discretion of our Board of Directors and will depend on our earnings, our financial condition, maintenance of our RIC status, compliance with applicable BDC regulations, compliance with our debt covenants each of the Funds' compliance with applicable SBIC regulations and such other factors as our Board of Directors may deem relevant from time to time. We cannot assure you that we will pay distributions to our stockholders in the future.

      When we make distributions, we will be required to determine the extent to which such distributions are paid out of current or accumulated taxable earnings, recognized capital gains or capital. To the extent there is a return of capital, investors will be required to reduce their basis in our stock for U.S. federal income tax purposes, which may result in higher tax liability when the shares are sold, even if they have not increased in value or have lost value. In addition, any return of capital will be net of any sales load and offering expenses associated with sales of shares of our common stock. In the future, our distributions may include a return of capital.

        We may have difficulty paying the distributions requiredare subject to maintain RIC tax treatment under the Coderisks related to corporate social responsibility.

        Our business faces increasing public scrutiny related to environmental, social and governance (“ESG”) activities. We risk damage to our brand and reputation if we recognize income before or without receiving cash representing such income.

             We will include in income certain amounts that we have not yet received in cash, such as: (i) amortization of original issue discount, which may arise if we receive warrants in connection with the origination of a loan such that ascribing a valuefail to the warrants creates original issue discount in the debt instrument, if we investact responsibly in a debtnumber of areas, such as diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency and considering ESG factors in our investment at a discountprocesses. Adverse incidents with respect to ESG activities could impact the par value of the debt security or possibly in other circumstances; (ii) contractual payment-in-kind, or PIK, interest, which represents contractual interest


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      added to the loan balance and due at the end of the loan term; (iii) contractual preferred dividends, which represents contractual dividends added to the preferred stock and due at the end of the preferred stock term, subject to adequate profitability at the portfolio company; or (iv) amortization of market discount, which is associated with loans purchased in the secondary market at a discount to par value. Such amortization of original issue discounts, increases in loan balances as a result of contractual PIK arrangements, cumulative preferred dividends, or amortization of market discount will be included in income before we receive the corresponding cash payments. We also may be required to include in income certain other amounts before we receive such amounts in cash. Investments structured with these features may represent a higher level of credit risk compared to investments generating income which must be paid in cash on a current basis. For the year ended December 31, 2018, (i) approximately 1.0%value of our total investment income was attributable to PIK income not paid currently in cash, (ii) approximately 0.5%brand, the cost of our total investment income was attributable to amortization of original issue discount, (iii) approximately 1.0% of our total investment income was attributable to cumulative dividend income not paid currently in cash,operations and (iv) approximately 2.5% of our total investment income was attributable to amortization of market discount on loans purchased in the secondary market at a discount.

             Since, in certain cases, we may recognize taxable income before or without receiving cash representing such income, we may have difficulty meeting the Annual Distribution Requirement necessary to maintain RIC tax treatment under the Code. Accordingly, we may have to sell some of our investments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for this purpose. If we are not able to obtain cash from other sources, we may fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax. For additional discussion regarding the tax implications of a RIC, please see "Business — Regulation — Taxation as a Regulated Investment Company."

             We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable by us in cash or in shares of stock (at the stockholders election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued guidance providing that a dividend payable in stock or in cash at the election of the stockholders will be treated as a taxable dividend eligible for the dividends paid deduction provided that at least 20% of the total dividend is payable in cash and certain other requirements are satisfied. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain to the extent such dividend is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay taxrelationships with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

             In order for us to continue to qualify for RIC tax treatment and to minimize corporate-level U.S. federal taxes, we will be required to distribute substantiallyinvestors, all of our net ordinary taxable income and net capital gain income, including taxable income from certain of our subsidiaries, which includes the income from the Funds. We will be partially dependent on the Funds for cash distributions to enable us to meet the RIC


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      distribution requirements. The Funds may be limited by SBIC regulations from making certain distributions to us that may be necessary to enable us to maintain our status as a RIC. We may have to request a waiver of the SBA's restrictions for the Funds to make certain distributions to maintain our eligibility for RIC status. We cannot assure you that the SBA will grant such waiver and if the Funds are unable to obtain a waiver, compliance with the SBIC regulations may result in loss of RIC tax treatment and a consequent imposition of an entity-level tax on us.

        Because we intend to distribute substantially all of our taxable income to our stockholders to maintain our status as a RIC, we will continue to need additional capital to finance our growth, and regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital and make distributions.

             In order to satisfy the requirements applicable to a RIC and to minimize corporate-level U.S. federal taxes, we intend to distribute to our stockholders substantially all of our net ordinary taxable income and net capital gain income. We may carry forward excess undistributed taxable income into the next year, net of the 4% U.S. federal excise tax. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. As a BDC, we generally are required to meet an asset coverage ratio, as defined in the 1940 Act, of at least 200% (or 150% if certain requirements are met) immediately after each issuance of senior securities. This requirement limits the amount that we may borrow and may prohibit us from making distributions. Because we will continue to need capital to grow our Investment Portfolio, this limitation may prevent us from incurring debt and require us to raise additional equity at a time when it may be disadvantageous to do so.

             While we expect to be able to borrow and to issue additional debt and equity securities, we cannot assure you that debt and equity financing will be available to us on favorable terms, or at all. In addition, as a BDC, we generally are not permitted to issue equity securities priced below net asset value without stockholder approval. If additional funds are not available to us, we could be forced to curtail or cease new investment activities, and our net asset value could decline.

        Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock.

             The 1940 Act prohibits us from selling shares of our common stock at a price below the current net asset value per share of such stock, with certain exceptions. One such exception is prior stockholder approval of issuances below net asset value provided that our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2018 annual meeting of stockholders because our common stock price per share had been trading significantly above the net asset value per share of our common stock. We may, however, seek such authorization at future annual or special meetings of stockholders. Our stockholders have previously approved a proposal to authorize us to issue securities to subscribe to, convert to, or purchase shares of our common stock in one or more offerings. Any decision to sell shares of our common stock below the then current net asset value per share of our common stock or securities to subscribe to, convert to, or purchase shares of our common stock would be subject to the determination by our Board of Directors that such issuance is in our and our stockholders' best interests.

             If we were to sell shares of our common stock below net asset value per share, such sales would result in an immediate dilution to the net asset value per share. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and a proportionately greater decrease in a stockholder's interest in our earnings and assets and voting interest in us than the increase in our assets resulting from such issuance. In addition, if we issue securities to subscribe to, convert to or purchase shares of common stock, the exercise or conversion of such securities would increase the number of outstanding shares of our common stock. Any such exercise would be dilutive on the voting power


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      of existing stockholders, and could be dilutive with regard to dividends and our net asset value, and other economic aspects of the common stock.

             Because the number of shares of common stock that could be so issued and the timing of any issuance is not currently known, the actual dilutive effect cannot be predicted; however, the example below illustrates the effect of dilution to existing stockholders resulting from the sale of common stock at prices below the net asset value of such shares.

               Illustration: Example of Dilutive Effect of the Issuance of Shares Below Net Asset Value.    Assume that Company XYZ has 1,000,000 total shares outstanding, $15,000,000 in total assets and $5,000,000 in total liabilities. The net asset value per share of the common stock of Company XYZ is $10.00. The following table illustrates the reduction to net asset value, or NAV, and the dilution experienced by Stockholder A following the sale of 40,000 shares of the common stock of Company XYZ at $9.50 per share, a price below its NAV per share.

       
       Prior to Sale
      Below NAV
       Following Sale
      Below NAV
       Percentage
      Change
       

      Reduction to NAV

                

      Total Shares Outstanding

        1,000,000  1,040,000  4.0% 

      NAV per share

       $10.00 $9.98  (0.2)% 

      Dilution to Existing Stockholder

                

      Shares Held by Stockholder A

        10,000  10,000(1) 0.0% 

      Percentage Held by Stockholder A

        1.00%  0.96%  (3.8)% 

      Total Interest of Stockholder A in NAV

       $100,000 $99,808  (0.2)% 

      (1)
      Assumes that Stockholder A does not purchase additional shares in the sale of shares below NAV.

        Changes in laws or regulations governing our operations may adversely affect our business or cause us to alter our business strategy.

             We, the Funds, and our portfolio companies are subject to applicable local, state and federal laws and regulations. New legislation may be enacted or new interpretations, rulings or regulations could be adopted, including those governing the types of investments we are permitted to make, any of which could harm us and our stockholders, potentially with retroactive effect. In addition, any change to the SBA's current debenture SBIC program could have a significant impact on our ability to obtain lower-cost leverage through the Funds, and therefore, our ability to compete with other finance companies.

             Additionally, any changes to the laws and regulations governing our operations relating to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth herein and may result in our investment focus shifting from the areas of expertise of our investment team to other types of investments in which our investment team may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.

        The Tax Cuts and Jobs Actoperations. Additionally, new regulatory initiatives related to ESG could have a negative effect on us, our subsidiaries, our portfolio companies and the holders of our securities.

             On December 20, 2017, the U.S. House of Representatives and the U.S. Senate each voted to approve H.R. 1 (the "Tax Cuts and Jobs Act") and, on December 22, 2017, President Trump signed the Tax Cuts and Jobs Act into law. The Tax Cuts and Jobs Act made significant changes to the U.S. federal income tax rules applicable to both individuals and entities, including corporations. The Tax Cuts and Jobs Act includes provisions that, among other things, reduce the U.S. corporate tax rate, introduce a capital investment deduction, limit the interest deduction, limit the use of net operating losses to offset future taxable income


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      and make extensive changes to the U.S. international tax system. Treasury and the Internal Revenue Service continue to release guidance in the form of regulations providing rules for implementation and interpretation of the Tax Cuts and Jobs Act provisions. Uncertainty remains regarding significant provisions of the Tax Cuts and Jobs Act while some of the Treasury regulations and guidance remain in proposed form. Accordingly, we cannot predict any additional future impact the enactment of such legislation will have on us, our subsidiaries, our portfolio companies and the holders of our securities.

        Terrorist attacks, acts of war or natural disasters may affect any market for our securities, impact the businesses in which we invest and harm our business, operating results and financial condition.

             Terrorist acts, acts of war or natural disasters may disrupt our operations, as well as the operations of the businesses in which we invest. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities, military or security operations, or natural disasters could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact the businesses in which we invest directly or indirectly and, in turn, could have a material adverse impact on our business, operating results and financial condition. Losses from terrorist attacks and natural disasters are generally uninsurable.

        We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.

             Our business is highly dependent on our and third parties' communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:

          sudden electrical or telecommunications outages;

          natural disasters such as earthquakes, tornadoes and hurricanes;

          events arising from local or larger scale political or social matters, including terrorist acts; and

          cyber attacks.

        The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.

             The occurrence of a disaster such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events unanticipated in our disaster recovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. If a significant number of our managers were unavailable in the event of a disaster, our ability to effectively conduct our business could be severely compromised.

             We depend heavily upon computer systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computer systems could be subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in


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      our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss.

      RISKS RELATED TO OUR INVESTMENTS

        Our investments in portfolio companies involve higher levels of risk, and we could lose all or part of our investment.

      Investing in our portfolio companies exposes us indirectly to a number of significant risks. Among other things, these companies:

          may have limited financial resources and may be unable to meet their obligations under their debt instruments that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees from subsidiaries or affiliates of our portfolio companies that we may have obtained in connection with our investment, as well as a corresponding decrease in the value of the equity components of our investments;

          may have shorter operating histories, narrower product lines, smaller market shares and/or significant customer concentrations than larger businesses, which tend to render them more vulnerable to competitors' actions and market conditions, as well as general economic downturns;

          are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation, termination or significant under-performance of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us;

          generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position; and

          generally have less publicly available information about their businesses, operations and financial condition. We are required to rely on the ability of our management team and investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and may lose all or part of our investment.
      may have limited financial resources and may be unable to meet their obligations under their debt instruments that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees from subsidiaries or affiliates of our portfolio companies that we may have obtained in connection with our investment, as well as a corresponding decrease in the value of the equity components of our investments;
      may have shorter operating histories, narrower product lines, smaller market shares and/or significant customer concentrations than larger businesses, which tend to render them more vulnerable to competitors’ actions and market conditions, as well as general economic downturns;
      are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation, termination or significant under-performance of one or more of these persons could have a material adverse impact on our portfolio company and, in turn, on us;
      generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position; and
      generally have less publicly available information about their businesses, operations and financial condition. We are required to rely on the ability of our management team and investment professionals to obtain adequate information to evaluate the potential returns from investing in these companies. If we are unable to uncover all material information about these companies, we may not make a fully informed investment decision, and may lose all or part of our investment.

      In addition, in the course of providing significant managerial assistance to certain of our portfolio companies, certain of our officers and directors may serve as directors on the boards of such companies. To the extent that litigation arises out of our investments in these companies, our officers and directors may be named as defendants in such litigation, which could result in an expenditure of funds (through our indemnification of such officers and directors) and the diversion of management time and resources.

        A decline in oil and natural gas prices could have a material adverse effect on us.

             A decline in oil and natural gas prices could adversely affect (i) the credit quality of our debt investments and (ii) the underlying operating performance of our equity investments in energy-related businesses and in portfolio companies located in geographic areas which are more sensitive to the health of the oil and gas industries. A decrease in credit quality and the operating performance would, in turn, negatively affect the fair value of these investments, which would consequently negatively affect our net asset value. Should a decline in oil and natural gas prices persist for an extended period of time, it is likely that the ability of these investments to satisfy financial or operating covenants imposed by us or other lenders will be adversely affected, thereby negatively impacting their financial condition and their ability to satisfy their debt service and other obligations to us. Likewise, should a decline in oil and natural gas prices persist, it is likely that our energy-related portfolio companies' and other affected companies' cash flow and profit generating


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      capacities would also be adversely affected thereby negatively impacting their ability to pay us dividends or distributions on our equity investments.

        We may be exposed to higher risks with respect to our investments that include original issue discount or PIK interest.

      Our investments may include original issue discount and contractual PIK interest, which represents contractual interest added to a loan balance and due at the end of such loan'sloan’s term. To the extent original issue discount or PIK interest constitute a portion of our income, we are exposed to typical risks associated with such income being required to be included in taxable and accounting income prior to receipt of cash, including the following:

          original issue discount and PIK instruments may have higher yields, which reflect the payment deferral and credit risk associated with these instruments;

          for accounting purposes, cash distributions to investors representing original issue discount income are not derived from paid in capital, although they may be effectively paid from any offering proceeds during any given period; thus, although the source for the cash used to pay a distribution
          original issue discount and PIK instruments may have higher yields, which reflect the payment deferral and credit risk associated with these instruments;

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      Table of original issue discount income may come from the cash invested by investors, the 1940 Act does not require that investors be given notice of this fact;

      original issue discount and PIK instruments may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of the collateral; and

      original issue discount and PIK instruments may represent a higher credit risk than coupon loans; even if the conditions for income accrual under generally accepted accounting principles in the United States of America are satisfied, a borrower could still default when actual payment is due upon the maturity of such loan.
      for accounting purposes, cash distributions to investors representing original issue discount income are not derived from paid in capital, although they may be effectively paid from any offering proceeds during any given period; thus, although the source for the cash used to pay a distribution of original issue discount income may come from the cash invested by investors, the 1940 Act does not require that investors be given notice of this fact;
      original issue discount and PIK instruments may have unreliable valuations because their continuing accruals require continuing judgments about the collectability of the deferred payments and the value of the collateral; and
      original issue discount and PIK instruments may represent a higher credit risk than coupon loans; even if the conditions for income accrual under generally accepted accounting principles in the United States of America are satisfied, a borrower could still default when actual payment is due upon the maturity of such loan.

      The lack of liquidity in our investments may adversely affect our business.

      We generally invest in companies whose securities are not publicly traded and whose securities will be subject to legal and other restrictions on resale or will otherwise be less liquid than publicly traded securities. The illiquidity of these investments may make it difficult for us to sell these investments when desired. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the value at which we had previously recorded these investments. As a result, we do not expect to achieve liquidity in our investments in the near-term. Our investments are usually subject to contractual or legal restrictions on resale or are otherwise illiquid because there is usually no established trading market for such investments. The illiquidity of most of our investments may make it difficult for us to dispose of them at a favorable price and, as a result, we may suffer losses.

      We may not have the funds or ability to make additional investments in our portfolio companies. After our initial investment in a portfolio company, we may be called upon from time to time to provide additional funds to such company or have the opportunity to increase our investment through the extension of additional loans, the exercise of a warrant to purchase equity securities, or the funding of additional equity investments. There is no assurance that we will make, or will have sufficient funds to make, follow-on investments. Any decisions not to make a follow-on investment or any inability on our part to make such an investment may have a negative impact on a portfolio company in need of such an investment, may result in a missed opportunity for us to increase our participation in a successful operation, may reduce our ability to protect an existing investment or may reduce the expected yield on the investment.


      TableThere may be circumstances where our debt investments could be subordinated to claims of Contents

        Our portfolio companies may incur debt that ranks equally with,other creditors or seniorwe could be subject to our investments in such companies.lender liability claims.

             We invest primarily in the secured term debt of LMM, Private Loan and Middle Market companies and equity issued by LMM companies. Our portfolio companies may have, or may be permitted to incur, other debt that ranks equally with, or senior to, the debt in which we invest. By their terms, such debt instruments may entitle the holders to receive payment of interest or principal on or before the dates on which we are entitled to receive payments with respect to the debt instruments in which we invest. Also, in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of debt instruments ranking senior to our investment in that portfolio company would typically be entitled to receive payment in full before we receive any distribution. After repaying such senior creditors, such portfolio company may not have any remaining assets to use for repaying its obligation to us. In the case of debt ranking equally with debt instruments in which we invest, we would have to share on an equal basis any distributions with other creditors holding such debt in the event of an insolvency, liquidation, dissolution, reorganization or bankruptcy of the relevant portfolio company.

        There may be circumstances whereEven if our debt investments could be subordinated to claims of other creditors or we could be subject to lender liability claims.

             Even though we may haveinvestment is structured certain of our investments as secured loans, if one of our portfolio companies were to go bankrupt, depending on the facts and circumstances, and based upona senior-secured loan, principles of equitable subordination, as defined by existing case law, could lead a bankruptcy court couldto subordinate all or a portion of our claim to that of other creditors and transfer any lien securing such subordinated claim to the bankruptcy estate. The principles of equitable

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      subordination defined by case law have generally indicated that a claim may be subordinated only if its holder is guilty of misconduct or where the senior loan is re-characterized as an equity investment and the senior lender has actually provided significant managerial assistance to the bankrupt debtor. We may also be subject to lender liability claims for actions taken by us with respect to a borrower'sborrower’s business or instances where we exercise control over the borrower. It is possible that we could become subject to a lender liability claim, including as a result of actions taken in rendering significant managerial assistance or actions to compel and collect payments from the borrower outside the ordinary course of business.

             Certain loans that we make are secured by a second priority security interest in the same collateral pledged by a portfolio company to secure senior debt owed by the portfolio company to commercial banks or other traditional lenders. Often the senior lender has procured covenants from the portfolio company prohibiting the incurrence of additional secured debt without the senior lender's consent. Prior to and as a condition of permitting the portfolio company to borrow money from us secured by the same collateral pledged to the senior lender, the senior lender will require assurances that it will control the disposition of any collateral in the event of bankruptcy or other default. In many such cases, the senior lender will require us to enter into an "intercreditor agreement" prior to permitting the portfolio company to borrow from us. Typically the intercreditor agreements we are requested to execute expressly subordinate our debt instruments to those held by the senior lender and further provide that the senior lender shall control: (1) the commencement of foreclosure or other proceedings to liquidate and collect on the collateral; (2) the nature, timing and conduct of foreclosure or other collection proceedings; (3) the amendment of any collateral document; (4) the release of the security interests in respect of any collateral; and (5) the waiver of defaults under any security agreement. Because of the control we may cede to senior lenders under intercreditor agreements we may enter, we may be unable to realize the proceeds of any collateral securing some of our loans.


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             Finally, the value of the collateral securing our debt investment will ultimately depend on market and economic conditions, the availability of buyers and other factors. Therefore, there can be no assurance that the proceeds, if any, from the sale or sales of all of the collateral would be sufficient to satisfy the loan obligations secured by our first or second priority liens. There is also a risk that such collateral securing our investments will decrease in value over time, will be difficult to sell in a timely manner, will be difficult to appraise and will fluctuate in value based upon the success of the portfolio company and market conditions. If such proceeds are not sufficient to repay amounts outstanding under the loan obligations secured by our second priority liens, then we, to the extent not repaid from the proceeds of the sale of the collateral, will only have an unsecured claim against the company's remaining assets, if any.

        We are a non-diversified investment company within the meaning of the 1940 Act, and therefore we are not limited with respect to the proportion of our assets that may be invested in securities of a single issuer.

      We are classified as a non-diversified investment company within the meaning of the 1940 Act, which means that we are not limited by the 1940 Act with respect to the proportion of our assets that we may invest in securities of a single issuer. Under the 1940 Act, a “diversified” investment company is required to invest at least 75% of the value of its total assets in cash and cash items, government securities, securities of other investment companies and other securities limited in respect of any one issuer to an amount not greater than 5% of the value of the total assets of such company and no more than 10% of the outstanding voting securities of such issuer. As a non-diversified investment company, we are not subject to this requirement. To the extent that we assume large positions in the securities of a small number of issuers, our net asset value may fluctuate to a greater extent than that of a diversified investment company as a result of changes in the financial condition or the market'smarket’s assessment of the issuer. We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. Beyond our RIC asset diversification requirements, we do not have fixed guidelines for diversification, and our investments could be concentrated in relatively few portfolio companies. See "Risk“Risk Factors — Federal Income Tax Risks Relating to Our Business and Structure — We will be subject to corporate-level U.S. federal income tax if we are unable to qualify as a RIC under Subchapter M of the Code."

        We generally will not control our portfolio companies.

      We do not, and do not expect to, control the decision making in many of our portfolio companies, even though we may have board representation or board observation rights, and our debt agreements may contain certain restrictive covenants. As a result, we are subject to the risk that a portfolio company in which we invest will make business decisions with which we disagree and the management of such company will take risks or otherwise act in ways that do not serve our interests as debt investors or minority equity holders. Due to the lack of liquidity for our investments in non-traded companies, we may not be able to dispose of our interests in our portfolio companies as readily as we would like or at an appropriate valuation. As a result, a portfolio company may make decisions that would decrease the value of our portfolio holdings.

        Defaults by our portfolio companies will harm our operating results.

      A portfolio company'scompany’s failure to satisfy financial or operating covenants imposed by us or other lenders could lead to non-payment of interest and other defaults and, potentially, termination of its loans and foreclosure on its secured assets, which could trigger cross-defaults under other agreements and jeopardize a portfolio company'scompany’s ability to meet its obligations under the debt or equity securities that we hold. We may incur expenses to the extent necessary to seek recovery upon default or to negotiate new terms, which may include the waiver of certain financial covenants, with a defaulting portfolio company.

        Any unrealized depreciation we experience in our portfolio may be an indication of future realized losses, which could reduce our income and gains available for distribution.

      As a BDC, we are required to carry our investments at market value or, if no market value is ascertainable, at the fair value as determined in good faith byaccordance with our Board of Directors.Valuation Procedures adopted pursuant to Rule 2a-5 under the 1940 Act. Decreases in the market values or fair values of our investments will be recorded as unrealized depreciation. Any unrealized depreciation in our portfolio could be an indication of a portfolio company'scompany’s inability to meet its repayment obligations to us with respect to affected loans or a potential impairment of the value of affected equity investments.

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      This could result in realized losses in the future and ultimately in reductions of our income and gains available for distribution in future periods.


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      We are subject to the risk that the investments we make in our portfolio companies may be repaid prior to maturity. When this occurs, we will generally reinvest these proceeds in temporary investments, pending their future investment in new portfolio companies. These temporary investments will typically have substantially lower yields than the debt being prepaid and we could experience significant delays in reinvesting these amounts. Any future investment in a new portfolio company may also be at lower yields than the debt that was repaid. As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elect to prepay amounts owed to us. Additionally, prepayments could negatively impact our return on equity, which could result in a decline in the market price of our securities.

             SomeTo the extent we borrow money or issue debt securities or preferred stock to make investments, our net investment income will depend, in part, upon the difference between the rate at which we borrow funds or pay interest or dividends on such debt securities or preferred stock and the rate at which we invest these funds. In addition, many of our debt investments and borrowings have floating interest rates that reset on a periodic basis, and many of our investments are subject to interest rate floors. As a result, a change in market interest rates could have a material adverse effect on

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      our net investment income, in particular with respect to increases from current levels to the level of the interest rate floors on certain investments. In periods of rising interest rates, our cost of funds will increase because the interest rates on the amounts borrowed under our credit facility are floating and are not subject to interest rate floors, which could reduce our net investment income to the extent any debt investments have either fixed interest rates, or floating interest rates subject to an interest rate floor above current levels, and as a result such interest rates on these debt investments will not increase until interest rates exceed the applicable floor.

      Some of our portfolio companies have debt investments which bear interest at variable rates and may be negatively affected by changes in market interest rates. An increase in market interest rates would increase the interest costs and reduce the cash flows of our portfolio companies that have variable rate debt instruments, a situation which could reduce the value of the investment.our investments in these portfolio companies. The value of our investmentssecurities could also be reduced from an increase in market interest rates as rates available to investors could make an investment in our securities less attractive than alternative investments. In addition, an increase in interest rates would make it more expensive for us to use debt to finance our investments. As a result, a significant increase in market interest rates could increase our cost of capital, which would reduce our net investment income. Conversely, decreases in market interest rates could negatively impact the interest income from our variable rate debt investments. A decrease in market interest rates may also have an adverse impact on our returns by requiring us to accept lower yields on our debt investments and by increasing the risk that our portfolio companies will prepay our debt investments, resulting in the need to redeploy capital at potentially lower rates. See further discussion and analysis at "Item“Item 7A. Quantitative and Qualitative Disclosures about Market Risk"Risk”.

      Certain investments that we have made in the past and may make in the future include warrants or other equity securities. Investments in equity securities involve a number of significant risks, including the risk of further dilution as a result of additional issuances, inability to access additional capital and failure to pay current distributions. Investments in preferred securities involve special risks, such as the risk of deferred distributions, credit risk, illiquidity and limited voting rights. In addition, we may from time to time make non-control, equity investments in portfolio companies. Our goal is ultimately to realize gains upon our disposition of such equity interests. However, the equity interests we receive may not appreciate in value and, in fact, may decline in value. Accordingly, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience. We also may be unable to realize any value if a portfolio company does not have a liquidity event, such as a sale of the business, recapitalization or public offering, which would allow us to sell the underlying equity interests. We often seek puts or similar rights to give us the right to sell our equity securities back to the portfolio company issuer; however, we may be unable to exercise these put rights for the consideration provided in our investment documents if the issuer is in financial distress.

      Our investment strategy contemplates potential investments in debt securities of foreign companies. Investing in foreign companies may expose us to additional risks not typically associated with investing in securities of U.S. companies. These risks include changes in exchange control regulations, political and social instability, expropriation, imposition of foreign taxes, less liquid markets and less available information than is generally the case in the U.S., higher transaction costs, less government supervision of exchanges, brokers and


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      issuers, less developed bankruptcy laws,

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      difficulty in enforcing contractual obligations, lack of uniform accounting and auditing standards and greater price volatility.

      Although most of our investments will be U.S. dollar denominated, any investments denominated in a foreign currency will be subject to the risk that the value of a particular currency will change in relation to one or more other currencies. Among the factors that may affect currency values are trade balances, the level of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capital appreciation, and political developments.

      RISKS RELATINGRELATED TO LEVERAGE

      Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us.

      Borrowings, also known as leverage, magnify the potential for loss on investments in our indebtedness and gain or loss on investments in our equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. Accordingly, any event that adversely affects the value of an investment would be magnified to the extent we use leverage. Such events could result in a substantial loss to us, which would be greater than if leverage had not been used. In addition, our investment objectives are dependent on the continued availability of leverage at attractive relative interest rates.

      We may also borrow from banks and other lenders and may issue debt securities or enter into other types of borrowing arrangements in the future. Lenders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default. We have the ability to pledge up to 100% of our assets and can grant a security interest in all of our assets under the terms of any debt instruments we could enter into with lenders. The terms of our existing indebtedness require us to comply with certain financial and operational covenants, and we expect similar covenants in future debt instruments. Failure to comply with such covenants could result in a default under the applicable credit facility or debt instrument if we are unable to obtain a waiver from the applicable lender or holder, and such lender or holder could accelerate repayment under such indebtedness and negatively affect our business, financial condition, results of operations and cash flows. In addition, under the terms of any credit facility or other debt instrument we enter into, in the event of a default, we are likely to be required by its terms to use the net proceeds of any investments that we sell to repay a portion of the amount borrowed under such facility or instrument before applying such net proceeds to any other uses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital Resources” for a discussion regarding our outstanding indebtedness.

      If the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any decrease in our income would cause net investment income to decline more sharply than it would have had we not leveraged our business. Such a decline could negatively affect our ability to pay common stock dividends, scheduled debt payments or other payments related to our securities.

      Illustration. The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing below.

      Assumed Return on Our Portfolio(1)

      (net of expenses)

      (10.0)

      %

      (5.0)

      %

      0.0

      %

      5.0

      %

      10.0

      %

      Corresponding Net Return to Common Stock Holder(2)

      (24.2)

      %

      (13.9)

      %

      (3.6)

      %

      6.7

      %

      17.0

      %


      (1)

      Assumes, as of December 31, 2021, $3,690.3 million in total assets, $1,805.0 million in debt outstanding, $1,788.8 million in net assets, and a weighted-average interest rate of 3.3%. Actual interest payments may be different.

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      (2)

      In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2021 total assets of at least 1.7%.

      Our ability to achieve our investment objective may depend in part on our ability to access additional leverage on favorable terms and there can be no assurance that such additional leverage can in fact be achieved. If we are unable to obtain leverage or if the interest rates of such leverage are not attractive, we could experience diminished returns. The number of leverage providers and the total amount of financing available could decrease or remain static.

      All of our assets are subject to security interests under our senior securities and if we default on our obligations under our senior securities, we may suffer adverse consequences, including foreclosure on our assets.

      Substantially all of our assets are currently pledged as collateral under our senior securities, including any credit facilities or notes. If we default on our obligations under our senior securities, our lenders may have the right to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests or their superior claim. In such event, we may be forced to sell our investments to raise funds to repay our outstanding borrowings in order to avoid foreclosure and these forced sales may be at times and at prices we would not consider advantageous. Moreover, such deleveraging of our company could significantly impair our ability to effectively operate our business in the manner in which we have historically operated. As a result, we could be forced to curtail or cease new investment activities and lower or eliminate the dividends that we have historically paid to our stockholders. In addition, if the lenders exercise their right to sell the assets pledged under our senior securities, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under the senior securities.

      If our operating performance declines and we are not able to generate sufficient cash flow to service our debt obligations, we may in the future need to refinance or restructure our debt, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required lenders under our senior securities to avoid being in default. If we are unable to implement one or more of these alternatives, we may not be able to meet our payment obligations under our senior securities. If we breach our covenants under our senior securities and seek a waiver, we may not be able to obtain a waiver from the required lenders or debt holders. If this occurs, we would be in default under our senior securities, the lenders or debt holders could exercise their rights as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations could proceed against the collateral securing the debt. Because certain of our senior securities have customary cross-default provisions, if the indebtedness under our senior securities is accelerated, we may be unable to repay or finance the amounts due.

      We have received Board approval that will allow us to incur additional leverage, which could increase the risk of investing in our securities.

      The 1940 Act generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). However, legislation passed in March 2018 modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur by lowering the required asset coverage ratio of 200% to an asset coverage ratio of 150% (i.e., the amount of debt may not exceed 662/3% of the value of our assets), if certain requirements are met.

      On February 23, 2022, our Board of Directors unanimously approved the application of the modified asset coverage requirements set described above. As a result, our asset coverage requirement for senior securities will be changed from 200% to 150%, effective February 23, 2023. The Board has also recommended that a proposal to approve the application of the 150% minimum asset coverage requirement be submitted for approval at our 2022 Annual Meeting of Stockholders. If stockholders approve this proposal, the Company would become subject to the 150% minimum asset coverage ratio the day after the 2022 Annual Meeting of Stockholders. The Board values the opinions of our stockholders and will reconvene to reconsider its approval of the modified asset coverage requirements if this proposal is not approved by stockholders. There can be no assurance that the Board would rescind its approval if this proposal is not

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      approved by stockholders. If this proposal is not approved by the stockholders and the Board does not rescind its approval, we will be subject to the 150% asset coverage ratio, beginning February 23, 2023.

      RISKS RELATED TO OUR SECURITIESINVESTMENT MANAGEMENT ACTIVITIES

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      governing our operations relating to permitted investments may cause us to alter our investment strategy in order to avail ourselves of new or different opportunities. Such changes could result in material differences to the strategies and plans set forth herein and may result in our investment focus shifting from the areas of expertise of our investment team to other types of investments in which our investment team may have less expertise or little or no experience. Thus, any such changes, if they occur, could have a material adverse effect on our results of operations and the value of your investment.

      Failure to maintain our status as a BDC would reduce our operating flexibility.

      If we do not remain a BDC, we might be regulated as a closed-end investment company under the 1940 Act, which would subject us to substantially more regulatory restrictions under the 1940 Act and correspondingly decrease our operating flexibility.

      Operating under the constraints imposed on us as a BDC and RIC may hinder the achievement of our investment objectives.

      The 1940 Act and the Code impose numerous constraints on the operations of BDCs and RICs that do not apply to certain of the other investment vehicles that we may compete with. BDCs are required, for example, to invest at least 70% of their total assets in certain qualifying assets, including U.S. private or thinly traded public companies, cash, cash equivalents, U.S. government securities and other high-quality debt instruments that mature in one year or less from the date of investment. Moreover, qualification for taxation as a RIC requires satisfaction of source-of-income, asset diversification and distribution requirements. Operating under these constraints may hinder our ability to take advantage of attractive investment opportunities and to achieve our investment objective. Any failure to do so could subject us to enforcement action by the SEC, cause us to fail to satisfy the requirements associated with RIC status and subject us to entity-level corporate income taxation, cause us to fail the 70% test described above or otherwise have a material adverse effect on our business, financial condition or results of operations.

      Regulations governing our operation as a BDC will affect our ability to, and the way in which we, raise additional capital.

      Our business will require capital to operate and grow. We may acquire such additional capital from the following sources:

      Senior Securities. We may issue debt securities or preferred stock and/or borrow money from banks or other financial institutions, which we refer to collectively as senior securities. As a result of issuing senior securities, we will be exposed to additional risks, including the following:

      Under the provisions of the 1940 Act, we are permitted, as a BDC, to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if certain requirements are met) immediately after each issuance of senior securities. If the value of our assets declines, we may be unable to satisfy this test. If that happens, we will be prohibited from issuing debt securities or preferred stock and/or borrowing money from banks or other financial institutions and may not be permitted to declare a dividend or make any distribution to stockholders or repurchase shares until such time as we satisfy this test.
      Any amounts that we use to service our debt or make payments on preferred stock will not be available for dividends to our common stockholders.
      It is likely that any senior securities or other indebtedness we issue will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, some of these securities or other indebtedness may be rated by rating agencies, and in obtaining a rating for such securities and other indebtedness, we may be required to abide by operating and investment guidelines that further restrict operating and financial flexibility.

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      We and, indirectly, our stockholders will bear the cost of issuing and servicing such securities and other indebtedness.
      Preferred stock or any convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock, including separate voting rights and could delay or prevent a transaction or a change in control to the detriment of the holders of our common stock.
      Any unsecured debt issued by us would generally rank (i) pari passu with our current and future unsecured indebtedness and effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and (ii) structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries.

      Additional Common Stock. We are not generally able to issue and sell our common stock at a price below net asset value per share. We may, however, sell our common stock, warrants, options or rights to acquire our common stock, at a price below the current net asset value of the common stock if our Board of Directors determines that such sale is in the best interests of our stockholders, and our stockholders approve such sale. See “Risk Factors – Risks Related to our Securities — Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock” for a discussion of the risks related to us issuing shares of our common stock below net asset value. Our stockholders have authorized us to issue warrants, options or rights to subscribe for, convert to, or purchase shares of our common stock at a price per share below the net asset value per share, subject to the applicable requirements of the 1940 Act. There is no expiration date on our ability to issue such warrants, options, rights or convertible securities based on this stockholder approval. If we raise additional funds by issuing more common stock or senior securities convertible into, or exchangeable for, our common stock, the percentage ownership of our stockholders at that time would decrease, and they may experience dilution. Moreover, we can offer no assurance that we will be able to issue and sell additional equity securities in the future, on favorable terms or at all.

      RISKS RELATED TO OUR SECURITIES

      Investing in our securities may involve a high degree of risk.

      The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and a higher risk of volatility or loss of principal. Our investments in portfolio companies involve higher levels of risk, and therefore, an investment in our securities may not be suitable for someone with lower risk tolerance.

      Shares of closed-end investment companies, including BDCs, may trade at a discount to their net asset value.

      Shares of closed-end investment companies, including BDCs, may trade at a discount to net asset value. This characteristic of closed-end investment companies and BDCs is separate and distinct from the risk that our net asset value per share may decline. We cannot predict whether our common stock will trade at, above or below net asset value. In addition, if our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price unless our stockholders approve such a sale and our Board of Directors makes certain determinations. See "Risk“Risk Factors — Risks RelatingRelated to Our Business and Structureour Securities — Stockholders may incur dilution if we sell shares of our common stock in one or more offerings at prices below the then current net asset value per share of our common stock or issue securities to subscribe to, convert to or purchase shares of our common stock"stock” for a discussion related to us issuing shares of our common stock below net asset value.

      We may be unable to invest a significant portion of the net proceeds from an offering or from exiting an investment or other capital on acceptable terms, which could harm our financial condition and operating results.39


             Delays in investing the net proceeds raised in an offering or other capital raised or proceeds resulting from exiting an investment may cause our performance to be worse than that of other fully invested BDCs or other lenders or investors pursuing comparable investment strategies. We cannot assure you that we will be able to identify any investments that meet our investment objective or that any investment that we make will produce a positive return. We may be unable to invest the net proceeds of any offering or other capital raised or proceeds resulting from exiting an investment on acceptable terms within the time period that we anticipate or at all, which could harm our financial condition and operating results.

             We anticipate that, depending on market conditions and the amount of the capital, it may take us a substantial period of time to invest substantially all the capital in securities meeting our investment objective. During this period, we may invest the capital primarily in marketable securities and idle funds investments, which generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments and may produce returns that are significantly lower than the returns which we expect to achieve when our portfolio is fully invested in securities meeting our investment objective. Most of the debt investments that meet our investment criteria are, or would be if rated, below investment grade quality. Indebtedness of below investment grade quality, which is often referred to as "junk," is regarded as having predominantly speculative characteristics with respect to the issuer's capacity to pay interest and repay principal. As a result, any distributions that we pay during such period may be substantially lower than the distributions that we may be able to pay when our portfolio is fully invested in securities meeting our investment objective. In addition, until such time as the net proceeds of any offering or from exiting an investment or other capital are invested in new securities meeting our investment objective, the market price for our securities may decline. Thus, the initial return on your investment may be lower than when, if ever, our portfolio is fully invested in securities meeting our investment objective.


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        Investing in our securities may involve a high degree of risk.

               The investments we make in accordance with our investment objective may result in a higher amount of risk than alternative investment options and a higher risk of volatility or loss of principal. Our investments in portfolio companies involve higher levels of risk, and therefore, an investment in our securities may not be suitable for someone with lower risk tolerance.

        Fluctuations in the trading prices of our securities may adversely affect the liquidity of the trading market for our securities and, if we seek to raise capital through future securities offerings, our ability to raise such capital. The market price and liquidity of the market for our securities may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include:

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        common stock in one or more offerings. Any decision to sell shares of our common stock below the then current net asset value per share of our common stock or securities to subscribe to, convert to, or purchase shares of our common stock would be subject to the determination by our Board of Directors that such issuance is in our and our stockholders’ best interests.

        If we were to sell shares of our common stock below net asset value per share, such sales would result in an immediate dilution to the net asset value per share. This dilution would occur as a result of the sale of shares at a price below the then current net asset value per share of our common stock and otherwise negatively impacta proportionately greater decrease in a stockholder’s interest in our earnings and assets and voting interest in us than the market priceincrease in our assets resulting from such issuance. In addition, if we issue securities to subscribe to, convert to or purchase shares of common stock, the exercise or conversion of such securities would increase the number of outstanding shares of our common stock;

        inabilitystock. Any such exercise would be dilutive on the voting power of existing stockholders and could be dilutive with regard to obtaindividends and our net asset value, and other economic aspects of the common stock.

        Because the number of shares of common stock that could be so issued and the timing of any exemptive relief that mayissuance is not currently known, the actual dilutive effect cannot be required by us inpredicted; however, the futureexample below illustrates the effect of dilution to existing stockholders resulting from the SEC;

        losssale of our BDC or RIC status or anycommon stock at prices below the net asset value of such shares.

        Illustration: Example of Dilutive Effect of the Funds' status as an SBIC;

        changesIssuance of Shares Below Net Asset Value. Assume that Company XYZ has 1,000,000 total shares outstanding, $15,000,000 in our earningstotal assets and $5,000,000 in total liabilities. The net asset value per share of the common stock of Company XYZ is $10.00. The following table illustrates the reduction to net asset value, or variations in our operating results;

        changes inNAV, and the valuedilution experienced by Stockholder A following the sale of our portfolio40,000 shares of investments;

        any shortfall in our investment income or net investment income or any increase in losses from levels expected by investors or securities analysts;

        lossthe common stock of Company XYZ at $9.50 per share, a major funding source;

        fluctuations in interest rates;

        the operating performance of companies comparable to us;

        departure of our key personnel;

        proposed, or completed, offerings of our securities, including classes other than our common stock;

        global or national credit market changes; and

        general economic trends and other external factors.

        The Maryland General Corporation Law and our articles of incorporation and bylaws contain provisions that may have the effect of discouraging, delaying or making difficult a change in control of our company or the removal of our incumbent directors. The existence of these provisions, among others, may have a negative impact on the price of our common stock and may discourage third-party bids for ownership of our company. These provisions may prevent any premiums being offered to you for our common stock.


        We may in the future determine to issue preferred stock, which could adversely affect the market value of our common stock.

        The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. In addition, the dividends on any preferred stock we issue must be cumulative. Payment of dividends and repayment of the liquidation preference of preferred stock must take

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        preference over any dividends or other payments to our common stockholders, and holders of preferred stock are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference (other than convertible preferred stock that converts into common stock). In addition, under the 1940 Act, preferred stock constitutes a “senior security” for purposes of the asset coverage test.

        The Notes are unsecured and therefore effectively subordinated to any current or future secured indebtedness, including indebtedness under the Credit Facility.indebtedness.

        The Notes are not secured by any of our assets or any of the assets of our subsidiaries and rank equally in right of payment with all of our existing and future unsubordinated, unsecured indebtedness. As a result, the Notes are effectively subordinated to any secured indebtedness we or our subsidiaries have currently incurred and may incur in the future (or any indebtedness that is initially unsecured to which we subsequently grant security) to the extent of the value of the assets securing such indebtedness. In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness in order to receive full payment of their indebtedness before the assets may be used to pay other creditors, including the holders of the Notes. As of December 31, 2018, we had $301.0 million outstanding under the Credit Facility out of $705.0 million in commitments. The indebtedness under the Credit Facility is senior to the Notes to the extent of the value of the assets securing such indebtedness.

        The Notes are obligations exclusively of Main Street Capital Corporation and not of any of our subsidiaries. None of our subsidiaries is a guarantor of the Notes, and the Notes are not required to be guaranteed by any subsidiaries we may acquire or create in the future. In addition, several of our subsidiaries, specifically the Funds, maintain significant indebtedness and as a result the Notes are structurally subordinated to the indebtedness of these subsidiaries. For example, as of December 31, 2018, the Funds had collectively issued $345.8 million of the current regulatory maximum of $350.0 million of SBA-guaranteed debentures, which are included in our consolidated financial statements. The assets of such subsidiaries are not directly available to satisfy the claims of our creditors, including holders of the Notes. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources" for more detail on the SBA-guaranteed debentures.

        Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of other creditors of our subsidiaries have priority over our equity interests in such subsidiaries (and therefore the claims of our creditors, including holders of the Notes) with respect to the assets of such subsidiaries. Even if we are recognized as a creditor of one or more of our subsidiaries, our claims would still be effectively subordinated to any security interests in the assets of any such subsidiary and to any indebtedness or other liabilities of any such subsidiary senior to our claims. Consequently, the Notes are structurally subordinated to all indebtedness including the SBA-guaranteed debentures, and other liabilities of any of our subsidiaries and any subsidiaries that we may in the future acquire or establish. In addition, our subsidiaries may incur substantial additional indebtedness in the future, all of which would be structurally senior to the Notes.

        The Notes may or may not have an established trading market. If a trading market in the Notes is developed, it may not be maintained. If the Notes are traded, they may trade at a discount to their initial offering price depending on prevailing interest rates, the market for similar securities, our credit ratings, our financial condition or other relevant factors. Accordingly, we cannot assure you that a liquid trading market has been or will develop for the Notes, that you will be able to sell your Notes at a particular time or that the price you receive when you sell will be favorable. To the extent an active trading market does not develop or is not maintained, the liquidity and trading price for the Notes may be harmed. Accordingly, you may be required to bear the financial risk of an investment in the Notes for an indefinite period of time.


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          A downgrade, suspension or withdrawal of the credit rating assigned by a rating agency to us or the Notes, if any, or change in the debt markets could cause the liquidity or market value of the Notes to decline significantly.

        Our credit ratings are an assessment by rating agencies of our ability to pay our debts when due. Consequently, real or anticipated changes in our credit ratings will generally affect the market value of the Notes. These credit ratings may not reflect the potential impact of risks relating to the structure or marketing of the Notes. Credit ratings are not a recommendation to buy, sell or hold any security, and may be revised or withdrawn at any time by the issuing organization in its sole discretion. We undertake no obligation to maintain our credit ratings or to advise holders of

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        Notes of any changes in our credit ratings. The Notes are currently rated by Standard & Poor's Ratings Services. There can be no assurance that our credit ratings will remain for any given period of time or that such credit ratings will not be lowered or withdrawn entirely by the rating agency if in their judgment future circumstances relating to the basis of the credit ratings, such as adverse changes in our company, so warrant. Downgrades to the credit rating assigned to us or our securities could increase our cost of capital or otherwise have a negative effect on our results of operations and financial condition. The conditions of the financial markets and prevailing interest rates have fluctuated in the past and are likely to fluctuate in the future, which could have an adverse effect on the market prices of the Notes.

        The indentures under which the Notes were issued offer limited protection to holders of the Notes. The terms of the indentures and the Notes do not restrict our or any of our subsidiaries'subsidiaries’ ability to engage in, or otherwise be a party to, a variety of corporate transactions, circumstances or events that could have an adverse impact on investments in the Notes. In particular, the terms of the indentures and the Notes do not place any restrictions on our or our subsidiaries'subsidiaries’ ability to:

        issue securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore is structurally senior to the Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the Notes with respect to the assets of our subsidiaries, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act or any successor provisions, but giving effect, in each case, to any exemptive relief granted to us by the SEC (currently, this provision generally prohibits us from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if certain requirements are met) after such borrowings);
        pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the Notes, including subordinated indebtedness;
        sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets);
        enter into transactions with affiliates;
        create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions;
        make investments; or
        create restrictions on the payment of dividends or other amounts to us from our subsidiaries.

        Furthermore, the terms of the indentures and the Notes do not protect holders of the Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, if any, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow or liquidity.


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        Our ability to recapitalize, incur additional debt and take a number of other actions that are not limited by the terms of the Notes may have important consequences for you as a holderholders of the Notes, including making it more difficult for us to satisfy our obligations with respect to the Notes or negatively affecting the trading value of the Notes.

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        Other debt we issue or incur in the future could contain more protections for its holders than the indentures and the Notes, including additional covenants and events of default. For example, the indentures under which the Notes are issued do not contain cross-default provisions that are contained in the Credit Facility. The issuance or incurrence of any such debt with incremental protections could affect the market for and trading levels and prices of the Notes.

        The Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option. We may choose to redeem the Notes at times when prevailing interest rates are lower than the interest rate paid on the Notes. In this circumstance, you may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the Notes being redeemed.

        We may not be able to repurchase the Notes upon certain change in control events described in the indenturesagreement under which the Notes were issued (each, a "Change“Change of Control Repurchase Event"Event”) because we may not have sufficient funds. Upon a Change of Control Repurchase Event, holders of the Notes may require us to repurchase for cash some or all of the Notes at a repurchase price equal to 100% of the aggregate principal amount of the Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date. The terms of our Credit Facility provide that certain change of control events will constitute an event of default thereunder entitling the lenders to accelerate any indebtedness outstanding under our Credit Facility at that time and to terminate the Credit Facility. In addition, the occurrence of a Change of Control Repurchase Event enabling the holders of the Notes to require the mandatory purchase of the Notes would constitute an event of default under our Credit Facility entitling the lenders to accelerate any indebtedness outstanding under our Credit Facility at that time and to terminate the Credit Facility. Our and our subsidiaries'subsidiaries’ future financing facilities may contain similar restrictions and provisions. Our failure to purchase such tendered Notes upon the occurrence of such Change of Control Repurchase Event would cause an event of default under the indentures governing the Notes and a cross-default under the agreements governing certain of our other indebtedness, which may result in the acceleration of such indebtedness requiring us to repay that indebtedness immediately. If a Change of Control Repurchase Event were to occur, we may not have sufficient funds to repay any such accelerated indebtedness.

               As of December 31, 2018, we had approximately $1,006.8 million of principal indebtedness, including $301.0 million outstanding under the Credit Facility, $345.8 million outstanding from SBA-guaranteed debentures, $175.0 million of the 4.50% Notes due 2019 and $185.0 million of the 4.50% Notes due 2022 outstanding. Any default under the agreements governing our indebtedness, including a default under the Credit Facility, under the Notes or under other indebtedness to which we may be a party that is not waived by the required lenders or debt holders, and the remedies sought by the holders of such indebtedness could make us unable to pay principal, premium, if any, and interest on the Notes and substantially decrease the market value of the Notes. If we are unable to generate sufficient cash flow and are otherwise unable to obtain funds necessary to meet required payments of principal, premium, if any, and interest on our indebtedness, or if we otherwise fail to comply with the various covenants, including financial and operating covenants, in the instruments governing our indebtedness, we could be in default under the terms of the agreements governing such indebtedness. In the event of such default, the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest, the lenders


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        under the Credit Facility or other debt we may incur in the future could elect to terminate their commitments, cease making further loans and institute foreclosure proceedings against our assets, and we could be forced into bankruptcy or liquidation. Our ability to generate sufficient cash flow in the future is, to some extent, subject to general economic, financial, competitive, legislative and regulatory factors as well as other factors that are beyond our control. We cannot assure you that our business will generate cash flow from operations, or that future borrowings will be available to us under the Credit Facility or otherwise, in an amount sufficient to enable us to meet our payment obligations under the Notes and our other debt and to fund other liquidity needs.

               IfRISKS RELATED TO OUR SBIC FUNDS

        We, through the Funds, issue debt securities guaranteed by the SBA and sold in the capital markets. As a result of its guarantee of the debt securities, the SBA has fixed dollar claims on the assets of the Funds that are superior to the claims of our operating performance declinessecurities holders.

        We, through the Funds, have outstanding SBIC debentures guaranteed by the SBA. The debentures guaranteed by the SBA have a maturity of ten years from the date of issuance and we are not ablerequire semiannual payments of interest. We will need to generate sufficient cash flow to service our debt obligations, we may inmake required interest payments on the future need to refinance or restructure our debt, including the Notes, sell assets, reduce or delay capital investments, seek to raise additional capital or seek to obtain waivers from the required lenders under the Credit Facility or the required holders of the Notes or other debt that we may incur in the future to avoid being in default.debentures. If we are unable to implement onemeet the

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        financial obligations under the debentures, the SBA, as a creditor, will have a superior claim to the assets of the Funds over our securities holders in the event we liquidate or the SBA exercises its remedies under such debentures as the result of a default by us.

        The Funds are licensed by the SBA, and therefore subject to SBIC regulations.

        The Funds, our wholly owned subsidiaries, are licensed to act as SBICs and are regulated by the SBA. The SBA also places certain limitations on the financing terms of investments by SBICs in portfolio companies and prohibits SBICs from providing funds for certain purposes or to businesses in a few prohibited industries. Compliance with SBA requirements may cause the Funds to forego attractive investment opportunities that are not permitted under SBIC regulations.

        Further, the SBIC regulations require, among other things, that a licensed SBIC be periodically examined by the SBA and audited by an independent auditor, in each case to determine the SBIC’s compliance with the relevant SBIC regulations. The SBA prohibits, without prior SBA approval, a “change of control” of an SBIC or transfers that would result in any person (or a group of persons acting in concert) owning 10% or more of these alternatives, we may not be ablea class of capital stock of a licensed SBIC. If the Funds fail to meet our payment obligations undercomply with applicable SBIC regulations, the NotesSBA could, depending on the severity of the violation, limit or prohibit their use of SBIC debentures, declare outstanding SBIC debentures immediately due and our other debt. If we breach our covenants underpayable, and/or limit them from making new investments. In addition, the Credit Facility,SBA can revoke or suspend a license for willful or repeated violation of, or willful or repeated failure to observe, any provision of the NotesSmall Business Investment Act of 1958 or other debt and seek a waiver, we may not be able to obtain a waiver fromany rule or regulation promulgated thereunder. Such actions by the required lenders or debt holders. If this occurs, weSBA would, be in default underturn, negatively affect us.

        Each of the Credit Facility, the Notes or other debt, the lenders or debt holders could exercise their rightsFunds, as described above, and we could be forced into bankruptcy or liquidation. If we are unable to repay debt, lenders having secured obligations could proceed against the collateral securing the debt. Because the Credit Facility has, and any future credit facilities will likely have, customary cross-default provisions, if the indebtedness under the Notes, the Credit Facility or under any future credit facility is accelerated, wean SBIC, may be unable to repaymake distributions to us that will enable us to meet or finance the amounts due.

               The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorablecontinue to the holders of preferred stock could adversely affect the market pricequalify for our common stock by making an investment in the common stock less attractive. In addition, the dividends on any preferred stock we issue must be cumulative. Payment of dividends and repayment of the liquidation preference of preferred stock must take preference over any dividends or other payments to our common stockholders, and holders of preferred stock are not subject to any of our expenses or losses and are not entitled to participate in any income or appreciation in excess of their stated preference (other than convertible preferred stock that converts into common stock). In addition, under the 1940 Act, preferred stock constitutes a "senior security" for purposes of the asset coverage test.

        Item 1B.    Unresolved Staff Comments

               None.

        Item 2.    Properties

               We do not own any real estate or other physical properties materially important to our operations. Currently, we lease office space in Houston, Texas for our corporate headquarters.

        Item 3.    Legal Proceedings

               We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.

        Item 4.    Mine Safety Disclosures

               Not applicable.


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        PART II

        Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

        COMMON STOCK, HOLDERS AND DISTRIBUTIONS

               Our common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "MAIN." Prior to October 14, 2010, our common stock was traded on the NASDAQ Global Select Market under the same symbol "MAIN." Our common stock began trading on the NASDAQ Global Select Market on October 5, 2007. Prior to that date, there was no established public trading market for our common stock.

               On February 27, 2019, there were approximately 346 holders of record of the common stock which did not include stockholders for whom shares are held in "nominee" or "street name."

               Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from net asset value per share or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value per share will decrease. It is not possible to predict whether our common stock will trade at, above, or below net asset value per share. Since our IPO in October 2007, our shares of common stock have traded at prices both less than and exceeding our net asset value per share.

               We currently pay regular monthly dividends and semiannual supplemental dividends to our stockholders. Our monthly dividends, if any, will be determined by our Board of Directors on a quarterly basis. Our semiannual supplemental dividends, if any, will also be determined by our Board of Directors on a periodic basis. During 2018, we paid supplemental dividends of $0.275 per share in each of June and December 2018, regular monthly dividends of $0.190 per share for each month of January through September 2018, regular monthly dividends of $0.195 per share for each month of October through December 2018, with such dividends totaling $2.845 per share. The 2018 regular monthly dividends of $2.295 per share, represent a 2.7% increase from the regular monthly dividends paid per share for the year ended 2017. For tax purposes, the 2018 dividends, which included the effects of dividends on an accrual basis, total $2.85 per share and were comprised of (i) ordinary income totaling approximately $2.270 per share, (ii) long term capital gain totaling approximately $0.375 per share, and (iii) qualified dividend income totaling approximately $0.205 per share. As we have previously discussed, it is our current intention to fully absorb our semi-annual supplemental dividends into our regular monthly dividends, and in the process maintain and grow our total combined dividends, by gradually reducing our semi-annual supplemental dividends while increasing our regular monthly dividends over multiple years beginning in 2019.

               In accordance with the IRC sections 871(k) and 881(e), the following percentages represent the portion of our dividends that constitute interest related dividends and short-term capital gains dividends for non-U.S. residents and foreign corporations. Including the long-term capital gains discussed above, the following percentages represent the total dividends which are exempt from U.S. withholding tax.

        Payment Dates
         Interest-Related Dividends
        and Short-Term
        Capital Gain Dividend
         Distributions Exempt
        from U.S.
        Withholding Tax(1)
         

        2/15/2018

          78.48% 78.73%

        From 3/15/2018 to 6/26/2018

          61.51% 61.51%

        7/16/2018

          0.00% 100.00%

        8/15/2018

          0.00% 97.20%

        9/14/2018

          16.04% 16.04%

        From 10/15/2018 to 1/15/2019

          55.00% 55.00%

        (1)
        The percentage for each period represents the portion of the taxable ordinary income dividends eligible for exemption from United States withholding tax for non-U.S. residents and foreign corporations.

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               To the extent non-U.S. resident taxes were withheld on ordinary dividends distributed, this information may be considered in connection with any claims for refund of such taxes to be filed by the non-U.S. resident stockholder with the Internal Revenue Service.

               To obtain and maintain RIC tax treatment and to minimize corporate-level U.S. federal taxes, we must, among other things,will be required to distribute at least 90%substantially all of our net ordinary taxable income and realized net short-term capital gainsgain income, including taxable income from certain of our subsidiaries, which includes the income from the Funds. We will be partially dependent on the Funds for cash distributions to enable us to meet the RIC distribution requirements. The Funds may be limited by SBIC regulations from making certain distributions to us that may be necessary to enable us to maintain our status as a RIC. We may have to request a waiver of the SBA’s restrictions for the Funds to make certain distributions to maintain our eligibility for RIC status. We cannot assure you that the SBA will grant such waiver and if the Funds are unable to obtain a waiver, compliance with the SBIC regulations may result in excessloss of realized net long-term capital losses, if any. RIC tax treatment and a consequent imposition of an entity-level tax on us.

        FEDERAL INCOME TAX RISKS

        We will be subject to a 4% non-deductiblecorporate-level U.S. federal exciseincome tax if we are unable to qualify as a RIC under Subchapter M of the Code.

        To maintain RIC tax treatment under the Code, we must meet the following annual distribution, income source and asset diversification requirements:

        The Annual Distribution Requirement for a RIC will be satisfied if we distribute to our stockholders on an annual basis at least 90% of our net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Depending on the level of taxable income earned in a tax year, we may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% U.S. federal excise tax on such income. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. For more information regarding tax treatment, see “Business — Regulation — Taxation as a Regulated Investment Company.” Because we use debt financing, we are subject to certain asset coverage ratio requirements under the 1940 Act and are (and may in the future become) subject to certain financial covenants under loan and credit agreements that could, under certain circumstances, restrict us from making distributions necessary to satisfy the distribution requirement. In

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        addition, because we receive non-cash sources of income such as PIK interest which involves us recognizing taxable income without receiving the cash representing such income, we may have difficulty meeting the distribution requirement. If we are unable to obtain cash from other sources, we could fail to qualify for RIC tax treatment and thus become subject to corporate-level U.S. federal income tax.
        The source-of-income requirement will be satisfied if we obtain at least 90% of our gross income for each year from distributions, interest, gains from the sale of stock or securities or similar sources.
        The asset diversification requirement will be satisfied if we meet certain asset diversification requirements at the end of each quarter of our taxable year. To satisfy this requirement, at least 50% of the value of our assets must consist of cash, cash equivalents, U.S. government securities, securities of other RICs, and other acceptable securities; and no more than 25% of the value of our assets can be invested in the securities, other than U.S. government securities or securities of other RICs, (i) of one issuer, (ii) of two or more issuers that are controlled, as determined under applicable Code rules, by us and that are engaged in the same or similar or related trades or businesses or (iii) of certain “qualified publicly traded partnerships.”

        Failure to meet these requirements may result in our having to dispose of certain investments quickly in order to prevent the loss of RIC status. Because most of our investments are in privately held companies, and therefore illiquid, any such dispositions could be made at disadvantageous prices and could result in substantial losses. Moreover, if we fail to maintain RIC tax treatment for any reason and are subject to corporate income tax, the resulting corporate taxes could substantially reduce our net assets, the amount of income available for distribution and the amount of our distributions.

        We may have difficulty paying the distributions required to maintain RIC tax treatment under the Code if we recognize income before or without receiving cash representing such income.

        We will include in income certain amounts that we have not yet received in cash, such as: (i) amortization of original issue discount, which may arise if we receive warrants in connection with the origination of a loan such that ascribing a value to the warrants creates original issue discount in the debt instrument, if we invest in a debt investment at a discount to the par value of the debt security or possibly in other circumstances; (ii) contractual payment-in-kind, or PIK, interest, which represents contractual interest added to the loan balance and due at the end of the loan term; (iii) contractual preferred dividends, which represents contractual dividends added to the preferred stock and due at the end of the preferred stock term, subject to adequate profitability at the portfolio company; or (iv) amortization of market discount, which is associated with loans purchased in the secondary market at a discount to par value. Such amortization of original issue discounts, increases in loan balances as a result of contractual PIK arrangements, cumulative preferred dividends, or amortization of market discount will be included in income before we receive the corresponding cash payments. We also may be required to include in income certain other amounts before we receive such amounts in cash. Investments structured with these features may represent a higher level of credit risk compared to investments generating income which must be paid in cash on a current basis.

        Since, in certain undistributedcases, we may recognize taxable income unlessbefore or without receiving cash representing such income, we distribute in a timely manner an amount at least equalmay have difficulty meeting the Annual Distribution Requirement necessary to maintain RIC tax treatment under the sum of (1) 98%Code. Accordingly, we may have to sell some of our net ordinary taxable incomeinvestments at times and/or at prices we would not consider advantageous, raise additional debt or equity capital or forgo new investment opportunities for each calendar year, (2) 98.2% of our capital gain net incomethis purpose. If we are not able to obtain cash from other sources, we may fail to qualify for the one-year period ending December 31 in that calendar yearRIC tax treatment and (3) any taxable income recognized, but not distributed, in preceding years on which we paid nothus become subject to corporate-level U.S. federal income tax. Dividends declared and paid by us inFor additional discussion regarding the tax implications of a year will generally differ from taxable income for that year,RIC, please see “Business — Regulation — Taxation as such dividendsa Regulated Investment Company.”

        We may include the distribution of current year taxable income, less amounts carried over into the following year, and the distribution of prior year taxable income carried over into and distributed in the current year. For amounts we carry over into the following year, we willfuture choose to pay dividends in our own stock, in which case you may be required to pay the 4% U.S. federal excise tax on the excess of 98% of our annual investment company taxable income and 98.2% of our capital gain net income over our distributions for the year. We may retain for investment some or all of our net capital gains (i.e., realized net long-term capital gains in excess of realized net short-term capital losses) and treat such amounts as deemed distributions to our stockholders. If we do this, our stockholders will be treated as if they had received actual distributions of the capital gains we retained and then reinvested the net after-tax proceeds in our common stock. In general, our stockholders also would be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to their allocable shares of the tax we paid on the capital gains deemed distributed to them. We can offer no assurance that we will achieve results that will permit the payment of any cash distributions and, if we issue senior securities, we may be prohibited from making distributions if doing so causes us to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of our borrowings.you receive.

        We may distribute taxable dividends that are payable in part in our stock. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable by us in cash or in shares of stock (at the stockholdersstockholders’ election) would satisfy the Annual Distribution Requirement. The Internal Revenue Service has issued guidance providing that a dividend payable in stock or in cash at the election of the stockholders will be treated as a taxable

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        dividend eligible for the dividends paid deduction provided that at least 20% of the total dividend is payable in cash and certain other requirements are satisfied. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income (or as long-term capital gain to the extent such dividend is properly reported as a capital gain dividend), to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives as a dividend in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the market price of our stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock. In addition, if a significant number of our stockholders determine to sell shares of our stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of our stock.

        Stockholders may have current tax liability on dividends they elect to reinvest in our common stock but would not receive cash from such dividends to pay such tax liability.

        If stockholders participate in our dividend reinvestment plan, they will be deemed to have received, and for federal income tax purposes will be taxed on, the amount reinvested in our common stock to the extent the amount reinvested was not a tax-free return of capital. As a result, unless a stockholder is a tax-exempt entity, it may have to use funds from other sources to pay its tax liability on the value of the dividend that they have elected to have reinvested in our common stock.

        Legislative or regulatory tax changes could adversely affect our stockholders.

        At any time, the federal income tax laws governing RICs or the administrative interpretations of those laws or regulations may be amended. The Biden Administration has announced a number of tax law proposals, including American Families Plan and Made in America Tax Plan, which include increases in the corporate and individual tax rates, and impose a minimum tax on book income and profits of certain multinational corporations. Any of those new laws, regulations or interpretations may take effect retroactively and could adversely affect the taxation of us or our stockholders. Therefore, changes in tax laws, regulations or administrative interpretations or any amendments thereto could diminish the value of an investment in our shares or the value or the resale potential of our investments. If we do not comply with applicable laws and regulations, we could lose any licenses that we then hold for the conduct of our business and may be subject to civil fines and criminal penalties.

        GENERAL RISK FACTORS

        Events outside of our control, including public health crises, supply-chain disruptions and inflation, could negatively affect our portfolio companies and our results of operations.

        Periods of market volatility have occurred and could continue to occur in response to pandemics or other events outside of our control. These types of events have adversely affected, and could continue to adversely affect, operating results for us and for our portfolio companies. The COVID-19 pandemic had a significant adverse effect on the U.S. economy, particularly in the second quarter of 2020. Although certain economic conditions in the United States improved in 2021, the pandemic continues to evolve, as recently experienced with the rapid spread of the Omicron variant, and risks remain with respect to local, regional, national and global markets and economies affected thereby, including the United States. With respect to U.S. and global credit markets and the economy in general, the pandemic has resulted in, and until fully resolved is likely to continue to result in, the following (among other things): (i) restrictions on travel and the temporary closure of many corporate offices, retail stores and manufacturing facilities and factories, resulting in significant disruption to the business of many companies, including supply chains and demand, as well as layoffs of employees; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments or waivers of their credit agreements to avoid default, increased defaults by borrowers and/or increased difficulty in obtaining refinancing; (iv) volatility in credit markets, including greater volatility in pricing and spreads; and (v) evolving proposals and actions by state and federal governments to address the problems being experienced by markets, businesses and the economy in general, which may not adequately address the problems being

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        faced. The COVID-19 pandemic is continuing as of the filing date of this Annual Report, and its extended duration may have further adverse impacts on our portfolio companies after December 31, 2021, as well as the economy in general.

        This pandemic has also caused, and may continue to cause, disruption to our portfolio companies’ global supply chain and business operations. In particular, shortages in commodities and materials, including shortages and reductions in allocations of electronic and other components from key suppliers, labor shortages and elevated levels of employee absenteeism, freight delays and other supply chain constraints and disruptions have significantly delayed or disrupted, and may continue to adversely impact, both our portfolio companies’ suppliers’ and third-party vendors and our portfolio companies’ ability to manufacture and deliver products and/or services to their end-users and customers. Our portfolio companies have also experienced a significant increase in commodity, parts and material component inflation in 2021 and 2022, as well as inflation in other costs, such as labor, packaging, freight and energy prices. Continued supply chain disruptions and delays, as well as continued heightened inflation, could lead to continued periodic production interruptions and other inefficiencies that could negatively impact our portfolio companies’ productivity, margin performance and results of operations, which could result in a material adverse effect on our financial condition, results of operations and cash flows.

        Although it is impossible to predict the precise nature and consequences of these events, or of any political or policy decisions and regulatory changes occasioned by emerging events or uncertainty on applicable laws or regulations that impact us and our portfolio companies and investments, it is clear that these types of events are impacting and will, for at least some time, continue to impact us and our portfolio companies; in many instances the impact will be adverse and material. Any potential impact to our results of operations will depend to a large extent on future developments and the ultimate duration and severity of the COVID-19 pandemic and the actions taken by authorities and other entities to contain the spread or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio companies' operating results and financial condition.

        The COVID-19 pandemic and the related disruption and financial distress experienced by our portfolio companies may have material adverse effects on our financial results, including investment income received from our investments and the underlying value of those investments. The COVID-19 pandemic has adversely impacted the fair value of certain of our investments, including those reported as of December 31, 2021, and the values reported may differ materially from the values that we may ultimately realize with respect to our investments. We may need to restructure our investments in certain portfolio companies as a result of the adverse effects of the COVID-19 pandemic, which could reduce the amount or extend the time for payment of principal or the life of our investment or reduce the amount or extend the time of payment of interest or dividends, among other things. Depending on the duration of the COVID-19 pandemic and the extent of its continuing effects on our portfolio companies' operations and our operating results, any future dividends to our stockholders may be for amounts less than our historical dividends, may be paid less frequently than historical practices and may also include return of capital.

        The 1940 Act generally prohibits us, as a BDC, from incurring indebtedness unless immediately after such borrowing we have an asset coverage, as defined in the 1940 Act, of at least 200% (or 150% if certain requirements are met). In addition, the terms of our senior securities may contain similar limitations or covenants requiring our compliance with the 1940 Act asset coverage requirements, and other affirmative and negative covenants. A continued significant decrease in the value of our Investment Portfolio, due to the effects of the COVID-19 pandemic or otherwise, resulting in significant reductions of our net asset value increases the risk of us not meeting the required asset coverage requirement under the 1940 Act or breaching covenants under our senior securities. Any such result could have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay dividends to our stockholders and attributes thereof.

        We are currently operating in a period of capital markets disruption and economic uncertainty, and capital markets may experience periods of disruption and instability in the future. These market conditions may materially and adversely affect debt and equity capital markets in the United States and abroad, which may have a negative impact on our business and operations.

        U.S. capital markets have experienced extreme volatility and disruption following the global outbreak of COVID-19 that began in December 2019, as evidenced by the volatility in global stock markets as a result of, among

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        other things, uncertainty surrounding the COVID-19 pandemic and the impact of supply chain disruptions. Despite actions of the U.S. federal government and foreign governments, these events have contributed to unpredictable general economic conditions that are materially and adversely impacting the broader financial and credit markets. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows, as well as the businesses of our portfolio companies, and the broader financial and credit markets.

        At various times, such disruptions have resulted in, and may in the future result in, a lack of liquidity in parts of the debt capital markets, significant write-offs in the financial services sector and the repricing of credit risk. Such conditions may occur for a prolonged period of time again, and may materially worsen in the future, including as a result of U.S. government shutdowns, or future downgrades to the U.S. government's sovereign credit rating or the perceived credit worthiness of the U.S. or other large global economies. In addition, the current U.S. political environment and the resulting uncertainties regarding actual and potential shifts in U.S. foreign investment, trade, taxation, economic, environmental and other policies under the current Administration, as well as the impact of geopolitical tension, such as a deterioration in the bilateral relationship between the U.S. and China or an escalation in conflict between Russia and Ukraine, could lead to disruption, instability and volatility in the global markets. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, and limit our ability to grow and could have a material negative impact on our operating results, financial condition, results of operations and cash flows and the fair values of our debt and equity investments.

        In addition, the U.S. and global capital markets have in the past, and may in the future, experience periods of extreme volatility and disruption during economic downturns and recessions. Trade wars and volatility in the U.S. repo market, the U.S. high yield bond markets, the Chinese stock markets and global markets for commodities may affect other financial markets worldwide. In addition, while recent government stimulus measures worldwide have reduced volatility in the financial markets, volatility may return as such measures are phased out, and the long-term impacts of such stimulus on fiscal policy and inflation remain unknown. Increases to budget deficits, which have been exacerbated by the COVID-19 pandemic, or direct and contingent sovereign debt may create concerns about the ability of certain nations to service their sovereign debt obligations and any risks resulting from any such debt crisis in Europe, the U.S. or elsewhere could have a detrimental impact on the global economy, sovereign and non-sovereign debt in certain countries and the financial condition of financial institutions generally. Austerity measures that certain countries may agree to as part of any debt crisis or disruptions to major financial trading markets may adversely affect world economic conditions, our business and the businesses of our portfolio companies.

        Additionally, the Federal Reserve is expected to raise the Federal Funds Rate in 2022. These developments, along with the United States government’s credit and deficit concerns, global economic uncertainties and market volatility and the impacts of COVID-19, could cause interest rates to be volatile, which may negatively impact our ability to access the capital markets on favorable terms.

        Deterioration in the economy and financial markets could impair our portfolio companies’ financial positions and operating results and affect the industries in which we invest, which could, in turn, harm our operating results.

        The broader fundamentals of the United States economy remain mixed. In the event that the United States economy contracts, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements and an increase in defaults. In addition, a decline in oil and natural gas prices would adversely affect the credit quality of our debt investments and the underlying operating performance of our equity investments in energy-related businesses. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by economic cycles, industry cycles or other conditions, which could also have a negative impact on our future results.

        Although we have been able to secure access to additional liquidity, the potential for volatility in the debt and equity capital markets provides no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all.

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        We may experience fluctuations in our operating results.

        We could experience fluctuations in our operating results due to a number of factors, including our ability or inability to make investments in companies that meet our investment criteria, the interest rate payable on the debt securities we acquire, the level of portfolio dividend and fee income, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, operating results for any period should not be relied upon as being indicative of performance in future periods.

        Terrorist attacks, acts of war, public health crises or natural disasters may affect any market for our securities, impact the businesses in which we invest and harm our business, operating results and financial condition.

        Terrorist acts, acts of war, public health crises (including the recent coronavirus outbreak) or natural disasters may disrupt our operations, as well as the operations of the businesses in which we invest. Such acts have created, and continue to create, economic and political uncertainties and have contributed to global economic instability. Future terrorist activities, military or security operations, public health crises, or natural disasters could further weaken the domestic/global economies and create additional uncertainties, which may negatively impact the businesses in which we invest directly or indirectly and, in turn, could have a material adverse impact on our business, operating results and financial condition. Losses from terrorist attacks, public health crises and natural disasters are generally uninsurable.

        Technological innovations and industry disruptions may negatively impact us.

        Technological innovations have disrupted traditional approaches in multiple industries and can permit younger companies to achieve success and in the process disrupt markets and market practices. We can provide no assurance that new businesses and approaches will not be created that would compete with us and/or our portfolio companies or alter the market practices in which we have been designed to function within and on which we depend on for our investment return. New approaches could damage our investments, disrupt the market in which we operate and subject us to increased competition, which could materially and adversely affect our business, financial condition and results of investments.

        We are highly dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.

        Our business is highly dependent on our and third parties’ communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. There could be:

        sudden electrical or telecommunications outages;
        natural disasters such as earthquakes, tornadoes and hurricanes;
        disease pandemics;
        events arising from local or larger scale political or social matters, including terrorist acts; and
        cyber attacks, including software viruses, ransomware, malware and phishing and vishing schemes.

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        The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.

        The occurrence of a disaster such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events unanticipated in our disaster recovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. If a significant number of our managers were unavailable in the event of a disaster, our ability to effectively conduct our business could be severely compromised.

        We depend heavily upon computer systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computer systems could be subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss.

        Third parties with which we do business (including, but not limited to, service providers, such as accountants, custodians, transfer agents and administrators, and the issuers of securities in which we invest) may also be sources or targets of cyber security or other technological risks. While we engage in actions to reduce our exposure resulting from outsourcing, we cannot control the cyber security plans and systems put in place by these third parties and ongoing threats may result in unauthorized access, loss, exposure or destruction of data, or other cybersecurity incidents, with increased costs and other consequences, including those described above. Privacy and information security laws and regulation changes, and compliance with those changes, may also result in cost increases due to system changes and the development of new administrative processes.

        Item 1B. Unresolved Staff Comments

        None.

        Item 2. Properties

        We do not own any real estate or other physical properties materially important to our operations. Currently, we lease office space in Houston, Texas for our corporate headquarters.

        Item 3. Legal Proceedings

        We may, from time to time, be involved in litigation arising out of our operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect any current matters will materially affect our financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on our financial condition or results of operations in any future reporting period.

        Item 4. Mine Safety Disclosures

        Not applicable.

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        PART II

        Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

        COMMON STOCK AND HOLDERS

        Our common stock is traded on the NYSE under the symbol “MAIN.”

        The following table sets forth, for the periods indicated, the range of high and low closing prices of our common stock as reported on the NYSE, and the sales price as a percentage of the net asset value per share of our common stock.

        Premium 

         

        Premium of

        (Discount) of

        High Sales

        Low Sales

         

        Price Range

        Price to

        Price to

         

            

        NAV(1)

            

        High

            

        Low

            

        NAV(2)

            

        NAV(2)

         

        Year ending December 31, 2022

          

          

          

          

          

        First Quarter (through February 24, 2022)

        *

        $

        41.08

        $

        44.88

        *

         

        *

        Year ended December 31, 2021

          

         

          

         

          

          

         

          

        Fourth Quarter

        $

        25.29

        $

        46.61

        $

        41.35

        84

        %  

        64

        %

        Third Quarter

         

        24.27

         

        42.81

         

        40.20

        76

        %  

        66

        %

        Second Quarter

         

        23.42

         

        43.41

         

        38.14

        85

        %  

        63

        %

        First Quarter

         

        22.65

         

        39.56

         

        31.35

        75

        %  

        38

        %

        Year ended December 31, 2020

         

          

         

          

         

          

          

         

          

        Fourth Quarter

        $

        22.35

        $

        32.59

        $

        27.39

        46

        %  

        23

        %

        Third Quarter

         

        21.52

         

        33.01

         

        28.66

        53

        %  

        33

        %

        Second Quarter

         

        20.85

         

        35.82

         

        17.34

        72

        %  

        (17)

        %

        First Quarter

         

        20.73

         

        45.00

         

        15.74

        117

        %  

        (24)

        %


        *Net asset value has not yet been determined for the first quarter of 2022.

        (1)Net asset value per share, or NAV, is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low closing prices. The net asset values shown are based on outstanding shares at the end of each period.
        (2)Calculated for each quarter as (i) NAV subtracted from the respective high or low share price divided by (ii) NAV.

        On February 24, 2022, the last sale price of our common stock on the NYSE was $41.67 per share, and there were approximately 434 holders of record of the common stock which did not include stockholders for whom shares are held in “nominee” or “street name.” The net asset value per share of our common stock on December 31, 2021 was $25.29, and the premium of the February 24, 2022 closing price of our common stock was 77% to this net asset value per share.

        Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from net asset value per share or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value per share will decrease. It is not possible to predict whether our common stock will trade at, above, or below net asset value per share. Since our IPO in October 2007, our shares of common stock have traded at prices both less than and exceeding our net asset value per share.

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        DIVIDEND/DISTRIBUTION POLICY

        We currently intend to distribute dividends or make distributions to our stockholders out of assets legally available for distribution. Our dividends and other distributions, if any, will be determined by our Board of Directors from time to time. Our ability to declare dividends depends on our earnings, our overall financial condition (including our liquidity position), maintenance of our RIC status and such other factors as our Board of Directors may deem relevant from time to time. When we make distributions, we are required to determine the extent to which such distributions are paid out of current or accumulated earnings, recognized capital gains or capital. To the extent there is a return of capital (a distribution of the stockholders' invested capital), investors will be required to reduce their basis in our stock for federal tax purposes. In the future, our distributions may include a return of capital.

        We have adopted a dividend reinvestment and direct stock purchase plan ("DRIP"(the “Plan”) that. The dividend reinvestment feature of the Plan (the “DRIP”) provides for the reinvestment of dividends on behalf of our stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if we declare a cash dividend, our stockholders who have not "opted out"“opted out” of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of new shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares will be valued based upon the final closing price of MSCC'sMSCC’s common stock on a valuation date determined for each dividend by our Board of Directors. Shares purchased in the open market to satisfy the DRIP


        Table of Contents

        requirements will be valued based upon the average price of the applicable shares purchased by the DRIP plan administrator, before any associated brokerage or other costs. Our DRIP is administered by itsour transfer agent on behalf of our record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in our DRIP but may provide a similar dividend reinvestment plan for their clients.

        SALES OF UNREGISTERED SECURITIES

        During the year ended December 31, 2018,2021, we issued a total of 394,403404,384 shares of our common stock under the DRIP. These issuances were not subject to the registration requirements of the Securities Act of 1933, as amended. The aggregate value of the shares of our common stock issued under the DRIP during 20182021 was approximately $14.9$16.3 million.

        PURCHASES OF EQUITY SECURITIES

               None.Upon vesting of restricted stock awarded pursuant to our employee equity compensation plan, shares may be withheld to meet applicable tax withholding requirements. Any withheld shares are treated as common stock purchases by the Company in our consolidated financial statements as they reduce the number of shares received by employees upon vesting (see “Purchase of vested stock for employee payroll tax withholding” in the consolidated statements of changes in net assets for share amounts withheld).

        STOCK PERFORMANCE GRAPH

        The following graph compares the stockholder return on our common stock from October 5, 2007 to December 31, 20182021 with the S&P 500 Index, the Russell 2000 Index, the KBW Regional Bank Index and the Main Street Peer Group (as defined below). This comparison assumes $100.00 was invested on October 5, 2007 (the date our common stock began to trade in connection with our initial public offering) in our common stock and in the comparison groups and assumes the reinvestment of all cash dividends prior to any tax effect. The comparisons in the graph below are based on historical data and are not intended to forecast the possible future performance of our common stock.


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        COMPARISON OF STOCKHOLDER RETURN(1)

        Among Main Street Capital Corporation, the S&P 500 Index, the Russell 2000 Index, the KBW

        Regional Bank Index, and the Main Street Peer Group(2)

        (For the Period October 5, 2007 to December 31, 2018)
        2021)

        TOTAL RETURN PERFORMANCE SINCE IPO

        GRAPHICChart, line chart

Description automatically generated


        (1)
        Total return includes reinvestment of dividends through December 31, 2018.

        (2)
        The Main Street Peer Group is composed of Apollo Investment Corporation, Ares Capital Corporation, BlackRock Capital Investment Corporation, Blackrock TCP Capital Corp., Capitala Finance Corp., Fidus Investment Corporation, FS KKR Capital Corp., Gladstone Investment Corporation, Goldman Sachs BDC, Inc., Golub Capital BDC, Inc., Hercules Capital, Inc., Medley Capital Corporation, Monroe Capital Corporation, New Mountain Finance Corporation, Newtek Business Services Corp., Oaktree Specialty Lending Corporation, Oaktree Strategic Income Corporation, PennantPark Floating Rate Capital Ltd., PennantPark Investment Corporation, Prospect Capital Corporation, Solar Capital Ltd., Solar Senior Capital Ltd., THL Credit, Inc., TPG Specialty Lending, Inc. and TriplePoint Venture Growth BDC Corp.
        (1)Total return includes reinvestment of dividends through December 31, 2021.
        (2)The Main Street Peer Group is composed of Apollo Investment Corp., Ares Capital Corporation, Barings BDC, Inc., Blackrock Capital Investment Corp., Crescent Capital BDC Inc, TCG BDC, Inc, Capital Southwest Corporation, Fidus Investment Corporation, FS KKR Capital Corp., Gladstone Investment Corporation, Golub Capital BDC, Inc., Goldman Sachs BDC, Inc., Hercules Capital Inc., Monroe Capital Corporation, Newtek Business Services Corp., New Mountain Finance Corporation, Oaktree Specialty Lending Corp., OFS Capital Corporation, PennantPark Floating Rate Capital Ltd., PennantPark Investment Corp., Prospect Capital Corporation, Saratoga Investment Corp., Stellus Capital Investment Corp., Solar Capital Ltd., Solar Senior Capital Ltd, BlackRock TCP Capital Corp., Triplepoint Venture Growth BDC Corp., Sixth Street Specialty Lending, Inc., and WhiteHorse Finance, Inc.

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        Item 6. Selected Financial Data
        [Reserved.]

               The selected financial and other data as

        55


        Table of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014 have been derived from consolidated financial statements that have been audited by Grant Thornton LLP, an independent registered public accounting firm. You should read this selected financial and other data in conjunction with our "Management'sContents

        Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and related notes included in this Annual Report on Form 10-K.

         
         Twelve Months Ended December 31, 
         
         2018 2017 2016 2015 2014 
         
         (dollars in thousands, except per share amounts)
         

        Statement of operations data:

                        

        Investment income:

                        

        Total interest, fee and dividend income

         $233,355 $205,741 $178,165 $163,603 $139,939 

        Interest from idle funds and other

              174  986  824 

        Total investment income

          233,355  205,741  178,339  164,589  140,763 

        Expenses:

                        

        Interest

          (43,493) (36,479) (33,630) (32,115) (23,589)

        Compensation

          (18,966) (18,560) (16,408) (14,852) (12,337)

        General and administrative

          (11,868) (11,674) (9,284) (8,621) (7,134)

        Share-based compensation

          (9,151) (10,027) (8,304) (6,262) (4,215)

        Expenses allocated to the External Investment Manager

          6,768  6,370  5,089  4,335  2,048 

        Total expenses

          (76,710) (70,370) (62,537) (57,515) (45,227)

        Net investment income

          156,645  135,371  115,802  107,074  95,536 

        Total net realized gain (loss) from investments

          1,341  16,182  29,389  (21,316) 23,206 

        Realized loss on extinguishment of debt           

          (2,896) (5,217)      

        Total net unrealized appreciation (depreciation) from investments

          17,981  42,545  (6,576) 10,871  (776)

        Total net unrealized appreciation (depreciation) from SBIC debentures

          1,294  6,212  (943) (879) (10,931)

        Income tax benefit (provision)

          (6,152) (24,471) 1,227  8,687  (6,287)

        Net increase in net assets resulting from operations attributable to common stock

         $168,213 $170,622 $138,899 $104,437 $100,748 

        Net investment income per share — basic and diluted

         $2.60 $2.39 $2.23 $2.18 $2.20 

        Net increase in net assets resulting from operations attributable to common stock per share — basic and diluted

         $2.80 $3.01 $2.67 $2.13 $2.31 

        Weighted-average shares outstanding — basic and diluted

          60,176,843  56,691,913  52,025,002  49,071,492  43,522,397 

        Operations

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         As of December 31, 
         
         2018 2017 2016 2015 2014 
         
          
         (dollars in thousands)
          
         

        Balance sheet data:

                        

        Assets:

                        

        Total portfolio investments at fair value

         $2,453,909 $2,171,305 $1,996,906 $1,799,996 $1,563,330 

        Marketable securities and idle funds investments

                3,693  9,067 

        Cash and cash equivalents

          54,181  51,528  24,480  20,331  60,432 

        Interest receivable and other assets

          40,875  38,725  37,123  37,638  46,406 

        Deferred financing costs, net of accumulated amortization            

          4,461  3,837  12,645  13,267  14,550 

        Deferred tax asset, net

              9,125  4,003   

        Total assets

         $2,553,426 $2,265,395 $2,080,279 $1,878,928 $1,693,785 

        Liabilities and net assets:

                        

        Credit facility

         $301,000 $64,000 $343,000 $291,000 $218,000 

        SBIC debentures at fair value(1)

          338,186  288,483  239,603  223,660  222,781 

        4.50% Notes due 2022

          182,622  182,015       

        4.50% Notes due 2019

          174,338  173,616  175,000  175,000  175,000 

        6.125% Notes

            89,057  90,655  90,738  90,823 

        Accounts payable and other liabilities

          17,962  20,168  14,205  12,292  10,701 

        Payable for securities purchased

          28,254  40,716  2,184  2,311  14,773 

        Interest payable

          6,041  5,273  4,103  3,959  4,848 

        Dividend payable

          11,948  11,146  10,048  9,074  7,663 

        Deferred tax liability, net

          17,026  10,553      9,214 

        Total liabilities

          1,077,377  885,027  878,798  808,034  753,803 

        Total net asset value

          1,476,049  1,380,368  1,201,481  1,070,894  939,982 

        Total liabilities and net assets                 

         $2,553,426 $2,265,395 $2,080,279 $1,878,928 $1,693,785 

        Other data:

                        

        Weighted-average effective yield on LMM debt investments(2),(3)

          12.3%  12.0%  12.5%  12.2%  13.2% 

        Number of LMM portfolio companies

          69  70  73  71  66 

        Weighted-average effective yield on Middle Market debt investments(2),(3)

          9.6%  9.0%  8.5%  8.0%  7.8% 

        Number of Middle Market portfolio companies

          56  62  78  86  86 

        Weighted-average effective yield on Private Loan debt investments(2),(3)

          10.4%  9.2%  9.6%  9.5%  10.1% 

        Number of Private Loan portfolio companies

          59  54  46  40  31 

        Expense ratios (as percentage of average net assets):

                        

        Total expenses, including income tax expense

          5.7%  7.4%  5.5%  4.6%  5.8% 

        Operating expenses

          5.3%  5.5%  5.6%  5.5%  5.1% 

        Operating expenses, excluding interest expense                 

          2.3%  2.6%  2.6%  2.4%  2.4% 

        Total investment return(4)

          –8.3%  16.0%  37.4%  8.5%  –3.1% 

        Total return based on change in NAV(5)

          12.2%  14.2%  13.0%  11.1%  12.7% 

        (1)
        SBIC debentures for December 31, 2018, 2017, 2016, 2015 and 2014 are $345,800, $295,800, $240,000, $225,000 and $225,000 at par, respectively.

        (2)
        Weighted-average effective yield is calculated based on our debt investments at the end of each period and includes amortization of deferred debt origination fees and accretion of original issue discount, but excludes liquidation fees payable upon repayment and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in shares of our common stock will realize on its investment because it does not reflect any debt investments on non-accrual status, our expenses or any sales load paid by an investor. For information on our investments on non-accrual status, see "Management's Discussion and Analysis of Financial Condition and Results of Operations — Portfolio Asset Quality".

        (3)
        Including investments on non-accrual status, the weighted-average effective yield for LMM, Middle Market, and Private Loan debt investments was 11.3%, 9.5%, and 9.8%, respectively, as of December 31, 2018.

        (4)
        Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by our dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.

        (5)
        Total return is based on change in net asset value and was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value. Non-operating changes include any items that affect net asset value other than the net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items.

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        Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Annual Report on Form 10-K.

        Statements we make in the following discussion which express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results, performance or achievements, or industry results, could differ materially from those we express in the following discussion as a result of a variety of factors, including the risks and uncertainties we have referred to under the headings "Cautionary“Cautionary Statement Concerning Forward-Looking Statements"Statements” and "Risk Factors"“Risk Factors” in Part I of this report.

        ORGANIZATIONCOVID-19 UPDATE

               Main Street Capital Corporation ("MSCC") is a principal investment firm primarilyThe COVID-19 pandemic, and the related effect on the U.S. and global economies, has had, and threatens to continue to have, adverse consequences for our business and operating results, and the businesses and operating results of our portfolio companies. During the quarter ended December 31, 2021, we continued to work collectively with our employees and portfolio companies to navigate the significant challenges created by the COVID-19 pandemic and the related labor and supply constraints, rising costs, and supply chain disruptions. We remain focused on providing customized debt and equity financing to lower middle market ("LMM") companies and debt capital to middle market ("Middle Market") companies. The portfolio investmentsensuring the safety of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop" financing alternatives within its LMM portfolio. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

               MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC") under the Investment Company Act of 1940, as amended (the "1940 Act"). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF"), Main Street Capital II, LP ("MSC II") and Main Street Capital III, LP ("MSC III" and, collectively with MSMF and MSC II, the "Funds"), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC") by the United States Small Business Administration ("SBA"). Because MSCC is internally managed, all of the executive officers and otherour employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

               MSC Adviser I, LLC (the "External Investment Manager") was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("External Parties") and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC") to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements.

               MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

               MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes.

               Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our," the "Company" and "Main Street" refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.


        Tableemployees of Contents

        OVERVIEW

               Our principal investment objective is to maximize our portfolio's total return by generating current income from our debt investments and capital appreciation from our equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Our LMM companies generally have annual revenues between $10 million and $150 million, and our LMM portfolio investments generally range in size from $5 million to $50 million. Our Middle Market investments are made in businesses that are generally larger in size than our LMM portfolio companies, with annual revenues typically between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million. Our private loan ("Private Loan") portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio.

               We seek to fill the financing gap for LMM businesses, which, historically, have had limited access to financing from commercial banks and other traditional sources. The underserved nature of the LMM creates the opportunity for us to meet the financing needs of LMM companies, while also negotiating favorable transaction termsmanaging our ongoing business activities. In this regard, we remain heavily engaged with our portfolio companies. As discussed below under “Discussion and Analysis of Results of Operations,” our investment income, principally our interest and dividend income, was negatively impacted by the economic effects of the COVID-19 pandemic in 2020. We continue to maintain access to multiple sources of liquidity, including cash, unused capacity under our Credit Facility and, as discussed under Liquidity and Capital Resources, access to capital markets for both equity participations. Ourand unsecured note issuances. As of December 31, 2021, we were in compliance with all debt covenants and do not anticipate any issues with our ability to invest across a company's capital structure, from secured loanscomply with all covenants in the future. Refer to equity securities, allows us“—Liquidity and Capital Resources” below for further discussion as of December 31, 2021.

        Neither our management nor our Board of Directors is able to offer portfolio companies a comprehensive suite of financing options, or a "one stop" financing solution. Providing customized, "one stop" financing solutions is important to LMM portfolio companies. We generally seek to partner directly with entrepreneurs, management teams and business owners in making our investments. Our LMM portfolio debt investments are generally secured by a first lien onpredict the assetsfull impact of the COVID-19 pandemic, including its duration and the magnitude of its economic and societal impact. As such, while we will continue to monitor the evolving situation and guidance from U.S. authorities, including federal, state and local public health authorities, we are unable to predict with any certainty the extent to which the outbreak will negatively affect our portfolio companycompanies’ operating results and typicallyfinancial condition or the impact that such disruptions may have a termon our results of between fiveoperations and seven years from the original investment date.

               Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have an expected duration of between three and seven years from the original investment date.

               Our Private Loan portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred tofinancial condition in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.future.

               Our other portfolio ("Other Portfolio") investments primarily consist of investments which are not consistent with the typical profiles for our LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In our Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.INVESTMENT PORTFOLIO ACTIVITY

               Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income Fund, Inc. ("HMS Income"). Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities.


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        The following tables provide a summary of our investments in the LMM, Private Loan and Middle Market and Private Loan portfolios as of December 31, 20182021 and 20172020 (this information excludes the Other Portfolio investments, short-term portfolio investments and the External Investment Manager which are discussed further below):

            

        As of December 31, 2021

        LMM (a)

        Private Loan

        Middle Market

        (dollars in millions)

         

        Number of portfolio companies

        73

         

        75

         

        36

        Fair value

        $

        1,716.4

         

        $

        1,141.8

         

        $

        395.2

        Cost

        $

        1,455.7

         

        $

        1,157.5

         

        $

        440.9

        Debt investments as a % of portfolio (at cost)

        70.9

        %

        95.7

        %

        93.3

        %

        Equity investments as a % of portfolio (at cost)

        29.1

        %

        4.3

        %

        6.7

        %

        % of debt investments at cost secured by first priority lien

        99.0

        %

        98.7

        %

        98.7

        %

        Weighted-average annual effective yield (b)

        11.2

        %

        8.2

        %

        7.5

        %

        Average EBITDA (c)

        $

        6.2

         

        $

        41.3

         

        $

        76.0


        56


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        (a)At December 31, 2021, we had equity ownership in all of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 40%.
        (b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2021, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average yield on our debt portfolio as of December 31, 2021 including debt investments on non-accrual status was 10.6% for our LMM portfolio, 8.0% for our Private Loan portfolio and 6.9% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of leverage, or debt capital, in our capital structure, our expenses or any sales load paid by an investor.
        (c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, three Private Loan portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

            

        As of December 31, 2020

        LMM (a)

        Private Loan

        Middle Market

        (dollars in millions)

         

        Number of portfolio companies

        70

         

        63

         

        42

        Fair value

        $

        1,285.5

         

        $

        740.4

         

        $

        445.6

        Cost

        $

        1,104.6

         

        $

        769.0

         

        $

        488.9

        Debt investments as a % of portfolio (at cost)

        65.8

        %

        93.8

        %

        93.0

        %

        Equity investments as a % of portfolio (at cost)

        34.2

        %

        6.2

        %

        7.0

        %

        % of debt investments at cost secured by first priority lien

        98.1

        %

        95.4

        %

        92.4

        %

        Weighted-average annual effective yield (b)

        11.6

        %

        8.7

        %

        7.9

        %

        Average EBITDA (c)

        $

        5.3

         

        $

        58.1

         

        $

        76.5


        (a)At December 31, 2020, we had equity ownership in approximately 99% of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 38%.
        (b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2020, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average yield on our debt portfolio as of December 31, 2020 including debt investments on non-accrual status was 10.4% for our LMM portfolio, 8.4% for our Private Loan portfolio and 7.9% for our Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of our common stock will realize on its investment because it does not reflect changes in the market value of our stock, our utilization of leverage, or debt capital, in our capital structure, our expenses or any sales load paid by an investor.
        (c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, four Private Loan portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.
         
         As of December 31, 2018 
         
         LMM(a) Middle Market Private Loan 
         
         (dollars in millions)
         

        Number of portfolio companies

          69  56  59 

        Fair value

         $1,195.0 $576.9 $507.9 

        Cost

         $990.9 $608.8 $553.3 

        % of portfolio at cost — debt

          68.7%  96.3%  93.0% 

        % of portfolio at cost — equity

          31.3%  3.7%  7.0% 

        % of debt investments at cost secured by first priority lien

          98.5%  87.9%  92.0% 

        Weighted-average annual effective yield(b)

          12.3%  9.6%  10.4% 

        Average EBITDA(c)

         $4.7 $99.1 $46.1 

        (a)
        At

        For the years ended December 31, 2018,2021 and 2020, we had equity ownership in approximately 99%achieved an annualized total return on investments of our LMM portfolio companies,16.6% and the average fully diluted equity ownership in those portfolio companies was approximately 40%.

        (b)
        The weighted average annual effective yields were computed4.1%, respectively. Total return on investments is calculated using the effective interest, rates for all debt investments at costdividend, and fee income, as of December 31, 2018, including amortization of deferred debt origination feeswell as the realized and accretion of original issue discount but excluding fees payable upon repaymentunrealized change in fair value of the debt instruments and any debtInvestment Portfolio for the specified period. Our total return on investments on non-accrual status. Weighted average annual effective yield is higher thannot reflective of what an investor in shares of our common stock will realize on its investment

        57


        because it does not reflect changes in the market value of our stock, our utilization of leverage, or debt capital, in our capital structure, our expenses or any sales load paid by an investor.

        (c)
        The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including two LMM portfolio companies, one Middle Market portfolio company and four Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.


         
         As of December 31, 2017 
         
         LMM(a) Middle Market Private Loan 
         
         (dollars in millions)
         

        Number of portfolio companies

          70  62  54 

        Fair value

         $948.2 $609.3 $467.5 

        Cost

         $776.5 $629.7 $489.2 

        % of portfolio at cost — debt

          67.1%  97.3%  93.6% 

        % of portfolio at cost — equity

          32.9%  2.7%  6.4% 

        % of debt investments at cost secured by first priority lien

          98.1%  90.5%  94.5% 

        Weighted-average annual effective yield(b)

          12.0%  9.0%  9.2% 

        Average EBITDA(c)

         $4.4 $78.3 $39.6 

        (a)
        At December 31, 2017, we had equity ownership in approximately 97% of our LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 39%.

        (b)
        The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2017, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. Weighted-average annual

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          effective yield is higher than what an investor in shares of our common stock will realize on its investment because it does not reflect our expenses or any sales load paid by an investor.

        (c)
        The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including six LMM portfolio companies, one Middle Market portfolio company and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for our investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

        As of December 31, 2018,2021, we had Other Portfolio investments in eleventhirteen companies, collectively totaling approximately $108.3$166.1 million in fair value and approximately $116.0$173.7 million in cost basis and which comprised approximately 4.4%4.7% and 5.3% of our Investment Portfolio (as defined in "Critical Accounting Policies — Basis of Presentation" below) at fair value.value and cost, respectively. As of December 31, 2017,2020, we had Other Portfolio investments in eleventwelve companies, collectively totaling approximately $104.6$96.6 million in fair value and approximately $109.4$124.7 million in cost basis and which comprised approximately 4.8%3.6% and 5.0% of our Investment Portfolio at fair value.value and cost, respectively.

        As of December 31, 2021, we had one short-term portfolio investment, which was a secured debt investment that had approximately $2.0 million in both fair value and in cost basis and which comprised approximately 0.1% of our Investment Portfolio at both fair value and cost. As of December 31, 2020, we held no short-term investments.

        As previously discussed, the External Investment Manager is a wholly owned subsidiary that is treated as a portfolio investment. As of December 31, 2018, there was no cost basis in2021, this investment and the investment had a fair value of approximately $65.7$140.4 million and a cost basis of $29.5 million, which comprised approximately 2.7%3.9% and 0.9% of our Investment Portfolio at fair value.value and cost, respectively. As of December 31, 2017, there was no cost basis in2020, this investment and the investment had a fair value of approximately $41.8$116.8 million and a cost basis of $29.5 million, which comprised approximately 1.9%4.3% and 1.2% of our Investment Portfolio at fair value.value and cost, respectively.

               Our portfolio investments areCRITICAL ACCOUNTING POLICIES

        The preparation of financial statements and related disclosures in conformity with generally made through MSCCaccepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the Funds. MSCCreported amounts of assets and liabilities, and contingent assets and liabilities at the Funds share the same investment strategies and criteria, although they are subject to different regulatory regimes. An investor's return in MSCC will depend, in part, on the Funds' investment returns as they are wholly owned subsidiaries of MSCC.

               The level of new portfolio investment activity will fluctuate from period to period based upon our viewdate of the current economic fundamentals, our abilityfinancial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. Critical accounting policies are those that require management to identify new investment opportunitiesmake subjective or complex judgments about the effect of matters that meet our investment criteria,are inherently uncertain and our ability to consummate the identified opportunities. The level of new investment activity, and associated interest and fee income, will directly impact future investment income. In addition, the level of dividends paid by portfolio companies and the portion of our portfolio debt investments on non-accrual status will directly impact future investment income. While we intend to grow our portfolio and our investment income over the long term, our growth and our operating resultsmay change in subsequent periods. Changes that may be more limited during depressed economic periods. However, we intend to appropriately manage our cost structure and liquidity position based on applicable economic conditions and our investment outlook. The level of realized gainsrequired in the underlying assumptions or losses and unrealized appreciation or depreciation on our investments will also fluctuate depending upon portfolio activity, economic conditions and the performance of our individual portfolio companies. The changesestimates in realized gains and losses and unrealized appreciation or depreciationthese areas could have a material impact on our operating results.current and future financial condition and results of operations.

               Because weManagement has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board of Directors. Our critical accounting policies and estimates include the Investment Portfolio Valuation and Revenue Recognition policies described below. Our significant accounting policies are internally managed, we do not pay any external investment advisory fees, but instead directly incur the operating costs associated with employing investment and portfolio management professionals. We believe that our internally managed structure provides us with a beneficial operating expense structure when compared to other publicly traded and privately held investment firms which are externally managed, and our internally managed structure allows us the opportunity to leverage our non-interest operating expenses as we grow our Investment Portfolio. For the years ended December 31, 2018 and 2017, the ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets was 1.4% and 1.6%, respectively.

               During May 2012, we entered into an investment sub-advisory agreement with HMS Adviser, LP ("HMS Adviser"), which is the investment advisor to HMS Income, a non-listed BDC, to provide certain investment


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        advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow us to own a registered investment adviser, we assigned the sub-advisory agreementdescribed in greater detail in Note B to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on our ability to meet the source-of-income requirement necessary for us to maintain our RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager is entitled to 50% of the base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with HMS Income. The External Investment Manager has conditionally agreed to waive the historical incentive fees otherwise earned. During the years ended December 31, 2018, 2017 and 2016, the External Investment Manager earned $11.6 million, $10.9 million and $9.5 million, respectively, of management fees (net of fees waived, if any) under the sub-advisory agreement with HMS Adviser.

               During April 2014, we received an exemptive order from the SEC permitting co-investments by us and HMS Income in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have made, and in the future intend to continue to make, such co-investments with HMS Income in accordance with the conditions of the order. The order requires, among other things, that we and the External Investment Manager consider whether each such investment opportunity is appropriate for HMS Income and, if it is appropriate, to propose an allocation of the investment opportunity between us and HMS Income. Because the External Investment Manager may receive performance-based fee compensation from HMS Income, this may provide it an incentive to allocate opportunities to HMS Income instead of us. However, both we and the External Investment Manager have policies and procedures in place to manage this conflict.

        CRITICAL ACCOUNTING POLICIES

          Basis of Presentation

               Our consolidated financial statements are preparedincluded in accordance with generally accepted accounting principles in the United States“Item 8.– Consolidated Financial Statements and Supplementary Data” of America ("U.S. GAAP"). For each of the periods presented herein, our consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of our investments in LMM portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio investments, and the investment in the External Investment Manager. Our results of operations and cash flows for the years ended December 31, 2018, 2017 and 2016 and financial position as of December 31, 2018 and 2017, are presentedthis Annual Report on a consolidated basis. The effects of all intercompany transactions between us and our consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform with the current presentation.Form 10-K.

               We are an investment company following the accounting and reporting guidance in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 946,Financial Services — Investment Companies ("ASC 946"). Under ASC 946, we are precluded from consolidating other entities in which we have equity investments, including those in which we have a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if we hold a controlling interest in an operating company that provides all or substantially all of its services directly to us or to any of our portfolio companies. Accordingly, as noted above, our consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. We have determined that all of our portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, our Investment Portfolio is carried on the consolidated balance sheet at fair value with any adjustments to fair value recognized as "Net Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net Realized Gain (Loss)."


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          Investment Portfolio Valuation

        The most significant determination inherent in the preparation of our consolidated financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We consider this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of both December 31, 20182021 and 2017,2020, our Investment Portfolio valued at fair value represented approximately 96%97% of our total assets. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820,Fair Value Measurements and Disclosures (" (“ASC 820"820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See "Note“Note B.1.—Valuation of the Investment Portfolio"Portfolio” in the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

        58


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        Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as unrealized appreciation or depreciation.

        In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of directors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its investment portfolio, subject to the active oversight of the board. Our Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of our executive officers to serve as the final responsibility for overseeing, reviewing and approving, in good faith, our determination ofBoard’s valuation designee. We adopted the fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements.Valuation Procedures effective April 1, 2021. We believe our Investment Portfolio as of December 31, 20182021 and 20172020 approximates fair value as of those dates based on the markets in which we operate and other conditions in existence on those reporting dates.

        We record interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we otherwise do not expect the debtor to be able to service all of its debt or other obligations, we will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security'ssecurity’s status significantly improves regarding the debtor'sdebtor’s ability to service the debt or other obligations, or if a loan or debt security is sold or written off, we remove it from non-accrual status.

        We may periodically provide services, including structuring and advisory services, to our portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.


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          Payment-in-Kind ("PIK"(“PIK”) Interest and Cumulative Dividends

        We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed below)in “Note B.9. – Income Taxes” in the notes to the consolidated financial statements), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2018, 20172021, 2020 and 2016,2019 (i) approximately 1.0%2.6%, 2.4%,2.8% and 3.6%2.0%, respectively, of our total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0%0.6%, 1.6%,0.8% and 1.2%1.0%, respectively, of our total investment income was attributable to cumulative dividend income not paid currently in cash.

          Share-Based Compensation59


                 We account for our share-based compensation plans using the fair value method, as prescribed by ASC 718,Compensation — Stock Compensation. Accordingly, for restricted stock awards, we measure the grant date fair value based upon the market price of our common stock on the date of the grant and amortize the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

                 We have also adopted Accounting Standards Update ("ASU") 2016-09,Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which requires that all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax expense or benefit in the income statement and not delay recognition of a tax benefit until the tax benefit is realized through a reduction to taxes payable. The tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur. Additionally, we have elected to account for forfeitures as they occur.

                 MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC's taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment company taxable income" (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

                 The Taxable Subsidiaries primarily hold certain portfolio investments for us. The Taxable Subsidiaries permit us to hold equity investments in portfolio companies which are "pass-through" entities for tax purposes and to continue to comply with the "source-of-income" requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with us for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in our consolidated


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          financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in our consolidated financial statements.

                 The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC's consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager's separate financial statements.

                 In December 2017, the "Tax Cuts and Jobs Act" legislation was enacted. The Tax Cuts and Jobs Act includes significant changes to the U.S. corporate tax system, including a U.S. federal corporate income tax rate reduction from 35% to 21% and other changes. ASC 740,Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation was enacted. As such, we have accounted for the tax effects as a result of the enactment of the Tax Cuts and Jobs Act beginning with the period ended December 31, 2017.

                 The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized.

                 Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

          INVESTMENT PORTFOLIO COMPOSITION

                 Our LMM portfolio investments primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Our LMM portfolio companies generally have annual revenues between $10 million and $150 million, and our LMM investments generally range in size from $5 million to $50 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, we receive nominally priced equity warrants and/or make direct equity investments in connection with a debt investment.

                 Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $3 million to $20 million. Our Middle Market portfolio debt


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          investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

                 Our Private Loan portfolio investments are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

                 Our Other Portfolio investments primarily consist of investments which are not consistent with the typical profiles for LMM, Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, we may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds.

                 Our external asset management business is conducted through the External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with HMS Income. Through this agreement, we share employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities, and we allocate the related expenses to the External Investment Manager pursuant to the sharing agreement. Our total expenses for the years ended December 31, 2018, 2017 and 2016 are net of expenses allocated to the External Investment Manager of $6.8 million, $6.4 million and $5.1 million, respectively. The External Investment Manager earns management fees based on the assets of the funds under management and may earn incentive fees, or a carried interest, based on the performance of the funds managed. The total contribution of the External Investment Manager to our net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income received from the External Investment Manager. For the years ended December 31, 2018, 2017 and 2016, the total contribution to our net investment income was $10.6 million, $9.4 million and $7.9 million, respectively.

          The following tables summarize the composition of our total combined LMM portfolio investments, Middle MarketPrivate Loan portfolio investments and Private LoanMiddle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle MarketPrivate Loan portfolio investments and Private LoanMiddle Market portfolio investments as of December 31, 20182021 and 20172020 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager)Manager, which are discussed in the “Investment Portfolio Activity” section above).

          Cost:
           December 31, 2018 December 31, 2017 

           

          December 31, 2021

           

          December 31, 2020

          First lien debt

           77.1% 79.0% 

           

          82.5

          %  

          77.0

          %

          Equity

           16.6% 15.3% 

           

          16.2

          %  

          19.0

          %

          Second lien debt

           5.3% 4.5% 

           

          0.6

          %  

          2.7

          %

          Equity warrants

           0.6% 0.7% 

           

          0.3

          %  

          0.5

          %

          Other

           0.4% 0.5% 

           

          0.4

          %  

          0.8

          %

           

          100.0

          %  

          100.0

          %

           100.0% 100.0% 

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          Fair Value:
           December 31, 2018 December 31, 2017 

           

          December 31, 2021

           

          December 31, 2020

           

          First lien debt

           69.0% 70.5% 

           

          74.3

          %  

          70.0

          %

           

          Equity

           25.5% 24.4% 

           

          24.6

          %  

          26.4

          %

           

          Second lien debt

           4.6% 4.1% 

           

          0.5

          %  

          2.4

          %

           

          Equity warrants

           0.5% 0.6% 

           

          0.2

          %  

          0.4

          %

           

          Other

           0.4% 0.4% 

           

          0.4

          %  

          0.8

          %

           

           

          100.0

          %  

          100.0

          %

           

           100.0% 100.0% 

          Our LMM portfolio investments, Middle MarketPrivate Loan portfolio investments and Private LoanMiddle Market portfolio investments carry a number of risks including: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment grade debt and equity investments in our Investment Portfolio. Please see "Risk“Risk Factors — Risks Related to Our Investments"our Investments” for a more complete discussion of the risks involved with investing in our Investment Portfolio.

          PORTFOLIO ASSET QUALITY

          We utilize an internally developed investment rating system to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio company. The investment rating system takes into consideration various factors, including each investment'sinvestment’s expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, the portfolio company'scompany’s future outlook and other factors that are deemed to be significant to the portfolio company.

          As of December 31, 2018,2021, our total Investment Portfolio had sixnine investments on non-accrual status, which comprised approximately 0.7% of its fair value and 3.3% of its cost. As of December 31, 2020, our total Investment Portfolio had seven investments on non-accrual status, which comprised approximately 1.3% of its fair value and 3.9% of its cost. As of December 31, 2017, our total Investment Portfolio had five investments on non-accrual status, which comprised approximately 0.2% of its fair value and 2.3%3.6% of its cost.

          The operating results of our portfolio companies are impacted by changes in the broader fundamentals of the United States economy. In the event thatperiods during which the United States economy contracts, as it did due to the impact of COVID-19, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in defaults on our debt investments or in realized losses on our investments and to difficulty in maintaining historical dividend payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the performance of certain portfolio companies will not be negatively impacted by future economic cycles or other conditions, which could also have a negative impact on our future results.


          60


          DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

          Set forth below is a comparison of the results of operations and changes in financial condition for the years ended December 31, 2021 and 2020. The comparison of, and changes between, the fiscal years ended December 31, 2020 and 2019 can be found within “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” included in Part II of our annual report on Form 10-K for the fiscal year ended December 31, 2020, which is incorporated herein by reference.

            Comparison of the years ended December 31, 20182021 and 20172020


           Twelve Months
          Ended
          December 31,
           Net Change

           2018 2017 Amount %

           (dollars in thousands)

          Total investment income

           $233,355 $205,741 $27,614 13%

          Total expenses

           (76,710) (70,370) (6,340)9%

          Net investment income

           156,645 135,371 21,274 16%

          Net realized gain from investments

           1,341 16,182 (14,841) 

          Net realized loss on extinguishment of debt

           (2,896) (5,217) 2,321  

          Net unrealized appreciation from:

                  

          Portfolio investments

           17,981 42,545 (24,564) 

          SBIC debentures

           1,294 6,212 (4,918) 

          Total net unrealized appreciation

           19,275 48,757 (29,482) 

          Income tax provision

           (6,152) (24,471) 18,319  

          Net increase in net assets resulting from operations

           $168,213 $170,622 $(2,409)(1)%

          Year Ended

           

          December 31,

          Net Change

              

          2021

              

          2020

              

          Amount

              

          %

          (dollars in thousands)

          Total investment income

          $

          289,047

          $

          222,614

          $

          66,433

           

          30

          %

          Total expenses

           

          (106,382)

           

          (84,669)

           

          (21,713)

           

          26

          %

          Net investment income

           

          182,665

           

          137,945

           

          44,720

           

          32

          %

          Net realized gain (loss) from investments

           

          45,336

           

          (115,947)

           

          161,283

          NM

          Net realized loss on extinguishment of debt

           

           

          (534)

           

          534

          NM

          Net unrealized appreciation (depreciation) from investments

           

          135,624

           

          (6,082)

           

          141,706

          NM

          Unrealized appreciation from SBIC debentures

           

           

          460

           

          (460)

          NM

          Total net unrealized appreciation (depreciation)

           

          135,624

           

          (5,622)

           

          141,246

          NM

          Income tax benefit (provision)

           

          (32,863)

           

          13,541

           

          (46,404)

          NM

          Net increase in net assets resulting from operations

          $

          330,762

          $

          29,383

          $

          301,379

           

          NM


          Year Ended

           

          December 31, 

          Net Change

              

          2021

              

          2020

              

          Amount

              

          %

          (dollars in thousands, except per share amounts)

           

          Net investment income

          $

          182,665

          $

          137,945

          $

          44,720

           

          32

          %

          Share‑based compensation expense

           

          10,887

           

          10,828

           

          59

           

          1

          %

          Distributable net investment income(a)

          $

          193,552

          $

          148,773

          $

          44,779

           

          30

          %

          Net investment income per share—Basic and diluted

          $

          2.65

          $

          2.10

          $

          0.55

           

          26

          %

          Distributable net investment income per share—Basic and diluted(a)

          $

          2.81

          $

          2.26

          $

          0.55

           

          24

          %

           
           Twelve Months
          Ended
          December 31,
           Net Change
           
           2018 2017 Amount %
           
           (dollars in thousands, except per share
          amounts)

          Net investment income

           $156,645 $135,371 $21,274 16%

          Share-based compensation expense

            9,151  10,027  (876)(9)%

          Distributable net investment income(a)

           $165,796 $145,398 $20,398 14%

          Net investment income per share — Basic and diluted

           $2.60 $2.39 $0.21 9%

          Distributable net investment income per share — Basic and diluted(a)

           $2.76 $2.56 $0.20 8%

          (a)

          NM

          Net Change % not meaningful

          (a)Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

          Investment Income

          Total investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

                 For the year ended December 31, 2018, total investment income2021 was $233.4$289.0 million, a 13%30% increase overfrom the $205.7$222.6 million of total investment income for the corresponding periodprior year. The following table provides a summary of 2017. Thisthe changes in the comparable period increase was principally attributable to (i) a $15.2 million net increase in interest income primarily related to higher average levels of Investment Portfolio debt investments and an increase in their average effectiveactivity.


          61


          Year Ended

          December 31, 

          Net Change

          2021

          2020

          Amount

          %

          (dollars in thousands)

          Interest Income

          $

          193,667

          $

          173,676

          $

          19,991

          12

          %

          (a)

          Dividend Income

          81,153

          36,373

          44,780

          123

          %

          (b)

          Fee Income

          14,227

          12,565

          1,662

          13

          %

          (c)

          Total Investment Income

          $

          289,047

          $

          222,614

          $

          66,433

          30

          %

          (d)


          (a)The increase in interest income was primarily due to (i) a $17.4 million increase related to higher average levels of Investment Portfolio debt investments and (ii) a $2.5 million increase related to repayment, repricing and other activities related to certain Investment Portfolio debt investments.
          (b)The increase in dividend income from Investment Portfolio equity investments was primarily a result of (i) improved operating results, financial condition and liquidity positions of certain of our portfolio companies following the impacts of the COVID-19 pandemic in 2020 and (ii) a $11.8 million increase related to elevated dividend income considered to be less consistent or non-recurring.
          (c)The increase in fee income was primarily due to a $3.4 million increase in fees from origination of debt investments resulting from higher new investment activity, partially offset by a $2.3 million decrease in fees from refinancing and prepayment of debt investments.
          (d)The increase in total investment income includes the impact of certain income considered less consistent or non-recurring, including (i) a $11.8 million increase in dividend income and (ii) a $0.3 million net increase in interest income and fee income related to accelerated prepayment, repricing and other activity related to certain Investment Portfolio debt investments.

          Expenses

          yields, partially offset by decreases in interest income associated with activity from portfolio companies that is considered to be less consistent on a recurring basis or non-recurring and prepayment, repricing and other activities involving existing Investment Portfolio debt investments, (ii) a $11.8 million increase in dividend income from Investment Portfolio equity investments and (iii) a $0.7 million increase in fee income. The $27.6 million increase in total investment income in the year ended December 31, 2018 includes $6.3 million related to elevated dividend income activity from certain Investment Portfolio equity investments that is considered to be less consistent on a recurring basis or non-recurring, partially offset by (i) a decrease of $2.7 million related to interest income activity from portfolio companies that is considered to be less consistent on a recurring basis or non-recurring and (ii) a decrease of $2.5 million related to lower accelerated prepayment, repricing and other activity for certain Investment Portfolio debt investments, in each case when compared to the same period in 2017.

            Expenses

                 For the year ended December 31, 2018, totalTotal expenses increased to $76.7 million from $70.4 million for the corresponding period of 2017. This comparable period increase in operating expenses was principally attributable to (i) a $7.0 million increase in interest expense, primarily due to an $8.0 million increase as a result of the issuance of our 4.50% Notes due 2022 in November 2017, with the remainder of the difference from prior year due to the higher average balance of SBIC debentures outstanding and an increase in both the average balance outstanding and the interest rate on our multi-year revolving credit facility (the "Credit Facility"), with these increases partially offset by a decrease from the redemption of the 6.125% Notes effective April 1, 2018, and (ii) a $0.4 million increase in compensation expense related to increases in the number of personnel, base compensation levels and incentive compensation accruals, with these increases partially offset by (i) a $0.9 million decrease in share-based compensation expense, (ii) a decrease of $0.9 million related to an additional decrease in incentive compensation accruals and (iii) a $0.4 million increase in the expenses allocated to the External Investment Manager as a result of elevated non-recurring strategic activities at the External Investment Manager during the year ended December 31, 2018. The $0.4 million increase in compensation expense is after (i) a $1.5 million decrease that is considered to be a one-time non-recurring benefit due to the conversion of a cash bonus to an expected non-cash restricted stock grant for an executive that will be amortized as non-cash, share-based compensation expense over the future service period and (ii) a $0.4 million decrease as a result of the decrease in the fair value of our deferred compensation plan assets. The ratio of our total operating expenses, excluding interest expense, as a percentage of our quarterly average total assets for the year ended December 31, 2018 was 1.4% on an annualized basis compared to 1.6% for2021 were $106.4 million, a 26% increase from $84.7 million in the year ended December 31, 2017.prior year. The following table provides a summary of the changes in the comparable period activity.

            Year Ended

            December 31, 

            Net Change

            2021

            2020

            Amount

            %

            (dollars in thousands)

            Employee compensation expenses

            $

            33,002

            $

            17,504

            $

            15,498

            89

            %

            (a)

            Deferred compensation plan expense

            1,440

            1,477

            (37)

            (3)

            %

            Total compensation expense

            34,442

            18,981

            15,461

            81

            %

            G&A expense

            12,494

            12,702

            (208)

            (2)

            %

            Interest expense

            58,836

            49,587

            9,249

            19

            %

            (b)

            Share-based compensation expense

            10,887

            10,828

            59

            1

            %

            Gross expenses

            116,659

            92,098

            24,561

            27

            %

            Allocation of expenses to the external investment manager

            (10,277)

            (7,429)

            (2,848)

            38

            %

            (c)

            Total expenses

            $

            106,382

            $

            84,669

            $

            21,713

            26

            %


            (a)The increase in employee compensation expenses was primarily due to an increase in our variable incentive compensation accruals related to our improved operating results in 2021.
            (b)The increase in interest expense is primarily related to increased leverage levels to support our investment activity in the year ended December 31, 2021 as compared to the prior year. These borrowings included (i) an aggregate of $500.0 million in aggregate principal amount of our 3.00% Notes issued in January and October 2021 and (ii) an additional $125.0 million aggregate principal amount which we issued under our 5.20% Notes in July 2020, partially offset by decreased interest expense relating to our Credit Facility due to the lower average balance outstanding and the lower average interest rate.

          62


          (c)The increase in the allocation of expenses to the External Investment Manager primarily relates to the impact of the transaction in October 2020, whereby the External Investment Manager became the sole investment adviser to MSC Income and the increased assets under management by the External Investment Manager.

          Net Investment Income

          Net investment income for the year ended December 31, 2018 was $156.62021 increased 32% to $182.7 million, or a 16% increase,$2.65 per share, compared to net investment income of $135.4$137.9 million, or $2.10 per share, for the corresponding period of 2017.prior year. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses, both as discussed above.

            Distributable Net Investment Income

                 For the year ended December 31, 2018, distributable The increase in net investment income increased 14% to $165.8 million, or $2.76 per share compared with $145.4 million, or $2.56 per share, inreflects these changes, as well as the corresponding period of 2017. The increase in distributable net investment income was primarily due to the higher level of total investment income, partially offset by higher operating expenses both as discussed above. Distributable net investment income on a per share basisweighted average shares outstanding for the year ended December 31, 2018 reflects (i) a consistent level of income per share from the comparable period in 2017 attributable to the net effect of the elevated dividend income activity, offset by the decreases in interest income associated with the comparable levels of activity from portfolio companies that is considered to be less consistent on a recurring basis or non-recurring and accelerated prepayment, repricing and other income activity considered non-recurring, as discussed above,


          Table of Contents

          (ii) an increase of $0.03 per share due to the non-recurring benefit to compensation expense and the decrease in the fair value of the deferred compensation plan assets, both as discussed above, and (iii) a greater number of average shares outstanding compared to the corresponding period in 20172021, primarily due to shares issued through the ATM Program (as defined in "— “—Liquidity and Capital Resources — Resources—Capital Resources"Resources” below), shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan.

            Net Increase in Net Assets Resulting from Operations

          The net increase in net assets resultinginvestment income on a per share basis includes the impacts of an increase of $0.17 per share due to the increase in investment income from operations duringcertain dividend income activity considered less consistent or non-recurring, as discussed above.

          Distributable Net Investment Income

          Distributable net investment income for the year ended December 31, 2018 was $168.22021 increased 30% to $193.6 million, or $2.80$2.81 per share, compared with $170.6$148.8 million, or $3.01$2.26 per share, duringin the prior year. The increase in distributable net investment income was primarily due to the increased level of total investment income, partially offset by higher operating expenses, both as discussed above. The increase in distributable net investment income on a per share basis for the year ended December 31, 2017. This $2.4 million decrease2021 also reflects the impacts of the increase in investment income from certain dividend activity considered less consistent or non-recurring and a greater number of average shares outstanding compared to the prior year, was primarilyboth as discussed above.

          Net Realized Gain (Loss) from Investments

          The following table provides a summary of the resultprimary components of (i) a $29.5 million decrease in net unrealized appreciation from portfolio investments and SBIC debentures, including the impact of accounting reversals relating to realized gains/income (losses), and (ii) a $14.8 million decrease in thetotal net realized gain from investments, with these decreases partially offset by (i) a $21.3 million increase in net investment income as discussed above, (ii) a $18.3 million decrease in the income tax provision and (iii) a $2.3 million improvement in the net realized loss on extinguishment of debt. The net realized gain from investments of $1.3$45.3 million for the year ended December 31, 2018 was primarily2021:

          Year Ended December 31, 2021

          Full Exits

          Partial Exits

          Restructures

          Other (a)

          Total (a)

          Net Gain/(Loss)

          # of Investments

          Net Gain/(Loss)

          # of Investments

          Net Gain/(Loss)

          # of Investments

          Net Gain/(Loss)

          Net Gain/(Loss)

          (dollars in thousands)

          LMM Portfolio

          $

          51,019

          7

          $

          -

          -

          $

          (10,925)

          1

          $

          (493)

          $

          39,601

          Private Loan Portfolio

          5,547

          2

          -

          -

          -

          -

          45

          5,592

          Middle Market Portfolio

          (3,749)

          3

          6,153

          1

          (4,528)

          1

          464

          (1,660)

          Other Portfolio

          (4,449)

          1

          5,920

          4

          -

          -

          351

          1,822

          Short-term Portfolio

          -

          -

          -

          -

          -

          -

          (19)

          (19)

          Total net realized gain/(loss)

          $

          48,368

          13

          $

          12,073

          5

          $

          (15,453)

          2

          $

          348

          $

          45,336

          (a)Other activity includes realized gains and losses from transactions involving 27 portfolio companies which are not considered to be significant individually or in the aggregate.

          63


          The following table provides a summary of the resultprimary components of (i) the net realized gain of $13.7 million resulting from the net effect of gains on the exits of six LMM investments, partially offset by losses on the exits of four LMM investments and other activity in the LMM portfolio, (ii) the realized gains of $6.1 million due to activity in our Other Portfolio and (iii) the realized gains of $2.5 million in our Private Loan portfolio, with the effect of these net realized gains partially offset by thetotal net realized loss on investments of $20.9$115.9 million in our Middle Market portfolio, which is primarilyfor the result of (i) the realized losses of $17.6 million on the restructures of two Middle Market investments and (ii) the realized losses of $4.4 million on the exits of two Middle Market investments.year ended December 31, 2020:

          Year Ended December 31, 2020

          Full Exits

          Partial Exits

          Restructures

          Other (a)

          Total (a)

          Net Gain/(Loss)

          # of Investments

          Net Gain/(Loss)

          # of Investments

          Net Gain/(Loss)

          # of Investments

          Net Gain/(Loss)

          Net Gain/(Loss)

          (dollars in thousands)

          LMM Portfolio

          $

          (5,937)

          5

          $

          (12,880)

          5

          $

          -

          -

          $

          (262)

          $

          (19,079)

          Private Loan Portfolio

          (29,075)

          2

          -

          -

          (14,914)

          2

          (627)

          (44,616)

          Middle Market Portfolio

          (22,503)

          6

          -

          -

          (30,594)

          4

          (58)

          (53,154)

          Other Portfolio

          -

          -

          -

          -

          -

          -

          903

          903

          Total Net Realized Gain/(Loss)

          $

          (57,514)

          13

          $

          (12,880)

          5

          $

          (45,509)

          6

          $

          (44)

          $

          (115,947)

          (a)Other activity includes realized gains and losses from transactions involving 37 portfolio companies which are not considered to be significant individually or in the aggregate.

          Net Unrealized Appreciation (Depreciation)

          The following table provides a summary of the total net unrealized appreciation of $19.3$135.6 million for the year ended December 31, 2018:2021:

          Year Ended December 31, 2021

          Private

          Middle

              

          LMM(a)

              

          Loan

              

          Market

              

          Other

          Total

           

          (dollars in millions)

          Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period

          $

          (27.5)

          $

          (3.7)

          $

          1.5

          $

          4.2

          $

          (25.5)

          Net unrealized appreciation (depreciation) relating to portfolio investments

           

          107.2

           

          17.2

           

          (3.7)

           

          40.4

          (b)

           

          161.1

          Total net unrealized appreciation (depreciation) relating to portfolio investments

          $

          79.7

          $

          13.5

          $

          (2.2)

          $

          44.6

          $

          135.6

           
           Twelve Months Ended December 31, 2018 
           
           LMM(a) Middle
          Market
           Private
          Loan
           Other Total 
           
           (dollars in millions)
           

          Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains / income) losses recognized during the current period

           $(22.2)$19.6 $(4.4)$(2.6)$(9.6)

          Net unrealized appreciation (depreciation) relating to portfolio investments

            54.5  (31.3) (19.3) 23.7(b) 27.6 

          Total net unrealized appreciation (depreciation) relating to portfolio investments

           $32.3 $(11.7)$(23.7)$21.1 $18.0 

          Unrealized appreciation relating to SBIC debentures(c)

                        1.3 

          Total net unrealized appreciation

                       $19.3 

          (a)
          LMM includes unrealized appreciation on 39 LMM portfolio investments and unrealized depreciation on 19 LMM portfolio investments.

          (b)
          Other includes $24.0 million of unrealized appreciation relating to the External Investment Manager and $0.3
          (a)Includes unrealized appreciation on 43 LMM portfolio investments and unrealized depreciation on 23 LMM portfolio investments.
          (b)Includes (i) $23.7 million of unrealized appreciation relating to the External Investment Manager and (ii) $16.3 million of net unrealized appreciation relating to the Other Portfolio.

          64


          The following table provides a summary of the total net unrealized depreciation relating toof $5.6 million for the Other Portfolio.

          (c)
          Primarily relates to unrealized appreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis and includes $1.4 million of accounting reversals of previously recognized unrealized depreciation recorded since the date of acquisition of MSC II on the debentures repaid due to fair value adjustments since such date.
          year ended December 31, 2020:

          Year Ended December 31, 2020

          Private

          Middle

              

          LMM(a)

              

          Loan

              

          Market

              

          Other

          Total

           

          (dollars in millions)

          Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net
          realized (gains / income) losses recognized during the current period

          $

          11.0

          $

          48.4

          $

          50.0

          $

          0.0

          $

          109.4

          Net unrealized appreciation (depreciation) relating to portfolio investments

           

          (34.7)

           

          (34.6)

           

          (43.1)

           

          (3.0)

          (b)

           

          (115.5)

          Total net unrealized appreciation (depreciation) relating to portfolio investments

          $

          (23.7)

          $

          13.7

          $

          6.9

          $

          (3.0)

          $

          (6.1)

          Unrealized appreciation relating to SBIC debentures (c)

           

          0.5

          Total net unrealized depreciation

          $

          (5.6)



          (a)

          Includes unrealized appreciation on 31 LMM portfolio investments and unrealized depreciation on 34 LMM portfolio investments.

          (b)

          Includes $16.5 million of net unrealized depreciation relating to the Other Portfolio, partially offset by $12.7 million of unrealized appreciation relating to the External Investment Manager.

          (c)

          Relates to unrealized depreciation on the SBIC debentures previously issued by Main Street Capital II, LP, a former wholly owned SBIC whose activities have been wound down, which were accounted for on a fair value basis.

          Table of ContentsIncome Tax Benefit (Provision)

          The income tax provision for the year ended December 31, 20182021 of $6.2$32.9 million principally consisted of (i) a deferred tax provision of $5.8$27.1 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary and permanent book-tax differences, and other(ii) a current tax expenseprovision of $0.4 million.

            Comparison of the years ended December 31, 2017 and 2016

           
           Twelve Months
          Ended
          December 31,
           Net Change 
           
           2017 2016 Amount % 
           
           (dollars in thousands)
           

          Total investment income

           $205,741 $178,339 $27,402  15% 

          Total expenses

            (70,370) (62,537) (7,833) 13% 

          Net investment income

            135,371  115,802  19,569  17% 

          Net realized gain from investments

            16,182  29,389  (13,207)   

          Net realized loss from SBIC debentures

            (5,217)   (5,217)   

          Net unrealized appreciation (depreciation) from:

                       

          Portfolio investments

            42,545  (8,305) 50,850    

          SBIC debentures and marketable securities and idle funds

            6,212  786  5,426    

          Total net unrealized appreciation (depreciation)

            48,757  (7,519) 56,276    

          Income tax benefit (provision)

            (24,471) 1,227  (25,698)   

          Net increase in net assets resulting from operations

           $170,622 $138,899 $31,723  23% 


           
           Twelve Months
          Ended
          December 31,
           Net Change 
           
           2017 2016 Amount % 
           
           (dollars in thousands, except per share
          amounts)

           

          Net investment income

           $135,371 $115,802 $19,569  17% 

          Share-based compensation expense

            10,027  8,304  1,723  21% 

          Distributable net investment income(a)

           $145,398 $124,106 $21,292  17% 

          Net investment income per share — Basic and diluted

           $2.39 $2.23 $0.16  7% 

          Distributable net investment income per share — Basic and diluted(a)

           $2.56 $2.39 $0.17  7% 

          (a)
          Distributable net investment income is net investment income as determined in accordance with U.S. GAAP, excluding the impact of share-based compensation expense which is non-cash in nature. We believe presenting distributable net investment income and related per share amounts is useful and appropriate supplemental disclosure of information for analyzing our financial performance since share-based compensation does not require settlement in cash. However, distributable net investment income is a non-U.S. GAAP measure and should not be considered as a replacement to net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, distributable net investment income should be reviewed only in connection with such U.S. GAAP measures in analyzing our financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to distributable net investment income is presented in the table above.

          Table of Contents

            Investment Income

                 For the year ended December 31, 2017, total investment income was $205.7 million, a 15% increase over the $178.3 million of total investment income for the corresponding period of 2016. This comparable period increase was principally attributable to (i) a $23.2 million increase in interest income primarily related to higher average levels of portfolio debt investments and increased activities involving existing Investment Portfolio debt investments, (ii) a $2.5 million increase in dividend income from Investment Portfolio equity investments and (iii) a $1.8 million increase in fee income. The $27.4 million increase in total investment income in the year ended December 31, 2017 includes (i) an increase of $6.7$5.7 million related to higher accelerated prepayment, repricinga $2.6 million provision for excise tax on our estimated undistributed taxable income and other activitya $3.1 million provision for certain portfolio debt investments when compared to the same period in 2016, (ii) an increase of $2.7 million related to interestcurrent U.S. federal and state income activity from portfolio companies that is considered to be less consistent on a recurring basis or non-recurring during the period when compared to the same period in 2016 and (iii) includes $1.7 million related to dividendtaxes.

          The income activity from portfolio companies that is considered to be less consistent on a recurring basis or non-recurring which is consistent with the amount from such dividend income activity in the same period in 2016.

            Expenses

                 For the year ended December 31, 2017, total expenses increased to $70.4 million from $62.5 million for the corresponding period of 2016. This comparable period increase in operating expenses was principally attributable to (i) a $2.8 million increase in interest expense, primarily due to (a) a $1.4 million increase on the Credit Facility due to the higher average interest rate during 2017, (b) a $0.9 million increase due to the issuance of our 4.50% Notes due 2022 in November 2017 and (c) a $0.5 million increase due to the higher average balance of SBIC debentures outstanding, (ii) a $2.4 million increase in general and administrative expenses, including approximately $0.6 million related to non-recurring professional fees and other expenses incurred on certain potential new portfolio investment opportunities which were terminated during the due diligence and legal documentation processes, (iii) a $2.2 million increase in compensation expense related to increases in the number of personnel, base compensation levels and incentive compensation accruals and (iv) a $1.7 million increase in share-based compensation expense, with these increases partially offset by a $1.3 million increase in the expenses allocated to the External Investment Manager, in each case when compared to the same period in the prior year. For the years ended December 31, 2017 and 2016, the ratio of our total operating expenses, excluding interest expense and the non-recurring professional fees and other expenses discussed above as a percentage of our quarterly average total assets was 1.5%. Including the effect of the non-recurring expenses, the ratiotax benefit for the year ended December 31, 2017 was 1.6%.

            Net Investment Income

                 Net investment income for the year ended December 31, 2017 was $135.4 million, or a 17% increase, compared to net investment income2020 of $115.8 million for the corresponding period of 2016. The increase in net investment income was principally attributable to the increase in total investment income, partially offset by higher operating expenses both as discussed above.

            Distributable Net Investment Income

                 For the year ended December 31, 2017, distributable net investment income increased 17% to $145.4 million, or $2.56 per share, compared with $124.1 million, or $2.39 per share in 2016. The increase in distributable net investment income was primarily due to the higher level of total investment income, partially offset by higher operating expenses both as discussed above. Distributable net investment income on a per share basis for the year ended December 31, 2017 reflects an (i) increase of approximately $0.16 per share from the comparable period in 2016 attributable to the net increase in the comparable levels of accelerated prepayment, repricing and other, unusual activity for certain Investment Portfolio debt investments and (ii) a greater number of average shares outstanding compared to the corresponding period in 2016 primarily due to shares issued through the ATM Program (as defined in "— Liquidity and Capital Resources — Capital Resources" below), shares issued pursuant to our equity incentive plans and shares issued pursuant to our dividend reinvestment plan.


          Table of Contents

            Net Increase in Net Assets Resulting from Operations

                 The net increase in net assets resulting from operations during the year ended December 31, 2017 was $170.6 million, or $3.01 per share, compared with $138.9 million, or $2.67 per share, during the year ended December 31, 2016. This $31.7 million increase from the prior year was primarily the result of (i) a $56.3 million improvement in net unrealized appreciation (depreciation) from portfolio investments and SBIC debentures, including the impact of accounting reversals relating to realized gains/income (losses), from net unrealized depreciation of $7.5 million for the year ended December 31, 2016 to net unrealized appreciation of $48.8 million for the year ended December 31, 2017, which includes the impact of approximately $15.0 million of unrealized appreciation in the LMM equity portfolio related to the enactment of the Tax Cuts and Jobs Act (see further discussion above in "— Critical Accounting Policies — Income Taxes") and (ii) a $19.6 million increase in net investment income as discussed above, with these increases partially offset by (i) a $25.7 million change in the income tax benefit (provision) from an income tax benefit of $1.2 million for the year ended December 31, 2016 to an income tax provision of $24.5 million for the year ended December 31, 2017, (ii) a $13.2 million decrease in the net realized gain from investments to a total net realized gain from investments of $16.2 million for the year ended December 31, 2017 and (iii) a $5.2 million realized loss on the repayment of SBIC debentures outstanding at MSC II which had previously been accounted for on the fair value method of accounting. The net realized gain from investments of $16.2 million for the year ended December 31, 2017 was primarily the result of (i) the net realized gain of $11.8 million resulting from gains on the exits of five LMM investments and losses on the exits of four LMM investments, (ii) realized gains of $9.3 million due to activity in our Other Portfolio, (iii) net realized gains of $3.0 million in our Private Loan portfolio resulting from gains on the exits of two Private Loan investments and a loss on the restructure of a Private Loan investment, (iv) realized gains of $2.1 million related to other activity in the LMM portfolio and (v) the net realized loss of $9.8 million in our Middle Market portfolio, which is primarily the result of (a) realized losses of $7.9 million on the exits of two Middle Market investments and (b) the realized loss of $3.5 million on the restructure of a Middle Market investment, with these changes partially offset by $1.5 million of net realized gains on other activity in our Middle Market portfolio. The realized loss of $5.2 million on the repayment of SBIC debentures is related to the previously recognized bargain purchase gain resulting from recording the MSC II debentures at fair value on the date of the acquisition of the majority of the equity interests of MSC II in 2010. The effect of the realized loss is offset by the reversal of all previously recognized unrealized depreciation on these SBIC debentures due to fair value adjustments since the date of the acquisition.


          Table of Contents

                 The following table provides a summary of the total net unrealized appreciation of $48.8 million for the year ended December 31, 2017:

           
           Twelve Months Ended December 31, 2017 
           
           LMM(a) Middle
          Market
           Private
          Loan
           Other(b) Total 
           
           (dollars in millions)
           

          Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains)/(income) losses recognized during the current period

           $(11.1)$5.6 $(3.1)$(8.1)$(16.7)

          Net unrealized appreciation (depreciation) relating to portfolio investments

            50.6  (9.6) (3.1) 21.4  59.3 

          Total net unrealized appreciation (depreciation) relating to portfolio investments

           $39.5 $(4.0)$(6.2)$13.3 $42.6 

          Unrealized appreciation relating to SBIC debentures(c)

                        6.2 

          Total net unrealized appreciation

                       $48.8 

          (a)
          LMM includes unrealized appreciation on 39 LMM portfolio investments and unrealized depreciation on 25 LMM portfolio investments.

          (b)
          Other includes $11.2 million of unrealized appreciation relating to the External Investment Manager and $10.2 million of net unrealized appreciation relating to the Other Portfolio.

          (c)
          Relates to unrealized appreciation on the SBIC debentures held by MSC II which are accounted for on a fair value basis and includes $6.0 million of accounting reversals resulting from the reversal of previously recognized unrealized depreciation recorded since the date of acquisition of MSC II on the debentures repaid due to fair value adjustments since such date and $0.2 million of current period unrealized appreciation on the remaining SBIC debentures.

                 The income tax provision for the year ended December 31, 2017 of $24.5$13.5 million principally consisted of a deferred tax provisionbenefit of $19.3$14.1 million, which is primarily the result of the net activity relating to our portfolio investments held in our Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation/depreciation and other temporary and permanent book-tax differences, and otherpartially offset by a current tax expenseprovision of $5.2$0.5 million, primarily related to (i) a $1.9$1.6 million accrualprovision for excise tax on our estimated undistributed taxable income and (ii)a $1.1 million benefit for current tax expense of $3.3 million related to accruals for U.S. federal and state income taxes.

            Net Increase (Decrease) in Net Assets Resulting from Operations

            The net increase in net assets resulting from operations for the year ended December 31, 2021 was $330.8 million, or $4.80 per share, compared with $29.4 million, or $0.45 per share, during the year ended December 31, 2020. The tables above provide a summary of the reasons for the change in Net Increase in Net Assets Resulting from Operations for the year ended December 31, 2021 as compared to the year ended December 31, 2020.

          65


          Liquidity and Capital Resources

          This “Liquidity and Capital Resources” section should be read in conjunction with the “COVID-19 Update” section above.

          Cash Flows

          For the year ended December 31, 2018,2021, we experiencedrealized a net increase in cash and cash equivalents in the amount of approximately $2.7$0.7 million, which is the net result of approximately $109.1$515.4 million of cash used in our operating activities and approximately $111.7$516.1 million of cash provided by our financing activities.

                 During the year ended December 31, 2018, $109.1The $515.4 million of cash was used in our operating activities which resulted primarily from (i) cash flows we generated from the operating profits earned through our operating activities totaling $149.8 million, which is our $165.8 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $14.7 million, payment-in-kind interest income of $2.3 million, cumulative dividends of $2.3 million and the amortization expense for deferred financing costs of $3.3 million, and (ii) cash uses totaling $963.4 million, which principally consisted of $962.5$1,763.8 million for the funding of new and follow-on portfolio company investments and settlement of accruals


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          for portfolio investments existing as of December 31, 2017 and $0.9 million related to decreases in payables and accruals and (iii)2020, partially offset by (i) cash proceeds totaling $704.6$1,054.5 million from $703.2 million in cash proceeds from the sales and repayments of debt investments and sales of and return on capital offrom equity investments, (ii) cash flows that we generated from the operating profits earned totaling $171.7 million, which is our distributable net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and $1.4the amortization expense for deferred financing costs, and (iii) cash proceeds of $22.2 million related to decreaseschanges in other assets.assets and liabilities.

                 During the year ended December 31, 2018, $111.7The $516.1 million inof cash was provided by our financing activities which principally consisted of (i) $237.0$500.0 million in cash proceeds from the initial and follow-on issuances of the 3.00% Notes, (ii) $98.9 million in net cash proceeds from the Credit Facility (ii) $78.4 million in net cash proceeds from theour ATM Program (described below), and direct stock purchase plan, (iii) $54.0$80.2 million in cash proceeds from the issuance of SBIC debentures and (iv) $51.0 million in net proceeds from the Credit Facility, partially offset by (i) $156.0$160.5 million in cash dividends paid to stockholders, (ii) $90.7 million in redemption of 6.125% Notes, (iii) $4.0$40.0 million in repayment of SBIC debentures, (iii) $8.2 million for debt issuance premiums, net of payments of deferred debt issuance costs, SBIC debenture fees and other costs, and (iv) $4.1$5.3 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements upon the vesting of such restricted stock and (v) $2.9 million for payment of deferred debt issuance costs, SBIC debenture fees and other costs.stock.

          For the year ended December 31, 2017,2020, we experienced a net increasedecrease in cash and cash equivalents in the amount of approximately $27.0$23.3 million, which is the net result of approximately $72.9$54.1 million of cash used in our operating activities and $30.8 million of cash provided by our operating activities and approximately $45.9financing activities.

          The $54.1 million of cash used in financing activities.

                 During the year ended December 31, 2017, $72.9 million of cash was provided by our operating activities which resulted primarily from (i) cash flows we generated from the operating profits earned through our operating activities totaling $123.1 million, which is our $145.4 million of distributable net investment income, excluding the non-cash effects of the accretion of unearned income of $17.0 million, payment-in-kind interest income of $4.9 million, cumulative dividends of $3.2 million and the amortization expense for deferred financing costs of $2.8 million, (ii) cash uses totaling $876.7$669.0 million for the funding of new and follow-on portfolio company investments, including the transaction pursuant to which the External Investment Manager became the sole investment adviser to MSC Income, and settlement of accruals for portfolio investments existing as of December 31, 2016, and (iii)2019, partially offset by (i) cash proceeds totaling $826.5$478.0 million from (a) $819.4 million in cash proceeds from the sales and repayments of debt investments and sales of and return on capital of equity investments, (b) $4.5(ii) cash flows we generated from the operating profits earned totaling $131.5 million, which is our distributable net investment income, excluding the non-cash effects of the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization expense for deferred financing costs, and (iii) cash proceeds of $5.4 million related to decreaseschanges in other assets and (c) $2.6liabilities.

          The $30.8 million related to increases in payables and accruals.

                 During the year ended December 31, 2017, $45.9 million inof cash was used inprovided by our financing activities which principally consisted of (i) $150.9$125.0 million in proceeds from the follow-on issuance of the 5.20% Notes in July 2020, (ii) $84.4 million in net cash proceeds from theour ATM Program (described below), (ii) $185.0 and direct stock purchase plan, (iii) $40.0 million in cash proceeds from the issuance of 4.50% Notes due 2022 in November 2017SBIC debentures and (iii) $81.0(iv) $0.7 million in cash proceeds fromfor debt issuance premiums, net of payments of deferred debt issuance costs, SBIC debentures,debenture fees and other costs, partially offset by (i) $279.0$144.5 million in cash dividends paid to stockholders, (ii) $42.0 million in repayment of SBIC debentures, (iii)  $31.0 million in net repayments on the Credit Facility and (ii) $148.4 million in cash dividends paid to stockholders, (iii) $25.2 million in repayment of SBIC debentures, (iii) $4.4(iv) $1.9 million for purchases of vested restricted stock from employees to satisfy their tax withholding requirements upon the vesting of such restricted stock and (iv) $5.9 million for paymentstock.

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          Capital Resources

          As of December 31, 2018,2021, we had $54.2$32.6 million in cash and cash equivalents and $404.0$535.0 million of unused capacity under the Credit Facility, before considering the accordion feature discussed below, which we maintain to support our investment and operating activities. As of December 31, 2018,2021, our net asset value totaled $1,476.0$1,788.8 million, or $24.09$25.29 per share.

          The Credit Facility which provides additional liquidity to support our investment and operational activities, was amended and restated during 2018 to provide for an increase inactivities. As of December 31, 2021, the Credit Facility included total commitments of $855.0 million from $585.0 million to $705.0 million and to increase thea diversified group of 18 lenders, to eighteen, eliminate interest rate adjustments previously subject to our maintenance ofheld a maturity date in April 2026 and contained an investment grade rating and extend the final maturity by two years to September 2023. The amended Credit Facility also contains an upsized accordion feature which allowsallowed us to increase the total commitments under the facility to up to $800.0$1,200.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

                 Borrowings As of December 31, 2021, borrowings under the Credit Facility bearbore interest, subject to our election and resetting on a monthly basis on the first of each month, on a per annum basis at a rate equal to the applicable LIBOR rate (2.5%(0.1% as of December 31, 2018)2021) plus (i) 1.875% (or the applicable base


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          rate (Prime Rate of 5.5%3.25% as of December 31, 2018)2021) plus 0.875%) as long as we meet certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the applicable base rate plus 1.0%) otherwise. We pay unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. TheAs of December 31, 2021, the Credit Facility containscontained certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base,liquidity, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining ana 1940 Act asset coverage ratio (tangible net worth to Credit Facility borrowings) of at least 1.5 to 1.0, and (iv) maintaining a minimum tangible net worth. Theworth and (v) maintaining a minimum asset coverage ratio of 200% with respect to the consolidated assets (with certain limitations on the contribution of equity in financing subsidiaries as specified therein) of MSCC and the guarantors under the Credit Facility is provided on a revolving basis through its final maturity date in September 2023,to the secured debt of MSCC and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval.guarantors. As of December 31, 2018,2021, we had $301.0$320.0 million in borrowings outstanding under the Credit Facility, the interest rate on the Credit Facility was 4.2%2.0% (based on the LIBOR rate of 0.1% as of the most recent reset date of January 1, 2022 plus 1.875%) and we were in compliance with all financial covenants of the Credit Facility.

          Through the Funds, we have the ability to issue SBIC debentures guaranteed by the SBA at favorable interest rates and favorable terms and conditions. Under existing SBASBIC regulations, SBA approvedSBA-approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Through the Funds,Under existing SBA-approved commitments, we have an effective maximum amount of $346.0 million following the prepayment of $4.0had $350.0 million of existingoutstanding SBIC debentures guaranteed by the SBA as discussed below.of December 31, 2021 through our wholly owned SBICs, which bear a weighted-average annual fixed interest rate of approximately 2.9%, paid semiannually, and mature ten years from issuance. The first maturity related to our SBIC debentures occurs in 2023, and the weighted-average remaining duration is approximately 6.1 years as of December 31, 2021. During the year ended December 31, 2018, we2021, Main Street issued $54.0$80.2 million of SBIC debentures and opportunistically prepaid $4.0$40.0 million of our existing SBIC debentures that were scheduled to mature over the next year as part of an effort to manage the maturity dates of ourthe oldest SBIC debentures. Debentures guaranteed by the SBA have fixed interest rates that equal prevailing 10-year Treasury Note rates plus a market spread and have a maturity of ten years with interest payable semiannually. The principal amount of the debentures is not required to be paid before maturity, but may be pre-paid at any time with no prepayment penalty. We expect to issue newmaintain SBIC debentures under the SBIC program in the future, subject to periodic repayments and borrowings, in an amount up to the regulatory maximum amount for affiliated SBIC funds. As of December 31, 2018, through our three wholly owned SBICs, we had $345.8 million of outstanding SBIC debentures guaranteed by the SBA, which bear a weighted-average annual fixed interest rate of approximately 3.7%, paid semiannually, and mature ten years from issuance. The first maturity related to our SBIC debentures occurs in 2019, and the weighted-average remaining duration is approximately 5.6 years as of December 31, 2018.

          In April 2013,November 2017, we issued $92.0 million, including the underwriters' full exercise of their over-allotment option, in aggregate principal amount of the 6.125% Notes (the "6.125% Notes"). The 6.125% Notes bore interest at a rate of 6.125% per year payable quarterly on January 1, April 1, July 1 and October 1 of each year. The total net proceeds to us from the 6.125% Notes, after underwriting discounts and estimated offering expenses payable, were approximately $89.0 million. On April 2, 2018, we redeemed the entire principal amount of the issued and outstanding 6.125% Notes effective April 1, 2018 (the "Redemption Date"). The 6.125% Notes were redeemed at par value, plus the accrued and unpaid interest thereon from January 1, 2018, through, but excluding, the Redemption Date. As part of the redemption, we recognized a realized loss on extinguishment of debt of $1.5 million in the second quarter of 2018 related to the write-off of the related unamortized deferred financing costs.

                 In November 2014, we issued $175.0$185.0 million in aggregate principal amount of 4.50% unsecured notes due 2019December 1, 2022 (the "4.50% Notes due 2019"“4.50% Notes”) at an issue price of 99.53%99.16%. The 4.50% Notes due 2019 are unsecured obligations and rank pari passu with our current and future unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2019;Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2019 mature on December 1, 2019, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The


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          4.50% Notes due 2019 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. We may from time to time repurchase the 4.50% Notes due 2019 in accordance with the

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          1940 Act and the rules promulgated thereunder. As of December 31, 2018,2021, the outstanding principal balance of the 4.50% Notes due 2019 was $175.0$185.0 million.

          The indenture governing the 4.50% Notes due 2019 (the "4.50%“4.50% Notes due 2019 Indenture"Indenture”) contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50% Notes  due 2019 and the Trusteetrustee if we cease to be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act").Act. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes dueIndenture. As of December 31, 2021, we were in compliance with these covenants.

          In April 2019, Indenture.

                 In November 2017, we issued $185.0$250.0 million in aggregate principal amount of 4.50%5.20% unsecured notes due 2022May 1, 2024 (the "4.50% Notes due 2022"“5.20% Notes”) at an issue price of 99.16%99.125%. Subsequently, in December 2019, we issued an additional $75.0 million in aggregate principal amount of the 5.20% Notes at an issue price of 105.0%. Also, in July 2020, we issued an additional $125.0 million in aggregate principal amount of the 5.20% Notes at an issue price of 102.674%. The 4.50%5.20% Notes due 2022issued in December 2019 and July 2020 have identical terms as, and are a part of a single series with, the 5.20% Notes issued in April 2019. The aggregate net proceeds from the 5.20% Notes issuances were used to repay a portion of the borrowings outstanding under the Credit Facility. The 5.20% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022;5.20% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50%5.20% Notes due 2022 mature on December 1, 2022, and may be redeemed in whole or in part at any time at our option subject to certain make-whole provisions. The 4.50%5.20% Notes due 2022 bear interest at a rate of 4.50%5.20% per year payable semiannually on JuneMay 1 and DecemberNovember 1 of each year. We may from time to time repurchase 4.50%the 5.20% Notes due 2022 in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2018,2021, the outstanding principal balance of the 4.50%5.20% Notes due 2022 was $185.0$450.0 million.

          The indenture governing the 4.50%5.20% Notes due 2022 (the "4.50%“5.20% Notes due 2022 Indenture"Indenture”) contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 4.50%5.20% Notes due 2022 and the Trusteetrustee if we cease to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 4.50%5.20% Notes Indenture. As of December 31, 2021, we were in compliance with these covenants.

          In January 2021, we issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due 2022July 14, 2026 (the “3.00% Notes”) at an issue price of 99.004%. In October 2021, we issued an additional $200.0 million in aggregate principal amount of the 3.00% Notes at an issue price of 101.741%. The 3.00% Notes issued in October 2021 have identical terms as, and are a part of a single series with, the 3.00% Notes issued in January 2021. The 3.00% Notes are unsecured obligations and rank pari passu with our current and future unsecured indebtedness; senior to any of our future indebtedness that expressly provides it is subordinated to the 3.00% Notes; effectively subordinated to all of our existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under our Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of our subsidiaries, including without limitation, the indebtedness of the Funds. The 3.00% Notes may be redeemed in whole or in part at any time at our option subject to certain make whole provisions. The 3.00% Notes bear interest at a rate of 3.00% per year payable semiannually on January 14 and July 14 of each year. We may from time to time repurchase the 3.00% Notes in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2021, the outstanding principal balance of the 3.00% Notes was $500.0 million.

          The indenture governing the 3.00% Notes (the “3.00% Notes Indenture”) contains certain covenants, including covenants requiring our compliance with (regardless of whether we are subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring us to provide financial information to the holders of the 3.00% Notes and the trustee if we cease to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 3.00% Notes Indenture. As of December 31, 2021, we were in compliance with these covenants.

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          We maintain a program with certain selling agents through which we can sell shares of our common stock by means of at-the-market offerings from time to time (the "ATM Program"“ATM Program”).

          During the year ended December 31, 2016,2021, we sold 3,324,6462,332,795 shares of our common stock at a weighted-average price of $34.17$42.71 per share and raised $113.6$99.6 million of gross proceeds under the ATM Program. Net proceeds were $112.0 million after commissions to the selling agents on shares sold and offering costs.

                 During the year ended December 31, 2017, we sold 3,944,972 shares of our common stock at a weighted-average price of $38.72 per share and raised $152.8 million of gross proceeds under the ATM Program. Net proceeds were $150.9 million after commissions to the selling agents on shares sold and offering costs.

                 During the year ended December 31, 2018, we sold 2,060,019 shares of our common stock at a weighted-average price of $38.48 per share and raised $79.3 million of gross proceeds under the ATM Program. Net proceeds were $78.0$98.4 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2018, 2,994,4692021, sales transactions representing 36,136 shares had not settled and are not included in shares issued and outstanding on the face of the consolidated balance sheet but are included in the weighted-average shares outstanding in the consolidated statement of operations and in the shares used to calculate net asset value per share. As of December 31, 2021, 3,380,577 shares remained available for sale under the ATM Program.

          During the year ended December 31, 2020, we sold 2,645,778 shares of our common stock at a weighted-average price of $32.10 per share and raised $84.9 million of gross proceeds under the ATM Program. Net proceeds were $83.8 million after commissions to the selling agents on shares sold and offering costs.

          We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, cash flows generated through our ongoing operating activities, utilization of available borrowings under our Credit Facility, and a combination of future issuances of debt and equity capital. Our primary uses


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          of funds will be investments in portfolio companies, operating expenses and cash distributions to holders of our common stock.

          We periodically invest excess cash balances into marketable securities and idle funds investments. The primary investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Private Loan and Middle Market and Private Loan portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments. We may also invest in short-term portfolio investments that are atypical of our LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital and are more liquid than investments within the other portfolios. Short-term portfolio investments consist primarily of investments in secured debt investments and independently rated debt investments.

          If our common stock trades below our net asset value per share, we will generally not be able to issue additional common stock at the market price, unless our stockholders approve such a sale and our Board of Directors makes certain determinations. We did not seek stockholder authorization to sell shares of our common stock below the then current net asset value per share of our common stock at our 2018 annual meeting2021 Annual Meeting of stockholdersStockholders, and have not sought such authorization since 2012, because our common stock price per share had been tradinghas generally traded significantly above the net asset value per share of our common stock since 2011. We would therefore need future approval from our stockholders to issue shares below the then current net asset value per share.

          In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are required to meet a coverage ratio of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if certain requirements are met). This requirement limits the amount that we may borrow. In January 2008, we received an exemptive order from the SEC to exclude SBA-guaranteed debt securities issued by MSMFthe Funds and any other wholly owned subsidiaries of ours which operate as SBICs from the asset coverage requirements of the 1940 Act as applicable to us, which, in turn, enables us to fund more investments with debt capital.

          Although we have been able to secure access to additional liquidity, including through the Credit Facility, public debt issuances, leverage available through the SBIC program and equity offerings, there is no assurance that debt or equity capital will be available to us in the future on favorable terms, or at all.

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            Recently Issued or Adopted Accounting Standards

                   In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09,Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements under ASC 605,Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the ASC. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. Under the guidance, an entity is required to perform the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. In March 2016, the FASB issued ASU 2016-08,Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10,Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarified the implementation guidance regarding performance obligations and licensing arrangements. In May 2016, the FASB issued ASU No. 2016-12,Revenue from Contracts with Customers (Topic 606) — Narrow-Scope Improvements and Practical Expedients, which clarified guidance on assessing collectability, presenting sales tax, measuring noncash consideration, and certain transition matters. In December 2016, the FASB issued


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            ASU No. 2016-20,Revenue from Contracts with Customers (Topic 606) — Technical Corrections and Improvements, which provided disclosure relief, and clarified the scope and application of the new revenue standard and related cost guidance. The guidance is effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Substantially all of our income is not within the scope of ASU 2014-09. For those income items that are within the scope (primarily fee income), we have similar performance obligations as compared with deliverables and separate units of account previously identified. As a result, our timing of income recognition remains the same and the adoption of the standard was not material.

                   In February 2016, the FASB issued ASU 2016-02,Leases, which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. The guidance is effective for annual periods beginning after December 15, 2018, and interim periods therein. Early application is permitted. While we continue to assess the effect of adoption, we currently believe the most significant change relates to the recognition of a new right-of-use asset and lease liability on our consolidated balance sheet for our office space operating lease. We currently have one operating lease for office space and do not expect a significant change in our leasing activity between now and adoption. See further discussion of our operating lease obligation in "Note K — Commitments and Contingences" in the notes to the consolidated financial statements.

                   In August 2016, the FASB issued ASU 2016-15,Statement of Cash Flows (Topic 230), which is intended to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods therein. We have adopted ASU 2016-15. The impact of the adoption of this accounting standard on our consolidated financial statements was not material.

                   In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820), which is intended to improve fair value and defined benefit disclosure requirements by removing disclosures that are not cost-beneficial, clarifying disclosures' specific requirements, and adding relevant disclosure requirements. The amendments take effect for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. We have elected to early adopt ASU 2018-13 in the current annual period. No significant changes were made to our fair value disclosures in the notes to the consolidated financial statements in order to comply with ASU 2018-13.

                   In August 2018, the SEC adopted rules (the "SEC Release") amending certain disclosure requirements intended to eliminate redundant, duplicative, overlapping, outdated, or superseded, in light of other SEC disclosure requirements, US GAAP requirements, or changes in the information environment. In part, the SEC Release requires an investment company to present distributable earnings in total on the consolidated balance sheet and consolidated statement of changes in net assets, rather than showing the three components of distributable earnings as previously shown. We adopted this part of the SEC Release in the current annual period and the changes in presentation have been retrospectively applied to the consolidated balance sheet as of December 31, 2017 and to the consolidated statements of changes in net assets for the years ended December 31, 2017 and 2016. The impact of the adoption of these rules on our consolidated financial statements was not material. Additionally, the SEC Release requires disclosure of changes in net assets within a registrant's Form 10-Q filing on a quarter-to-date and year-to-date basis for both the current year and prior year comparative periods. We expect to adopt the new requirement to present changes in shareholders' equity in interim financial statements within Form 10-Q filings starting with the quarter ending March 31, 2019. The compliance date for the SEC Release was for all filings, as applicable, on or after November 5, 2018. The adoption of these additional rules will not have a material impact on the consolidated financial statements.


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            From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our consolidated financial statements upon adoption. For a description of recently issued or adopted accounting standards, see Note B.13 to the consolidated financial statements included in “Item 8. Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

              Inflation

            Inflation has not historically had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, specifically including over the last few quarters as a result of the COVID-19 pandemic and related supply chain and labor issues, and may incontinue to experience, the future experience, theincreasing impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials and third-party services and required energy consumption. These issues and challenges related to inflation are receiving significant attention from our investment teams and the management teams of our portfolio companies as we work to manage these growing challenges. Prolonged or more severe impacts of inflation to our portfolio companies could continue to impact their operating profits and, thereby, increase their borrowing costs, and as a result negatively impact their ability to service their debt obligations and/or reduce their available cash for distributions. In addition, these factors could have a negative impact on the fair value of our investments in these portfolio companies. The combined impacts of these impacts in turn could negatively affect our results of operations.

              Off-Balance Sheet Arrangements

            We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At December 31, 2018,2021, we had a total of $136.9$236.3 million in outstanding commitments comprised of (i) 33sixty-seven investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) 11ten investments with equity capital commitments that had not been fully called.

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              Contractual Obligations

              As of December 31, 2018,2021, the future fixed commitments for cash payments in connection with our SBIC debentures, the 4.50% Notes, due 2019, the 4.50%5.20% Notes, due 2022the 3.00% Notes and rent obligations under our office lease for each of the next five years and thereafter are as follows:follows (dollars in thousands):

                  

              2022

                  

              2023

                  

              2024

                  

              2025

                  

              2026

                  

              Thereafter

                  

              Total

              SBIC debentures

              $

              $

              16,000

              $

              63,800

              $

              -

              $

              $

              270,200

              $

              350,000

              Interest due on SBIC debentures

              10,133

              9,899

              8,455

              7,228

              7,228

              15,565

              58,508

              4.50% Notes due 2022

              185,000

              185,000

              Interest due on 4.50% Notes due 2022

              8,325

              8,325

              5.20% Notes due 2024

              450,000

              450,000

              Interest due on 5.20% Notes due 2024

              23,400

              23,400

              11,700

              58,500

              3.00% Notes due 2026

              500,000

              500,000

              Interest due on 3.00% Notes due 2026

              15,017

              15,000

              15,000

              15,000

              15,000

              15,000

              90,017

              Operating Lease Obligation (1)

              790

              804

              818

              832

              846

              933

              5,023

              Total

              $

              242,665

              $

              65,103

              $

              549,773

              $

              23,060

              $

              523,074

              $

              301,698

              $

              1,705,373

               
               2019 2020 2021 2022 2023 Thereafter Total 

              SBIC debentures

               $16,000 $55,000 $40,000 $5,000 $16,000 $213,800 $345,800 

              Interest due on SBIC debentures

                12,738  11,819  9,260  8,248  7,868  23,317  73,250 

              4.50% Notes due 2019

                175,000            175,000 

              Interest due on 4.50% Notes due 2019

                7,875            7,875 

              4.50% Notes due 2022

                      185,000      185,000 

              Interest due on 4.50% Notes due 2022

                8,325  8,325  8,325  8,325      33,300 

              Operating Lease Obligation(1)

                748  762  776  790  804  3,429  7,309 

              Total

               $220,686 $75,906 $58,361 $207,363 $24,672 $240,546 $827,534 

              (1)Operating Lease Obligation means a rent payment obligation under a lease classified as an operating lease and disclosed pursuant to ASC 842, as may be modified or supplemented.
              (1)
              Operating Lease Obligation means a rent payment obligation under a lease classified as an operating lease and disclosed pursuant to FASB ASC 840, as may be modified or supplemented.

              As of December 31, 2018,2021, we had $301.0$320.0 million in borrowings outstanding under our Credit Facility, and the Credit Facility is currently scheduled to mature in September 2023. The Credit Facility contains two, one-year extension options which could extend the maturity to September 2025, subject to lender approval. See further discussion of the Credit Facility terms in "— Liquidity and Capital Resources — Capital Resources."April 2026.

                Related Party Transactions

              As discussed further above, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of our Investment Portfolio. At December 31, 2018,2021, we had a receivable of approximately $2.9$5.6 million due from the External Investment Manager, which included approximately $1.8$3.3 million related primarily related to operating expenses incurred by us as required to support the


              Table of Contents

              External Investment Manager'sManager’s business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion above in "— Critical Accounting Policies — Income Taxes")Note B.9. and approximately $1.2Note D in the notes to the consolidated financial statements included in “Item 8. Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K) and $2.3 million of dividends declared but not paid by the External Investment Manager. We have entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for the External Investment Manager’s relationship with MSC Income and its other clients. See Note A.1 and Note D in the notes to the consolidated financial statements included in “Item 8. Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K for more information regarding the External Investment Manager.

              From time to time, we may make investments in clients of the External Investment Manager in the form of debt or equity capital on terms approved by our Board of Directors. In January 2021, we entered into a Term Loan Agreement with MSC Income (the “Term Loan Agreement”). The Term Loan Agreement was unanimously approved by our Board, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act and the board of directors of MSC Income, including each director who is not an “interested person” of MSC Income or the External Investment Manager. The Term Loan Agreement initially provided for a term loan of $40.0 million to MSC Income, bearing interest at a fixed rate of 5.00% per annum, and maturing in January 2026. The Term Loan Agreement was amended in July 2021 to provide for borrowings up to an additional $35.0 million, $20.0 million of which was funded upon signing of the amendment and $15.0 million available in two additional advances during the six months following the amendment date. Borrowings under the Term Loan Agreement were expressly subordinated and junior in

              71


              right of payment to all secured indebtedness of MSC Income. In October 2021, MSC Income fully repaid all borrowings outstanding under the Term Loan Agreement and the Term Loan Agreement was terminated.

              In December 2020, the External Investment Manager entered into an Investment Management Agreement with the Private Loan Fund, pursuant to which the External Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees. The Private Loan Fund is a private investment fund exempt from registration under the 1940 Act that co-invests with Main Street in Main Street’s Private Loan investment strategy. In connection with the Private Loan Fund’s initial closing in December 2020, we committed to contribute up to $10.0 million as a limited partner and will be entitled to distributions on such interest. In addition, certain of our officers and employees (and certain of their immediate family members) made capital commitments to the Private Loan Fund as limited partners and therefore have direct pecuniary interests in the Private Loan Fund. In February 2022, we increased our commitment to the Private Loan Fund from $10.0 million to $15.0 million. Our investment in the Private Loan Fund was unanimously approved by our Board, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act.

              Additionally, we provided the Private Loan Fund with a revolving line of credit pursuant to an Unsecured Revolving Promissory Note, dated February 5, 2021 and amended November 30, 2021 and December 29, 2021 (as amended, the “Private Loan Fund Loan”), in an aggregate amount equal to the amount of limited partner capital commitments to the Private Loan Fund up to $85.0 million. Borrowings under the Private Loan Fund Loan bore interest at a fixed rate of 5.00% per annum and matured on February 28, 2022. The Private Loan Fund Loan was unanimously approved by our Board of Directors, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. In February 2022, the Private Loan Fund fully repaid all borrowings outstanding under the Private Loan Fund Loan and the Private Loan Fund Loan was terminated.

              In November 2015, our Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the "2015“2015 Deferred Compensation Plan"Plan”). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the "2013“2013 Deferred Compensation Plan"Plan”). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors'directors’ fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of December 31, 2018, $6.12021, $15.8 million of compensation and directors' feesdividend reinvestments, plus net unrealized gains and losses and investment income and minus distributions had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan).  Of this amount, $3.3$7.3 million washad been deferred into phantom Main Street stock units, representing 97,344 shares of our common stock. Including phantom stock units issued through dividend reinvestment and net of any shares distributed, the phantom stock units outstanding as of December 31, 2018 represented 119,639162,040 shares of our common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the consolidated statements of changes in net assets until such shares are actually distributed to the participant in accordance with the plan, but the related phantom stock units are included in operating expenses and weighted-average shares outstanding with the related dollar amount of the deferral included in ourtotal expenses in Main Street’s consolidated statements of operations as earned. The dividend amounts related to additional phantom stock units are included in the statements of changes in net assets as an increase to dividends to stockholders offset by a corresponding increase to additional paid-in capital.

                Recent Developments

              In February 2022, we declared a supplemental cash dividend of $0.075 per share payable in March 2022. This supplemental cash dividend is in addition to the previously announced regular monthly cash dividends that we declared for the first quarter of 2022 of $0.215 per share for each of January, 2019, we led a new portfolio investment to facilitate the minority recapitalization of Centre Technologies, Inc. ("Centre"), a premier provider of IT hardware, softwareFebruary and service solutions. We, along with our co-investors, partnered with Centre's founder and Chief Executive Officer and management team to facilitate the transaction, with us funding $18.1 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in Houston, Texas, and founded in 2006, Centre has established itself as a mission critical IT solutions provider offering a full suite of solutions including managed and hosted services, value-added sourcing and integration, and project services.March 2022.

                     In January 2019, we led a new portfolio investment to facilitate the management buyout of CompareNetworks Inc. ("CompareNetworks"), a leading provider of media, marketing and technology solutions that drive revenue for life science and healthcare product manufacturers. We, along with our co-investors, partnered with CompareNetworks' founders and management team to facilitate the transaction, with us funding $10.7 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in South San Francisco, California, and founded in 2000, CompareNetworks provides life scientists, researchers, lab-based professionals, pharmaceutical professionals and healthcare professionals with digital tools and information resources to research, identify and determine which products and technologies to use.

                     In January 2019, we fully exited our equity investment in Boss Industries, LLC ("Boss"). Boss markets, designs and manufacturers vehicle-mounted, and portable air compressor and generator systems utilized in municipal and utility services, energy product and industrial services. We realized a gain of approximately $4.0 million on the exit of our equity investment in Boss.

              During February 2019,2022, we declared regular monthly dividends of $0.200$0.215 per share for each month of April, May and June 2019.of 2022. These regular monthly dividends equal a total of $0.600$0.645 per share for the second quarter of 2019 and represent2022, representing a 5.3%4.9% increase from the regular monthly dividends paid in the second quarter of 2021. Including the supplemental dividend declared for March 2022 and the regular monthly dividends declared for the first and second quarter of 2018.


              72


              Including the dividends declared for the second quarter of 2019,2022, we will have paid $25.420$33.540 per share in cumulative dividends since our October 2007 initial public offering.

              On February 23, 2022, our Board of Directors unanimously approved the application to the Company of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the 1940 Act. As a result, the minimum asset coverage ratio applicable to the Company will be reduced from 200% to 150%, effective as of February 23, 2023, unless approved earlier by a vote of our stockholders, in which case the 150% minimum asset coverage ratio will be effective on the day after such approval. The Board also authorized the submission of a proposal for stockholders to accelerate the application of the 150% minimum asset coverage ratio to the Company at the 2022 Annual Meeting of Stockholders.

              Item 7A. Quantitative and Qualitative Disclosures about Market Risk

              We are subject to financial market risks, including changes in interest rates. Changesrates, and changes in interest rates may affect both our cost of fundinginterest expense on the debt outstanding under our Credit Facility and our interest income from portfolio investments. Our risk management systems and procedures are designed to identify and analyze our risk, to set appropriate policies and limits and to continually monitor these risks. Our investment income will be affected by changes in various interest rates, including LIBOR and prime rates, to the extent that any debt investments include floating interest rates. See “Risk Factors — Risks Related to our Investments —Changes relating to the LIBOR calculation process, the phase-out of LIBOR and the use of replacement rates for LIBOR may adversely affect the value of our portfolio securities.”, “Risk Factors — Risks Related to our Investments — Changes in interest rates may affect our cost of capital, net investment income and value of our investments.” and ��Risk Factors — Risks Related to Leverage — Because we borrow money, the potential for gain or loss on amounts invested in us is magnified and may increase the risk of investing in us.” for more information regarding risks associated with our debt investments and borrowings that utilize LIBOR as a reference rate.

              The majority of our debt investments are made with either fixed interest rates or floating-ratesfloating rates that are subject to contractual minimum interest rates for the term of the investment. As of December 31, 2018,2021, approximately 72%70.9% of our debt investment portfolio (at cost) bore interest at floating rates, 90%92.8% of which were subject to contractual minimum interest rates. Our interest expense will be affected by changes in the published LIBOR rate in connection with our Credit Facility; however, the interest rates on our outstanding SBIC debentures, 4.50% Notes, due 20195.20% Notes and 4.50%3.00% Notes, due 2022, which collectively comprise the majority of our outstanding debt, are fixed for the life of such debt. As of December 31, 2018,2021, we had not entered into any interest rate hedging arrangements. Due to our limited use of derivatives, we have claimed an exclusion from the definition of the term “commodity pool operator” under the Commodity Exchange Act and, therefore, are not subject to registration or regulation as a pool operator under such Act. The following table shows the approximate annualized increase or decrease in the components of net investment income due to hypothetical base rate changes in interest rates, assuming no changes in our investments and borrowings as of December 31, 2018.2021.

                  

              Increase

                  

              (Increase)

                  

              Increase

                  

              Increase

              (Decrease)

              Decrease

              (Decrease) in Net

              (Decrease) in Net

              in Interest

              in Interest

              Investment

              Investment

              Basis Point Change

                  

              Income

                  

              Expense

                  

              Income

                  

              Income per Share

              (dollars in thousands, except per share amounts)

              (150)

              $

              (330)

              $

              320

              $

              (10)

              $

              (100)

               

              (289)

               

              320

               

              31

               

              (50)

               

              (242)

               

              320

               

              78

               

              (25)

               

              (218)

               

              320

               

              102

               

              25

               

              381

               

              (800)

               

              (419)

               

              (0.01)

              50

               

              787

               

              (1,600)

               

              (813)

               

              (0.01)

              75

              1,514

              (2,400)

              (886)

              (0.01)

              100

               

              4,766

               

              (3,200)

               

              1,566

               

              0.02

              125

              8,994

              (4,000)

              4,994

              0.07

              150

              13,455

              (4,800)

              8,655

              0.12

              73


              Basis Point Change
               Increase
              (Decrease)
              in Interest
              Income
               (Increase)
              Decrease
              in Interest
              Expense
               Increase
              (Decrease) in Net
              Investment
              Income
               Increase
              (Decrease) in Net
              Investment
              Income per Share
               
               
               (dollars in thousands)
               

              (50)

               $(6,479)$1,505 $(4,974)$(0.08)

              (25)

                (3,240) 752  (2,488) (0.04)

              25

                3,240  (752) 2,488  0.04 

              50

                6,479  (1,505) 4,974  0.08 

              100

                12,958  (3,010) 9,948  0.16 

              200

                25,917  (6,020) 19,897  0.32 

              300

                38,875  (9,030) 29,845  0.49 

              400

                51,833  (12,040) 39,793  0.65 

              The hypothetical results assume that all LIBOR and prime rate changes would be effective on the first day of the period. However, the contractual LIBOR and prime rate reset dates would vary throughout the period, on either a monthly or quarterly basis, for both our investments and our Credit Facility. The hypothetical results would also be impacted by the changes in the amount of debt outstanding under our Credit Facility (with an increase (decrease) in the debt outstanding under the Credit Facility resulting in an (increase) decrease in the hypothetical interest expense).


              74


              Item 8. Consolidated Financial Statements and Supplementary Data


              Index to Consolidated Financial Statements

              Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248)

              80

              76

              Consolidated Balance Sheets asSheets—As of December 31, 20182021 and 2017December 31, 2020

              82

              81

              Consolidated Statements of Operations forOperations—For the Years Endedyears ended December 31, 2018, 20172021, 2020 and 20162019

              83

              82

              Consolidated Statements of Changes in Net Assets forAssets—For the Years Endedyears ended December 31, 2018, 20172021, 2020 and 20162019

              84

              83

              Consolidated Statements of Cash Flows forFlows— For the Years Endedyears ended December 31, 2018, 20172021, 2020 and 20162019

              85

              84

              Consolidated SchedulesSchedule of Investments as of Investments—December 31, 2018 and 20172021

              86

              Consolidated Schedule of Investments—December 31, 2020

              108

              Notes to Consolidated Financial Statements

              130

              Consolidated Schedules of Investments in and Advances to Affiliates— For the years ended December 31, 2021 and 2020

              144

              175


              75



              Report of Independent Registered Public Accounting Firm

              Board of Directors and Stockholders'
              Stockholders

              Main Street Capital Corporation

              Opinion on the financial statements

              We have audited the accompanying consolidated balance sheets of Main Street Capital Corporation (a Maryland corporation) and subsidiaries (the "Company"“Company”), including the consolidated schedule of investments as of December 31, 20182021 and 2017,2020, the related consolidated statements of operations, changes in net assets, and cash flows for each of the three years in the period ended December 31, 2018,2021, and the related notes schedules and financial highlights (collectively referred to as the "financial statements"“financial statements”). and the financial highlights for each of the five years in the period ended December 31, 2021. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20182021 and 2017,2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018,2021, and the financial highlights for each of the five years in the period ended December 31, 2018,2021, in conformity with accounting principles generally accepted in the United States of America.

              We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"(“PCAOB”), the Company'sCompany’s internal control over financial reporting as of December 31, 2018,2021, based on criteria established in the 2013Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"(“COSO”), and our report dated March 1, 2019February 25, 2022 expressed an unqualified opinion.

              Basis for opinion

              These financial statements are the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sCompany’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

              We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures includeincluded examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included verification by confirmation of securities as of December 31, 2018 and 2017, by correspondence with the portfolio companies and custodians, or by other appropriate auditing procedures where replies were not received. We believe that our audits provide a reasonable basis for our opinion.

              Critical audit matters

              The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to it relates.

              Fair Value Investments

              As described further in Note C to the financial statements, the Company’s investments at fair value were $3,561,831 thousand at December 31, 2021, of which $3,559,837 thousand were categorized as Level 3 investments within the fair value hierarchy. Management’s valuation techniques for Level 3 investments includes a combination of

              76


              investments measured using significant unobservable inputs and assumptions and investments measured using quoted prices by independent sources. Level 3 investment values, for which quoted prices by independent sources are not available or appropriate, are generally based on valuation techniques, such as the income and market approach, that require inputs that are significant to the overall fair value measurement and are unobservable. The significant unobservable inputs disclosed by management include, among others, weighted-average cost of capital (“WACC”) inputs and market multiples for equity investments, and risk adjusted discount rates, percentage of expected principal recovery and third-party quotes for debt investments. Changes in these assumptions could have a significant impact on the determination of fair value. As such, we identified fair value of Level 3 investments measured using significant unobservable inputs and assumptions as a critical audit matter.

              The principal considerations for our determination that fair value of Level 3 investments measured using significant unobservable inputs is a critical audit matter are the significant management judgements used in developing complex valuation techniques and inherent estimation uncertainty. Auditing these investments requires a high degree of auditor judgement and subjectivity, in addition to the use of valuation professionals with specialized skills and knowledge, to evaluate the reasonableness of unobservable inputs and assumptions.

              The primary procedures we performed to address this critical audit matter included:

              Testing the design and operating effectiveness of controls over management’s process to determine investment fair value. Specifically, we identified and tested key attributes of management’s fair value determination review. These attributes addressed the relevance, adequacy and appropriateness of the data, assumptions, valuation methods, and mathematical accuracy used to determine investment fair value as of the reporting date.
              With the assistance of internal valuation specialists to evaluate and test management’s process to develop the valuation estimates, we performed substantive audit procedures to determine mathematical accuracy and to determine that the data, valuation methods, and significant unobservable inputs and assumptions used to determine investment fair value as of the Company’s reporting date were reasonable. We tested certain key inputs/assumptions tested for a sample of investments, including the following, as applicable:
              enterprise values,
              weighted average cost of capital (“WACC”),
              discount rates,
              forecasted cash flows and long-term growth rates,
              discount for lack of marketability,
              market multiples,
              weighting between valuation techniques,
              risk adjusted discount factor,
              percentage of expected principal recovery,
              third party quotes, in conjunction with other inputs, and
              third-party appraisals.

              77


              In testing the above, we considered available third-party market information and published studies, current economic conditions and subsequent events, and other information that could be corroborated to source information.

              /s/ GRANT THORNTON LLP

              We have served as the Company'sCompany’s auditor since 2007.

              Houston, Texas
              March 1, 2019

              February 25, 2022


              78



              Report of Independent Registered Public Accounting Firm

              Board of Directors and Stockholders'
              Stockholders

              Main Street Capital Corporation

              Opinion on internal control over financial reporting

              We have audited the internal control over financial reporting of Main Street Capital Corporation (a Maryland corporation) and subsidiaries (the "Company"“Company”) as of December 31, 2018,2021, based on criteria established in the 2013Internal Control — Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)(“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2021, based on criteria established in the 2013Internal Control — Control—Integrated Framework issued by COSO.

              We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"(“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 20182021, and our report dated March 1, 2019,February 25, 2022 expressed an unqualified opinion on those financial statements.

              Basis for opinion

              The Company'sCompany’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management'sManagement’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company'sCompany’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

              We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

              Definition and limitations of internal control over financial reporting

              A company'scompany’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'scompany’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company'scompany’s assets that could have a material effect on the financial statements.

              79


              Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

              /s/ GRANT THORNTON LLP

              Houston, Texas
              March 1, 2019


              February 25, 2022

              80



              MAIN STREET CAPITAL CORPORATION

              Consolidated Balance Sheets

              (dollars in thousands, except shares and per share amounts)


              December 31,
              2018
              December 31,
              2017

              December 31, 

              December 31, 

                  

              2021

                  

              2020

              ASSETS

                

               

                

               

                

              Investments at fair value:


               

               

               

                

               

                

              Control investments (cost: $750,618 and $530,034 as of December 31, 2018 and December 31, 2017, respectively)

              $1,004,993$750,706

              Affiliate investments (cost: $381,307 and $367,317 as of December 31, 2018 and December 31, 2017, respectively)

              359,890338,854

              Non-Control/Non-Affiliate investments (cost: $1,137,108 and $1,107,447 as of December 31, 2018 and December 31, 2017, respectively)

              1,089,0261,081,745

              Total investments (cost: $2,269,033 and $2,004,798 as of December 31, 2018 and December 31, 2017, respectively)

              2,453,9092,171,305

              Control investments (cost: $1,107,597 and $831,490 as of December 31, 2021 and December 31, 2020, respectively)

              $

              1,489,257

              $

              1,113,725

              Affiliate investments (cost: $578,539 and $416,479 as of December 31, 2021 and December 31, 2020, respectively)

               

              549,214

               

              366,301

              Non‑Control/Non‑Affiliate investments (cost: $1,573,110 and $1,268,740 as of December 31, 2021 and December 31, 2020, respectively)

               

              1,523,360

               

              1,204,840

              Total investments (cost: $3,259,246 and $2,516,709 as of December 31, 2021 and December 31, 2020, respectively)

               

              3,561,831

               

              2,684,866

              Cash and cash equivalents


              54,181

              51,528

               

              32,629

               

              31,919

              Interest receivable and other assets

              39,67436,343

               

              56,488

               

              49,761

              Receivable for securities sold

              1,2012,382

               

              35,125

               

              Deferred financing costs (net of accumulated amortization of $6,562 and $5,600 as of December 31, 2018 and December 31, 2017, respectively)

              4,4613,837

              Deferred financing costs (net of accumulated amortization of $9,462 and $8,477 as of December 31, 2021 and December 31, 2020, respectively)

               

              4,217

               

              2,818

              Total assets

              $2,553,426$2,265,395

              $

              3,690,290

              $

              2,769,364

              ​​

              LIABILITIES

                

               

               

              Credit facility



              $

              301,000


              $

              64,000

              $

              320,000

              $

              269,000

              SBIC debentures (par: $345,800 ($16,000 due within one year) and $295,800 as of December 31, 2018 and December 31, 2017, respectively)

              338,186288,483

              4.50% Notes due 2022 (par: $185,000 as of both December 31, 2018 and December 31, 2017)

              182,622182,015

              4.50% Notes due 2019 (par: $175,000 as of both December 31, 2018 and December 31, 2017)

              174,338173,616

              6.125% Notes (par: $90,655 as of December 31, 2017)

              89,057

              3.00% Notes due 2026 (par: $500,000 as of December 31, 2021)

               

              497,609

               

              5.20% Notes due 2024 (par: $450,000 as of both December 31, 2021 and December 31, 2020)

               

              451,272

               

              451,817

              SBIC debentures (par: $350,000 and $309,800 as of December 31, 2021 and December 31, 2020, respectively)

               

              342,731

               

              303,972

              4.50% Notes due 2022 (par: $185,000 as of both December 31, 2021 and December 31, 2020)

               

              184,444

               

              183,836

              Accounts payable and other liabilities

              17,96220,168

               

              40,469

               

              20,833

              Payable for securities purchased

              28,25440,716

               

              5,111

               

              Interest payable

              6,0415,273

               

              14,926

               

              8,658

              Dividend payable

              11,94811,146

               

              15,159

               

              13,889

              Deferred tax liability, net

              17,02610,553

               

              29,723

               

              2,592

              Total liabilities

              1,077,377885,027

               

              1,901,444

               

              1,254,597

              Commitments and contingencies (Note K)


               

               

               

               

              NET ASSETS


               

               

               

               

              Common stock, $0.01 par value per share (150,000,000 shares authorized; 61,264,861 and 58,660,680 shares issued and outstanding as of December 31, 2018 and December 31, 2017, respectively)


              613

              586

              Additional paid-in capital

              1,409,9451,310,780

              Total distributable earnings (loss)

              $65,491$69,002

              Common stock, $0.01 par value per share (150,000,000 shares authorized; 70,700,885 and 67,674,853 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively)

               

              707

               

              677

              Additional paid‑in capital

               

              1,736,346

               

              1,615,940

              Total undistributed (overdistributed) earnings

               

              51,793

               

              (101,850)

              Total net assets

              1,476,0491,380,368

               

              1,788,846

               

              1,514,767

              Total liabilities and net assets

              $2,553,426$2,265,395

              $

              3,690,290

              $

              2,769,364

              ​​

              NET ASSET VALUE PER SHARE

              $24.09$23.53

              $

              25.29

              $

              22.35

              ​​

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


              81



              MAIN STREET CAPITAL CORPORATION

              Consolidated Statements of Operations

              (dollars in thousands, except shares and per share amounts)


               Twelve Months Ended December 31, 

               2018 2017 2016 

                  

              Twelve Months Ended December 31, 

              2021

                  

              2020

                  

              2019

              INVESTMENT INCOME:

                     

               

                

               

                

               

                

              Interest, fee and dividend income:

                     

               

                

               

                

               

                

              Control investments

               $85,853 $62,762 $52,221 

              $

              122,277

              $

              81,155

              $

              92,414

              Affiliate investments

               36,800 37,509 37,702 

               

              51,278

               

              32,435

               

              34,732

              Non-Control/Non-Affiliate investments

               110,702 105,470 88,242 

              Interest, fee and dividend income

               233,355 205,741 178,165 

              Interest, fee and dividend income from marketable securities and idle funds investments

                 174 

              Non‑Control/Non‑Affiliate investments

               

              115,492

               

              109,024

               

              116,227

              Total investment income

               233,355 205,741 178,339 

               

              289,047

               

              222,614

               

              243,373

              EXPENSES:

                     

               

               

               

                

              Interest

               (43,493) (36,479) (33,630)

               

              (58,836)

               

              (49,587)

               

              (50,258)

              Compensation

               (18,966) (18,560) (16,408)

               

              (34,442)

               

              (18,981)

               

              (19,792)

              General and administrative

               (11,868) (11,674) (9,284)

               

              (12,494)

               

              (12,702)

               

              (12,546)

              Share-based compensation

               (9,151) (10,027) (8,304)

              Share‑based compensation

               

              (10,887)

               

              (10,828)

               

              (10,083)

              Expenses allocated to the External Investment Manager

               6,768 6,370 5,089 

               

              10,277

               

              7,429

               

              6,672

              Total expenses

               (76,710) (70,370) (62,537)

               

              (106,382)

               

              (84,669)

               

              (86,007)

              NET INVESTMENT INCOME

               156,645 135,371 115,802 

               

              182,665

               

              137,945

               

              157,366

              NET REALIZED GAIN (LOSS):

                     

               

               

               

                

              Control investments

               4,681 259 32,220 

               

              6,494

               

              (59,594)

               

              4,797

              Affiliate investments

               20 8,044 25,167 

               

              17,181

               

              2,203

               

              (565)

              Non-Control/Non-Affiliate investments

               (3,360) 7,879 (26,317)

              Marketable securities and idle funds investments

                 (1,681)

              Non‑Control/Non‑Affiliate investments

               

              21,661

               

              (58,556)

               

              (19,344)

              Realized loss on extinguishment of debt

               (2,896) (5,217)  

               

               

              (534)

               

              (5,689)

              Total net realized gain (loss)

               (1,555) 10,965 29,389 

               

              45,336

               

              (116,481)

               

              (20,801)

              NET UNREALIZED APPRECIATION (DEPRECIATION):

                     

               

               

               

                

              Control investments

               37,826 63,627 (12,674)

               

              99,420

               

              37,924

               

              (980)

              Affiliate investments

               12,062 (11,330) (35,540)

               

              21,989

               

              (29,038)

               

              990

              Non-Control/Non-Affiliate investments

               (31,907) (9,752) 39,909 

              Marketable securities and idle funds investments

                 1,729 

              Non‑Control/Non‑Affiliate investments

               

              14,215

               

              (14,968)

               

              (10,214)

              SBIC debentures

               1,294 6,212 (943)

               

               

              460

               

              4,450

              Total net unrealized appreciation (depreciation)

               19,275 48,757 (7,519)

               

              135,624

               

              (5,622)

               

              (5,754)

              INCOME TAXES:

                     

               

               

               

                

              Federal and state income, excise and other taxes

               (319) (5,206) (2,089)

               

              (5,732)

               

              (590)

               

              (3,546)

              Deferred taxes

               (5,833) (19,265) 3,316 

               

              (27,131)

               

              14,131

               

              2,304

              Income tax benefit (provision)

               (6,152) (24,471) 1,227 

               

              (32,863)

               

              13,541

               

              (1,242)

              NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

               $168,213 $170,622 $138,899 

              NET INVESTMENT INCOME PER SHARE — BASIC AND DILUTED

               $2.60 $2.39 $2.23 

              NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE — BASIC AND DILUTED

               $2.80 $3.01 $2.67 

              WEIGHTED AVERAGE SHARES OUTSTANDING — BASIC AND DILUTED

               60,176,843 56,691,913 52,025,002 

              NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS

              $

              330,762

              $

              29,383

              $

              129,569

              NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED

              $

              2.65

              $

              2.10

              $

              2.50

              NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER
              SHARE—BASIC AND DILUTED

              $

              4.80

              $

              0.45

              $

              2.06

              WEIGHTED AVERAGE SHARES
              OUTSTANDING—BASIC AND DILUTED

               

              68,960,923

               

              65,705,963

               

              62,960,591

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


              82



              MAIN STREET CAPITAL CORPORATION

              Consolidated Statements of Changes in Net Assets

              (dollars in thousands, except shares)


               Common Stock  
                
                
               

               Number of
              Shares
               Par
              Value
               Additional
              Paid-In
              Capital
               Total
              Distributable
              Earnings (Loss)
               Total Net
              Asset Value
               

              Balances at December 31, 2015

               50,413,744 $504 $1,011,467 $58,923 $1,070,894 

              Public offering of common stock, net of offering costs

               3,324,646 33 112,006  112,039 

              Share-based compensation

                 8,304  8,304 

              Purchase of vested stock for employee payroll tax withholding

               (80,750) (1) (2,592)  (2,593)

              Dividend reinvestment

               434,631 4 14,073  14,077 

              Amortization of directors' deferred compensation

                 628  628 

              Issuance of restricted stock, net of forfeited shares

               262,586 3 (3)   

              Dividends to stockholders ($2.725 dividends per share comprised of $2.175 regular monthly dividends and $0.550 supplemental dividends)

                  (142,573) (142,573)

              Cumulative-effect to retained earnings for excess tax benefit

                  1,806 1,806 

              Net increase resulting from operations

                  138,899 138,899 

              Balances at December 31, 2016

               54,354,857 $543 $1,143,883 $57,055 $1,201,481 

              Common Stock

              Additional

              Total

              Number of

              Par

              PaidIn

              Undistributed

              Total Net

                  

              Shares

                  

              Value

                  

              Capital

                  

              Earnings

                  

              Asset Value

              Balances at December 31, 2018

               

              61,264,861

              $

              613

              $

              1,409,945

              $

              65,491

              $

              1,476,049

              Public offering of common stock, net of offering costs

               3,947,165 40 150,946  150,986 

               

              2,259,729

               

              23

               

              89,246

               

               

              89,269

              Share-based compensation

                 10,027  10,027 

              Purchase of vested stock for employee payroll tax withholding

               (113,371) (1) (4,350)  (4,351)

              Investment through issuance of unregistered shares

               11,464  442  442 

              Dividend reinvestment

               234,513 2 9,154  9,156 

              Amortization of directors' deferred compensation

                 680  680 

              Issuance of restricted stock, net of forfeited shares

               226,052 2 (2)   

              Dividends to stockholders ($2.785 dividends per share comprised of $2.235 regular monthly dividends and $0.550 supplemental dividends)

                  (158,675) (158,675)

              Net increase resulting from operations

                  170,622 170,622 

              Balances at December 31, 2017

               58,660,680 $586 $1,310,780 $69,002 $1,380,368 

              Public offering of common stock, net of offering costs

               2,069,103 21 78,373  78,394 

              Share-based compensation

                 9,151  9,151 

              Share‑based compensation

               

               

               

              10,083

               

               

              10,083

              Purchase of vested stock for employee payroll tax withholding

               (109,693) (1) (4,076)  (4,077)

               

              (103,730)

               

              (1)

               

              (3,941)

               

               

              (3,942)

              Dividend reinvestment

               394,403 4 14,870  14,874 

               

              441,927

               

              4

               

              18,081

               

               

              18,085

              Amortization of directors' deferred compensation

                 850  850 

              Amortization of directors’ deferred compensation

               

               

               

              866

               

               

              866

              Issuance of restricted stock, net of forfeited shares

               250,368 3 (3)   

               

              390,150

               

              4

               

              (4)

               

               

              Dividends to stockholders ($2.845 dividends per share comprised of $2.295 regular monthly dividends and $0.550 supplemental dividends)

                  (171,724) (171,724)

              Dividends to stockholders

               

               

               

              401

               

              (183,990)

               

              (183,589)

              Reclassification for certain permanent book-to-tax differences

              (12,242)

              12,242

              Net increase resulting from operations

                  168,213 168,213 

               

               

               

               

              129,569

               

              129,569

              Balances at December 31, 2018

               61,264,861 $613 $1,409,945 $65,491 $1,476,049 

              Balances at December 31, 2019

               

              64,252,937

              $

              643

              $

              1,512,435

              $

              23,312

              $

              1,536,390

              Public offering of common stock, net of offering costs

               

              2,662,777

               

              27

               

              84,354

               

               

              84,381

              Share‑based compensation

               

               

               

              10,828

               

               

              10,828

              Purchase of vested stock for employee payroll tax withholding

               

              (89,447)

               

              (1)

               

              (1,890)

               

               

              (1,891)

              Dividend reinvestment

               

              517,796

               

              4

               

              16,230

               

               

              16,234

              Amortization of directors’ deferred compensation

               

               

               

              853

               

               

              853

              Issuance of restricted stock, net of forfeited shares

               

              417,969

               

              4

               

              (4)

               

               

              Dividends to stockholders

               

               

               

              385

               

              (161,796)

               

              (161,411)

              Reclassification for certain permanent book-to-tax differences

               

               

              (7,251)

               

              7,251

              Net increase resulting from operations

               

               

               

               

              29,383

               

              29,383

              Balances at December 31, 2020

               

              67,762,032

              $

              677

              $

              1,615,940

              $

              (101,850)

              $

              1,514,767

              Public offering of common stock, net of offering costs

               

              2,345,554

               

              24

               

              98,865

               

               

              98,889

              Share‑based compensation

               

               

               

              10,887

               

               

              10,887

              Purchase of vested stock for employee payroll tax withholding

               

              (134,238)

               

              (1)

               

              (5,302)

               

               

              (5,303)

              Dividend reinvestment

               

              404,384

               

              4

               

              16,279

               

               

              16,283

              Amortization of directors’ deferred compensation

               

               

               

              652

               

               

              652

              Issuance of restricted stock, net of forfeited shares

               

              359,289

               

              3

               

              (3)

               

               

              Dividends to stockholders

               

               

               

              406

               

              (178,497)

               

              (178,091)

              Reclassification for certain permanent book-to-tax differences

               

               

               

              (1,378)

               

              1,378

               

              Net increase resulting from operations

               

               

               

               

              330,762

               

              330,762

              Balances at December 31, 2021

               

              70,737,021

              $

              707

              $

              1,736,346

              $

              51,793

              $

              1,788,846

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


              83



              MAIN STREET CAPITAL CORPORATION

              Consolidated Statements of Cash Flows

              (dollars in thousands)


               Twelve Months Ended December 31, 

               2018 2017 2016 

              Year Ended

                  

              December 31, 

              2021

                 

              2020

                 

              2019

              CASH FLOWS FROM OPERATING ACTIVITIES

                     

              Net increase in net assets resulting from operations

               $168,213 $170,622 $138,899 

              $

              330,762

              $

              29,383

              $

              129,569

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

                     

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

              Investments in portfolio companies

               (962,456) (876,744) (641,197)

              (1,763,755)

              (669,007)

              (664,062)

              Proceeds from sales and repayments of debt investments in portfolio companies

               626,059 737,297 409,542 

              920,828

              443,573

              439,363

              Proceeds from sales and return of capital of equity investments in portfolio companies

               77,103 82,128 76,731 

              133,644

              34,439

              38,536

              Investments in marketable securities and idle funds investments

                 (523)

              Proceeds from sales and repayments of marketable securities and idle funds investments

                 4,316 

              Net unrealized (appreciation) depreciation

               (19,275) (48,757) 7,519 

              (135,624)

              5,622

              5,754

              Net realized (gain) loss

               1,555 (10,965) (29,389)

              (45,336)

              116,481

              20,801

              Accretion of unearned income

               (14,724) (17,008) (10,211)

              (15,619)

              (11,756)

              (12,070)

              Payment-in-kind interest

               (2,304) (4,884) (6,497)

              (7,573)

              (6,225)

              (5,018)

              Cumulative dividends

               (2,301) (3,226) (2,200)

              (1,739)

              (1,791)

              (2,382)

              Share-based compensation expense

               9,151 10,027 8,304 

              10,887

              10,828

              10,083

              Amortization of deferred financing costs

               3,299 2,784 2,582 

              2,998

              2,513

              3,717

              Deferred tax provision

               5,833 19,265 (3,316)

              Deferred tax (benefit) provision

              27,131

              (14,131)

              (2,304)

              Changes in other assets and liabilities:

                     

              Interest receivable and other assets

               (2,276) 2,080 (2,564)

              (5,504)

              4,599

              (6,680)

              Interest payable

               768 1,170 144 

              6,268

              1,366

              1,251

              Accounts payable and other liabilities

               (1,356) 6,643 2,541 

              20,289

              (2,846)

              7,436

              Deferred fees and other

               3,645 2,470 2,589 

              6,970

              2,868

              2,172

              Net cash used in operating activities

              (515,373)

              (54,084)

              (33,834)

              Net cash provided by (used in) operating activities

               (109,066) 72,902 (42,730)

              CASH FLOWS FROM FINANCING ACTIVITIES

               
               
               
               
               
               
               

              Proceeds from public offering of common stock, net of offering costs

               78,394 150,986 112,039 

              98,889

              84,381

              89,269

              Proceeds from public offering of 4.50% Notes due 2022

                185,000  

              Proceeds from public offering of 5.20% Notes due 2024

              -

              125,000

              325,000

              Proceeds from public offering of 3.00% Notes due 2026

              500,000

              -

              -

              Dividends paid

               (156,048) (148,421) (127,522)

              (160,537)

              (144,462)

              (164,278)

              Proceeds from issuance of SBIC debentures

               54,000 81,000 15,000 

              80,200

              40,000

              -

              Repayments of SBIC debentures

               (4,000) (25,200)  

              (40,000)

              (42,000)

              (34,000)

              Redemption of 6.125% Notes

               (90,655)  (83)

              Redemption of 4.50% Notes due 2019

              -

              -

              (175,000)

              Proceeds from credit facility

               632,000 448,000 390,000 

              1,100,000

              399,000

              639,000

              Repayments on credit facility

               (395,000) (727,000) (338,000)

              Payment of deferred issuance costs and SBIC debenture fees

               (2,895) (5,868) (1,962)

              Purchases of vested stock for employee payroll tax withholding

               (4,077) (4,351) (2,593)

              Net cash provided by (used in) financing activities

               111,719 (45,854) 46,879 

              Net increase in cash and cash equivalents

               2,653 27,048 4,149 

              CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

               51,528 24,480 20,331 

              CASH AND CASH EQUIVALENTS AT END OF PERIOD

               $54,181 $51,528 $24,480 

              Supplemental cash flow disclosures:

                     

              Interest paid

               $39,300 $32,411 $30,756 

              Taxes paid

               $5,112 $2,398 $1,495 

              Non-cash financing activities:

                     

              Shares issued pursuant to the DRIP

               $14,874 $9,156 $14,077 

              84


              Year Ended

                  

              December 31, 

              2021

                 

              2020

                 

              2019

              Repayments on credit facility

              (1,049,000)

              (430,000)

              (640,000)

              Debt issuance premiums (costs), net

              (8,166)

              729

              (1,150)

              Purchases of vested stock for employee payroll tax withholding

              (5,303)

              (1,891)

              (3,942)

              Net cash provided by financing activities

              516,083

              30,757

              34,899

              Net increase (decrease) in cash and cash equivalents

              710

              (23,327)

              1,065

              CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

              31,919

              55,246

              54,181

              CASH AND CASH EQUIVALENTS AT END OF PERIOD

              $

              32,629

              $

              31,919

              $

              55,246

              Supplemental cash flow disclosures:

              Interest paid

              $

              50,729

              $

              45,582

              $

              45,167

              Taxes paid

              $

              2,233

              $

              3,136

              $

              2,300

              Operating non-cash activities:

              Right-of-use assets obtained in exchange for operating lease liabilities

              $

              -

              $

              -

              $

              5,240

              Non-cash financing activities:

              Value of shares issued pursuant to the DRIP

              $

              16,283

              $

              16,234

              $

              18,085

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


              85


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2018
              2021

              (dollars in thousands)

              (unaudited)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Control Investments (5)

              Analytical Systems Keco Holdings, LLC

              Manufacturer of Liquid and Gas Analyzers

              Secured Debt

              (9)

              8/16/2019

              12.00% (L+10.00%, Floor 2.00%)

              8/16/2024

              $

              4,945

              $

              4,736

              $

              4,736

              Preferred Member Units

              8/16/2019

              3,200

              3,200

              -

              Preferred Member Units

              5/20/2021

              2,427

              2,427

              4,894

              Warrants

              (27)

              8/16/2019

              420

              8/16/2029

              316

              -

              10,679

              9,630

              ASC Interests, LLC

              Recreational and Educational Shooting Facility

              Secured Debt

              12/31/2019

              13.00%

              7/31/2022

              200

              200

              200

              Secured Debt

              8/1/2013

              13.00%

              7/31/2022

              1,650

              1,636

              1,636

              Member Units

              8/1/2013

              1,500

              1,500

              720

              3,336

              2,556

              ATS Workholding, LLC

              (10)

              Manufacturer of Machine Cutting Tools and Accessories

              Secured Debt

              (14)

              11/16/2017

              5.00%

              8/16/2023

              4,794

              4,635

              3,005

              Preferred Member Units

              11/16/2017

              3,725,862

              3,726

              -

              8,361

              3,005

              Barfly Ventures, LLC

              (10)

              Casual Restaurant Group

              Secured Debt

              10/15/2020

              7.00%

              10/31/2024

              711

              711

              711

              Member Units

              10/26/2020

              37

              1,584

              1,930

              2,295

              2,641

              Bolder Panther Group, LLC

              Consumer Goods and Fuel Retailer

              Secured Debt

              (9)

              12/31/2020

              10.50% (L+9.00%, Floor 1.50%)

              12/31/2025

              39,000

              38,687

              39,000

              Class A Preferred Member Units

              (8)

              12/31/2020

              14.00%

              10,194

              10,194

              Class B Preferred Member Units

              (8)

              12/31/2020

              140,000

              8.00%

              14,000

              23,170

              62,881

              72,364

              Brewer Crane Holdings, LLC

              Provider of Crane Rental and Operating Services

              Secured Debt

              (9)

              1/9/2018

              11.00% (L+10.00%, Floor 1.00%)

              1/9/2023

              8,060

              8,037

              8,037

              Preferred Member Units

              (8)

              1/9/2018

              2,950

              4,280

              7,710

              12,317

              15,747

              Bridge Capital Solutions Corporation

              Financial Services and Cash Flow Solutions Provider

              Secured Debt

              7/25/2016

              13.00%

              12/11/2024

              8,813

              8,813

              8,813

              Warrants

              (27)

              7/25/2016

              82

              7/25/2026

              2,132

              4,060

              Secured Debt

              (30)

              7/25/2016

              13.00%

              12/11/2024

              1,000

              1,000

              1,000

              Preferred Member Units

              (8) (30)

              7/25/2016

              17,742

              1,000

              1,000

              12,945

              14,873

              Café Brazil, LLC

              Casual Restaurant Group

              Member Units

              (8)

              6/9/2006

              1,233

              1,742

              2,570

              California Splendor Holdings LLC

              Processor of Frozen Fruits

              Secured Debt

              (9)

              3/30/2018

              11.00% (L+10.00%, Floor 1.00%)

              3/30/2023

              28,000

              27,915

              27,915

              Preferred Member Units

              (8) (19)

              7/31/2019

              6,725

              15.00% PIK

              9,510

              9,510

              Preferred Member Units

              (8)

              3/30/2018

              6,157

              10,775

              13,275

              48,200

              50,700

              86


              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Control Investments(5)

                 

               

               

               

                        

                              

              Access Media Holdings, LLC(10)

               July 22, 2015 

              Private Cable Operator

                          

                   

              10% PIK Secured Debt (Maturity — July 22, 2020)(14)(19)

               $23,828 $23,828 $8,558 

                   

              Preferred Member Units (9,481,500 units)(27)

                   9,375  (284)

                   

              Member Units (45 units)

                   1   

                         33,204  8,274 

                              

              ASC Interests, LLC

               August 1, 2013 

              Recreational and Educational Shooting Facility

                          

                   

              11% Secured Debt (Maturity — July 31, 2020)

                1,650  1,622  1,622 

                   

              Member Units (1,500 units)

                   1,500  1,370 

                         3,122  2,992 

                              

              ATS Workholding, LLC(10)

               March 10, 2014 

              Manufacturer of Machine Cutting Tools and Accessories

                          

                   

              5% Secured Debt (Maturity — November 16, 2021)

                4,877  4,507  4,390 

                   

              Preferred Member Units (3,725,862 units)

                   3,726  3,726 

                         8,233  8,116 

                              

              Bond-Coat, Inc.

               December 28, 2012 

              Casing and Tubing Coating Services

                          

                   

              12% Secured Debt (Maturity — December 28, 2020)

                11,596  11,367  11,596 

                   

              Common Stock (57,508 shares)

                   6,350  9,370 

                         17,717  20,966 

                              

              Brewer Crane Holdings, LLC

               January 9, 2018 

              Provider of Crane Rental and Operating Services

                          

                   

              LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.35%, Secured Debt (Maturity — January 9, 2023)(9)

                9,548  9,467  9,467 

                   

              Preferred Member Units (2,950 units)(8)

                   4,280  4,280 

                         13,747  13,747 

                              

              Café Brazil, LLC

               April 20, 2004 

              Casual Restaurant Group

                          

                   

              Member Units (1,233 units)(8)

                   1,742  4,780 

                              

              California Splendor Holdings LLC

               March 30, 2018 

              Processor of Frozen Fruits

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.50%, Secured Debt (Maturity — March 30, 2023)(9)

                11,091  10,928  10,928 

                   

              LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.50%, Secured Debt (Maturity — March 30, 2023)(9)

                28,000  27,755  27,755 

                   

              Preferred Member Units (6,157 units)(8)

                   10,775  9,745 

                         49,458  48,428 

                              

              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              CBT Nuggets, LLC

              Produces and Sells IT Training Certification Videos

              Member Units

              (8)

              6/1/2006

              416

              1,300

              50,620

              Centre Technologies Holdings, LLC

              Provider of IT Hardware Services and Software Solutions

              Secured Debt

              (9)

              1/4/2019

              12.00% (L+10.00%, Floor 2.00%)

              1/4/2024

              9,416

              9,370

              8,864

              Preferred Member Units

              1/4/2019

              12,696

              5,840

              5,840

              15,210

              14,704

              Chamberlin Holding LLC

              Roofing and Waterproofing Specialty Contractor

              Secured Debt

              (9)

              2/26/2018

              9.00% (L+8.00%, Floor 1.00%)

              2/26/2023

              17,817

              17,738

              17,817

              Member Units

              (8)

              2/26/2018

              4,347

              11,440

              24,140

              Member Units

              (8) (30)

              11/2/2018

              1,047,146

              1,322

              1,540

              30,500

              43,497

              Charps, LLC

              Pipeline Maintenance and Construction

              Unsecured Debt

              8/26/2020

              10.00%

              1/31/2024

              5,694

              4,599

              5,694

              Preferred Member Units

              (8)

              2/3/2017

              1,829

              1,963

              13,990

              6,562

              19,684

              Clad-Rex Steel, LLC

              Specialty Manufacturer of Vinyl-Clad Metal

              Secured Debt

              (9)

              12/20/2016

              10.50% (L+9.50%, Floor 1.00%)

              1/15/2024

              10,480

              10,401

              10,401

              Member Units

              (8)

              12/20/2016

              717

              7,280

              10,250

              Secured Debt

              12/20/2016

              10.00%

              12/20/2036

              1,081

              1,071

              1,071

              Member Units

              (30)

              12/20/2016

              800

              210

              530

              18,962

              22,252

              CMS Minerals Investments

              Oil & Gas Exploration & Production

              Member Units

              (8) (30)

              4/1/2016

              100

              1,838

              1,974

              Cody Pools, Inc.

              Designer of Residential and Commercial Pools

              Secured Debt

              (9)

              3/6/2020

              12.25% (L+10.50%, Floor 1.75%)

              12/17/2026

              42,497

              42,117

              42,484

              Preferred Member Units

              (8) (30)

              3/6/2020

              587

              8,317

              47,640

              50,434

              90,124

              Colonial Electric Company LLC

              Provider of Electrical Contracting Services

              Secured Debt

              3/31/2021

              12.00%

              3/31/2026

              24,570

              24,351

              24,351

              Preferred Member Units

              (8)

              3/31/2021

              17,280

              7,680

              9,130

              32,031

              33,481

              CompareNetworks Topco, LLC

              Internet Publishing and Web Search Portals

              Secured Debt

              (9)

              1/29/2019

              10.00% (L+9.00%, Floor 1.00%)

              1/29/2024

              6,477

              6,452

              6,477

              Preferred Member Units

              (8)

              1/29/2019

              1,975

              1,975

              12,000

              8,427

              18,477

              Copper Trail Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (CTMH, LP)

              (31)

              7/17/2017

              38.8%

              710

              710

              Datacom, LLC

              Technology and Telecommunications Provider

              Secured Debt

              3/31/2021

              5.00%

              12/31/2025

              8,892

              8,296

              7,668

              Preferred Member Units

              3/31/2021

              9,000

              2,610

              2,610

              87


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              10,906

              10,278

              Digital Products Holdings LLC

              Designer and Distributor of Consumer Electronics

              Secured Debt

              (9)

              4/1/2018

              11.00% (L+10.00%, Floor 1.00%)

              4/1/2023

              16,853

              16,801

              16,801

              Preferred Member Units

              (8)

              4/1/2018

              3,857

              9,501

              9,835

              26,302

              26,636

              Direct Marketing Solutions, Inc.

              Provider of Omni-Channel Direct Marketing Services

              Secured Debt

              (9)

              2/13/2018

              12.00% (L+11.00%, Floor 1.00%)

              2/13/2024

              24,070

              23,911

              24,048

              Preferred Stock

              (8)

              2/13/2018

              8,400

              8,400

              18,350

              32,311

              42,398

              Gamber-Johnson Holdings, LLC

              Manufacturer of Ruggedized Computer Mounting Systems

              Secured Debt

              (9)

              6/24/2016

              9.50% (L+7.50%, Floor 2.00%)

              1/1/2025

              21,598

              21,535

              21,598

              Member Units

              (8)

              6/24/2016

              9,042

              17,692

              49,700

              39,227

              71,298

              Garreco, LLC

              Manufacturer and Supplier of Dental Products

              Secured Debt

              (9)

              7/15/2013

              9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%)

              7/31/2022

              4,196

              4,196

              4,196

              Member Units

              (8)

              7/15/2013

              1,200

              1,200

              2,270

              5,396

              6,466

              GRT Rubber Technologies LLC

              Manufacturer of Engineered Rubber Products

              Secured Debt

              12/19/2014

              8.10% (L+8.00%)

              10/29/2026

              38,885

              38,672

              38,885

              Member Units

              (8)

              12/19/2014

              5,879

              13,065

              46,190

              51,737

              85,075

              Gulf Manufacturing, LLC

              Manufacturer of Specialty Fabricated Industrial Piping Products

              Member Units

              (8)

              8/31/2007

              438

              2,980

              5,640

              Gulf Publishing Holdings, LLC

              Energy Industry Focused Media and Publishing

              Secured Debt

              (9) (17) (19)

              9/29/2017

              10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%)

              9/30/2020

              257

              257

              257

              Secured Debt

              (17) (19)

              4/29/2016

              12.50% (6.25% Cash, 6.25% PIK)

              4/29/2021

              13,565

              13,565

              9,717

              Member Units

              4/29/2016

              3,681

              3,681

              -

              17,503

              9,974

              Harris Preston Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (2717 MH, L.P.)

              (31)

              10/1/2017

              49.3%

              2,703

              3,971

              Harrison Hydra-Gen, Ltd.

              Manufacturer of Hydraulic Generators

              Common Stock

              6/4/2010

              107,456

              718

              3,530

              Jensen Jewelers of Idaho, LLC

              Retail Jewelry Store

              Secured Debt

              (9)

              11/14/2006

              10.00% (Prime+6.75%, Floor 2.00%)

              11/14/2023

              2,550

              2,536

              2,550

              Member Units

              (8)

              11/14/2006

              627

              811

              12,420

              3,347

              14,970

              Johnson Downie Opco, LLC

              Executive Search Services

              Secured Debt

              (9)

              12/10/2021

              13.00% (L+11.50%, Floor 1.50%)

              12/10/2026

              11,475

              11,344

              11,344

              Preferred Equity

              12/10/2021

              3,150

              3,150

              3,150

              14,494

              14,494

              88


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              KBK Industries, LLC

              Manufacturer of Specialty Oilfield and Industrial Products

              Member Units

              (8)

              1/23/2006

              325

              783

              13,620

              Kickhaefer Manufacturing Company, LLC

              Precision Metal Parts Manufacturing

              Secured Debt

              10/31/2018

              11.50%

              10/31/2023

              20,415

              20,324

              20,324

              Member Units

              10/31/2018

              581

              12,240

              12,310

              Secured Debt

              10/31/2018

              9.00%

              10/31/2048

              3,915

              3,876

              3,876

              Member Units

              (8) (30)

              10/31/2018

              800

              992

              2,460

              37,432

              38,970

              Market Force Information, LLC

              Provider of Customer Experience Management Services

              Secured Debt

              (9)

              7/28/2017

              12.00% (L+11.00%, Floor 1.00%)

              7/28/2023

              3,400

              3,400

              3,400

              Secured Debt

              (14) (19)

              7/28/2017

              12.00% PIK

              7/28/2023

              26,079

              25,952

              8,936

              Member Units

              7/28/2017

              743,921

              16,642

              -

              45,994

              12,336

              MH Corbin Holding LLC

              Manufacturer and Distributor of Traffic Safety Products

              Secured Debt

              8/31/2015

              13.00%

              3/31/2022

              8,250

              8,241

              5,934

              Preferred Member Units

              3/15/2019

              66,000

              4,400

              -

              Preferred Member Units

              9/1/2015

              4,000

              6,000

              -

              18,641

              5,934

              MS Private Loan Fund I, LP

              (12) (13)

              Investment Partnership

              Unsecured Debt

              2/11/2021

              5.00%

              2/28/2022

              63,151

              63,151

              63,151

              LP Interests

              (31)

              1/26/2021

              12.1%

              2,500

              2,581

              65,651

              65,732

              MSC Adviser I, LLC

              (16)

              Third Party Investment Advisory Services

              Member Units

              (8)

              11/22/2013

              29,500

              140,400

              Mystic Logistics Holdings, LLC

              Logistics and Distribution Services Provider for Large Volume Mailers

              Secured Debt

              8/18/2014

              12.00%

              1/17/2022

              6,378

              6,377

              6,378

              Common Stock

              (8)

              8/18/2014

              5,873

              2,720

              8,840

              9,097

              15,218

              NAPCO Precast, LLC

              Precast Concrete Manufacturing

              Member Units

              (8)

              1/31/2008

              2,955

              2,975

              13,560

              Nebraska Vet AcquireCo, LLC

              Mixed-Animal Veterinary and Animal Health Product Provider

              Secured Debt

              12/31/2020

              12.00%

              12/31/2025

              10,500

              10,412

              10,412

              Secured Debt

              12/31/2020

              12.00%

              12/31/2025

              4,868

              4,829

              4,829

              Preferred Member Units

              12/31/2020

              6,987

              6,987

              7,700

              22,228

              22,941

              NexRev LLC

              Provider of Energy Efficiency Products & Services

              Secured Debt

              2/28/2018

              11.00%

              2/28/2023

              16,217

              16,173

              14,045

              Preferred Member Units

              (8)

              2/28/2018

              86,400,000

              6,880

              2,690

              23,053

              16,735

              NRP Jones, LLC

              Manufacturer of Hoses, Fittings and Assemblies

              Secured Debt

              12/21/2017

              12.00%

              3/20/2023

              2,080

              2,080

              2,080

              Member Units

              (8)

              12/22/2011

              65,962

              3,717

              6,440

              5,797

              8,520

              NuStep, LLC

              Designer, Manufacturer and

              89


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Distributor of Fitness Equipment

              Secured Debt

              (9)

              1/31/2017

              7.50% (L+6.50%, Floor 1.00%)

              1/31/2025

              1,720

              1,720

              1,720

              Secured Debt

              1/31/2017

              11.00%

              1/31/2025

              17,240

              17,236

              17,240

              Preferred Member Units

              1/31/2017

              406

              10,200

              13,500

              29,156

              32,460

              OMi Topco, LLC

              Manufacturer of Overhead Cranes

              Secured Debt

              8/31/2021

              12.00%

              8/31/2026

              18,000

              17,831

              18,000

              Preferred Member Units

              (8)

              4/1/2008

              900

              1,080

              20,210

              18,911

              38,210

              Orttech Holdings, LLC

              Distributor of Industrial Clutches, Brakes and Other Components

              Secured Debt

              (9)

              7/30/2021

              12.00% (L+11.00%, Floor 1.00%)

              7/31/2026

              24,375

              24,151

              24,151

              Preferred Stock

              (8) (30)

              7/30/2021

              10,000

              10,000

              10,000

              34,151

              34,151

              Pearl Meyer Topco LLC

              Provider of Executive Compensation Consulting Services

              Secured Debt

              4/27/2020

              12.00%

              4/27/2025

              32,674

              32,438

              32,674

              Member Units

              (8)

              4/27/2020

              13,800

              13,000

              26,970

              45,438

              59,644

              PPL RVs, Inc.

              Recreational Vehicle Dealer

              Secured Debt

              (9)

              10/31/2019

              7.50% (L+7.00%, Floor 0.50%)

              11/15/2022

              750

              726

              726

              Secured Debt

              (9)

              11/15/2016

              7.50% (L+7.00%, Floor 0.50%)

              11/15/2022

              11,655

              11,655

              11,655

              Common Stock

              (8)

              6/10/2010

              2,000

              2,150

              14,360

              14,531

              26,741

              Principle Environmental, LLC

              Noise Abatement Service Provider

              Secured Debt

              2/1/2011

              13.00%

              11/15/2026

              1,473

              1,465

              1,465

              Secured Debt

              7/1/2011

              13.00%

              11/15/2026

              5,924

              5,808

              5,808

              Preferred Member Units

              2/1/2011

              21,806

              5,709

              11,160

              Common Stock

              1/27/2021

              1,037

              1,200

              710

              14,182

              19,143

              Quality Lease Service, LLC

              Provider of Rigsite Accommodation Unit Rentals and Related Services

              Member Units

              6/8/2015

              1,000

              9,213

              2,149

              River Aggregates, LLC

              Processor of Construction Aggregates

              Member Units

              (8) (30)

              12/20/2013

              1,500

              369

              3,280

              Robbins Bros. Jewelry, Inc.

              Bridal Jewelry Retailer

              Secured Debt

              (9)

              12/15/2021

              12.00% (L+11.00%, Floor 1.00%)

              12/15/2026

              36,360

              35,956

              35,956

              Preferred Equity

              12/15/2021

              11,070

              11,070

              11,070

              47,026

              47,026

              Tedder Industries, LLC

              Manufacturer of Firearm Holsters and Accessories

              Secured Debt

              8/31/2018

              12.00%

              8/31/2022

              16,240

              16,181

              16,181

              Preferred Member Units

              8/31/2018

              505

              8,579

              8,579

              24,760

              24,760

              Televerde, LLC

              Provider of Telemarketing and Data Services

              Member Units

              1/6/2011

              460

              1,290

              7,280

              Trantech Radiator Topco, LLC

              Transformer Cooling Products and Services

              90


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Secured Debt

              5/31/2019

              12.00%

              5/31/2024

              8,720

              8,663

              8,712

              Common Stock

              (8)

              5/31/2019

              615

              4,655

              8,660

              13,318

              17,372

              UnionRock Energy Fund II, LP

              (12) (13)

              Investment Partnership

              LP Interests

              (8) (31)

              6/15/2020

              49.6%

              3,828

              6,122

              Vision Interests, Inc.

              Manufacturer / Installer of Commercial Signage

              Series A Preferred Stock

              12/23/2011

              3,000,000

              3,000

              3,000

              VVS Holdco LLC

              Omnichannel Retailer of Animal Health Products

              Secured Debt

              (9)(30)

              12/1/2021

              7.00% (L+6.00%, Floor 1.00%)

              12/1/2026

              1,200

              1,170

              1,169

              Secured Debt

              (30)

              12/1/2021

              11.50%

              12/1/2026

              30,400

              30,100

              30,100

              Preferred Equity

              (30)

              12/1/2021

              11,840

              11,840

              11,840

              43,110

              43,109

              Ziegler’s NYPD, LLC

              Casual Restaurant Group

              Secured Debt

              6/1/2015

              12.00%

              10/1/2022

              625

              625

              625

              Secured Debt

              10/1/2008

              6.50%

              10/1/2022

              1,000

              1,000

              1,000

              Secured Debt

              10/1/2008

              14.00%

              10/1/2022

              2,750

              2,750

              2,750

              Preferred Member Units

              6/30/2015

              10,072

              2,834

              2,130

              Warrants

              (27)

              7/1/2015

              587

              10/1/2025

              600

              -

              7,809

              6,505

              Subtotal Control Investments (83.3% of net assets at fair value)

              $

              1,107,597

              $

              1,489,257

              91


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Affiliate Investments (6)

              AAC Holdings, Inc.

              (11)

              Substance Abuse Treatment Service Provider

              Secured Debt

              (19)

              12/11/2020

              18.00% (10.00% Cash, 8.00% PIK)

              6/25/2025

              $

              10,202

              $

              10,011

              $

              9,794

              Common Stock

              12/11/2020

              593,928

              3,148

              2,079

              Warrants

              (27)

              12/11/2020

              554,353

              12/11/2025

              -

              1,940

              13,159

              13,813

              AFG Capital Group, LLC

              Provider of Rent-to-Own Financing Solutions and Services

              Secured Debt

              4/25/2019

              10.00%

              5/25/2022

              144

              144

              144

              Preferred Member Units

              (8)

              11/7/2014

              186

              1,200

              7,740

              1,344

              7,884

              ATX Networks Corp.

              (11)

              Provider of Radio Frequency Management Equipment

              Secured Debt

              (9)

              9/1/2021

              8.50% (L+7.50%, Floor 1.00%)

              9/1/2026

              7,667

              7,092

              7,092

              Unsecured Debt

              (19)

              9/1/2021

              10.00% PIK

              9/1/2028

              3,067

              1,963

              1,963

              Common Stock

              9/1/2021

              583

              -

              -

              9,055

              9,055

              BBB Tank Services, LLC

              Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

              Unsecured Debt

              (9) (17)

              4/8/2016

              12.00% (L+11.00%, Floor 1.00%)

              4/8/2021

              4,800

              4,800

              2,508

              Preferred Stock (non-voting)

              (8) (14) (19)

              12/17/2018

              15.00% PIK

              162

              -

              Member Units

              4/8/2016

              800,000

              800

              -

              5,762

              2,508

              Boccella Precast Products LLC

              Manufacturer of Precast Hollow Core Concrete

              Secured Debt

              9/23/2021

              10.00%

              2/28/2027

              320

              320

              320

              Member Units

              (8)

              6/30/2017

              2,160,000

              2,256

              4,830

              2,576

              5,150

              Brightwood Capital Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (Brightwood Capital Fund V, LP)

              (31)

              7/12/2021

              15.8%

              1,000

              1,000

              Buca C, LLC

              Casual Restaurant Group

              Secured Debt

              (9) (17)

              6/30/2015

              10.25% (L+9.25%, Floor 1.00%)

              6/30/2020

              19,491

              19,491

              14,370

              Preferred Member Units

              (14) (19)

              6/30/2015

              6

              6.00% PIK

              4,770

              -

              24,261

              14,370

              Career Team Holdings, LLC

              Provider of Workforce Training and Career Development Services

              Secured Debt

              12/17/2021

              12.50%

              12/17/2026

              20,250

              20,050

              20,050

              Class A Common Units

              12/17/2021

              450,000

              4,500

              4,500

              24,550

              24,550

              Chandler Signs Holdings, LLC

              (10)

              Sign Manufacturer

              Class A Units

              1/4/2016

              1,500,000

              1,500

              460

              Classic H&G Holdings, LLC

              Provider of Engineered Packaging Solutions

              92


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Secured Debt

              (9)

              3/12/2020

              7.00% (L+6.00%, Floor 1.00%)

              3/12/2025

              4,000

              4,000

              4,000

              Secured Debt

              3/12/2020

              8.00%

              3/12/2025

              19,274

              19,139

              19,274

              Preferred Member Units

              (8)

              3/12/2020

              154

              5,760

              15,260

              28,899

              38,534

              Congruent Credit Opportunities Funds

              (12) (13)

              Investment Partnership

              LP Interests (Congruent Credit Opportunities Fund
              III, LP)

              (8) (31)

              2/4/2015

              17.4%

              10,256

              9,959

              DMA Industries, LLC

              Distributor of aftermarket ride control products

              Secured Debt

              11/19/2021

              12.00%

              11/19/2026

              21,200

              20,993

              20,993

              Preferred Equity

              11/19/2021

              5,944

              5,944

              5,944

              26,937

              26,937

              Dos Rios Partners

              (12) (13)

              Investment Partnership

              LP Interests (Dos Rios Partners, LP)

              (31)

              4/25/2013

              20.2%

              6,605

              10,329

              LP Interests (Dos Rios Partners - A, LP)

              (31)

              4/25/2013

              6.4%

              2,097

              3,280

              8,702

              13,609

              Dos Rios Stone Products LLC

              (10)

              Limestone and Sandstone Dimension Cut Stone Mining Quarries

              Class A Preferred Units

              (30)

              6/27/2016

              2,000,000

              2,000

              640

              EIG Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (EIG Global Private Debt Fund-A, L.P.)

              (8) (31)

              11/6/2015

              5,000,000

              594

              547

              Flame King Holdings, LLC

              Propane Tank and Accessories Distributor

              Secured Debt

              (9)

              10/29/2021

              7.50% (L+6.50%, Floor 1.00%)

              10/31/2026

              6,400

              6,324

              6,324

              Secured Debt

              (9)

              10/29/2021

              12.00% (L+11.00%, Floor 1.00%)

              10/31/2026

              21,200

              20,996

              20,996

              Preferred Equity

              10/29/2021

              9,360

              10,400

              10,400

              37,720

              37,720

              Freeport Financial Funds

              (12) (13)

              Investment Partnership

              LP Interests (Freeport Financial SBIC Fund LP)

              (31)

              3/23/2015

              9.3%

              5,974

              6,078

              LP Interests (Freeport First Lien Loan Fund III LP)

              (8) (31)

              7/31/2015

              6.0%

              7,629

              7,231

              13,603

              13,309

              GFG Group, LLC.

              Grower and Distributor of a Variety of Plants and Products to Other Wholesalers, Retailers and Garden Centers

              Secured Debt

              3/31/2021

              12.00%

              3/31/2026

              12,545

              12,435

              12,545

              Preferred Member Units

              (8)

              3/31/2021

              226

              4,900

              6,990

              17,335

              19,535

              Harris Preston Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (HPEP 3, L.P.)

              (31)

              8/9/2017

              8.2%

              3,193

              4,712

              93


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Hawk Ridge Systems, LLC

              (13)

              Value-Added Reseller of Engineering Design and Manufacturing Solutions

              Secured Debt

              (9)

              12/2/2016

              7.00% (L+6.00%, Floor 1.00%)

              1/15/2026

              2,585

              2,585

              2,585

              Secured Debt

              12/2/2016

              8.00%

              1/15/2026

              34,800

              34,672

              34,800

              Preferred Member Units

              (8)

              12/2/2016

              226

              2,850

              14,680

              Preferred Member Units

              (30)

              12/2/2016

              226

              150

              770

              40,257

              52,835

              Houston Plating and Coatings, LLC

              Provider of Plating and Industrial Coating Services

              Unsecured Convertible Debt

              5/1/2017

              8.00%

              5/1/2022

              3,000

              3,000

              2,960

              Member Units

              (8)

              1/8/2003

              322,297

              2,352

              3,210

              5,352

              6,170

              I-45 SLF LLC

              (12) (13)

              Investment Partnership

              Member Units (Fully diluted 20.0%; 24.40% profits
              interest) (8)

              (8)

              10/20/2015

              19,000

              14,387

              Iron-Main Investments, LLC

              Consumer Reporting Agency Providing Employment Background Checks and Drug Testing

              Secured Debt

              8/3/2021

              13.00%

              8/1/2026

              4,600

              4,557

              4,557

              Secured Debt

              9/1/2021

              12.50%

              9/1/2026

              3,200

              3,170

              3,170

              Secured Debt

              8/3/2021

              12.50%

              11/30/2026

              20,000

              19,805

              19,805

              Secured Debt

              (19)

              8/3/2021

              12.50% PIK

              3/31/2022

              8,944

              8,944

              8,944

              Common Stock

              8/3/2021

              179,778

              1,798

              1,798

              38,274

              38,274

              L.F. Manufacturing Holdings, LLC

              (10)

              Manufacturer of Fiberglass Products

              Preferred Member Units (non-voting)

              (8) (19)

              1/1/2019

              14.00% PIK

              107

              107

              Member Units

              12/23/2013

              2,179,001

              2,019

              2,557

              2,126

              2,664

              OnAsset Intelligence, Inc.

              Provider of Transportation Monitoring / Tracking Products and Services

              Secured Debt

              (19)

              5/20/2014

              12.00% PIK

              12/31/2022

              935

              935

              935

              Secured Debt

              (19)

              3/21/2014

              12.00% PIK

              12/31/2022

              954

              954

              954

              Secured Debt

              (19)

              5/10/2013

              12.00% PIK

              12/31/2022

              2,055

              2,055

              2,055

              Secured Debt

              (19)

              4/18/2011

              12.00% PIK

              12/31/2022

              4,286

              4,286

              4,286

              Unsecured Debt

              (19)

              6/5/2017

              10.00% PIK

              12/31/2022

              192

              192

              192

              Preferred Stock

              (14) (19)

              4/18/2011

              912

              7.00% PIK

              1,981

              -

              Common Stock

              4/15/2021

              635

              830

              -

              Warrants

              (27)

              4/18/2011

              4,699

              5/10/2023

              1,089

              -

              12,322

              8,422

              Oneliance, LLC

              Construction Cleaning Company

              Secured Debt

              (9)

              8/6/2021

              12.00% (L+11.00%, Floor 1.00%)

              8/6/2026

              5,600

              5,547

              5,547

              Preferred Stock

              8/6/2021

              1,056

              1,056

              1,056

              6,603

              6,603

              Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

              Provider of Rigsite Accommodation Unit Rentals and Related Services

              Secured Debt

              (14) (17)

              6/30/2015

              12.00%

              1/8/2018

              30,369

              29,865

              -

              Preferred Member Units

              1/8/2013

              250

              2,500

              -

              32,365

              -

              94


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              SI East, LLC

              Rigid Industrial Packaging Manufacturing

              Secured Debt

              8/31/2018

              10.25%

              8/31/2023

              65,850

              65,738

              65,850

              Preferred Member Units

              (8)

              8/31/2018

              157

              1,218

              11,570

              66,956

              77,420

              Slick Innovations, LLC

              Text Message Marketing Platform

              Secured Debt

              9/13/2018

              13.00%

              9/13/2023

              5,320

              5,248

              5,320

              Common Stock

              9/13/2018

              70,000

              700

              1,510

              Warrants

              (27)

              9/13/2018

              18,084

              9/13/2028

              181

              400

              6,129

              7,230

              Sonic Systems International, LLC

              (10)

              Nuclear Power Staffing Services

              Secured Debt

              (9)

              8/20/2021

              8.50% (L+7.50%, Floor 1.00%)

              8/20/2026

              11,982

              11,757

              11,757

              Common Stock

              8/20/2021

              7,866

              1,070

              1,070

              12,827

              12,827

              Superior Rigging & Erecting Co.

              Provider of Steel Erecting, Crane Rental & Rigging Services

              Secured Debt

              8/31/2020

              12.00%

              8/31/2025

              21,500

              21,332

              21,332

              Preferred Member Units

              8/31/2020

              1,571

              4,500

              4,500

              25,832

              25,832

              The Affiliati Network, LLC

              Performance Marketing Solutions

              Secured Debt

              8/9/2021

              7.00%

              8/9/2026

              280

              262

              262

              Secured Debt

              8/9/2021

              11.83%

              8/9/2026

              12,961

              12,834

              12,834

              Preferred Stock

              (8)

              8/9/2021

              1,280,000

              6,400

              6,400

              19,496

              19,496

              UniTek Global Services, Inc.

              (11)

              Provider of Outsourced Infrastructure Services

              Secured Debt

              (9) (19)

              10/15/2018

              8.50% (6.50% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%)

              8/20/2024

              397

              396

              371

              Secured Debt

              (9) (19)

              8/27/2018

              8.50% (6.50% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%)

              8/20/2024

              1,986

              1,974

              1,852

              Secured Convertible Debt

              (19)

              1/1/2021

              15.00% PIK

              2/20/2025

              1,197

              1,197

              2,375

              Preferred Stock

              (8) (19)

              8/29/2019

              1,133,102

              20.00% PIK

              1,757

              2,833

              Preferred Stock

              (14) (19)

              8/21/2018

              1,521,122

              20.00% PIK

              2,188

              1,498

              Preferred Stock

              (14) (19)

              1/15/2015

              4,336,866

              13.50% PIK

              7,924

              -

              Preferred Stock

              (14) (19)

              6/30/2017

              2,281,682

              19.00% PIK

              3,667

              -

              Common Stock

              4/1/2020

              945,507

              -

              -

              19,103

              8,929

              Universal Wellhead Services Holdings, LLC

              (10)

              Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

              Preferred Member Units

              (14) (19) (30)

              12/7/2016

              716,949

              14.00% PIK

              1,032

              -

              Member Units

              (30)

              12/7/2016

              4,000,000

              4,000

              -

              5,032

              -

              Volusion, LLC

              Provider of Online Software-as-a-Service eCommerce Solutions

              Secured Debt

              (17)

              1/26/2015

              11.50%

              1/26/2020

              17,434

              17,434

              17,434

              Unsecured Convertible Debt

              5/16/2018

              8.00%

              11/16/2023

              409

              409

              409

              Preferred Member Units

              1/26/2015

              4,876,670

              14,000

              5,990

              Warrants

              (27)

              1/26/2015

              1,831,355

              1/26/2025

              2,576

              -

              34,419

              23,833

              Subtotal Affiliate Investments (30.7% of net assets at fair value)

              $

              578,539

              $

              549,214

              95


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Non-Control/Non-Affiliate Investments (7)

              Acousti Engineering Company of Florida

              (10)

              Interior Subcontractor Providing Acoustical Walls and Ceilings

              Secured Debt

              (9)

              11/2/2020

              10.00% (L+8.50%, Floor 1.50%)

              11/2/2025

              $

              12,111

              $

              12,005

              $

              12,111

              Secured Debt

              (9)

              5/26/2021

              14.00% (L+12.50%, Floor 1.50%)

              11/2/2025

              850

              841

              850

              12,846

              12,961

              ADS Tactical, Inc.

              (11)

              Value-Added Logistics and Supply Chain Provider to the Defense Industry

              Secured Debt

              (9)

              3/29/2021

              6.75% (L+5.75%, Floor 1.00%)

              3/19/2026

              22,136

              21,734

              22,012

              American Health Staffing Group, Inc.

              (10)

              Healthcare Temporary Staffing

              Secured Debt

              (9)

              11/19/2021

              7.00% (L+6.00%, Floor 1.00%)

              11/19/2026

              7,067

              6,988

              6,988

              American Nuts, LLC

              (10)

              Roaster, Mixer and Packager of Bulk Nuts and Seeds

              Secured Debt

              (9)

              12/21/2018

              9.00% (L+8.00%, Floor 1.00%)

              4/10/2025

              12,017

              11,854

              12,017

              American Teleconferencing Services, Ltd.

              (11)

              Provider of Audio Conferencing and Video Collaboration Solutions

              Secured Debt

              (9) (14) (17)

              9/17/2021

              7.50% (L+6.50%, Floor 1.00%)

              9/9/2021

              2,980

              2,980

              89

              Secured Debt

              (9) (14)

              5/19/2016

              7.50% (L+6.50%, Floor 1.00%)

              6/28/2023

              14,370

              13,706

              431

              16,686

              520

              ArborWorks, LLC

              (10)

              Vegetation Management Services

              Secured Debt

              (9)

              11/9/2021

              8.00% (L+7.00%, Floor 1.00%)

              11/9/2026

              32,605

              31,873

              31,873

              Common Equity

              11/9/2021

              234

              234

              234

              32,107

              32,107

              Arrow International, Inc

              (10)

              Manufacturer and Distributor of Charitable Gaming Supplies

              Secured Debt

              (9) (23)

              12/21/2020

              9.18% (L+7.93%, Floor 1.25%)

              12/21/2025

              22,500

              22,300

              22,500

              AVEX Aviation Holdings, LLC

              (10)

              Specialty Aircraft Dealer

              Secured Debt

              (9)

              12/15/2021

              7.50% (L+6.50%, Floor 1.00%)

              12/15/2026

              13,320

              13,005

              13,005

              Common Equity

              12/15/2021

              360

              360

              360

              13,365

              13,365

              Berry Aviation, Inc.

              (10)

              Charter Airline Services

              Secured Debt

              (19)

              7/6/2018

              12.00% (10.50% Cash, 1.50% PIK)

              1/6/2024

              4,694

              4,674

              4,694

              Preferred Member Units

              (8) (19) (30)

              11/12/2019

              122,416

              16.00% PIK

              168

              208

              Preferred Member Units

              (14) (19) (30)

              7/6/2018

              1,548,387

              8.00% PIK

              1,671

              2,487

              6,513

              7,389

              Binswanger Enterprises, LLC

              (10)

              Glass Repair and Installation Service Provider

              Secured Debt

              (9)

              3/10/2017

              9.50% (L+8.50%, Floor 1.00%)

              3/10/2023

              12,194

              12,107

              12,194

              Member Units

              3/10/2017

              1,050,000

              1,050

              730

              13,157

              12,924

              96


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Bluestem Brands, Inc.

              (11)

              Multi-Channel Retailer of General Merchandise

              Secured Debt

              (9)

              8/28/2020

              10.00% (L+8.50%, Floor 1.50%)

              8/28/2025

              5,357

              5,357

              5,337

              Common Stock

              (8)

              10/1/2020

              723,184

              1

              1,515

              5,358

              6,852

              Brainworks Software, LLC

              (10)

              Advertising Sales and Newspaper Circulation Software

              Secured Debt

              (9) (14) (17)

              8/12/2014

              12.50% (Prime+9.25%, Floor 3.25%)

              7/22/2019

              7,817

              7,817

              4,201

              Brightwood Capital Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (Brightwood Capital Fund III, LP)

              (8) (31)

              7/21/2014

              1.6%

              7,200

              4,269

              LP Interests (Brightwood Capital Fund IV, LP)

              (8) (31)

              10/26/2016

              0.6%

              4,350

              4,394

              11,550

              8,663

              Burning Glass Intermediate Holding Company, Inc.

              (10)

              Provider of Skills-Based Labor Market Analytics

              Secured Debt

              (9)

              6/14/2021

              6.00% (L+5.00%, Floor 1.00%)

              6/10/2026

              465

              429

              429

              Secured Debt

              (9)

              6/14/2021

              6.00% (L+5.00%, Floor 1.00%)

              6/10/2028

              20,134

              19,803

              19,985

              20,232

              20,414

              Cadence Aerospace LLC

              (10)

              Aerostructure Manufacturing

              Secured Debt

              (19) (35)

              11/14/2017

              9.28% Cash, 0.22% PIK

              11/14/2023

              28,540

              28,399

              26,767

              CAI Software LLC

              Provider of Specialized Enterprise Resource Planning Software

              Preferred Equity

              12/13/2021

              1,788,527

              1,789

              1,789

              Preferred Equity

              12/13/2021

              596,176

              -

              -

              1,789

              1,789

              Camin Cargo Control, Inc.

              (11)

              Provider of Mission Critical Inspection, Testing and Fuel Treatment Services

              Secured Debt

              (9)

              6/14/2021

              7.50% (L+6.50%, Floor 1.00%)

              6/4/2026

              15,920

              15,775

              15,840

              Cenveo Corporation

              (11)

              Provider of Digital Marketing Agency Services

              Common Stock

              9/7/2018

              322,907

              6,183

              2,852

              Chisholm Energy Holdings, LLC

              (10)

              Oil & Gas Exploration & Production

              Secured Debt

              (9)

              5/15/2019

              7.75% (L+6.25%, Floor 1.50%)

              5/15/2026

              2,857

              2,804

              2,663

              Clarius BIGS, LLC

              (10)

              Prints & Advertising Film Financing

              Secured Debt

              (14) (17) (19)

              9/23/2014

              15.00% PIK

              1/5/2015

              2,756

              2,756

              33

              Computer Data Source, LLC

              (10)

              Third Party Maintenance Provider to the Data Center Ecosystem

              Secured Debt

              (9)

              8/6/2021

              8.50% (L+7.50%, Floor 1.00%)

              8/6/2026

              21,681

              21,234

              21,234

              Construction Supply Investments, LLC

              (10)

              Distribution Platform of Specialty Construction

              97


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Materials to Professional Concrete and Masonry Contractors

              Member Units

              (8)

              12/29/2016

              861,618

              3,335

              14,640

              Darr Equipment LP

              (10)

              Heavy Equipment Dealer

              Secured Debt

              (19)

              12/26/2017

              12.50% (11.50% Cash, 1.00% PIK)

              6/22/2023

              4,685

              4,685

              4,227

              Warrants

              (29)

              4/15/2014

              915,734

              12/23/2023

              474

              160

              5,159

              4,387

              DTE Enterprises, LLC

              (10)

              Industrial Powertrain Repair and Services

              Secured Debt

              (9)

              4/13/2018

              9.50% (L+8.00%, Floor 1.50%)

              4/13/2023

              9,324

              9,259

              8,884

              Class AA Preferred Member Units (non-voting)

              (8) (19)

              4/13/2018

              10.00% PIK

              1,051

              1,051

              Class A Preferred Member Units

              (14) (19)

              4/13/2018

              776,316

              8.00% PIK

              776

              320

              11,086

              10,255

              Dynamic Communities, LLC

              (10)

              Developer of Business Events and Online Community Groups

              Secured Debt

              (9)

              7/17/2018

              9.50% (L+8.50%, Floor 1.00%)

              7/17/2023

              5,681

              5,638

              5,569

              Eastern Wholesale Fence LLC

              (10)

              Manufacturer and Distributor of Residential and Commercial Fencing Solutions

              Secured Debt

              (9)

              11/19/2020

              8.00%, (L+7.00%, Floor 1.00%)

              10/30/2025

              31,810

              31,238

              31,810

              EnCap Energy Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (EnCap Energy Capital Fund VIII, L.P.)

              (8) (31)

              1/22/2015

              0.1%

              3,745

              1,599

              LP Interests (EnCap Energy Capital Fund VIII Co-
              Investors, L.P.)

              (31)

              1/21/2015

              0.4%

              2,097

              777

              LP Interests (EnCap Energy Capital Fund IX, L.P.)

              (8) (31)

              1/22/2015

              0.1%

              4,047

              2,284

              LP Interests (EnCap Energy Capital Fund X, L.P.)

              (8) (31)

              3/25/2015

              0.1%

              8,443

              8,276

              LP Interests (EnCap Flatrock Midstream Fund II, L.P.)

              (31)

              3/30/2015

              0.8%

              6,582

              2,796

              LP Interests (EnCap Flatrock Midstream Fund III, L.P.)

              (8) (31)

              3/27/2015

              0.2%

              6,082

              5,064

              30,996

              20,796

              EPIC Y-Grade Services, LP

              (11)

              NGL Transportation & Storage

              Secured Debt

              (9)

              6/22/2018

              7.00% (L+6.00%, Floor 1.00%)

              6/30/2027

              6,892

              6,819

              5,862

              Event Holdco, LLC

              (10)

              Event and Learning Management Software for Healthcare

              98


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Organizations and Systems

              Secured Debt

              (9)(30)

              12/22/2021

              8.00% (L+7.00%, Floor 1.00%)

              12/22/2026

              51,692

              51,135

              51,135

              Flip Electronics LLC

              (10)

              Distributor of Hard-to-Find and Obsolete Electronic Components

              Secured Debt

              (9) (33)

              1/4/2021

              9.09% (L+8.09%, Floor 1.00%)

              1/2/2026

              5,400

              5,304

              5,287

              Fortna Acquisition Co., Inc.

              (10)

              Process, Physical Distribution and Logistics Consulting Services

              Secured Debt

              7/23/2019

              5.09% (L+5.00%)

              4/8/2025

              7,595

              7,525

              7,595

              Fuse, LLC

              (11)

              Cable Networks Operator

              Secured Debt

              6/30/2019

              12.00%

              6/28/2024

              1,810

              1,810

              1,672

              Common Stock

              6/30/2019

              10,429

              256

              -

              2,066

              1,672

              GeoStabilization International (GSI)

              (11)

              Geohazard Engineering Services & Maintenance

              Secured Debt

              1/2/2019

              5.35% (L+5.25%)

              12/19/2025

              20,710

              20,615

              20,606

              GoWireless Holdings, Inc.

              (11)

              Provider of Wireless Telecommunications Carrier Services

              Secured Debt

              (9)

              1/10/2018

              7.50% (L+6.50%, Floor 1.00%)

              12/22/2024

              18,534

              18,440

              18,576

              Grupo Hima San Pablo, Inc.

              (11)

              Tertiary Care Hospitals

              Secured Debt

              (9) (14) (17)

              3/7/2013

              9.25% (L+7.00%, Floor 1.50%)

              4/30/2019

              4,504

              4,504

              1,269

              Secured Debt

              (14) (17)

              3/7/2013

              13.75%

              10/15/2018

              2,055

              2,040

              49

              Secured Debt

              (17)

              3/7/2013

              12.00%

              12/24/2021

              147

              147

              147

              6,691

              1,465

              GS HVAM Intermediate, LLC

              (10)

              Specialized Food Distributor

              Secured Debt

              (9)

              10/18/2019

              6.75% (L+5.75%, Floor 1.00%)

              10/2/2024

              13,243

              13,167

              13,243

              GS Operating, LLC

              (10)

              Distributor of Industrial and Specialty Parts

              Secured Debt

              (9)

              2/24/2020

              8.00% (L+6.50%, Floor 1.50%)

              2/24/2025

              28,451

              28,068

              28,451

              HDC/HW Intermediate Holdings

              (10)

              Managed Services and Hosting Provider

              Secured Debt

              (9)

              12/21/2018

              8.50% (L+7.50%, Floor 1.00%)

              12/21/2023

              3,449

              3,419

              3,059

              Heartland Dental, LLC

              (10)

              Dental Support Organization

              Secured Debt

              (9)

              9/9/2020

              7.50% (L+6.50%, Floor 1.00%)

              4/30/2025

              14,813

              14,477

              14,887

              HOWLCO LLC

              (11) (13) (21)

              Provider of Accounting and Business Development Software to Real Estate End Markets

              Secured Debt

              (9)

              8/19/2021

              7.00% (L+6.00%, Floor 1.00%)

              10/23/2026

              25,546

              25,546

              25,546

              Hybrid Promotions, LLC

              (10)

              Wholesaler of Licensed, Branded and Private Label Apparel

              99


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Secured Debt

              (9)

              6/30/2021

              9.25% (L+8.25%, Floor 1.00%)

              6/30/2026

              7,088

              6,957

              7,028

              IG Parent Corporation

              (11)

              Software Engineering

              Secured Debt

              (9)

              7/30/2021

              6.75% (L+5.75%, Floor 1.00%)

              7/30/2026

              9,591

              9,419

              9,419

              Implus Footcare, LLC

              (10)

              Provider of Footwear and Related Accessories

              Secured Debt

              (9)

              6/1/2017

              8.75% (L+7.75%, Floor 1.00%)

              4/30/2024

              18,702

              18,471

              17,743

              Independent Pet Partners Intermediate Holdings, LLC

              (10)

              Omnichannel Retailer of Specialty Pet Products

              Secured Debt

              (36)

              8/20/2020

              7.20%

              12/22/2022

              6,563

              6,563

              6,563

              Secured Debt

              (19)

              12/10/2020

              6.00% PIK

              11/20/2023

              17,891

              16,861

              16,861

              Preferred Stock (non-voting)

              (19)

              12/10/2020

              6.00% PIK

              3,235

              4,329

              Preferred Stock (non-voting)

              12/10/2020

              -

              -

              Member Units

              11/20/2018

              1,558,333

              1,558

              -

              28,217

              27,753

              Industrial Services Acquisition, LLC

              (10)

              Industrial Cleaning Services

              Secured Debt

              (9)

              8/13/2021

              7.75% (L+6.75%, Floor 1.00%)

              8/13/2026

              19,897

              19,490

              19,490

              Preferred Member Units

              (8) (19) (30)

              1/31/2018

              144

              10.00% PIK

              120

              164

              Preferred Member Units

              (8) (19) (30)

              5/17/2019

              80

              20.00% PIK

              81

              99

              Member Units

              (30)

              6/17/2016

              900

              900

              730

              20,591

              20,483

              Infolinks Media Buyco, LLC

              (10)

              Exclusive Placement Provider to the Advertising Ecosystem

              Secured Debt

              (9)

              11/1/2021

              7.00% (L+6.00%, Floor 1.00%)

              11/1/2026

              8,680

              8,487

              8,487

              Interface Security Systems, L.L.C

              (10)

              Commercial Security & Alarm Services

              Secured Debt

              (9)

              12/9/2021

              11.75% (L+10.00%, Floor 1.75%)

              8/7/2023

              525

              525

              525

              Secured Debt

              (9) (14) (19)

              8/7/2019

              9.75% (8.75% Cash, 1.00% PIK) (1.00% PIK + L+7.00%, Floor 1.75%)

              8/7/2023

              7,313

              7,237

              5,233

              7,762

              5,758

              Intermedia Holdings, Inc.

              (11)

              Unified Communications as a Service

              Secured Debt

              (9)

              8/3/2018

              7.00% (L+6.00%, Floor 1.00%)

              7/19/2025

              20,627

              20,559

              20,527

              Invincible Boat Company, LLC.

              (10)

              Manufacturer of Sport Fishing Boats

              Secured Debt

              (9)

              8/28/2019

              8.00% (L+6.50%, Floor 1.50%)

              8/28/2025

              17,510

              17,354

              17,510

              INW Manufacturing, LLC

              (11)

              Manufacturer of Nutrition and Wellness Products

              Secured Debt

              (9)

              5/19/2021

              6.50% (L+5.75%, Floor 0.75%)

              3/25/2027

              7,406

              7,205

              7,258

              Isagenix International, LLC

              (11)

              Direct Marketer of Health & Wellness Products

              Secured Debt

              (9)

              6/21/2018

              6.75% (L+5.75%, Floor 1.00%)

              6/14/2025

              5,158

              5,135

              3,865

              Jackmont Hospitality, Inc.

              (10)

              Franchisee of Casual Dining Restaurants

              100


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Secured Debt

              (9)

              5/26/2015

              8.00% (L+7.00%, Floor 1.00%)

              11/4/2024

              2,100

              2,100

              2,100

              Preferred Equity

              11/8/2021

              2,826,667

              314

              314

              2,414

              2,414

              Joerns Healthcare, LLC

              (11)

              Manufacturer and Distributor of Health Care Equipment & Supplies

              Secured Debt

              (9)

              8/21/2019

              7.00% (L+6.00%, Floor 1.00%)

              8/21/2024

              4,034

              3,989

              3,658

              Secured Debt

              (19)

              11/15/2021

              15.00% PIK

              11/8/2022

              1,000

              1,004

              1,004

              Common Stock

              8/21/2019

              472,579

              4,429

              -

              9,422

              4,662

              JTI Electrical & Mechanical, LLC

              (10)

              Electrical, Mechanical and Automation Services

              Secured Debt

              (9)

              12/22/2021

              7.00% (L+6.00%, Floor 1.00%)

              12/22/2026

              37,895

              36,972

              36,972

              Common Equity

              12/22/2021

              1,684,211

              1,684

              1,684

              38,656

              38,656

              Klein Hersh, LLC

              (10)

              Executive and C-Suite Placement for the Life Sciences and Healthcare Industries

              Secured Debt

              (9)

              11/13/2020

              7.75% (L+7.00%, Floor 0.75%)

              11/13/2025

              43,321

              42,342

              43,278

              KMS, LLC

              (10)

              Wholesaler of Closeout and Value-priced Products

              Secured Debt

              (9)

              10/4/2021

              8.25% (L+7.25%, Floor 1.00%)

              10/4/2026

              7,581

              7,415

              7,415

              Kore Wireless Group Inc.

              (11) (13)

              Mission Critical Software Platform

              Secured Debt

              12/31/2018

              5.72% (L+5.50%)

              12/20/2024

              11,415

              11,345

              11,400

              Laredo Energy, LLC

              (10)

              Oil & Gas Exploration & Production

              Member Units

              5/4/2020

              1,155,952

              11,560

              9,659

              LaserAway Intermediate Holdings II, LLC

              (11)

              Aesthetic Dermatology Service Provider

              Secured Debt

              (9)

              10/18/2021

              6.50% (L+5.75%, Floor 0.75%)

              10/14/2027

              4,130

              4,050

              4,115

              Lightbox Holdings, L.P.

              (11)

              Provider of Commercial Real Estate Software

              Secured Debt

              5/23/2019

              5.22% (L+5.00%)

              5/9/2026

              14,625

              14,460

              14,442

              LKCM Headwater Investments I, L.P.

              (12) (13)

              Investment Partnership

              LP Interests

              (8) (31)

              1/25/2013

              2.3%

              1,746

              2,541

              LL Management, Inc.

              (10)

              Medical Transportation Service Provider

              Secured Debt

              (9)

              5/2/2019

              8.25% (L+7.25%, Floor 1.00%)

              9/25/2023

              17,438

              17,309

              17,438

              LLFlex, LLC

              (10)

              Provider of Metal-Based Laminates

              Secured Debt

              (9)

              8/16/2021

              10.00% (L+9.00%, Floor 1.00%)

              8/16/2026

              4,478

              4,382

              4,382

              Logix Acquisition Company, LLC

              (10)

              Competitive Local Exchange Carrier

              Secured Debt

              (9)

              1/8/2018

              6.75% (L+5.75%, Floor 1.00%)

              12/22/2024

              25,850

              24,605

              24,428

              Looking Glass Investments, LLC

              (12) (13)

              Specialty Consumer Finance

              101


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Member Units

              7/1/2015

              3

              125

              25

              Mac Lean-Fogg Company

              (10)

              Manufacturer and Supplier for Auto and Power Markets

              Secured Debt

              (9)

              4/22/2019

              5.88% (L+5.25%, Floor 0.625%)

              12/22/2025

              17,080

              16,995

              17,080

              Preferred Stock

              (19)

              10/1/2019

              13.75% (4.50% Cash, 9.25% PIK)

              1,920

              1,920

              18,915

              19,000

              Mako Steel, LP

              (10)

              Self-Storage Design & Construction

              Secured Debt

              (9)

              3/15/2021

              8.00% (L+7.25%, Floor 0.75%)

              3/13/2026

              17,589

              17,267

              17,589

              MB2 Dental Solutions, LLC

              (11)

              Dental Partnership Organization

              Secured Debt

              (9)

              1/28/2021

              7.00% (L+6.00%, Floor 1.00%)

              1/29/2027

              11,682

              11,531

              11,682

              Mills Fleet Farm Group, LLC

              (10)

              Omnichannel Retailer of Work, Farm and Lifestyle Merchandise

              Secured Debt

              (9)

              10/24/2018

              7.25% (L+6.25%, Floor 1.00%)

              10/24/2024

              17,781

              17,563

              17,781

              NBG Acquisition Inc

              (11)

              Wholesaler of Home Décor Products

              Secured Debt

              (9)

              4/28/2017

              6.50% (L+5.50%, Floor 1.00%)

              4/26/2024

              3,987

              3,961

              2,758

              NinjaTrader, LLC

              (10)

              Operator of Futures Trading Platform

              Secured Debt

              (9)

              12/18/2019

              7.25% (L+6.25%, Floor 1.00%)

              12/18/2024

              31,425

              30,837

              31,368

              NNE Partners, LLC

              (10)

              Oil & Gas Exploration & Production

              Secured Debt

              (19)

              3/2/2017

              9.37% (4.87% Cash, 4.50% PIK) (4.50% PIK + L+4.75%)

              12/31/2023

              24,781

              24,709

              23,154

              Northstar Group Services, Inc

              (11)

              Commercial & Industrial Services

              Secured Debt

              (9)

              11/1/2021

              6.50% (L+5.50%, Floor 1.00%)

              11/12/2026

              10,000

              9,952

              10,034

              NTM Acquisition Corp.

              (11)

              Provider of B2B Travel Information Content

              Secured Debt

              (9) (19)

              7/12/2016

              8.25% (7.25% Cash, 1.00% PIK) (1.00%PIK + L+6.25%, Floor 1.00%)

              6/7/2024

              4,598

              4,598

              4,552

              NWN Corporation

              (10)

              Value Added Reseller and Provider of Managed Services to a Diverse Set of Industries

              Secured Debt

              (9)

              5/7/2021

              7.50% (L+6.50%, Floor 1.00%)

              5/7/2026

              42,972

              42,108

              42,323

              Ospemifene Royalty Sub LLC

              (10)

              Estrogen-Deficiency Drug Manufacturer and Distributor

              Secured Debt

              (14)

              7/8/2013

              11.50%

              11/15/2026

              4,562

              4,562

              112

              OVG Business Services, LLC

              (10)

              Venue Management Services

              Secured Debt

              (9)

              11/29/2021

              7.25% (L+6.25%, Floor 1.00%)

              11/19/2028

              14,000

              13,861

              13,861

              102


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Project Eagle Holdings, LLC

              (10)

              Provider of Secure Business Collaboration Software

              Secured Debt

              (9)

              7/6/2020

              7.75% (L+6.75%, Floor 1.00%)

              7/6/2026

              29,738

              29,151

              29,714

              PT Network, LLC

              (10)

              Provider of Outpatient Physical Therapy and Sports Medicine Services

              Secured Debt

              (9) (19)

              10/12/2017

              8.50% (6.50% Cash, 2.00% PIK) (2.00% PIK + L+5.50%, Floor 1.00%)

              11/30/2023

              8,889

              8,889

              8,889

              Common Stock

              1/1/2020

              2

              -

              80

              8,889

              8,969

              RA Outdoors LLC

              (10)

              Software Solutions Provider for Outdoor Activity Management

              Secured Debt

              (9)

              4/8/2021

              7.75% (L+6.75%, Floor 1.00%)

              4/8/2026

              19,374

              19,193

              18,352

              Research Now Group, Inc. and Survey Sampling International, LLC

              (11)

              Provider of Outsourced Online Surveying

              Secured Debt

              (9)

              12/29/2017

              6.50% (L+5.50%, Floor 1.00%)

              12/20/2024

              20,124

              19,789

              19,899

              RM Bidder, LLC

              (10)

              Scripted and Unscripted TV and Digital Programming Provider

              Member Units

              11/12/2015

              2,779

              46

              26

              Warrants

              (26)

              11/12/2015

              187,161

              10/20/2025

              425

              -

              471

              26

              Roof Opco, LLC

              (10)

              Residential Re-Roofing/Repair

              Secured Debt

              (9)

              8/27/2021

              7.00% (L+6.00%, Floor 1.00%)

              8/27/2026

              2,800

              2,704

              2,704

              RTIC Subsidiary Holdings, LLC

              (10)

              Direct-To-Consumer eCommerce Provider of Outdoor Products

              Secured Debt

              (9)

              9/1/2020

              9.00% (L+7.75%, Floor 1.25%)

              9/1/2025

              18,191

              17,997

              18,191

              Rug Doctor, LLC.

              (10)

              Carpet Cleaning Products and Machinery

              Secured Debt

              (9)

              7/16/2021

              7.25% (L+6.25%, Floor 1.00%)

              11/16/2024

              11,145

              10,902

              10,902

              Salient Partners L.P.

              (11)

              Provider of Asset Management Services

              Secured Debt

              (9)

              8/31/2018

              7.00% (L+6.00%, Floor 1.00%)

              10/30/2022

              6,251

              6,247

              4,063

              Secured Debt

              (9)

              9/30/2021

              6.00% (L+5.00%, Floor 1.00%)

              10/30/2022

              1,250

              1,250

              2,435

              7,497

              6,498

              Savers, Inc.

              (11)

              For-Profit Thrift Retailer

              Secured Debt

              (9)

              5/14/2021

              6.25% (L+5.50%, Floor 0.75%)

              4/26/2028

              11,400

              11,295

              11,386

              SIB Holdings, LLC

              (10)

              Provider of Cost Reduction Services

              Secured Debt

              (9)

              10/29/2021

              7.00% (L+6.00%, Floor 1.00%)

              10/29/2026

              6,282

              6,134

              6,145

              Common Equity

              10/29/2021

              95,238

              200

              200

              6,334

              6,345

              South Coast Terminals Holdings, LLC

              (10)

              Specialty Toll Chemical Manufacturer

              103


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Secured Debt

              (9)

              12/10/2021

              7.25% (L+6.25%, Floor 1.00%)

              12/13/2026

              50,704

              49,589

              49,589

              Common Equity

              12/10/2021

              863,636

              864

              864

              50,453

              50,453

              Staples Canada ULC

              (10) (13) (21)

              Office Supplies Retailer

              Secured Debt

              (9) (22)

              9/14/2017

              8.00% (L+7.00%, Floor 1.00%)

              9/12/2024

              16,116

              16,039

              15,620

              Stellant Systems, Inc.

              (11)

              Manufacturer of Traveling Wave Tubes and Vacuum Electronic Devices

              Secured Debt

              (9)

              1/0/1900

              6.25% (L+5.50%, Floor 0.75%)

              10/1/2028

              7,700

              7,625

              7,700

              Student Resource Center, LLC

              (10)

              Higher Education Services

              Secured Debt

              (9)

              6/25/2021

              9.00% (L+8.00%, Floor 1.00%)

              6/25/2026

              10,969

              10,753

              10,826

              Tacala Investment Corp.

              (34)

              Quick Service Restaurant Group

              Secured Debt

              (9)

              3/19/2021

              4.25% (L+3.50%, Floor 0.75%)

              2/5/2027

              1,995

              1,995

              1,994

              Team Public Choices, LLC

              (11)

              Home-Based Care Employment Service Provider

              Secured Debt

              (9)

              12/22/2020

              6.00% (L+5.00%, Floor 1.00%)

              12/18/2027

              15,109

              14,778

              15,071

              Tectonic Financial, LLC

              Financial Services Organization

              Common Stock

              (8)

              5/15/2017

              200,000

              2,000

              4,650

              Tex Tech Tennis, LLC

              (10)

              Sporting Goods & Textiles

              Common Stock

              (30)

              7/7/2021

              1,000,000

              1,000

              1,000

              U.S. TelePacific Corp.

              (11)

              Provider of Communications and Managed Services

              Secured Debt

              (9)

              5/17/2017

              7.00% (L+6.00%, Floor 1.00%)

              5/2/2023

              17,088

              16,985

              12,917

              USA DeBusk LLC

              (10)

              Provider of Industrial Cleaning Services

              Secured Debt

              (9)

              10/22/2019

              6.75% (L+5.75%, Floor 1.00%)

              9/8/2026

              37,281

              36,510

              37,281

              Veregy Consolidated, Inc.

              (11)

              Energy Service Company

              Secured Debt

              (9)

              11/9/2020

              6.25% (L+5.25, Floor 1.00%)

              11/3/2025

              5,875

              5,111

              5,111

              Secured Debt

              (9)

              11/9/2020

              7.00% (L+6.00%, Floor 1.00%)

              11/3/2027

              14,888

              14,524

              14,925

              19,635

              20,036

              Vida Capital, Inc

              (11)

              Alternative Asset Manager

              Secured Debt

              10/10/2019

              6.10% (L+6.00%)

              10/1/2026

              17,089

              16,905

              15,850

              Vistar Media, Inc.

              (10)

              Operator of Digital Out-of-Home Advertising Platform

              Preferred Stock

              4/3/2019

              70,207

              767

              1,726

              VORTEQ Coil Finishers, LLC

              (10)

              Specialty Coating of Aluminum and Light-Gauge Steel

              Secured Debt

              (9)

              11/30/2021

              8.50% (L+7.50%, Floor 1.00%)

              11/30/2026

              25,962

              25,450

              25,450

              Common Equity

              11/30/2021

              1,038,462

              1,038

              1,038

              26,488

              26,488

              104


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Wahoo Fitness Acquisition L.L.C.

              (11)

              Fitness Training Equipment Provider

              Secured Debt

              (9)

              8/17/2021

              6.75% (L+5.75%, Floor 1.00%)

              8/12/2028

              15,000

              14,569

              14,916

              Wall Street Prep, Inc.

              (10)

              Financial Training Services

              Secured Debt

              (9)

              7/19/2021

              8.00% (L+7.00%, Floor 1.00%)

              7/19/2026

              4,373

              4,288

              4,285

              Common Stock

              7/19/2021

              400,000

              400

              400

              4,688

              4,685

              Watterson Brands, LLC

              (10)

              Facility Management Services

              Secured Debt

              (9)

              12/17/2021

              7.25% (L+6.25%, Floor 1.00%)

              12/17/2026

              25,876

              25,267

              25,267

              Winter Services LLC

              (10)

              Provider of Snow Removal and Ice Management Services

              Secured Debt

              (9)

              11/19/2021

              8.00% (L+7.00%, Floor 1.00%)

              11/19/2026

              10,278

              10,018

              10,061

              Xenon Arc, Inc.

              (10)

              Tech-enabled Distribution Services to Chemicals and Food Ingredients Primary Producers

              Secured Debt

              (9)

              12/17/2021

              6.75% (L+6.00%, Floor 0.75%)

              12/17/2026

              38,600

              37,423

              37,423

              YS Garments, LLC

              (11)

              Designer and Provider of Branded Activewear

              Secured Debt

              (9)

              8/22/2018

              6.50% (L+5.50%, Floor 1.00%)

              8/9/2024

              13,034

              12,967

              12,578

              Subtotal Non-Control/Non-Affiliate Investments (85.2% of net assets at fair value)

              $

              1,573,110

              $

              1,523,360

              Total Portfolio Investments,December 31, 2021 (199.2% of net assets at fair value)

              $

              3,259,246

              $

              3,561,831

              105


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              (1)

              All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds.

              (2)

              Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

              (3)

              See Note C and Schedule 12-14 for a summary of geographic location of portfolio companies.

              (4)

              Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

              (5)

              Control investments are defined by the 1940 Act, as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

              (6)

              Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments.

              (7)

              Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

              (8)

              Income producing through dividends or distributions.

              (9)

              Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company’s investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower’s option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at December 31, 2021. As noted in this schedule, 67% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.00%, with a weighted-average LIBOR floor of approximately 1.06%.

              (10)

              Private Loan portfolio investment. See Note C for a description of Private Loan portfolio investments.

              (11)

              Middle Market portfolio investment. See Note C for a description of Middle Market portfolio investments.

              (12)

              Other Portfolio investment. See Note C for a description of Other Portfolio investments.

              (13)

              Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

              (14)

              Non-accrual and non-income producing investment.

              (15)

              All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”

              (16)

              External Investment Manager. Investment is not encumbered as security for the Company's Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds.

              (17)

              Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

              (18)

              Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C for further discussion.

              (19)

              PIK interest income and cumulative dividend income represent income not paid currently in cash.

              (20)

              All portfolio company headquarters are based in the United States, unless otherwise noted.

              (21)

              Portfolio company headquarters are located outside of the United States.

              (22)

              In connection with the Company's debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $21.4 million Canadian Dollars and receive $16.9 million U.S. Dollars with a settlement date of September 14, 2022. The unrealized depreciation on the forward foreign currency contract was not significant as of December 31, 2021.

              (23)

              The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with

              106


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2021

              (dollars in thousands)

              respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.25% (Floor 1.25%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.

              (24)

              Investment date represents the date of initial investment in the security position.

              (25)

              Warrants are presented in equivalent shares with a strike price of $10.92 per share.

              (26)

              Warrants are presented in equivalent units with a strike price of $14.28 per unit.

              (27)

              Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.

              (28)

              Warrants are presented in equivalent shares with a strike price of $0.001 per share.

              (29)

              Warrants are presented in equivalent units with a strike price of $1.50 per unit.

              (30)

              Shares/Units represent ownership in an underlying Real Estate or HoldCo entity.

              (31)

              Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.

              (32)

              Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investment in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investment in this portfolio company is on non-accrual status.

              (33)

              The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.96% (Floor 1.00%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.

              (34)

              Short-term portfolio investments. See Note C for a description of short-term portfolio investments.

              (35)

              The security has an effective contractual interest rate of 2.00% PIK + L+6.50%, Floor 1.00%, but the issuer may, in its discretion, elect to pay the PIK interest in cash. The rate presented represents the effective current yield based on actual payments received during the period.

              (36)

              Delayed draw term loan facility permits the borrower to make an interest rate election on each new tranche of borrowings under the facility. The rate presented represents a weighted-average rate for borrowings under the facility. As of December 31, 2021, borrowings under the loan facility bear interest at L+6.00% or Prime+5.00%.

              107


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Control Investments (5)

              ASC Interests, LLC

              Recreational and Educational Shooting Facility

              Secured Debt

              8/1/2013

              13.00%

              7/31/2022

              $

              1,750

              $

              1,715

              $

              1,715

              Member Units

              8/1/2013

              1,500

              1,500

              1,120

              3,215

              2,835

              Analytical Systems Keco, LLC

              Manufacturer of Liquid and Gas Analyzers

              Secured Debt

              (9)

              8/16/2019

              12.00% (L+10.00%, Floor 2.00%)

              8/16/2024

              5,155

              4,874

              4,874

              Preferred Member Units

              8/16/2019

              3,200

              3,200

              3,200

              Warrants

              (27)

              8/16/2019

              420

              8/16/2029

              316

              10

              8,390

              8,084

              ATS Workholding, LLC

              (10)

              Manufacturer of Machine Cutting Tools and Accessories

              Secured Debt

              (14)

              11/16/2017

              5.00%

              11/16/2021

              4,982

              4,824

              3,347

              Preferred Member Units

              11/16/2017

              3,725,862

              3,726

              -

              8,550

              3,347

              Project BarFly, LLC

              (10)

              Casual Restaurant Group

              Secured Debt

              10/15/2020

              7.00%

              10/31/2024

              343

              343

              343

              Member Units

              10/26/2020

              37

              1,584

              1,584

              1,927

              1,927

              Bolder Panther Group, LLC

              Consumer Goods and Fuel Retailer

              Secured Debt

              (9)

              12/31/2020

              10.50% (L+9.00%, Floor 1.50%)

              12/31/2025

              27,500

              27,225

              27,225

              Class A Preferred Member Units

              (30)

              12/31/2020

              14.00%

              10,194

              10,194

              Class B Preferred Member Units

              (30)

              12/31/2020

              140,000

              8.00%

              14,000

              14,000

              51,419

              51,419

              Bond-Coat, Inc.

              Casing and Tubing Coating Services

              Common Stock

              12/28/2012

              57,508

              6,350

              2,040

              Brewer Crane Holdings, LLC

              Provider of Crane Rental and Operating Services

              Secured Debt

              (9)

              1/9/2018

              11.00% (L+10.00%, Floor 1.00%)

              1/9/2023

              8,556

              8,513

              8,513

              Preferred Member Units

              (8)

              1/9/2018

              2,950

              4,280

              5,850

              12,793

              14,363

              Bridge Capital Solutions Corporation

              Financial Services and Cash Flow Solutions Provider

              Secured Debt

              7/25/2016

              13.00%

              12/11/2024

              8,813

              8,403

              8,403

              Warrants

              (27)

              7/25/2016

              82

              7/25/2026

              2,132

              3,220

              Secured Debt

              (30)

              7/25/2016

              13.00%

              12/11/2024

              1,000

              998

              998

              Preferred Member Units

              (8) (30)

              7/25/2016

              17,742

              1,000

              1,000

              12,533

              13,621

              Café Brazil, LLC

              Casual Restaurant Group

              Member Units

              (8)

              6/9/2006

              1,233

              1,742

              2,030

              108


              MAIN STREET CAPITAL CORPORATION


              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              California Splendor Holdings LLC

              Processor of Frozen Fruits

              Secured Debt

              (9)

              3/30/2018

              9.00% (L+8.00%, Floor 1.00%)

              3/30/2023

              8,100

              8,014

              8,043

              Secured Debt

              (9)

              3/30/2018

              11.00% (L+10.00%, Floor 1.00%)

              3/30/2023

              28,000

              27,854

              27,789

              Preferred Member Units

              (8)

              7/31/2019

              6,725

              8,255

              8,255

              Preferred Member Units

              (8)

              3/30/2018

              6,157

              10,775

              6,241

              54,898

              50,328

              CBT Nuggets, LLC

              Produces and Sells IT Training Certification Videos

              Member Units

              (8)

              6/1/2006

              416

              1,300

              46,080

              Centre Technologies Holdings, LLC

              Provider of IT Hardware Services and Software Solutions

              Secured Debt

              (9)

              1/4/2019

              12.00% (L+10.00%, Floor 2.00%)

              1/4/2024

              11,628

              11,549

              11,549

              Preferred Member Units

              1/4/2019

              12,696

              5,840

              6,160

              17,389

              17,709

              Chamberlin Holding LLC

              Roofing and Waterproofing Specialty Contractor

              Secured Debt

              (9)

              2/26/2018

              9.00% (L+8.00%, Floor 1.00%)

              2/26/2023

              15,212

              15,136

              15,212

              Member Units

              (8)

              2/26/2018

              4,347

              11,440

              28,070

              Member Units

              (8) (30)

              11/2/2018

              1,047,146

              1,322

              1,270

              27,898

              44,552

              Charps, LLC

              Pipeline Maintenance and Construction

              Unsecured Debt

              (19)

              8/26/2020

              10.00% (8.67% Cash, 1.33% PIK)

              1/31/2024

              9,388

              7,641

              8,475

              Secured Debt

              6/5/2019

              15.00%

              6/5/2022

              669

              669

              669

              Preferred Member Units

              (8)

              2/3/2017

              1,600

              400

              10,520

              8,710

              19,664

              Clad-Rex Steel, LLC

              Specialty Manufacturer of Vinyl-Clad Metal

              Secured Debt

              (9)

              12/20/2016

              10.50% (L+9.50%, Floor 1.00%)

              12/20/2021

              10,880

              10,853

              10,853

              Member Units

              (8)

              12/20/2016

              717

              7,280

              8,610

              Secured Debt

              (30)

              12/20/2016

              10.00%

              12/20/2036

              1,111

              1,100

              1,100

              Member Units

              (30)

              12/20/2016

              800

              210

              530

              19,443

              21,093

              CMS Minerals Investments

              Oil & Gas Exploration & Production

              Member Units

              (30)

              4/1/2016

              100

              2,179

              1,624

              Cody Pools, Inc.

              Designer of Residential and Commercial Pools

              Secured Debt

              (9)

              3/6/2020

              12.25% (L+10.50%, Floor 1.75%)

              3/6/2025

              14,216

              14,092

              14,216

              Preferred Member Units

              3/6/2020

              587

              8,317

              14,940

              22,409

              29,156

              CompareNetworks Topco, LLC

              Internet Publishing and Web Search Portals

              Secured Debt

              (9)

              1/29/2019

              12.00% (L+11.00%, Floor 1.00%)

              1/29/2024

              7,954

              7,910

              7,953

              109


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Preferred Member Units

              (8)

              1/29/2019

              1,975

              1,975

              6,780

              9,885

              14,733

              Copper Trail Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (CTMH, LP)

              (31)

              7/17/2017

              38.8%

              747

              747

              Datacom, LLC

              Technology and Telecommunications Provider

              Secured Debt

              (14)

              5/30/2014

              8.00%

              5/31/2021

              1,800

              1,800

              1,615

              Secured Debt

              (14) (19)

              5/30/2014

              10.50% PIK

              5/31/2021

              12,507

              12,475

              10,531

              Class A Preferred Member Units

              5/30/2014

              -

              1,294

              -

              Class B Preferred Member Units

              5/30/2014

              6,453

              6,030

              -

              21,599

              12,146

              Digital Products Holdings LLC

              Designer and Distributor of Consumer Electronics

              Secured Debt

              (9)

              4/1/2018

              11.00% (L+10.00%, Floor 1.00%)

              4/1/2023

              18,173

              18,077

              18,077

              Preferred Member Units

              (8)

              4/1/2018

              3,857

              9,501

              9,835

              27,578

              27,912

              Direct Marketing Solutions, Inc.

              Provider of Omni-Channel Direct Marketing Services

              Secured Debt

              (9)

              2/13/2018

              12.00% (L+11.00%, Floor 1.00%)

              2/13/2023

              15,090

              15,007

              15,007

              Preferred Stock

              2/13/2018

              8,400

              8,400

              19,380

              23,407

              34,387

              Gamber-Johnson Holdings, LLC ("GJH")

              Manufacturer of Ruggedized Computer Mounting Systems

              Secured Debt

              (9)

              6/24/2016

              9.00% (L+7.00%, Floor 2.00%)

              6/24/2021

              19,838

              19,807

              19,838

              Member Units

              (8)

              6/24/2016

              8,619

              14,844

              52,490

              34,651

              72,328

              Garreco, LLC

              Manufacturer and Supplier of Dental Products

              Secured Debt

              (9)

              7/15/2013

              9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%)

              1/31/2021

              4,519

              4,519

              4,519

              Member Units

              7/15/2013

              1,200

              1,200

              1,410

              5,719

              5,929

              GRT Rubber Technologies LLC ("GRT")

              Manufacturer of Engineered Rubber Products

              Secured Debt

              12/19/2014

              7.15% (L+7.00%)

              12/31/2023

              16,775

              16,775

              16,775

              Member Units

              (8)

              12/19/2014

              5,879

              13,065

              44,900

              29,840

              61,675

              Gulf Manufacturing, LLC

              Manufacturer of Specialty Fabricated Industrial Piping Products

              Member Units

              (8)

              8/31/2007

              438

              2,980

              4,510

              Gulf Publishing Holdings, LLC

              Energy Industry Focused Media and Publishing

              Secured Debt

              (9) (17) (19)

              9/29/2017

              10.50% (5.25% Cash, 5.25% PIK)

              9/30/2020

              250

              250

              250

              110


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              (L+9.50%, Floor 1.00%)

              Secured Debt

              (19)

              4/29/2016

              12.50% (6.25% Cash, 6.25% PIK)

              4/29/2021

              13,147

              13,135

              12,044

              Member Units

              4/29/2016

              3,681

              3,681

              -

              17,066

              12,294

              Harris Preston Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (2717 MH, L.P.)

              (31)

              10/1/2017

              49.3%

              2,599

              2,702

              LP Interests (2717 HPP-MS, L.P.)

              (31)

              12/28/2020

              49.3%

              250

              250

              2,849

              2,952

              Harrison Hydra-Gen, Ltd.

              Manufacturer of Hydraulic Generators

              Common Stock

              (8)

              6/4/2010

              107,456

              718

              5,450

              Jensen Jewelers of Idaho, LLC

              Retail Jewelry Store

              Secured Debt

              (9)

              11/14/2006

              10.00% (Prime+6.75%, Floor 2.00%)

              11/14/2023

              3,400

              3,374

              3,400

              Member Units

              (8)

              11/14/2006

              627

              811

              7,620

              4,185

              11,020

              J&J Services, Inc.

              Provider of Dumpster and Portable Toilet Rental Services

              Secured Debt

              10/31/2019

              11.50%

              10/31/2024

              12,800

              12,697

              12,800

              Preferred Stock

              10/31/2019

              2,814

              7,085

              12,680

              19,782

              25,480

              KBK Industries, LLC

              Manufacturer of Specialty Oilfield and Industrial Products

              Member Units

              (8)

              1/23/2006

              325

              783

              13,200

              Kickhaefer Manufacturing Company, LLC

              Precision Metal Parts Manufacturing

              Secured Debt

              10/31/2018

              11.50%

              10/31/2023

              22,415

              22,269

              22,269

              Member Units

              10/31/2018

              581

              12,240

              12,240

              Secured Debt

              10/31/2018

              9.00%

              10/31/2048

              3,948

              3,909

              3,909

              Member Units

              (8) (30)

              10/31/2018

              800

              992

              1,160

              39,410

              39,578

              Market Force Information, LLC

              Provider of Customer Experience Management Services

              Secured Debt

              (9)

              7/28/2017

              12.00% (L+11.00%, Floor 1.00%)

              7/28/2023

              1,600

              1,600

              1,600

              Secured Debt

              (14) (19)

              7/28/2017

              12.00% PIK

              7/28/2023

              26,079

              25,952

              13,562

              Member Units

              7/28/2017

              743,921

              16,642

              -

              44,194

              15,162

              MH Corbin Holding LLC

              Manufacturer and Distributor of Traffic Safety Products

              Secured Debt

              (19)

              8/31/2015

              13.00% (10.00% Cash, 3.00% PIK)

              3/31/2022

              8,570

              8,527

              8,280

              Preferred Member Units

              3/15/2019

              66,000

              4,400

              2,370

              Preferred Member Units

              9/1/2015

              4,000

              6,000

              -

              18,927

              10,650

              MSC Adviser I, LLC

              (16)

              Third Party Investment
              Advisory Services

              Member Units

              (8) (31)

              11/22/2013

              29,500

              116,760

              Mystic Logistics Holdings, LLC

              Logistics and Distribution Services

              111


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Provider for Large Volume Mailers

              Secured Debt

              8/18/2014

              12.00%

              1/17/2022

              6,733

              6,723

              6,723

              Common Stock

              (8)

              8/18/2014

              5,873

              2,720

              8,990

              9,443

              15,713

              NAPCO Precast, LLC

              Precast Concrete Manufacturing

              Member Units

              (8)

              1/31/2008

              2,955

              2,975

              16,100

              Nebraska Vet AcquireCo, LLC (NVS)

              Mixed-Animal Veterinary and Animal Health Product Provider

              Secured Debt

              12/31/2020

              12.00%

              12/31/2025

              10,500

              10,395

              10,395

              Preferred Member Units

              12/31/2020

              6,500

              6,500

              6,500

              16,895

              16,895

              NexRev LLC

              Provider of Energy Efficiency Products & Services

              Secured Debt

              2/28/2018

              11.00%

              2/28/2023

              17,097

              17,016

              16,726

              Preferred Member Units

              (8)

              2/28/2018

              86,400,000

              6,880

              1,470

              23,896

              18,196

              NRI Clinical Research, LLC

              Clinical Research Service Provider

              Secured Debt

              9/8/2011

              9.00%

              6/8/2022

              5,620

              5,572

              5,620

              Warrants

              (27)

              9/8/2011

              251,723

              6/8/2027

              252

              1,490

              Member Units

              (8)

              9/8/2011

              1,454,167

              765

              5,600

              6,589

              12,710

              NRP Jones, LLC

              Manufacturer of Hoses, Fittings and Assemblies

              Secured Debt

              12/21/2017

              12.00%

              3/20/2023

              2,080

              2,080

              2,080

              Member Units

              (8)

              12/22/2011

              65,962

              3,717

              2,821

              5,797

              4,901

              NuStep, LLC

              Designer, Manufacturer and Distributor of Fitness Equipment

              Secured Debt

              1/31/2017

              12.00%

              1/31/2022

              17,240

              17,193

              17,193

              Preferred Member Units

              1/31/2017

              406

              10,200

              10,780

              27,393

              27,973

              OMi Holdings, Inc.

              Manufacturer of Overhead Cranes

              Common Stock

              (8)

              4/1/2008

              1,500

              1,080

              20,380

              Pearl Meyer Topco LLC

              Provider of Executive Compensation Consulting Services

              Secured Debt

              4/27/2020

              12.00%

              4/27/2025

              37,513

              37,202

              37,202

              Member Units

              (8)

              4/27/2020

              13,800

              13,000

              15,940

              50,202

              53,142

              Televerde, LLC (Pegasus Research Group, LLC)

              Provider of Telemarketing and Data Services

              Member Units

              (8)

              1/6/2011

              460

              1,290

              8,830

              PPL RVs, Inc.

              Recreational Vehicle Dealer

              Secured Debt

              (9)

              11/15/2016

              7.50% (L+7.00%, Floor 0.50%)

              11/15/2022

              11,855

              11,781

              11,806

              Common Stock

              (8)

              6/10/2010

              2,000

              2,150

              11,500

              13,931

              23,306

              112


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Principle Environmental, LLC (d/b/a TruHorizon Environmental Solutions)

              Noise Abatement Service Provider

              Secured Debt

              2/1/2011

              13.00%

              4/30/2023

              6,397

              6,335

              6,397

              Preferred Member Units

              (8)

              2/1/2011

              19,631

              4,600

              10,500

              Warrants

              (27)

              2/1/2011

              1,018

              1/31/2021

              1,200

              870

              12,135

              17,767

              Quality Lease Service, LLC

              Provider of Rigsite Accommodation Unit Rentals and Related Services

              Member Units

              6/8/2015

              1,000

              11,063

              4,460

              River Aggregates, LLC

              Processor of Construction Aggregates

              Member Units

              (30)

              3/30/2011

              1,500

              369

              3,240

              Tedder Industries, LLC

              Manufacturer of Firearm Holsters and Accessories

              Secured Debt

              8/31/2018

              12.00%

              8/31/2023

              16,400

              16,301

              16,301

              Preferred Member Units

              8/31/2018

              479

              8,136

              8,136

              24,437

              24,437

              Trantech Radiator Topco, LLC

              Transformer Cooling Products and Services

              Secured Debt

              5/31/2019

              12.00%

              5/31/2024

              8,720

              8,644

              8,644

              Common Stock

              (8)

              5/31/2019

              615

              4,655

              6,030

              13,299

              14,674

              UnionRock Energy Fund II, LP

              (12) (13)

              Oil & Gas Exploration & Production

              LP Interests

              (31)

              6/15/2020

              49.6%

              2,894

              2,894

              Vision Interests, Inc.

              Manufacturer / Installer of Commercial Signage

              Secured Debt

              (17)

              6/5/2007

              13.00%

              9/30/2019

              2,028

              2,028

              2,028

              Series A Preferred Stock

              12/23/2011

              3,000,000

              3,000

              3,160

              5,028

              5,188

              Ziegler's NYPD, LLC

              Casual Restaurant Group

              Secured Debt

              6/1/2015

              12.00%

              10/1/2022

              625

              625

              625

              Secured Debt

              10/1/2008

              6.50%

              10/1/2022

              1,000

              1,000

              979

              Secured Debt

              10/1/2008

              14.00%

              10/1/2022

              2,750

              2,750

              2,750

              Preferred Member Units

              7/1/2015

              10,072

              2,834

              1,780

              Warrants

              (27)

              6/30/2015

              587

              10/1/2025

              600

              -

              7,809

              6,134

              Subtotal Control Investments (73.5% of net assets at fair value)

              $

              831,490

              $

              1,113,725

              113


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Affiliate Investments (6)

              AAC Holdings, Inc.

              (11)

              Substance Abuse Treatment Service Provider

              Secured Debt

              (19)

              12/11/2020

              18.00% (10.00% Cash, 8.00% PIK)

              6/25/2025

              9,406

              9,187

              9,187

              Common Stock

              12/11/2020

              593,928

              3,148

              3,148

              Warrants

              (27)

              12/11/2020

              554,353

              12/11/2025

              -

              2,938

              12,335

              15,273

              AFG Capital Group, LLC

              Provider of Rent-to-Own Financing Solutions and Services

              Secured Debt

              4/25/2019

              10.00%

              5/25/2022

              491

              491

              491

              Preferred Member Units

              11/7/2014

              186

              1,200

              5,810

              1,691

              6,301

              American Trailer Rental Group LLC

              Provider of Short-term Trailer and Container Rental

              Member Units

              (30)

              6/7/2017

              73,493

              8,596

              16,010

              BBB Tank Services, LLC

              Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

              Unsecured Debt

              (9)

              4/8/2016

              12.00% (L+11.00%, Floor 1.00%)

              4/8/2021

              4,800

              4,773

              4,722

              Preferred Stock (non-voting)

              (8) (19)

              12/17/2018

              15.00% PIK

              151

              151

              Member Units

              4/8/2016

              800,000

              800

              280

              5,724

              5,153

              Boccella Precast Products LLC

              Manufacturer of Precast Hollow Core Concrete

              Member Units

              (8)

              6/30/2017

              2,160,000

              2,256

              6,040

              Buca C, LLC

              Casual Restaurant Group

              Secured Debt

              (9) (17)

              6/30/2015

              10.25% (L+9.25%, Floor 1.00%)

              6/30/2020

              19,004

              19,004

              14,256

              Preferred Member Units

              (8) (19)

              6/30/2015

              6

              6.00% PIK

              4,770

              -

              23,774

              14,256

              CAI Software LLC

              Provider of Specialized Enterprise Resource Planning Software

              Secured Debt

              10/10/2014

              12.50%

              12/7/2023

              47,474

              47,133

              47,474

              Member Units

              (8)

              10/10/2014

              77,960

              2,095

              7,190

              49,228

              54,664

              Chandler Signs Holdings, LLC

              (10)

              Sign Manufacturer

              Class A Units

              1/4/2016

              1,500,000

              1,500

              1,460

              Charlotte Russe, Inc

              (11)

              Fast-Fashion Retailer to Young Women

              Common Stock

              2/2/2018

              19,041

              3,141

              -

              Classic H&G Holdings, LLC

              Provider of Engineered Packaging Solutions

              Secured Debt

              3/12/2020

              12.00%

              3/12/2025

              24,800

              24,583

              24,800

              Preferred Member Units

              (8)

              3/12/2020

              154

              5,760

              9,510

              30,343

              34,310

              114


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Congruent Credit Opportunities Funds

              (12) (13)

              Investment Partnership

              LP Interests (Congruent Credit Opportunities Fund
              II, LP)

              (31)

              1/24/2012

              19.8%

              4,449

              94

              LP Interests (Congruent Credit Opportunities Fund
              III, LP)

              (8) (31)

              2/4/2015

              17.4%

              11,741

              11,540

              16,190

              11,634

              Copper Trail Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (Copper Trail Energy Fund I, LP)

              (8) (31)

              7/17/2017

              12.4%

              2,161

              1,782

              Dos Rios Partners

              (12) (13)

              Investment Partnership

              LP Interests (Dos Rios Partners, LP)

              (31)

              4/25/2013

              20.2%

              6,605

              5,417

              LP Interests (Dos Rios Partners - A, LP)

              (31)

              4/25/2013

              6.4%

              2,097

              1,720

              8,702

              7,137

              East Teak Fine Hardwoods, Inc.

              Distributor of Hardwood Products

              Common Stock

              4/13/2006

              6,250

              480

              300

              EIG Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (EIG Global Private Debt Fund-A, L.P.)

              (8) (31)

              11/6/2015

              11.1%

              739

              526

              Freeport Financial Funds

              (12) (13)

              Investment Partnership

              LP Interests (Freeport Financial SBIC Fund LP)

              (31)

              3/23/2015

              9.3%

              5,974

              5,264

              LP Interests (Freeport First Lien Loan Fund III LP)

              (8) (31)

              7/31/2015

              6.0%

              10,785

              10,321

              16,759

              15,585

              Harris Preston Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (HPEP 3, L.P.)

              (31)

              8/9/2017

              8.2%

              3,071

              3,258

              Hawk Ridge Systems, LLC

              (13)

              Value-Added Reseller of Engineering Design and Manufacturing Solutions

              Secured Debt

              12/2/2016

              11.00%

              12/2/2023

              18,400

              18,366

              18,400

              Preferred Member Units

              (8)

              12/2/2016

              226

              2,850

              8,030

              Preferred Member Units

              (30)

              12/2/2016

              226

              150

              420

              21,366

              26,850

              Houston Plating and Coatings, LLC

              Provider of Plating and Industrial Coating Services

              Unsecured Convertible Debt

              5/1/2017

              8.00%

              5/1/2022

              3,000

              3,000

              2,900

              Member Units

              (8)

              1/8/2003

              322,297

              2,352

              5,080

              115


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              5,352

              7,980

              I-45 SLF LLC

              (12) (13)

              Investment Partnership

              Member Units (Fully diluted 20.0%; 24.40% profits
              interest) (8)

              (8) (31)

              10/20/2015

              20.00% Fully Diluted, 24.40% Profits Interest

              20,200

              15,789

              L.F. Manufacturing Holdings, LLC

              (10)

              Manufacturer of Fiberglass Products

              Preferred Member Units (non-voting)

              (8) (19)

              1/1/2019

              14.00% PIK

              93

              93

              Member Units

              12/23/2013

              2,179,001

              2,019

              2,050

              2,112

              2,143

              OnAsset Intelligence, Inc.

              Provider of Transportation Monitoring / Tracking Products and Services

              Secured Debt

              (19)

              5/20/2014

              12.00% PIK

              6/30/2021

              830

              830

              830

              Secured Debt

              (19)

              3/21/2014

              12.00% PIK

              6/30/2021

              846

              846

              846

              Secured Debt

              (19)

              5/10/2013

              12.00% PIK

              6/30/2021

              1,823

              1,823

              1,823

              Secured Debt

              (19)

              4/18/2011

              12.00% PIK

              6/30/2021

              3,802

              3,802

              3,802

              Preferred Stock

              4/18/2011

              912

              1,981

              -

              Warrants

              (27)

              4/18/2011

              5,333

              4/18/2021

              1,919

              -

              Unsecured Debt

              (19)

              6/5/2017

              10.00% PIK

              6/30/2021

              64

              64

              64

              11,265

              7,365

              PCI Holding Company, Inc.

              Manufacturer of Industrial Gas Generating Systems

              Preferred Stock

              4/25/2017

              1,500,000

              3,927

              4,130

              Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

              Provider of Rigsite Accommodation Unit Rentals and Related Services

              Secured Debt

              (14) (32)

              6/30/2015

              12.00%

              1/8/2018

              30,369

              29,865

              -

              Preferred Member Units

              1/8/2013

              250

              2,500

              -

              32,365

              -

              Salado Stone Holdings, LLC

              (10)

              Limestone and Sandstone Dimension Cut Stone Mining Quarries

              Class A Preferred Units

              (30)

              6/27/2016

              2,000,000

              2,000

              1,250

              Slick Innovations, LLC

              Text Message Marketing Platform

              9/13/2018

              Secured Debt

              13.00%

              9/13/2023

              5,720

              5,605

              5,719

              Common Stock

              70,000

              700

              1,330

              Warrants

              (27)

              18,084

              9/13/2028

              181

              360

              6,486

              7,409

              SI East, LLC

              Rigid Industrial Packaging Manufacturing

              Secured Debt

              9/13/2018

              9.50%

              8/31/2023

              32,963

              32,760

              32,962

              Preferred Member Units

              (8)

              9/13/2018

              157

              6,000

              9,780

              38,760

              42,742

              Superior Rigging & Erecting Co.

              Provider of Steel Erection, Crane Rental & Rigging Services

              Secured Debt

              8/31/2020

              12.00%

              8/31/2025

              21,500

              21,298

              21,298

              Preferred Member Units

              8/31/2020

              1,473

              4,500

              4,500

              25,798

              25,798

              116


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              UniTek Global Services, Inc.

              (11)

              Provider of Outsourced Infrastructure Services

              Secured Debt

              (9)

              10/15/2018

              7.50% (L+6.50% Floor 1.00%)

              8/20/2024

              452

              450

              404

              Secured Debt

              (9)

              8/27/2018

              7.50% (L+6.50% Floor 1.00%)

              8/20/2024

              2,256

              2,237

              2,022

              Preferred Stock

              (8) (19)

              8/29/2019

              1,133,102

              20.00% PIK

              1,441

              2,832

              Preferred Stock

              (8) (19)

              8/21/2018

              1,521,122

              20.00% PIK

              2,188

              375

              Preferred Stock

              (19)

              1/15/2015

              2,281,682

              19.00% PIK

              3,667

              -

              Preferred Stock

              (19)

              6/30/2017

              4,336,866

              13.50% PIK

              7,924

              -

              Common Stock

              4/1/2020

              945,507

              -

              -

              17,907

              5,633

              Universal Wellhead Services Holdings, LLC

              (10)

              Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

              Preferred Member Units

              (19) (30)

              12/7/2016

              716,949

              14.00% PIK

              1,032

              -

              Member Units

              (30)

              12/7/2016

              4,000,000

              4,000

              -

              5,032

              -

              Volusion, LLC

              Provider of Online Software-as-a-Service eCommerce Solutions

              Secured Debt

              (17)

              1/26/2015

              11.50%

              1/26/2020

              20,234

              20,234

              19,242

              Unsecured Convertible Debt

              5/16/2018

              8.00%

              11/16/2023

              409

              409

              291

              Preferred Member Units

              1/26/2015

              4,876,670

              14,000

              5,990

              Warrants

              (27)

              1/26/2015

              1,831,355

              1/26/2025

              2,576

              -

              37,219

              25,523

              Subtotal Affiliate Investments (24.2% of net assets at fair value)

              $

              416,479

              $

              366,301

              117


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Non-Control/Non-Affiliate Investments (7)

              Acousti Engineering Company of Florida, Inc.

              (10)

              Interior Subcontractor Providing Acoustical Walls and Ceilings

              Secured Debt

              (9)

              11/2/2020

              10.00% (L+8.50%, Floor 1.50%)

              10/31/2025

              13,000

              12,858

              12,858

              Adams Publishing Group, LLC

              (10)

              Local Newspaper Operator

              Secured Debt

              (9)

              11/19/2015

              8.75% (L+7.00%, Floor 1.75%)

              7/3/2023

              5,863

              5,745

              5,813

              Secured Debt

              (9)

              11/19/2015

              8.75% (L+7.00%, Floor 1.75%)

              7/3/2023

              5,745

              5,813

              ADS Tactical, Inc.

              (10)

              Value-Added Logistics and Supply Chain Provider to the Defense Industry

              Secured Debt

              (9)

              3/7/2017

              7.00% (L+6.25%, Floor 0.75%)

              7/26/2023

              19,633

              19,529

              19,633

              Aethon United BR LP

              (10)

              Oil & Gas Exploration & Production

              Secured Debt

              (9)

              9/8/2017

              7.75% (L+6.75%, Floor 1.00%)

              9/8/2023

              9,750

              9,659

              9,544

              Affordable Care Holding Corp.

              (10)

              Dental Support Organization

              Secured Debt

              (9)

              5/9/2019

              5.75% (L+4.75%, Floor 1.00%)

              10/22/2022

              14,246

              14,066

              14,044

              ALKU, LLC.

              (11)

              Specialty National Staffing Operator

              Secured Debt

              10/18/2019

              5.75% (L+5.50%)

              7/29/2026

              9,466

              9,385

              9,478

              American Nuts, LLC

              (10)

              Roaster, Mixer and Packager of Bulk Nuts and Seeds

              Secured Debt

              (9)

              12/21/2018

              9.00% (L+8.00%, Floor 1.00%)

              4/10/2023

              1,161

              1,155

              1,157

              Secured Debt

              (9)

              4/10/2018

              9.00% (L+8.00%, Floor 1.00%)

              4/10/2023

              10,969

              10,799

              10,954

              11,954

              12,111

              American Teleconferencing Services, Ltd.

              (11)

              Provider of Audio Conferencing and Video Collaboration Solutions

              Secured Debt

              (9)

              5/19/2016

              7.50% (L+6.50%, Floor 1.00%)

              6/8/2023

              17,358

              16,634

              8,071

              APTIM Corp.

              (11)

              Engineering, Construction & Procurement

              Secured Debt

              8/17/2018

              7.75%

              6/15/2025

              12,452

              11,063

              9,734

              Arcus Hunting LLC

              (10)

              Manufacturer of Bowhunting and Archery Products and Accessories

              Secured Debt

              (9)

              1/6/2015

              11.00% (L+10.00%, Floor 1.00%)

              3/31/2021

              11,009

              11,009

              11,009

              Arrow International, Inc

              (10)

              Manufacturer and Distributor of Charitable Gaming Supplies

              Secured Debt

              (9) (23)

              12/21/2020

              9.23% (L+7.98%, Floor 1.25%)

              12/21/2025

              10,000

              9,901

              9,901

              118


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              ASC Ortho Management Company, LLC

              (10)

              Provider of Orthopedic Services

              Secured Debt

              (9)

              8/31/2018

              8.50% (L+7.50%, Floor 1.00%)

              8/31/2023

              5,206

              5,148

              5,149

              Secured Debt

              (19)

              8/31/2018

              13.25% PIK

              12/1/2023

              2,116

              2,091

              2,116

              7,239

              7,265

              ATX Networks Corp.

              (11) (13) (21)

              Provider of Radio Frequency Management Equipment

              Secured Debt

              (9) (19)

              6/30/2015

              8.75% (7.25% Cash, 1.50% PIK) (1.50% PIK + L+6.25%, Floor 1.00%)

              12/31/2023

              13,402

              13,342

              12,263

              Berry Aviation, Inc.

              (10)

              Charter Airline Services

              Secured Debt

              (19)

              7/6/2018

              12.00% (10.50% Cash, 1.5% PIK)

              1/6/2024

              4,624

              4,595

              4,624

              Preferred Member Units

              (8) (19) (30)

              7/6/2018

              122,416

              16.00% PIK

              145

              145

              Preferred Member Units

              (19) (30)

              7/6/2018

              1,548,387

              8.00% PIK

              1,671

              904

              6,411

              5,673

              BigName Commerce, LLC

              (10)

              Provider of Envelopes and Complimentary Stationery Products

              Secured Debt

              (9)

              5/11/2017

              8.25% (L+7.25%, Floor 1.00%)

              5/11/2022

              2,044

              2,037

              2,011

              Binswanger Enterprises, LLC

              (10)

              Glass Repair and Installation Service Provider

              Secured Debt

              (9)

              3/10/2017

              9.50% (L+8.50%, Floor 1.00%)

              3/9/2022

              12,958

              12,798

              12,958

              Member Units

              3/10/2017

              1,050,000

              1,050

              670

              13,848

              13,628

              BLST Operating Company, LLC.

              (11)

              Multi-Channel Retailer of General Merchandise

              Secured Debt

              (9)

              8/28/2020

              10.00% (L+8.50%, Floor 1.50%)

              8/28/2025

              5,879

              5,879

              5,879

              Common Stock

              10/1/2020

              653

              -

              -

              Warrants

              (27)

              10/1/2020

              70

              8/28/2030

              -

              -

              5,879

              5,879

              Brainworks Software, LLC

              (10)

              Advertising Sales and Newspaper Circulation Software

              Secured Debt

              (9) (14) (17)

              8/12/2014

              12.50% (Prime+9.25%, Floor 3.25%)

              7/22/2019

              7,817

              7,817

              5,332

              Brightwood Capital Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (Brightwood Capital Fund III, LP)

              (8) (31)

              7/21/2014

              1.6%

              10,800

              8,459

              LP Interests (Brightwood Capital Fund IV, LP)

              (8) (31)

              10/26/2016

              0.6%

              5,000

              4,745

              15,800

              13,204

              Cadence Aerospace LLC

              (10)

              Aerostructure Manufacturing

              Secured Debt

              (9) (19)

              11/14/2017

              9.50% (4.25% Cash, 5.25% PIK) (5.25%

              11/14/2023

              27,703

              27,484

              26,359

              119


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              PIK + L+3.25%, Floor 1.00%)

              California Pizza Kitchen, Inc.

              (11)

              Casual Restaurant Group

              Secured Debt

              (9)

              11/23/2020

              11.50% (L+10.00%, Floor 1.50%)

              11/23/2024

              7,700

              7,288

              7,315

              Secured Debt

              (9) (19)

              11/23/2020

              13.50% (1.00% Cash, 12.50% PIK) (1.00% Cash, L+11.00% PIK, Floor 1.50%)

              11/23/2024

              2,657

              2,590

              2,524

              Secured Debt

              (9) (19)

              11/23/2020

              15.00% (1.00% Cash, 14.00% PIK) (1.00% Cash, L+12.50% PIK, Floor 1.50%)

              5/23/2025

              2,291

              2,291

              1,833

              Common Stock

              11/23/2020

              169,088

              949

              1,860

              13,118

              13,532

              Central Security Group, Inc.

              (11)

              Security Alarm Monitoring Service Provider

              Secured Debt

              (9)

              10/16/2020

              7.00% (L+6.00%, Floor 1.00%)

              10/16/2025

              6,891

              6,891

              5,823

              Common Stock

              10/16/2020

              329,084

              1,481

              1,645

              8,372

              7,468

              Cenveo Corporation

              (11)

              Provider of Digital Marketing Agency Services

              Secured Debt

              (9)

              9/7/2018

              10.50% (L+9.50%, Floor 1.00%)

              6/7/2023

              5,250

              5,129

              4,909

              Common Stock

              9/7/2018

              177,130

              5,309

              2,613

              10,438

              7,522

              Chisholm Energy Holdings, LLC

              (10)

              Oil & Gas Exploration & Production

              Secured Debt

              (9)

              5/15/2019

              7.75% (L+6.25%, Floor 1.50%)

              5/15/2026

              3,571

              3,498

              3,274

              Clarius BIGS, LLC

              (10)

              Prints & Advertising Film Financing

              Secured Debt

              (14) (17) (19)

              9/23/2014

              15.00% PIK

              1/5/2015

              2,832

              2,832

              31

              Clickbooth.com, LLC

              (10)

              Provider of Digital Advertising Performance Marketing Solutions

              Secured Debt

              (9)

              12/5/2017

              9.50% (L+8.50%, Floor 1.00%)

              1/31/2025

              7,850

              7,750

              7,850

              Construction Supply Investments, LLC

              (10)

              Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

              Member Units

              12/29/2016

              5,637

              8,617

              Copper Trail Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (CTEF I, LP)

              11/3/2020

              375

              -

              67

              Corel Corporation

              (11) (13) (21)

              Publisher of Desktop and Cloud-based Software

              Secured Debt

              7/24/2019

              5.23% (L+5.00%)

              7/2/2026

              19,403

              18,580

              19,124

              Darr Equipment LP

              (10)

              Heavy Equipment Dealer

              Secured Debt

              (19)

              12/26/2017

              12.50% (11.50% Cash, 1.00% PIK)

              6/22/2023

              5,959

              5,959

              5,959

              Warrants

              (29)

              4/15/2014

              915,734

              12/23/2023

              474

              -

              120


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              6,433

              5,959

              Digital River, Inc.

              (11)

              Provider of Outsourced e-Commerce Solutions and Services

              Secured Debt

              (9)

              2/24/2015

              8.00% (L+7.00%, Floor 1.00%)

              2/12/2023

              13,628

              13,422

              13,560

              DTE Enterprises, LLC

              (10)

              Industrial Powertrain Repair and Services

              Secured Debt

              (9)

              4/13/2018

              10.00% (L+8.50%, Floor 1.50%)

              4/13/2023

              9,324

              9,213

              9,004

              Class AA Preferred Member Units (non-voting)

              (8) (19)

              4/13/2018

              10.00% PIK

              951

              951

              Class A Preferred Member Units

              4/13/2018

              776,316

              776

              880

              10,940

              10,835

              Dynamic Communities, LLC

              (10)

              Developer of Business Events and Online Community Groups

              Secured Debt

              (9) (19)

              7/17/2018

              12.50% (6.25% Cash, 6.25% PIK) (L+11.50%, Floor 1.00%)

              7/17/2023

              5,320

              5,256

              4,921

              Eastern Wholesale Fence LLC

              (10)

              Manufacturer and Distributor of Residential and Commercial Fencing Solutions

              Secured Debt

              (9)

              11/19/2020

              7.50%, (L+6.50%, Floor 1.00%)

              10/30/2025

              11,857

              11,523

              11,523

              Echo US Holdings, LLC.

              (10)

              Developer and Manufacturer of PVC and Polypropylene Materials

              Secured Debt

              (9)

              11/12/2019

              7.88% (L+6.25%, Floor 1.63%)

              10/25/2024

              22,190

              22,090

              22,190

              Electronic Transaction Consultants, LLC

              (10)

              Technology Service Provider for Toll Road and Infrastructure Operators

              Secured Debt

              (9)

              7/24/2020

              8.50% (L+7.50%, Floor 1.00%)

              7/24/2025

              10,000

              9,829

              9,829

              EnCap Energy Fund Investments

              (12) (13)

              Investment Partnership

              LP Interests (EnCap Energy Capital Fund VIII, L.P.)

              (31)

              1/22/2015

              0.1%

              3,813

              959

              LP Interests (EnCap Energy Capital Fund VIII Co-
              Investors, L.P.)

              (31)

              1/21/2015

              0.4%

              2,097

              465

              LP Interests (EnCap Energy Capital Fund IX, L.P.)

              (8) (31)

              1/22/2015

              0.1%

              4,366

              1,291

              LP Interests (EnCap Energy Capital Fund X, L.P.)

              (8) (31)

              3/25/2015

              0.1%

              8,720

              6,426

              LP Interests (EnCap Flatrock Midstream Fund II, L.P.)

              (8) (31)

              3/30/2015

              0.8%

              6,706

              2,546

              121


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              LP Interests (EnCap Flatrock Midstream Fund III, L.P.)

              (8) (31)

              3/27/2015

              0.2%

              6,982

              5,793

              32,684

              17,480

              Encino Acquisition Partners Holdings, Inc.

              (11)

              Oil & Gas Exploration & Production

              Secured Debt

              (9)

              11/16/2018

              7.75% (L+6.75%, Floor 1.00%)

              10/29/2025

              9,000

              8,932

              8,297

              EPIC Y-Grade Services, LP

              (11)

              NGL Transportation & Storage

              Secured Debt

              (9)

              6/22/2018

              7.00% (L+6.00%, Floor 1.00%)

              6/30/2027

              6,944

              6,854

              5,799

              Fortna, Inc.

              (10)

              Process, Physical Distribution and Logistics Consulting Services

              Secured Debt

              7/23/2019

              5.15% (L+5.00%)

              4/8/2025

              7,673

              7,553

              7,486

              Fuse, LLC

              (11)

              Cable Networks Operator

              Secured Debt

              6/30/2019

              12.00%

              6/28/2024

              1,810

              1,810

              1,472

              Common Stock

              6/30/2019

              10,429

              256

              -

              2,066

              1,472

              GeoStabilization International (GSI)

              (11)

              Geohazard Engineering Services & Maintenance

              Secured Debt

              1/2/2019

              5.40% (L+5.25%)

              12/19/2025

              11,224

              11,137

              11,196

              GoWireless Holdings, Inc.

              (11)

              Provider of Wireless Telecommunications Carrier Services

              Secured Debt

              (9)

              1/10/2018

              7.50% (L+6.50%, Floor 1.00%)

              12/22/2024

              17,113

              16,988

              16,976

              Grupo Hima San Pablo, Inc.

              (11)

              Tertiary Care Hospitals

              Secured Debt

              (9) (17)

              3/7/2013

              9.25% (L+7.00%, Floor 1.50%)

              4/30/2019

              4,504

              4,504

              3,375

              Secured Debt

              (17)

              3/7/2013

              13.75%

              10/15/2018

              2,055

              2,040

              49

              6,544

              3,424

              GS HVAM Intermediate, LLC

              (10)

              Specialized Food Distributor

              Secured Debt

              (9)

              10/18/2019

              6.75% (L+5.75%, Floor 1.00%)

              10/2/2024

              11,053

              10,952

              11,007

              GS Operating, LLC (Gexpro Services)

              (10)

              Distributor of Industrial and Specialty Parts

              Secured Debt

              (9)

              2/24/2020

              8.00% (L+6.50%, Floor 1.50%)

              2/24/2025

              29,180

              28,692

              28,953

              HDC/HW Intermediate Holdings

              (10)

              Managed Services and Hosting Provider

              Secured Debt

              (9)

              12/21/2018

              8.50% (L+7.50%, Floor 1.00%)

              12/21/2023

              3,474

              3,429

              3,351

              Heartland Dental, LLC

              (10)

              Dental Support Organization

              Secured Debt

              (9)

              9/9/2020

              7.50% (L+6.50%, Floor 1.00%)

              4/30/2025

              14,925

              14,501

              14,501

              Hunter Defense Technologies, Inc.

              (10)

              Provider of Military and Commercial Shelters and Systems

              Secured Debt

              (9)

              3/29/2018

              8.00% (L+7.00%, Floor 1.00%)

              3/29/2023

              35,246

              34,820

              35,246

              122


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              HW Temps LLC

              Temporary Staffing Solutions

              Secured Debt

              3/29/2019

              12.00%

              3/29/2023

              9,801

              9,698

              8,994

              Hyperion Materials & Technologies, Inc.

              (11) (13)

              Manufacturer of Cutting and Machine Tools & Specialty Polishing Compounds

              Secured Debt

              (9)

              9/12/2019

              6.50% (L+5.50%, Floor 1.00%)

              8/28/2026

              22,275

              21,894

              20,813

              Ian, Evan & Alexander Corporation (EverWatch)

              (10)

              Cybersecurity, Software and Data Analytics provider to the Intelligence Community

              Secured Debt

              (9)

              7/31/2020

              9.50% (L+8.50%, Floor 1.00%)

              7/31/2025

              16,529

              16,158

              16,158

              Implus Footcare, LLC

              (10)

              Provider of Footwear and Related Accessories

              Secured Debt

              (9)

              6/1/2017

              8.75% (L+7.75%, Floor 1.00%)

              4/30/2024

              18,890

              18,566

              17,172

              Independent Pet Partners Intermediate Holdings, LLC

              (10)

              Omnichannel Retailer of Specialty Pet Products

              Secured Debt

              (19)

              8/20/2020

              6.31% PIK (L+6.00% PIK)

              12/22/2022

              6,111

              6,111

              6,111

              Secured Debt

              (19)

              12/10/2020

              6.00% PIK

              11/20/2023

              16,670

              15,086

              15,086

              Preferred Stock (non-voting)

              12/10/2020

              3,235

              3,235

              Preferred Stock (non-voting)

              12/10/2020

              -

              -

              Member Units

              11/20/2018

              1,558,333

              1,558

              -

              25,990

              24,432

              Industrial Services Acquisition, LLC

              (10)

              Industrial Cleaning Services

              Unsecured Debt

              (19)

              6/17/2016

              13.00% (6.00% Cash, 7.00% PIK)

              12/17/2022

              5,624

              5,579

              5,624

              Preferred Member Units

              (8) (19) (30)

              1/31/2018

              144

              10.00% PIK

              112

              112

              Preferred Member Units

              (8) (19) (30)

              5/17/2019

              80

              20.00% PIK

              71

              71

              Member Units

              (30)

              6/17/2016

              900

              900

              530

              6,662

              6,337

              Inn of the Mountain Gods Resort and Casino

              (11)

              Hotel & Casino Owner & Operator

              Secured Debt

              7/18/2018

              9.25%

              11/30/2023

              6,677

              6,677

              6,677

              Interface Security Systems, L.L.C

              (10)

              Commercial Security & Alarm Services

              Secured Debt

              (9) (19)

              8/7/2019

              11.75% (8.75% Cash, 3.00% PIK) (3.00% PIK + L+7.00%, Floor 1.75%)

              8/7/2023

              7,245

              7,145

              7,245

              Intermedia Holdings, Inc.

              (11)

              Unified Communications as a Service

              Secured Debt

              (9)

              8/3/2018

              7.00% (L+6.00%, Floor 1.00%)

              7/19/2025

              20,839

              20,755

              20,823

              Invincible Boat Company, LLC.

              (10)

              Manufacturer of Sport Fishing Boats

              Secured Debt

              (9)

              8/28/2019

              8.00% (L+6.50%, Floor 1.50%)

              8/28/2025

              8,876

              8,793

              8,876

              Isagenix International, LLC

              (11)

              Direct Marketer of Health & Wellness Products

              Secured Debt

              (9)

              6/21/2018

              6.75% (L+5.75%, Floor 1.00%)

              6/14/2025

              5,572

              5,541

              3,130

              123


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Jackmont Hospitality, Inc.

              (10)

              Franchisee of Casual Dining Restaurants

              Secured Debt

              (9)

              5/26/2015

              7.75% (L+6.75%, Floor 1.00%)

              5/26/2021

              3,954

              3,953

              3,157

              Joerns Healthcare, LLC

              (11)

              Manufacturer and Distributor of Health Care Equipment & Supplies

              Secured Debt

              (9)

              8/21/2019

              7.00% (L+6.00%, Floor 1.00%)

              8/21/2024

              4,016

              3,955

              4,016

              Common Stock

              8/21/2019

              472,579

              4,429

              2,795

              8,384

              6,811

              Kemp Technologies Inc.

              (10)

              Provider of Application Delivery Controllers

              Secured Debt

              (9)

              6/27/2019

              7.50% (L+6.50%, Floor 1.00%)

              3/29/2024

              17,387

              17,088

              17,387

              Common Stock

              1,000,000

              1,550

              1,550

              18,638

              18,937

              Klein Hersh, LLC

              (10)

              Executive and C-Suite Placement for the Life Sciences and Healthcare Industries

              Secured Debt

              (9)

              11/13/2020

              8.75% (L+8.00%, Floor 0.75%)

              11/13/2025

              35,000

              34,098

              34,098

              Kore Wireless Group Inc.

              (11)

              Mission Critical Software Platform

              Secured Debt

              12/31/2018

              5.75% (L+5.50%)

              12/20/2024

              19,090

              19,003

              18,828

              Larchmont Resources, LLC

              (11)

              Oil & Gas Exploration & Production

              Secured Debt

              (9) (19)

              12/8/2016

              11.00% PIK (L+10.00% PIK, Floor 1.00%)

              8/9/2021

              2,185

              2,185

              983

              Member Units

              (30)

              4/1/2018

              2,828

              353

              113

              2,538

              1,096

              Laredo Energy, LLC

              (10)

              Oil & Gas Exploration & Production

              Member Units

              5/4/2020

              1,155,952

              11,560

              10,238

              Lightbox Holdings, L.P.

              (11)

              Provider of Commercial Real Estate Software

              Secured Debt

              5/23/2019

              5.15% (L+5.00%)

              5/9/2026

              14,813

              14,623

              14,368

              LKCM Headwater Investments I, L.P.

              (12) (13)

              Investment Partnership

              LP Interests

              (31)

              1/25/2013

              2.3%

              1,746

              3,524

              LL Management, Inc.

              (10)

              Medical Transportation Service Provider

              Secured Debt

              (9)

              5/2/2019

              8.25% (L+7.25%, Floor 1.00%)

              9/25/2023

              16,504

              16,337

              16,504

              Logix Acquisition Company, LLC

              (10)

              Competitive Local Exchange Carrier

              Secured Debt

              (9)

              1/8/2018

              6.75% (L+5.75%, Floor 1.00%)

              12/22/2024

              26,131

              24,550

              24,171

              Looking Glass Investments, LLC

              (12) (13)

              Specialty Consumer
              Finance

              Member Units

              7/1/2015

              3

              125

              25

              LSF9 Atlantis Holdings, LLC

              (11)

              Provider of Wireless Telecommunications Carrier Services

              124


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Secured Debt

              (9)

              5/17/2017

              7.00% (L+6.00%, Floor 1.00%)

              5/1/2023

              9,206

              9,206

              9,177

              Lulu's Fashion Lounge, LLC

              (10)

              Fast Fashion E-Commerce Retailer

              Secured Debt

              (9) (19)

              8/31/2017

              10.50% (8.00% Cash, 2.50% PIK) (2.50% PIK + L+7.00%, Floor 1.00%)

              8/28/2022

              11,152

              10,983

              9,535

              Lynx FBO Operating LLC

              (10)

              Fixed Based Operator in the General Aviation Industry

              Secured Debt

              (9)

              9/30/2019

              7.25% (L+5.75%, Floor 1.50%)

              9/30/2024

              13,613

              13,369

              13,521

              Member Units

              9/30/2019

              4,872

              687

              780

              14,056

              14,301

              Mac Lean-Fogg Company

              (10)

              Manufacturer and Supplier for Auto and Power Markets

              Secured Debt

              (9)

              4/22/2019

              5.63% (L+5.00%, Floor 0.625%)

              12/22/2025

              17,251

              17,149

              17,251

              Preferred Stock

              (8) (19)

              10/1/2019

              13.75% (4.50% Cash, 9.25% PIK)

              1,870

              1,870

              1,841

              19,019

              19,092

              MHVC Acquisition Corp.

              (11)

              Provider of Differentiated Information Solutions, Systems Engineering, and Analytics

              Secured Debt

              (9)

              5/8/2017

              6.25% (L+5.25%, Floor 1.00%)

              4/29/2024

              19,797

              19,716

              19,846

              Mills Fleet Farm Group, LLC

              (10)

              Omnichannel Retailer of Work, Farm and Lifestyle Merchandise

              Secured Debt

              (9)

              10/24/2018

              7.00% (L+6.00%, Floor 1.00%)

              10/24/2024

              13,860

              13,595

              13,609

              NBG Acquisition Inc

              (11)

              Wholesaler of Home Décor Products

              Secured Debt

              (9)

              4/28/2017

              6.50% (L+5.50%, Floor 1.00%)

              4/26/2024

              4,070

              4,034

              3,399

              NinjaTrader, LLC

              (10)

              Operator of Futures Trading Platform

              Secured Debt

              (9)

              12/18/2019

              8.25% (L+6.75%, Floor 1.50%)

              12/18/2024

              16,875

              16,543

              16,849

              NNE Partners, LLC

              (10)

              Oil & Gas Exploration & Production

              Secured Debt

              (19)

              3/2/2017

              9.48% (4.75% Cash, 4.50% PIK) (4.50% PIK + L+4.75%)

              12/31/2023

              23,683

              23,572

              21,025

              Project Eagle Holdings, LLC

              (10)

              Provider of Secure Business Collaboration Software

              Secured Debt

              (9)

              7/6/2020

              9.25% (L+8.25%, Floor 1.00%)

              7/6/2026

              14,963

              14,583

              14,583

              Novetta Solutions, LLC

              (11)

              Provider of Advanced Analytics Solutions for Defense Agencies

              Secured Debt

              (9)

              6/21/2017

              6.00% (L+5.00%, Floor 1.00%)

              10/17/2022

              22,912

              22,629

              22,864

              NTM Acquisition Corp.

              (11)

              Provider of B2B Travel Information Content

              125


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              Secured Debt

              (9) (19)

              7/12/2016

              8.25% (7.25% Cash, 1.00% PIK) (1.00%PIK + L+6.25%, Floor 1.00%)

              6/7/2024

              4,694

              4,694

              4,224

              Ospemifene Royalty Sub LLC (QuatRx)

              (10)

              Estrogen-Deficiency Drug Manufacturer and Distributor

              Secured Debt

              (14)

              7/8/2013

              11.50%

              11/15/2026

              4,765

              4,765

              121

              PaySimple, Inc.

              (10)

              Leading Technology Services Commerce Platform

              Secured Debt

              9/9/2019

              5.65% (L+5.50%)

              8/23/2025

              24,448

              24,225

              23,959

              PricewaterhouseCoopers Public Sector LLP

              (11)

              Provider of Consulting Services to Governments

              Secured Debt

              5/24/2018

              8.15% (L+8.00%)

              5/1/2026

              9,000

              8,969

              9,000

              PT Network, LLC

              (10)

              Provider of Outpatient Physical Therapy and Sports Medicine Services

              Secured Debt

              (9) (19)

              10/12/2017

              8.73% (6.73% Cash, 2.00% PIK) (2.00% PIK + L+5.50%, Floor 1.00%)

              11/30/2023

              8,601

              8,601

              8,601

              Research Now Group, Inc. and Survey Sampling International, LLC

              (11)

              Provider of Outsourced Online Surveying

              Secured Debt

              (9)

              12/29/2017

              6.50% (L+5.50%, Floor 1.00%)

              12/20/2024

              17,930

              17,497

              17,715

              RM Bidder, LLC

              (10)

              Scripted and Unscripted TV and Digital Programming Provider

              Warrants

              (26)

              11/12/2015

              187,161

              10/20/2025

              425

              -

              Member Units

              11/12/2015

              2,779

              46

              26

              471

              26

              RTIC Subsidiary Holdings, LLC

              (10)

              Direct-To-Consumer eCommerce Provider of Outdoor Products

              Secured Debt

              (9)

              9/1/2020

              9.00% (L+7.75%, Floor 1.25%)

              9/1/2025

              17,260

              17,026

              17,026

              SAFETY Investment Holdings, LLC

              Provider of Intelligent Driver Record Monitoring Software and Services

              Member Units

              4/29/2016

              2,000,000

              2,000

              2,350

              Salient Partners L.P.

              (11)

              Provider of Asset Management Services

              Secured Debt

              (9)

              8/31/2018

              7.00% (L+6.00%, Floor 1.00%)

              8/31/2021

              6,450

              6,443

              4,542

              Staples Canada ULC

              (10) (13) (21)

              Office Supplies Retailer

              Secured Debt

              (9) (22)

              9/14/2017

              8.00% (L+7.00%, Floor 1.00%)

              9/12/2024

              13,032

              12,896

              12,382

              TEAM Public Choices, LLC

              (10)

              Home-Based Care Employment Service Provider

              Secured Debt

              (9)

              12/22/2020

              6.00% (L+5.00%, Floor 1.00%)

              12/18/2027

              12,500

              12,126

              12,406

              Tectonic Financial, Inc.

              Financial Services Organization

              Common Stock

              5/15/2017

              200,000

              2,000

              2,800

              126


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              Portfolio Company (1) (20)

              Business Description

              Type of Investment (2) (3) (15)

              Investment Date (24)

              Shares/Units

              Rate

              Maturity Date

              Principal (4)

              Cost (4)

              Fair Value (18)

              TGP Holdings III LLC

              (11)

              Outdoor Cooking & Accessories

              Secured Debt

              (9)

              9/30/2017

              9.50% (L+8.50%, Floor 1.00%)

              9/25/2025

              5,500

              5,448

              5,307

              The Pasha Group

              (11)

              Diversified Logistics and Transportation Provided

              Secured Debt

              (9)

              2/2/2018

              9.00% (L+8.00%, Floor 1.00%)

              1/26/2023

              10,162

              9,585

              9,323

              USA DeBusk LLC

              (10)

              Provider of Industrial Cleaning Services

              Secured Debt

              (9)

              10/22/2019

              6.75% (L+5.75%, Floor 1.00%)

              10/22/2024

              24,948

              24,561

              24,591

              U.S. TelePacific Corp.

              (11)

              Provider of Communications and Managed Services

              Secured Debt

              (9)

              5/17/2017

              6.50% (L+5.50%, Floor 1.00%)

              5/2/2023

              17,088

              16,913

              15,486

              Veregy Consolidated, Inc.

              (11)

              Energy Service Company

              Secured Debt

              (9)

              11/9/2020

              7.00% (L+6.00%, Floor 1.00%)

              11/3/2027

              15,000

              14,587

              14,888

              Vida Capital, Inc

              (11)

              Alternative Asset Manager

              Secured Debt

              10/10/2019

              6.15% (L+6.00%)

              10/1/2026

              17,853

              17,626

              17,272

              Vistar Media, Inc.

              (10)

              Operator of Digital Out-of-Home Advertising Platform

              Secured Debt

              (9) (19)

              2/17/2017

              12.00% (8.50% Cash, 3.50% PIK) (3.50% PIK + L+7.50%, Floor 1.00%)

              4/3/2023

              2,490

              2,394

              2,490

              Secured Debt

              (9) (19)

              4/3/2019

              12.00% (8.50% Cash, 3.50% PIK) (3.50% PIK + L+7.50%, Floor 1.00%)

              4/3/2023

              2,146

              2,119

              2,146

              Preferred Stock

              4/3/2019

              70,207

              767

              910

              Warrants

              (25)

              4/3/2019

              69,675

              4/3/2029

              -

              920

              5,280

              6,466

              YS Garments, LLC

              (11)

              Designer and Provider of Branded Activewear

              Secured Debt

              (9)

              8/22/2018

              7.00% (L+6.00%, Floor 1.00%)

              8/9/2024

              13,997

              13,902

              12,911

              Zilliant Incorporated

              Price Optimization and Margin Management Solutions

              Preferred Stock

              12/31/2020

              186,777

              154

              260

              Warrants

              (28)

              12/31/2020

              952,500

              6/15/2022

              1,071

              1,190

              1,225

              1,450

              Subtotal Non-Control/Non-Affiliate Investments (79.5% of net assets at fair value)

              1,268,740

              1,204,840

              Total Portfolio Investments, December 31, 2020 (177.2% of net assets at fair value)

              $

              2,516,709

              $

              2,684,866

              127


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              (1)

              All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note C for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds.

              (2)

              Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

              (3)

              See Note C and Schedule 12-14 for a summary of geographic location of portfolio companies.

              (4)

              Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

              (5)

              Control investments are defined by the 1940 Act, as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

              (6)

              Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments.

              (7)

              Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

              (8)

              Income producing through dividends or distributions.

              (9)

              Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company’s investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower’s option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at December 31, 2020. As noted in this schedule, 61% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.00%, with a weighted-average LIBOR floor of approximately 1.11%.

              (10)

              Private Loan portfolio investment. See Note C for a description of Private Loan portfolio investments.

              (11)

              Middle Market portfolio investment. See Note C for a description of Middle Market portfolio investments.

              (12)

              Other Portfolio investment. See Note C for a description of Other Portfolio investments.

              (13)

              Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

              (14)

              Non-accrual and non-income producing investment.

              (15)

              All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”

              (16)

              External Investment Manager. Investment is not encumbered as security for the Company's Credit Facility or in support of the SBA-guaranteed debentures issued by the Funds.

              (17)

              Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

              (18)

              Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C for further discussion.

              (19)

              PIK interest income and cumulative dividend income represent income not paid currently in cash.

              (20)

              All portfolio company headquarters are based in the United States, unless otherwise noted.

              (21)

              Portfolio company headquarters are located outside of the United States.

              (22)

              In connection with the Company's debt investment in Staples Canada ULC and in an attempt to mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company maintains a forward foreign currency contract with Cadence Bank to lend $15.8 million Canadian Dollars and receive $12.0 million U.S. Dollars with a settlement date of September 14, 2021. The unrealized appreciation on the forward foreign currency contract is $0.4 million as of December 31, 2020.

              (23)

              The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with

              128


              Table of Contents

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments (Continued)

              December 31, 2020

              (dollars in thousands)

              respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.25% (Floor 1.25%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.

              (24)

              Investment date represents the date of initial investment in the security position.

              (25)

              Warrants are presented in equivalent shares with a strike price of $10.92 per share.

              (26)

              Warrants are presented in equivalent units with a strike price of $14.28 per unit.

              (27)

              Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.

              (28)

              Warrants are presented in equivalent shares with a strike price of $0.001 per share.

              (29)

              Warrants are presented in equivalent units with a strike price of $1.50 per unit.

              (30)

              Shares/Units represent ownership in an underlying Real Estate or HoldCo entity.

              (31)

              Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.

              (32)

              Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investment in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investment in this portfolio company is on non-accrual status.

              129


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2018
              (dollars in thousands)

              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              CBT Nuggets, LLC

               June 1, 2006 

              Produces and Sells IT Training Certification Videos

                          

                   

              Member Units (416 units)(8)

                   1,300  61,610 

                              

              Chamberlin Holding LLC

               February 26, 2018 

              Roofing and Waterproofing Specialty Contractor

                          

                   

              LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.75%, Secured Debt (Maturity — February 26, 2023)(9)

                20,203  20,028  20,028 

                   

              Member Units (4,347 units)(8)

                   11,440  18,940 

                   

              Member Units (Chamberlin Langfield Real Estate, LLC) (732,160 units)

                   732  732 

                         32,200  39,700 

                              

              Charps, LLC

               February 3, 2017 

              Pipeline Maintenance and Construction

                          

                   

              12% Secured Debt (Maturity — February 3, 2022)

                11,900  11,805  11,888 

                   

              Preferred Member Units (1,600 units)(8)

                   400  2,270 

                         12,205  14,158 

                              

              Clad-Rex Steel, LLC

               December 20, 2016 

              Specialty Manufacturer of Vinyl-Clad Metal

                          

                   

              LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 11.35%, Secured Debt (Maturity — December 20, 2021)(9)

                12,080  12,001  12,080 

                   

              Member Units (717 units)(8)

                   7,280  10,610 

                   

              10% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity — December 20, 2036)

                1,161  1,150  1,161 

                   

              Member Units (Clad-Rex Steel RE Investor, LLC) (800 units)

                   210  350 

                         20,641  24,201 

                              

              CMS Minerals Investments

               January 30, 2015 

              Oil & Gas Exploration & Production

                          

                   

              Member Units (CMS Minerals II, LLC) (100 units)(8)

                   2,707  2,580 

                              

              Copper Trail Fund Investments(12)(13)

               July 17, 2017 

              Investment Partnership

                          

                   

              LP Interests (CTMH, LP) (Fully diluted 38.8%)

                   872  872 

                   

              LP Interests (Copper Trail Energy Fund I, LP) (Fully diluted 30.1%)(8)

                   3,495  4,170 

                         4,367  5,042 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2018
              (dollars in thousands)

              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Datacom, LLC

               May 30, 2014 

              Technology and Telecommunications Provider

                          

                   

              8% Secured Debt (Maturity — May 30, 2019)(14)

                1,800  1,800  1,690 

                   

              10.50% PIK Secured Debt (Maturity — May 30, 2019)(14)(19)

                12,511  12,479  9,786 

                   

              Class A Preferred Member Units

                   1,294   

                   

              Class B Preferred Member Units (6,453 units)

                   6,030   

                         21,603  11,476 

                              

              Digital Products Holdings LLC

               April 1, 2018 

              Designer and Distributor of Consumer Electronics

                          

                   

              LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.38%, Secured Debt (Maturity — April 1, 2023)(9)

                25,740  25,511  25,511 

                   

              Preferred Member Units (3,451 shares)(8)

                   8,466  8,466 

                         33,977  33,977 

                              

              Direct Marketing Solutions, Inc.

               February 13, 2018 

              Provider of Omni-Channel Direct Marketing Services

                          

                   

              LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 13.38%, Secured Debt (Maturity — February 13, 2023)(9)

                18,017  17,848  17,848 

                   

              Preferred Stock (8,400 shares)

                   8,400  14,900 

                         26,248  32,748 

                              

              Gamber-Johnson Holdings, LLC

               June 24, 2016 

              Manufacturer of Ruggedized Computer Mounting Systems

                          

                   

              LIBOR Plus 7.50% (Floor 2.00%), Current Coupon 9.85%, Secured Debt (Maturity — June 24, 2021)(9)

                21,486  21,356  21,486 

                   

              Member Units (8,619 units)(8)

                   14,844  45,460 

                         36,200  66,946 

                              

              Garreco, LLC

               July 15, 2013 

              Manufacturer and Supplier of Dental Products

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%, Ceiling 1.50%), Current Coupon 9.50%, Secured Debt (Maturity — March 31, 2020)(9)

                5,121  5,099  5,099 

                   

              Member Units (1,200 units)

                   1,200  2,590 

                         6,299  7,689 

                              

              GRT Rubber Technologies LLC

               December 19, 2014 

              Manufacturer of Engineered Rubber Products

                          

                   

              LIBOR Plus 7.00%, Current Coupon 9.35%, Secured Debt (Maturity — December 31, 2023)(9)

                9,740  9,716  9,740 

                   

              Member Units (5,879 units)(8)

                   13,065  39,060 

                         22,781  48,800 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2018
              (dollars in thousands)

              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Guerdon Modular Holdings, Inc.

               August 13, 2014 

              Multi-Family and Commercial Modular Construction Company

                          

                   

              13% Secured Debt (Maturity — March 1, 2019)

                12,588  12,572  12,002 

                   

              Preferred Stock (404,998 shares)

                   1,140   

                   

              Common Stock (212,033 shares)

                   2,983   

                   

              Warrants (6,208,877 equivalent shares; Expiration — April 25, 2028; Strike price — $0.01 per unit)

                      

                         16,695  12,002 

                              

              Gulf Manufacturing, LLC

               August 31, 2007 

              Manufacturer of Specialty Fabricated Industrial Piping Products

                          

                   

              Member Units (438 units)(8)

                   2,980  11,690 

                              

              Gulf Publishing Holdings, LLC

               April 29, 2016 

              Energy Industry Focused Media and Publishing

                          

                   

              12.5% Secured Debt (Maturity — April 29, 2021)

                12,666  12,594  12,594 

                   

              Member Units (3,681 units)

                   3,681  4,120 

                         16,275  16,714 

                              

              Harborside Holdings, LLC

               March 20, 2017 

              Real Estate Holding Company

                          

                   

              Member units (100 units)

                   6,306  9,500 

                              

              Harris Preston Fund Investments(12)(13)

               October 1, 2017 

              Investment Partnership

                          

                   

              LP Interests (2717 MH, L.P.) (Fully diluted 49.3%)

                   1,040  1,133 

                              

              Harrison Hydra-Gen, Ltd.

               June 4, 2010 

              Manufacturer of Hydraulic Generators

                          

                   

              Common Stock (107,456 shares)(8)

                   718  8,070 

                              

              HW Temps LLC

               July 2, 2015 

              Temporary Staffing Solutions

                          

                   

              LIBOR Plus 13.00% (Floor 1.00%), Current Coupon 15.35%, Secured Debt (Maturity July 2, 2020)(9)

                9,976  9,938  9,938 

                   

              Preferred Member Units (3,200 units)(8)

                   3,942  3,942 

                         13,880  13,880 

                              

              IDX Broker, LLC

               November 15, 2013 

              Provider of Marketing and CRM Tools for the Real Estate Industry

                          

                   

              11.5% Secured Debt (Maturity — November 15, 2020)

                14,350  14,262  14,350 

                   

              Preferred Member Units (5,607 units)(8)

                   5,952  13,520 

                         20,214  27,870 

                              

              Jensen Jewelers of Idaho, LLC

               November 14, 2006 

              Retail Jewelry Store

                          

                   

              Prime Plus 6.75% (Floor 2.00%), Current Coupon 12.00%, Secured Debt (Maturity — November 14, 2019)(9)

                3,355  3,337  3,355 

                   

              Member Units (627 units)(8)

                   811  5,090 

                         4,148  8,445 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2018
              (dollars in thousands)

              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              KBK Industries, LLC

               January 23, 2006 

              Manufacturer of Specialty Oilfield and Industrial Products

                          

                   

              Member Units (325 units)(8)

                   783  8,610 

                              

              Kickhaefer Manufacturing Company, LLC

               October 31, 2018 

              Precision Metal Parts Manufacturing

                          

                   

              11.5% Secured Debt (Maturity — October 31, 2020)

                1,064  1,045  1,045 

                   

              11.5% Secured Debt (Maturity — October 31, 2023)

                28,000  27,730  27,730 

                   

              Member Units (581 units)

                   12,240  12,240 

                   

              9.0% Secured Debt (Maturity — October 31, 2048)

                4,006  3,970  3,970 

                   

              Member Units (KMC RE Investor, LLC) (800 units)

                   992  992 

                         45,977  45,977 

                              

              Lamb Ventures, LLC

               May 30, 2008 

              Aftermarket Automotive Services Chain

                          

                   

              11% Secured Debt (Maturity — July 1, 2022)

                8,339  8,306  8,339 

                   

              Preferred Stock (non-voting)

                   400  400 

                   

              Member Units (742 units)

                   5,273  7,440 

                   

              9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity — March 31, 2027)

                432  428  432 

                   

              Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

                   625  630 

                         15,032  17,241 

                              

              Market Force Information, LLC

               July 28, 2017 

              Provider of Customer Experience Management Services

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.74%, Secured Debt (Maturity — July 28, 2022)(9)

                200  200  200 

                   

              LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 13.74%, Secured Debt (Maturity — July 28, 2022)(9)

                22,800  22,624  22,624 

                   

              Member Units (657,113 units)

                   14,700  13,100 

                         37,524  35,924 

                              

              MH Corbin Holding LLC

               August 31, 2015 

              Manufacturer and Distributor of Traffic Safety Products

                          

                   

              10% Current / 3% PIK Secured Debt (Maturity — August 31, 2020)(14)(19)

                12,263  12,121  11,733 

                   

              Preferred Member Units (4,000 shares)

                   6,000  1,000 

                         18,121  12,733 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2018
              (dollars in thousands)

              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Mid-Columbia Lumber Products, LLC

               December 18, 2006 

              Manufacturer of Finger-Jointed Lumber Products

                          

                   

              10% Secured Debt (Maturity — January 15, 2020)

                1,750  1,746  1,746 

                   

              12% Secured Debt (Maturity — January 15, 2020)

                3,900  3,880  3,880 

                   

              Member Units (7,874 units)

                   3,001  3,860 

                   

              9.5% Secured Debt (Mid-Columbia Real Estate, LLC) (Maturity — May 13, 2025)

                746  746  746 

                   

              Member Units (Mid-Columbia Real Estate, LLC) (500 units)(8)

                   790  1,470 

                         10,163  11,702 

                              

              MSC Adviser I, LLC(16)

               November 22, 2013 

              Third Party Investment Advisory Services

                          

                   

              Member Units (Fully diluted 100.0%)(8)

                     65,748 

                              

              Mystic Logistics Holdings, LLC

               August 18, 2014 

              Logistics and Distribution Services Provider for Large Volume Mailers

                          

                   

              12% Secured Debt (Maturity — August 15, 2019)

                7,536  7,506  7,506 

                   

              Common Stock (5,873 shares)

                   2,720  210 

                         10,226  7,716 

                              

              NAPCO Precast, LLC

               January 31, 2008 

              Precast Concrete Manufacturing

                          

                   

              LIBOR Plus 8.50%, Current Coupon 11.24%, Secured Debt (Maturity — May 31, 2019)

                11,475  11,464  11,475 

                   

              Member Units (2,955 units)(8)

                   2,975  13,990 

                         14,439  25,465 

                              

              NexRev LLC

               February 28, 2018 

              Provider of Energy Efficiency Products & Services

                          

                   

              11% Secured Debt (Maturity — February 28, 2023)

                17,440  17,288  17,288 

                   

              Preferred Member Units (86,400,000 units)(8)

                   6,880  7,890 

                         24,168  25,178 

                              

              NRI Clinical Research, LLC

               September 8, 2011 

              Clinical Research Service Provider

                          

                   

              14% Secured Debt (Maturity — June 8, 2022)

                6,685  6,545  6,685 

                   

              Warrants (251,723 equivalent units; Expiration — June 8, 2027; Strike price — $0.01 per unit)

                   252  660 

                   

              Member Units (1,454,167 units)

                   765  2,478 

                         7,562  9,823 

                              

              NRP Jones, LLC

               December 22, 2011 

              Manufacturer of Hoses, Fittings and Assemblies

                          

                   

              12% Secured Debt (Maturity — March 20, 2023)

                6,376  6,376  6,376 

                   

              Member Units (65,962 units)

                   3,717  5,960 

                         10,093  12,336 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2018
              (dollars in thousands)

              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              NuStep, LLC

               January 31, 2017 

              Designer, Manufacturer and Distributor of Fitness Equipment

                          

                   

              12% Secured Debt (Maturity — January 31, 2022)

                20,600  20,458  20,458 

                   

              Preferred Member Units (406 units)

                   10,200  10,200 

                         30,658  30,658 

                              

              OMi Holdings, Inc.

               April 1, 2008 

              Manufacturer of Overhead Cranes

                          

                   

              Common Stock (1,500 shares)(8)

                   1,080  16,020 

                              

              Pegasus Research Group, LLC

               January 6, 2011 

              Provider of Telemarketing and Data Services

                          

                   

              Member Units (460 units)

                   1,290  7,680 

                              

              PPL RVs, Inc.

               June 10, 2010 

              Recreational Vehicle Dealer

                          

                   

              LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 9.40%, Secured Debt (Maturity — November 15, 2021)(9)

                15,100  15,006  15,100 

                   

              Common Stock (1,962 shares)(8)

                   2,150  10,380 

                         17,156  25,480 

                              

              Principle Environmental, LLC (d/b/a TruHorizon Environmental Solutions)

               February 1, 2011 

              Noise Abatement Service Provider

                          

                   

              13% Secured Debt (Maturity — April 30, 2020)

                7,477  7,398  7,477 

                   

              Preferred Member Units (19,631 units)(8)

                   4,600  13,090 

                   

              Warrants (1,018 equivalent units; Expiration — January 31, 2021; Strike price — $0.01 per unit)

                   1,200  780 

                         13,198  21,347 

                              

              Quality Lease Service, LLC

               June 8, 2015 

              Provider of Rigsite Accommodation Unit Rentals and Related Services

                          

                   

              Zero Coupon Secured Debt (Maturity — June 8, 2021)

                7,341  7,341  6,450 

                   

              Member Units (1,000 units)

                   4,043  3,809 

                         11,384  10,259 

                              

              River Aggregates, LLC

               March 30, 2011 

              Processor of Construction Aggregates

                          

                   

              Zero Coupon Secured Debt (Maturity — June 30, 2018)(17)

                750  750  722 

                   

              Member Units (1,150 units)

                   1,150  4,610 

                   

              Member Units (RA Properties, LLC) (1,500 units)

                   369  2,930 

                         2,269  8,262 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2018
              (dollars in thousands)

              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Tedder Industries, LLC

               August 31, 2018 

              Manufacturer of Firearm Holsters and Accessories

                          

                   

              12% Secured Debt (Maturity — August 31, 2020)

                480  480  480 

                   

              12% Secured Debt (Maturity — August 31, 2023)

                16,400  16,246  16,246 

                   

              Preferred Member Units (440 units)

                   7,476  7,476 

                         24,202  24,202 

                              

              The MPI Group, LLC

               October 2, 2007 

              Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                          

                   

              9% Secured Debt (Maturity — October 2, 2019)

                2,924  2,924  2,582 

                   

              Series A Preferred Units (2,500 units)

                   2,500  440 

                   

              Warrants (1,424 equivalent units; Expiration — July 1, 2024; Strike price — $0.01 per unit)

                   1,096   

                   

              Member Units (MPI Real Estate Holdings, LLC) (100 units)(8)

                   2,300  2,479 

                         8,820  5,501 

                              

              Vision Interests, Inc.

               June 5, 2007 

              Manufacturer / Installer of Commercial Signage

                          

                   

              13% Secured Debt (Maturity — December 23, 2018)(17)

                2,153  2,153  2,153 

                   

              Series A Preferred Stock (3,000,000 shares)

                   3,000  3,740 

                   

              Common Stock (1,126,242 shares)

                   3,706  280 

                         8,859  6,173 

                              

              Ziegler's NYPD, LLC

               October 1, 2008 

              Casual Restaurant Group

                          

                   

              6.5% Secured Debt (Maturity — October 1, 2019)

                1,000  998  1,000 

                   

              12% Secured Debt (Maturity — October 1, 2019)

                425  425  425 

                   

              14% Secured Debt (Maturity — October 1, 2019)

                2,750  2,750  2,750 

                   

              Warrants (587 equivalent units; Expiration — October 1, 2019; Strike price — $0.01 per unit)

                   600   

                   

              Preferred Member Units (10,072 units)

                   2,834  1,249 

                         7,607  5,424 

              Subtotal Control Investments (68.1% of net assets at fair value)

               $750,618 $1,004,993 

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Affiliate Investments(6)

                 

               

               

               

                        

                              

              AFG Capital Group, LLC

               November 7, 2014 

              Provider of Rent-to-Own Financing Solutions and Services

                          

                   

              Warrants (42 equivalent units; Expiration — November 7, 2024; Strike price — $0.01 per unit)

                  $259 $950 

                   

              Preferred Member Units (186 units)(8)

                   1,200  3,980 

                         1,459  4,930 

                              

              Barfly Ventures, LLC(10)

               August 31, 2015 

              Casual Restaurant Group

                          

                   

              12% Secured Debt (Maturity — August 31, 2020)

                10,185  10,039  10,018 

                   

              Options (3 equivalent units)

                   607  940 

                   

              Warrant (1 equivalent unit; Expiration — August 31, 2025; Strike price — $1.00 per unit)

                   473  410 

                         11,119  11,368 

                              

              BBB Tank Services, LLC

               April 8, 2016 

              Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

                          

                   

              LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 13.35%, (Maturity — April 8, 2021)(9)

                4,000  3,833  3,833 

                   

              Preferred Stock (non-voting)

                   113  113 

                   

              Member Units (800,000 units)

                   800  230 

                         4,746  4,176 

                              

              Boccella Precast Products LLC

               June 30, 2017 

              Manufacturer of Precast Hollow Core Concrete

                          

                   

              LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.40%, Secured Debt (Maturity — June 30, 2022)(9)

                15,724  15,512  15,724 

                   

              Member Units (2,160,000 units)(8)

                   2,160  5,080 

                         17,672  20,804 

                              

              Boss Industries, LLC

               July 1, 2014 

              Manufacturer and Distributor of Air, Power and Other Industrial Equipment

                          

                   

              Preferred Member Units (2,242 units)(8)

                   2,246  6,176 

                              

              Bridge Capital Solutions Corporation

               April 18, 2012 

              Financial Services and Cash Flow Solutions Provider

                          

                   

              13% Secured Debt (Maturity — July 25, 2021)

                7,500  6,221  6,221 

                   

              Warrants (82 equivalent shares; Expiration — July 25, 2026; Strike price — $0.01 per share)

                   2,132  4,020 

                   

              13% Secured Debt (Mercury Service Group, LLC) (Maturity — July 25, 2021)

                1,000  994  1,000 

                   

              Preferred Member Units (Mercury Service Group, LLC) (17,742 units)(8)

                   1,000  1,000 

                         10,347  12,241 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Buca C, LLC

               June 30, 2015 

              Casual Restaurant Group

                          

                   

              LIBOR Plus 9.25% (Floor 1.00%), Current Coupon 11.63%, Secured Debt (Maturity — June 30, 2020)(9)

                19,104  19,038  19,038 

                   

              Preferred Member Units (6 units; 6% cumulative)(8)(19)

                   4,431  4,431 

                         23,469  23,469 

                              

              CAI Software LLC

               October 10, 2014 

              Provider of Specialized Enterprise Resource Planning Software

                          

                   

              12% Secured Debt (Maturity — December 7, 2023)

                10,880  10,763  10,880 

                   

              Member Units (66,968 units)(8)

                   751  2,717 

                         11,514  13,597 

                              

              Chandler Signs Holdings, LLC(10)

               January 4, 2016 

              Sign Manufacturer

                          

                   

              12% Current / 1% PIK Secured Deb (Maturity — July 4, 2021)(19)

                4,546  4,522  4,546 

                   

              Class A Units (1,500,000 units)(8)

                   1,500  2,120 

                         6,022  6,666 

                              

              Charlotte Russe, Inc(11)

               May 28, 2013 

              Fast-Fashion Retailer to Young Women

                          

                   

              8.50% Secured Debt (Maturity — February 2, 2023)

                7,932  7,932  3,930 

                   

              Common Stock (19,041 shares)

                   3,141   

                         11,073  3,930 

                              

              Condit Exhibits, LLC

               July 1, 2008 

              Tradeshow Exhibits / Custom Displays Provider

                          

                   

              Member Units (3,936 units)(8)

                   100  1,950 

                              

              Congruent Credit Opportunities Funds(12)(13)

               January 24, 2012 

              Investment Partnership

                          

                   

              LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)

                   5,210  855 

                   

              LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

                   16,959  17,468 

                         22,169  18,323 

                              

              Dos Rios Partners(12)(13)

               April 25, 2013 

              Investment Partnership

                          

                   

              LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

                   5,846  7,153 

                   

              LP Interests (Dos Rios Partners — A, LP) (Fully diluted 6.4%)

                   1,856  2,271 

                         7,702  9,424 

                              

              East Teak Fine Hardwoods, Inc.

               April 13, 2006 

              Distributor of Hardwood Products

                          

                   

              Common Stock (6,250 shares)(8)

                   480  560 

                              

              EIG Fund Investments(12)(13)

               November 6, 2015 

              Investment Partnership

                          

                   

              LP Interests (EIG Global Private Debt Fund-A, L.P.) (Fully diluted 11.1%)(8)

                   553  505 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Freeport Financial Funds(12)(13)

               June 13, 2013 

              Investment Partnership

                          

                   

              LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.3%)(8)

                   5,974  5,399 

                   

              LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.0%)(8)

                   11,155  10,980 

                         17,129  16,379 

                              

              Harris Preston Fund Investments(12)(13)

               August 9, 2017 

              Investment Partnership

                          

                   

              LP Interests (HPEP 3, L.P.) (Fully diluted 8.2%)

                   1,733  1,733 

                              

              Hawk Ridge Systems, LLC(13)

               December 2, 2016 

              Value-Added Reseller of Engineering Design and Manufacturing Solutions

                          

                   

              10.5% Secured Debt (Maturity — December 2, 2021)

                14,300  14,201  14,300 

                   

              Preferred Member Units (226 units)(8)

                   2,850  7,260 

                   

              Preferred Member Units (HRS Services, ULC) (226 units)

                   150  380 

                         17,201  21,940 

                              

              Houston Plating and Coatings, LLC

               January 8, 2003 

              Provider of Plating and Industrial Coating Services

                          

                   

              8% Unsecured Convertible Debt (Maturity — May 1, 2022)

                3,000  3,000  3,720 

                   

              Member Units (318,462 units)(8)

                   2,236  8,330 

                         5,236  12,050 

                              

              I-45 SLF LLC(12)(13)

               October 20, 2015 

              Investment Partnership

                          

                   

              Member Units (Fully diluted 20.0%; 24.4% profits interest)(8)

                   16,200  15,627 

                              

              L.F. Manufacturing Holdings, LLC(10)

               December 23, 2013 

              Manufacturer of Fiberglass Products

                          

                   

              Member Units (2,179,001 units)

                   2,019  2,060 

                              

              Meisler Operating LLC

               June 7, 2017 

              Provider of Short-term Trailer and Container Rental

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.90%, Secured Debt (Maturity — June 7, 2022)(9)

                20,480  20,312  20,312 

                   

              Member Units (Milton Meisler Holdings LLC) (48,555 units)

                   4,855  5,780 

                         25,167  26,092 

                              

              OnAsset Intelligence, Inc.

               April 18, 2011 

              Provider of Transportation Monitoring / Tracking Products and Services

                          

                   

              12% PIK Secured Debt (Maturity — June 30, 2021)(19)

                5,743  5,743  5,743 

                   

              10% PIK Unsecured Debt (Maturity — June 30, 2021)(19)

                53  53  53 

                   

              Preferred Stock (912 shares)

                   1,981   

                   

              Warrants (5,333 equivalent shares; Expiration — April 18, 2021; Strike price — $0.01 per share)

                   1,919   

                         9,696  5,796 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              PCI Holding Company, Inc.

               December 18, 2012 

              Manufacturer of Industrial Gas Generating Systems

                          

                   

              12% Current / 3% PIK Secured Debt (Maturity — March 31, 2019)(19)

                11,919  11,908  11,908 

                   

              Preferred Stock (1,740,000 shares) (non-voting)

                   1,740  3,480 

                   

              Preferred Stock (1,500,000 shares)

                   3,927  340 

                         17,575  15,728 

                              

              Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

               January 8, 2013 

              Provider of Rigsite Accommodation Unit Rentals and Related Services

                          

                   

              12% Secured Debt (Maturity — January 8, 2018)(14)(15)

                30,785  30,281  250 

                   

              Preferred Member Units (250 units)

                   2,500   

                         32,781  250 

                              

              Salado Stone Holdings, LLC(10)

               June 27, 2016 

              Limestone and Sandstone Dimension Cut Stone Mining Quarries

                          

                   

              Class A Preferred Units (Salado Acquisition, LLC) (2,000,000 units)(8)

                   2,000  1,040 

                              

              SI East, LLC

               August 31, 2018 

              Rigid Industrial Packaging Manufacturing

                          

                   

              10.25% Current, Secured Debt (Maturity — August 31, 2023)

                35,250  34,885  34,885 

                   

              Preferred Member Units (157 units)

                   6,000  6,000 

                         40,885  40,885 

                              

              Slick Innovations, LLC

               September 13, 2018 

              Text Message Marketing Platform

                          

                   

              14% Current, Secured Debt (Maturity — September 13, 2023)

                7,200  6,959  6,959 

                   

              Member Units (70,000 units)

                   700  700 

                   

              Warrants (18,084 equivalent units; Expiration — September 13, 2028; Strike price — $0.01 per unit)

                   181  181 

                         7,840  7,840 

                              

              UniTek Global Services, Inc.(11)

               April 15, 2011 

              Provider of Outsourced Infrastructure Services

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 8.01%, Secured Debt (Maturity — August 20, 2024)(9)

                2,993  2,969  2,969 

                   

              Preferred Stock (1,521,122 shares; 19% cumulative)(8)(19)

                   1,637  1,637 

                   

              Preferred Stock (2,281,682 shares; 19% cumulative)(8)(19)

                   3,038  3,038 

                   

              Preferred Stock (4,336,866 shares; 13.5% cumulative)(8)(19)

                   7,413  7,413 

                   

              Common Stock (945,507 shares)

                     1,420 

                         15,057  16,477 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Universal Wellhead Services Holdings, LLC(10)

               October 30, 2014 

              Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                          

                   

              Preferred Member Units (UWS Investments, LLC) (716,949 units; 14% cumulative)(8)(19)

                   837  950 

                   

              Member Units (UWS Investments, LLC) (4,000,000 units)

                   4,000  2,330 

                         4,837  3,280 

                              

              Volusion, LLC

               January 26, 2015 

              Provider of Online Software-as-a-Service eCommerce Solutions

                          

                   

              11.5% Secured Debt (Maturity — January 26, 2020)

                19,272  18,407  18,407 

                   

              8% Unsecured Convertible Debt (Maturity — November 16, 2023)

                297  297  297 

                   

              Preferred Member Units (4,876,670 units)

                   14,000  14,000 

                   

              Warrants (1,831,355 equivalent units; Expiration — January 26, 2025; Strike price — $0.01 per unit)

                   2,576  1,890 

                         35,280  34,594 

              Subtotal Affiliate Investments (24.4% of net assets at fair value)

                  $381,307 $359,890 

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Non-Control/Non-Affiliate Investments(7)

               

               

                        

                              

              AAC Holdings, Inc.(11)

               June 30, 2017 

              Substance Abuse Treatment Service Provider

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 9.28%, Secured Debt (Maturity — June 30, 2023)(9)

               $14,500 $14,245 $14,246 

                              

              Adams Publishing Group, LLC(10)

               November 19, 2015 

              Local Newspaper Operator

                          

                   

              Prime Plus 4.00% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity — July 3, 2023)(9)

                4,250  4,160  4,160 

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.93%, Secured Debt (Maturity — July 3, 2023)(9)

                8,108  7,956  7,956 

                         12,116  12,116 

                              

              ADS Tactical, Inc.(10)

               March 7, 2017 

              Value-Added Logistics and Supply Chain Provider to the Defense Industry

                          

                   

              LIBOR Plus 6.25% (Floor 0.75%), Current Coupon 8.77%, Secured Debt (Maturity — July 26, 2023)(9)

                16,416  16,263  15,306 

                              

              Aethon United BR LP(10)

               September 8, 2017 

              Oil & Gas Exploration & Production

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 9.14%, Secured Debt (Maturity — September 8, 2023)(9)

                4,063  4,011  3,817 

                              

              Allen Media, LLC.(11)

               September 18, 2018 

              Operator of Cable Television Networks

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 9.21%, Secured Debt (Maturity — August 30, 2023)(9)

                17,143  16,670  16,800 

                              

              Allflex Holdings III Inc.(11)

               July 18, 2013 

              Manufacturer of Livestock Identification Products

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.48%, Secured Debt (Maturity — July 19, 2021)(9)

                13,120  13,077  13,013 

                              

              American Nuts, LLC(10)

               April 10, 2018 

              Roaster, Mixer and Packager of Bulk Nuts and Seeds

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%) PIK, 9.50% PIK Secured Debt, (Maturity — April 10, 2023)(9)(19)

                1,127  1,115  1,115 

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.90%, Secured Debt (Maturity — April 10, 2023)(9)

                11,194  11,000  10,475 

                         12,115  11,590 

                              

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              American Scaffold Holdings, Inc.(10)

               June 14, 2016 

              Marine Scaffolding Service Provider

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 9.30%, Secured Debt (Maturity — March 31, 2022)(9)

                6,656  6,592  6,623 

                              

              American Teleconferencing Services, Ltd.(11)

               May 19, 2016 

              Provider of Audio Conferencing and Video Collaboration Solutions

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 9.09%, Secured Debt (Maturity — December 8, 2021)(9)

                15,940  15,186  13,310 

                              

              Apex Linen Service, Inc.

               October 30, 2015 

              Industrial Launderers

                          

                   

              LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 11.35%, Secured Debt (Maturity — October 30, 2022)(9)

                2,400  2,400  2,400 

                   

              16% Secured Debt (Maturity — October 30, 2022)

                14,416  14,357  14,357 

                         16,757  16,757 

                              

              APTIM Corp.(11)

               August 17, 2018 

              Engineering, Construction & Procurement

                          

                   

              7.75% Secured Debt (Maturity — June 15, 2025)

                12,452  10,633  9,464 

                              

              Arcus Hunting LLC(10)

               January 6, 2015 

              Manufacturer of Bowhunting and Archery Products and Accessories

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.40%, Secured Debt (Maturity — November 13, 2019)(9)

                15,394  15,351  15,394 

                              

              Arise Holdings, Inc.(10)

               March 12, 2018 

              Tech-Enabled Business Process Outsourcing

                          

                   

              Preferred Stock (1,000,000 shares)

                   1,000  1,704 

                              

              ASC Ortho Management Company, LLC(10)

               August 31, 2018 

              Provider of Orthopedic Services

                          

                   

              LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.90%, Secured Debt (Maturity — August 31, 2023)(9)

                4,660  4,559  4,559 

                   

              13.25% PIK Secured Debt (Maturity — December 1, 2023)(19)

                1,624  1,587  1,587 

                         6,146  6,146 

                              

              ATI Investment Sub, Inc.(11)

               July 11, 2016 

              Manufacturer of Solar Tracking Systems

                          

                   

              LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.76%, Secured Debt (Maturity — June 22, 2021)(9)

                4,385  4,346  3,943 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              ATX Networks Corp.(11)(13)(21)

               June 30, 2015 

              Provider of Radio Frequency Management Equipment

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.39% / 1.00% PIK, Current Coupon Plus PIK 9.39%, Secured Debt (Maturity — June 11, 2021)(9)(19)

                14,121  13,844  13,415 

                              

              Berry Aviation, Inc.(10)

               July 6, 2018 

              Charter Airline Services

                          

                   

              10.50% Current / 1.5% PIK, Secured Debt (Maturity — January 6, 2024)(19)

                4,485  4,443  4,443 

                   

              Preferred Member Units (Berry Acquisition, LLC) (1,548,387 units; 8% cumulative)(8)(19)

                   1,609  1,609 

                         6,052  6,052 

                              

              BigName Commerce, LLC(10)

               May 11, 2017 

              Provider of Envelopes and Complimentary Stationery Products

                          

                   

              LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.65%, Secured Debt (Maturity — May 11, 2022)(9)

                2,462  2,440  2,369 

                              

              Binswanger Enterprises, LLC(10)

               March 10, 2017 

              Glass Repair and Installation Service Provider

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.74%, Secured Debt (Maturity — March 9, 2022)(9)

                14,368  14,169  13,743 

                   

              Member Units (1,050,000 units)

                   1,050  1,330 

                         15,219  15,073 

                              

              Bluestem Brands, Inc.(11)

               December 19, 2013 

              Multi-Channel Retailer of General Merchandise

                          

                   

              LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 10.02%, Secured Debt (Maturity — November 6, 2020)(9)

                11,375  11,262  7,356 

                              

              Brainworks Software, LLC(10)

               August 12, 2014 

              Advertising Sales and Newspaper Circulation Software

                          

                   

              Prime Plus 9.25% (Floor 3.25%), Current Coupon 14.70%, Secured Debt (Maturity — July 22, 2019)(9)

                6,733  6,723  6,590 

                              

              Brightwood Capital Fund Investments(12)(13)

               July 21, 2014 

              Investment Partnership

                          

                   

              LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 1.6%)(8)

                   12,000  10,264 

                   

              LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.6%)(8)

                   2,000  2,063 

                         14,000  12,327 

                              

              Cadence Aerospace LLC(10)

               November 14, 2017 

              Aerostructure Manufacturing

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 9.06%, Secured Debt (Maturity — November 14, 2023)(9)

                19,470  19,301  18,244 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              California Pizza Kitchen, Inc.(11)

               August 29, 2016 

              Casual Restaurant Group

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.53%, Secured Debt (Maturity — August 23, 2022)(9)

                12,739  12,707  12,389 

                              

              Central Security Group, Inc.(11)

               December 4, 2017 

              Security Alarm Monitoring Service Provider

                          

                   

              LIBOR Plus 5.63% (Floor 1.00%), Current Coupon 8.15%, Secured Debt (Maturity — October 6, 2021)(9)

                13,884  13,821  13,867 

                              

              Cenveo Corporation(11)

               September 4, 2015 

              Provider of Digital Marketing Agency Services

                          

                   

              Libor Plus 9.00% (Floor 1.00%), Current Coupon 11.54%, Secured Debt (Maturity — June 7, 2023)(9)

                6,370  6,128  6,048 

                   

              Common Stock (177,130 shares)

                   5,309  2,746 

                         11,437  8,794 

                              

              Clarius BIGS, LLC(10)

               September 23, 2014 

              Prints & Advertising Film Financing

                          

                   

              15% PIK Secured Debt (Maturity — January 5, 2015)(14)(17)

                2,908  2,908  44 

                              

              Clickbooth.com, LLC(10)

               December 5, 2017 

              Provider of Digital Advertising Performance Marketing Solutions

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.90%, Secured Debt (Maturity — December 5, 2022)(9)

                2,925  2,876  2,750 

                              

              Construction Supply Investments, LLC(10)

               December 29, 2016 

              Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.62%, Secured Debt (Maturity — June 30, 2023)(9)

                15,423  15,355  15,384 

                   

              Member Units (42,207 units)

                   4,221  4,290 

                         19,576  19,674 

                              

              CTVSH, PLLC(10)

               August 3, 2017 

              Emergency Care and Specialty Service Animal Hospital

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.74%, Secured Debt (Maturity — August 3, 2022)(9)

                11,250  11,163  10,939 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Darr Equipment LP(10)

               April 15, 2014 

              Heavy Equipment Dealer

                          

                   

              11.5% Current / 1% PIK Secured Debt (Maturity - June 22, 2023)(19)

                5,839  5,839  5,723 

                   

              Warrants (915,734 equivalent units; Expiration — December 23, 2023; Strike price — $1.50 per unit)

                   474  60 

                         6,313  5,783 

                              

              Digital River, Inc.(11)

               February 24, 2015 

              Provider of Outsourced e-Commerce Solutions and Services

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.78%, Secured Debt (Maturity — February 12, 2021)(9)

                10,146  10,074  10,044 

                              

              DTE Enterprises, LLC(10)

               April 13, 2018 

              Industrial Powertrain Repair and Services

                          

                   

              LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 10.12%, Secured Debt (Maturity — April 13, 2023)(9)

                12,492  12,260  11,580 

                   

              Class AA Preferred Member Units (non-voting; 10% cumulative)(8)(19)

                   778  778 

                   

              Class A Preferred Member Units (776,316 units)(8)

                   776  1,300 

                         13,814  13,658 

                              

              Dynamic Communities, LLC(10)

               July 17, 2018 

              Developer of Business Events and Online Community Groups

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.80%, Secured Debt (Maturity — July 17, 2023)(9)

                5,600  5,495  5,495 

                              

              Elite SEM INC.(10)

               August 31, 2018 

              Provider of Digital Marketing Agency Services

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 11.27%, Secured Debt (Maturity — February 1, 2022)(9)(23)

                6,875  6,750  6,750 

                              

              EnCap Energy Fund Investments(12)(13)

               December 28, 2010 

              Investment Partnership

                          

                   

              LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

                   3,661  2,003 

                   

              LP Interests (EnCap Energy Capital Fund VIII Co- Investors, L.P.) (Fully diluted 0.4%)(8)

                   2,103  1,153 

                   

              LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

                   4,430  3,784 

                   

              LP Interests (EnCap Energy Capital Fund X, L.P.) (Fully diluted 0.1%)(8)

                   7,629  7,692 

                   

              LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 0.8%)(8)

                   5,881  4,538 

                   

              LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.2%)(8)

                   5,423  5,051 

                         29,127  24,221 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Encino Acquisition Partners Holdings, Inc.(11)

               November 16, 2018 

              Oil & Gas Exploration & Production

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 9.27%, Secured Debt (Maturity — October 29, 2025)(9)

                9,000  8,911  8,595 

                              

              EPIC Y-Grade Services, LP(11)

               June 22, 2018 

              NGL Transportation & Storage

                          

                   

              LIBOR Plus 5.50%, Current Coupon 8.02%, Secured Debt (Maturity — June 13, 2024)

                17,500  17,175  16,625 

                              

              Evergreen Skills Lux S.á r.l. (d/b/a Skillsoft)(11)(13)

               May 5, 2014 

              Technology-based Performance Support Solutions

                          

                   

              LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 10.77%, Secured Debt (Maturity — April 28, 2022)(9)

                6,999  6,901  3,931 

                              

              Extreme Reach, Inc.(11)

               March 31, 2015 

              Integrated TV and Video Advertising Platform

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.78%, Secured Debt (Maturity — February 7, 2020)(9)

                16,460  16,451  16,371 

                              

              Felix Investments Holdings II(10)

               August 9, 2017 

              Oil & Gas Exploration & Production

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 9.10%, Secured Debt (Maturity — August 9, 2022)(9)

                3,333  3,279  3,141 

                              

              Flavors Holdings Inc.(11)

               October 15, 2014 

              Global Provider of Flavoring and Sweetening Products

                          

                   

              LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 8.55%, Secured Debt (Maturity — April 3, 2020)(9)

                12,295  12,044  11,434 

                              

              GeoStabilization International (GSI)(11)

               December 31, 2018 

              Geohazard Engineering Services & Maintenance

                          

                   

              LIBOR Plus 5.50%, Current Coupon 8.09%, Secured Debt (Maturity — December 19, 2025)

                16,500  16,335  16,418 

                              

              GI KBS Merger Sub LLC(11)

               November 10, 2014 

              Outsourced Janitorial Service Provider

                          

                   

              LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 7.43%, Secured Debt (Maturity — October 29, 2021)(9)

                9,195  9,139  9,207 

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 11.02%, Secured Debt (Maturity — April 29, 2022)(9)

                3,915  3,797  3,949 

                         12,936  13,156 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Good Source Solutions, Inc.(10)

               October 23, 2018 

              Specialized Food Distributor

                          

                   

              LIBOR Plus 8.34% (Floor 1.00%), Current Coupon 11.14%, Secured Debt (Maturity — June 29, 2023)(9)(23)

                5,000  4,952  4,952 

                              

              GoWireless Holdings, Inc.(11)

               December 31, 2017 

              Provider of Wireless Telecommunications Carrier Services

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 9.02%, Secured Debt (Maturity — December 22, 2024)(9)

                17,325  17,170  16,856 

                              

              Grupo Hima San Pablo, Inc.(11)

               March 7, 2013 

              Tertiary Care Hospitals

                          

                   

              LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 9.52%, Secured Debt (Maturity — January 31, 2019)(9)

                4,688  4,688  3,629 

                   

              13.75% Secured Debt (Maturity — October 15, 2018)(17)

                2,055  2,040  226 

                         6,728  3,855 

                              

              HDC/HW Intermediate Holdings(10)

               December 21, 2018 

              Managed Services and Hosting Provider

                          

                   

              LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 10.29%, Secured Debt (Maturity — December 21, 2023)(9)

                3,201  3,132  3,132 

                              

              Hoover Group, Inc.(10)(13)

               October 21, 2016 

              Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets

                          

                   

              LIBOR Plus 6.00%, Current Coupon 8.71%, Secured Debt (Maturity — January 28, 2020)

                5,250  4,803  4,771 

                   

              LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.90%, Secured Debt (Maturity — January 28, 2021)(9)

                9,395  9,053  8,831 

                         13,856  13,602 

                              

              Hunter Defense Technologies, Inc.(10)

               March 29, 2018 

              Provider of Military and Commercial Shelters and Systems

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.80%, Secured Debt (Maturity — March 29, 2023)(9)

                16,080  15,757  15,077 

                              

              Hydrofarm Holdings LLC(10)

               May 18, 2017 

              Wholesaler of Horticultural Products

                          

                   

              LIBOR Plus 10.00%, Current Coupon 3.69% / 8.61% PIK, Current Coupon Plus PIK 12.30% Secured Debt (Maturity — May 12, 2022)(19)

                7,235  7,139  5,660 

                              

              iEnergizer Limited(11)(13)(21)

               May 8, 2013 

              Provider of Business Outsourcing Solutions

                          

                   

              LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 8.53%, Secured Debt (Maturity — May 1, 2019)(9)

                14,100  14,052  14,117 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Implus Footcare, LLC(10)

               June 1, 2017 

              Provider of Footwear and Related Accessories

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 9.55%, Secured Debt (Maturity — April 30, 2021)(9)

                18,819  18,629  18,390 

                              

              Independent Pet Partners Intermediate Holdings, LLC(10)

               November 20, 2018 

              Omnichannel Retailer of Specialty Pet Products

                          

                   

              LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 11.90%, Secured Debt (Maturity — November 19, 2023)(9)

                2,078  2,037  2,037 

                   

              Member Units (1,558,333 units)

                   1,558  1,558 

                         3,595  3,595 

                              

              Industrial Services Acquisition, LLC(10)

               June 17, 2016 

              Industrial Cleaning Services

                          

                   

              6% Current / 7% PIK Unsecured Debt (Maturity — December 17, 2022)(19)

                4,885  4,822  4,470 

                   

              Preferred Member Units (Industrial Services Investments, LLC) (144 units; 10% cumulative)(8)(19)

                   94  94 

                   

              Member Units (Industrial Services Investments, LLC) (900 units)

                   900  210 

                         5,816  4,774 

                              

              Inn of the Mountain Gods Resort and Casino(11)

               October 30, 2013 

              Hotel & Casino Owner & Operator

                          

                   

              9.25% Secured Debt (Maturity — November 30, 2020)

                7,832  7,479  7,480 

                              

              Intermedia Holdings, Inc.(11)

               August 3, 2018 

              Unified Communications as a Service

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.52%, Secured Debt (Maturity — July 19, 2025)(9)

                11,571  11,461  11,557 

                              

              irth Solutions, LLC

               December 29, 2010 

              Provider of Damage Prevention Information Technology Services

                          

                   

              Member Units (27,893 units)

                   1,441  2,830 

                              

              Isagenix International, LLC(11)

               June 21, 2018 

              Direct Marketer of Health & Wellness Products

                          

                   

              LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 8.55%, Secured Debt (Maturity — June 14, 2025)(9)

                6,268  6,208  6,095 

                              

              JAB Wireless, Inc.(10)

               May 2, 2018 

              Fixed Wireless Broadband Provider

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.39%, Secured Debt (Maturity — May 2, 2023)(9)

                14,888  14,754  13,987 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Jacent Strategic Merchandising, LLC(10)

               September 16, 2015 

              General Merchandise Distribution

                          

                   

              LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 10.27%, Secured Debt (Maturity — September 16, 2020)(9)

                10,740  10,705  10,740 

                              

              Jackmont Hospitality, Inc.(10)

               May 26, 2015 

              Franchisee of Casual Dining Restaurants

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 9.26%, Secured Debt (Maturity — May 26, 2021)(9)

                4,165  4,157  4,165 

                              

              Jacuzzi Brands LLC(11)

               June 30, 2017 

              Manufacturer of Bath and Spa Products

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.52%, Secured Debt (Maturity — June 28, 2023)(9)

                3,850  3,788  3,831 

                              

              Joerns Healthcare, LLC(11)

               April 3, 2013 

              Manufacturer and Distributor of Health Care Equipment & Supplies

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.71% Secured Debt (Maturity — May 9, 2020)(9)

                13,387  13,335  11,998 

                              

              Kore Wireless Group Inc.(11)

               December 31, 2018 

              Mission Critical Software Platform

                          

                   

              LIBOR Plus 5.50%, Current Coupon 8.29%, Secured Debt (Maturity — December 20, 2024)

                6,667  6,600  6,631 

                              

              Larchmont Resources, LLC(11)

               August 13, 2013 

              Oil & Gas Exploration & Production

                          

                   

              LIBOR Plus 9.00% (Floor 1.00%) PIK, 11.77% PIK Secured Debt, (Maturity — August 7, 2020)(9)(19)

                2,312  2,312  2,266 

                   

              Member Units (Larchmont Intermediate Holdco, LLC) (2,828 units)

                   353  707 

                         2,665  2,973 

                              

              LKCM Headwater Investments I, L.P.(12)(13)

               January 25, 2013 

              Investment Partnership

                          

                   

              LP Interests (Fully diluted 2.3%)(8)

                   1,780  3,501 

                              

              Logix Acquisition Company, LLC(10)

               June 24, 2016 

              Competitive Local Exchange Carrier

                          

                   

              LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 8.27%, Secured Debt (Maturity — December 22, 2024)(9)

                12,927  12,725  12,797 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Looking Glass Investments, LLC(12)(13)

               July 1, 2015 

              Specialty Consumer Finance

                          

                   

              Member Units (2.5 units)

                   125  57 

                   

              Member Units (LGI Predictive Analytics LLC) (190,712 units)(8)

                   49  33 

                         174  90 

                              

              LSF9 Atlantis Holdings, LLC(11)

               May 17, 2017 

              Provider of Wireless Telecommunications Carrier Services

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.38%, Secured Debt (Maturity — May 1, 2023)(9)

                9,710  9,694  9,269 

                              

              Lulu's Fashion Lounge, LLC(10)

               August 31, 2017 

              Fast Fashion E-Commerce Retailer

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.52%, Secured Debt (Maturity — August 28, 2022)(9)

                12,358  12,060  11,987 

                              

              MHVC Acquisition Corp.(11)

               May 8, 2017 

              Provider of differentiated information solutions, systems engineering, and analytics

                          

                   

              LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 8.06%, Secured Debt (Maturity — April 29, 2024)(9)

                15,475  15,442  15,088 

                              

              Mills Fleet Farm Group, LLC(10)

               October 24, 2018 

              Omnichannel Retailer of Work, Farm and Lifestyle Merchandise

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.77%, Secured Debt (Maturity — October 24, 2024)(9)

                15,000  14,707  15,000 

                              

              Mobileum(10)

               October 23, 2018 

              Provider of big data analytics to telecom service providers

                          

                   

              LIBOR Plus 10.25% (Floor 0.75%), Current Coupon 13.06%, Secured Debt (Maturity — May 1, 2022)(9)

                7,500  7,429  7,429 

                              

              NBG Acquisition Inc(11)

               April 28, 2017 

              Wholesaler of Home Décor Products

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 8.09%, Secured Debt (Maturity — April 26, 2024)(9)

                4,292  4,235  4,184 

                              

              New Era Technology, Inc.(10)

               June 30, 2018 

              Managed Services and Hosting Provider

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.99%, Secured Debt (Maturity — June 22, 2023)(9)

                7,654  7,526  7,616 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              New Media Holdings II LLC(11)(13)

               June 10, 2014 

              Local Newspaper Operator

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.77%, Secured Debt (Maturity — July 14, 2022)(9)

                21,125  20,797  20,967 

                              

              NNE Partners, LLC(10)

               March 2, 2017 

              Oil & Gas Exploration & Production

                          

                   

              LIBOR Plus 8.00%, Current Coupon 10.74%, Secured Debt (Maturity — March 2, 2022)

                20,417  20,260  19,572 

                              

              North American Lifting Holdings, Inc.(11)

               February 26, 2015 

              Crane Service Provider

                          

                   

              LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 7.30%, Secured Debt (Maturity — November 27, 2020)(9)

                7,664  7,093  6,997 

                              

              Novetta Solutions, LLC(11)

               June 21, 2017 

              Provider of Advanced Analytics Solutions for Defense Agencies

                          

                   

              LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 7.53%, Secured Debt (Maturity — October 17, 2022)(9)

                15,478  15,091  15,091 

                              

              NTM Acquisition Corp.(11)

               July 12, 2016 

              Provider of B2B Travel Information Content

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.96%, Secured Debt (Maturity — June 7, 2022)(9)

                4,419  4,396  4,375 

                              

              Ospemifene Royalty Sub LLC (QuatRx)(10)

               July 8, 2013 

              Estrogen-Deficiency Drug Manufacturer and Distributor

                          

                   

              11.5% Secured Debt (Maturity — November 15, 2026)(14)

                4,975  4,975  937 

                              

              Permian Holdco 2, Inc.(11)

               February 12, 2013 

              Storage Tank Manufacturer

                          

                   

              14% PIK Unsecured Debt (Maturity — October 15, 2021)(19)

                396  396  396 

                   

              Preferred Stock (Permian Holdco 1, Inc.) (154,558 units)

                   799  920 

                         1,195  1,316 

                              

              Pernix Therapeutics Holdings, Inc.(10)

               August 18, 2014 

              Pharmaceutical Royalty

                          

                   

              12% Secured Debt (Maturity — August 1, 2020)

                3,031  3,031  2,037 

                              

              Pier 1 Imports, Inc.(11)

               February 20, 2018 

              Decorative Home Furnishings Retailer

                          

                   

              LIBOR Plus 3.50% (Floor 1.00%), Current Coupon 6.38%, Secured Debt (Maturity — April 30, 2021)(9)

                9,736  9,152  6,998 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Point.360(10)

               July 8, 2015 

              Fully Integrated Provider of Digital Media Services

                          

                   

              Warrants (65,463 equivalent shares; Expiration — July 7, 2020; Strike price — $0.75 per share)

                   69   

                   

              Common Stock (163,658 shares)

                   273  5 

                         342  5 

                              

              PricewaterhouseCoopers Public Sector LLP(11)

               May 24, 2018 

              Provider of Consulting Services to Governments

                          

                   

              LIBOR Plus 7.50%, Current Coupon 9.74%, Secured Debt (Maturity — May 1, 2026)

                8,000  7,962  8,040 

                              

              Prowler Acquisition Corp.(11)

               February 11, 2014 

              Specialty Distributor to the Energy Sector

                          

                   

              LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 7.30%, Secured Debt (Maturity — January 28, 2020)(9)

                20,028  19,122  19,727 

                              

              PT Network, LLC(10)

               November 1, 2013 

              Provider of Outpatient Physical Therapy and Sports Medicine Services

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.99%, Secured Debt (Maturity — November 30, 2021)(9)

                8,732  8,732  8,619 

                              

              Research Now Group, Inc. and Survey Sampling International, LLC(11)

               December 31, 2017 

              Provider of Outsourced Online Surveying

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 8.02%, Secured Debt (Maturity — December 20, 2024)(9)

                15,360  14,757  15,110 

                              

              Resolute Industrial, LLC(10)

               July 26, 2017 

              HVAC Equipment Rental and Remanufacturing

                          

                   

              Member Units (601 units)

                   750  920 

                              

              RM Bidder, LLC(10)

               November 12, 2015 

              Scripted and Unscripted TV and Digital Programming Provider

                          

                   

              Warrants (327,532 equivalent units; Expiration — October 20, 2025; Strike price — $14.28 per unit)

                   425   

                   

              Member Units (2,779 units)

                   46  11 

                         471  11 

                              

              SAFETY Investment Holdings, LLC

               April 29, 2016 

              Provider of Intelligent Driver Record Monitoring Software and Services

                          

                   

              Member Units (2,000,000 units)

                   2,000  1,820 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Salient Partners L.P.(11)

               June 25, 2015 

              Provider of Asset Management Services

                          

                   

              LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 8.27%, Secured Debt (Maturity — June 9, 2021)(9)

                7,313  7,280  7,280 

                              

              SiTV, LLC(11)

               September 26, 2017 

              Cable Networks Operator

                          

                   

              10.375% Secured Debt (Maturity — July 1, 2019)

                10,429  7,196  3,911 

                              

              SMART Modular Technologies, Inc.(10)(13)

               August 18, 2017 

              Provider of Specialty Memory Solutions

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.86%, Secured Debt (Maturity — August 9, 2022)(9)

                19,000  18,793  19,095 

                              

              Sorenson Communications, Inc.(11)

               June 7, 2016 

              Manufacturer of Communication Products for Hearing Impaired

                          

                   

              LIBOR Plus 5.75% (Floor 2.25%), Current Coupon 8.56%, Secured Debt (Maturity — April 30, 2020)(9)

                13,097  13,059  13,048 

                              

              Staples Canada ULC(10)(13)(21)

               September 14, 2017 

              Office Supplies Retailer

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.26%, Secured Debt (Maturity — September 12, 2023)(9)(22)

                16,867  16,589  14,026 

                              

              STL Parent Corp.(10)

               December 14, 2018 

              Manufacturer and Servicer of Tank and Hopper Railcars

                          

                   

              LIBOR Plus 7.00%, Current Coupon 9.52%, Secured Debt (Maturity — December 5, 2022)

                15,000  14,475  14,475 

                              

              Strike, LLC(11)

               December 12, 2016 

              Pipeline Construction and Maintenance Services

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.59%, Secured Debt (Maturity — November 30, 2022)(9)

                9,000  8,797  9,011 

                              

              TE Holdings, LLC(11)

               December 5, 2013 

              Oil & Gas Exploration & Production

                          

                   

              Member Units (97,048 units)

                   970  66 

                              

              Tectonic Holdings, LLC

               May 15, 2017 

              Financial Services Organization

                          

                   

              Member Units (200,000 units)(8)

                   2,000  2,420 

                              

              TeleGuam Holdings, LLC(11)

               June 26, 2013 

              Cable and Telecom Services Provider

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 11.02%, Secured Debt (Maturity — April 12, 2024)(9)

                7,750  7,620  7,798 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              TGP Holdings III LLC(11)

               September 30, 2017 

              Outdoor Cooking & Accessories

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 11.30%, Secured Debt (Maturity — September 25, 2025)(9)

                5,500  5,433  5,335 

                              

              The Pasha Group(11)

               February 2, 2018 

              Diversified Logistics and Transportation Provided

                          

                   

              LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 10.06%, Secured Debt (Maturity — January 26, 2023)(9)

                10,938  10,655  11,006 

                              

              TMC Merger Sub Corp.(11)

               December 22, 2016 

              Refractory & Maintenance Services Provider

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 9.31%, Secured Debt (Maturity — October 31, 2022)(9)(24)

                17,207  17,014  17,121 

                              

              TOMS Shoes, LLC(11)

               November 13, 2014 

              Global Designer, Distributor, and Retailer of Casual Footwear

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 8.30%, Secured Debt (Maturity — October 30, 2020)(9)

                4,813  4,635  3,798 

                              

              Turning Point Brands, Inc.(10)(13)

               February 17, 2017 

              Marketer/Distributor of Tobacco Products

                          

                   

              LIBOR Plus 7.00%, Current Coupon 9.46%, Secured Debt (Maturity — March 7, 2024)

                8,500  8,424  8,585 

                              

              TVG-I-E CMN ACQUISITION, LLC(10)

               November 3, 2016 

              Organic Lead Generation for Online Postsecondary Schools

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.52%, Secured Debt (Maturity — November 3, 2021)(9)

                19,503  19,191  19,454 

                              

              U.S. TelePacific Corp.(11)

               September 14, 2016 

              Provider of Communications and Managed Services

                          

                   

              LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 7.80%, Secured Debt (Maturity — May 2, 2023)(9)

                18,491  18,344  17,363 

                              

              VIP Cinema Holdings, Inc.(11)

               March 9, 2017 

              Supplier of Luxury Seating to the Cinema Industry

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.53%, Secured Debt (Maturity — March 1, 2023)(9)

                10,494  10,451  10,304 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              Portfolio Company(1)(20)
               Investment Date(26)
               Business Description
               Type of Investment(2)(3)(25)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Vistar Media, Inc.(10)

               February 17, 2017 

              Operator of Digital Out-of-Home Advertising Platform

                          

                   

              LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.74%, Secured Debt (Maturity — February 16, 2022)(9)

                3,263  3,048  2,987 

                   

              Warrants (70,207 equivalent shares; Expiration — February 17, 2027; Strike price — $0.01 per share)

                   331  790 

                         3,379  3,777 

                              

              Wireless Vision Holdings, LLC(10)

               September 29, 2017 

              Provider of Wireless Telecommunications Carrier Services

                          

                   

              LIBOR Plus 8.91% (Floor 1.00%), Current Coupon 11.41%, Secured Debt (Maturity — September 29, 2022)(9)(28)

                14,279  14,055  13,414 

                              

              YS Garments, LLC(11)

               August 22, 2018 

              Designer and Provider of Branded Activewear

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.42% Secured Debt (Maturity — August 9, 2024)(9)

                14,906  14,764  14,756 

                              

              Zilliant Incorporated

               June 15, 2012 

              Price Optimization and Margin Management Solutions

                          

                   

              Preferred Stock (186,777 shares)

                   154  260 

                   

              Warrants (952,500 equivalent shares; Expiration — June 15, 2022; Strike price — $0.001 per share)

                   1,071  1,189 

                         1,225  1,449 

              Subtotal Non-Control/Non-Affiliate Investments (73.8% of net assets at fair value)

                  $1,137,108 $1,089,026 

              Total Portfolio Investments, December 31, 2018

                  $2,269,033 $2,453,909 

              (1)
              All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

              (2)
              Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

              (3)
              See Note C for a summary of geographic location of portfolio companies.

              (4)
              Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

              (5)
              Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

              (6)
              Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

              (7)
              Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

              (8)
              Income producing through dividends or distributions.

              (9)
              Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at December 31, 2018. As noted in this schedule, 64% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.00%, with a weighted-average LIBOR floor of approximately 1.03%.

              (10)
              Private Loan portfolio investment. See Note B for a description of Private Loan portfolio investments.

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2018
              (dollars in thousands)
              (unaudited)

              (11)
              Middle Market portfolio investment. See Note B for a description of Middle Market portfolio investments.

              (12)
              Other Portfolio investment. See Note B for a description of Other Portfolio investments.

              (13)
              Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

              (14)
              Non-accrual and non-income producing investment.

              (15)
              Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

              (16)
              External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

              (17)
              Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

              (18)
              Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C for further discussion.

              (19)
              PIK interest income and cumulative dividend income represent income not paid currently in cash.

              (20)
              All portfolio company headquarters are based in the United States, unless otherwise noted.

              (21)
              Portfolio company headquarters are located outside of the United States.

              (22)
              In connection with the Company's debt investment in Staples Canada ULC to help mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company has a forward foreign currency contract with Cadence Bank to lend $20.4 million Canadian Dollars and receive $15.7 million U.S. Dollars with a settlement date of September 12, 2019. The unrealized appreciation on the forward foreign currency contract is $0.6 million as of December 31, 2018.

              (23)
              The Company has entered into an intercreditor agreement that entitles the CompanyNotes to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 6.00% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

              (24)
              The Company has entered into an intercreditor agreement that entitles the Company to the "first out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a lower interest rate than the contractual stated interest rate of LIBOR plus 6.64% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such lower rate.

              (25)
              All of the Company's portfolio investments are generally subject to restrictions on resale as "restricted securities."

              (26)
              Investment date represents the date of initial investment in the portfolio company.

              (27)
              Investment has an unfunded commitment as of December 31, 2018 (see Note K). The fair value of the investment includes the impact of the fair value of any unfunded commitments

              (28)
              The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 8.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

              Financial StatementsTable of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Control Investments(5)

                 

               

               

               

                        

                              

              Access Media Holdings, LLC(10)

               July 22, 2015 

              Private Cable Operator

                          

                   

              5% Current / 5% PIK Secured Debt (Maturity — July 22, 2020)(19)

               $23,828 $23,828 $17,150 

                   

              Preferred Member Units (8,248,500 units)

                   8,142   

                   

              Member Units (45 units)

                   1   

                         31,971  17,150 

                              

              ASC Interests, LLC

               August 1, 2013 

              Recreational and Educational Shooting Facility

                          

                   

              11% Secured Debt (Maturity — July 31, 2018)

                1,800  1,795  1,795 

                   

              Member Units (1,500 units)

                   1,500  1,530 

                         3,295  3,325 

                              

              ATS Workholding, LLC(10)

               March 10, 2014 

              Manufacturer of Machine Cutting Tools and Accessories

                          

                   

              5% Secured Debt (Maturity — November 16, 2021)

                3,726  3,249  3,249 

                   

              Preferred Member Units (3,725,862 units)

                   3,726  3,726 

                         6,975  6,975 

                              

              Bond-Coat, Inc.

               December 28, 2012 

              Casing and Tubing Coating Services

                          

                   

              12% Secured Debt (Maturity — December 28, 2017)(17)

                11,596  11,596  11,596 

                   

              Common Stock (57,508 shares)

                   6,350  9,370 

                         17,946  20,966 

                              

              Café Brazil, LLC

               April 20, 2004 

              Casual Restaurant Group

                          

                   

              Member Units (1,233 units)(8)

                   1,742  4,900 

                              

              CBT Nuggets, LLC

               June 1, 2006 

              Produces and Sells IT Training Certification Videos

                          

                   

              Member Units (416 units)(8)

                   1,300  89,560 

                              

              Charps, LLC

               February 3, 2017 

              Pipeline Maintenance and Construction

                          

                   

              12% Secured Debt (Maturity — February 3, 2022)

                18,400  18,225  18,225 

                   

              Preferred Member Units (1,600 units)

                   400  650 

                         18,625  18,875 

                              

              Clad-Rex Steel, LLC

               December 20, 2016 

              Specialty Manufacturer of Vinyl-Clad Metal

                          

                   

              LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.86%, Secured Debt (Maturity — December 20, 2021)(9)

                13,280  13,168  13,280 

                   

              Member Units (717 units)(8)

                   7,280  9,500 

                   

              10% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity — December 20, 2036)

                1,183  1,171  1,183 

                   

              Member Units (Clad-Rex Steel RE Investor, LLC) (800 units)

                   210  280 

                         21,829  24,243 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              CMS Minerals Investments

               January 30, 2015 

              Oil & Gas Exploration & Production

                          

                   

              Member Units (CMS Minerals II, LLC) (100 units)(8)

                   3,440  2,392 

                              

              Copper Trail Energy Fund I, LP(12)(13)

               July 17, 2017 

              Investment Partnership

                          

                   

              LP Interests (Fully diluted 30.1%)

                   2,500  2,500 

                              

              Datacom, LLC

               May 30, 2014 

              Technology and Telecommunications Provider

                          

                   

              8% Secured Debt (Maturity — May 30, 2018)

                1,575  1,575  1,575 

                   

              5.25% Current / 5.25% PIK Secured Debt (Maturity — May 30, 2019)(19)

                12,349  12,311  11,110 

                   

              Class A Preferred Member Units

                   1,181  730 

                   

              Class B Preferred Member Units (6,453 units)

                   6,030   

                         21,097  13,415 

                              

              Gamber-Johnson Holdings, LLC

               June 24, 2016 

              Manufacturer of Ruggedized Computer Mounting Systems

                          

                   

              LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.36%, Secured Debt (Maturity — June 24, 2021)(9)

                23,400  23,213  23,400 

                   

              Member Units (8,619 units)(8)

                   14,844  23,370 

                         38,057  46,770 

                              

              Garreco, LLC

               July 15, 2013 

              Manufacturer and Supplier of Dental Products

                          

                   

              LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.34%, Secured Debt (Maturity — March 31, 2020)(9)

                5,483  5,443  5,443 

                   

              Member Units (1,200 units)

                   1,200  1,940 

                         6,643  7,383 

                              

              GRT Rubber Technologies LLC

               December 19, 2014 

              Manufacturer of Engineered Rubber Products

                          

                   

              LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity — December 19, 2019)(9)

                11,603  11,550  11,603 

                   

              Member Units (5,879 units)(8)

                   13,065  21,970 

                         24,615  33,573 

                              

              Gulf Manufacturing, LLC

               August 31, 2007 

              Manufacturer of Specialty Fabricated Industrial Piping Products

                          

                   

              Member Units (438 units)(8)

                   2,980  10,060 

                              

              Gulf Publishing Holdings, LLC

               April 29, 2016 

              Energy Industry Focused Media and Publishing

                          

                   

              LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.86%, Secured Debt (Maturity — September 30, 2020)(9)

                80  80  80 

                   

              12.5% Secured Debt (Maturity — April 29, 2021)

                12,800  12,703  12,703 

                   

              Member Units (3,681 units)

                   3,681  4,840 

                         16,464  17,623 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Harborside Holdings, LLC

               March 20, 2017 

              Real Estate Holding Company

                          

                   

              Member units (100 units)

                   6,206  9,400 

                              

              Harris Preston Fund Investments(12)(13)

               October 1, 2017 

              Investment Partnership

                          

                   

              LP Interests (2717 MH, L.P.) (Fully diluted 49.3%)

                   536  536 

                              

              Harrison Hydra-Gen, Ltd.

               June 4, 2010 

              Manufacturer of Hydraulic Generators

                          

                   

              Common Stock (107,456 shares)

                   718  3,580 

                              

              HW Temps LLC

               July 2, 2015 

              Temporary Staffing Solutions

                          

                   

              LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.36%, Secured Debt (Maturity July 2, 2020)(9)

                9,976  9,918  9,918 

                   

              Preferred Member Units (3,200 units)

                   3,942  3,940 

                         13,860  13,858 

                              

              Hydratec, Inc.

               November 1, 2007 

              Designer and Installer of Micro-Irrigation Systems

                          

                   

              Common Stock (7,095 shares)(8)

                   7,095  15,000 

                              

              IDX Broker, LLC

               November 15, 2013 

              Provider of Marketing and CRM Tools for the Real Estate Industry

                          

                   

              11.5% Secured Debt (Maturity — November 15, 2020)

                15,250  15,116  15,250 

                   

              Preferred Member Units (5,607 units)(8)

                   5,952  11,660 

                         21,068  26,910 

                              

              Jensen Jewelers of Idaho, LLC

               November 14, 2006 

              Retail Jewelry Store

                          

                   

              Prime Plus 6.75% (Floor 2.00%), Current Coupon 11.00%, Secured Debt (Maturity — November 14, 2019)(9)

                3,955  3,917  3,955 

                   

              Member Units (627 units)(8)

                   811  5,100 

                         4,728  9,055 

                              

              KBK Industries, LLC

               January 23, 2006 

              Manufacturer of Specialty Oilfield and Industrial Products

                          

                   

              10% Secured Debt (Maturity — September 28, 2020)

                375  372  375 

                   

              12.5% Secured Debt (Maturity — September 28, 2020)

                5,900  5,867  5,900 

                   

              Member Units (325 units)(8)

                   783  4,420 

                         7,022  10,695 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Lamb Ventures, LLC

               May 30, 2008 

              Aftermarket Automotive Services Chain

                          

                   

              11% Secured Debt (Maturity — July 1, 2022)

                9,942  9,890  9,942 

                   

              Preferred Equity (non-voting)

                   400  400 

                   

              Member Units (742 units)(8)

                   5,273  6,790 

                   

              9.5% Secured Debt (Lamb's Real Estate Investment I, LLC) (Maturity — March 31, 2027)

                432  428  432 

                   

              Member Units (Lamb's Real Estate Investment I, LLC) (1,000 units)(8)

                   625  520 

                         16,616  18,084 

                              

              Marine Shelters Holdings, LLC

               December 28, 2012 

              Fabricator of Marine and Industrial Shelters

                          

                   

              12% PIK Secured Debt (Maturity — December 28, 2017)(14)

                3,131  3,078   

                   

              Preferred Member Units (3,810 units)

                   5,352   

                         8,430   

                              

              Market Force Information, LLC

               July 28, 2017 

              Provider of Customer Experience Management Services

                          

                   

              LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.48%, Secured Debt (Maturity — July 28, 2022)(9)

                23,360  23,143  23,143 

                   

              Member Units (657,113 units)

                   14,700  14,700 
              ��

                         37,843  37,843 

                              

              MH Corbin Holding LLC

               August 31, 2015 

              Manufacturer and Distributor of Traffic Safety Products

                          

                   

              13% Secured Debt (Maturity — August 31, 2020)

                12,600  12,526  12,526 

                   

              Preferred Member Units (4,000 shares)

                   6,000  6,000 

                         18,526  18,526 

                              

              Mid-Columbia Lumber Products, LLC

               December 18, 2006 

              Manufacturer of Finger-Jointed Lumber Products

                          

                   

              10% Secured Debt (Maturity — January 15, 2020)

                1,398  1,390  1,390 

                   

              12% Secured Debt (Maturity — January 15, 2020)

                3,900  3,863  3,863 

                   

              Member Units (5,714 units)

                   2,405  1,575 

                   

              9.5% Secured Debt (Mid-Columbia Real Estate, LLC) (Maturity — May 13, 2025)

                791  791  791 

                   

              Member Units (Mid-Columbia Real Estate, LLC) (500 units)(8)

                   790  1,290 

                         9,239  8,909 

                              

              MSC Adviser I, LLC(16)

               November 22, 2013 

              Third Party Investment Advisory Services

                          

                   

              Member Units (Fully diluted 100.0%)(8)

                     41,768 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Mystic Logistics Holdings, LLC

               August 18, 2014 

              Logistics and Distribution Services Provider for Large Volume Mailers

                          

                   

              12% Secured Debt (Maturity — August 15, 2019)

                7,768  7,696  7,696 

                   

              Common Stock (5,873 shares)

                   2,720  6,820 

                         10,416  14,516 

                              

              NAPCO Precast, LLC

               January 31, 2008 

              Precast Concrete Manufacturing

                          

                   

              LIBOR Plus 8.50%, Current Coupon 9.98%, Secured Debt (Maturity — May 31, 2019)

                11,475  11,439  11,475 

                   

              Member Units (2,955 units)(8)

                   2,975  11,670 

                         14,414  23,145 

                              

              NRI Clinical Research, LLC

               September 8, 2011 

              Clinical Research Service Provider

                          

                   

              LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity — January 15, 2018)(9)

                400  400  400 

                   

              14% Secured Debt (Maturity — January 15, 2018)

                3,865  3,865  3,865 

                   

              Warrants (251,723 equivalent units; Expiration — September 8, 2021; Strike price — $0.01 per unit)

                   252  500 

                   

              Member Units (1,454,167 units)

                   765  2,500 

                         5,282  7,265 

                              

              NRP Jones, LLC

               December 22, 2011 

              Manufacturer of Hoses, Fittings and Assemblies

                          

                   

              12% Secured Debt (Maturity — March 20, 2023)

                6,376  6,376  6,376 

                   

              Member Units (65,208 units)(8)

                   3,717  3,250 

                         10,093  9,626 

                              

              NuStep, LLC

               January 31, 2017 

              Designer, Manufacturer and Distributor of Fitness Equipment

                          

                   

              12% Secured Debt (Maturity — January 31, 2022)

                20,600  20,420  20,420 

                   

              Preferred Member Units (406 units)

                   10,200  10,200 

                         30,620  30,620 

                              

              OMi Holdings, Inc.

               April 1, 2008 

              Manufacturer of Overhead Cranes

                          

                   

              Common Stock (1,500 shares)(8)

                   1,080  14,110 

                              

              Pegasus Research Group, LLC

               January 6, 2011 

              Provider of Telemarketing and Data Services

                          

                   

              Member Units (460 units)(8)

                   1,290  10,310 

                              

              PPL RVs, Inc.

               June 10, 2010 

              Recreational Vehicle Dealer

                          

                   

              LIBOR Plus 7.00% (Floor 0.50%), Current Coupon 8.34%, Secured Debt (Maturity — November 15, 2021)(9)

                16,100  15,972  16,100 

                   

              Common Stock (1,962 shares)(8)

                   2,150  12,440 

                         18,122  28,540 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Principle Environmental, LLC (d/b/a TruHorizon Environmental Solutions)

               February 1, 2011 

              Noise Abatement Service Provider

                          

                   

              13% Secured Debt (Maturity — April 30, 2020)

                7,477  7,347  7,477 

                   

              Preferred Member Units (19,631 units)

                   4,600  11,490 

                   

              Warrants (1,018 equivalent units; Expiration — January 31, 2021; Strike price — $0.01 per unit)

                   1,200  650 

                         13,147  19,617 

                              

              Quality Lease Service, LLC

               June 8, 2015 

              Provider of Rigsite Accommodation Unit Rentals and Related Services

                          

                   

              Zero Coupon Secured Debt (Maturity — June 8, 2020)

                7,341  7,341  6,950 

                   

              Member Units (1,000 units)

                   2,868  4,938 

                         10,209  11,888 

                              

              River Aggregates, LLC

               March 30, 2011 

              Processor of Construction Aggregates

                          

                   

              Zero Coupon Secured Debt (Maturity — June 30, 2018)

                750  707  707 

                   

              Member Units (1,150 units)

                   1,150  4,610 

                   

              Member Units (RA Properties, LLC) (1,500 units)

                   369  2,559 

                         2,226  7,876 

                              

              SoftTouch Medical Holdings LLC

               October 31, 2014 

              Provider of In-Home Pediatric Durable Medical Equipment

                          

                   

              LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity — October 31, 2019)(9)

                7,140  7,110  7,140 

                   

              Member Units (4,450 units)(8)

                   4,930  10,089 

                         12,040  17,229 

                              

              The MPI Group, LLC

               October 2, 2007 

              Manufacturer of Custom Hollow Metal Doors, Frames and Accessories

                          

                   

              9% Secured Debt (Maturity — October 2, 2018)

                2,924  2,923  2,410 

                   

              Series A Preferred Units (2,500 units)

                   2,500   

                   

              Warrants (1,424 equivalent units; Expiration — July 1, 2024; Strike price — $0.01 per unit)

                   1,096   

                   

              Member Units (MPI Real Estate Holdings, LLC) (100 units)(8)

                   2,300  2,389 

                         8,819  4,799 

                              

              Uvalco Supply, LLC

               January 2, 2008 

              Farm and Ranch Supply Store

                          

                   

              9% Secured Debt (Maturity — January 1, 2019)

                348  348  348 

                   

              Member Units (1,867 units)(8)

                   3,579  3,880 

                         3,927  4,228 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Vision Interests, Inc.

               June 5, 2007 

              Manufacturer / Installer of Commercial Signage

                          

                   

              13% Secured Debt (Maturity — December 23, 2018)

                2,814  2,797  2,797 

                   

              Series A Preferred Stock (3,000,000 shares)

                   3,000  3,000 

                   

              Common Stock (1,126,242 shares)

                   3,706   

                         9,503  5,797 

                              

              Ziegler's NYPD, LLC

               October 1, 2008 

              Casual Restaurant Group

                          

                   

              6.5% Secured Debt (Maturity — October 1, 2019)

                1,000  996  996 

                   

              12% Secured Debt (Maturity — October 1, 2019)

                300  300  300 

                   

              14% Secured Debt (Maturity — October 1, 2019)

                2,750  2,750  2,750 

                   

              Warrants (587 equivalent units; Expiration — September 29, 2018; Strike price — $0.01 per unit)

                   600   

                   

              Preferred Member Units (10,072 units)

                   2,834  3,220 

                         7,480  7,266 

              Subtotal Control Investments (54.4% net assets at fair value)

               $530,034 $750,706 

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Affiliate Investments(6)

               

               

               

               

               

               

                        

                              

              AFG Capital Group, LLC

               

              November 7, 2014

               

              Provider of Rent-to-Own Financing Solutions and Services

                          

                   

              Warrants (42 equivalent units; Expiration — November 7, 2024; Strike price — $0.01 per unit)

                  $259 $860 

                   

              Preferred Member Units (186 units)(8)

                   1,200  3,590 

                         1,459  4,450 

                              

              Barfly Ventures, LLC(10)

               

              August 31, 2015

               

              Casual Restaurant Group

                          

                   

              12% Secured Debt (Maturity — August 31, 2020)

                8,715  8,572  8,715 

                   

              Options (2 equivalent units)

                   397  920 

                   

              Warrant (1 equivalent unit; Expiration — August 31, 2025; Strike price — $1.00 per unit)

                   473  520 

                         9,442  10,155 

                              

              BBB Tank Services, LLC

               

              April 8, 2016

               

              Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.36%, Secured Debt (Maturity — April 8, 2021)(9)

                800  778  778 

                   

              15% Secured Debt (Maturity — April 8, 2021)

                4,000  3,876  3,876 

                   

              Member Units (800,000 units)

                   800  500 

                         5,454  5,154 

                              

              Boccella Precast Products LLC

               

              June 30, 2017

               

              Manufacturer of Precast Hollow Core Concrete

                          

                   

              LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.34%, Secured Debt (Maturity — June 30, 2022)(9)

                16,400  16,230  16,400 

                   

              Member Units (2,160,000 units)

                   2,160  3,440 

                         18,390  19,840 

                              

              Boss Industries, LLC

               

              July 1, 2014

               

              Manufacturer and Distributor of Air, Power and Other Industrial Equipment

                          

                   

              Preferred Member Units (2,242 units)(8)

                   2,080  3,930 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Bridge Capital Solutions Corporation

               

              April 18, 2012

               

              Financial Services and Cash Flow Solutions Provider

                          

                   

              13% Secured Debt (Maturity — July 25, 2021)

                7,500  5,884  5,884 

                   

              Warrants (63 equivalent shares; Expiration — July 25, 2026; Strike price — $0.01 per share)

                   2,132  3,520 

                   

              13% Secured Debt (Mercury Service Group, LLC) (Maturity — July 25, 2021)

                1,000  992  1,000 

                   

              Preferred Member Units (Mercury Service Group, LLC) (17,742 units)(8)

                   1,000  1,000 

                         10,008  11,404 

                              

              Buca C, LLC

               

              June 30, 2015

               

              Casual Restaurant Group

                          

                   

              LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.63%, Secured Debt (Maturity — June 30, 2020)(9)

                20,304  20,193  20,193 

                   

              Preferred Member Units (6 units; 6% cumulative)(8)(19)

                   4,177  4,172 

                         24,370  24,365 

                              

              CAI Software LLC

               

              October 10, 2014

               

              Provider of Specialized Enterprise Resource Planning Software

                          

                   

              12% Secured Debt (Maturity — October 10, 2019)

                4,083  4,060  4,083 

                   

              Member Units (65,356 units)(8)

                   654  3,230 

                         4,714  7,313 

                              

              Chandler Signs Holdings, LLC(10)

               

              January 4, 2016

               

              Sign Manufacturer

                          

                   

              12% Secured Debt (Maturity — July 4, 2021)

                4,500  4,468  4,500 

                   

              Class A Units (1,500,000 units)(8)

                   1,500  2,650 

                         5,968  7,150 

                              

              Condit Exhibits, LLC

               

              July 1, 2008

               

              Tradeshow Exhibits / Custom Displays Provider

                          

                   

              Member Units (3,936 units)(8)

                   100  1,950 

                              

              Congruent Credit Opportunities Funds(12)(13)

               

              January 24, 2012

               

              Investment Partnership

                          

                   

              LP Interests (Congruent Credit Opportunities Fund II, LP) (Fully diluted 19.8%)(8)

                   5,730  1,515 

                   

              LP Interests (Congruent Credit Opportunities Fund III, LP) (Fully diluted 17.4%)(8)

                   17,869  18,632 

                         23,599  20,147 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Dos Rios Partners(12)(13)

               

              April 25, 2013

               

              Investment Partnership

                          

                   

              LP Interests (Dos Rios Partners, LP) (Fully diluted 20.2%)

                   5,996  7,165 

                   

              LP Interests (Dos Rios Partners — A, LP) (Fully diluted 6.4%)

                   1,904  1,889 

                         7,900  9,054 

                              

              Dos Rios Stone Products LLC(10)

               

              June 27, 2016

               

              Limestone and Sandstone Dimension Cut Stone Mining Quarries

                          

                   

              Class A Preferred Units (2,000,000 units)(8)

                   2,000  1,790 

                              

              East Teak Fine Hardwoods, Inc.

               

              April 13, 2006

               

              Distributor of Hardwood Products

                          

                   

              Common Stock (6,250 shares)(8)

                   480  630 

                              

              EIG Fund Investments(12)(13)

               

              November 6, 2015

               

              Investment Partnership

                          

                   

              LP Interests (EIG Global Private Debt Fund-A, L.P.) (Fully diluted 11.1%)(8)

                   1,103  1,055 

                              

              Freeport Financial Funds(12)(13)

               

              June 13, 2013

               

              Investment Partnership

                          

                   

              LP Interests (Freeport Financial SBIC Fund LP) (Fully diluted 9.3%)(8)

                   5,974  5,614 

                   

              LP Interests (Freeport First Lien Loan Fund III LP) (Fully diluted 6.0%)(8)

                   8,558  8,506 

                         14,532  14,120 

                              

              Gault Financial, LLC (RMB Capital, LLC)

               

              November 21, 2011

               

              Purchases and Manages Collection of Healthcare and other Business Receivables

                          

                   

              10.5% Secured Debt (Maturity — January 1, 2019)

                12,483  12,483  11,532 

                   

              Warrants (29,032 equivalent units; Expiration — February 9, 2022; Strike price — $0.01 per unit)

                   400   

                         12,883  11,532 

                              

              Guerdon Modular Holdings, Inc.

               

              August 13, 2014

               

              Multi-Family and Commercial Modular Construction Company

                          

                   

              13% Secured Debt (Maturity — August 13, 2019)

                10,708  10,632  10,632 

                   

              Preferred Stock (404,998 shares)

                   1,140   

                   

              Common Stock (212,033 shares)

                   2,983   

                         14,755  10,632 

                              

              Harris Preston Fund Investments(12)(13)

               

              October 1, 2017

               

              Investment Partnership

                          

                   

              LP Interests (HPEP 3, L.P.) (Fully diluted 9.9%)

                   943  943 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Hawk Ridge Systems, LLC(13)

               

              December 2, 2016

               

              Value-Added Reseller of Engineering Design and Manufacturing Solutions

                          

                   

              11% Secured Debt (Maturity — December 2, 2021)

                14,300  14,175  14,300 

                   

              Preferred Member Units (226 units)(8)

                   2,850  3,800 

                   

              Preferred Member Units (HRS Services, ULC) (226 units)(8)

                   150  200 

                         17,175  18,300 

                              

              Houston Plating and Coatings, LLC

               

              January 8, 2003

               

              Provider of Plating and Industrial Coating Services

                          

                   

              8% Unsecured Convertible Debt (Maturity — May 1, 2022)

                3,000  3,000  3,200 

                   

              Member Units (315,756 units)

                   2,179  6,140 

                         5,179  9,340 

                              

              I-45 SLF LLC(12)(13)

               

              October 20, 2015

               

              Investment Partnership

                          

                   

              Member Units (Fully diluted 20.0%; 24.4% profits interest)(8)

                   16,200  16,841 

                              

              L.F. Manufacturing Holdings, LLC(10)

               

              December 23, 2013

               

              Manufacturer of Fiberglass Products

                          

                   

              Member Units (2,179,001 units)

                   2,019  2,000 

                              

              Meisler Operating LLC

               

              June 7, 2017

               

              Provider of Short-term Trailer and Container Rental

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.84%, Secured Debt (Maturity — June 7, 2022)(9)

                16,800  16,633  16,633 

                   

              Member Units (Milton Meisler Holdings LLC) (31,976 units)

                   3,200  3,390 

                         19,833  20,023 

                              

              OnAsset Intelligence, Inc.

               

              April 18, 2011

               

              Provider of Transportation Monitoring / Tracking Products and Services

                          

                   

              12% PIK Secured Debt (Maturity — June 30, 2021)(19)

                5,094  5,094  5,094 

                   

              10% PIK Unsecured Debt (Maturity — June 30, 2021)(19)

                48  48  48 

                   

              Preferred Stock (912 shares)

                   1,981   

                   

              Warrants (5,333 equivalent shares; Expiration — April 18, 2021; Strike price — $0.01 per share)

                   1,919   

                         9,042  5,142 

                              

              OPI International Ltd.(13)

               

              November 30, 2010

               

              Provider of Man Camp and Industrial Storage Services

                          

                   

              Common Stock (20,766,317 shares)

                   1,371   

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              PCI Holding Company, Inc.

               

              December 18, 2012

               

              Manufacturer of Industrial Gas Generating Systems

                          

                   

              12% Secured Debt (Maturity — March 31, 2019)

                12,650  12,593  12,593 

                   

              Preferred Stock (1,740,000 shares) (non-voting)

                   1,740  2,610 

                   

              Preferred Stock (1,500,000 shares; 20% cumulative)(8)(19)

                   3,927  890 

                         18,260  16,093 

                              

              Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

               

              January 8, 2013

               

              Provider of Rigsite Accommodation Unit Rentals and Related Services

                          

                   

              12% Secured Debt (Maturity — January 8, 2018)(14)(15)

                30,785  30,281  250 

                   

              Preferred Member Units (250 units)

                   2,500   

                         32,781  250 

                              

              Tin Roof Acquisition Company

               

              November 13, 2013

               

              Casual Restaurant Group

                          

                   

              12% Secured Debt (Maturity — November 13, 2018)

                12,783  12,722  12,722 

                   

              Class C Preferred Stock (Fully diluted 10.0%; 10% cumulative)(8)(19)

                   3,027  3,027 

                         15,749  15,749 

                              

              UniTek Global Services, Inc.(11)

               

              April 15, 2011

               

              Provider of Outsourced Infrastructure Services

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.20%, Secured Debt (Maturity — January 13, 2019)(9)

                8,535  8,529  8,535 

                   

              LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.20% / 1.00% PIK, Current Coupon Plus PIK 10.20%, Secured Debt (Maturity — January 13, 2019)(9)(19)

                137  137  137 

                   

              15% PIK Unsecured Debt (Maturity — July 13, 2019)(19)

                865  865  865 

                   

              Preferred Stock (2,596,567 shares; 19% cumulative)(8)(19)

                   2,858  2,850 

                   

              Preferred Stock (4,935,377 shares; 13.5% cumulative)(8)(19)

                   7,361  7,320 

                   

              Common Stock (1,075,992 shares)

                     2,490 

                         19,750  22,197 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Universal Wellhead Services Holdings, LLC(10)

               

              October 30, 2014

               

              Provider of Wellhead Equipment, Designs, and Personnel to the Oil & Gas Industry

                          

                   

              Preferred Member Units (UWS Investments, LLC) (716,949 units)

                   717  830 

                   

              Member Units (UWS Investments, LLC) (4,000,000 units)

                   4,000  1,910 

                         4,717  2,740 

                              

              Valley Healthcare Group, LLC

               

              December 29, 2015

               

              Provider of Durable Medical Equipment

                          

                   

              LIBOR Plus 12.50% (Floor 0.50%), Current Coupon 13.86%, Secured Debt (Maturity — December 29, 2020)(9)

                11,766  11,685  11,685 

                   

              Preferred Member Units (Valley Healthcare Holding, LLC) (1,600 units)

                   1,600  1,600 

                         13,285  13,285 

                              

              Volusion, LLC

               

              January 26, 2015

               

              Provider of Online Software-as-a-Service eCommerce Solutions

                          

                   

              11.5% Secured Debt (Maturity — January 26, 2020)

                16,734  15,200  15,200 

                   

              Preferred Member Units (4,876,670 units)

                   14,000  14,000 

                   

              Warrants (1,831,355 equivalent units; Expiration — January 26, 2025; Strike price — $0.01 per unit)

                   2,576  2,080 

                         31,776  31,280 

              Subtotal Affiliate Investments (24.5% net assets at fair value)

               $367,317 $338,854 

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Non-Control/Non-Affiliate Investments(7)

               

               

               

               

                        

                              

              AAC Holdings, Inc.(11)

               June 30, 2017 

              Substance Abuse Treatment Service Provider

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.13%, Secured Debt (Maturity — June 30, 2023)(9)

               $11,751 $11,475 $11,810 

              Adams Publishing Group, LLC(10)

               November 19, 2015 

              Local Newspaper Operator

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity — November 3, 2020)(9)

                10,341  10,116  10,147 

                              

              ADS Tactical, Inc.(10)

               March 7, 2017 

              Value-Added Logistics and Supply Chain Provider to the Defense Industry

                          

                   

              LIBOR Plus 7.50% (Floor 0.75%), Current Coupon 9.19%, Secured Debt (Maturity — December 31, 2022)(9)

                13,014  12,767  12,833 

                              

              Aethon United BR LP(10)

               September 8, 2017 

              Oil & Gas Exploration & Production

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.15%, Secured Debt (Maturity — September 8, 2023)(9)

                3,438  3,388  3,388 

                              

              Ahead, LLC(10)

               November 13, 2015 

              IT Infrastructure Value Added Reseller

                          

                   

              LIBOR Plus 6.50%, Current Coupon 8.20%, Secured Debt (Maturity — November 2, 2020)

                11,061  10,848  11,130 

                              

              Allflex Holdings III Inc.(11)

               July 18, 2013 

              Manufacturer of Livestock Identification Products

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.36%, Secured Debt (Maturity — July 19, 2021)(9)

                13,846  13,781  13,955 

                              

              American Scaffold Holdings, Inc.(10)

               June 14, 2016 

              Marine Scaffolding Service Provider

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.19%, Secured Debt (Maturity — March 31, 2022)(9)

                7,031  6,947  6,996 

                              

              American Teleconferencing Services, Ltd.(11)

               May 19, 2016 

              Provider of Audio Conferencing and Video Collaboration Solutions

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.90%, Secured Debt (Maturity — December 8, 2021)(9)

                10,582  9,934  10,443 

                   

              LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 10.85%, Secured Debt (Maturity — June 6, 2022)(9)

                3,714  3,589  3,507 

                         13,523  13,950 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Anchor Hocking, LLC(11)

               April 2, 2012 

              Household Products Manufacturer

                          

                   

              LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.49%, Secured Debt (Maturity — June 4, 2020)(9)

                2,254  2,211  2,248 

                   

              Member Units (440,620 units)

                   4,928  3,745 

                         7,139  5,993 

              Apex Linen Service, Inc.

               October 30, 2015 

              Industrial Launderers

                          

                   

              LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.36%, Secured Debt (Maturity — October 30, 2022)(9)

                2,400  2,400  2,400 

                   

              16% Secured Debt (Maturity — October 30, 2022)

                14,416  14,347  14,347 

                         16,747  16,747 

              Arcus Hunting LLC.(10)

               January 6, 2015 

              Manufacturer of Bowhunting and Archery Products and Accessories

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.34%, Secured Debt (Maturity — November 13, 2019)(9)

                15,391  15,294  15,391 

              ATI Investment Sub, Inc.(11)

               July 11, 2016 

              Manufacturer of Solar Tracking Systems

                          

                   

              LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.82%, Secured Debt (Maturity — June 22, 2021)(9)

                7,364  7,215  7,346 

              ATX Networks Corp.(11)(13)(21)

               June 30, 2015 

              Provider of Radio Frequency Management Equipment

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.33% / 1.00% PIK, Current Coupon Plus PIK 8.33%, Secured Debt (Maturity — June 11, 2021)(9)(19)

                9,567  9,454  9,507 

                              

              Berry Aviation, Inc.(10)

               January 30, 2015 

              Airline Charter Service Operator

                          

                   

              13.75% Secured Debt (Maturity — January 30, 2020)

                5,627  5,598  5,627 

                   

              Common Stock (553 shares)

                   400  1,010 

                         5,998  6,637 

                              

              BigName Commerce, LLC(10)

               May 11, 2017 

              Provider of Envelopes and Complimentary Stationery Products

                          

                   

              LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.59%, Secured Debt (Maturity — May 11, 2022)(9)

                2,488  2,461  2,461 

                              

              Binswanger Enterprises, LLC(10)

               March 10, 2017 

              Glass Repair and Installation Service Provider

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.69%, Secured Debt (Maturity — March 9, 2022)(9)

                15,325  15,060  15,192 

                   

              Member Units (1,050,000 units)

                   1,050  1,000 

                         16,110  16,192 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Bluestem Brands, Inc.(11)

               December 19, 2013 

              Multi-Channel Retailer of General Merchandise

                          

                   

              LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.07%, Secured Debt (Maturity — November 6, 2020)(9)

                12,127  11,955  8,540 

                              

              Brainworks Software, LLC(10)

               August 12, 2014 

              Advertising Sales and Newspaper Circulation Software

                          

                   

              Prime Plus 9.25% (Floor 3.25%), Current Coupon 13.75%, Secured Debt (Maturity — July 22, 2019)(9)

                6,733  6,705  6,573 

                              

              Brightwood Capital Fund Investments(12)(13)

               July 21, 2014 

              Investment Partnership

                          

                   

              LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 1.6%)(8)

                   12,000  10,328 

                   

              LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.8%)(8)

                   1,000  1,063 

                         13,000  11,391 

                              

              Brundage-Bone Concrete Pumping, Inc.(11)

               August 18, 2014 

              Construction Services Provider

                          

                   

              10.375% Secured Debt (Maturity — September 1, 2023)

                3,000  2,987  3,180 

                              

              Cadence Aerospace LLC(10)

               November 14, 2017 

              Aerostructure Manufacturing

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.91%, Secured Debt (Maturity — November 14, 2023)(9)

                15,000  14,853  14,853 

                              

              CapFusion, LLC(13)

               March 25, 2016 

              Non-Bank Lender to Small Businesses

                          

                   

              13% Secured Debt (Maturity — March 25, 2021)(14)

                6,705  5,645  1,871 

                              

              California Pizza Kitchen, Inc.(11)

               August 29, 2016 

              Casual Restaurant Group

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity — August 23, 2022)(9)

                12,902  12,862  12,677 

                              

              CDHA Management, LLC(10)

               December 5, 2016 

              Dental Services

                          

                   

              LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.76%, Secured Debt (Maturity — December 5, 2021)(9)

                5,365  5,303  5,365 

                              

              Central Security Group, Inc.(11)

               December 4, 2017 

              Security Alarm Monitoring Service Provider

                          

                   

              LIBOR Plus 5.63% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity — October 6, 2021)(9)

                7,481  7,462  7,518 

                              

              Cenveo Corporation(11)

               September 4, 2015 

              Provider of Commercial Printing, Envelopes, Labels, and Printed Office Products

                          

                   

              6% Secured Debt (Maturity — August 1, 2019)

                19,130  17,126  13,582 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Charlotte Russe, Inc(11)

               May 28, 2013 

              Fast-Fashion Retailer to Young Women

                          

                   

              LIBOR Plus 5.50% (Floor 1.25%), Current Coupon 6.89%, Secured Debt (Maturity — May 22, 2019)(9)

                19,041  16,473  7,807 

                              

              Clarius BIGS, LLC(10)

               September 23, 2014 

              Prints & Advertising Film Financing

                          

                   

              15% PIK Secured Debt (Maturity — January 5, 2015)(14)(17)

                2,924  2,924  85 

                              

              Clickbooth.com, LLC(10)

               December 5, 2017 

              Provider of Digital Advertising Performance Marketing Solutions

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.01%, Secured Debt (Maturity — December 5, 2022)(9)

                3,000  2,941  2,941 

                              

              Construction Supply Investments, LLC(10)

               December 29, 2016 

              Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity — June 30, 2023)(9)

                7,125  7,090  7,090 

                   

              Member Units (28,000 units)

                   3,723  3,723 

                         10,813  10,813 

                              

              CTVSH, PLLC(10)

               August 3, 2017 

              Emergency Care and Specialty Service Animal Hospital

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.48%, Secured Debt (Maturity — August 3, 2022)(9)

                11,850  11,739  11,739 

                              

              Darr Equipment LP(10)

               April 15, 2014 

              Heavy Equipment Dealer

                          

                   

              11.5% Current / 1% PIK Secured Debt (Maturity - June 22, 2023)(19)

                7,229  7,229  7,229 

                   

              Warrants (915,734 equivalent units; Expiration — December 23, 2023; Strike price — $1.50 per unit)

                   474  10 

                         7,703  7,239 

                              

              Digital River, Inc.(11)

               February 24, 2015 

              Provider of Outsourced e-Commerce Solutions and Services

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.08%, Secured Debt (Maturity — February 12, 2021)(9)

                9,313  9,266  9,337 

                              

              Drilling Info Holdings, Inc.

               November 20, 2009 

              Information Services for the Oil and Gas Industry

                          

                   

              Common Stock (3,788,865 shares)(8)

                     8,610 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              EnCap Energy Fund Investments(12)(13)

               December 28, 2010 

              Investment Partnership

                          

                   

              LP Interests (EnCap Energy Capital Fund VIII, L.P.) (Fully diluted 0.1%)(8)

                   3,906  2,202 

                   

              LP Interests (EnCap Energy Capital Fund VIII Co- Investors, L.P.) (Fully diluted 0.4%)

                   2,227  1,549 

                   

              LP Interests (EnCap Energy Capital Fund IX, L.P.) (Fully diluted 0.1%)(8)

                   4,305  3,720 

                   

              LP Interests (EnCap Energy Capital Fund X, L.P.) (Fully diluted 0.1%)(8)

                   6,277  6,225 

                   

              LP Interests (EnCap Flatrock Midstream Fund II, L.P.) (Fully diluted 0.8%)(8)

                   6,138  6,116 

                   

              LP Interests (EnCap Flatrock Midstream Fund III, L.P.) (Fully diluted 0.2%)

                   3,458  3,828 

                         26,311  23,640 

                              

              Evergreen Skills Lux S.á r.l.
              (d/b/a Skillsoft)(11)(13)

               May 5, 2014 

              Technology-based Performance Support Solutions

                          

                   

              LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 9.82%, Secured Debt (Maturity — April 28, 2022)(9)

                6,999  6,878  6,244 

                              

              Extreme Reach, Inc.(11)

               March 31, 2015 

              Integrated TV and Video Advertising Platform

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.95%, Secured Debt (Maturity — February 7, 2020)(9)

                10,411  10,397  10,398 

                              

              Felix Investments Holdings II(10)

               August 9, 2017 

              Oil & Gas Exploration & Production

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.90%, Secured Debt (Maturity — August 9, 2022)(9)

                3,333  3,267  3,267 

                              

              Flavors Holdings Inc.(11)

               October 15, 2014 

              Global Provider of Flavoring and Sweetening Products

                          

                   

              LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.44%, Secured Debt (Maturity — April 3, 2020)(9)

                13,076  12,616  12,128 

                              

              GI KBS Merger Sub LLC(11)

               November 10, 2014 

              Outsourced Janitorial Services to Retail/Grocery Customers

                          

                   

              LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.48%, Secured Debt (Maturity — October 29, 2021)(9)

                6,807  6,733  6,833 

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.88%, Secured Debt (Maturity — April 29, 2022)(9)

                3,915  3,769  3,793 

                         10,502  10,626 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              GoWireless Holdings, Inc.(11)

               December 31, 2017 

              Provider of Wireless Telecommunications Carrier Services

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.16%, Secured Debt (Maturity — December 22, 2024)(9)

                18,000  17,820  17,865 

                              

              Grace Hill, LLC(10)

               August 29, 2014 

              Online Training Tools for the Multi-Family Housing Industry

                          

                   

              Prime Plus 5.25% (Floor 1.00%), Current Coupon 9.75%, Secured Debt (Maturity — August 15, 2019)(9)

                1,215  1,208  1,215 

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.58%, Secured Debt (Maturity — August 15, 2019)(9)

                11,407  11,356  11,407 

                         12,564  12,622 

                              

              Great Circle Family Foods, LLC(10)

               March 25, 2015 

              Quick Service Restaurant Franchise

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.34%, Secured Debt (Maturity — October 28, 2019)(9)

                7,219  7,187  7,219 

                              

              Grupo Hima San Pablo, Inc.(11)

               March 7, 2013 

              Tertiary Care Hospitals

                          

                   

              LIBOR Plus 7.00% (Floor 1.50%), Current Coupon 8.50%, Secured Debt (Maturity — January 31, 2018)(9)

                4,750  4,748  3,541 

                   

              13.75% Secured Debt (Maturity — July 31, 2018)

                2,055  2,040  226 

                         6,788  3,767 

                              

              GST Autoleather, Inc.(11)

               July 21, 2014 

              Automotive Leather Manufacturer

                          

                   

              PRIME Plus 6.50% (Floor 2.25%), Current Coupon 11.00%, Secured Debt (Maturity — April 5, 2018)(9)

                7,578  7,500  7,500 

                   

              PRIME Plus 6.50% (Floor 2.00%), Current Coupon 11.00%, Secured Debt (Maturity — July 10, 2020)(9)

                15,619  15,120  11,813 

                         22,620  19,313 

                              

              Guitar Center, Inc.(11)

               April 10, 2014 

              Musical Instruments Retailer

                          

                   

              6.5% Secured Debt (Maturity — April 15, 2019)

                16,625  16,009  15,378 

                              

              Hojeij Branded Foods, LLC(10)

               July 28, 2015 

              Multi-Airport, Multi- Concept Restaurant Operator

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity — July 20, 2022)(9)

                12,137  12,022  12,137 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Hoover Group, Inc.(10)(13)

               October 21, 2016 

              Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets

                          

                   

              LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.70%, Secured Debt (Maturity — January 28, 2021)(9)

                8,460  7,986  7,783 

                              

              Hostway Corporation(11)

               December 27, 2013 

              Managed Services and Hosting Provider

                          

                   

              LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.44%, Secured Debt (Maturity — December 13, 2019)(9)

                20,150  19,796  19,621 

                   

              LIBOR Plus 6.75% (Floor 1.25%), Current Coupon 8.44%, Secured Debt (Maturity — December 13, 2018)(9)

                12,406  11,575  11,692 

                         31,371  31,313 

                              

              Hunter Defense Technologies, Inc.(11)

               August 14, 2014 

              Provider of Military and Commercial Shelters and Systems

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity — August 5, 2019)(9)

                20,224  19,851  19,997 

                              

              Hydrofarm Holdings LLC(10)

               May 18, 2017 

              Wholesaler of Horticultural Products

                          

                   

              LIBOR Plus 7.00%, Current Coupon 8.49%, Secured Debt (Maturity — May 12, 2022)

                6,708  6,588  6,699 

                              

              iEnergizer Limited(11)(13)(21)

               May 8, 2013 

              Provider of Business Outsourcing Solutions

                          

                   

              LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.57%, Secured Debt (Maturity — May 1, 2019)(9)

                11,005  10,764  10,977 

                              

              Implus Footcare, LLC(10)

               June 1, 2017 

              Provider of Footwear and Related Accessories

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.44%, Secured Debt (Maturity — April 30, 2021)(9)

                19,372  19,115  19,243 

                              

              Indivior Finance LLC(11)(13)

               March 20, 2015 

              Specialty Pharmaceutical Company Treating Opioid Dependence

                          

                   

              LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.50%, Secured Debt (Maturity — December 18, 2022)(9)

                1,176  1,171  1,182 

                              

              Industrial Services Acquisition, LLC(10)

               June 17, 2016 

              Industrial Cleaning Services

                          

                   

              11.25% Current / 0.75% PIK Unsecured Debt (Maturity — December 17, 2022)(19)

                4,553  4,478  4,553 

                   

              Member Units (Industrial Services Investments, LLC) (900,000 units)

                   900  810 

                         5,378  5,363 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Inn of the Mountain Gods Resort and Casino(11)

               October 30, 2013 

              Hotel & Casino Owner & Operator

                          

                   

              9.25% Secured Debt (Maturity — November 30, 2020)

                6,249  5,994  5,687 

                              

              iPayment, Inc.(11)

               June 25, 2015 

              Provider of Merchant Acquisition

                          

                   

              LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.62%, Secured Debt (Maturity — April 11, 2023)(9)

                11,970  11,861  12,090 

                              

              iQor US Inc.(11)

               April 17, 2014 

              Business Process Outsourcing Services Provider

                          

                   

              LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity — April 1, 2021)(9)

                990  983  986 

                              

              irth Solutions, LLC

               December 29, 2010 

              Provider of Damage Prevention Information Technology Services

                          

                   

              Member Units (27,893 units)

                   1,441  1,920 

                              

              Jacent Strategic Merchandising, LLC(10)

               September 16, 2015 

              General Merchandise Distribution

                          

                   

              LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.01%, Secured Debt (Maturity — September 16, 2020)(9)

                11,110  11,054  11,110 

                              

              Jackmont Hospitality, Inc.(10)

               May 26, 2015 

              Franchisee of Casual Dining Restaurants

                          

                   

              LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.32%, Secured Debt (Maturity — May 26, 2021)(9)

                4,390  4,379  4,390 

                              

              Jacuzzi Brands LLC(11)

               June 30, 2017 

              Manufacturer of Bath and Spa Products

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity — June 28, 2023)(9)

                3,950  3,876  3,980 

                              

              Joerns Healthcare, LLC(11)

               April 3, 2013 

              Manufacturer and Distributor of Health Care Equipment & Supplies

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.48% Secured Debt (Maturity — May 9, 2020)(9)

                13,387  13,299  12,472 

                              

              Keypoint Government Solutions, Inc.(10)

               April 17, 2017 

              Provider of Pre-Employment Screening Services

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.35%, Secured Debt (Maturity — April 18, 2024)(9)

                12,031  11,921  12,031 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Larchmont Resources, LLC(11)

               August 13, 2013 

              Oil & Gas Exploration & Production

                          

                   

              LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.53%, PIK Secured Debt (Maturity — August 7, 2020)(9)(19)

                2,418  2,418  2,394 

                   

              Member Units (Larchmont Intermediate Holdco, LLC) (2,828 units)

                   353  976 

                         2,771  3,370 

                              

              LKCM Headwater Investments I, L.P.(12)(13)

               January 25, 2013 

              Investment Partnership

                          

                   

              LP Interests (Fully diluted 2.3%)

                   2,500  4,234 

                              

              Logix Acquisition Company, LLC(10)

               June 24, 2016 

              Competitive Local Exchange Carrier

                          

                   

              LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.28%, Secured Debt (Maturity — August 9, 2024)(9)

                10,135  9,921  9,921 

                              

              Looking Glass Investments, LLC(12)(13)

               July 1, 2015 

              Specialty Consumer Finance

                          

                   

              Member Units (2.5 units)

                   125  57 

                   

              Member Units (LGI Predictive Analytics LLC) (190,712 units)(8)

                   108  92 

                         233  149 

                              

              LSF9 Atlantis Holdings, LLC(11)

               May 17, 2017 

              Provider of Wireless Telecommunications Carrier Services

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.57%, Secured Debt (Maturity — May 1, 2023)(9)

                2,963  2,931  2,978 

                              

              Lulu's Fashion Lounge, LLC(10)

               August 31, 2017 

              Fast Fashion E-Commerce Retailer

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.57%, Secured Debt (Maturity — August 28, 2022)(9)

                13,381  12,993  13,531 

                              

              Messenger, LLC(10)

               December 5, 2014 

              Supplier of Specialty Stationery and Related Products to the Funeral Industry

                          

                   

              LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.74%, Secured Debt (Maturity — September 9, 2020)(9)

                17,331  17,249  17,331 

                              

              Minute Key, Inc.

               September 19, 2014 

              Operator of Automated Key Duplication Kiosks

                          

                   

              Warrants (1,437,409 equivalent shares; Expiration — May 20, 2025; Strike price — $0.01 per share)

                   280  1,170 

                              

              NBG Acquisition Inc(11)

               April 28, 2017 

              Wholesaler of Home Décor Products

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity — April 26, 2024)(9)

                4,402  4,336  4,452 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              New Media Holdings II LLC(11)(13)

               June 10, 2014 

              Local Newspaper Operator

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.82%, Secured Debt (Maturity — July 14, 2022)(9)

                17,715  17,342  17,864 

                              

              NNE Partners, LLC(10)

               March 2, 2017 

              Oil & Gas Exploration & Production

                          

                   

              LIBOR Plus 8.00%, Current Coupon 9.49%, Secured Debt (Maturity — March 2, 2022)

                11,958  11,854  11,854 

                              

              North American Lifting Holdings, Inc.(11)

               February 26, 2015 

              Crane Service Provider

                          

                   

              LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.19%, Secured Debt (Maturity — November 27, 2020)(9)

                7,745  6,913  7,256 

                              

              Novetta Solutions, LLC(11)

               June 21, 2017 

              Provider of Advanced Analytics Solutions for Defense Agencies

                          

                   

              LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.70%, Secured Debt (Maturity — October 17, 2022)(9)

                14,636  14,189  14,239 

                              

              NTM Acquisition Corp.(11)

               July 12, 2016 

              Provider of B2B Travel Information Content

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.94%, Secured Debt (Maturity — June 7, 2022)(9)

                6,186  6,126  6,155 

                              

              Ospemifene Royalty Sub LLC (QuatRx)(10)

               July 8, 2013 

              Estrogen-Deficiency Drug Manufacturer and Distributor

                          

                   

              11.5% Secured Debt (Maturity — November 15, 2026)(14)

                5,071  5,071  1,198 

                              

              P.F. Chang's China Bistro, Inc.(11)

               September 6, 2017 

              Casual Restaurant Group

                          

                   

              LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.51%, Secured Debt (Maturity — September 1, 2022)(9)

                4,988  4,846  4,715 

                              

              Paris Presents Incorporated(11)

               February 5, 2015 

              Branded Cosmetic and Bath Accessories

                          

                   

              LIBOR Plus 8.75% (Floor 1.00%), Current Coupon 10.32%, Secured Debt (Maturity — December 31, 2021)(9)

                4,500  4,471  4,477 

                              

              Parq Holdings Limited Partnership(11)(13)(21)

               December 22, 2014 

              Hotel & Casino Operator

                          

                   

              LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.19%, Secured Debt (Maturity — December 17, 2020)(9)

                7,481  7,399  7,528 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Permian Holdco 2, Inc.(11)

               February 12, 2013 

              Storage Tank Manufacturer

                          

                   

              14% PIK Unsecured Debt (Maturity — October 15, 2021)(19)

                306  306  306 

                   

              Preferred Stock (Permian Holdco 1, Inc.) (154,558 units)

                   799  980 

                   

              Common Stock (Permian Holdco 1, Inc.) (154,558 units)

                     140 

                         1,105  1,426 

                              

              Pernix Therapeutics Holdings, Inc.(10)

               August 18, 2014 

              Pharmaceutical Royalty

                          

                   

              12% Secured Debt (Maturity — August 1, 2020)

                3,129  3,129  1,971 

                              

              Point.360(10)

               July 8, 2015 

              Fully Integrated Provider of Digital Media Services

                          

                   

              Warrants (65,463 equivalent shares; Expiration — July 7, 2020; Strike price — $0.75 per share)

                   69   

                   

              Common Stock (163,658 shares)

                   273  11 

                         342  11 

                              

              PPC/SHIFT LLC(10)

               December 22, 2016 

              Provider of Digital Solutions to Automotive Industry

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.69%, Secured Debt (Maturity — December 22, 2021)(9)

                6,869  6,748  6,869 

                              

              Prowler Acquisition Corp.(11)

               February 11, 2014 

              Specialty Distributor to the Energy Sector

                          

                   

              LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.19%, Secured Debt (Maturity — January 28, 2020)(9)

                12,830  11,332  12,253 

                              

              PT Network, LLC(10)

               November 1, 2013 

              Provider of Outpatient Physical Therapy and Sports Medicine Services

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.86%, Secured Debt (Maturity — November 30, 2021)(9)

                8,553  8,553  8,553 

                              

              QBS Parent, Inc.(11)

               August 12, 2014 

              Provider of Software and Services to the Oil & Gas Industry

                          

                   

              LIBOR Plus 4.75% (Floor 1.00%), Current Coupon 6.13%, Secured Debt (Maturity — August 7, 2021)(9)

                14,272  14,114  14,165 

                              

              Research Now Group, Inc. and Survey Sampling International, LLC(11)

               December 31, 2017 

              Provider of Outsourced Online Surveying

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.13%, Secured Debt (Maturity — December 20, 2024)(9)

                13,500  12,826  12,826 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Resolute Industrial, LLC(10)

               July 26, 2017 

              HVAC Equipment Rental and Remanufacturing

                          

                   

              LIBOR Plus 7.62% (Floor 1.00%), Current Coupon 8.95%, Secured Debt (Maturity — July 26, 2022)(9)(25)

                17,088  16,770  16,770 

                   

              Member Units (601 units)

                   750  750 

                         17,520  17,520 

                              

              RGL Reservoir Operations Inc.(11)(13)(21)

               August 25, 2014 

              Oil & Gas Equipment and Services

                          

                   

              1% Current / 9% PIK Secured Debt (Maturity — December 21, 2024)(19)

                721  407  407 

                              

              RM Bidder, LLC(10)

               November 12, 2015 

              Scripted and Unscripted TV and Digital Programming Provider

                          

                   

              Warrants (327,532 equivalent units; Expiration — October 20, 2025; Strike price — $14.28 per unit)

                   425   

                   

              Member Units (2,779 units)

                   46  20 

                         471  20 

                              

              SAFETY Investment Holdings, LLC

               April 29, 2016 

              Provider of Intelligent Driver Record Monitoring Software and Services

                          

                   

              Member Units (2,000,000 units)

                   2,000  1,670 

                              

              Salient Partners L.P.(11)

               June 25, 2015 

              Provider of Asset Management Services

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.85%, Secured Debt (Maturity — June 9, 2021)(9)

                10,081  9,870  9,778 

                              

              SiTV, LLC(11)

               September 26, 2017 

              Cable Networks Operator

                          

                   

              10.375% Secured Debt (Maturity — July 1, 2019)

                10,429  7,006  7,040 

                              

              SMART Modular Technologies, Inc.(10)(13)

               August 18, 2017 

              Provider of Specialty Memory Solutions

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.66%, Secured Debt (Maturity — August 9, 2022)(9)

                14,625  14,351  14,552 

                              

              Sorenson Communications, Inc.(11)

               June 7, 2016 

              Manufacturer of Communication Products for Hearing Impaired

                          

                   

              LIBOR Plus 5.75% (Floor 2.25%), Current Coupon 8.00%, Secured Debt (Maturity — April 30, 2020)(9)

                13,234  13,170  13,341 

                              

              Staples Canada ULC(10)(13)(21)

               September 14, 2017 

              Office Supplies Retailer

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.43%, Secured Debt (Maturity — September 12, 2023)(9)(22)

                20,000  19,617  18,891 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Strike, LLC(11)

               December 12, 2016 

              Pipeline Construction and Maintenance Services

                          

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity — November 30, 2022)(9)

                9,500  9,250  9,643 

                   

              LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.45%, Secured Debt (Maturity — May 30, 2019)(9)

                2,500  2,479  2,513 

                         11,729  12,156 

                              

              Subsea Global Solutions, LLC(10)

               March 17, 2015 

              Underwater Maintenance and Repair Services

                          

                   

              LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.50%, Secured Debt (Maturity — March 17, 2020)(9)

                7,687  7,637  7,687 

                              

              Synagro Infrastructure Company, Inc(11)

               August 29, 2013 

              Waste Management Services

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.19%, Secured Debt (Maturity — August 22, 2020)(9)

                9,161  8,933  8,608 

                              

              Tectonic Holdings, LLC

               May 15, 2017 

              Financial Services Organization

                          

                   

              Member Units (200,000 units)(8)

                   2,000  2,320 

                              

              TE Holdings, LLC(11)

               December 5, 2013 

              Oil & Gas Exploration & Production

                          

                   

              Member Units (97,048 units)

                   970  158 

                              

              TeleGuam Holdings, LLC(11)

               June 26, 2013 

              Cable and Telecom Services Provider

                          

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.07%, Secured Debt (Maturity — April 12, 2024)(9)

                7,750  7,602  7,808 

                              

              TGP Holdings III LLC(11)

               September 30, 2017 

              Outdoor Cooking & Accessories

                          

                   

              LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity — September 25, 2024)(9)

                6,898  6,820  6,969 

                   

              LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.19%, Secured Debt (Maturity — September 25, 2025)(9)

                5,000  4,927  5,075 

                         11,747  12,044 

                              

              The Container Store, Inc.(11)

               August 22, 2017 

              Operator of Stores Offering Storage and Organizational Products

                          

                   

              LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.69%, Secured Debt (Maturity — August 15, 2021)(9)

                9,938  9,660  9,652 

                              

              TMC Merger Sub Corp.(11)

               December 22, 2016 

              Refractory & Maintenance Services Provider

                          

                   

              LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.88%, Secured Debt (Maturity — October 31, 2022)(9)(26)

                17,653  17,516  17,741 

                              

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              TOMS Shoes, LLC(11)

               November 13, 2014 

              Global Designer, Distributor, and Retailer of Casual Footwear

                          

                   

              LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.98%, Secured Debt (Maturity — October 30, 2020)(9)

                4,875  4,610  2,901 

                              

              Turning Point Brands, Inc.(10)(13)

               February 17, 2017 

              Marketer/Distributor of Tobacco Products

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.61%, Secured Debt (Maturity — May 17, 2022)(9)(25)

                8,436  8,364  8,605 

                              

              TVG-I-E CMN ACQUISITION, LLC(10)

               November 3, 2016 

              Organic Lead Generation for Online Postsecondary Schools

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.56%, Secured Debt (Maturity — November 3, 2021)(9)

                8,170  8,031  8,170 

                              

              Tweddle Group, Inc.(11)

               November 15, 2016 

              Provider of Technical Information Services to Automotive OEMs

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.38%, Secured Debt (Maturity — October 21, 2022)(9)

                6,114  6,011  6,023 

                              

              U.S. TelePacific Corp.(11)

               September 14, 2016 

              Provider of Communications and Managed Services

                          

                   

              LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.69%, Secured Debt (Maturity — May 2, 2023)(9)

                20,703  20,507  19,862 

                              

              US Joiner Holding Company(11)

               April 23, 2014 

              Marine Interior Design and Installation

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity — April 16, 2020)(9)

                13,465  13,366  13,398 

                              

              VIP Cinema Holdings, Inc.(11)

               March 9, 2017 

              Supplier of Luxury Seating to the Cinema Industry

                          

                   

              LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity — March 1, 2023)(9)

                7,700  7,666  7,777 

                              

              Vistar Media, Inc.(10)

               February 17, 2017 

              Operator of Digital Out-of-Home Advertising Platform

                          

                   

              LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.69%, Secured Debt (Maturity — February 16, 2022)(9)

                3,319  3,048  3,102 

                   

              Warrants (70,207 equivalent shares; Expiration — February 17, 2027; Strike price — $0.01 per share)

                   331  499 

                         3,379  3,601 

                              

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              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              Portfolio Company(1)(20)
               Investment Date(28)
               Business Description
               Type of Investment(2)(3)(27)
               Principal(4)
               Cost(4)
               Fair Value(18)
               
                

              Wellnext, LLC(10)

               May 23, 2016 

              Manufacturer of Supplements and Vitamins

                          

                   

              LIBOR Plus 10.10% (Floor 1.00%), Current Coupon 11.67%, Secured Debt (Maturity — July 21, 2022)(9)(23)

                9,930  9,857  9,930 

                              

              Wireless Vision Holdings, LLC(10)

               September 29, 2017 

              Provider of Wireless Telecommunications Carrier Services

                          

                   

              LIBOR Plus 8.91% (Floor 1.00%), Current Coupon 10.27%, Secured Debt (Maturity — September 29, 2022)(9)(24)

                12,932  12,654  12,654 

                              

              Wirepath LLC(11)

               August 16, 2017 

              E-Commerce Provider into Connected Home Market

                          

                   

              LIBOR Plus 5.25% (Floor 1.00%), Current Coupon 6.87%, Secured Debt (Maturity — August 5, 2024)(9)

                4,988  4,964  5,055 

                              

              Zilliant Incorporated

               June 15, 2012 

              Price Optimization and Margin Management Solutions

                          

                   

              Preferred Stock (186,777 shares)

                   154  260 

                   

              Warrants (952,500 equivalent shares; Expiration — June 15, 2022; Strike price — $0.001 per share)

                   1,071  1,189 

                         1,225  1,449 

                              

              Subtotal Non-Control/Non-Affiliate Investments (78.4% of net assets at fair value)

                        $1,107,447 $1,081,745 

                              

              Total Portfolio Investments, December 31, 2017

                        $2,004,798 $2,171,305 

              (1)
              All investments are Lower Middle Market portfolio investments, unless otherwise noted. See Note B for a description of Lower Middle Market portfolio investments. All of the Company's investments, unless otherwise noted, are encumbered either as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

              (2)
              Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.

              (3)
              See Note C for a summary of geographic location of portfolio companies.

              (4)
              Principal is net of repayments. Cost is net of repayments and accumulated unearned income.

              (5)
              Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act") as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.

              (6)
              Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% of the voting securities are owned and the investments are not classified as Control investments.

              (7)
              Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.

              (8)
              Income producing through dividends or distributions.

              (9)
              Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company's investment portfolio bear interest at a rate that may be determined by reference to either LIBOR or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower's option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at December 31, 2017. As noted in this schedule, 67% of the loans (based on the par amount) contain LIBOR floors which range between 0.50% and 2.25%, with a weighted-average LIBOR floor of approximately 1.02%.

              (10)
              Private Loan portfolio investment. See Note B for a description of Private Loan portfolio investments.

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              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments — (Continued)

              December 31, 2017
              (dollars in thousands)

              (11)
              Middle Market portfolio investment. See Note B for a description of Middle Market portfolio investments.

              (12)
              Other Portfolio investment. See Note B for a description of Other Portfolio investments.

              (13)
              Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.

              (14)
              Non-accrual and non-income producing investment.

              (15)
              Portfolio company is in a bankruptcy process and, as such, the maturity date of our debt investments in this portfolio company will not be finally determined until such process is complete. As noted in footnote (14), our debt investments in this portfolio company are on non-accrual status.

              (16)
              External Investment Manager. Investment is not encumbered as security for the Company's Credit Agreement or in support of the SBA-guaranteed debentures issued by the Funds.

              (17)
              Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.

              (18)
              Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C for further discussion.

              (19)
              PIK interest income and cumulative dividend income represent income not paid currently in cash.

              (20)
              All portfolio company headquarters are based in the United States, unless otherwise noted.

              (21)
              Portfolio company headquarters are located outside of the United States.

              (22)
              In connection with the Company's debt investment in Staples Canada ULC to help mitigate any potential adverse change in foreign exchange rates during the term of the Company's investment, the Company entered into a forward foreign currency contract with Cadence Bank to lend $24.2 million Canadian Dollars and receive $20.0 million U.S. Dollars with a settlement date of September 12, 2018. The unrealized appreciation on the forward foreign currency contract is $0.7 million as of December 31, 2017. This unrealized appreciation is offset by the foreign currency translation depreciation on the investment.

              (23)
              The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

              (24)
              The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 8.50% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such higher rate.

              (25)
              As part of the credit agreement with the portfolio company, the Company is entitled to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche receives priority over the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. The rate the Company receives per the Credit Agreement is the same as the rate reflected in the Consolidated Schedule of Investments above.

              (26)
              The Company has entered into an intercreditor agreement that entitles the Company to the "first out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a lower interest rate than the contractual stated interest rate of LIBOR plus 6.64% (Floor 1.00%) per the Credit Agreement and the Consolidated Schedule of Investments above reflects such lower rate.

              (27)
              All of the Company's portfolio investments are generally subject to restrictions on resale as "restricted securities."

              (28)
              Investment date represents the date of initial investment in the portfolio company.

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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

              NOTE A — A—ORGANIZATION AND BASIS OF PRESENTATION

              1.           Organization

              Main Street Capital Corporation ("MSCC"(“MSCC”) is a principal investment firm primarily focused on providing customized debt and equity financing to lower middle market ("LMM"(“LMM”) companies and debt capital to middle market ("(“Middle Market"Market”) companies. The portfolio investments of MSCC and its consolidated subsidiaries are typically made to support management buyouts, recapitalizations, growth financings, refinancings and acquisitions of companies that operate in a variety of industry sectors. MSCC seeks to partner with entrepreneurs, business owners and management teams and generally provides "one stop"“one stop” financing alternatives within its LMM portfolio.investment strategy. MSCC and its consolidated subsidiaries invest primarily in secured debt investments, equity investments, warrants and other securities of LMM companies based in the United States and in secured debt investments of Middle Market companies generally headquartered in the United States.

              MSCC was formed in March 2007 to operate as an internally managed business development company ("BDC"(“BDC”) under the Investment Company Act of 1940, as amended (the "1940 Act"“1940 Act”). MSCC wholly owns several investment funds, including Main Street Mezzanine Fund, LP ("MSMF"), Main Street Capital II, LP ("MSC II"(“MSMF”) and Main Street Capital III, LP ("(“MSC III"III” and, collectivelytogether with MSMF, and MSC II, the "Funds"“Funds”), and each of their general partners. The Funds are each licensed as a Small Business Investment Company ("SBIC"(“SBIC”) by the United States Small Business Administration ("SBA"(“SBA”). Because MSCC is internally managed, all of the executive officers and other employees are employed by MSCC. Therefore, MSCC does not pay any external investment advisory fees, but instead directly incurs the operating costs associated with employing investment and portfolio management professionals.

              MSC Adviser I, LLC (the "External“External Investment Manager"Manager”) was formed in November 2013 as a wholly owned subsidiary of MSCC to provide investment management and other services to parties other than MSCC and its subsidiaries or their portfolio companies ("(“External Parties"Parties”) and receives fee income for such services. MSCC has been granted no-action relief by the Securities and Exchange Commission ("SEC"(“SEC”) to allow the External Investment Manager to register as a registered investment adviser under the Investment Advisers Act of 1940, as amended. Since the External Investment Manager conducts all of its investment management activities for External Parties, it is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC'sMSCC’s consolidated financial statements.

              MSCC has elected to be treated for U.S. federal income tax purposes as a regulated investment company ("RIC"(“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"“Code”). As a result, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

              MSCC has certain direct and indirect wholly owned subsidiaries that have elected to be taxable entities (the "Taxable Subsidiaries"“Taxable Subsidiaries”). The primary purpose of the Taxable Subsidiaries is to permit MSCC to hold equity investments in portfolio companies which are "pass-through"“pass-through” entities for tax purposes.

              Unless otherwise noted or the context otherwise indicates, the terms "we," "us," "our,"“we,” “us,” “our,” the "Company"“Company” and "Main Street"“Main Street” refer to MSCC and its consolidated subsidiaries, which include the Funds and the Taxable Subsidiaries.

              2.           Basis of Presentation

              Main Street'sStreet’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("(“U.S. GAAP"GAAP”). The Company is an investment company following accounting and reporting guidance in Financial Accounting Standards Board ("FASB"(“FASB”)


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              Accounting Standards Codification ("ASC"(“ASC”) 946,Financial Services — Services—Investment Companies (" (“ASC 946"946”). For each of the periods presented

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              herein, Main Street'sStreet’s consolidated financial statements include the accounts of MSCC and its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of Main Street'sStreet’s investments in LMM portfolio companies, investments in Private Loan (as defined in Note C) portfolio companies, investments in Middle Market portfolio companies, Private Loan portfolio investments, Other Portfolio (as defined in Note C) investments and the investment in the External Investment Manager (see "Note C — “Note C—Fair Value Hierarchy for Investments and Debentures — Debentures—Portfolio Composition — Composition—Investment Portfolio Composition"Composition” for additional discussion of Main Street'sStreet’s Investment Portfolio and definitions for the defined terms Private Loan and Other Portfolio). Main Street'sStreet’s results of operations and cash flows for the years ended December 31, 2018, 20172021, 2020 and 20162019 and financial position as of December 31, 20182021 and 2017,2020, are presented on a consolidated basis. The effects of all intercompany transactions between Main Street and its consolidated subsidiaries have been eliminated in consolidation. Certain reclassifications have been made to prior period balances to conform with the current presentation.

              Principles of Consolidation

              Under ASC 946, Main Street is precluded from consolidating other entities in which Main Street has equity investments, including those in which it has a controlling interest, unless the other entity is another investment company. An exception to this general principle in ASC 946 occurs if Main Street holds a controlling interest in an operating company that provides all or substantially all of its services directly to Main Street or to its portfolio companies. Accordingly, as noted above, MSCC'sMSCC’s consolidated financial statements include the financial position and operating results for the Funds and the Taxable Subsidiaries. Main Street has determined that allnone of its portfolio investments do not qualify for this exception, including the investment in the External Investment Manager. Therefore, Main Street'sStreet’s Investment Portfolio is carried on the consolidated balance sheet at fair value, as discussed further in Note B.1., with any adjustments to fair value recognized as "Net“Net Unrealized Appreciation (Depreciation)" on the consolidated statements of operations until the investment is realized, usually upon exit, resulting in any gain or loss being recognized as a "Net“Net Realized Gain (Loss)."

                Portfolio Investment Classification

              Main Street classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) "Control Investments"“Control Investments” are defined as investments in which Main Street owns more than 25% of the voting securities or has rights to maintain greater than 50% of the board representation, (b) "Affiliate Investments"“Affiliate Investments” are defined as investments in which Main Street owns between 5% and 25% (inclusive) of the voting securities and does not have rights to maintain greater than 50% of the board representation, and (c) "Non-Control/“Non-Control/Non-Affiliate Investments"Investments” are defined as investments that are neither Control Investments nor Affiliate Investments. For purposes of determining the classification of its Investment Portfolio, Main Street has excluded consideration of any voting securities or board appointment rights held by third-party investment funds advised by the External Investment Manager.

              NOTE B — B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              1.           Valuation of the Investment Portfolio

              Main Street accounts for its Investment Portfolio at fair value. As a result, Main Street follows the provisions of ASC 820,Fair Value Measurements and Disclosures (" (“ASC 820"820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires Main Street to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact.

              Main Street'sStreet’s portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by privately held, LMM companies and more liquid debt securities issued by Middle Market companies that


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              are generally larger in size than the LMM companies. Main Street categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities in privately held companies whichthat have been originated by Main Street or through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as "club“club deals." Private Loan investments are typically

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              similar in size, structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street'sStreet’s portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Middle MarketPrivate Loan portfolio investments or Private LoanMiddle Market portfolio investments, including investments which may be managed by third parties. Main Street'sStreet’s portfolio may also include short-term portfolio investments that are atypical of Main Street’s LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital and are more liquid than investments within the other portfolios. Main Street’s portfolio investments may be subject to restrictions on resale.

              LMM investments and Other Portfolio investments generally have no established trading market while Middle Market securitiesand short-term portfolio investments generally have established markets that are not active. Private Loan investments may include investments which have no established trading market or have established markets that are not active. Main Street determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820, and awith such valuation process approved by its Board of Directors and in accordance with the 1940 Act. Main Street'sStreet’s valuation policies and processes are intended to provide a consistent basis for determining the fair value of Main Street'sStreet’s Investment Portfolio.

              For LMM portfolio investments, Main Street generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology ("Waterfall"(“Waterfall”) for its LMM equity investments and an income approach using a yield-to-maturity model ("Yield-to-Maturity"(“Yield-to-Maturity”) for its LMM debt investments. For Middle Market and short-term portfolio investments, Main Street primarily uses quoted prices in the valuation process. Main Street determines the appropriateness of the use of third-party broker quotes, if any, in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Private Loan and Middle Market and Private Loan portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, Main Street generally calculates the fair value of the investment primarily based on the net asset value ("NAV"(“NAV”) of the fund and adjusts the fair value for other factors deemed relevant that would affect the fair value of the investment. All of the valuation approaches for Main Street'sStreet’s portfolio investments estimate the value of the investment as if Main Street were to sell, or exit, the investment as of the measurement date.

              These valuation approaches consider the value associated with Main Street'sStreet’s ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, "control"“control” portfolio investments are composed of debt and equity securities in companies for which Main Street has a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company'scompany’s board of directors. For valuation purposes, "non-control"“non-control” portfolio investments are generally composed of debt and equity securities in companies for which Main Street does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company'scompany’s board of directors.

              Under the Waterfall valuation method, Main Street estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              the portfolio company, and then performs a waterfallWaterfall calculation by allocating the enterprise value over the portfolio company'scompany’s securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, privately held companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization ("EBITDA"(“EBITDA”), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, Main Street analyzes various factors including the portfolio company'scompany’s historical and projected financial results. Due to

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              SEC deadlines for Main Street'sStreet’s quarterly and annual financial reporting, the operating results of a portfolio company used in the current period valuation are generally the results from the period ended three months prior to such valuation date and may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment in its determination.determining. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, Main Street also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, Main Street allocates the enterprise value to investments in order of the legal priority of the various components of the portfolio company'scompany’s capital structure. In applying the Waterfall valuation method, Main Street assumes the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which Main Street believes is consistent with its past transaction history and standard industry practices.

              Under the Yield-to-Maturity valuation method, Main Street also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in the associated loan agreements, as well as the financial position and credit risk of the portfolio company. Main Street'sStreet’s estimate of the expected repayment date of its debt securities is generally the maturity date of the instrument, as Main Street generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance, changes in market-based interest rates and other factors. Main Street will generally use the value determined by the Yield-to-Maturity analysis as the fair value for that security; however, because of Main Street'sStreet’s general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the assumptions that Main Street uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, Main Street may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.

              Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, Main Street measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date and adjusts the investment'sinvestment’s fair value for factors known to Main Street that would affect that fund'sfund’s NAV, including, but not limited to, fair values for individual investments held by the fund if Main Street holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the investment, Main Street considers whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of Main Street'sStreet’s investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an implied market return on equity required by market


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              participants, or other uncertainties surrounding Main Street'sStreet’s ability to realize the full NAV of its interests in the investment fund.

              Pursuant to its internal valuation process and the requirements under the 1940 Act, Main Street performs valuation procedures on each of its portfolio investments quarterly. In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the Company'sCompany’s determinations of the fair value of its LMM portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street'sStreet’s investments in each LMM portfolio company at least once every calendar year, and for Main Street'sStreet’s investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders'stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street'sStreet’s investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at Main Street'sStreet’s determination of fair value on its investments in a total of 54 LMM portfolio companies for the

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              year ended December 31, 2018,2021, representing approximately 87%81% of the total LMM portfolio at fair value as of December 31, 2018,2021, and on a total of 5358 LMM portfolio companies for the year ended December 31, 2017,2020, representing approximately 91% of the total LMM portfolio at fair value as of December 31, 2017.2020. Excluding its investments in new LMM portfolio companies which havethat, as of December 31, 2021 and 2020, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment as of December 31, 2018 and 2017, as applicable, or whose primary purpose is to own real estate for which a third-party appraisal is obtained on at least an annual basis, the percentage of the LMM portfolio reviewed and certified by itsMain Street’s independent financial advisory services firm for both of the years ended December 31, 20182021 and 20172020 was 98% and 97%99% of the total LMM portfolio at fair value as of December 31, 2018 and 2017, respectively.value.

              For valuation purposes, all of Main Street's Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. Because the vast majority of the Middle Market portfolio investments are typically valued using third-party quotes or other independent pricing services (including 94% and 95% of the Middle Market portfolio investments as of December 31, 2018 and 2017, respectively), Main Street generally does not consult with any financial advisory services firms in connection with determining the fair value of its Middle Market investments.

                     For valuation purposes, all of Main Street'sStreet’s Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, Main Street, among other things, consults with a nationally recognized independent financial advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations and an assurance certification regarding the Company'sCompany’s determinations of the fair value of its Private Loan portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to Main Street'sStreet’s investments in each Private Loan portfolio company at least once every calendar year, and for Main Street'sStreet’s investments in new Private Loan portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, Main Street may determine that it is not cost-effective, and as a result is not in its stockholders'stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of Main Street'sStreet’s investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. Main Street consulted with and received an assurance certification from its independent financial advisory services firm in arriving at its determination of fair value on its investments in a total of 2739 Private Loan portfolio companies for the year ended December 31, 2018,2021, representing approximately 57%60% of the total Private Loan portfolio at fair value as of December 31, 2018,2021, and on a total of 2636 Private Loan portfolio companies for the year ended December 31, 2017,2020, representing approximately 57%66% of the total Private Loan portfolio at fair value as of December 31, 2017.2020. Excluding its investments in new Private Loan portfolio companies which havethat, as of December 31, 2021 and 2020, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment decision as of December 31, 2018 and 2017, as applicable, and its investments in its Private Loan portfolio companies that were not reviewed because the investment is valued based upon third-party quotes or other independent pricing, the percentage of the Private Loan portfolio reviewed and certified by itsMain Street’s independent financial advisory services firm for the years ended December 31, 20182021 and 20172020 was 91%93% and 94%92% of the total Private Loan portfolio at fair value as of December 31, 20182021 and 2017,2020, respectively.

              For valuation purposes, all of Main Street'sStreet’s Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third party quotes or other independent pricing are not available or appropriate, Main Street generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. The Company generally consults on a limited basis with a financial advisory services firm in connection with determining the fair value of its Middle Market portfolio investments due to the nature of these investments. The vast majority (93% and 90%, as of December 31, 2021 and 2020, respectively) of the Middle Market portfolio investments are valued using third-party quotes or other independent pricing services, or are new investments that will be consulted on once they have been in the Investment Portfolio for at least twelve months subsequent to the initial investment.

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              For valuation purposes, all of Main Street’s short-term portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, Main Street uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. Because all of the short-term portfolio investments are typically valued using third-party quotes or other independent pricing services, Main Street generally does not consult with any financial advisory services firms in connection with determining the fair value of its short-term portfolio investments.

              For valuation purposes, all of Main Street’s Other Portfolio investments are non-control investments. Main Street'sStreet’s Other Portfolio investments comprised 4.4%4.7% and 4.8%3.6% of Main Street'sStreet’s Investment Portfolio at fair value as of December 31, 20182021 and 2017,2020, respectively. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments are generally not readily available. For its Other Portfolio equity investments, Main Street generally determines the fair value of these investments using the NAV valuation method.

              For valuation purposes, Main Street'sStreet’s investment in the External Investment Manager is a control investment. Market quotations are not readily available for this investment, and as a result, Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach. In estimating the enterprise value, Main Street analyzes various factors, including the entity'sentity’s historical and projected financial results, as well as its size, marketability and performance relative to the population of market comparables. This valuation approach estimates the value of the investment as if Main Street were to sell, or exit, the investment. In addition, Main Street considers its ability to control the capital structure of the company, as well as the timing of a potential exit, in connection with determining the fair value of the External Investment Manager.

              Due to the inherent uncertainty in the valuation process, Main Street'sStreet’s determination of fair value for its Investment Portfolio may differ materially from the values that would have been determined had a ready market for the securities existed. In addition, changes in the market environment, portfolio company performance and other events that may occur over the lives of the investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. Main


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              Street determines the fair value of each individual investment and records changes in fair value as unrealized appreciation or depreciation.

              Main Street uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for its LMM portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM portfolio company and the investments held therein.

                     The BoardIn December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC’s board of Directors of Main Street has the final responsibility for overseeing, reviewing and approving, in good faith, Main Street's determination ofdirectors to designate its executive officers or investment adviser as a valuation designee to determine the fair value for its Investment Portfolio,investment portfolio, subject to the active oversight of the board. Main Street’s Board of Directors has approved policies and procedures pursuant to Rule 2a-5 (the “Valuation Procedures”) and has designated a group of its executive officers to serve as well as itsthe Board’s valuation procedures, consistent with 1940 Act requirements.designee. Main Street adopted the Valuation Procedures effective April 1, 2021. Main Street believes its Investment Portfolio as of December 31, 20182021 and 20172020 approximates fair value as of those dates based on the markets in which Main Streetit operates and other conditions in existence on those reporting dates.

              2.           Use of Estimates

              The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1., the consolidated financial statements include investments in the Investment Portfolio whose values have been estimated by Main Street, with the oversight, reviewpursuant to valuation policies and approvalprocedures approved and overseen by Main Street'sStreet’s Board of Directors, in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ materially from the values that would have been determined had a ready market for the securities existed.

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              The COVID-19 pandemic, and the related effect on the U.S. and global economies, has impacted, and threatens to continue to impact, the businesses and operating results of certain of Main Street’s portfolio companies, as well as market interest rate spreads. As a result of these and other current effects of the COVID-19 pandemic, as well as the uncertainty regarding the extent and duration of its impact, the valuation of Main Street’s Investment Portfolio has experienced increased volatility since the beginning of the COVID-19 pandemic.

              3.           Cash and Cash Equivalents

              Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.

              At December 31, 2018,2021, cash balances totaling $50.3$30.0 million exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company'sCompany’s cash deposits are held at large established high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote.

              4.            Interest, Dividend and Fee Income

              Main Street records interest and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. In accordance with Main Street'sStreet’s valuation policies, Main Street evaluates accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if Main Street otherwise does not expect the debtor to be able to service all of its debt or other obligations, Main Street will generally place the loan or debt security on non-accrual status and cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security'ssecurity’s status significantly improves regarding the debtor'sdebtor’s ability to service the debt or other obligations, or if a loan or debt security is sold or written-off,written off, Main Street removes it from non-accrual status.


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              As of December 31, 2018,2021, Main Street'sStreet’s total Investment Portfolio had sixnine investments on non-accrual status, which comprised approximately 0.7% of its fair value and 3.3% of its cost. As of December 31, 2020, Main Street’s total Investment Portfolio had seven investments on non-accrual status, which comprised approximately 1.3% of its fair value and 3.9% of its cost. As of December 31, 2017, Main Street's total Investment Portfolio had five investments on non-accrual status, which comprised approximately 0.2% of its fair value and 2.3%3.6% of its cost.

              Main Street holds certain debt and preferred equity instruments in its Investment Portfolio that contain payment-in-kind ("PIK"(“PIK”) interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the PIK interest and cumulative dividends in cash. For the years ended December 31, 2021, 2020 and 2019 (i) approximately 2.6%, 2.8% and 2.0%, respectively, of Main Street’s total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 0.6%, 0.8% and 1.0%, respectively, of Main Street’s total investment income was attributable to cumulative dividend income not paid currently in cash. Main Street stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest and dividends in arrears are no longer collectible. For the years ended December 31, 2018, 2017 and 2016, (i) approximately 1.0%, 2.4% and 3.6%, respectively, of Main Street's total investment income was attributable to PIK interest income not paid currently in cash and (ii) approximately 1.0%, 1.6% and 1.2%, respectively, of Main Street's total investment income was attributable to cumulative dividend income not paid currently in cash.

              Main Street may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into income over the life of the financing.

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              A presentation of thetotal investment income Main Street received from its Investment Portfolio in each of the periods presented is as follows:

              Twelve Months Ended December 31, 

                  

              2021

                  

              2020

                  

              2019


               Twelve Months Ended December 31, 

               2018 2017 2016 

               (dollars in thousands)
               

              (dollars in thousands)

              Interest, fee and dividend income:

                     

              Interest income

               $177,103 $161,934 $138,689 

              $

              193,667

              $

              173,676

              $

              187,381

              Dividend income

               46,471 34,704 32,182 

               

              81,153

               

              36,373

               

              49,782

              Fee income

               9,781 9,103 7,294 

               

              14,227

               

              12,565

               

              6,210

              Total interest, fee and dividend income

               $233,355 $205,741 $178,165 

              $

              289,047

              $

              222,614

              $

              243,373

              5.           Deferred Financing Costs

              Deferred financing costs include commitment fees and other costs related to Main Street'sStreet’s multi-year revolving credit facility (the "Credit Facility"“Credit Facility”) and its unsecured notes, as well as the commitment fees and leverage fees (approximately 3.4% of the total commitment and draw amounts, as applicable) on the SBIC debentures which are not accounted for under the fair value option under ASC 825 (as discussed further in Note B.11.).debentures. See further discussion of Main Street'sStreet’s debt in Note E. Deferred financing costs in connection with the Credit Facility are capitalized as an asset. Deferred financing costs in connection with all other debt arrangements not using the fair value option are a direct deduction from the related debt liability.


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              6.           Equity Offering Costs

              The Company'sCompany’s offering costs are charged against the proceeds from equity offerings when the proceeds are received.

              7.           Unearned Income — Income—Debt Origination Fees and Original Issue Discount and Discounts/Discounts / Premiums to Par Value

              Main Street capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into income based on the effective interest method over the life of the financing.

              In connection with its portfolio debt investments, Main Street sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, "nominal“nominal cost equity"equity”) that are valued as part of the negotiation process with the particular portfolio company. When Main Street receives nominal cost equity, Main Street allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest income based on the effective interest method over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.

              Main Street may also purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, Main Street records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income based on the effective interest method over the life of the debt investment. In the case of a purchase at a premium, Main Street records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income based on the effective interest method over the life of the debt investment.

              To maintain RIC tax treatment (as discussed in Note B.9. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though Main Street may not have collected the interest

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              income. For the years ended December 31, 2018, 20172021, 2020 and 2016,2019, approximately 3.0%2.0%, 3.6%2.7% and 3.1%2.7%, respectively, of Main Street'sStreet’s total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.

              8.           Share-Based Compensation

              Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718,Compensation — Compensation—Stock CompensationCompensation.. Accordingly, for restricted stock awards, Main Street measures the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

              Main Street has also adopted Accounting Standards Update ("ASU"(“ASU”) 2016-09,Compensation — Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which requires that all excess tax benefits and tax deficiencies (including tax benefits of dividends on share-based payment awards) be recognized as income tax expense or benefit in the income statement and not delay recognition of a tax benefit until the tax benefit is realized through a reduction to taxes payable. TheAccordingly, the tax effects of exercised or vested awards should beare treated as discrete items in the reporting period in which they occur. Additionally, Main Street has elected to account for forfeitures as they occur.


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              9.            Income Taxes

              MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC'sMSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment“investment company taxable income"income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) the filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

              The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through"“pass-through” entities for tax purposes and to continue to comply with the "source-of-income"“source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street'sStreet’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street'sStreet’s consolidated financial statements.

              The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC'sMSCC’s consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for its stand-alone financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. The income tax expense, or

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              benefit, if any, and the related tax assets and liabilities, of the External Investment Manager are reflected in the External Investment Manager'sManager’s separate financial statements.

                     In December 2017, the "Tax Cuts and Jobs Act" legislation was enacted. The Tax Cuts and Jobs Act includes significant changes to the U.S. corporate tax system, including a U.S. federal corporate income tax rate reduction from 35% to 21% and other changes. ASC 740,Income Taxes, requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation was enacted. As such, Main Street has accounted for the tax effects as a result of the enactment of the Tax Cuts and Jobs Act beginning with the period ended December 31, 2017.

              The Taxable Subsidiaries and the External Investment Manager use the liability method in accounting for income taxes. Deferred tax assets and liabilities are recorded for temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements, using statutory tax


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              rates in effect for the year in which the temporary differences are expected to reverse. A valuation allowance is provided, if necessary, against deferred tax assets when it is more likely than not that some portion or all of the deferred tax asset will not be realized. Our stockholder’s equity includes an adjustment to classification as a result of permanent book-to-tax differences, which include differences in the book and tax treatment of income and expenses.

              Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized.

              10.         Net Realized Gains or Losses and Net Unrealized Appreciation or Depreciation

              Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

              11.         Fair Value of Financial Instruments

              Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Main Street believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.

                     As part of Main Street's acquisition of the majority of the equity interests of MSC II in January 2010 (the "MSC II Acquisition"), Main Street electedTo estimate the fair value option under ASC 825,Financial Instruments ("ASC 825"), relating to accounting forof Main Street’s multiple tranches of unsecured debt obligations at theirinstruments as disclosed in Note E – Debt, Main Street uses quoted market prices. For the estimated fair value of Main Street’s SBIC debentures, Main Street uses the Yield-to-Maturity valuation method based on projections of the discounted future free cash flows that the debt security will likely generate, including both the discounted cash flows of the associated interest and principal amounts for the MSC II SBIC debentures acquired as part of the acquisition accounting related to the MSC II Acquisition and values those obligations as discussed further in Note C. In order to provide for a more consistent basis of presentation, Main Street has continued to elect the fair value option for SBIC debentures issued by MSC II subsequent to the MSC II Acquisition. When the fair value option is elected for a given SBIC debenture, the deferred loan costs associated with the debenture are fully expensed in the current period to "Net Unrealized Appreciation (Depreciation) — SBIC debentures" as part of the fair value adjustment. Interest incurred in connection with SBIC debentures which are valued at fair value is included in interest expense.debt security.

              12.         Earnings per Share

              Basic and diluted per share calculations are computed utilizing the weighted-average number of shares of common stock outstanding for the period. In accordance with ASC 260,Earnings Per Share, the unvested shares of restricted stock awarded pursuant to Main Street'sStreet’s equity compensation plans are participating securities and, therefore, are included in the basic earnings per share calculation. As a result, for all periods presented, there is no difference between diluted earnings per share and basic earnings per share amounts.

              13.         Recently Issued or Adopted Accounting Standards

              In May 2014,March 2020, the FASB issued ASU 2014-09,Revenue from Contracts with Customers2020-04, “Reference rate reform (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements under ASC 605,Revenue Recognition, and most industry-specific guidance throughout the Industry Topics848)—Facilitation of the ASC.effects of reference rate reform on financial reporting.” The core principle of theamendments 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


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              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              guidancewith certain lenders. Many of these agreements include language for choosing an alternative successor rate if LIBOR reference is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity expectsno longer considered to be entitled in exchange for those goods or services. Under the guidance, an entity isappropriate. Contract modifications are required to performbe evaluated in determining whether the following five steps: (1) identify the contract(s) with a customer; (2) identify the performance obligationsmodifications result in the contract; (3) determineestablishment of new contracts or the transaction price; (4) allocatecontinuation of existing contracts. The Company adopted this amendment in March 2020 and plans to apply the transaction priceamendments in this update to account for contract modifications due to changes in reference rates when LIBOR reference is no longer used. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the year ended December 31, 2021. The Company continues to evaluate the impact that the amendments in this update will have on its consolidated financial statements and disclosures when applied.

              In May 2020, the SEC published Release No. 33-10786 (the “May 2020 Release”), Amendments to Financial Disclosures about Acquired and Disposed Businesses, announcing its adoption of rules amending Rule 1-02(w)(2) under Regulation S-X used in the determination of a significant subsidiary specific to investment companies, including BDCs. In part, the rules adopted pursuant to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The guidance will significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. Additionally, the guidance requires improved disclosures as to the nature, amount, timing and uncertainty of revenue that is recognized. In March 2016, the FASB issued ASU 2016-08,Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10,Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarified the implementation guidance regarding performance obligations and licensing arrangements. In May 2016, the FASB issued ASU No. 2016-12,Revenue from Contracts with Customers (Topic 606) — Narrow-Scope Improvements and Practical Expedients, which clarified guidance on assessing collectability, presenting sales tax, measuring noncash consideration, and certain transition matters. In December 2016, the FASB issued ASU No. 2016-20,Revenue from Contracts with Customers (Topic 606) — Technical Corrections and Improvements, which provided disclosure relief, and clarified the scope and application of the new revenue standard and related cost guidance. The guidance is effective for the annual reporting period beginning after December 15, 2017, including interim periods within that reporting period. Substantially all of Main Street's income is not within the scope of ASU 2014-09. For those income items that are within the scope (primarily fee income), Main Street has similar performance obligations as compared with deliverables and separate units of account previously identified. As a result, Main Street's timing of its income recognition remains the same and the adoption of the standard was not material.

                     In February 2016, the FASB issued ASU 2016-02,Leases, which requires lessees to recognize on the balance sheet a right-of-use asset, representing its right to use the underlying asset for the lease term, and a lease liability for all leases with terms greater than 12 months. The guidance also requires qualitative and quantitative disclosures designed to assess the amount, timing, and uncertainty of cash flows arising from leases. The standard requires2020 Release eliminated the use of a modified retrospective transition approach, which includes a number of optional practical expedients that entities may elect to apply. The guidance is effectivethe asset test, and amended the income and investment tests for annual periods beginning after December 15, 2018, and interim periods therein. Early application is permitted. While Main Street continues to assess the effect of adoption, Main Street currently believes the most significant change relates to the recognition of a new right-of-use asset and lease liability on its consolidated balance sheet for its office space operating lease. Main Street currently has one operating lease for office space and does not expect a significant changedetermining whether an unconsolidated subsidiary requires additional disclosure in the leasing activity between now and adoption. See further discussionfootnotes of the operating lease obligation in Note K.

                     In August 2016, the FASB issued ASU 2016-15,Statement of Cash Flows (Topic 230), which is intended to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2017, and interim periods therein. Main Street has adopted ASU 2016-15 and the impact of the adoption of this accounting standard on Main Street's consolidated financial statements was not material.

                     In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820), which is intended to improve fair value and defined benefit disclosure requirements by removing disclosures that are not cost beneficial, clarifying disclosures' specific requirements, and adding relevant disclosure requirements. The amendments take effect for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Main Street elected to early adopt ASU 2018-13 in the current annual period. No significant changes were made to the fair value disclosures in the notes to the consolidated financial statements in order to comply with ASU 2018-13.


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                     In August 2018, the SEC adopted rules (the "SEC Release") amending certain disclosure requirements intended to eliminate redundant, duplicative, overlapping, outdated, or superseded, in light of other SEC disclosure requirements, US GAAP requirements, or changes in the information environment. In part, the SEC Release requires an investment company to present distributable earnings in total on the consolidated balance sheet and consolidated statement of changes in net assets, rather than showing the three components of distributable earnings as previously shown.statements. Main Street adopted this part of the SEC Release in the current annual period and the changes in presentation have been retrospectively appliedrules pursuant to the consolidated balance sheet as of December 31, 2017 and toMay 2020 Release during the consolidated statements of changes in net assets for the yearsquarter ended December 31, 2017 and 2016.June 30, 2020. The impact of the adoption of these rules on Main Street'sStreet’s consolidated financial statements was not material. Additionally,

              In December 2020, the SEC published Release requires disclosureNo. IC-34084 (the “December 2020 Release”) Use of changesDerivatives by Registered Investment Companies and Business Development Companies, announcing its adoption of Rule 18f-4 and amendment of Rule 6c-11 under the 1940 Act to provide an updated, comprehensive approach to the regulation of registered investment companies’, including BDCs’, use of derivatives and address investor protection concerns. In part, the rules adopted pursuant to the December 2020 Release require that funds using derivatives generally will have to adopt a derivatives risk management program that a derivatives risk manager administers and that the fund’s board of directors oversees, and comply with an outer limit on fund leverage. Funds that use derivatives only in net assets within a registrant's Form 10-Q filing on a quarter-to-datelimited manner will not be subject to these requirements, but they will have to adopt and year-to-date basis for bothimplement policies and procedures reasonably designed to manage the current yearfund’s derivatives risks. Funds also will be subject to reporting and prior year comparative periods.recordkeeping requirements regarding their derivatives use. Main Street expectsadopted the rules pursuant to adopt the new requirement to present changes in shareholders' equity in interim financial statements within Form 10-Q filings starting withDecember 2020 Release during the quarter endingended March 31, 2019. The compliance date for2021. As Main Street is a limited user of derivatives, the SEC Release was for all filings, as applicable, on or after November 5, 2018. Theimpact of the adoption of these rules will not have a material impact on the consolidated financial statements.statements was not material.

              In December 2021, the SEC published Staff Accounting Bulletin No. 120 (“SAB 120”) to provide accounting and disclosure guidance for stock compensation awards made to executives and conforming amendments to the Staff Accounting Bulletin Series to align with the current authoritative accounting guidance in ASC 718, Compensation – Stock Compensation. In part, SAB 120 requires that an entity disclose how it determines the current price of underlying shares for grant-date fair value, the policy for when an adjustment to the share price is required, how it determines the amount of an adjustment to the share price and any significant assumptions used in determining an adjustment to the share price. SAB 120 is effective for all stock compensation awards issued after December 1, 2021. Main Street is in the compliance with the guidance pursuant to SAB 120 for any share-based compensation disclosures. See Note J – Share-Based Compensation for further discussion of Main Street’s policies and procedures regarding share-based compensation. Main Street does not expect the impact of SAB 120 to be material to the consolidated financial statements and the notes thereto.

              From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that are adopted by Main Street as of the specified effective date. Main Street believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon adoption.

              NOTE C — C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES — DEBENTURES—PORTFOLIO COMPOSITION

              ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value, and enhances disclosure requirements for fair value measurements. Main Street accounts for its investments at fair value.

              140


              Fair Value Hierarchy

              In accordance with ASC 820, Main Street has categorized its investments based on the priority of the inputs to the valuation technique into a three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).

              Investments recorded on Main Street'sStreet’s balance sheet are categorized based on the inputs to the valuation techniques as follows:

                Level 1 — 1—Investments whose values are based on unadjusted quoted prices for identical assets in an active market that Main Street has the ability to access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities).

                Level 2 — 2—Investments whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the investment. Level 2 inputs include the following:

                  Quoted prices for similar assets in active markets (for example, investments in restricted stock);

                  Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies);
              Quoted prices for similar assets in active markets (for example, investments in restricted stock);
              Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies);
              Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and
              Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment.

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                  Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and

                  Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment.

                Level 3 — 3—Investments whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement (for example, investments in illiquid securities issued by privately held companies). These inputs reflect management'smanagement’s own assumptions about the assumptions a market participant would use in pricing the investment.

              As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, unrealized appreciation and depreciation related to such investments categorized within the Level 3 tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3).

              As of December 31, 20182021 and 2017,2020, all of Main Street'sStreet’s LMM portfolio investments consisted of illiquid securities issued by privately held companies. As a result,companies and the fair value determination for all of Main Street's LMM portfoliothese investments primarily consisted of unobservable inputs. As a result, all of Main Street'sStreet’s LMM portfolio investments were categorized as Level 3 as of December 31, 20182021 and 20172020.

              As of December 31, 20182021 and 2017,2020, Main Street'sStreet’s Private Loan portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street’s Private Loan portfolio investments were categorized as Level 3 as of December 31, 2021 and 2020.

              141


              As of December 31, 2021 and 2020, Main Street’s Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street'sStreet’s Middle Market portfolio investments were categorized as Level 3 as of December 31, 20182021 and 2017.2020.

              As of December 31, 20182021 and 2017,2020, Main Street's Private Loan portfolio investments primarily consisted of investments in interest-bearing secured debt investments. The fair value determination for these investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of Main Street's Private Loan portfolio investments were categorized as Level 3 as of December 31, 2018 and 2017.

                     As of December 31, 2018 and 2017, Main Street'sStreet’s Other Portfolio investments consisted of illiquid securities issued by privately held companies. Thecompanies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of Main Street'sStreet’s Other Portfolio investments were categorized as Level 3 as of December 31, 20182021 and 2017.2020.

              As of December 31, 2021, Main Street held one short-term portfolio investment, which was a secured debt investment. The fair value determination for this investment consisted of available observable inputs in non-active markets sufficient to determine the fair value of the investment. As a result, Main Street’s short-term portfolio investment was categorized as Level 2 as of December 31, 2021. Main Street did not hold any short-term portfolio investments as of December 31, 2020.

              The fair value determination of each portfolio investment categorized as Level 3 required one or more of the following unobservable inputs:

                  Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers;

                  Current and projected financial condition of the portfolio company;

                  Current and projected ability of the portfolio company to service its debt obligations;
              Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers;
              Current and projected financial condition of the portfolio company;
              Current and projected ability of the portfolio company to service its debt obligations;
              Type and amount of collateral, if any, underlying the investment;
              Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio) applicable to the investment;
              Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio);
              Pending debt or capital restructuring of the portfolio company;
              Projected operating results of the portfolio company;
              Current information regarding any offers to purchase the investment;
              Current ability of the portfolio company to raise any additional financing as needed;
              Changes in the economic environment which may have a material impact on the operating results of the portfolio company;
              Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company;
              Qualitative assessment of key management;
              Contractual rights, obligations or restrictions associated with the investment; and

              142


              Other factors deemed relevant.


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                  Type and amount of collateral, if any, underlying the investment;

                  Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio) applicable to the investment;

                  Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio);

                  Pending debt or capital restructuring of the portfolio company;

                  Projected operating results of the portfolio company;

                  Current information regarding any offers to purchase the investment;

                  Current ability of the portfolio company to raise any additional financing as needed;

                  Changes in the economic environment which may have a material impact on the operating results of the portfolio company;

                  Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company;

                  Qualitative assessment of key management;

                  Contractual rights, obligations or restrictions associated with the investment; and

                  Other factors deemed relevant.

              The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the reporting date. The significant unobservable inputs used in the fair value measurement of Main Street'sStreet’s LMM equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not be appropriate), are (i) EBITDA multiples and (ii) the weighted-average cost of capital ("WACC"(“WACC”). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement. On the contrary, significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of Main Street'sStreet’s LMM, Private Loan and Middle Market and Private Loan securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (see "Note“Note B.1.—Valuation of the Investment Portfolio"Portfolio”) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the tables below.


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              The following tables provide a summary of the significant unobservable inputs used to fair value Main Street'sStreet’s Level 3 portfolio investments as of December 31, 20182021 and 2017:2020:

                  

              Fair Value as of

                  

                  

                  

                  

                  

               

              December 31, 

               

              Type of

              2021

              Significant

              Weighted

               

              Investment

               

              (in thousands)

              Valuation Technique

              Unobservable Inputs

              Range(3)

              Average(3)

              Median(3)

              Equity investments

              $

              1,050,269

               

              Discounted cash flow

               

              WACC

               

              9.1% - 20.6%

               

              13.8

              %

              14.8

              %

               

              Market comparable / Enterprise Value

               

              EBITDA multiple (1)

               

              4.8x - 7.7x(2)

               

              6.6x

               

              5.9x

              Debt investments

              $

              2,158,424

               

              Discounted cash flow

               

              Risk adjusted discount factor

               

              5.6% - 15.7%(2)

               

              9.8

              %

              9.3

              %

               

              Expected principal recovery percentage

               

              0.0% - 100.0%

               

              99.6

              %

              100.0

              %

              Debt investments

              $

              351,144

               

              Market approach

               

              Third‑party quote

               

              3.0 - 100.5

               

              94.4

               

              99.0

              Total Level 3 investments

              $

              3,559,837


              (1)EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.
              (2)Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.2x - 11.0x and the range for risk adjusted discount factor is 4.2% - 38.5%.
              (3)Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

              Type of Investment
               Fair Value as of
              December 31,
              2018
              (in thousands)
               Valuation Technique Significant
              Unobservable Inputs
               Range(3) Weighted
              Average(3)
               Median(3) 

              Equity investments

               $767,156 

              Discounted cash flow

               

              WACC

               9.9% - 20.7%  13.7%  14.3% 

                  

              Market comparable / Enterprise Value

               

              EBITDA multiple(1)

               4.7x - 8.0x(2)  7.0x  6.0x 

              Debt investments

               
              $

              1,039,453
               

              Discounted cash flow

               

              Risk adjusted discount factor

               

              8.5% - 17.0%(2)

                
              12.2%
                
              12.0%
               

                    

              Expected principal recovery percentage

               1.5% - 100.0%  99.3%  100.0% 

              Debt investments

               
              $

              647,300
               

              Market approach

               

              Third-party quote

               

              37.5 - 101.0

                
              96.0
                
              98.3
               

              Total Level 3 investments            

               $2,453,909             

              143


              (1)
              EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

              (2)
              Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 3.9x - 15.0x and the range for risk adjusted discount factor is 5.3% - 30.3%.

              (3)
              Does not include investments for which the valuation technique does not include the use of the applicable fair value input.
              Type of Investment
               Fair Value as of
              December 31,
              2017
              (in thousands)
               Valuation Technique Significant
              Unobservable Inputs
               Range(3) Weighted
              Average(3)
               Median(3) 

              Equity investments

               $653,008 

              Discounted cash flow

               

              WACC

               11.1% - 23.2%  13.7%  14.0% 

                  

              Market comparable / Enterprise Value

               

              EBITDA multiple(1)

               4.3x - 8.5x(2)  7.3x  6.0x 

              Debt investments

               $858,816 

              Discounted cash flow

               

              Risk adjusted discount factor

               6.7% - 16.1%(2)  11.2%  11.0% 

                    

              Expected principal recovery percentage

               2.9% - 100.0%  99.8%  100.0% 

              Debt investments

               $659,481 

              Market approach

               

              Third-party quote

               11.0 - 106.0  95.9%  99.4% 

              Total Level 3 investments            

               $2,171,305             

              (1)
              EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.

              (2)
              Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 17.5x and the range for risk adjusted discount factor is 4.3% - 30.0%.

              (3)
              Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

              Table of Contents

                  

              Fair Value as of

                  

                  

                  

                  

                  

               

              December 31, 

               

              Type of

              2020

              Significant

              Weighted

               

              Investment

               

              (in thousands)

              Valuation Technique

              Unobservable Inputs

              Range(3)

              Average(3)

              Median(3)

              Equity investments

              $

              877,732

               

              Discounted cash flow

               

              WACC

               

              9.4% - 21.0%

               

              14.3

              %

              15.0

              %

               

              Market comparable / Enterprise Value

               

              EBITDA multiple (1)

               

              4.5x - 8.5x(2)

               

              7.0x

               

              6.1x

              Debt investments

              $

              1,339,079

               

              Discounted cash flow

               

              Risk adjusted discount factor

               

              7.4% - 15.3%(2)

               

              10.6

              %

              10.8

              %

               

              Expected principal recovery percentage

               

              0.0% - 100.0%

               

              99.4

              %

              100.0

              %

              Debt investments

              $

              468,055

               

              Market approach

               

              Third‑party quote

               

              45.0 - 100.3

               

              94.7

               

              96.5

              Total Level 3 investments

              $

              2,684,866


              (1)EBITDA may include proforma adjustments and/or other addbacks based on specific circumstances related to each investment.
              (2)Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 2.2x - 15.0x and the range for risk adjusted discount factor is 5.4% - 29.5%.
              (3)Does not include investments for which the valuation technique does not include the use of the applicable fair value input.


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              The following tables provide a summary of changes in fair value of Main Street'sStreet’s Level 3 portfolio investments for the years ended December 31, 20182021 and 20172020 (amounts in thousands):

              Net

              Fair Value

              Transfers

              Changes

              Net

              Fair Value

              as of

              Into

              from

              Unrealized

              as of

              Type of

               

              December 31, 

               

              Level 3

               

              Redemptions/

               

              New

               

              Unrealized

               

              Appreciation

               

              December 31, 

              Investment

                  

              2020

                  

              Hierarchy

                  

              Repayments

                  

              Investments

                  

              to Realized

                  

              (Depreciation)

                  

              Other(1)

                  

              2021

              Debt

              $

              1,807,134

              $

              $

              (909,464)

              $

              1,608,143

              $

              18,397

              $

              (10,844)

              $

              (3,798)

              $

              2,509,568

              Equity

              866,734

              (78,824)

              106,193

              (27,260)

              170,786

              6,080

              1,043,709

              Equity Warrant

              10,998

              (1,071)

              (2,159)

              1,074

              (2,282)

              6,560

              $

              2,684,866

              $

              $

              (989,359)

              $

              1,714,336

              $

              (11,022)

              $

              161,016

              $

              $

              3,559,837


              (1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.

                  

                  

                  

                  

                  

              Net

                  

                  

                  

              Fair Value

              Transfers

              Changes

              Net

              Fair Value

              as of

              Into

              from

              Unrealized

              as of

              Type of

              December 31, 

              Level 3

              Redemptions/

              New

              Unrealized

              Appreciation

              December 31, 

              Investment

              2019

              Hierarchy

              Repayments

              Investments

               

              to Realized

              (Depreciation)

              Other(1)

              2020

              Debt

              $

              1,782,575

              $

              $

              (544,545)

              $

              560,536

              $

              110,099

              $

              (78,866)

              $

              (22,665)

              $

              1,807,134

              Equity

               

              809,538

               

              (51,251)

              114,733

              8,938

              (38,404)

              22,665

               

              866,219

              Equity Warrant

               

              10,211

               

              (2,245)

              2,245

              1,302

               

              11,513

              $

              2,602,324

              $

              $

              (598,041)

              $

              675,269

              $

              121,282

              $

              (115,968)

              $

              $

              2,684,866


              (1)Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.
              Type of
              Investment
               Fair Value
              as of
              December 31,
              2017
               Transfers
              Into
              Level 3
              Hierarchy
               Redemptions/
              Repayments
               New
              Investments
               Net
              Changes
              from
              Unrealized
              to Realized
               Net
              Unrealized
              Appreciation
              (Depreciation)
               Other(1) Fair Value
              as of
              December 31,
              2018
               

              Debt

               $1,518,297 $ $(653,200)$837,162 $38,722 $(45,778)$(8,450)$1,686,753 

              Equity

                641,493    (48,585) 114,639  (33,971) 73,684  8,450  755,710 

              Equity Warrant

                11,515    (680) 181  (720) 1,150    11,446 

               $2,171,305 $ $(702,465)$951,982 $4,031 $29,056 $ $2,453,909 

              (1)
              Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.
              Type of
              Investment
               Fair Value
              as of
              December 31,
              2016
               Transfers
              Into
              Level 3
              Hierarchy
               Redemptions/
              Repayments
               New
              Investments
               Net
              Changes
              from
              Unrealized
              to Realized
               Net
              Unrealized
              Appreciation
              (Depreciation)
               Other(1) Fair Value
              as of
              December 31,
              2017
               

              Debt

               $1,427,823 $ $(753,240)$848,014 $25,146 $(19,664)$(9,782)$1,518,297 

              Equity

                549,453    (44,773) 74,227  (25,596) 77,583  10,599  641,493 

              Equity Warrant

                17,550    (4,697) 331  (549) (303) (817) 11,515 

               $1,994,826 $ $(802,710)$922,572 $(999)$57,616 $ $2,171,305 

              (1)
              Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.

                     As of December 31, 2018 and 2017, the fair value determination for the SBIC debentures recorded at fair value primarily consisted of unobservable inputs. As a result, the SBIC debentures which are recorded at fair value were categorized as Level 3. Main Street determines the fair value of these instruments primarily using a Yield-to-Maturity approach that analyzes the discounted cash flows of interest and principal for each SBIC debenture recorded at fair value based on estimated market interest rates for debt instruments of similar structure, terms, and maturity. Main Street's estimate of the expected repayment date of principal for each SBIC debenture recorded at fair value is the legal maturity date of the instrument. The significant unobservable inputs used in the fair value measurement of Main Street's SBIC debentures recorded at fair value are the estimated market interest rates used to fair value each debenture using the yield valuation technique described above. Significant increases (decreases) in the estimated market interest rates in isolation would result in a significantly lower (higher) fair value measurement.

                     The following tables provide a summary of the significant unobservable inputs used to fair value Main Street's Level 3 SBIC debentures as of December 31, 2018 and 2017 (amounts in thousands):

              Type of Instrument
               Fair Value
              as of
              December 31, 2018
               Valuation Technique Significant
              Unobservable Inputs
               Range Weighted
              Average
               

              SBIC debentures

               $44,688 Discounted cash flow Estimated market interest rates 5.5% - 5.8%  5.6%


              Type of Instrument
               Fair Value
              as of
              December 31, 2017
               Valuation Technique Significant
              Unobservable Inputs
               Range Weighted
              Average
               

              SBIC debentures

               $48,608 Discounted cash flow Estimated market interest rates 4.9% - 5.5%  5.1%

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                     The following tables provide a summary of changes for the Level 3 SBIC debentures recorded at fair value for the years ended December 31, 2018 and 2017 (amounts in thousands):

              Type of Instrument
               Fair Value
              as of
              December 31,
              2017
               Repayments Net Realized
              Loss
               New SBIC
              Debentures
               Net
              Unrealized
              (Appreciation)
              Depreciation
               Fair Value
              as of
              December 31,
              2018
               

              SBIC debentures at fair value

               $48,608 $(4,000)$1,374 $ $(1,294)$44,688 


              Type of Instrument
               Fair Value
              as of
              December 31,
              2016
               Repayments Net Realized
              Loss
               New SBIC
              Debentures
               Net
              Unrealized
              (Appreciation)
              Depreciation
               Fair Value
              as of
              December 31,
              2017
               

              SBIC debentures at fair value

               $74,803 $(25,200)$5,217 $ $(6,212)$48,608 

              At December 31, 20182021 and 2017,2020, Main Street'sStreet’s investments and SBIC debentures at fair value were categorized as follows in the fair value hierarchy for ASC 820 purposes:

              144

               
                
               Fair Value Measurements 
               
                
               (in thousands)
               
              At December 31, 2018
               Fair Value Quoted Prices in
              Active Markets for
              Identical Assets
              (Level 1)
               Significant Other
              Observable Inputs
              (Level 2)
               Significant
              Unobservable
              Inputs
              (Level 3)
               

              LMM portfolio investments

               $1,195,035 $ $ $1,195,035 

              Middle Market portfolio investments

                576,929      576,929 

              Private Loan portfolio investments

                507,892      507,892 

              Other Portfolio investments

                108,305      108,305 

              External Investment Manager

                65,748      65,748 

              Total investments

               $2,453,909 $ $ $2,453,909 

              SBIC debentures at fair value

               $44,688 $ $ $44,688 



               
                
               Fair Value Measurements 
               
                
               (in thousands)
               
              At December 31, 2017
               Fair Value Quoted Prices in
              Active Markets for
              Identical Assets
              (Level 1)
               Significant Other
              Observable Inputs
              (Level 2)
               Significant
              Unobservable
              Inputs
              (Level 3)
               

              LMM portfolio investments

               $948,196 $ $ $948,196 

              Middle Market portfolio investments

                609,256      609,256 

              Private Loan portfolio investments

                467,475      467,475 

              Other Portfolio investments

                104,610      104,610 

              External Investment Manager

                41,768      41,768 

              Total investments

               $2,171,305 $ $ $2,171,305 

              SBIC debentures at fair value

               $48,608 $ $ $48,608 

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              Fair Value Measurements

              (in thousands)

                  

                  

              Quoted Prices in

                  

                  

              Significant

               

              Active Markets for

               

              Significant Other

               

              Unobservable

               

              Identical Assets

               

              Observable Inputs

               

              Inputs

              At December 31, 2021

              Fair Value

               

              (Level 1)

              (Level 2)

               

              (Level 3)

              LMM portfolio investments

              $

              1,716,415

              $

              $

              $

              1,716,415

              Private Loan portfolio investments

               

              1,141,772

               

               

               

              1,141,772

              Middle Market portfolio investments

               

              395,167

               

               

               

              395,167

              Other Portfolio investments

               

              166,083

               

               

               

              166,083

              External Investment Manager

               

              140,400

               

               

               

              140,400

              Short-term portfolio investments

              1,994

              1,994

              Total investments

              $

              3,561,831

              $

              $

              1,994

              $

              3,559,837

                  

              Fair Value Measurements

              (in thousands)

              Quoted Prices in

              Significant

               

              Active Markets for

               

              Significant Other

              Unobservable

               

              Identical Assets

               

              Observable Inputs

               

              Inputs

              At December 31, 2020

              Fair Value

                  

              (Level 1)

                  

              (Level 2)

                  

              (Level 3)

              LMM portfolio investments

              $

              1,285,524

              $

              $

              $

              1,285,524

              Private Loan portfolio investments

               

              740,370

               

               

               

              740,370

              Middle Market portfolio investments

               

              445,609

               

               

               

              445,609

              Other Portfolio investments

               

              96,603

               

               

               

              96,603

              External Investment Manager

               

              116,760

               

               

               

              116,760

              Total investments

              $

              2,684,866

              $

              $

              $

              2,684,866

              Investment Portfolio Composition

              Main Street'sStreet’s principal investment objective is to maximize its portfolio’s total return by generating current income from its debt investments and current income and capital appreciation from its equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities in a portfolio company. Main Street seeks to achieve its investment objective through its LMM, portfolioPrivate Loan, and Middle Market investment strategies.

              Main Street’s LMM investment strategy involves investments primarily consist ofin secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the United States. Main Street'sStreet’s LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in size from $5 million to $50$75 million. The LMM debt investments are typically secured by either a first or second priority lien on the assets of the portfolio company, can include either fixed or floating rate terms and generally have a term of between five and seven years from the original investment date. In most LMM portfolio investments, Main Street receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.

              Main Street's Middle Market portfolioStreet’s private loan (“Private Loan”) investment strategy involves investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the United States that are generally larger inconsistent with the size than theof its LMM portfolio companies included in Main Street's LMM portfolio. Main Street'sor Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3$10 million to $20$75 million. Main Street'sStreet’s Private Loan investments consist generally of loans that have been originated by Main Street or through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as “club deals.” Private Loan investments are typically similar in structure, terms and conditions to investments Main Street holds in its LMM portfolio and Middle Market portfolio. Main Street’s Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

              Main Street's private loan ("Street may have the option to invest alongside the sponsor in the equity securities of its Private Loan")Loan portfolio companies.

              145


              Main Street’s Middle Market investment strategy involves investments are primarilyin syndicated loans to or debt securities in privately heldMiddle Market companies, which have been originated through strategic relationshipsMain Street defines as companies with other investment funds on a collaborative basis,annual revenues between $150 million and are often referred to in the debt markets as "club deals." Private Loan investments are typically similar$1.5 billion, and generally range in size structure, terms and conditionsfrom $3 million to investments$25 million. Main Street holds in its LMM portfolio andStreet’s Middle Market portfolio. Main Street's Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a terman expected duration of between three and seven years from the original investment date.

              Main Street'sStreet’s other portfolio ("(“Other Portfolio"Portfolio”) investments primarily consist of investments whichthat are not consistent with the typical profiles for its LMM, Private Loan or Middle Market and Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, Main Street may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, Main Street generally receives distributions related to the assets held by the portfolio company. Those assets are typically expected to be liquidated over a five to tenten-year period.

              Based upon Main Street’s liquidity and capital structure management activities, Main Street’s Investment Portfolio may also include short-term portfolio investments that are atypical of Main Street’s LMM, Private Loan and Middle Market portfolio investments in that they are intended to be a short-term deployment of capital. Those assets are typically expected to be liquidated in one year period.or less. These short-term investments are not expected to be a significant portion of the overall Investment Portfolio.

              Main Street'sStreet’s external asset management business is conducted through its External Investment Manager. The External Investment Manager earns management fees based on the assets of the funds under management for external parties and may earn incentive fees, or a carried interest, based on the performance of the fundsassets managed. Main Street entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for its relationship with MSC Income Fund, Inc. (“MSC Income”), formerly known as HMS Income Fund, Inc. ("HMS Income"). Through this agreement, Main Street shares employees with the External Investment Manager, including their related infrastructure, business relationships, management expertise and capital raising capabilities. Main Street allocates the related expenses to the External Investment Manager pursuant to the sharing agreement. Main Street'sStreet’s total expenses for the years ended December 31, 2018, 20172021, 2020 and 20162019 are net of expenses allocated to the External Investment Manager of $6.8$10.3 million, $6.4$7.4 million, and $5.1$6.7 million, respectively.

              Investment income, consisting of interest, dividends and fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment income in any given year could also be highly concentrated among several portfolio


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              companies. For the years ended December 31, 2018, 20172021 and 2016,2020, Main Street did not record investment income from any single portfolio company in excess of 10% of total investment income.

              The following tables provide a summary of Main Street'sStreet’s investments in the LMM, Private Loan and Middle Market and Private Loan portfolios as of December 31, 20182021 and 20172020 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager, each of which areis discussed further below):

                  

              As of December 31, 2021

              LMM (a)

              Private Loan

              Middle Market

              (dollars in millions)

               

              Number of portfolio companies

              73

               

              75

               

              36

              Fair value

              $

              1,716.4

               

              $

              1,141.8

               

              $

              395.2

              Cost

              $

              1,455.7

               

              $

              1,157.5

               

              $

              440.9

              Debt investments as a % of portfolio (at cost)

              70.9

              %

              95.7

              %

              93.3

              %

              Equity investments as a % of portfolio (at cost)

              29.1

              %

              4.3

              %

              6.7

              %

              % of debt investments at cost secured by first priority lien

              99.0

              %

              98.7

              %

              98.7

              %

              Weighted-average annual effective yield (b)

              11.2

              %

              8.2

              %

              7.5

              %

              Average EBITDA (c)

              $

              6.2

               

              $

              41.3

               

              $

              76.0


              (a)At December 31, 2021, Main Street had equity ownership in all of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 40%.

              146


              (b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2021, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average yield on Main Street’s debt portfolio as of December 31, 2021 including debt investments on non-accrual status was 10.6% for its LMM portfolio, 8.0% for its Private Loan portfolio and 7.1% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of leverage, or debt capital, in its capital structure, and Main Street’s expenses or any sales load paid by an investor.
              (c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, three Private Loan portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

                  

              As of December 31, 2020

              LMM (a)

              Private Loan

              Middle Market

              (dollars in millions)

               

              Number of portfolio companies

              70

               

              63

               

              42

              Fair value

              $

              1,285.5

               

              $

              740.4

               

              $

              445.6

              Cost

              $

              1,104.6

               

              $

              769.0

               

              $

              488.9

              Debt investments as a % of portfolio (at cost)

              65.8

              %

              93.8

              %

              93.0

              %

              Equity investments as a % of portfolio (at cost)

              34.2

              %

              6.2

              %

              7.0

              %

              % of debt investments at cost secured by first priority lien

              98.1

              %

              95.4

              %

              92.4

              %

              Weighted-average annual effective yield (b)

              11.6

              %

              8.7

              %

              7.9

              %

              Average EBITDA (c)

              $

              5.3

               

              $

              58.1

               

              $

              76.5


              (a)At December 31, 2020, Main Street had equity ownership in approximately 99% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 38%.
              (b)The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2020, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average yield on Main Street’s debt portfolio as of December 31, 2020 including debt investments on non-accrual status was 10.4% for its LMM portfolio, 8.4% for its Private Loan portfolio and 7.9% for its Middle Market portfolio. The weighted-average annual effective yield is not reflective of what an investor in shares of Main Street’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street’s stock, Main Street’s utilization of leverage, or debt capital, in its capital structure, Main Street’s expenses or any sales load paid by an investor.
              (c)The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Private Loan and Middle Market portfolios. These calculations exclude certain portfolio companies, including three LMM portfolio companies, four Private Loan portfolio companies and one Middle Market portfolio company, as EBITDA is not a meaningful valuation metric for Main Street’s investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.
               
               As of December 31, 2018 
               
               LMM(a) Middle
              Market
               Private
              Loan
               
               
               (dollars in millions)
               

              Number of portfolio companies

                69  56  59 

              Fair value

               $1,195.0 $576.9 $507.9 

              Cost

               $990.9 $608.8 $553.3 

              % of portfolio at cost — debt

                68.7%  96.3%  93.0% 

              % of portfolio at cost — equity

                31.3%  3.7%  7.0% 

              % of debt investments at cost secured by first priority lien

                98.5%  87.9%  92.0% 

              Weighted-average annual effective yield(b)

                12.3%  9.6%  10.4% 

              Average EBITDA(c)

               $4.7 $99.1 $46.1 

              (a)
              At

              For the years ended December 31, 2018,2021 and 2020, Main Street had equity ownership in approximately 99%achieved a total return on investments of its LMM portfolio companies,16.6% and the average fully diluted equity ownership in those portfolio companies was approximately 40%.

              (b)
              The weighted-average annual effective yields were computed4.1%, respectively. Total return on investments is calculated using the effective interest, rates for all debt investments at costdividend, and fee income, as of December 31, 2018, including amortization of deferred debt origination feeswell as the realized and accretion of original issue discount but excluding fees payable upon repaymentunrealized change in fair value of the debt instruments and any debtInvestment Portfolio for the specified period. Main Street’s total return on investments on non-accrual status. The weighted-average annual effective yield is higher thannot reflective of what an investor in shares of Main Street'sStreet’s common stock will realize on its investment because it does not reflect changes in the market value of Main Street'sStreet’s stock, Main Street’s utilization of leverage, or debt capital, in its capital structure, Main Street’s expenses or any sales load paid by an investor.

              (c)
              The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including two LMM portfolio companies, one Middle Market portfolio company and four Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street's


              147


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

               
               As of December 31, 2017 
               
               LMM(a) Middle
              Market
               Private
              Loan
               
               
               (dollars in millions)
               

              Number of portfolio companies

                70  62  54 

              Fair value

               $948.2 $609.3 $467.5 

              Cost

               $776.5 $629.7 $489.2 

              % of portfolio at cost — debt

                67.1%  97.3%  93.6% 

              % of portfolio at cost — equity

                32.9%  2.7%  6.4% 

              % of debt investments at cost secured by first priority lien

                98.1%  90.5%  94.5% 

              Weighted-average annual effective yield(b)

                12.0%  9.0%  9.2% 

              Average EBITDA(c)

               $4.4 $78.3 $39.6 

              (a)
              At December 31, 2017, Main Street had equity ownership in approximately 97% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 39%.

              (b)
              The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2017, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in shares of Main Street's common stock will realize on its investment because it does not reflect Main Street's expenses or any sales load paid by an investor.

              (c)
              The average EBITDA is calculated using a simple average for the LMM portfolio and a weighted-average for the Middle Market and Private Loan portfolios. These calculations exclude certain portfolio companies, including six LMM portfolio companies, one Middle Market portfolio company and three Private Loan portfolio companies, as EBITDA is not a meaningful valuation metric for Main Street's investments in these portfolio companies, and those portfolio companies whose primary purpose is to own real estate.

              As of December 31, 2018,2021, Main Street had Other Portfolio investments in eleventhirteen companies, collectively totaling approximately $108.3$166.1 million in fair value and approximately $116.0$173.7 million in cost basis and which comprised approximately 4.4%4.7% and 5.3% of Main Street'sStreet’s Investment Portfolio at fair value.value and cost, respectively. As of December 31, 2017,2020, Main Street had Other Portfolio investments in eleventwelve companies, collectively totaling approximately $104.6$96.6 million in fair value and approximately $109.4$124.7 million in cost basis and which comprised approximately 4.8%3.6% and 5.0% of Main Street'sStreet’s Investment Portfolio at fair value.value and cost, respectively.

              As of December 31, 2021, Main Street had one short-term portfolio investment, which was a secured debt investment that had approximately $2.0 million in both fair value and in cost basis and which comprised approximately 0.1% of Main Street’s Investment Portfolio at both fair value and cost. As of December 31, 2020, Main Street held no short-term portfolio investments.

              As discussed further in Note A.1., Main Street holds an investment in the External Investment Manager, a wholly owned subsidiary that is treated as a portfolio investment. As of December 31, 2018, there was no cost basis in2021, this investment and the investment had a fair value of approximately $65.7$140.4 million and a cost basis of $29.5 million, which comprised approximately 2.7%3.9% and 0.9% of Main Street'sStreet’s Investment Portfolio at fair value.value and cost, respectively. As of December 31, 2017, there was no cost basis in2020, this investment and the investment had a fair value of approximately $41.8$116.8 million and a cost basis of $29.5 million, which comprised approximately 1.9%4.3% and 1.2% of Main Street'sStreet’s Investment Portfolio at fair value.value and cost, respectively.

              The following tables summarize the composition of Main Street'sStreet’s total combined LMM portfolio investments, Middle MarketPrivate Loan portfolio investments and Private LoanMiddle Market portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              MarketPrivate Loan portfolio investments and Private LoanMiddle Market portfolio investments, as of December 31, 20182021 and 20172020 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager)Manager, each of which is discussed above).

              Cost:
               December 31,
              2018
               December 31,
              2017
               

               

              December 31, 2021

               

              December 31, 2020

              First lien debt

               77.1% 79.0% 

               

              82.5

              %  

              77.0

              %

              Equity

               16.6% 15.3% 

               

              16.2

              %  

              19.0

              %

              Second lien debt

               5.3% 4.5% 

               

              0.6

              %  

              2.7

              %

              Equity warrants

               0.6% 0.7% 

               

              0.3

              %  

              0.5

              %

              Other

               0.4% 0.5% 

               

              0.4

              %  

              0.8

              %

               

              100.0

              %  

              100.0

              %

               100.0% 100.0% 


              Fair Value:
               December 31,
              2018
               December 31,
              2017
               

               

              December 31, 2021

               

              December 31, 2020

               

              First lien debt

               69.0% 70.5% 

               

              74.3

              %  

              70.0

              %

               

              Equity

               25.5% 24.4% 

               

              24.6

              %  

              26.4

              %

               

              Second lien debt

               4.6% 4.1% 

               

              0.5

              %  

              2.4

              %

               

              Equity warrants

               0.5% 0.6% 

               

              0.2

              %  

              0.4

              %

               

              Other

               0.4% 0.4% 

               

              0.4

              %  

              0.8

              %

               

               

              100.0

              %  

              100.0

              %

               

               100.0% 100.0% 

              The following tables summarize the composition of Main Street'sStreet’s total combined LMM portfolio investments, Middle MarketPrivate Loan portfolio investments and Private LoanMiddle Market portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Middle MarketPrivate Loan portfolio investments and Private LoanMiddle Market portfolio investments, as of December 31, 20182021 and 20172020 (this information

              148


              excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.

              Cost:

               

              December 31, 2021

               

              December 31, 2020

               

              West

               

              28.3

              %  

              21.0

              %

               

              Northeast

               

              22.6

              %  

              22.6

              %

               

              Southwest

               

              21.6

              %  

              24.3

              %

               

              Midwest

               

              15.1

              %  

              18.2

              %

               

              Southeast

               

              11.6

              %  

              12.8

              %

               

              Canada

               

              0.8

              %  

              1.1

              %

               

               

              100.0

              %  

              100.0

              %

               

              Fair Value:

               

              December 31, 2021

               

              December 31, 2020

               

              West

               

              28.5

              %  

              21.4

              %

               

              Southwest

               

              23.0

              %  

              24.7

              %

               

              Northeast

               

              21.9

              %  

              21.7

              %

               

              Midwest

               

              15.8

              %  

              19.7

              %

               

              Southeast

               

              10.0

              %  

              11.5

              %

               

              Canada

               

              0.8

              %  

              1.0

              %

               

               

              100.0

              %  

              100.0

              %

               

              Cost:
               December 31,
              2018
               December 31,
              2017
               

              West

                27.2%  20.7% 

              Southwest

                26.7%  26.1% 

              Midwest

                19.4%  22.3% 

              Northeast

                14.3%  15.2% 

              Southeast

                10.0%  12.8% 

              Canada

                1.4%  1.9% 

              Other Non-United States

                1.0%  1.0% 

                100.0%  100.0% 

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


              Fair Value:
               December 31,
              2018
               December 31,
              2017
               

              Southwest

                28.4%  26.8% 

              West

                28.2%  23.7% 

              Midwest

                18.9%  20.3% 

              Northeast

                13.4%  14.6% 

              Southeast

                8.9%  11.9% 

              Canada

                1.2%  1.8% 

              Other Non-United States

                1.0%  0.9% 

                100.0%  100.0% 

              Main Street'sStreet’s LMM portfolio investments, Middle MarketPrivate Loan portfolio investments and Private LoanMiddle Market portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of Main Street'sStreet’s total combined LMM portfolio investments, Middle MarketPrivate Loan portfolio investments and Private Loan

              149


              Middle Market portfolio investments by industry at cost and fair value as of


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              December 31, 20182021 and 20172020 (this information excludes the Other Portfolio, short-term portfolio investments and the External Investment Manager).

              Cost:

              December 31, 2021

              December 31, 2020

              Construction & Engineering

               

              7.8

              %  

              6.0

              %

              Machinery

               

              7.3

              %  

              6.4

              %

              Internet Software & Services

               

              7.2

              %  

              5.2

              %

              Commercial Services & Supplies

               

              5.9

              %  

              4.7

              %

              Distributors

               

              4.7

              %  

              2.1

              %

              Professional Services

               

              4.6

              %  

              5.1

              %

              Leisure Equipment & Products

               

              4.1

              %  

              4.2

              %

              Energy Equipment & Services

               

              4.0

              %  

              4.5

              %

              Health Care Providers & Services

               

              3.9

              %  

              5.1

              %

              Specialty Retail

               

              3.5

              %  

              3.1

              %

              IT Services

               

              3.5

              %  

              4.0

              %

              Diversified Consumer Services

               

              3.4

              %  

              1.0

              %

              Diversified Telecommunication Services

               

              2.6

              %  

              2.6

              %

              Communications Equipment

               

              2.3

              %  

              3.3

              %

              Containers & Packaging

               

              2.3

              %  

              1.6

              %

              Building Products

               

              2.3

              %  

              1.4

              %

              Textiles, Apparel & Luxury Goods

               

              2.2

              %  

              0.6

              %

              Tobacco

               

              2.1

              %  

              2.2

              %

              Diversified Financial Services

               

              2.1

              %  

              2.1

              %

              Food Products

               

              2.0

              %  

              2.6

              %

              Aerospace & Defense

               

              1.9

              %  

              5.9

              %

              Software

               

              1.8

              %  

              4.4

              %

              Oil, Gas & Consumable Fuels

               

              1.8

              %  

              3.2

              %

              Media

               

              1.8

              %  

              2.1

              %

              Chemicals

               

              1.7

              %  

              0.9

              %

              Internet & Catalog Retail

               

              1.6

              %  

              0.7

              %

              Hotels, Restaurants & Leisure

               

              1.4

              %  

              2.6

              %

              Electronic Equipment, Instruments & Components

               

              1.4

              %  

              1.9

              %

              Life Sciences Tools & Services

               

              1.4

              %  

              1.4

              %

              Computers & Peripherals

               

              1.3

              %  

              1.5

              %

              Household Durables

              1.0

              %  

              1.3

              %

              Trading Companies & Distributors

              0.9

              %  

              1.2

              %

              Food & Staples Retailing

              0.8

              %  

              1.0

              %

              Transportation Infrastructure

              %  

              1.0

              %

              Other (1)

              3.4

              %  

              3.1

              %

               

              100.0

              %  

              100.0

              %


              (1)Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments at each date.

              Cost:
               December 31,
              2018
               December 31,
              2017
               

              Construction & Engineering

                7.5%  6.4% 

              Media

                6.5%  4.4% 

              Machinery

                6.5%  5.2% 

              Energy Equipment & Services

                6.4%  6.9% 

              Commercial Services & Supplies

                4.9%  4.5% 

              Diversified Telecommunication Services

                4.8%  4.1% 

              Specialty Retail

                4.2%  5.3% 

              Internet Software & Services

                4.1%  3.4% 

              Leisure Equipment & Products

                3.9%  3.0% 

              IT Services

                3.8%  3.9% 

              Aerospace & Defense

                3.8%  3.3% 

              Food Products

                3.8%  1.9% 

              Electronic Equipment, Instruments & Components

                3.5%  3.4% 

              Hotels, Restaurants & Leisure

                3.3%  6.2% 

              Oil, Gas & Consumable Fuels

                3.0%  1.6% 

              Health Care Providers & Services

                2.8%  2.9% 

              Professional Services

                2.6%  3.7% 

              Computers & Peripherals

                2.6%  2.8% 

              Software

                2.6%  2.5% 

              Communications Equipment

                2.5%  2.3% 

              Containers & Packaging

                1.9%  0.0% 

              Construction Materials

                1.8%  1.7% 

              Road & Rail

                1.8%  1.0% 

              Distributors

                1.7%  1.9% 

              Building Products

                1.6%  1.9% 

              Internet & Catalog Retail

                1.1%  1.3% 

              Diversified Financial Services

                0.6%  1.6% 

              Health Care Equipment & Supplies

                0.6%  2.0% 

              Diversified Consumer Services

                0.4%  1.6% 

              Real Estate Management & Development

                0.3%  1.0% 

              Auto Components

                0.0%  1.9% 

              Other(1)

                5.1%  6.4% 

                100.0%  100.0% 

              150


              (1)
              Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              Fair Value:
               December 31,
              2018
               December 31,
              2017
               

              December 31, 2021

              December 31, 2020

              Machinery

               8.8% 6.4% 

               

              8.5

              %  

              8.1

              %

              Construction & Engineering

               7.9% 6.3% 

               

              7.7

              %  

              6.1

              %

              Internet Software & Services

               

              6.4

              %  

              4.5

              %

              Diversified Consumer Services

               

              5.9

              %  

              3.0

              %

              Commercial Services & Supplies

               

              5.5

              %  

              4.5

              %

              Distributors

               

              4.7

              %  

              2.1

              %

              Specialty Retail

               

              4.1

              %  

              3.4

              %

              Leisure Equipment & Products

               

              4.0

              %  

              4.0

              %

              Professional Services

               

              3.9

              %  

              4.0

              %

              Health Care Providers & Services

               

              3.6

              %  

              5.2

              %

              IT Services

               

              3.3

              %  

              3.8

              %

              Energy Equipment & Services

               5.7% 6.2% 

               

              2.8

              %  

              3.0

              %

              Diversified Telecommunication Services

               

              2.5

              %  

              2.0

              %

              Containers & Packaging

               

              2.5

              %  

              1.7

              %

              Diversified Financial Services

               

              2.3

              %  

              2.3

              %

              Computers & Peripherals

               

              2.2

              %  

              2.9

              %

              Tobacco

               

              2.2

              %  

              2.1

              %

              Building Products

               

              2.2

              %  

              1.4

              %

              Media

               5.4% 3.8% 

               

              2.2

              %  

              2.5

              %

              Commercial Services & Supplies

               4.4% 4.1% 

              Specialty Retail

               4.2% 5.3% 

              Diversified Telecommunication Services

               4.0% 3.4% 

              IT Services

               3.9% 4.0% 

              Internet Software & Services

               3.8% 3.2% 

              Computers & Peripherals

               3.8% 3.0% 

              Leisure Equipment & Products

               3.7% 2.9% 

              Textiles, Apparel & Luxury Goods

               

              2.1

              %  

              0.5

              %

              Software

               

              2.0

              %  

              4.6

              %

              Food Products

               

              1.9

              %  

              2.2

              %

              Aerospace & Defense

               3.5% 3.1% 

               

              1.7

              %  

              5.7

              %

              Food Products

               3.5% 1.8% 

              Chemicals

               

              1.6

              %  

              0.9

              %

              Communications Equipment

               

              1.5

              %  

              2.7

              %

              Internet & Catalog Retail

               

              1.5

              %  

              0.6

              %

              Oil, Gas & Consumable Fuels

               

              1.4

              %  

              2.7

              %

              Life Sciences Tools & Services

               

              1.3

              %  

              1.4

              %

              Construction Materials

               

              1.1

              %  

              1.4

              %

              Hotels, Restaurants & Leisure

               3.2% 5.9% 

              1.0

              %  

              2.0

              %  

              Diversified Consumer Services

               2.9% 5.9% 

              Software

               2.9% 2.5% 

              Household Durables

              0.9

              %  

              1.3

              %  

              Trading Companies & Distributors

              0.9

              %  

              1.2

              %  

              Electronic Equipment, Instruments & Components

               2.8% 2.8% 

              0.7

              %  

              1.3

              %  

              Health Care Providers & Services

               2.7% 2.8% 

              Oil, Gas & Consumable Fuels

               2.7% 1.5% 

              Professional Services

               2.4% 3.5% 

              Communications Equipment

               2.2% 2.2% 

              Construction Materials

               2.1% 1.9% 

              Containers & Packaging

               1.8% 0.0% 

              Road & Rail

               1.8% 1.0% 

              Building Products

               1.6% 1.8% 

              Distributors

               1.5% 1.8% 

              Diversified Financial Services

               0.9% 1.6% 

              Internet & Catalog Retail

               0.8% 1.1% 

              Air Freight & Logistics

               0.6% 1.0% 

              Health Care Equipment & Supplies

               0.5% 2.1% 

              Real Estate Management & Development

               0.4% 1.1% 

              Auto Components

               0.0% 1.6% 

              Other(1)

               3.6% 4.4% 

              Transportation Infrastructure

              %  

              1.0

              %  

              Other (1)

              3.9

              %  

              3.9

              %  

              100.0

              %  

              100.0

              %  

               100.0% 100.0% 

              (1)Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Private Loan portfolio investments and Middle Market portfolio investments at each date.
              (1)
              Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

              At December 31, 20182021 and 2017,2020, Main Street had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

              Unconsolidated Significant Subsidiaries

              In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, Main Street must determine which of its unconsolidated controlled portfolio companies, if any, are considered "significant“significant subsidiaries."” On May 20, 2020, the SEC published in Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses, amendments to Rule 1-02(w)(2) of Regulation S-X used in the determination of a significant subsidiary specific to investment companies, including BDCs. The amendments became effective on January 1, 2021, but the SEC allowed for early application. Main Street elected to apply these revisions effective June 30, 2020. In evaluating theseits unconsolidated controlled portfolio companies in accordance with Regulation S-X, there are threetwo tests utilizedthat Main Street

              151


              must utilize to determine if any of Main


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              Street's Street’s Control Investments (as defined in Note A, including those unconsolidated portfolio companies defined as Control Investments in which Main Street does not own greater than 50% of the voting securities)securities or maintain greater than 50% of the board representation) are considered significant subsidiaries: the investment test the asset test and the income test. The investment test is generally measured by dividing Main Street’s investment in the Control Investment by the value of Main Street’s total investments. The income test isgenerally measured by dividing the absolute value of the combined totalsum of total investment income, net realized gain (loss) and net unrealized appreciation (depreciation) from eachthe relevant Control Investment for the period being tested by the absolute value of Main Street's pre-tax incomeStreet’s change in net assets resulting from operations for the same period. RuleRules 3-09 and 4-08(g) of Regulation S-X as interpreted by the SEC, requiresrequire Main Street to include (1) separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which Main Street owns greater than 50% of the voting securities) in an annual report if any of the three tests exceed 20% of Main Street's total investments at fair value, total assets or total income, respectively. Rule 4-08(g) of Regulation S-X requiresand (2) summarized financial information of a Control Investment in an annual report if any of the three tests exceeds 10% of Main Street's annual total amounts and Rule 10-01(b)(1) of Regulation S-X requires summarized financial information in a quarterly report, respectively, if anycertain thresholds of the threeinvestment or income tests exceeds 20% of Main Street's year-to-date total amounts.are exceeded and the unconsolidated portfolio company qualifies as a significant subsidiary.

              As of December 31, 20182021, 2020 and 2017,2019, Main Street had no single investment that represented greater than 10% of its total Investment Portfolio at fair value and no single investment whose total assets represented greater than 10% of its total assets. After performing the income test for the year ended December 31, 2018, Main Street determined that its income from three of its Control Investments individually generated more than 10% of its total income, primarily due to the unrealized appreciation that was recognized on the investments. As such, Gamber Johnson Holdings, LLC ("GJH"), GRT Rubber Technologies LLC ("GRT") and the wholly owned External Investment Manager were each considered significant subsidiaries at the 10% income level (see further discussion and summarized financial information of the External Investment Manager in Note D). Additionally, after performing the income test for the years ended December 31, 2017 and 2016, Main Street determined that its income from one of its Control Investments individually generated more than 10% of its total income, primarily due to unrealized appreciation that was recognized on the investment. As such, CBT Nuggets, LLC ("CBT"), an unconsolidated portfolio company that was a Control Investment, but for which Main Street was not the majority owner and did not have rights to maintain greater than 50% of the board representation, was consideredqualified as a significant subsidiary atunder either the 10% level as of December 31, 2017 and 2016.investment or income tests.

                     The following table shows the summarized financial information for CBT:

               
               As of December 31, 
               
               2018 2017 
               
               (dollars in thousands)
               

              Balance Sheet Data

                     

              Current Assets

               $4,025 $14,585 

              Noncurrent Assets

                11,372  11,769 

              Current Liabilities

                15,103  17,570 

              Noncurrent Liabilities

                   


               
               Twelve Months Ended December 31, 
               
               2018 2017 2016 
               
               (dollars in thousands)
               

              Summary of Operations

                        

              Total Revenue

               $39,209 $40,802 $38,779 

              Gross Profit

                35,160  35,837  33,661 

              Income from Operations

                3,978  9,018  13,117 

              Net Income

                4,868  18,379  12,819 

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

                     The following table shows the summarized financial information for GJH:

               
               As of December 31, 
               
               2018 2017 
               
               (dollars in thousands)
               

              Balance Sheet Data

                     

              Current Assets

               $17,113 $13,473 

              Noncurrent Assets

                38,038  37,177 

              Current Liabilities

                6,825  5,769 

              Noncurrent Liabilities

                26,857  27,959 


               
               Twelve Months Ended
              December 31,
               
               
               2018 2017 2016 
               
               (dollars in thousands)
               

              Summary of Operations

                        

              Total Revenue

               $53,715 $42,429 $31,581 

              Gross Profit

                20,927  17,067  13,380 

              Income from Operations

                5,374  3,149  3,712 

              Net Income

                2,799  (486) 1,865 

                     The following table shows the summarized financial information for GRT:

               
               As of December 31, 
               
               2018 2017 
               
               (dollars in thousands)
               

              Balance Sheet Data

                     

              Current Assets

               $8,399 $8,375 

              Noncurrent Assets

                24,242  28,121 

              Current Liabilities

                2,870  3,577 

              Noncurrent Liabilities

                14,445  15,876 


               
               Twelve Months Ended
              December 31,
               
               
               2018 2017 2016 
               
               (dollars in thousands)
               

              Summary of Operations

                        

              Total Revenue

               $37,821 $31,165 $26,140 

              Gross Profit

                9,526  6,737  6,330 

              Income from Operations

                4,934  2,329  2,181 

              Net Income

                2,470  (103) (270)

              NOTE D — D—EXTERNAL INVESTMENT MANAGER

              As discussed further in Note A.1.,A.1 and Note C, the External Investment Manager provides investment management and other services to External Parties. The External Investment Manager is accounted for as a portfolio investment of MSCC since the External Investment Manager conducts all of its investment management activities for External Parties.

              During May 2012, Main Street entered into an investment sub-advisory agreement with HMS Adviser, LP ("(“HMS Adviser"Adviser”), which iswas the investment advisoradviser to HMSMSC Income a non-listed BDC,at the time, to


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              provide certain investment advisory services to HMS Adviser. In December 2013, after obtaining required no-action relief from the SEC to allow it to own a registered investment adviser, Main Street assigned the sub-advisory agreement to the External Investment Manager since the fees received from such arrangement could otherwise have negative consequences on MSCC'sMSCC’s ability to meet the source-of-income requirement necessary for it to maintain its RIC tax treatment. Under the investment sub-advisory agreement, the External Investment Manager iswas entitled to 50% of the annual base management fee and the incentive fees earned by HMS Adviser under its advisory agreement with MSC Income. Effective October 30, 2020, the External Investment Manager and HMS Income.Adviser consummated the transactions contemplated by that certain asset purchase agreement by and among the External Investment Manager, HMS Adviser and the other parties thereto whereby the External Investment Manager became the sole investment adviser and administrator to MSC Income pursuant to an Investment Advisory and Administrative Services Agreement entered into between the External Investment Manager and MSC Income (the “Advisory Agreement”). The Advisory Agreement includes a 1.75% annual management fee, reduced from 2.00%, and the same incentive fee as under MSC Income’s prior advisory agreement with HMS Adviser, with the External Investment Manager receiving 100% of such fee income (increased from 50% previously).

              As described more fully in Note L – Related Party Transactions, the External Investment Manager launched a new private fund, MS Private Loan Fund I, LP, a private investment fund with a strategy to co-invest with Main Street in Private Loan portfolio investments (the “Private Loan Fund”), in December 2020. The External Investment Manager has conditionally agreedentered into an Investment Management Agreement in December 2020 with the Private Loan Fund, pursuant to waivewhich the historicalExternal Investment Manager provides investment advisory and management services to the Private Loan Fund in exchange for an asset-based fee and certain incentive fees otherwise earned. fees. The External Investment Manager may also advise other clients, including funds and separately managed accounts, pursuant to advisory and services agreements with such clients in exchange for asset-based and incentive fees.

              During the yearsyear ended December 31, 2018, 2017 and 2016,2021, the External Investment Manager earned $11.6$17.7 million $10.9in base management fee income and $0.6 million and $9.5in incentive fees compared to $10.7 million respectively, of base management fees (netand no incentive fees in 2020 and $11.1 million of base management fees waived, if any) underand $2.0 million in incentive fees in 2019 for the sub-advisory agreement with HMS Adviser.

                     The investment in the External Investment Manager is accounted for using fair value accounting, with the fair value determined by Main Streetadvisory services provided to MSC Income, other funds and approved, in good faith, by Main Street's Boardother clients.

              152


              Main Street determines the fair value of the External Investment Manager using the Waterfall valuation method under the market approach (see further discussion in Note B.1.). Any change in fair value of the investment in the External Investment Manager is recognized on Main Street'sStreet’s consolidated statements of operations in "Net“Net Unrealized Appreciation (Depreciation)—Control investments."

              The External Investment Manager is an indirect wholly owned subsidiary of MSCC owned through a Taxable Subsidiary and is a disregarded entity for tax purposes. The External Investment Manager has entered into a tax sharing agreement with its Taxable Subsidiary owner. Since the External Investment Manager is accounted for as a portfolio investment of MSCC and is not included as a consolidated subsidiary of MSCC in MSCC'sMSCC’s consolidated financial statements, and as a result of the tax sharing agreement with its Taxable Subsidiary owner, for financial reporting purposes the External Investment Manager is treated as if it is taxed at normal corporate tax rates based on its taxable income and, as a result of its activities, may generate income tax expense or benefit. Main Street owns the External Investment Manager through the Taxable Subsidiary to allow MSCC to continue to comply with the "source-of-income"“source-of-income” requirements contained in the RIC tax provisions of the Code. The taxable income, or loss, of the External Investment Manager may differ from its book income, or loss, due to temporary book and tax timing differences and permanent differences. As a result of the above described financial reporting and tax treatment, the External Investment Manager provides for any income tax expense, or benefit, and any tax assets or liabilities in its separate financial statements.

              Main Street shares employees with the External Investment Manager and allocates costs related to such shared employees to the External Investment Manager generally based on a combination of the direct time spent, new investment origination activity and assets under management, depending on the nature of the expense. For the years ended December 31, 2018, 20172021, 2020 and 2016,2019, Main Street allocated $6.8$10.3 million, $6.4$7.4 million and $5.1$6.7 million of total expenses, respectively, to the External Investment Manager. The total contribution of the External Investment Manager to Main Street'sStreet’s net investment income consists of the combination of the expenses allocated to the External Investment Manager and the dividend income receivedearned from the External Investment Manager. For the years ended December 31, 2018, 20172021, 2020, and 2016,2019 the total contribution to Main Street'sStreet’s net investment income was $10.6$16.5 million, $9.4$9.9 million and $7.9$11.7 million, respectively.


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              Summarized financial information from the separate financial statements of the External Investment Manager as of December 31, 20182021 and 20172020 and for the years ended December 31, 2018, 20172021, 2020 and 20162019 is as follows:

              As of 

              As of 

              December 31, 

              December 31, 

                  

              2021

                  

              2020

              (dollars in thousands)

              Cash

              $

              $

              Accounts receivable—advisory clients

               

              5,595

               

              3,520

              Intangible Asset

              29,500

              29,500

              Total assets

              $

              35,095

              $

              33,020

              Accounts payable to MSCC and its subsidiaries

              $

              3,288

              $

              2,423

              Dividend payable to MSCC and its subsidiaries

               

              2,307

               

              1,097

              Equity

               

              29,500

               

              29,500

              Total liabilities and equity

              $

              35,095

              $

              33,020

              153


              Twelve Months Ended 

              December 31, 

                  

              2021

                  

              2020

                  

              2019

              (dollars in thousands)

              Management fee income

              $

              17,665

              $

              10,665

              $

              11,116

              Incentive fees

               

              622

               

               

              1,972

              Total revenues

               

              18,287

               

              10,665

               

              13,088

              Expenses allocated from MSCC or its subsidiaries:

               

               

              Salaries, share‑based compensation and other personnel costs

              (8,417)

              (4,984)

              (4,388)

              Other G&A expenses

              (1,860)

              (2,445)

              (2,284)

              Total allocated expenses

               

              (10,277)

               

              (7,429)

               

              (6,672)

              Pre‑tax income

               

              8,010

               

              3,236

               

              6,416

              Tax expense

               

              (1,795)

               

              (745)

               

              (1,427)

              Net income

              $

              6,215

              $

              2,491

              $

              4,989

              NOTE E—DEBT

              Summary of debt as of December 31, 2021 is as follows:

                  

              Outstanding Balance

                  

              Unamortized Debt Issuance (Costs)/Premiums

                  

              Recorded Value

                  

              Estimated Fair Value (1)

              (in thousands)

              SBIC Debentures

              $

              350,000

              $

              (7,269)

              $

              342,731

              $

              328,206

              Credit Facility

              320,000

              320,000

              320,000

              4.50% Notes due 2022

              185,000

              (556)

              184,444

              190,043

              5.20% Notes due 2024

              450,000

              1,272

              451,272

              480,767

              3.00% Notes due 2026

              500,000

              (2,391)

              497,609

              502,285

              Total Debt

              $

              1,805,000

              $

              (8,944)

              $

              1,796,056

              $

              1,821,301


              (1)Estimated fair value for outstanding debt if Main Street had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of Main Street’s debt in Note B.11. – Fair Value of Financial Instruments.

              Summary of debt as of December 31, 2020 is as follows:

                  

              Outstanding Balance

                  

              Unamortized Debt Issuance (Costs)/Premiums

                  

              Recorded Value

                  

              Estimated Fair Value (1)

              (in thousands)

              SBIC Debentures

              $

              309,800

              $

              (5,828)

              $

              303,972

              $

              309,907

              Credit Facility

              269,000

              269,000

              269,000

              4.50% Notes due 2022

              185,000

              (1,164)

              183,836

              194,938

              5.20% Notes due 2024

              450,000

              1,817

              451,817

              488,102

              Total Debt

              $

              1,213,800

              $

              (5,175)

              $

              1,208,625

              $

              1,261,947


              (1)Estimated fair value for outstanding debt if Main Street had adopted the fair value option under ASC 825. See discussion of the methods used to estimate the fair value of Main Street’s debt in Note B.11. – Fair Value of Financial Instruments.
               
               As of
              December 31,
               
               
               2018 2017 
               
               (dollars in thousands)
               

              Cash

               $ $ 

              Accounts receivable — HMS Income

                2,947  2,863 

              Total assets

               $2,947 $2,863 

              Accounts payable to MSCC and its subsidiaries

               $1,786 $1,963 

              Dividend payable to MSCC and its subsidiaries

                1,161  900 

              Equity

                   

              Total liabilities and equity

               $2,947 $2,863 

              154


              Summarized interest expense for the years ended December 31, 2021, 2020 and 2019 is as follows (in thousands):

              Twelve Months Ended December 31, 

              2021

              2020

              2019

              SBIC Debentures

              $

              10,857

              $

              11,867

              $

              12,739

              Credit Facility

              5,204

              9,232

              10,974

              4.50% Notes due 2019

              7,881

              4.50% Notes due 2022

              8,932

              8,932

              8,932

              5.20% Notes due 2024

              22,855

              19,556

              9,732

              3.00% Notes due in 2026

              10,988

              Total Interest Expense

              $

              58,836

              $

              49,587

              $

              50,258


               
               Year Ended December 31, 
               
               2018 2017 2016 
               
               (dollars in thousands)
               

              Management fee income

               $11,592 $10,946 $9,540 

              Expenses allocated from MSCC or its subsidiaries:

                        

              Salaries, share-based compensation and other personnel costs

                (4,324) (3,989) (3,470)

              Other G&A expenses

                (2,444) (2,381) (1,619)

              Total allocated expenses

                (6,768) (6,370) (5,089)

              Pre-tax income

                4,824  4,576  4,451 

              Tax expense

                (1,002) (1,544) (1,623)

              Net income

               $3,822 $3,032 $2,828 

              NOTE E — DEBT

              SBIC Debentures

              Under existing SBASBIC regulations, SBA approvedSBA-approved SBICs under common control have the ability to issue debentures guaranteed by the SBA up to a regulatory maximum amount of $350.0 million. Main Street, through the Funds, has an effective maximum amount of $346.0 million following the prepayment of $4.0 million of existing SBIC debentures as discussed below.Street’s SBIC debentures payable, under existing SBA-approved commitments, were $345.8$350.0 million and $295.8$309.8 million at December 31, 20182021 and 2017,2020, respectively. SBIC debentures provide for interest to be paid semiannually, with principal due at the applicable 10-year maturity date of each debenture. During the year ended December 31, 2018,2021, Main Street issued $54.0$80.2 million of SBIC debentures and opportunistically prepaid $4.0$40.0 million of existing SBIC debentures that were scheduled to mature over the next year as part of an effort to manage the maturity dates of the oldest SBIC debentures. As a result of this prepayment, Main Street recognized a realized loss of $1.4 million due to the previously recognized gain recorded as a result of recording the MSC II debentures at fair value on the date of the acquisition of the majority interests of MSC II. The effect of the realized loss is offset by the reversal of all previously recognized unrealized depreciation due to fair value adjustments since the date of the acquisition. Main Street expects to issue newmaintain SBIC debentures under the SBIC program in the future, subject to periodic repayments and borrowings, in an amount up to the regulatory maximum amount for affiliated SBIC funds. The weighted-average annual


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              interest rate on the SBIC debentures was 3.7%2.9% and 3.6%3.4% as of December 31, 20182021 and 2017,2020, respectively. The first principal maturity due under the existing SBIC debentures is in 2019,2023, and the weighted-average remaining duration as of December 31, 20182021 was approximately 5.66.1 years. For the years ended December 31, 2018, 2017 and 2016, Main Street recognized interest expense, including the amortization of upfront leverage and other miscellaneous fees, attributable to the SBIC debentures of $12.8 million, $10.5 million and $10.0 million, respectively. In accordance with SBASBIC regulations, the Funds are precluded from incurring additional non-SBIC debt without the prior approval of the SBA.

              As of December 31, 2018, the recorded value of2021, the SBIC debentures was $338.2 million which consisted of (i) $44.7 million recorded at fair value, or $1.3 million less than the $46.0 million par value of the SBIC debentures issued in MSC II, (ii) $149.8$175.0 million par value of SBIC debentures outstanding held inissued by MSMF, with a recorded value of $148.0$171.4 million that was net of unamortized debt issuance costs of $1.8$3.6 million and (iii) $150.0(ii) $175.0 million par value of SBIC debentures held inissued by MSC III with a recorded value of $145.5$171.3 million that was net of unamortized debt issuance costs of $4.5$3.7 million. As

              155


              The maturity dates and fixed interest rates for Main Street'sStreet’s SBIC Debentures as of December 31, 20182021 and 20172020 are summarized in the following table:

              Fixed

              Interest

              December 31, 

              December 31, 

              Maturity Date
               Fixed
              Interest
              Rate
               December 31,
              2018
               December 31,
              2017
               

              Rate

              2021

              2020

              9/1/2019

               4.95% 16,000,000 20,000,000 

              3/1/2020

               4.51% 10,000,000 10,000,000 

              9/1/2020

               3.50% 35,000,000 35,000,000 

              9/1/2020

               3.93% 10,000,000 10,000,000 

              3/1/2021

               4.37% 10,000,000 10,000,000 

              4.37

              %

              $

              $

              10,000,000

              3/1/2021

               4.60% 20,000,000 20,000,000 

              4.60

              %

              20,000,000

              9/1/2021

               3.39% 10,000,000 10,000,000 

              3.39

              %

              10,000,000

              9/1/2022

               2.53% 5,000,000 5,000,000 

              3/1/2023

               3.16% 16,000,000 16,000,000 

              3.16

              %

              16,000,000

              16,000,000

              3/1/2024

               3.95% 39,000,000 39,000,000 

              3.95

              %

              39,000,000

              39,000,000

              3/1/2024

               3.55% 24,800,000 24,800,000 

              3.55

              %

              24,800,000

              24,800,000

              3/1/2027

               3.52% 40,400,000 40,400,000 

              3.52

              %

              40,400,000

              40,400,000

              9/1/2027

               3.19% 34,600,000 34,600,000 

              3.19

              %

              34,600,000

              34,600,000

              3/1/2028

               3.41% 43,000,000 21,000,000 

              3.41

              %

              43,000,000

              43,000,000

              9/1/2028

               3.55% 32,000,000  

              3.55

              %

              32,000,000

              32,000,000

              3/1/2030

              2.35

              %

              15,000,000

              15,000,000

              9/1/2030

              1.13

              %

              10,000,000

              10,000,000

              9/1/2030

              1.31

              %

              10,000,000

              10,000,000

              3/1/2031

              1.94

              %

              25,200,000

              5,000,000

              9/1/2031

              1.58

              %

              60,000,000

              Ending Balance

                 345,800,000 295,800,000 

              350,000,000

              309,800,000

              Credit Facility

              Main Street maintains the Credit Facility to provide additional liquidity to support its investment and operational activities. TheAs of December 31, 2021 the Credit Facility was amended and restated during 2018 to provide for an increase inincluded total commitments of $855.0 million from $585.0 million to $705.0 million and to increase thea diversified group of 18 lenders, to eighteen, eliminate interest rate adjustments previously subject to Main Street's maintenance ofheld a maturity date in April 2026 and contained an investment grade rating and extend the final maturity by two years to September 2023. The amended Credit Facility also contains an upsized accordion feature which allowsallowed Main Street to increase the total commitments under the


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              facility to up to $800.0$1,200.0 million from new and existing lenders on the same terms and conditions as the existing commitments.

                     BorrowingsAs of December 31, 2021, borrowings under the Credit Facility bearbore interest, subject to Main Street'sStreet’s election and resetting on a monthly basis on the first of each month, on a per annum basis at a rate equal to the applicable LIBOR rate (2.5%(0.1% as of the most recent reset date for the period ended December 31, 2018)2021) plus (i) 1.875% (or the applicable base rate (Prime Rate of 5.5%3.25% as of December 31, 2018)2021) plus 0.875%) as long as Main Street meets certain agreed upon excess collateral and maximum leverage requirements or (ii) 2.0% (or the applicable base rate plus 1.0%) otherwise. Main Street pays unused commitment fees of 0.25% per annum on the unused lender commitments under the Credit Facility. The Credit Facility is secured by a first lien on the assets of MSCC and its subsidiaries, excluding the equity ownership or assets of the Funds and the External Investment Manager. TheAs of December 31, 2021, the Credit Facility containscontained certain affirmative and negative covenants, including but not limited to: (i) maintaining a minimum availability of at least 10% of the borrowing base,liquidity, (ii) maintaining an interest coverage ratio of at least 2.0 to 1.0, (iii) maintaining ana 1940 Act asset coverage ratio (tangible net worth to Credit Facility borrowings) of at least 1.5 to 1.0, and (iv) maintaining a minimum tangible net worth. The Credit Facility is providedworth and (v) maintaining a minimum asset coverage ratio of 200% with respect to the consolidated assets (with certain limitations on a revolving basis through its final maturity datethe contribution of equity in September 2023,financing subsidiaries as specified therein) of MSCC and contains two, one-year extension options which could extend the final maturity by up to two years, subject to certain conditions, including lender approval.

                     At December 31, 2018, Main Street had $301.0 million in borrowings outstandingguarantors under the Credit Facility. Facility to the secured debt of MSCC and the guarantors.

              As of December 31, 2018, if Main Street had adopted the fair value option under ASC 825 for its Credit Facility, Main Street estimates its fair value would approximate its recorded value. Main Street recognized interest expense related to the Credit Facility, including unused commitment fees and amortization of deferred issuance costs, of $11.7 million, $10.6 million and $9.2 million, respectively, for the years ended December 31, 2018, 2017 and 2016. As of December 31, 2018,2021, the interest rate on the Credit Facility was 4.2% and2.0% (based on the LIBOR rate of 0.1% as of the most recent reset date plus 1.875%). The average interest rate for borrowings under the yearCredit Facility was 2.0% and 2.5% for the years ended December 31, 2018 was 3.9%.2021 and 2020, respectively. As of December 31, 2018,2021, Main Street was in compliance with all financial covenants of the Credit Facility.

              6.125%156


              4.50% Notes due 2022

              In April 2013,November 2017, Main Street issued $92.0 million, including the underwriters' full exercise of their option to purchase additional principal amounts to cover over-allotments, in aggregate principal amount of 6.125% Notes due 2023 (the "6.125% Notes"). The 6.125% Notes bore interest at a rate of 6.125% per year payable quarterly on January 1, April 1, July 1 and October 1 of each year. The total net proceeds to Main Street from the 6.125% Notes, after underwriting discounts and estimated offering expenses payable, were approximately $89.0 million. On April 2, 2018, Main Street redeemed the entire principal amount of the issued and outstanding 6.125% Notes effective April 1, 2018 (the "Redemption Date"). The 6.125% Notes were redeemed at par value, plus the accrued and unpaid interest thereon from January 1, 2018, through, but excluding, the Redemption Date. As part of the redemption, Main Street recognized a realized loss on extinguishment of debt of $1.5 million in the second quarter of 2018 related to the write-off of the related unamortized deferred financing costs. Main Street recognized interest expense related to the 6.125% Notes, including amortization of unamortized deferred issuance costs, of $1.5 million for the year ended December 31 2018 and $5.9 million for each of the years ended December 31, 2017 and 2016.

              4.50% Notes due 2019

                     In November 2014, Main Street issued $175.0$185.0 million in aggregate principal amount of 4.50% unsecured notes due 2019December 1, 2022 (the "4.50% Notes due 2019"“4.50% Notes”) at an issue price of 99.53%99.16%. The 4.50% Notes due 2019 are unsecured obligations and rank pari passu with Main Street'sStreet’s current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2019; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              of the assets securing such indebtedness, including borrowings under the Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2019 mature on December 1, 2019, and may be redeemed in whole or in part at any time at Main Street's option subject to certain make-whole provisions. The 4.50% Notes due 2019 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes due 2019, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $171.2 million. Main Street may from time to time repurchase the 4.50% Notes due 2019 in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2018, the outstanding balance of the 4.50% Notes due 2019 was $175.0 million and the recorded value of $174.3 million was net of unamortized debt issuance costs of $0.7 million. As of December 31, 2018, if Main Street had adopted the fair value option under ASC 825 for the 4.50% Notes due 2019, Main Street estimates its fair value would be approximately $175.0 million. Main Street recognized interest expense related to the 4.50% Notes due 2019, including amortization of unamortized deferred issuance costs, of $8.6 million for each of the years ended December 31, 2018, 2017 and 2016.

                     The indenture governing the 4.50% Notes due 2019 (the "4.50% Notes due 2019 Indenture") contains certain covenants, including covenants requiring Main Street's compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes due 2019 and the Trustee if Main Street ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2019 Indenture. As of December 31, 2018, Main Street was in compliance with these covenants.

              4.50% Notes due 2022

                     In November 2017, Main Street issued $185.0 million in aggregate principal amount of 4.50% unsecured notes due 2022 (the "4.50% Notes due 2022") at an issue price of 99.16%. The 4.50% Notes due 2022 are unsecured obligations and rank pari passu with Main Street's current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 4.50% Notes due 2022;Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 4.50% Notes due 2022 mature on December 1, 2022, and may be redeemed in whole or in part at any time at Main Street'sStreet’s option subject to certain make-whole provisions. The 4.50% Notes due 2022 bear interest at a rate of 4.50% per year payable semiannually on June 1 and December 1 of each year. The total net proceeds from the 4.50% Notes, due 2022, resulting from the issue price and after underwriting discounts and estimated offering expenses payable, were approximately $182.2 million. Main Street may from time to time repurchase the 4.50% Notes due 2022 in accordance with the 1940 Act and the rules promulgated thereunder. As of December 31, 2018, the outstanding balance of the 4.50% Notes due 2022 was $185.0 million and the recorded value of $182.6 million was net of unamortized debt issuance costs of $2.4 million. As of December 31, 2018, if Main Street had adopted the fair value option under ASC 825 for the 4.50% Notes due 2022, Main Street estimates its fair value would be approximately $186.2 million. Main Street recognized interest expense related to the 4.50% Notes due 2022, including amortization of unamortized deferred issuance costs, of $9.0 million and $0.9 million for the years ended December 31, 2018 and 2017, respectively.

              The indenture governing the 4.50% Notes due 2022 (the "4.50%“4.50% Notes due 2022 Indenture"Indenture”) contains certain covenants, including covenants requiring Main Street'sStreet’s compliance with (regardless of whether Main


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 4.50% Notes due 2022 and the Trusteetrustee if Main Street ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 4.50% Notes due 2022 Indenture. As of December 31, 2018,2021, Main Street was in compliance with these covenants.

              5.20% Notes due 2024

              In April 2019, Main Street issued $250.0 million in aggregate principal amount of 5.20% unsecured notes due May 1, 2024 (the “5.20% Notes”) at an issue price of 99.125%. Subsequently, in December 2019, Main Street issued an additional $75.0 million aggregate principal amount of the 5.20% Notes at an issue price of 105.0% and, in July 2020, Main Street issued an additional $125.0 million aggregate principal amount at an issue price of 102.674%. The 5.20% Notes issued in December 2019 and July 2020 have identical terms as, and are a part of a single series with, the 5.20% Notes issued in April 2019. The 5.20% Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 5.20% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 5.20% Notes may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The 5.20% Notes bear interest at a rate of 5.20% per year payable semiannually on May 1 and November 1 of each year. The total net proceeds from the 5.20% Notes, resulting from the issue price and after net issue price premiums and estimated offering expenses payable, were approximately $451.4 million. Main Street may from time to time repurchase the 5.20% Notes in accordance with the 1940 Act and the rules promulgated thereunder.

              The indenture governing the 5.20% Notes (the “5.20% Notes Indenture”) contains certain covenants, including covenants requiring Main Street’s compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 5.20% Notes and the trustee if Main Street ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 5.20% Notes Indenture. As of December 31, 2021, Main Street was in compliance with these covenants.

              3.00% Notes due 2026

              In January 2021, Main Street issued $300.0 million in aggregate principal amount of 3.00% unsecured notes due July 14, 2026 (the “3.00% Notes”) at an issue price of 99.004%. Subsequently, in October 2021, Main Street issued

              157


              an additional $200.0 million aggregate principal amount of the 3.00% Notes at an issue price of 101.741%. The 3.00% Notes issued in October 2021 have identical terms as, and are a part of a single series with, the 3.00% Notes issued in January 2021. The 3.00% Notes are unsecured obligations and rank pari passu with Main Street’s current and future unsecured indebtedness; senior to any of its future indebtedness that expressly provides it is subordinated to the 3.00% Notes; effectively subordinated to all of its existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, including borrowings under its Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any of its subsidiaries, including without limitation, the indebtedness of the Funds. The 3.00% Notes may be redeemed in whole or in part at any time at Main Street’s option subject to certain make-whole provisions. The 3.00% Notes bear interest at a rate of 3.00% per year payable semiannually on January 14 and July 14 of each year. The total net proceeds from the 3.00% Notes, resulting from the issue price and after net issue price premiums and estimated offering expenses payable, were approximately $498.3 million. Main Street may from time to time repurchase the 3.00% Notes in accordance with the 1940 Act and the rules promulgated thereunder.

              The indenture governing the 3.00% Notes (the “3.00% Notes Indenture”) contains certain covenants, including covenants requiring Main Street’s compliance with (regardless of whether Main Street is subject to) the asset coverage requirements set forth in Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as well as covenants requiring Main Street to provide financial information to the holders of the 3.00% Notes and the trustee if Main Street ceases to be subject to the reporting requirements of the Exchange Act. These covenants are subject to limitations and exceptions that are described in the 3.00% Notes Indenture. As of December 31, 2021, Main Street was in compliance with these covenants.

              Contractual Payment Obligations

              A summary of Main Street'sStreet’s contractual payment obligations for the repayment of outstanding indebtedness at December 31, 20182021 is as follows:

                  

              2022

                  

              2023

                  

              2024

                  

              2025

                  

              2026

                  

              Thereafter

                  

              Total

              SBIC debentures

              $

              $

              16,000

              $

              63,800

              $

              $

              $

              270,200

              $

              350,000

              4.50% Notes due 2022

              185,000

              185,000

              5.20% Notes due 2024

              450,000

              450,000

              3.00% Notes due 2026

              500,000

              500,000

              Credit Facility

              320,000

              320,000

              Total

              $

              185,000

              $

              16,000

              $

              513,800

              $

              $

              820,000

              $

              270,200

              $

              1,805,000

              Senior Securities

              Information about Main Street’s senior securities is shown in the following table as of December 31 for the years indicated in the table, unless otherwise noted.

                  

              Total Amount

                  

                  

                  

              Outstanding

              Involuntary

              Exclusive of

              Asset

              Liquidating

              Average

              Treasury

              Coverage

              Preference

              Market Value

              Class and Year

              Securities(1)

              per Unit(2)

              per Unit(3)

              per Unit(4)

              (dollars in

              thousands)

              SBIC Debentures

              2012

              $

              225,000

              2,763

              N/A

              2013

               

              200,200

              2,476

              N/A

              2014

               

              225,000

              2,323

              N/A

              2015

               

              225,000

              2,368

              N/A

              2016

               

              240,000

              2,415

              N/A

              2017

               

              295,800

              2,687

              N/A

              2018

               

              345,800

              2,455

              N/A

               
               2019 2020 2021 2022 2023 Thereafter Total 

              SBIC debentures

               $16,000 $55,000 $40,000 $5,000 $16,000 $213,800 $345,800 

              4.50% Notes due 2019

                175,000            175,000 

              4.50% Notes due 2022

                      185,000      185,000 

              Credit Facility

                        301,000    301,000 

              Total

               $191,000 $55,000 $40,000 $190,000 $317,000 $213,800 $1,006,800 

              158



              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              NOTE F — FINANCIAL HIGHLIGHTS

               
               Twelve Months Ended December 31, 
              Per Share Data:
               2018 2017 2016 2015 2014 

              NAV at the beginning of the period

               $23.53 $22.10 $21.24 $20.85 $19.89 

              Net investment income(1)

                2.60  2.39  2.23  2.18  2.20 

              Net realized gain (loss)(1)(2)

                (0.03) 0.19  0.56  (0.43) 0.53 

              Net unrealized appreciation (depreciation)(1)(2)

                0.32  0.86  (0.14) 0.20  (0.27)

              Income tax benefit (provision)(1)(2)

                (0.09) (0.43) 0.02  0.18  (0.15)

              Net increase in net assets resulting from operations(1)

                2.80  3.01  2.67  2.13  2.31 

              Dividends paid from net investment income

                (2.69) (2.47) (1.99) (2.49) (2.17)

              Distributions from capital gains

                (0.16) (0.32) (0.74) (0.16) (0.38)

              Total dividends paid

                (2.85) (2.79) (2.73) (2.65) (2.55)

              Impact of the net change in monthly dividends declared prior to the end of the period and paid in the subsequent period

                (0.01) (0.01) (0.01) (0.01) (0.01)

              Accretive effect of stock offerings (issuing shares above NAV per share)

                0.47  1.07  0.76  0.74  1.07 

              Accretive effect of DRIP issuance (issuing shares above NAV per share)

                0.09  0.06  0.08  0.12  0.12 

              Other(3)

                0.06  0.09  0.09  0.06  0.02 

              NAV at the end of the period

               $24.09 $23.53 $22.10 $21.24 $20.85 

              Market value at the end of the period

               $33.81 $39.73 $36.77 $29.08 $29.24 

              Shares outstanding at the end of the period

                61,264,861  58,660,680  54,354,857  50,413,744  45,079,150 

                  

              Total Amount

                  

                  

                  

              Outstanding

              Involuntary

              Exclusive of

              Asset

              Liquidating

              Average

              Treasury

              Coverage

              Preference

              Market Value

              Class and Year

              Securities(1)

              per Unit(2)

              per Unit(3)

              per Unit(4)

              (dollars in

              thousands)

              2019

               

              311,800

              2,363

              N/A

              2020

               

              309,800

              2,244

              N/A

              2021

               

              350,000

              1,985

              N/A

              Credit Facility

               

              2012

              $

              132,000

              2,763

              N/A

              2013

               

              237,000

              2,476

              N/A

              2014

               

              218,000

              2,323

              N/A

              2015

               

              291,000

              2,368

              N/A

              2016

               

              343,000

              2,415

              N/A

              2017

               

              64,000

              2,687

              N/A

              2018

               

              301,000

              2,455

              N/A

              2019

               

              300,000

              2,363

              N/A

              2020

               

              269,000

              2,244

              N/A

              2021

               

              320,000

              1,985

              N/A

              6.125% Notes

               

              2013

              $

              90,882

              2,476

              $

              24.35

              2014

               

              90,823

              2,323

              24.78

              2015

               

              90,738

              2,368

              25.40

              2016

               

              90,655

              2,415

              25.76

              2017

              90,655

              2,687

              25.93

              4.50% Notes Due 2019

               

              2014

              $

              175,000

              2,323

              N/A

              2015

               

              175,000

              2,368

              N/A

              2016

               

              175,000

              2,415

              N/A

              2017

               

              175,000

              2,687

              N/A

              2018

              175,000

              2,455

              N/A

              4.50% Notes Due 2022

              2017

              $

              185,000

              2,687

              N/A

              2018

              185,000

              2,455

              N/A

              2019

               

              185,000

              2,363

              N/A

              2020

               

              185,000

              2,244

              N/A

              2021

              185,000

              1,985

              N/A

              5.20% Notes Due 2024

               

              2019

              $

              325,000

              2,363

              N/A

              2020

              450,000

              2,244

              N/A

              2021

              450,000

              1,985

              N/A

              3.00% Notes Due 2026

              2021

              $

              500,000

              1,985

              N/A


              (1)

              Total amount of each class of senior securities outstanding at the end of the period presented.

              (2)

              Asset coverage per unit is the ratio of the carrying value of Main Street’s total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.

              (3)

              The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The “—” indicates information that the SEC expressly does not require to be disclosed for certain types of senior securities.

              159


              (1)
              Based on weighted-average number of common shares outstanding for the period.

              (2)
              Net realized gains or losses, net unrealized appreciation or depreciation, and income taxes can fluctuate significantly from period to period.

              Table of Contents

              (4)

              Average market value per unit for the 6.125% Notes represents the average of the daily closing prices as reported on the NYSE during the period presented. Average market value per unit for the SBIC debentures, Credit Facility, 4.50% Notes, 5.20% Notes and 3.00% notes are not applicable because these are not registered for public trading.

              NOTE F—FINANCIAL HIGHLIGHTS


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              (3)
              Includes the impact

                  

              Twelve Months Ended December 31, 

              Per Share Data:

                  

              2021

                  

              2020

                  

              2019

                  

              2018

                  

              2017

              NAV at the beginning of the period

              $

              22.35

              $

              23.91

              $

              24.09

              $

              23.53

              $

              22.10

              Net investment income(1)

               

              2.65

               

              2.10

               

              2.50

               

              2.60

               

              2.39

              Net realized gain (loss) (1)(2)

               

              0.66

               

              (1.77)

               

              (0.33)

               

              (0.03)

               

              0.19

              Net unrealized appreciation (depreciation)(1)(2)

               

              1.97

               

              (0.09)

               

              (0.09)

               

              0.32

               

              0.86

              Income tax benefit (provision)(1)(2)

               

              (0.48)

               

              0.21

               

              (0.02)

               

              (0.09)

               

              (0.43)

              Net increase (decrease) in net assets resulting from operations(1)

               

              4.80

               

              0.45

               

              2.06

               

              2.80

               

              3.01

              Dividends paid from net investment income

               

              2.58

               

              (2.46)

               

              (2.91)

               

              (2.69)

               

              (2.47)

              Distributions from capital gains

               

               

               

               

              (0.16)

               

              (0.32)

              Dividends paid

               

              (2.58)

               

              (2.46)

               

              (2.91)

               

              (2.85)

               

              (2.79)

              Impact of the net change in monthly dividends declared prior to the end of the period and paid in the subsequent period

               

              (0.01)

               

               

              (0.01)

               

              (0.01)

               

              (0.01)

              Accretive effect of stock offerings (issuing shares above NAV per share)

               

              0.58

               

              0.41

               

              0.55

               

              0.47

               

              1.07

              Accretive effect of DRIP issuance (issuing shares above NAV per share)

              0.09

              0.08

               

              0.12

               

              0.09

               

              0.06

              Other(3)

               

              0.06

               

              (0.04)

               

              0.01

               

              0.06

               

              0.09

              NAV at the end of the period

              $

              25.29

              $

              22.35

              $

              23.91

              $

              24.09

              $

              23.53

              Market value at the end of the period

              $

              44.86

              $

              32.26

              $

              43.11

              $

              33.81

              $

              39.73

              Shares outstanding at the end of the period

              70,737,021

              67,762,032

              64,252,937

              61,264,861

              58,660,680

              160


              Twelve Months Ended December 31, 

              Per Share Data:

                  

              2016

                  

              2015

                  

              2014

                  

              2013

                  

              2012

              NAV at the beginning of the period

              $

              21.24

              $

              20.85

              $

              19.89

              $

              18.59

              $

              15.19

              Net investment income(1)

               

              2.23

               

              2.18

               

              2.20

               

              2.06

               

              2.01

              Net realized gain (loss) (1)(2)

               

              0.56

               

              (0.43)

               

              0.53

               

              0.07

               

              0.55

              Net unrealized appreciation (depreciation)(1)(2)

               

              (0.14)

               

              0.20

               

              (0.27)

               

              0.52

               

              1.34

              Income tax benefit (provision)(1)(2)

               

              0.02

               

              0.18

               

              (0.15)

               

               

              (0.37)

              Net increase (decrease) in net assets resulting from operations(1)

               

              2.67

               

              2.13

               

              2.31

               

              2.65

               

              3.53

              Dividends paid from net investment income

               

              (1.99)

               

              (2.49)

               

              (2.17)

               

              (2.29)

               

              (1.17)

              Distributions from capital gains

               

              (0.74)

               

              (0.16)

               

              (0.38)

               

              (0.37)

               

              (0.54)

              Dividends paid

               

              (2.73)

               

              (2.65)

               

              (2.55)

               

              (2.66)

               

              (1.71)

              Impact of the net change in monthly dividends declared prior to the end of the period and paid in the subsequent period

               

              (0.01)

               

              (0.01)

               

              (0.01)

               

              (0.02)

               

              (0.02)

              Accretive effect of stock offerings (issuing shares above NAV per share)

               

              0.76

               

              0.74

               

              1.07

               

              1.13

               

              1.33

              Accretive effect of DRIP issuance (issuing shares above NAV per share)

               

              0.08

               

              0.12

               

              0.12

               

              0.13

               

              0.07

              Other(3)

               

              0.09

               

              0.06

               

              0.02

               

              0.07

               

              0.20

              NAV at the end of the period

              $

              22.10

              $

              21.24

              $

              20.85

              $

              19.89

              $

              18.59

              Market value at the end of the period

              $

              36.77

              $

              29.08

              $

              29.24

              $

              32.69

              $

              30.51

              Shares outstanding at the end of the period

              54,354,857

              50,413,744

              45,079,150

              39,852,604

              34,589,484


              (1)Based on weighted-average number of common shares outstanding for the period.
              (2)Net realized gains or losses, net unrealized appreciation or depreciation, and income taxes can fluctuate significantly from period to period.
              (3)Includes the impact of the different share amounts as a result of calculating certain per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.

              ��

              Year Ended December 31, 

              2021

                 

              2020

                 

              2019

              2018

              2017

              (dollars in thousands)

              NAV at end of period

              $

              1,788,846

              $

              1,514,767

              $

              1,536,390

              $

              1,476,049

              $

              1,380,368

              Average NAV

              $

              1,626,585

              $

              1,436,291

              $

              1,517,615

              $

              1,441,163

              $

              1,287,639

              Average outstanding debt

              $

              1,417,831

              $

              1,152,108

              $

              1,055,800

              $

              947,694

              $

              843,993

              Ratio of total expenses, including income tax expense, to average NAV (1)

              8.56

              %

              4.95

              %

              5.75

              %

              5.75

              %

              7.37

              %

              Ratio of operating expenses to average NAV (2)

              6.54

              %

              5.89

              %

              5.67

              %

              5.32

              %

              5.47

              %

              Ratio of operating expenses, excluding interest expense, to average NAV (2)

              2.92

              %

              2.44

              %

              2.36

              %

              2.30

              %

              2.63

              %

              Ratio of net investment income to average NAV

              11.23

              %

              9.60

              %

              10.37

              %

              10.87

              %

              10.51

              %

              Portfolio turnover ratio

              29.81

              %

              18.00

              %

              18.86

              %

              29.13

              %

              38.18

              %

              Total investment return (3)

              48.24

              %

              (19.11)

              %

              36.86

              %

              (8.25)

              %

              16.02

              %

              Total return based on change in NAV (4)

              21.84

              %

              1.91

              %

              8.78

              %

              12.19

              %

              14.20

              %

               
               Twelve Months Ended December 31, 
               
               2018 2017 2016 2015 2014 
               
               (dollars in thousands)
               

              NAV at end of period

               $1,476,049 $1,380,368 $1,201,481 $1,070,894 $939,982 

              Average NAV

               $1,441,163 $1,287,639 $1,118,567 $1,055,313 $885,568 

              Average outstanding debt

               $947,694 $843,993 $801,048 $759,396 $575,524 

              Ratio of total expenses, including income tax expense, to average NAV(1)

                5.75%  7.37%  5.48%  4.63%  5.82% 

              Ratio of operating expenses to average NAV(2)

                5.32%  5.47%  5.59%  5.45%  5.11% 

              Ratio of operating expenses, excluding interest expense, to average NAV(2)

                2.30%  2.63%  2.58%  2.41%  2.44% 

              Ratio of net investment income to average NAV

                10.87%  10.51%  10.35%  10.15%  10.79% 

              Portfolio turnover ratio

                29.13%  38.18%  24.63%  25.37%  35.71% 

              Total investment return(3)

                –8.25%  16.02%  37.36%  8.49%  –3.09% 

              Total return based on change in NAV(4)

                12.19%  14.20%  12.97%  11.11%  12.71% 

              161


              (1)
              Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards, which are non-cash in nature and may vary significantly from period to period. Main Street is required to include net deferred tax provision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable.

              (2)
              Unless otherwise noted, operating expenses include interest, compensation, general and administrative and share-based compensation expenses, net of expenses allocated to the External Investment Manager.

              (3)
              Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street's dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.

              (4)
              Total return is based on change in net asset value was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value. Non-operating changes include any items that affect net asset value other than the net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items.

              Year Ended December 31, 

              2016

                 

              2015

                 

              2014

              2013

              2012

              (dollars in thousands)

              NAV at end of period

              $

              1,201,481

              $

              1,070,894

              $

              939,982

              $

              792,533

              $

              642,976

              Average NAV

              $

              1,118,567

              $

              1,053,313

              $

              885,568

              $

              706,056

              $

              512,156

              Average outstanding debt

              $

              801,048

              $

              759,396

              $

              575,524

              $

              444,331

              $

              322,154

              Ratio of total expenses, including income tax expense, to average NAV (1)

              5.48

              %

              4.63

              %

              5.82

              %

              5.82

              %

              8.18

              %

              Ratio of operating expenses to average NAV (2)

              5.59

              %

              5.45

              %

              5.11

              %

              5.82

              %

              6.07

              %

              Ratio of operating expenses, excluding interest expense, to average NAV (2)

              2.58

              %

              2.41

              %

              2.44

              %

              2.95

              %

              3.03

              %

              Ratio of net investment income to average NAV

              10.35

              %

              10.15

              %

              10.79

              %

              10.68

              %

              11.57

              %

              Portfolio turnover ratio

              24.63

              %

              25.37

              %

              35.71

              %

              36.10

              %

              56.22

              %

              Total investment return (3)

              37.36

              %

              8.49

              %

              (3.09)

              %

              16.68

              %

              53.60

              %

              Total return based on change in NAV (4)

              12.97

              %

              11.11

              %

              12.71

              %

              15.06

              %

              25.73

              %


              (1)Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards, which are non-cash in nature and may vary significantly from period to period. Main Street is required to include net deferred tax provision/benefit in calculating its total expenses even though these net deferred taxes are not currently payable/receivable.
              (2)Unless otherwise noted, operating expenses include interest, compensation, general and administrative and share-based compensation expenses, net of expenses allocated to the External Investment Manager of $10.3 million, $7.4 million, $6.7 million, $6.8 million, $6.4 million, $5.1 million, $4.3 million and $2.0 million for the years ended December 31, 2021, 2020, 2019, 2018, 2017, 2016, 2015 and 2014. There were no expenses allocated to the External Investment Manager for the year ended December 31, 2013 and 2012.
              (3)Total investment return is based on the purchase of stock at the current market price on the first day and a sale at the current market price on the last day of each period reported on the table and assumes reinvestment of dividends at prices obtained by Main Street’s dividend reinvestment plan during the period. The return does not reflect any sales load that may be paid by an investor.
              (4)Total return is based on change in net asset value was calculated using the sum of ending net asset value plus dividends to stockholders and other non-operating changes during the period, as divided by the beginning net asset value. Non-operating changes include any items that affect net asset value other than the net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the DRIP and equity incentive plans and other miscellaneous items.

              NOTE G — G—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

              Main Street currently pays monthly dividends to its stockholders. Future monthly dividends, if any, will be determined by its Board of Directors on a quarterly basis. During 2018,2021, Main Street paid supplemental dividends of $0.275 per share in each of June and December 2018, regular monthly dividends of $0.190$0.205 per share for each month of January through September 2018,2021 and regular monthly dividends of $0.195$0.21 per share for each month of October through December 2018, with such dividends totaling $170.9 million, or $2.845 per share.2021. The 20182021 regular monthly dividends, which total $137.5$170.2 million, or $2.295$2.475 per share, represent a 2.7%0.6% increase from the regular monthly dividends paid totaling $161.1 million, or $2.46 per share, for the year ended 2017. 2020. During 2021, Main Street also paid a supplemental dividend of $0.10 per share in December 2021.

              For tax purposes, the 20182021 dividends, which included the effects of dividends on an accrual basis, total $2.85$2.575 per share and were comprised of (i) ordinary income totaling approximately $2.270 per share, (ii) long term capital gain totaling approximately $0.375$1.891 per share, and (iii)(ii) qualified dividend income totaling approximately $0.205$0.684 per share. As of December 31, 2018,2021, Main Street estimates that it has generated undistributed taxable income of approximately $53.4$66.0 million, or $0.87$0.93 per share, that will be carried forward toward distributions to be paid in 2019. For the years ended2022.


              162



              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              December 31, 2017 and 2016, Main Street paid total dividends of approximately $157.6 million, or $2.785 per share, and $141.6 million, or $2.725 per share, respectively.

              MSCC has elected to be treated for U.S. federal income tax purposes as a RIC. MSCC'sMSCC’s taxable income includes the taxable income generated by MSCC and certain of its subsidiaries, including the Funds, which are treated as disregarded entities for tax purposes. As a RIC, MSCC generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that MSCC distributes to its stockholders. MSCC must generally distribute at least 90% of its "investment“investment company taxable income"income” (which is generally its net ordinary taxable income and realized net short-term capital gains in excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its RIC status (pass-through tax treatment for amounts distributed). As part of maintaining RIC status, undistributed taxable income (subject to a 4% non-deductible U.S. federal excise tax) pertaining to a given fiscal year may be distributed up to 12 months subsequent to the end of that fiscal year, provided such dividends are declared on or prior to the later of (i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the year in which such taxable income was generated.

              The determination of the tax attributes for Main Street’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and capital gains,qualified dividends, but may also include qualified dividendseither one or both of capital gains and return of capital. The tax character of distributions paid for the years ended December 31, 2018, 20172021, 2020 and 20162019 was as follows:

              Twelve Months Ended December 31, 

              2021

              2020

              2019

              (dollars in thousands)

              Ordinary income(1)

              $

              129,625

              $

              135,128

              $

              166,280

              Qualified dividends

              47,202

              12,398

              15,451

              Distributions of long-term capital gains

              1,858

              Distributions on tax basis

              $

              176,827

              $

              147,526

              $

              183,589


              (1)The years ended December 31, 2021, 2020 and 2019 include $1.8 million, $1.5 million and $1.6 million, respectively, that was reported for tax purposes as compensation for services in accordance with Section 83 of the Code.
               
               Twelve Months Ended December 31, 
               
               2018 2017 2016 
               
               (dollars in thousands)
               

              Ordinary income(1)

               $136,934 $126,540 $100,059 

              Qualified dividends

                12,277  4,656  2,992 

              Distributions of long term capital gains

                22,513  27,479  39,522 

              Distributions on tax basis

               $171,724 $158,675 $142,573 

              163


              (1)
              The years ended December 31, 2018, 2017 and 2016 include $1.4 million, $1.5 million and $1.6 million, respectively, that was reported as compensation for services for tax purposes in accordance with Section 83 of the Code.

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              Listed below is a reconciliation of "Net“Net increase (decrease) in net assets resulting from operations"operations” to taxable income and to total distributions declared to common stockholders for the years ended December 31, 2018, 20172021, 2020 and 2016.2019.

              Year Ended December 31, 

                 

              2021

                 

              2020

                 

              2019

              (estimated, dollars in thousands)

              Net increase (decrease) in net assets resulting from operations

              $

              330,762

              $

              29,383

              $

              129,569

              Book-tax difference from share-based compensation expense

              (3,213)

              5,139

              (354)

              Net unrealized (appreciation) depreciation

              (135,624)

              5,622

              5,754

              Income tax provision (benefit)

              32,863

              (13,541)

              1,242

              Pre-tax book (income) loss not consolidated for tax purposes

              (59,634)

              37,420

              (30,690)

              Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates

              39,819

              93,025

              65,686

              Estimated taxable income (1)

              204,973

              157,048

              171,207

              Taxable income earned in prior year and carried forward for distribution in current year

              24,359

              29,107

              41,489

              Taxable income earned prior to period end and carried forward for distribution next period

              (65,994)

              (38,248)

              (42,281)

              Dividend payable as of period end and paid in the following period

              15,159

              13,889

              13,174

              Total distributions accrued or paid to common stockholders

              $

              178,497

              $

              161,796

              $

              183,589

               
               Year Ended December 31, 
               
               2018 2017 2016 
               
               (estimated, dollars in thousands)
               

              Net increase in net assets resulting from operations

               $168,213 $170,622 $138,899 

              Book-tax difference from share-based compensation expense

                (1,430) (867) 1,619 

              Net unrealized (appreciation) depreciation

                (19,275) (48,757) 7,519 

              Income tax provision (benefit)

                6,152  24,471  (1,227)

              Pre-tax book (income) loss not consolidated for tax purposes

                (454) 2,357  15,742 

              Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates

                17,649  10,844  (7,300)

              Estimated taxable income(1)

                170,855  158,670  155,252 

              Taxable income earned in prior year and carried forward for distribution in current year

                42,357  42,362  29,683 

              Taxable income earned prior to period end and carried forward for distribution next period

                (53,436) (53,503) (52,410)

              Dividend payable as of period end and paid in the following period

                11,948  11,146  10,048 

              Total distributions accrued or paid to common stockholders

               $171,724 $158,675 $142,573 

              (1)Main Street’s taxable income for each period is an estimate and will not be finally determined until the company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.
              (1)
              Main Street's taxable income for each period is an estimate and will not be finally determined until the company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.

              The Taxable Subsidiaries primarily hold certain portfolio investments for Main Street. The Taxable Subsidiaries permit Main Street to hold equity investments in portfolio companies which are "pass-through"“pass-through” entities for tax purposes and to continue to comply with the "source-of-income"“source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with Main Street for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in Main Street'sStreet’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with MSCC for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in Main Street'sStreet’s consolidated financial statements.

              The income tax expense (benefit) for Main Street is generally composed of (i) deferred tax expense (benefit), which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book tax differences, and (ii) current tax expense, which is primarily the result of current U.S. federal income and state taxes and excise taxes on Main Street’s estimated undistributed taxable income. The income tax expense, or benefit, and the related tax assets and liabilities generated by the Taxable Subsidiaries, if any, are reflected in Main Street's Street’s

              164


              consolidated statement of operations. Main Street's


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              Street’s provision for income taxes was comprised of the following for the years ended December 31, 2018, 20172021, 2020 and 20162019 (amounts in thousands):


               Twelve Months Ended
              December 31,
               

               2018 2017 2016 

              Twelve Months Ended

              December 31, 

              2021

              2020

              2019

              Current tax expense (benefit):

                     

              Federal

               $(2,398)$1,865 $1 

              $

              (235)

              $

              497

              $

              1,019

              State

               1,688 1,415 347 

              3,377

              (1,554)

              1,408

              Excise

              2,590

              1,647

              1,119

              Total current tax expense (benefit)

               (710) 3,280 348 

              5,732

              590

              3,546

              Deferred tax expense (benefit):

                     

              Federal

               3,763 15,248 (5,359)

              23,205

              (13,082)

              (1,267)

              State

               2,070 4,017 2,043 

              3,926

              (1,049)

              (1,037)

              Total deferred tax expense (benefit)

               5,833 19,265 (3,316)

              27,131

              (14,131)

              (2,304)

              Excise tax

               1,029 1,926 1,741 

              Total income tax provision (benefit)

               $6,152 $24,471 $(1,227)

              $

              32,863

              $

              (13,541)

              $

              1,242

              MSCC operates in a manner to maintain its RIC status and to eliminate corporate-level U.S. federal income tax (other than the 4% excise tax) by distributing sufficient investment company taxable income and long-term capital gains. As a result, MSCC will have an effective tax rate equal to 0% before the excise tax and income taxes incurred by the Taxable Subsidiaries. As such, a reconciliation of the differences between Main Street'sStreet’s reported income tax expense and its tax expense at the federal statutory rate of 21% is not meaningful.

              As of December 31, 2018,2021, the cost of investments for U.S. federal income tax purposes was $2,244.0$3,256.5 million, with such investments having a gross unrealized appreciation of $385.6$559.9 million and gross unrealized depreciation of $172.0$253.6 million.

                     The net deferred tax liability at December 31, 2018 was $17.0 million compared to $10.6 million at December 31, 2017, primarily related to loss carryforwards, timing differences in net unrealized appreciation or depreciation and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. The net deferred tax liability as of December 31, 2017 equal to $10.6 million reflects a reduction of $2.8 million resulting from the decrease in the U.S. federal corporate income tax rate from 35% to 21% as enacted by the Tax Cuts and Jobs Act (see further discussion in Note B.9.). For the year ended December 31, 2018, for U.S. federal income tax purposes, the Taxable Subsidiaries had capital loss carryforwards totaling approximately $7.8 million which, if unused, will expire in taxable year 2021 and generated a capital loss carryforward of $5.1 million which, if unused, will expire in taxable year 2023. At December 31, 2018, for U.S. federal income tax purposes, the Taxable Subsidiaries had a net operating loss carryforward from prior years which, if unused, will expire in various taxable years from 2028 through 2037. Under the Tax Cuts and Jobs Act, any net operating losses generated in 2018 and future periods will have an indefinite carryforward. The timing and manner in which Main Street will utilize any loss carryforwards generated before December 31, 2018 may be limited in the future under the provisions of the Code. Additionally, as a result of the Tax Cuts and Jobs Act, our Taxable Subsidiaries have an interest expense limitation carryforward which have an indefinite carryforward.

              Management believes that the realization of the deferred tax assets is more likely than not based on expectations as to future taxable income and scheduled reversals of temporary differences. Accordingly, Main Street did not record a valuation allowance related to its deferred tax assets at December 31, 20182021 and


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              2017. 2020. The following table sets forth the significant components of net deferred tax assets and liabilities as of December 31, 20182021 and 20172020 (amounts in thousands):

              Years Ended 

              December 31, 

              2021

              2020

              Deferred tax assets:

                

              Net operating loss carryforwards

              $

              34,102

              $

              41,691

              Interest expense carryforwards

              11,283

              9,779

              Capital loss carryforwards

              929

              Other

              2,809

              2,315

              Total deferred tax assets

              48,194

              54,714

              Deferred tax liabilities:

                

              Net unrealized appreciation of portfolio investments

              (49,658)

              (28,351)

              Net basis differences in portfolio investments

              (28,259)

              (28,955)

              Total deferred tax liabilities

              (77,917)

              (57,306)

              Total deferred tax asset (liabilities), net

              $

              (29,723)

              $

              (2,592)

              The net deferred tax liability at December 31, 2021 and 2020 was $29.7 million and $2.6 million, respectively, with the change primarily related to changes in net unrealized appreciation or depreciation, changes in loss carryforwards, and other temporary book-tax differences relating to portfolio investments held by the Taxable Subsidiaries. At December 31, 2021, for U.S. federal income tax purposes, the Taxable Subsidiaries had a net operating loss carryforward from prior years which, if unused, will expire in various taxable years from 2034 through 2037. Any

              165


               
               Years Ended
              December 31,
               
               
               2018 2017 

              Deferred tax assets:

                     

              Net operating loss carryforwards

               $29,546 $28,422 

              Interest Expense Carryforwards

                5,199   

              Capital loss carryforwards

                2,795  1,011 

              Other

                1,532  893 

              Total deferred tax assets

                39,072  30,326 

              Deferred tax liabilities:

                     

              Net unrealized appreciation of portfolio investments

                (37,137) (31,711)

              Net basis differences in portfolio investments

                (18,961) (9,168)

              Other

                   
              ���

              Total deferred tax liabilities

                (56,098) (40,879)

              Total deferred tax asset (liabilities), net

               $(17,026)$(10,553)

              net operating losses generated in 2018 and future periods are not subject to expiration and will carryforward indefinitely until utilized. The Taxable Subsidiaries have interest expense limitation carryforwards which have an indefinite carryforward. In addition, as of December 31, 2021, for U.S. federal income tax purposes at the RIC level, MSCC had net capital loss carryforwards totaling approximately $67.7 million available to offset future capital gains, to the extent available and permitted by U.S. federal income tax law. However, as long as MSCC maintains its RIC status, any capital loss carryforwards at the RIC are not subject to a federal income tax-effect and are not subject to an expiration date.

              NOTE H — H—COMMON STOCK

              Main Street maintains a program with certain selling agents through which it can sell shares of its common stock by means of at-the-market offerings from time to time (the "ATM Program"“ATM Program”).

              During the year ended December 31, 2018,2021, Main Street sold 2,060,0192,332,795 shares of its common stock at a weighted-average price of $38.48$42.71 per share and raised $79.3$99.6 million of gross proceeds under the ATM Program. Net proceeds were $78.0$98.4 million after commissions to the selling agents on shares sold and offering costs. As of December 31, 2018, 2,994,4692021, sales transactions representing 36,136 shares had not settled and are not included in shares issued and outstanding on the face of the consolidated balance sheet, but are included in the weighted-average shares outstanding in the consolidated statement of operations and in the shares used to calculate net asset value per share. As of December 31, 2021, 3,380,577 shares remained available for sale under the ATM Program.

              During the year ended December 31, 2017,2020, Main Street sold 3,944,9722,645,778 shares of its common stock at a weighted-average price of $38.72$32.10 per share and raised $152.8$84.9 million of gross proceeds under the ATM Program. Net proceeds were $150.9$83.8 million after commissions to the selling agents on shares sold and offering costs.

              During the year ended December 31, 2016,2019, Main Street sold 3,324,6462,247,187 shares of its common stock at a weighted-average price of $34.17$40.05 per share and raised $113.6$90.0 million of gross proceeds under the ATM Program. Net proceeds were $112.0$88.8 million after commissions to the selling agents on shares sold and offering costs.

              NOTE I — I—DIVIDEND REINVESTMENT PLAN ("DRIP")

              The dividend reinvestment feature of Main Street's DRIPStreet’s dividend reinvestment and direct stock purchase plan (the “DRIP”) provides for the reinvestment of dividends on behalf of its stockholders, unless a stockholder has elected to receive dividends in cash. As a result, if Main Street declares a cash dividend, its stockholders who have not "opted out"“opted out” of the DRIP by the dividend record date will have their cash dividend automatically reinvested into additional shares of MSCC common stock. The share requirements of the DRIP may be satisfied through the issuance of shares of common stock or through open market purchases of common stock by the DRIP plan administrator. Newly issued shares will be valued based upon the final closing price of MSCC'sMSCC’s common stock on the valuation date determined for each dividend by Main Street'sStreet’s Board of Directors. Shares purchased in the open market to satisfy the DRIP requirements will be valued based upon the average price of the applicable shares purchased, before any associated brokerage or other


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              costs. Main Street'sStreet’s DRIP is administered by its transfer agent on behalf of Main Street'sStreet’s record holders and participating brokerage firms. Brokerage firms and other financial intermediaries may decide not to participate in Main Street'sStreet’s DRIP but may provide a similar dividend reinvestment plan for their clients.

                     ForSummarized DRIP information for the yearyears ended December 31, 2018, $14.9 million2021, 2020 and 2019 is as follows:

              December 31, 

              2021

              2020

              2019

              ($ in millions)

              DRIP participation

              $

              16.3

              $

              16.2

              $

              18.1

              Shares issued for DRIP

              404,384

              517,796

              441,927

              166


              NOTE J — J—SHARE-BASED COMPENSATION

              Main Street accounts for its share-based compensation plans using the fair value method, as prescribed by ASC 718,Compensation — Compensation—Stock Compensation. Accordingly, for restricted stock awards, Main Street measured the grant date fair value based upon the market price of its common stock on the date of the grant and amortizes the fair value of the awards as share-based compensation expense over the requisite service period, which is generally the vesting term.

              Main Street'sStreet’s Board of Directors approves the issuance of shares of restricted stock to Main Street employees pursuant to the Main Street Capital Corporation 2015 Equity and Incentive Plan (the "Equity“Equity and Incentive Plan"Plan”). These shares generally vest over a three-year period from the grant date. The fair value is expensed over the service period, starting on the grant date. The following table summarizes the restricted stock issuances approved by Main Street'sStreet’s Board of Directors under the Equity and Incentive Plan, net of shares forfeited, if any, and the remaining shares of restricted stock available for issuance as of December 31, 2018.2021.

              Restricted stock authorized under the plan

              3,000,000

              Less net restricted stock granted during:

              Year ended December 31, 2015

              (900)

              (900)

              Year ended December 31, 2016

              (260,514)

              (260,514)

              Year ended December 31, 2017

              (223,812)

              (223,812)

              Year ended December 31, 2018

              (243,779)

              (243,779)

              Year ended December 31, 2019

              (384,049)

              Year ended December 31, 2020

              (370,272)

              Year ended December 31, 2021

              (332,143)

              Restricted stock available for issuance as of December 31, 20182021

              2,270,995

              1,184,531

              As of December 31, 2018,2021, the following table summarizes the restricted stock issued to Main Street'sStreet’s non-employee directors and the remaining shares of restricted stock available for issuance pursuant to the Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan. These shares are


              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              granted upon appointment or election to the board and vest on the day immediately preceding the annual meeting of stockholders following the respective grant date and are expensed over such service period.

              Restricted stock authorized under the plan

              300,000

              Less net restricted stock granted during:

              Year ended December 31, 2015

              (6,806)

              (6,806)

              Year ended December 31, 2016

              (6,748)

              (6,748)

              Year ended December 31, 2017

              (5,948)

              (5,948)

              Year ended December 31, 2018

              (6,376)

              (6,376)

              Year ended December 31, 2019

              (6,008)

              Year ended December 31, 2020

              (11,463)

              Year ended December 31, 2021

              (4,949)

              Restricted stock available for issuance as of December 31, 20182021

              274,122

              251,702

              For the years ended December 31, 2018, 20172021, 2020 and 2016,2019, Main Street recognized total share-based compensation expense of $9.2$10.9 million, $10.0$10.8 million and $8.3$10.1 million, respectively, related to the restricted stock issued to Main Street employees and non-employee directors.

              As of December 31, 2018,2021, there was $10.8$14.3 million of total unrecognized compensation expense related to Main Street'sStreet’s non-vested restricted shares. This compensation expense is expected to be recognized over a remaining weighted-average period of approximately 1.8 years as of December 31, 2018.2021.


              167



              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              NOTE K — K—COMMITMENTS AND CONTINGENCIES

                     As ofAt December 31, 2018,2021, Main Street had the following outstanding commitments (in thousands):

              Investments with equity capital commitments that have not yet funded:

                  

              Amount

               

              Congruent Credit Opportunities Fund III, LP

              $

              8,117

              Encap Energy Fund Investments

              EnCap Energy Capital Fund IX, L.P.

              $

              216

              EnCap Energy Capital Fund X, L.P.

               

              748

              EnCap Flatrock Midstream Fund II, L.P.

              4,586

              EnCap Flatrock Midstream Fund III, L.P.

              365

              $

              5,915

              MS Private Loan Fund I, LP

              $

              7,500

              EIG Fund Investments

              $

              3,701

               

              Brightwood Capital Fund Investments

              Brightwood Capital Fund III, LP

              $

              3,000

              Brightwood Capital Fund V, LP

              4,000

              $

              7,000

              Freeport Fund Investments

              Freeport Financial SBIC Fund LP

              $

              1,375

              Freeport First Lien Loan Fund III LP

              4,871

              $

              6,246

              LKCM Headwater Investments I, L.P.

              $

              2,500

              UnionRock Energy Fund II, LP

              $

              1,039

              HPEP 3, L.P.

              $

              1,555

              Dos Rios Partners

              Dos Rios Partners, LP

              $

              835

              Dos Rios Partners - A, LP

              265

              $

              1,100

              Total Equity Commitments

              $

              44,673

              168


               
               Amount 

              Investments with equity capital commitments that have not yet funded:

                  

              Congruent Credit Opportunities Funds

                
               
               

              Congruent Credit Opportunities Fund II, LP

               $8,488 

              Congruent Credit Opportunities Fund III, LP

                8,117 

               $16,605 

              Encap Energy Fund Investments

                  

              EnCap Energy Capital Fund VIII, L.P. 

               $240 

              EnCap Energy Capital Fund IX, L.P. 

                344 

              EnCap Energy Capital Fund X, L.P. 

                2,467 

              EnCap Flatrock Midstream Fund II, L.P. 

                6,311 

              EnCap Flatrock Midstream Fund III, L.P. 

                2,083 

               $11,445 

              Brightwood Capital Fund Investments

                  

              Brightwood Capital Fund III, LP

               $3,000 

              Brightwood Capital Fund IV, LP

                3,000 

               $6,000 

              Freeport Fund Investments

                  

              Freeport Financial SBIC Fund LP

               $1,375 

              Freeport First Lien Loan Fund III LP

                1,345 

               $2,720 

              Harris Preston Fund Investments

                  

              HPEP 3, L.P. 

               $3,267 

              EIG Fund Investments

               
              $

              4,668
               

              LKCM Headwater Investments I, L.P. 

               
              $

              2,500
               

              Dos Rios Partners

                
               
               

              Dos Rios Partners, LP

               $1,594 

              Dos Rios Partners — A, LP

                506 

               $2,100 

              Copper Trail Fund Investments

                  

              Copper Trail Energy Fund I, LP

               $1,232 

              I-45 SLF LLC

               
              $

              800
               

              Access Media Holdings, LLC

               
              $

              284
               

              Total equity commitments

               $51,621 

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

               
               Amount 

              Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:

                  

              Independent Pet Partners Intermediate Holdings, LLC

               
              $

              29,089
               

              GRT Rubber Technologies LLC

                8,375 

              SI East, LLC

                7,500 

              California Splendor Holdings LLC

                7,409 

              NexRev LLC

                4,000 

              PT Network, LLC

                3,618 

              Hoover Group, Inc. 

                2,250 

              Boccella Precast Products LLC

                2,000 

              Arcus Hunting LLC

                1,807 

              Chamberlin Holding LLC

                1,600 

              Direct Marketing Solutions, Inc. 

                1,600 

              Meisler Operating LLC

                1,600 

              Lamb Ventures, LLC

                1,500 

              Gamber-Johnson Holdings, LLC

                1,200 

              Volusion, LLC

                1,075 

              NRI Clinical Research, LLC

                1,000 

              Aethon United BR LP

                938 

              Kickhaefer Manufacturing Company, LLC

                936 

              CTVSH, PLLC

                800 

              BBB Tank Services, LLC

                800 

              DTE Enterprises RLOC

                750 

              ASC Ortho Management Company, LLC

                750 

              Adams Publishing Group, LLC

                750 

              Tedder Industries, LLC

                720 

              HDC/HW Intermediate Holdings

                640 

              Wireless Vision Holdings, LLC

                592 

              Jensen Jewelers of Idaho, LLC

                500 

              New Era Technology, Inc. 

                479 

              Barfly Ventures, LLC

                368 

              American Nuts, LLC

                280 

              Dynamic Communities, LLC

                250 

              ATS Workholding, LLC

                42 

              BigName Commerce, LLC

                29 

              Total loan commitments

               $85,247 

              Total commitments

               $136,868 

              Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:

                  

              Amount

              Xenon Arc, Inc.

              $

              32,400

              JTI Electrical & Mechanical, LLC

              8,421

              NinjaTrader, LLC

              7,472

              Watterson Brands, LLC

              7,374

              NWN Corporation

              6,716

              South Coast Terminals Holdings, LLC

              5,433

              SI East, LLC

              5,250

              Bolder Panther Group, LLC

              5,000

              Pearl Meyer Topco LLC

              5,000

              ArborWorks, LLC

              4,818

              Robbins Bros. Jewelry, Inc.

              4,500

              Event Holdco, LLC

              4,308

              Winter Services LLC

              4,167

              Classic H&G Holdco, LLC

              4,000

              Roof Opco, LLC

              3,889

              Direct Marketing Solutions, Inc.

              3,400

              Rug Doctor, LLC

              3,270

              MB2 Dental Solutions, LLC

              3,120

              Cody Pools, Inc.

              2,950

              Infolinks Media Buyco, LLC

              2,520

              AVEX Aviation Holdings, LLC

              2,520

              Nebraska Vet AcquireCo, LLC

              2,500

              Superior Rigging & Erecting Co.

              2,500

              Klein Hersh, LLC

              2,500

              IG Parent Corporation

              2,500

              Computer Data Source, LLC

              2,250

              KMS, LLC

              2,171

              SIB Holdings, LLC

              2,124

              RTIC Subsidiary Holdings, LLC

              2,055

              Mako Steel, LP

              2,049

              Fortna, Inc.

              2,027

              VVS Holdco, LLC

              2,000

              Burning Glass Intermediate Holding Company, Inc.

              1,859

              Evergreen North America Acquisitions, LLC

              1,854

              MS Private Loan Fund I, LP

              1,849

              Career Team Acquireco LLC

              1,800

              Johnson Downie Opco, LLC

              1,800

              Eastern Wholesale Fence LLC

              1,747

              The Affiliati Network, LLC

              1,720

              Colonial Electric Company LLC

              1,600

              Market Force Information, LLC

              1,600

              Chamberlin Holding LLC

              1,600

              Flame King Holdings, LLC

              1,600

              Trantech Radiator Topco, LLC

              1,600

              GS HVAM Intermediate, LLC

              1,591

              Hawk Ridge Systems, LLC

              1,415

              GRT Rubber Technologies LLC

              1,340

              Interface Security Systems, L.L.C

              1,312

              RA Outdoors LLC

              1,278

              PPL RVs, Inc.

              1,250

              Project Eagle Holdings, LLC

              1,250

              Gamber-Johnson Holdings, LLC

              1,200

              Invincible Boat Company, LLC.

              1,080

              CompareNetworks Topco, LLC

              1,000

              American Health Staffing Group, Inc.

              933

              Mystic Logistics Holdings, LLC

              800

              Project BarFly, LLC

              760

              DTE Enterprises, LLC

              750

              Student Resource Center, LLC

              750

              Orttech Holdings, LLC

              625

              ASC Interests, LLC

              500

              Jensen Jewelers of Idaho, LLC

              500

              PT Network, LLC

              460

              169


              Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:

                  

              Amount

              Wall Street Prep, Inc.

              400

              American Nuts, LLC

              281

              Dynamic Communities, LLC

              250

              Acousti Engineering Company of Florida

              53

              Total Loan Commitments

              $

              191,611

              Total Commitments

              $

              236,284

              Main Street will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and cash equivalents and borrowings under the Credit Facility). Main Street follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary. The Company had total unrealized depreciation of $0.3$0.1 million on the outstanding unfunded commitments as of December 31, 2018.2021.


              TableEffective January 1, 2019, ASC 842 required that a lessee evaluate its leases to determine whether they should be classified as operating or financing leases. Main Street identified one operating lease for its office space. The lease commenced May 15, 2017 and expires January 31, 2028. It contains two five-year extension options for a final expiration date of ContentsJanuary 31, 2038.


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              As Main Street classified this lease as an operating lease prior to implementation, ASC 842-10-65-1 indicates that a right-of-use asset and lease liability should be recorded based on the effective date. Main Street adopted ASC 842 effective January 1, 2019 and recorded a right-of-use asset and a lease liability as of that date. After this date, Main Street has anrecorded lease expense on a straight-line basis, consistent with the accounting treatment for lease expense prior to the adoption of ASC 842.

              Total operating lease for office space. Total rent expensecost incurred by Main Street for each of the years ended December 31, 2018, 20172021, 2020 and 20162019 was $0.7 million, $0.7million. As of December 31, 2021, the asset related to the operating lease was $3.8 million and $0.6is included in the interest receivable and other assets balance on the consolidated balance sheet. The lease liability was $4.4 million respectively.and is included in the accounts payable and other liabilities balance on the consolidated balance sheet. As of December 31, 2021, the remaining lease term was 6.1 years and the discount rate was 4.2%.

              The following table shows future minimum payments under Main Street'sStreet’s operating lease as of December 31, 2018:2021 (in thousands):

              For the Years Ended December 31,
               Amount 

              Amount

              2019

               $748 

              2020

               762 

              2021

               776 

              2022

               790 

              $

              790

              2023

               804 

              804

              2024

              818

              2025

              832

              2026

              846

              Thereafter

               3,429 

              933

              Total

               $7,309 

              $

              5,023

              Main Street may, from time to time, be involved in litigation arising out of its operations in the normal course of business or otherwise. Furthermore, third parties may try to impose liability on Main Street in connection with the activities of its portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, Main Street does not expect any current matters will materially affect its financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect on Main Street'sStreet’s financial condition or results of operations in any future reporting period.

              170


              NOTE L SELECTED QUARTERLY DATA (UNAUDITED)


               2018 

               (dollars in thousands,
              except per share amounts)
               

               Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 

                  

              2021

              (dollars in thousands, 

              except per share amounts)

              Qtr. 1

              Qtr. 2

              Qtr. 3

              Qtr. 4

              Total investment income

               $55,942 $59,869 $58,263 $59,280 

              $

              62,807

              $

              67,294

              $

              76,779

              $

              82,167

              Net investment income

               $36,975 $39,512 $38,075 $42,083 

              $

              39,757

              $

              42,395

              $

              49,304

              $

              51,209

              Net increase in net assets resulting from operations

               $34,517 $55,451 $68,740 $9,505 

              $

              57,346

              $

              95,110

              $

              83,956

              $

              94,350

              Net investment income per share — basic and diluted

               $0.63 $0.66 $0.63 $0.69 

              $

              0.58

              $

              0.62

              $

              0.71

              $

              0.73

              Net increase in net assets resulting from operations per share — basic and diluted

               $0.59 $0.93 $1.13 $0.16 

              $

              0.84

              $

              1.39

              $

              1.22

              $

              1.34


                  

              2020

              (dollars in thousands,

              except per share amounts)

                  

              Qtr. 1

                  

              Qtr. 2

                  

              Qtr. 3

                  

              Qtr. 4

              Total investment income

              $

              56,150

              $

              52,007

              $

              51,954

              $

              62,503

              Net investment income

              $

              36,545

              $

              31,294

              $

              30,462

              $

              39,644

              Net increase in net assets resulting from operations

              $

              (171,438)

              $

              43,369

              $

              78,195

              $

              79,257

              Net investment income per share — basic and diluted

              $

              0.57

              $

              0.48

              $

              0.46

              $

              0.59

              Net increase in net assets resulting from operations per share — basic and diluted

              $

              (2.66)

              $

              0.66

              $

              1.18

              $

              1.19

                  

              2019

              (dollars in thousands,

               except per share amounts)

                  

              Qtr. 1

                  

              Qtr. 2

                  

              Qtr. 3

                  

              Qtr. 4

              Total investment income

              $

              61,365

              $

              61,293

              $

              60,068

              $

              60,649

              Net investment income

              $

              39,491

              $

              39,617

              $

              39,012

              $

              39,247

              Net increase in net assets resulting from operations

              $

              41,401

              $

              38,254

              $

              33,902

              $

              16,014

              Net investment income per share — basic and diluted

              $

              0.64

              $

              0.63

              $

              0.62

              $

              0.62

              Net increase in net assets resulting from operations per share — basic and diluted

              $

              0.67

              $

              0.61

              $

              0.54

              $

              0.25

               
               2017 
               
               (dollars in thousands,
              except per share amounts)
               
               
               Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 

              Total investment income

               $47,889 $50,271 $51,786 $55,795 

              Net investment income

               $31,166 $32,693 $34,029 $37,483 

              Net increase in net assets resulting from operations

               $31,450 $42,829 $34,899 $61,444 

              Net investment income per share — basic and diluted

               $0.57 $0.58 $0.60 $0.64 

              Net increase in net assets resulting from operations per share — basic and diluted

               $0.57 $0.76 $0.61 $1.05 

              Table of Contents


              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


               
               2016 
               
               (dollars in thousands,
              except per share amounts)
               
               
               Qtr. 1 Qtr. 2 Qtr. 3 Qtr. 4 

              Total investment income

               $42,006 $42,902 $46,599 $46,830 

              Net investment income

               $27,164 $27,648 $30,557 $30,432 

              Net increase in net assets resulting from operations

               $16,812 $30,911 $43,181 $47,993 

              Net investment income per share — basic and diluted

               $0.54 $0.54 $0.58 $0.57 

              Net increase in net assets resulting from operations per share — basic and diluted

               $0.33 $0.60 $0.82 $0.90 

              NOTE M — M—RELATED PARTY TRANSACTIONS

              As discussed further in Note D, the External Investment Manager is treated as a wholly owned portfolio company of MSCC and is included as part of Main Street'sStreet’s Investment Portfolio. At December 31, 2018,2021, Main Street had a receivable of approximately $2.9$5.6 million due from the External Investment Manager, which included (i) approximately $1.8$3.3 million related primarily to operating expenses incurred by MSCC or its subsidiaries as required to support the External Investment Manager'sManager’s business and amounts due from the External Investment Manager to Main Street under a tax sharing agreement (see further discussion in Note D) and (ii) approximately $1.2$2.3 million of dividends declared but not paid by the External Investment Manager. MSCC has entered into an agreement with the External Investment Manager to share employees in connection with its asset management business generally, and specifically for the External Investment Manager’s relationship with MSC Income and its other clients (see further discussion in Note A.1 and Note D).

              From time to time, Main Street may make investments in clients of the External Investment Manager in the form of debt or equity capital on terms approved by Main Street’s Board of Directors. In January 2021, Main Street entered into a Term Loan Agreement with MSC Income (the “Term Loan Agreement”). The Term Loan Agreement was unanimously approved by Main Street’s Board, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act, and the board of directors of MSC Income, including each director who is not an “interested person” of MSC Income or the External Investment Manager. The Term Loan Agreement initially provided for a term loan of $40.0 million to MSC Income, bearing interest at a fixed rate of 5.00% per annum, and maturing in January 2026. The Term Loan Agreement was amended in July 2021 to provide for borrowings up to an additional $35.0 million, $20.0 million of which was funded upon signing of the amendment and $15.0 million available in two additional advances during the six months following the amendment date. Borrowings under the Term Loan Agreement are expressly subordinated and junior in right of payment to all secured indebtedness of MSC Income. In

              171


              October 2021, MSC Income fully repaid all borrowings outstanding under the Term Loan Agreement and the Term Loan Agreement was terminated.

              In December 2020, the External Investment Manager entered into an Investment Management Agreement with the Private Loan Fund to provide investment advisory and management services in exchange for an asset-based fee and certain incentive fees. The Private Loan Fund is a private investment fund exempt from registration under the 1940 Act that co-invests with Main Street in Main Street’s Private Loan investment strategy. In connection with the Private Loan Fund’s initial closing in December 2020, Main Street committed to contribute up to $10.0 million as a limited partner and will be entitled to distributions on such interest. In addition, certain of Main Street’s officers and employees (and certain of their immediate family members) have made capital commitments to the Private Loan Fund as limited partners and therefore have direct pecuniary interests in the Private Loan Fund. As of December 31, 2021, Main Street has funded approximately $2.5 million of its limited partner commitment and Main Street’s unfunded commitment was approximately $7.5 million. In February 2022, Main Street increased its commitment to the Private Loan Fund from $10.0 million to $15.0 million. Main Street’s limited partner commitment to the Private Loan Fund was unanimously approved by the Board, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act.

              Additionally, Main Street provided the Private Loan Fund with a revolving line of credit pursuant to an Unsecured Revolving Promissory Note, dated February 5, 2021 and as amended November 30, 2021 and December 29, 2021 (as amended, the “Private Loan Fund Loan”), in an aggregate amount equal to the amount of limited partner capital commitments to the Private Loan Fund up to $85.0 million. Borrowings under the Private Loan Fund Loan bore interest at a fixed rate of 5.00% per annum and matured on February 28, 2022. The Private Loan Fund Loan was unanimously approved by Main Street’s Board, including each director who is not an “interested person,” as such term is defined in Section 2(a)(19) of the 1940 Act. As of December 31, 2021, there were $63.2 million of borrowings outstanding under the Private Loan Fund Loan. In February 2022, the Private Loan Fund fully repaid all borrowings outstanding under the Private Loan Fund Loan and the Private Loan Fund Loan was terminated.

              In November 2015, Main Street'sStreet’s Board of Directors approved and adopted the Main Street Capital Corporation Deferred Compensation Plan (the "2015“2015 Deferred Compensation Plan"Plan”). The 2015 Deferred Compensation Plan became effective on January 1, 2016 and replaced the Deferred Compensation Plan for Non-Employee Directors previously adopted by the Board of Directors in June 2013 (the "2013“2013 Deferred Compensation Plan"Plan”). Under the 2015 Deferred Compensation Plan, non-employee directors and certain key employees may defer receipt of some or all of their cash compensation and directors'directors’ fees, subject to certain limitations. Individuals participating in the 2015 Deferred Compensation Plan receive distributions of their respective balances based on predetermined payout schedules or other events as defined by the plan and are also able to direct investments made on their behalf among investment alternatives permitted from time to time under the plan, including phantom Main Street stock units. As of December 31, 2018, $6.12021, $15.8 million of compensation and directors' feesdividend reinvestments, plus net unrealized gains and losses and investment income and minus distributions had been deferred under the 2015 Deferred Compensation Plan (including amounts previously deferred under the 2013 Deferred Compensation Plan).  Of this amount, $3.3$7.3 million washad been deferred into phantom Main Street stock units, representing 97,344162,040 shares of Main Street's common stock. Including phantom stock units issued through dividend reinvestment and net of any shares distributed, the phantom stock units outstanding as of December 31, 2018 represented 119,639 shares of Main Street'sStreet’s common stock. Any amounts deferred under the plan represented by phantom Main Street stock units will not be issued or included as outstanding on the consolidated statements of changes in net assets until such shares are actually distributed to the participant in accordance with the plan, but the related phantom stock units are included in operating expenses and weighted-average shares outstanding with the related dollar amount of the deferral included in total expenses in Main Street'sStreet’s consolidated statements of operations as earned. The dividend amounts related to additional phantom stock units are included in the statements of changes in net assets as an increase to dividends to stockholders offset by a corresponding increase to additional paid-in capital.

              NOTE N — N—SUBSEQUENT EVENTS

              In January 2019,February 2022, Main Street leddeclared a new portfolio investmentsupplemental cash dividend of $0.075 per share payable in March 2022. This supplemental cash dividend is in addition to facilitate the minority recapitalization of Centre Technologies, Inc. ("Centre"), a premier provider of IT hardware, software and service solutions.previously announced regular monthly cash dividends that Main Street along with its co-investors, partnered with Centre's founderdeclared for the first quarter of 2022 of $0.215 per share for each of January, February and Chief Executive Officer and management team to facilitate the transaction, with Main Street funding $18.1 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in Houston, Texas, and founded in 2006, Centre has established itself as a mission critical IT solutions provider offering a full suiteMarch 2022.


              172



              MAIN STREET CAPITAL CORPORATION

              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

              of solutions including managed and hosted services, value-added sourcing and integration, and project services.

                     In January 2019, Main Street led new portfolio investment to facilitate the management buyout of CompareNetworks Inc. ("CompareNetworks"), a leading provider of media, marketing and technology solutions that drive revenue for life science and healthcare product manufacturers. Main Street, along with its co-investors, partnered with CompareNetworks' founders and management team to facilitate the transaction, with Main Street funding $10.7 million in a combination of first-lien, senior secured term debt and a direct equity investment. Headquartered in South San Francisco, California, and founded in 2000, CompareNetworks provides life scientists, researchers, lab-based professionals, pharmaceutical professionals and healthcare professionals with digital tools and information resources to research, identify and determine which products and technologies to use.

                     In January 2019, Main Street fully exited its equity investment in Boss Industries, LLC ("Boss"). Boss markets, designs and manufacturers vehicle-mounted, and portable air compressor and generator systems utilized in municipal and utility services, energy product and industrial services. Main Street realized a gain of approximately $4.0 million on the exit of its equity investment in Boss.

              During February 2019,2022, Main Street declared regular monthly dividends of $0.200$0.215 per share for each month of April, May and June 2019.2022. These regular monthly dividends equal a total of $0.600$0.645 per share for the second quarter of 2019 and represent2022, representing a 5.3%4.9% increase from the regular monthly dividends declared for the second quarter of 2018.2021. Including the supplemental dividends declared for March 2022 and the regular monthly dividends declared for the first quarter and second quarter of 2019,2022, Main Street will have paid $25.420$33.540 per share in cumulative dividends since its October 2007 initial public offering.

              On February 23, 2022, Main Street’s Board of Directors unanimously approved the application to the Company of the 150% minimum asset coverage ratio set forth in Section 61(a)(2) of the 1940 Act. As a result, the minimum asset coverage ratio applicable to the Company will be reduced from 200% to 150%, effective as of February 23, 2023, unless approved earlier by a vote of Main Street’s stockholders, in which case the 150% minimum asset coverage ratio will be effective on the day after such approval. The Main Street Board also authorized the submission of a proposal for stockholders to accelerate the application of the 150% minimum asset coverage ratio to the Company at Main Street’s 2022 Annual Meeting of Stockholders.


              173


              Report of Independent Registered Public Accounting Firm

              Board of Directors and Stockholders'
              Stockholders

              Main Street Capital Corporation

              Opinion on financial statement schedule

              We have audited in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"(“PCAOB”) the consolidated financial statements of Main Street Capital Corporation and subsidiaries (the "Company"“Company”) referred to in our report dated March 1, 2019,February 25, 2022, which is included in the annual report on the Form 10-K. Our audits of the consolidated financial statements also included the audit of the consolidated financial statement schedule (listedfor the years ended December 31, 2021 and 2020, listed in the index appearing under Item 15(2)). In our opinion, this consolidated financial statement schedule, when considered in relation to the consolidated financial statements as a whole, presentspresent fairly, in all material respects, the information set forth therein.

              Basis for opinion

              This consolidated financial statement schedule is the responsibility of the Company'sCompany’s management. Our responsibility is to express an opinion on the Company'sCompany’s consolidated financial statement schedule based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

              /s/ GRANT THORNTON LLP

              Houston, Texas
              March 1, 2019


              February 25, 2022

              174


              Schedule 12-14

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments inIn and Advances to Affiliates

              December 31, 2018
              2021

              (dollarsdollars in thousands)

              Amount of

              Interest,

              Fees or

              Amount of

              Amount of

              Dividends

              December 31, 

              December 31, 

              Realized

              Unrealized

              Credited to

              2020

              Gross

              Gross

              2021

              Company
               
              Investment(1)(10)(11)
               Geography Amount of
              Realized
              Gain/(Loss)
               Amount of
              Unrealized
              Gain/(Loss)
               Amount of
              Interest,
              Fees or
              Dividends
              Credited to
              Income(2)
               December 31,
              2017
              Fair Value
               Gross
              Additions(3)
               Gross
              Reductions(4)
               December 31,
              2018
              Fair Value
               

                  

              Investment(1)(10)(11)

                  

              Geography

                  

              Gain/(Loss)

                  

              Gain/(Loss)

                  

              Income(2)

                  

              Fair Value

                  

              Additions(3)

                  

              Reductions(4)

                  

              Fair Value

              Majority-owned investments

                               

                

              Majorityowned investments

                

                

                

                

                

                

                

                

                

              ASK (Analytical Systems Keco Holdings, LLC)

              12.00% (L+10.00%, Floor 2.00%) Secured Debt

              (8)

              $

              -

              $

              -

              $

              691

              $

              4,873

              $

              153

              $

              290

              $

              4,736

              Preferred Member Units

              (8)

              -

              (733)

              -

              3,200

              4,894

              3,200

              4,894

              Warrants

              (8)

              -

              (10)

              -

              10

              -

              10

              -

              Brewer Crane Holdings, LLC

              11.00% (L+10.00%, Floor 1.00%) Secured Debt

              (9)

              -

              -

              940

              8,513

              20

              496

               

              8,037

              Preferred Member Units

              (9)

              -

              1,860

              927

              5,850

              1,860

              -

               

              7,710

              Café Brazil, LLC

               Member Units (8) $ $(120)$291 $4,900 $ $120 $4,780 

              Member Units

              (8)

              -

              540

              1,012

              2,030

              540

              -

               

              2,570

              California Splendor Holdings LLC

               LIBOR Plus 8.00% (Floor 1.00%) (9)   1,025  21,128 10,200 10,928 

              11.00% (L+10.00%, Floor 1.00%) Secured Debt

              (9)

              -

              36

              3,381

              35,833

              211

              8,129

               

              27,915

               LIBOR Plus 10.00% (Floor 1.00%) (9)   2,990  27,755  27,755 

               Preferred Member Units (9)  (1,030) 178  12,500 2,755 9,745 

              Preferred Member Units

              (9)

              -

              7,034

              1,505

              14,496

              8,289

              -

               

              22,785

              Clad-Rex Steel, LLC

               LIBOR Plus 9.50% (Floor 1.00%) (5)  (33) 1,517 13,280 33 1,233 12,080 

              10.00% Secured Debt

              (5)

              -

              -

              110

              1,100

              -

              29

               

              1,071

               Member Units (5)  1,110 500 9,500 1,110  10,610 

               10% Secured Debt (5)   117 1,183  22 1,161 

               Member Units (5)  70  280 70  350 

              10.50% (L+9.50%, Floor 1.00%) Secured Debt

              (5)

              -

              -

              1,167

              10,853

              (52)

              400

               

              10,401

              Member Units

              (5)

              -

              1,640

              2,391

              9,140

              1,640

              -

               

              10,780

              CMS Minerals Investments

               Member Units (9)  921 117 2,392 921 733 2,580 

              Member Units

              (9)

              -

              691

              50

              1,624

              691

              341

               

              1,974

              Cody Pools, Inc.

              12.25% (L+10.50%, Floor 1.75%) Secured Debt

              (8)

              -

              242

              2,357

              14,216

              32,737

              4,469

              42,484

              Preferred Member Units

              (8)

              -

              32,700

              3,100

              14,940

              32,700

              -

              47,640

              CompareNetworks Topco, LLC

              10.00% (L+9.00%, Floor 1.00%) Secured Debt

              (9)

              -

              (18)

              777

              7,954

              18

              1,495

               

              6,477

              Preferred Member Units

              (9)

              -

              5,220

              474

              6,780

              5,220

              -

               

              12,000

              Datacom, LLC

              5.00% Secured Debt

              (8)

              -

              (628)

              793

              -

              8,404

              736

               

              7,668

              8.00% Secured Debt

              (8)

              (3,601)

              2,130

              1

              12,146

              2,130

              14,276

               

              -

              Preferred Member Units

              (8)

              (7,324)

              7,324

              -

              -

              9,934

              7,324

               

              2,610

              Direct Marketing Solutions, Inc.

               LIBOR Plus 11.00% (Floor 1.00%) (9)   2,502  18,631 783 17,848 

              12.00% (L+11.00%, Floor 1.00%) Secured Debt

              (9)

              -

              137

              2,034

              15,006

              9,512

              470

               

              24,048

               Preferred Stock (9)  6,500   14,900  14,900 

              Preferred Stock

              (9)

              -

              (1,030)

              672

              19,380

              -

              1,030

               

              18,350

              Gamber-Johnson Holdings, LLC

               LIBOR Plus 7.50% (Floor 2.00%) (5)  (57) 2,579 23,400 57 1,971 21,486 

              9.50% (L+7.50%, Floor 2.00%) Secured Debt

              (5)

              -

              32

              2,019

              19,838

              1,761

              1

               

              21,598

               Member Units (5)  22,090 1,797 23,370 22,090  45,460 

              Member Units

              (5)

              -

              (5,638)

              3,921

              52,490

              2,848

              5,638

               

              49,700

              GRT Rubber Technologies LLC

               LIBOR Plus 7.00% (8)  (30) 1,199 11,603 30 1,893 9,740 

              8.10% (L+8.00%) Secured Debt

              (8)

              -

              213

              1,786

              16,775

              22,110

              -

               

              38,885

               Member Units (8)  17,090 2,876 21,970 17,090  39,060 

              Harborside Holdings, LLC

               Member Units (8)    9,400 100  9,500 

              Harris Preston Fund Investments

               LP Interests (2717 MH, L.P.) (8)  93  536 597  1,133 

              Hydratec, Inc.

               Common Stock (9) 7,922 (7,905) 332 15,000  15,000  

              IDX Broker, LLC

               11.5% Secured Debt (9)  (47) 1,765 15,250 47 947 14,350 

               Preferred Member Units (9)  1,860 276 11,660 1,860  13,520 

              Member Units

              (8)

              -

              1,290

              4,264

              44,900

              1,290

              -

               

              46,190

              Jensen Jewelers of Idaho, LLC

               Prime Plus 6.75% (Floor 2.00%) (9)  (20) 450 3,955 20 620 3,355 

              10.00% (Prime+6.75%, Floor 2.00%) Secured Debt

              (9)

              -

              (13)

              313

              3,400

              13

              863

               

              2,550

               Member Units (9)  (10) 250 5,100  10 5,090 

              10.00% (Prime+6.75%, Floor 2.00%) Secured Debt

              (9)

              -

              -

              3

              -

              -

              -

               

              -

              Lamb Ventures, LLC

               11% Secured Debt (8)  (18) 976 9,942 218 1,821 8,339 

               Preferred Equity (8)    400   400 

               Member Units (8)  650  6,790 650  7,440 

               9.5% Secured Debt (8)   42 432   432 

               Member Units (8)  110 53 520 110  630 

              Member Units

              (9)

              -

              4,800

              1,937

              7,620

              4,800

              -

               

              12,420

              Mid-Columbia Lumber Products, LLC

               10% Secured Debt (9)   182 1,390 356  1,746 

               12% Secured Debt (9)   491 3,863 17  3,880 

               Member Units (9)  1,689 6 1,575 2,285  3,860 

               9.5% Secured Debt (9)   74 791  45 746 

               Member Units (9)  180 57 1,290 180  1,470 

              Kickhaefer Manufacturing Company, LLC

              11.50% Secured Debt

              (5)

              -

              -

              2,526

              22,269

              55

              2,000

               

              20,324

              9.00% Secured Debt

              (5)

              -

              -

              354

              3,909

              -

              33

               

              3,876

              Member Units

              (5)

              -

              1,370

              92

              13,400

              1,370

              -

               

              14,770

              Market Force Information, LLC

              12.00% (L+11.00%, Floor 1.00%) Secured Debt

              (9)

              -

              -

              387

              1,600

              1,800

              -

               

              3,400

              12.00% PIK Secured Debt

              (9)

              -

              (4,626)

              -

              13,562

              -

              4,626

               

              8,936

              MH Corbin Holding LLC

              13.00% Secured Debt

              (5)

              -

              (2,059)

              1,137

              8,280

              34

              2,380

               

              5,934

              Preferred Member Units

              (5)

              -

              (2,370)

              -

              2,370

              -

              2,370

               

              -

              MSC Adviser I, LLC

               Member Units (8)  23,980 3,822 41,768 23,980  65,748 

              Member Units

              (8)

              -

              23,638

              6,216

              116,760

              23,640

              -

               

              140,400

              Mystic Logistics Holdings, LLC

              12.00% Secured Debt

              (6)

              -

              1

              820

              6,723

              10

              355

               

              6,378

              Common Stock

              (6)

              -

              (150)

              1,271

              8,990

              -

              150

               

              8,840

              Mystic Logistics Holdings, LLC

               12% Secured Debt (6)   969 7,696 42 232 7,506 

               Common Stock (6)  (6,610)  6,820  6,610 210 

              NexRev LLC

               11% Secured Debt (8)   1,829  17,288  17,288 

               Preferred Member Units (8)  1,010 60  7,890  7,890 

              NRP Jones, LLC

               12% Secured Debt (5)   776 6,376   6,376 

               Member Units (5)  2,710  3,250 2,710  5,960 

              OMi Holdings, Inc.

              12.00% Secured Debt

              (8)

              -

              169

              1,109

              -

              18,000

              -

               

              18,000

              Preferred Member Units

              (8)

              -

              (170)

              1,578

              20,380

              -

              170

               

              20,210

              PPL RVs, Inc.

               LIBOR Plus 7.00% (Floor 0.50%) (8)  (35) 1,487 16,100 35 1,035 15,100 

              7.50% (L+7.00%, Floor 0.50%) Secured Debt

              (8)

              -

              (25)

              957

              11,806

              801

              225

               

              12,382

               Common Stock (8)  (2,060) 3 12,440  2,060 10,380 

              Common Stock

              (8)

              -

              2,860

              555

              11,500

              2,860

              -

               

              14,360

              Principle Environmental, LLC

               13% Secured Debt (8)  (51) 1,037 7,477 51 51 7,477 

              13.00% Secured Debt

              (8)

              -

              (62)

              929

              6,397

              2,938

              2,062

               

              7,273

              (d/b.a TruHorizon

               Preferred Member Units (8)  1,600 1,482 11,490 1,600  13,090 

              Environmental Solutions)

               Warrants (8)  130  650 130  780 

              Common Stock

              (8)

              -

              (490)

              -

              -

              1,200

              490

               

              710

              Preferred Member Units

              (8)

              -

              (449)

              -

              10,500

              1,109

              449

               

              11,160

              Warrants

              (8)

              -

              330

              -

              870

              330

              1,200

               

              -

              Quality Lease Service, LLC

               Zero Coupon Secured Debt (7)  (500)  6,950  500 6,450 

              Member Units

              (7)

              -

              (461)

              -

              4,460

              -

              2,312

               

              2,148

               Member Units (7)  (2,303)  4,938 1,174 2,303 3,809 

              Tedder Industries, LLC

               12%, Secured Debt (9)   20  480  480 

               12%, Secured Debt (9)   1,010  16,246  16,246 

               Member Units (9)     7,476  7,476 

              Robbins Bros. Jewelry, Inc.

              12.00% (L+11.00%, Floor 1.00%) Secured Debt

              (9)

              -

              -

              621

              -

              35,956

              -

               

              35,956

              Preferred Equity

              (9)

              -

              -

              -

              -

              11,070

              -

               

              11,070

              The MPI Group, LLC

               9% Secured Debt (7)  171 268 2,410 172  2,582 

               Series A Preferred Units (7)  440   440  440 

               Warrants (7)        

               Member Units (7)  90 190 2,389 90  2,479 

              Trantech Radiator Topco, LLC

              12.00% Secured Debt

              (7)

              -

              49

              1,084

              8,644

              68

              -

              8,712

              Common Stock

              (7)

              -

              2,630

              116

              6,030

              2,630

              -

              8,660

              Uvalco Supply, LLC

               9% Secured Debt (8)   7 348  348  

               Member Units (8) 301 (301) 898 3,880  3,880  

              Ziegler’s NYPD, LLC

              12.00% Secured Debt

              (8)

              -

              -

              76

              625

              -

              -

              625

              14.00% Secured Debt

              (8)

              -

              -

              390

              2,750

              -

              -

              2,750

              Vision Interests, Inc.

               13% Secured Debt (9)   364 2,797 17 661 2,153 

               Series A Preferred Stock (9)  740  3,000 740  3,740 

               Common Stock (9)  280   280  280 

              6.50% Secured Debt

              (8)

              -

              21

              66

              979

              21

              -

              1,000

              Preferred Member Units

              (8)

              -

              350

              -

              1,780

              350

              -

              2,130

              Other controlled investments

              2717 MH, L.P.

              LP Interests (2717 HPP-MS, L.P.)

              (8)

              -

              -

              -

              250

              -

              250

              -


              175


              Table of Contents

              Company
               
              Investment(1)(10)(11)
               Geography Amount of
              Realized
              Gain/(Loss)
               Amount of
              Unrealized
              Gain/(Loss)
               Amount of
              Interest,
              Fees or
              Dividends
              Credited to
              Income(2)
               December 31,
              2017
              Fair Value
               Gross
              Additions(3)
               Gross
              Reductions(4)
               December 31,
              2018
              Fair Value
               

              Ziegler's NYPD, LLC

               6.5% Secured Debt (8)  2 68 996 4  1,000 

               12% Secured Debt (8)   47 300 125  425 

               14% Secured Debt (8)   390 2,750   2,750 

               Warrants (8)        

               Preferred Member Units (8)  (1,970)  3,220  1,971 1,249 

              Other controlled investments

                               

                

              Access Media Holdings, LLC

               10% PIK Secured Debt (5)  (8,592) 25 17,150  8,592 8,558 

               Preferred Member Units(12) (5)  (1,517)   1,233 1,517 (284)

               Member Units (5)        

              LP Interests (2717 MH, L.P.)

              (8)

              -

              1,165

              -

              2,702

              1,269

              -

              3,971

              ASC Interests, LLC

               11% Secured Debt (8)   199 1,795  173 1,622 

              13.00% Secured Debt

              (8)

              -

              -

              261

              1,715

              121

              -

              1,836

               Member Units (8)  (160)  1,530  160 1,370 

              Member Units

              (8)

              -

              (400)

              -

              1,120

              -

              400

              720

              ATS Workholding, LLC

               5% Secured Debt (9)  (117) 334 3,249 1,258 117 4,390 

              5.00% Secured Debt

              (9)

              -

              (154)

              -

              3,347

              -

              342

              3,005

               Preferred Member Units (9)    3,726   3,726 

              Barfly Ventures, LLC

              7.00% Secured Debt

              (5)

              -

              -

              49

              343

              367

              -

              710

              Member Units

              (5)

              -

              346

              -

              1,584

              346

              -

              1,930

              Bolder Panther Group, LLC

              10.50% (L+9.00%, Floor 1.50%) Secured Debt

              (9)

              -

              313

              3,686

              27,225

              12,275

              500

              39,000

              Class A Preferred Member Units

              (9)

              -

              -

              1,427

              10,194

              -

              -

              10,194

              Class B Preferred Member Units

              (9)

              -

              9,170

              3,100

              14,000

              9,170

              -

              23,170

              Bond-Coat, Inc.

               12% Secured Debt (8)  229 1,482 11,596   11,596 

              Common Stock

              (8)

              (2,320)

              4,310

              -

              2,040

              4,310

              6,350

              -

               Common Stock (8)    9,370   9,370 

              Bridge Capital Solutions Corporation

              13.00% Secured Debt

              (6)

              -

              -

              1,705

              9,401

              412

              -

              9,813

              Preferred Member Units

              (6)

              -

              -

              100

              1,000

              -

              -

              1,000

              Brewer Crane Holdings, LLC

               LIBOR Plus 10.00% (Floor 1.00%) (9)   1,274  9,839 372 9,467 

               Preferred Member Units (9)   117  4,280  4,280 

              Warrants

              (6)

              -

              840

              -

              3,220

              840

              -

              4,060

              CBT Nuggets, LLC

               Member Units (9)  (27,950) 11,395 89,560  27,950 61,610 

              Member Units

              (9)

              -

              4,540

              2,308

              46,080

              4,540

              -

              50,620

              Centre Technologies Holdings, LLC

              12.00% (L+10.00%, Floor 2.00%) Secured Debt

              (8)

              -

              (507)

              1,266

              11,549

              33

              2,718

              8,864

              Preferred Member Units

              (8)

              -

              (320)

              120

              6,160

              -

              320

              5,840

              Chamberlin Holding LLC

               LIBOR Plus 10.00% (Floor 1.00%) (8)   2,645  21,425 1,397 20,028 

              9.00% (L+8.00%, Floor 1.00%) Secured Debt

              (8)

              -

              2

              1,544

              15,212

              4,001

              1,396

              17,817

               Member Units (8)  7,500 2,349  18,940  18,940 

               Member Units (8)     732  732 

              Member Units

              (8)

              -

              (3,660)

              3,922

              29,340

              270

              3,930

              25,680

              Charps, LLC

               LIBOR Plus 7.00% (Floor 1.00%) (5)   45  1,600 1,600  

              10.00% Unsecured Debt

              (5)

              -

              260

              1,007

              8,475

              559

              3,340

              5,694

               12% Secured Debt (5)  83 2,034 18,225 163 6,500 11,888 

               Preferred Member Units (5)  1,620 250 650 1,620  2,270 

              15.00%

              (5)

              -

              -

              4

              669

              -

              669

              -

              Copper Trail Fund Investments

               LP Interests (CTMH, LP) (9)   22  872  872 

               LP Interests (Copper Trail Energy Fund I, LP) (9)  675 57 2,500 1,944 274 4,170 

              Preferred Member Units

              (5)

              -

              1,907

              4,839

              10,520

              3,470

              -

              13,990

              Datacom, LLC

               8% Secured Debt (8)  (110) 33 1,575 225 110 1,690 

               10.50% PIK Secured Debt (8)  (1,493) 330 11,110 169 1,493 9,786 

               Class A Preferred Member Units (8)  (843)  730 113 843  

               Class B Preferred Member Units (8)        

              Colonial Electric Company LLC

              12.00% Secured Debt

              (6)

              -

              -

              2,705

              -

              24,981

              630

              24,351

              Preferred Member Units

              (6)

              -

              1,450

              1,480

              -

              9,130

              -

              9,130

              Copper Trail Energy Fund I, LP - CTMH

              LP Interests (CTMH, LP)

              (9)

              -

              -

              -

              747

              -

              37

              710

              Digital Products Holdings LLC

               LIBOR Plus 10.00% (Floor 1.00%) (5)   2,713  26,171 660 25,511 

              11.00% (L+10.00%, Floor 1.00%) Secured Debt

              (5)

              -

              -

              1,978

              18,077

              44

              1,320

              16,801

               Preferred Member Units (5)   150  8,800 334 8,466 

              Preferred Member Units

              (5)

              -

              -

              200

              9,835

              -

              -

              9,835

              Garreco, LLC

               LIBOR Plus 8.00% (Floor 1.00%, Ceiling 1.50%) (8)   642 5,443 18 362 5,099 

              9.00% (L+8.00%, Floor 1.00%, Ceiling 1.50%) Secured Debt

              (8)

              -

              -

              405

              4,519

              -

              323

              4,196

               Member Units (8)  650  1,940 650  2,590 

              Guerdon Modular Holdings, Inc.

               13% Secured Debt (9)  (570) 1,312 10,632 2,340 970 12,002 

               Preferred Stock (9)        

               Common Stock (9)        

               Warrants (9)        

              Member Units

              (8)

              -

              860

              300

              1,410

              860

              -

              2,270

              Gulf Manufacturing, LLC

               Member Units (8)  1,630 1,227 10,060 1,630  11,690 

              Member Units

              (8)

              -

              1,130

              2,109

              4,510

              1,130

              -

              5,640

              Gulf Publishing Holdings, LLC

              10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) Secured Debt

              (8)

              -

              -

              21

              250

              14

              7

              257

              12.50% (6.25% Cash, 6.25% PIK) Secured Debt

              (8)

              -

              (2,757)

              1,282

              12,044

              849

              3,176

              9,717

              Gulf Publishing Holdings, LLC

               LIBOR Plus 9.50% (Floor 1.00%) (8)   11 80 160 240  

               12.5% Secured Debt (8)   1,634 12,703 25 134 12,594 

               Member Units (8)  (720)  4,840  720 4,120 

              Harrison Hydra-Gen, Ltd.

               Common Stock (8)  4,490 180 3,580 4,490  8,070 

              Common Stock

              (8)

              -

              (1,920)

              -

              5,450

              -

              1,920

              3,530

              J&J Services, Inc.

              11.50% Secured Debt

              (7)

              -

              (103)

              1,264

              12,800

              103

              12,903

              -

              Preferred Stock

              (7)

              10,952

              (5,595)

              -

              12,680

              -

              12,680

              -

              HW Temps LLC

               LIBOR Plus 13.00% (Floor 1.00%) (6)   1,431 9,918 20  9,938 

               Preferred Member Units (6)  2 170 3,940 2  3,942 

              Johnson Downie Opco, LLC

              13.00% (L+11.50%, Floor 1.50%) Secured Debt

              (8)

              -

              -

              208

              -

              11,344

              -

              11,344

              Preferred Equity

              (8)

              -

              -

              -

              -

              3,150

              -

              3,150

              KBK Industries, LLC

               10% Secured Debt (5)  (3) 9 375 3 378  

              Member Units

              (5)

              -

              420

              992

              13,200

              420

              -

              13,620

               12.5% Secured Debt (5)  (33) 546 5,900 33 5,933  

               Member Units (5)  4,190 842 4,420 4,190  8,610 

              MS Private Loan Fund

              5.00% Unsecured Debt

              (8)

              -

              -

              1,402

              -

              66,726

              3,575

              63,151

              LP Interests

              (8)

              -

              81

              -

              -

              2,581

              -

              2,581

              Kickhaefer Manufacturing Company, LLC

               11.5% Secured Debt (5)   33  1,045  1,045 

               11.5% Secured Debt (5)   1,125  27,730  27,730 

               Member Units (5)     12,240  12,240 

               9.0% Secured Debt (5)   63  3,970  3,970 

               Member Units (5)     992  992 

              MSC Income Fund Inc.

              5.00% Unsecured Debt

              (8)

              -

              -

              2,179

              -

              60,000

              60,000

              -

              NAPCO Precast, LLC

              Member Units

              (8)

              -

              (2,540)

              1,553

              16,100

              -

              2,540

              13,560

              Nebraska Vet AcquireCo, LLC (NVS)

              12.00% Secured Debt

              (5)

              -

              -

              1,466

              10,395

              4,846

              -

              15,241

              Preferred Member Units

              (5)

              -

              713

              -

              6,500

              1,200

              -

              7,700

              Marine Shelters Holdings, LLC

               12% PIK Secured Debt (8) (3,361) 3,078   3,361 3,361  

               Preferred Member Units (8) (5,352) 5,352   5,352 5,352  
              ��

              Market Force Information, LLC

               LIBOR Plus 7.00% (Floor 1.00%) (9)   26  680 480 200 

               LIBOR Plus 11.00% (Floor 1.00%) (9)   3,121 23,143 41 560 22,624 

               Member Units (9)  (1,600)  14,700  1,600 13,100 

              MH Corbin Holding LLC

               10% Current/3% PIK Secured Debt (5)  (387) 1,187 12,526 119 912 11,733 

               Preferred Member Units (5)  (5,000) 140 6,000  5,000 1,000 

              NAPCO Precast, LLC

               LIBOR Plus 8.50% (8)  (25) 1,277 11,475 25 25 11,475 

               Member Units (8)  2,320 1,862 11,670 2,320  13,990 

              NexRev LLC

              11.00% Secured Debt

              (8)

              -

              (1,839)

              1,883

              16,727

              38

              2,720

              14,045

              Preferred Member Units

              (8)

              -

              1,220

              80

              1,470

              1,220

              -

              2,690

              NRI Clinical Research, LLC

               14% Secured Debt (9)  140 982 4,265 3,035 615 6,685 

              9.00% Secured Debt

              (9)

              -

              (48)

              380

              5,620

              48

              5,668

              -

               Warrants (9)  160  500 160  660 

               Member Units (9)  (22)  2,500 152 174 2,478 

              Member Units

              (9)

              8,787

              (4,835)

              2,805

              5,600

              (749)

              4,851

              -

              Warrants

              (9)

              -

              (1,238)

              -

              1,490

              -

              1,490

              -

              NRP Jones, LLC

              12.00% Secured Debt

              (5)

              -

              -

              253

              2,080

              -

              -

              2,080

              Member Units

              (5)

              -

              3,619

              (45)

              2,821

              3,619

              -

              6,440

              NuStep, LLC

               12% Secured Debt (5)   2,550 20,420 38  20,458 

              11.00% Secured Debt

              (5)

              -

              4

              1,991

              17,193

              47

              -

              17,240

               Preferred Member Units (5)    10,200   10,200 
              ���

              7.50% (L+6.50%, Floor 1.00%) Secured Debt

              (5)

              -

              -

              58

              -

              2,120

              400

              1,720

              OMi Holdings, Inc.

               Common Stock (8)  1,910 1,608 14,110 1,910  16,020 

              Preferred Member Units

              (5)

              -

              2,720

              -

              10,780

              2,720

              -

              13,500

              Orttech Holdings, LLC

              12.00% (L+11.00%, Floor 1.00%) Secured Debt

              (5)

              -

              -

              1,522

              -

              24,151

              -

              24,151

              Preferred Stock

              (5)

              -

              -

              130

              -

              12,600

              2,600

              10,000

              Pearl Meyer Topco LLC

              12.00% Secured Debt

              (6)

              -

              236

              4,259

              37,201

              311

              4,838

              32,674

              Member Units

              (6)

              -

              11,030

              3,599

              15,940

              11,030

              -

              26,970

              Pegasus Research Group, LLC

               Member Units (8)  (2,630)  10,310  2,630 7,680 

              Member Units

              (8)

              -

              (1,550)

              -

              8,830

              -

              1,550

              7,280

              River Aggregates, LLC

              Member Units

              (8)

              -

              40

              125

              3,240

              40

              -

              3,280

              Tedder Industries, LLC

              12.00% Secured Debt

              (9)

              -

              -

              2,009

              16,301

              2,280

              2,400

              16,181

              Preferred Member Units

              (9)

              -

              -

              -

              8,136

              443

              -

              8,579

              UnionRock Energy Fund II, LP

              LP Interests

              (9)

              -

              2,295

              273

              2,894

              3,669

              440

              6,123

              Vision Interests, Inc.

              13.00% Secured Debt

              (9)

              -

              -

              244

              2,028

              -

              2,028

              -

              Series A Preferred Stock

              (9)

              -

              (160)

              -

              3,160

              -

              160

              3,000

              VVS Holdco LLC

              11.50% Secured Debt

              (5)

              -

              -

              913

              -

              30,100

              -

              30,100

              7.00% (L+6.00%, Floor 1.00%) Secured Debt

              (5)

              -

              -

              7

              -

              1,169

              -

              1,169

              Preferred Equity

              (5)

              -

              -

              -

              -

              11,840

              -

              11,840

              Other

              Amounts related to investments transferred to or from other 1940 Act classification during the period

              -

              -

              -

              -

              -

              -

              -

              Total Control investments

              $

              6,494

              $

              99,420

              $

              122,277

              $

              1,113,725

              $

              592,022

              $

              216,490

              $

              1,489,257

              Affiliate Investments

              AAC Holdings, Inc.

              18.00% (10.00% Cash, 8.00% PIK) Secured Debt

              (7)

              $

              -

              $

              (217)

              $

              1,817

              $

              9,187

              $

              1,095

              $

              488

              $

              9,794


              176


              Table of Contents

              Company
               
              Investment(1)(10)(11)
               Geography Amount of
              Realized
              Gain/(Loss)
               Amount of
              Unrealized
              Gain/(Loss)
               Amount of
              Interest,
              Fees or
              Dividends
              Credited to
              Income(2)
               December 31,
              2017
              Fair Value
               Gross
              Additions(3)
               Gross
              Reductions(4)
               December 31,
              2018
              Fair Value
               

              River Aggregates, LLC

               Zero Coupon Secured Debt (8)  (28) 43 707 43 28 722 

               Member Units (8)    4,610   4,610 

               Member Units (8)  370  2,559 371  2,930 

              Common Stock

              (7)

              -

              (1,069)

              -

              3,148

              -

              1,069

              2,079

              SoftTouch Medical Holdings LLC

               LIBOR Plus 9.00% (Floor 1.00%) (7)  (30) 119 7,140 30 7,170  

               Member Units (7) 5,171 (5,159) 865 10,089  10,089  

              Warrants

              (7)

              -

              (998)

              -

              2,938

              -

              998

              1,940

              Other

                               

              Amounts related to investments transferred to or from other 1940 Act classification during the period

                   25 (10,632)    

              AFG Capital Group, LLC

              10.00% Secured Debt

              (8)

              -

              -

              31

              491

              -

              347

              144

              Preferred Member Units

              (8)

              -

              1,930

              200

              5,810

              1,930

              -

              7,740

              Total Control investments

                 $4,681 $37,826 $85,853 $750,706 $400,284 $156,629 $1,004,993 

              ATX Networks Corp.

              10.00% PIK Unsecured Debt

              (6)

              -

              -

              -

              -

              1,963

              -

              1,963

              8.50% (L+7.50%, Floor 1.00%) Secured Debt

              (6)

              -

              -

              168

              -

              7,092

              -

              7,092

              8.75% (7.25% Cash, 1.50% PIK) (1.50% PIK + L+6.25%, Floor 1.00%) Secured Debt

              (6)

              (4,528)

              1,133

              -

              12,263

              1,521

              13,784

              -

              BBB Tank Services, LLC

              12.00% (L+11.00%, Floor 1.00%) Unsecured Debt

              (8)

              -

              (2,242)

              612

              4,722

              27

              2,242

              2,507

              Member Units

              (8)

              -

              (280)

              -

              280

              -

              280

              -

              Preferred Stock (non-voting)

              (8)

              -

              (162)

              11

              151

              11

              162

              -

              Boccella Precast Products LLC

              10.00% Secured Debt

              (6)

              -

              -

              9

              -

              320

              -

              320

              Member Units

              (6)

              -

              (1,210)

              398

              6,040

              -

              1,210

              4,830

              Brightwood Capital Fund Investments - Fund V

              LP Interests (Brightwood Capital Fund V, LP)

              (6)

              -

              -

              -

              -

              1,000

              -

              1,000

              Buca C, LLC

              10.25% (L+9.25%, Floor 1.00%) Secured Debt

              (7)

              -

              (373)

              1,782

              14,256

              487

              373

              14,370

              CAI Software LLC

              12.50% Secured Debt

              (6)

              -

              (340)

              7,570

              47,474

              23,940

              71,414

              -

              Member Units

              (6)

              10,252

              (5,095)

              2,380

              7,190

              -

              7,190

              -

              Career Team Holdings, LLC

              12.50% Secured Debt

              (6)

              -

              -

              513

              -

              20,050

              -

              20,050

              Class A Common Units

              (6)

              -

              -

              -

              -

              4,500

              -

              4,500

              Chandler Signs Holdings, LLC

              Class A Units

              (8)

              -

              (1,000)

              -

              1,460

              -

              1,000

              460

              Charlotte Russe, Inc

              Common Stock

              (9)

              (3,141)

              3,141

              -

              -

              3,141

              3,141

              -

              Classic H&G Holdings, LLC

              7.00% (L+6.00%, Floor 1.00%) Secured Debt

              (6)

              -

              -

              83

              -

              4,000

              -

              4,000

              8.00% Secured Debt

              (6)

              -

              (82)

              2,210

              24,800

              82

              5,608

              19,274

              Preferred Member Units

              (6)

              -

              5,750

              1,070

              9,510

              5,750

              -

              15,260

              Congruent Credit Opportunities Funds

              LP Interests (Congruent Credit Opportunities Fund
              III, LP)

              (8)

              -

              (96)

              776

              11,540

              -

              1,581

              9,959

              LP Interests (Congruent Credit Opportunities Fund
              II, LP)

              (8)

              (4,449)

              4,355

              -

              94

              4,355

              4,449

              -

              Copper Trail Energy Fund I, LP

              LP Interests (Copper Trail Energy Fund I, LP)

              (9)

              (203)

              379

              378

              1,782

              379

              2,161

              -

              DMA Industries, LLC

              12.00% Secured Debt

              (7)

              -

              -

              521

              -

              20,993

              -

              20,993

              Preferred Equity

              (7)

              -

              -

              -

              -

              5,944

              -

              5,944

              Dos Rios Partners

              LP Interests (Dos Rios Partners - A, LP)

              (8)

              715

              1,560

              -

              1,720

              1,560

              -

              3,280

              LP Interests (Dos Rios Partners, LP)

              (8)

              2,252

              4,912

              -

              5,417

              4,912

              -

              10,329

              Dos Rios Stone Products LLC

              Class A Preferred Units

              (8)

              -

              (610)

              -

              1,250

              -

              610

              640

              East Teak Fine Hardwoods, Inc.

              Common Stock

              (7)

              (80)

              180

              100

              300

              180

              480

              -

              EIG Fund Investments

              LP Interests (EIG Global Private Debt Fund-A, L.P.)

              (8)

              9

              166

              53

              526

              200

              179

              547

              Flame King Holdings, LLC

              12.00% (L+11.00%, Floor 1.00%) Secured Debt

              (9)

              -

              -

              884

              -

              20,996

              -

              20,996

              7.50% (L+6.50%, Floor 1.00%) Secured Debt

              (9)

              -

              -

              77

              -

              6,324

              -

              6,324

              Preferred Equity

              (9)

              -

              -

              -

              -

              10,400

              -

              10,400

              Freeport Financial SBIC Fund LP

              LP Interests (Freeport Financial SBIC Fund LP)

              (5)

              -

              814

              -

              5,264

              814

              -

              6,078

              LP Interests (Freeport First Lien Loan Fund III LP)

              (5)

              -

              66

              751

              10,321

              66

              3,156

              7,231

              GFG Group, LLC.

              12.00% Secured Debt

              (5)

              -

              110

              1,601

              -

              15,745

              3,200

              12,545

              Preferred Member Units

              (5)

              -

              2,090

              629

              -

              6,990

              -

              6,990

              Hawk Ridge Systems, LLC

              7.00% (L+6.00%, Floor 1.00%) Secured Debt

              (9)

              -

              -

              70

              -

              2,585

              -

              2,585

              8.00% Secured Debt

              (9)

              -

              94

              2,023

              18,400

              16,400

              -

              34,800

              Preferred Member Units

              (9)

              -

              7,000

              1,914

              8,450

              7,000

              -

              15,450

              Houston Plating and Coatings, LLC

              8.00% Unsecured Convertible Debt

              (8)

              -

              60

              243

              2,900

              60

              -

              2,960

              Member Units

              (8)

              -

              (1,870)

              261

              5,080

              -

              1,870

              3,210

              HPEP 3, L.P.

              LP Interests (HPEP 3, L.P.)

              (8)

              -

              1,332

              177

              3,258

              1,706

              252

              4,712

              I-45 SLF LLC

              Member Units (Fully diluted 20.0%; 24.40% profits
              interest)

              (8)

              -

              (202)

              1,861

              15,789

              800

              2,202

              14,387

              Iron-Main Investments, LLC

              12.50% Secured Debt

              (5)

              -

              -

              201

              -

              3,170

              -

              3,170

              12.50% PIK Secured Debt

              (5)

              -

              -

              408

              -

              9,088

              144

              8,944

              12.50% Secured Debt

              (5)

              -

              -

              731

              -

              19,805

              -

              19,805

              13.00% Secured Debt

              (5)

              -

              -

              346

              -

              4,557

              -

              4,557

              Common Stock

              (5)

              -

              -

              -

              -

              1,798

              -

              1,798

              L.F. Manufacturing Holdings, LLC

              Member Units

              (8)

              -

              510

              -

              2,050

              510

              -

              2,560

              Preferred Member Units (non-voting)

              (8)

              -

              -

              14

              93

              14

              -

              107

              Meisler Operating LLC

              Common Stock

              (5)

              17,048

              (7,413)

              -

              16,010

              (550)

              15,460

              -

              OnAsset Intelligence, Inc.

              10.00% PIK Unsecured Debt

              (8)

              -

              -

              11

              64

              139

              11

              192

              12.00% PIK Secured Debt

              (8)

              -

              -

              930

              7,299

              930

              -

              8,229

              Common Stock

              (8)

              -

              (830)

              -

              -

              830

              830

              -

              Warrants

              (8)

              -

              830

              -

              -

              830

              830

              -

              Oneliance, LLC

              12.00% (L+11.00%, Floor 1.00%) Secured Debt

              (7)

              -

              -

              335

              -

              5,547

              -

              5,547

              Preferred Stock

              (7)

              -

              -

              -

              -

              1,056

              -

              1,056

              PCI Holding Company, Inc.

              Preferred Stock

              (9)

              -

              (203)

              2,852

              4,130

              -

              4,130

              -

              SI East, LLC (Stavig)

              10.25% Secured Debt

              (7)

              -

              (90)

              4,032

              32,962

              36,765

              3,877

              65,850

              Preferred Member Units

              (7)

              -

              6,572

              2,340

              9,780

              6,572

              4,782

              11,570


              177


              Table of Contents

              Slick Innovations, LLC

              13.00% Secured Debt

              (6)

              -

              (42)

              731

              5,720

              42

              442

              5,320

              Common Stock

              (6)

              -

              180

              -

              1,330

              180

              -

              1,510

              Warrants

              (6)

              -

              40

              -

              360

              40

              -

              400

              Sonic Systems International, LLC

              8.50% (L+7.50%, Floor 1.00%) Secured Debt

              (8)

              -

              -

              394

              -

              11,757

              -

              11,757

              Common Stock

              (8)

              -

              -

              37

              -

              1,070

              -

              1,070

              Superior Rigging & Erecting Co.

              12.00% Secured Debt

              (7)

              -

              -

              2,650

              21,298

              34

              -

              21,332

              Preferred Member Units

              (7)

              -

              -

              -

              4,500

              -

              -

              4,500

              The Affiliati Network, LLC

              11.83% Secured Debt

              (9)

              -

              -

              842

              -

              13,873

              1,039

              12,834

              7.00% Secured Debt

              (9)

              -

              -

              9

              -

              1,462

              1,200

              262

              Preferred Stock

              (9)

              -

              -

              270

              -

              6,400

              -

              6,400

              UniTek Global Services, Inc.

              15.00% PIK Secured Convertible Debt

              (6)

              -

              1,178

              151

              -

              2,461

              86

              2,375

              8.50% (6.50% cash, 2.00% PIK) (2.00% PIK, L+5.50% Floor 1.00%) Secured Debt

              (6)

              -

              115

              236

              2,425

              259

              462

              2,222

              Preferred Stock

              (6)

              -

              807

              315

              3,208

              1,439

              316

              4,331

              Volusion, LLC

              11.50% Secured Debt

              (8)

              -

              991

              2,248

              19,243

              991

              2,800

              17,434

              8.00% Unsecured Convertible Debt

              (8)

              -

              118

              33

              291

              118

              -

              409

              Preferred Member Units

              (8)

              -

              -

              -

              5,990

              -

              -

              5,990

              Other

              Amounts related to investments transferred to or from other 1940 Act classification during the period

              (694)

              -

              (11)

              (12,263)

              -

              -

              -

              Total Affiliate investments

              $

              17,181

              $

              21,989

              $

              51,278

              $

              366,301

              $

              336,505

              $

              165,855

              $

              549,214


              (1)The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.
              (2)Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts from investments transferred from other 1940 Act classifications during the period.”
              (3)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.
              (4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.
              (5)Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control investments located in this region was $342,215. This represented 23.0% of net assets as of December 31, 2021. The fair value as of December 31, 2021 for affiliate investments located in this region was $71,118. This represented 12.9% of net assets as of December 31, 2021.
              (6)Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control investments located in this region was $123,216. This represented 8.3% of net assets as of December 31, 2021. The fair value as of December 31, 2021 for affiliate investments located in this region was $94,447. This represented 17.2% of net assets as of December 31, 2021.
              (7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control investments located in this region was $19,520. This represented 1.3% of net assets as of December 31, 2021. The fair value as of December 31, 2021 for affiliate investments located in this region was $164,975. This represented 30.0% of net assets as of December 31, 2021.
              (8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control investments located in this region was $640,096. This represented 43.0% of net assets as of

              178


              Company
               
              Investment(1)(10)(11)
               Geography Amount of
              Realized
              Gain/(Loss)
               Amount of
              Unrealized
              Gain/(Loss)
               Amount of
              Interest,
              Fees or
              Dividends
              Credited to
              Income(2)
               December 31,
              2017
              Fair Value
               Gross
              Additions(3)
               Gross
              Reductions(4)
               December 31,
              2018
              Fair Value
               

              Affiliate Investments

                                        

                                        

              AFG Capital Group, LLC

               Warrants (8) $ $90 $ $860 $90 $ $950 

               Preferred Member Units (8)    390  40  3,590  390    3,980 

              Barfly Ventures, LLC

               12% Secured Debt (5)    (164) 1,177  8,715  1,467  164  10,018 

               Options (5)    (190) 210  920  210  190  940 

               Warrants (5)    (110)   520    110  410 

              BBB Tank Services, LLC

               LIBOR Plus 10% (Floor 1.00%) (8)      83  778  434  1,212   

               LIBOR Plus 11% (Floor 1.00%) (8)      693  3,876    43  3,833 

               Preferred Member Units (8)          113    113 

               Member Units (8)    (270)   500    270  230 

              Boccella Precast Products LLC

               LIBOR Plus 10% (Floor 1.00%) (6)    43  1,964  16,400  2,164  2,840  15,724 

               Member Units (6)    1,640  635  3,440  1,640    5,080 

              Boss Industries, LLC

               Preferred Member Units (5)    2,080  849  3,930  2,246    6,176 

              Bridge Capital Solutions

               13% Secured Debt (6)      1,351  5,884  337    6,221 

              Corporation

               Warrants (6)    500    3,520  500    4,020 

               13% Secured Debt (6)    (2) 134  1,000  2  2  1,000 

               Preferred Member Units (6)      108  1,000      1,000 

              Buca C, LLC

               LIBOR Plus 9.25% (Floor 1.00%) (7)      2,286  20,193  45  1,200  19,038 

               Preferred Member Units (7)    5  254  4,172  259    4,431 

              CAI Software LLC

               12% Secured Debt (6)    94  726  4,083  7,797  1,000  10,880 

               Member Units (6)    (610) 20  3,230  97  610  2,717 

              Chandler Signs Holdings, LLC

               12% Secured Debt/1.00% PIK (8)    (8) 604  4,500  54  8  4,546 

               Class A Units (8)    (530) 60  2,650    530  2,120 

              Charlotte Russe, Inc

               8.50% Secured Debt (9)    4,663  630  7,807  16,659  20,536  3,930 

               Common Stock (9)    (3,141)     3,141  3,141   

              Condit Exhibits, LLC

               Member Units (9)      123  1,950      1,950 

              Congruent Credit

               LP Interests (Fund II) (8)    (140)   1,515    660  855 

              Opportunities Funds

               LP Interests (Fund III) (8)    (254) 2,017  18,632  4,014  5,178  17,468 

              Dos Rios Partners

               LP Interests (Dos Rios Partners, LP) (8)    138    7,165  138  150  7,153 

               LP Interests (Dos Rios Partners — A, LP) (8)    430    1,889  430  48  2,271 

              East Teak Fine Hardwoods, Inc.

               Common Stock (7)    (70) 35  630    70  560 

              EIG Fund Investments

               LP Interests (EIG Global Private Debt fund-A, L.P.) (8)      64  1,055  479  1,029  505 

              Freeport Financial Funds

               LP Interests (Freeport Financial SBIC Fund LP) (5)    (215) 102  5,614    215  5,399 

               LP Interests (Freeport First Lien Loan Fund III LP) (5)    (123) 902  8,506  2,597  123  10,980 

              Gault Financial, LLC

               8% Secured Debt (7)  (33) 950  815  11,532  950  12,482   

              (RMB Capital, LLC)

               Warrants (7)  (400) 400      400  400   

              Harris Preston Fund Investments

               LP Interests (HPEP 3, L.P.) (8)        943  790    1,733 

              Hawk Ridge Systems, LLC

               10.5% Secured Debt (9)    (26) 1,561  14,300  26  26  14,300 

               Preferred Member Units (9)    3,460  352  3,800  3,460    7,260 

               Preferred Member Units (9)    180    200  180    380 

              Houston Plating and

               8% Unsecured Convertible Debt (8)    520  243  3,200  520    3,720 

              Coatings, LLC

               Member Units (8)    2,133  289  6,140  2,190    8,330 

              I-45 SLF LLC

               Member Units (8)    (1,214) 2,945  16,841    1,214  15,627 

              L.F. Manufacturing Holdings, LLC

               Member Units (8)    60    2,000  60    2,060 

              Meisler Operating LLC

               LIBOR Plus 8.50% (Floor 1.00%) (5)      2,228  16,633  3,999  320  20,312 

               Member Units (5)    735    3,390  2,390    5,780 

              OnAsset Intelligence, Inc.

               12% PIK Secured Debt (8)      649  5,094  649    5,743 

               10% PIK Secured Debt (8)      5  48  5    53 

               Preferred Stock (8)               

               Warrants (8)               

              OPI International Ltd.

               Common Stock (8)  (1,371) 1,371      1,371  1,371   

              PCI Holding Company, Inc.

               12% Current/3% PIK Secured Debt (9)      2,105  12,593  615  1,300  11,908 

               Preferred Stock (9)    (550)   890    550  340 

               Preferred Stock (9)    870    2,610  870    3,480 

              Rocaceia, LLC (Quality Lease

               12% Secured Debt (8)        250      250 

              and Rental Holdings, LLC)

               Preferred Member Units (8)               

              Salado Stone Holdings, LLC

               Class A Preferred Units (8)    (750) 23  1,790    750  1,040 

              SI East, LLC

               10.25% Current, Secured Debt (7)      1,471    36,501  1,616  34,885 

               Preferred Member Units (7)          6,000    6,000 

              Slick Innovations, LLC

               14.00% Current, Secured Debt (6)      463    6,959    6,959 

               Warrants (6)          181    181 

               Member Units (6)          700    700 

              Tin Roof Acquisition Company

               12% Secured Debt (7)      841  12,722  561  13,283   

               Class��C Preferred Stock (7)      152  3,027  152  3,179   

              Table of Contents

              December 31, 2021. The fair value as of December 31, 2021 for affiliate investments located in this region was $108,623. This represented 19.8% of net assets as of December 31, 2021.
              (9)Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of December 31, 2021 for control investments located in this region was $364,210. This represented 24.5% of net assets as of December 31, 2021. The fair value as of December 31, 2021 for affiliate investments located in this region was $110,051. This represented 20.0% of net assets as of December 31, 2021.
              (10)All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.
              (11)This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can be located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs.

              179


              Company
               
              Investment(1)(10)(11)
               Geography Amount of
              Realized
              Gain/(Loss)
               Amount of
              Unrealized
              Gain/(Loss)
               Amount of
              Interest,
              Fees or
              Dividends
              Credited to
              Income(2)
               December 31,
              2017
              Fair Value
               Gross
              Additions(3)
               Gross
              Reductions(4)
               December 31,
              2018
              Fair Value
               

              UniTek Global Services, Inc.

               LIBOR Plus 5.50% (Floor 1.00%) (6)    (6) 127    2,975  6  2,969 

               LIBOR Plus 8.50% (Floor 1.00%) (6)      819  8,535  6  8,541   

               LIBOR Plus 7.50% (Floor 1.00%)/1.00% PIK (6)      7  137    137   

               15% PIK Unsecured Debt (6)      122  865  87  952   

               Preferred Stock (6)    41  1,038  7,320  1,080  987  7,413 

               Preferred Stock (6)      121    1,852  215  1,637 

               Preferred Stock (6)    8  580  2,850  587  399  3,038 

               Common Stock (6)  399  (1,069)   2,490    1,070  1,420 

              Universal Wellhead Services

               Preferred Member Units (8)      120  830  120    950 

              Holdings, LLC

               Member Units (8)    420    1,910  420    2,330 

              Valley Healthcare Group, LLC

               LIBOR Plus 10.50% (Floor 0.50%) (8)      1,400  11,685  81  11,766   

               Preferred Member Units (8)  1,898    58  1,600    1,600   

              Volusion, LLC

               11.5% Secured Debt (8)      2,818  15,200  3,207    18,407 

               8% Unsecured Convertible Debt (8)      15    297    297 

               Preferred Member Units (8)      1  14,000      14,000 

               Warrants (8)    (190)   2,080    190  1,890 

              Other

                                        

              Amounts related to investments transferred to or from other 1940 Act classification during the period

                    (473) 473  365  2,825       

              Total Affiliate investments

                   $20 $12,062 $36,800 $338,854 $125,544 $101,683 $359,890 

              (1)
              The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.

              (2)
              Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in "Amounts from investments transferred from other 1940 Act classifications during the period."

              (3)
              Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.

              (4)
              Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

              (5)
              Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2018 for control investments located in this region was $257,870. This represented 17.5% of net assets as of December 31, 2018. The fair value as of December 31, 2018 for affiliate investments located in this region was $60,015. This represented 4.1% of net assets as of December 31, 2018.

              (6)
              Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2018 for control investments located in this region was $21,596. This represented 1.5% of net assets as of December 31, 2018. The fair value as of December 31, 2018 for affiliate investments located in this region was $70,959. This represented 4.8% of net assets as of December 31, 2018.

              (7)
              Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2018 for control investments located in this region was $15,760. This represented 1.1% of net assets as of December 31, 2018. The fair value as of December 31, 2018 for affiliate investments located in this region was $64,914. This represented 4.4% of net assets as of December 31, 2018.

              (8)
              Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2018 for control investments located in this region was $401,355. This represented 27.2% of net assets as of December 31, 2018. The fair value as of December 31, 2018 for affiliate investments located in this region was $120,454. This represented 8.2% of net assets as of December 31, 2018.

              (9)
              Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of December 31, 2018 for control investments located in this region was $308,412. This represented 20.9% of net assets as of December 31, 2018. The fair value as of December 31, 2018 for affiliate investments located in this region was $43,548. This represented 3.0% of net assets as of December 31, 2018.

              (10)
              All of the Company's portfolio investments are generally subject to restrictions on resale as "restricted securities," unless otherwise noted.

              (11)
              This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can be located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs.

              (12)
              Investment has an unfunded commitment as of December 31, 2018 (see Note K). The fair value of the investment includes the impact of the fair value of any unfunded commitments.

              Table of Contents

              Schedule 12-14

              MAIN STREET CAPITAL CORPORATION

              Consolidated Schedule of Investments inIn and Advances to Affiliates

              December 31, 2017
              2020

              (dollars in thousands)

              Amount of

              Interest,

              Fees or

              Amount of

              Amount of

              Dividends

              December 31, 

              December 31, 

              Realized

              Unrealized

              Credited to

              2019

              Gross

              Gross

              2020

              Company
               
              Investment(1)(10)(11)
               Geography Amount of
              Realized
              Gain/(Loss)
               Amount of
              Unrealized
              Gain/(Loss)
               Amount of
              Interest,
              Fees or
              Dividends
              Credited to
              Income(2)
               December 31,
              2016
              Fair Value
               Gross
              Additions(3)
               Gross Reductions(4) December 31,
              2017
              Fair Value
               

                  

              Investment(1)(10)(11)

                  

              Geography

                  

              Gain/(Loss)

                  

              Gain/(Loss)

                  

              Income(2)

                  

              Fair Value

                  

              Additions(3)

                  

              Reductions(4)

                  

              Fair Value

              Majority-owned investments

                                

                

              Majorityowned investments

                

                

                

                

                

                

                

                

                

              Café Brazil, LLC

               Member Units (8) $ $(1,140)$179 $6,040 $ $1,140 $4,900 

               

              Member Units

               

              (8)

              $

              $

              (410)

              $

              38

              $

              2,440

              $

              $

              410

              $

              2,030

              California Splendor Holdings LLC

               

              LIBOR Plus 8.00% (Floor 1.00%)

               

              (9)

               

               

              29

               

              1,154

               

              7,104

               

              18,239

               

              17,300

               

              8,043

               

              LIBOR Plus 10.00% (Floor 1.00%)

               

              (9)

               

               

              (65)

               

              3,291

               

              27,801

               

              53

               

              65

               

              27,789

               

              Preferred Member Units

               

              (9)

               

               

               

              1,092

               

              7,163

               

              1,092

               

               

              8,255

               

              Preferred Member Units

               

              (9)

               

               

              (1,141)

               

              250

               

              7,382

               

               

              1,141

               

              6,241

              Clad-Rex Steel, LLC

               LIBOR Plus 9.50% (Floor 1.00) (5)  112 1,542 14,337 143 1,200 13,280 

               

              LIBOR Plus 9.50% (Floor 1.00%)

               

              (5)

               

               

              49

               

              1,195

               

              10,781

               

              72

               

               

              10,853

               Member Units (5)  2,220 520 7,280 2,220  9,500 

               10% Secured Debt (5)  12 119 1,190 12 19 1,183 

               Member Units (5)  70  210 70  280 

               

              Member Units

               

              (5)

               

               

              (1,020)

               

              587

               

              9,630

               

               

              1,020

               

              8,610

               

              10% Secured Debt

               

              (5)

               

               

              (11)

               

              113

               

              1,137

               

               

              37

               

              1,100

               

              Member Units

               

              (5)

               

               

              70

               

               

              460

               

              70

               

               

              530

              CMS Minerals Investments

               Preferred Member Units (8) 1,405 (1,578) 96 3,682  3,682  

               

              Member Units

               

              (9)

               

               

              (69)

               

               

              1,900

               

               

              276

               

              1,624

               Member Units (8)  (600) 212 3,381  989 2,392 

              Cody Pools, Inc.

               

              LIBOR Plus 10.50% (Floor 1.75%)

               

              (8)

              125

              1,798

              16,000

              1,784

              14,216

               

              Preferred Member Units

               

              (8)

              6,623

              87

              14,940

              14,940

              Gamber-Johnson

               LIBOR Plus 11.00% (Floor 1.00%) (5)  187 2,988 23,846 235 681 23,400 

              Holdings, LLC

               Member Units (5)  4,450 592 18,920 4,450  23,370 

              CompareNetworks Topco, LLC

               

              LIBOR Plus 11.00% (Floor 1.00%)

               

              (9)

               

               

              43

               

              1,123

               

              8,288

               

              2,075

               

              2,410

               

              7,953

               

              Preferred Member Units

               

              (9)

               

               

              3,770

               

              632

               

              3,010

               

              3,770

               

               

              6,780

              Direct Marketing Solutions, Inc.

               

              LIBOR Plus 11.00% (Floor 1.00%)

               

              (9)

               

               

              (110)

               

              1,934

               

              15,707

               

              37

               

              737

               

              15,007

               

              Preferred Stock

               

              (9)

               

               

              (820)

               

               

              20,200

               

               

              820

               

              19,380

              Gamber-Johnson Holdings, LLC

               

              LIBOR Plus 7.00% (Floor 2.00%)

               

              (5)

               

               

              (41)

               

              1,776

               

              19,022

               

              1,640

               

              824

               

              19,838

               

              Member Units

               

              (5)

               

               

              (920)

               

              3,537

               

              53,410

               

               

              920

               

              52,490

              GRT Rubber Technologies LLC

               LIBOR Plus 9.00% (Floor 1.00%) (8)  (34) 1,314 13,274 34 1,705 11,603 

               

              LIBOR Plus 7.00%

               

              (8)

               

               

               

              1,294

               

              15,016

               

              1,759

               

               

              16,775

               Member Units (8)  1,660 746 20,310 1,660  21,970 

               

              Member Units

               

              (8)

               

               

              (2,550)

               

              3,542

               

              47,450

               

               

              2,550

               

              44,900

              Guerdon Modular Holdings, Inc.

               

              16.00% Secured Debt

               

              (9)

               

              (12,776)

               

              12,588

               

               

               

              12,776

               

              12,776

               

               

              LIBOR Plus 8.50% (Floor 1.00%)

               

              (9)

               

              (993)

               

              1,010

               

               

               

              993

               

              993

               

               

              Preferred Stock

               

              (9)

               

              (1,140)

               

              1,140

               

               

               

              1,140

               

              1,140

               

               

              Common Stock

               

              (9)

               

              (2,849)

               

              2,983

               

               

               

              2,849

               

              2,849

               

               

              Warrants

               

              (9)

               

               

               

               

               

               

               

              Harborside Holdings, LLC

               Member Units (8)  3,194   9,400  9,400 

               

              Member Units

               

              (8)

               

              (2,406)

               

              (3,054)

               

               

              9,560

               

              100

               

              9,660

               

              Harris Preston Fund Investments

               LP Interests (2717 MH, L.P.) (8)     536  536 

              Hydratec, Inc.

               Common Stock (9)  (640) 1,631 15,640  640 15,000 

              IDX Broker, LLC

               11.5% Secured Debt (9)  88 1,316 10,950 5,500 1,200 15,250 

               

              11.00% Secured Debt

               

              (9)

               

               

              (42)

               

              711

               

              13,400

               

              42

               

              13,442

               

               Preferred Member Units (9)  4,274 136 7,040 4,620  11,660 

               

              Preferred Member Units

               

              (9)

               

              9,337

               

              (9,088)

               

              1,193

               

              15,040

               

               

              15,040

               

              Jensen Jewelers of Idaho, LLC

               Prime Plus 6.75% (Floor 2.00%) (9)  (20) 451 4,055 520 620 3,955 

               

              Prime Plus 6.75% (Floor 2.00%)

               

              (9)

               

               

              (14)

               

              423

               

              4,000

               

              14

               

              614

               

              3,400

               Member Units (9)  640 207 4,460 640  5,100 

               

              Member Units

               

              (9)

               

               

              (650)

               

              683

               

              8,270

               

               

              650

               

              7,620

              Lamb Ventures, LLC

               11% Secured Debt (8)  52 994 7,657 2,850 565 9,942 

               Preferred Equity (8)    400   400 

               Member Units (8)  800 40 5,990 800  6,790 

               9.5% Secured Debt (8)  4 65 1,170 432 1,170 432 

               Member Units (8)  (820) 845 1,340  820 520 

              Kickhaefer Manufacturing Company, LLC

               

              11.50% Secured Debt

               

              (5)

               

               

               

              2,947

               

              24,982

               

              1,433

               

              4,146

               

              22,269

               

              Member Units

               

              (5)

               

               

               

               

              12,240

               

               

               

              12,240

              Lighting Unlimited, LLC

               8% Secured Debt (8)   29 1,514  1,514  

               Preferred Equity (8) (434) 24  410 24 434  

               Warrants (8) (54) 54   54 54  

               Member Units (8) (100) 100   100 100  

               

              9.00% Secured Debt

               

              (5)

               

               

               

              357

               

              3,939

               

               

              30

               

              3,909

               

              Member Units

               

              (5)

               

               

               

              84

               

              1,160

               

               

               

              1,160

              Market Force Information, LLC

               

              12.00% PIK Secured Debt

               

              (9)

               

               

              (11,762)

               

              242

               

              22,621

               

              2,794

               

              11,853

               

              13,562

               

              LIBOR Plus 11.00% (Floor 1.00%)

               

              (9)

               

               

               

              116

               

              2,695

               

              1,791

               

              2,886

               

              1,600

               

              Member Units

               

              (9)

               

               

              (5,280)

               

               

              5,280

               

               

              5,280

               

              MH Corbin Holding LLC

               

              13.00% Secured Debt

               

              (5)

               

               

              (322)

               

              1,181

               

              8,890

               

              32

               

              642

               

              8,280

               

              Preferred Member Units

               

              (5)

               

               

              (20)

               

               

              20

               

               

              20

               

               

              Preferred Member Units

               

              (5)

               

               

              (2,400)

               

               

              4,770

               

               

              2,400

               

              2,370

              Mid-Columbia Lumber Products, LLC

               10% Secured Debt (9)   176 1,750 593 953 1,390 

               

              10.00% Secured Debt

               

              (9)

               

               

              148

               

              44

               

              1,602

               

              148

               

              1,750

               

               12% Secured Debt (9)   477 3,900  37 3,863 

               Member Units (9)  (1,500) 6 2,480 595 1,500 1,575 

               9.5% Secured Debt (9)   78 836  45 791 

               Member Units (9)  150 72 600 690  1,290 

               

              12.00% Secured Debt

               

              (9)

               

               

              256

               

              119

               

              3,644

               

              256

               

              3,900

               

               

              Member Units

               

              (9)

               

              (4,240)

               

              3,239

               

              1

               

               

              101

               

              101

               

               

              9.50% Secured Debt

               

              (9)

               

               

               

              30

               

              701

               

              19

               

              720

               

               

              Member Units

               

              (9)

               

               

              (850)

               

              20

               

              1,640

               

              709

               

              2,349

               

              MSC Adviser I, LLC

               Member Units (8)  11,151 3,032 30,617 11,151  41,768 

               

              Member Units

               

              (8)

               

               

              12,740

               

              2,491

               

              74,520

               

              42,240

               

               

              116,760

              Mystic Logistics Holdings, LLC

               

              12.00% Secured Debt

               

              (6)

               

               

               

              814

               

              6,253

               

              990

               

              520

               

              6,723

               

              Common Stock

               

              (6)

               

               

              580

               

              203

               

              8,410

               

              580

               

               

              8,990

              Mystic Logistics Holdings, LLC

               12% Secured Debt (6)  (124) 1,073 9,176 52 1,532 7,696 

               Common Stock (6)  1,040  5,780 1,040  6,820 

              NRP Jones, LLC

               12% Secured Debt (5)   4,117 13,915 7,821 15,360 6,376 

               Warrants (5)  687  130 687 817  

               Member Units (5)  2,023 18 410 2,840  3,250 

              OMi Holdings, Inc.

               

              Common Stock

               

              (8)

               

               

              3,430

               

              2,343

               

              16,950

               

              3,430

               

               

              20,380

              Pearl Meyer Topco LLC

               

              12.00% Secured Debt

               

              (6)

               

               

               

              3,356

               

               

              37,202

               

               

              37,202

               

              Member Units

               

              (6)

               

               

              2,940

               

              538

               

               

              16,740

               

              800

               

              15,940

              PPL RVs, Inc.

               LIBOR Plus 7.00% (Floor 0.50%) (8)  128 1,473 17,826 174 1,900 16,100 

               

              LIBOR Plus 7.00% (Floor 0.50%)

               

              (8)

               

               

              25

               

              1,204

               

              12,118

               

              188

               

              500

               

              11,806

               Common Stock (8)  660 80 11,780 660  12,440 

               

              Common Stock

               

              (8)

               

               

              1,570

               

              690

               

              9,930

               

              1,570

               

               

              11,500

              Principle Environmental, LLC

               13% Secured Debt (8)  131 998 7,438 39  7,477 

              (d/b.a TruHorizon

               Preferred Member Units (8) (63) 6,183  5,370 6,183 63 11,490 

              Environmental Solutions)

               Warrants (8)  380  270 380  650 

              Quality Lease Service, LLC

               Zero Coupon Secured Debt (7)  (391) 273 7,068 273 391 6,950 

               Member Units (7)    3,188 1,750  4,938 

              The MPI Group, LLC

               9% Secured Debt (7)  (513) 268 2,922 1 513 2,410 

               Series A Preferred Units (7)        

               Warrants (7)        

               Member Units (7)  90 92 2,300 89  2,389 

              Uvalco Supply, LLC

               9% Secured Debt (8)   54 872  524 348 

               Member Units (8) 69 (496) 235 4,640  760 3,880 

              Vision Interests, Inc.

               13% Secured Debt (9)   382 2,814  17 2,797 

               Series A Preferred Stock (9)    3,000   3,000 

               Common Stock (9)        

              Ziegler's NYPD, LLC

               6.5% Secured Debt (8)   68 994 2  996 

               12% Secured Debt (8)   37 300   300 

               14% Secured Debt (8)   390 2,750   2,750 

               Warrants (8)  (240)  240  240  

               Preferred Member Units (8)  (880)  4,100  880 3,220 

                

              Principle Environmental, LLC

               

              13.00% Secured Debt

               

              (8)

               

               

              44

               

              877

               

              6,397

               

               

               

              6,397


              180


              Table of Contents

              Company
               
              Investment(1)(10)(11)
               Geography Amount of
              Realized
              Gain/(Loss)
               Amount of
              Unrealized
              Gain/(Loss)
               Amount of
              Interest,
              Fees or
              Dividends
              Credited to
              Income(2)
               December 31,
              2016
              Fair Value
               Gross
              Additions(3)
               Gross Reductions(4) December 31,
              2017
              Fair Value
               

              Other controlled investments

                                

                

              Access Media Holdings, LLC

               5% Current/5% PIK Secured Debt (5)  (3,714) 2,379 19,700 1,164 3,714 17,150 

               Preferred Member Units (5)  (1,908)  240 1,668 1,908  

               Member Units (5)        

              (d/b/a TruHorizon
              Environmental Solutions)

               

              Preferred Member Units

               

              (8)

               

               

              (2,890)

               

               

              13,390

               

               

              2,890

               

              10,500

              Ameritech College Operations, LLC

               13% Secured Debt (9)   96 1,003  1,003  

               13% Secured Debt (9)   285 3,025  3,025  

               Preferred Member Units (9) (3,321)  198 2,291 3,900 6,191  

               

              Warrants

               

              (8)

               

               

              (220)

               

               

              1,090

               

               

              220

               

              870

              ASC Interests, LLC

               11% Secured Debt (8)  (16) 232 2,100 11 316 1,795 

               Member Units (8)  (1,150) (12) 2,680  1,150 1,530 

              Quality Lease Service, LLC

               

              Member Units

               

              (7)

               

               

              (4,880)

               

               

              9,289

               

              301

               

              5,130

               

              4,460

              Trantech Radiator Topco, LLC

               

              12.00% Secured Debt

               

              (7)

               

               

               

              1,105

               

              9,102

               

              22

               

              480

               

              8,644

               

              Common Stock

               

              (7)

               

               

              1,375

               

              116

               

              4,655

               

              1,375

               

               

              6,030

              ATS Workholding, LLC

               5% Secured Debt (9)   36  3,249  3,249 

               Preferred Member Units (9)     3,726  3,726 

              Vision Interests, Inc.

               

              13.00% Secured Debt

               

              (9)

               

               

               

              268

               

              2,028

               

               

               

              2,028

               

              Series A Preferred Stock

               

              (9)

               

               

              (929)

               

               

              4,089

               

               

              929

               

              3,160

              Bond-Coat, Inc.

               12% Secured Debt (8)  (40) 1,450 11,596 40 40 11,596 

               Common Stock (8)  2,710  6,660 2,710  9,370 

               

              Common Stock

               

              (9)

               

              (3,586)

               

              3,296

               

               

              409

               

              3,296

               

              3,705

               

              CBT Nuggets, LLC

               Member Units (9)  34,080 9,439 55,480 34,080  89,560 

              Charps, LLC

               12% Secured Debt (5)   2,371  19,025 800 18,225 

               Preferred Member Units (5)  250   650  650 

              Copper Trail Energy Fund I, LP

               LP Interests (9)     2,500  2,500 

              Datacom, LLC

               8% Secured Debt (8)   101 900 945 270 1,575 

               5.25% Current / 5.25% PIK Secured Debt (8)  (599) 1,296 11,049 660 599 11,110 

               Class A Preferred Member Units (8)  (638)  1,368  638 730 

               Class B Preferred Member Units (8)  (1,529)  1,529  1,529  

              Garreco, LLC

               LIBOR Plus 10.00% (Floor 1.00%) (8)   702 5,219 991 767 5,443 

               Member Units (8)  790  1,150 790  1,940 

              Gulf Manufacturing, LLC

               9% PIK Secured Debt (8)   51 777  777  

               Member Units (8)  1,290 437 8,770 1,290  10,060 

              Gulf Publishing Holdings, LLC

               LIBOR Plus 9.50% (Floor 1.00%) (8)   5  80  80 

               12.5% Secured Debt (8)   1,557 9,911 2,792  12,703 

               Member Units (8)  1,159 40 3,124 1,716  4,840 

              Harrison Hydra-Gen, Ltd.

               Common Stock (8)  460  3,120 460  3,580 

              Hawthorne Customs and

               Member Units (8) (159) 309  280 309 589  

              Dispatch Services, LLC

               Member Units (8) 632 (825) 127 2,040  2,040  

              HW Temps LLC

               LIBOR Plus 11.00% (Floor 1.00%) (6)   1,430 10,500 18 600 9,918 

               Preferred Member Units (6)   140 3,940   3,940 

              Indianapolis Aviation Partners, LLC

               15% Secured Debt (8)   292 3,100  3,100  

               Warrants (8) 2,384 (1,520)  2,649  2,649  

              KBK Industries, LLC

               10% Secured Debt (5)  3 100 1,250 100 975 375 

               12.5% Secured Debt (5)  33 788 5,889 11  5,900 

               Member Units (5)  1,197 183 2,780 1,640  4,420 

              Marine Shelters Holdings, LLC

               12% PIK Secured Debt (8)  (2,551)  9,387  9,387  

               Preferred Member Units (8) (100)    100 100  

              Market Force Information, LLC

               LIBOR Plus 11.00% (Floor 1.00%) (9)   1,541  23,815 672 23,143 

               Member Units (9)     14,700  14,700 

              MH Corbin Holding LLC

               13% Secured Debt (5)   2,030 13,197 29 700 12,526 

               Preferred Member Units (5)   140 6,000   6,000 

              NAPCO Precast, LLC

               LIBOR Plus 8.50% (8)  36 917  11,475  11,475 

               Prime Plus 2.00% (Floor 7.00%) (8)  (20) 122 2,713 20 2,733  

               18% Secured Debt (8)  (30) 327 3,952 30 3,982  

               Member Units (8)  750 393 10,920 750  11,670 

              NRI Clinical Research, LLC

               LIBOR Plus 6.50% (Floor 1.50%) (9)   36 200 200  400 

               14% Secured Debt (9)  (33) 650 4,261 33 429 3,865 

               Warrants (9)  (180)  680  180 500 

               Member Units (9)  40  2,462 360 322 2,500 

              NuStep, LLC

               12% Secured Debt (5)   2,646  20,420  20,420 

               Preferred Member Units (5)     10,200  10,200 

              OMi Holdings, Inc.

               Common Stock (8)  1,030 1,081 13,080 1,030  14,110 

              Pegasus Research Group, LLC

               Member Units (8)  1,690 157 8,620 1,690  10,310 

              River Aggregates, LLC

               Zero Coupon Secured Debt (8)   80 627 80  707 

               Member Units (8)  10  4,600 10  4,610 

               Member Units (8)  50  2,510 49  2,559 

              SoftTouch Medical Holdings LLC

               LIBOR Plus 9.00% (Floor 1.00%) (7)  (15) 748 7,140 15 15 7,140 

               Member Units (7)  920 969 9,170 919  10,089 

              Other

                                

              Amounts related to investments transferred to or from other 1940 Act classification during the period

                    (219) (9,919)    

              Total Control investments

                  $259 $63,627 $62,762 $594,282 $239,770 $93,265 $750,706 

              Ziegler’s NYPD, LLC

               

              6.50% Secured Debt

               

              (8)

               

               

              (21)

               

              66

               

              1,000

               

               

              21

               

              979

               

              12.00% Secured Debt

               

              (8)

               

               

               

              76

               

              625

               

               

               

              625

               

              14.00% Secured Debt

               

              (8)

               

               

               

              391

               

              2,750

               

               

               

              2,750

               

              Warrants

               

              (8)

               

               

               

               

               

               

               

               

              Preferred Member Units

               

              (8)

               

               

              511

               

               

              1,269

               

              511

               

               

              1,780

              Other controlled investments

               

               

               

               

               

               

               

               

               

              Access Media Holdings, LLC

               

              10.00% PIK Secured Debt

               

              (5)

               

              (19,698)

               

              17,442

               

              50

               

              6,387

               

              17,442

               

              23,829

               

               

              Preferred Member Units

               

              (5)

               

              (9,376)

               

              9,660

               

               

              (284)

               

              9,660

               

              9,376

               

               

              Member Units

               

              (5)

               

              (1)

               

               

               

               

              1

               

              1

               

              Analytical Systems Keco, LLC

               

              LIBOR Plus 10.00% (Floor 2.00%)

               

              (8)

               

               

               

              724

               

              5,210

               

              74

               

              410

               

              4,874

               

              Preferred Member Units

               

              (8)

               

               

               

               

              3,200

               

               

               

              3,200

               

              Warrants

               

              (8)

               

               

              (306)

               

               

              316

               

               

              306

               

              10

              ASC Interests, LLC

               

              13.00% Secured Debt

               

              (8)

               

               

               

              237

               

              1,639

               

              100

               

              24

               

              1,715

               

              Member Units

               

              (8)

               

               

              (170)

               

               

              1,290

               

               

              170

               

              1,120

              ATS Workholding, LLC

               

              5.00% Secured Debt

               

              (9)

               

               

              (1,332)

               

              282

               

              4,521

               

              179

               

              1,353

               

              3,347

               

              Preferred Member Units

               

              (9)

               

               

              (939)

               

               

              939

               

               

              939

               

              Bolder Panther Group, LLC

               

              LIBOR Plus 9.00% (Floor 1.50%)

               

              (9)

               

               

               

              579

               

               

              27,225

               

               

              27,225

               

              Preferred Member Units

               

              (9)

               

               

               

               

               

              10,194

               

               

              10,194

               

              Preferred Member Units

               

              (9)

               

               

               

               

               

              14,000

               

               

              14,000

              Bond-Coat, Inc.

               

              15.00% Secured Debt

               

              (8)

               

              (3)

               

               

              1,399

               

              11,473

               

              123

               

              11,596

               

               

              Common Stock

               

              (8)

               

               

              (6,260)

               

               

              8,300

               

               

              6,260

               

              2,040

              Brewer Crane Holdings, LLC

               

              LIBOR Plus 10.00% (Floor 1.00%)

               

              (9)

               

               

               

              1,012

               

              8,989

               

              20

               

              496

               

              8,513

               

              Preferred Member Units

               

              (9)

               

               

              1,570

               

              120

               

              4,280

               

              1,570

               

               

              5,850

              Bridge Capital Solutions Corporation

               

              13.00% Secured Debt

               

              (6)

               

               

               

              1,771

               

              7,797

               

              606

               

               

              8,403

               

              Warrants

               

              (6)

               

               

              (280)

               

               

              3,500

               

               

              280

               

              3,220

               

              13.00% Secured Debt

               

              (6)

               

               

               

              135

               

              996

               

              2

               

               

              998

               

              Preferred Member Units

               

              (6)

               

               

               

              100

               

              1,000

               

               

               

              1,000

              CBT Nuggets, LLC

               

              Member Units

               

              (9)

               

               

              (4,770)

               

              954

               

              50,850

               

               

              4,770

               

              46,080

              Centre Technologies Holdings, LLC

               

              LIBOR Plus 10.00% (Floor 2.00%)

               

              (8)

               

               

               

              1,480

               

              12,136

               

              25

               

              612

               

              11,549

               

              Preferred Member Units

               

              (8)

               

               

              320

               

              120

               

              5,840

               

              320

               

               

              6,160

              Chamberlin Holding LLC

               

              LIBOR Plus 8.00% (Floor 1.00%)

               

              (8)

               

               

              (47)

               

              1,942

               

              17,773

               

              47

               

              2,608

               

              15,212

               

              Member Units

               

              (8)

               

               

              4,030

               

              4,134

               

              24,040

               

              4,030

               

               

              28,070

               

              Member Units

               

              (8)

               

               

              (455)

               

              68

               

              1,450

               

              275

               

              455

               

              1,270

              Charps, LLC

               

              15.00% Secured Debt

               

              (5)

               

               

               

              258

               

              2,000

               

               

              1,331

               

              669

               

              8.67% Current / 1.33% PIK

               

              (5)

               

               

              1,716

               

              1,499

               

               

              8,903

               

              428

               

              8,475

               

              Preferred Member Units

               

              (5)

               

               

              2,718

               

              559

               

              6,920

               

              3,600

               

               

              10,520

              Copper Trail Fund Investments

               

              LP Interests (CTMH, LP)

               

              (9)

               

               

               

               

              872

               

               

              125

               

              747

              Datacom, LLC

               

              8.00% Secured Debt

               

              (8)

               

               

               

               

              1,615

               

               

               

              1,615

               

              10.50% PIK Secured Debt

               

              (8)

               

               

              389

               

               

              10,142

               

              389

               

               

              10,531

               

              Class A Preferred Member Units

               

              (8)

               

               

               

               

               

               

               

               

              Class B Preferred Member Units

               

              (8)

               

               

               

               

               

               

               

              Digital Products Holdings LLC

               

              LIBOR Plus 10.00% (Floor 1.00%)

               

              (5)

               

               

              1,026

               

              2,177

               

              18,452

               

              1,072

               

              1,447

               

              18,077

               

              Preferred Member Units

               

              (5)

               

               

              4,661

               

              200

               

              5,174

               

              4,661

               

               

              9,835

              Garreco, LLC

               

              LIBOR Plus 8.00% (Floor 1.00%, Ceiling 1.50%)

               

              (8)

               

               

               

              428

               

              4,515

               

              4

               

               

              4,519

               

              Member Units

               

              (8)

               

               

              (1,150)

               

               

              2,560

               

               

              1,150

               

              1,410

              Gulf Manufacturing, LLC

               

              Member Units

               

              (8)

               

               

              (2,920)

               

              135

               

              7,430

               

               

              2,920

               

              4,510

              Gulf Publishing Holdings, LLC

               

              LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 5.25% / 5.25% PIK

               

              (8)

               

               

               

              27

               

              280

               

              17

               

              47

               

              250

               

              6.25% Current / 6.25% PIK

               

              (8)

               

               

              (1,091)

               

              1,650

               

              12,493

               

              1,055

               

              1,504

               

              12,044

               

              Member Units

               

              (8)

               

               

              (2,420)

               

               

              2,420

               

               

              2,420

               

              Harris Preston Fund Investments

               

              LP Interests (2717 MH, L.P.)

               

              (8)

               

              693

               

              (319)

               

               

              3,157

               

              52

               

              507

               

              2,702

               

              LP Interests (2717 HPP-MH, L.P.)

               

              (8)

               

               

               

               

               

              250

               

               

              250

              Harrison Hydra-Gen, Ltd.

               

              Common Stock

               

              (8)

               

               

              (2,520)

               

              104

               

              7,970

               

               

              2,520

               

              5,450

              J&J Services, Inc.

               

              11.50% Secured Debt

               

              (7)

               

               

              103

               

              1,943

               

              17,430

               

              170

               

              4,800

               

              12,800

               

              Preferred Stock

               

              (7)

               

               

              5,595

               

               

              7,160

               

              5,595

               

              75

               

              12,680

              KBK Industries, LLC

               

              Member Units

               

              (5)

               

               

              (2,270)

               

              454

               

              15,470

               

               

              2,270

               

              13,200

              NAPCO Precast, LLC

               

              Member Units

               

              (8)

               

               

              1,340

               

              642

               

              14,760

               

              1,340

               

               

              16,100

              Nebraska Vet AcquireCo, LLC (NVS)

               

              12.00% Secured Debt

               

              (5)

               

               

               

              223

               

               

              10,395

               

               

              10,395

               

              Preferred Member Units

               

              (5)

               

               

               

               

               

              6,500

               

               

              6,500

              NexRev LLC

               

              11.00% PIK Secured Debt

               

              (8)

               

               

              (289)

               

              1,973

               

              17,469

               

              201

               

              944

               

              16,726

               

              Preferred Member Units

               

              (8)

               

               

              (4,840)

               

              (35)

               

              6,310

               

               

              4,840

               

              1,470

              NRI Clinical Research, LLC

               

              9.00% Secured Debt

               

              (9)

               

               

              (47)

               

              752

               

              5,981

               

              1,566

               

              1,927

               

              5,620

               

              Warrants

               

              (9)

               

               

              260

               

               

              1,230

               

              260

               

               

              1,490

               

              Member Units

               

              (9)

               

               

              612

               

              548

               

              4,988

               

              1,160

               

              548

               

              5,600


              181


              Table of Contents

              Company
               
              Investment(1)(10)(11)
               Geography Amount of
              Realized
              Gain/(Loss)
               Amount of
              Unrealized
              Gain/(Loss)
               Amount of
              Interest,
              Fee or
              Dividends
              Credited to
              Income(2)
               December 31,
              2016
              Fair Value
               Gross
              Additions(3)
               Gross
              Reductions(4)
               December 31,
              2017
              Fair Value
               

              NRP Jones, LLC

               

              12.00% Secured Debt

               

              (5)

               

               

               

              764

               

              6,376

               

               

              4,296

               

              2,080

               

              Member Units

               

              (5)

               

              1,279

               

              (1,889)

               

              384

               

              4,710

               

               

              1,889

               

              2,821

              NuStep, LLC

               

              12.00% Secured Debt

               

              (5)

               

               

               

              2,444

               

              19,703

               

              196

               

              2,706

               

              17,193

               

              Preferred Member Units

               

              (5)

               

               

              580

               

               

              10,200

               

              580

               

               

              10,780

              Pegasus Research Group, LLC

               

              Member Units

               

              (8)

               

               

              660

               

              491

               

              8,170

               

              660

               

               

              8,830

              Project BarFly, LLC

               

              Member Units

               

              (5)

               

               

               

               

               

              1,584

               

               

              1,584

               

              7.00% Secured Debt

               

              (5)

               

              (8,591)

               

              8,961

               

               

              7,736

               

              2,438

               

              10,174

               

               

              7.00% Secured Debt

               

              (5)

               

              (110)

               

               

               

               

              110

               

              110

               

               

              Warrants

               

              (5)

               

              (607)

               

              607

               

               

               

              607

               

              607

               

               

              7.00% Secured Debt

               

              (5)

               

               

               

              3

               

               

              343

               

               

              343

               

              Warrants

               

              (5)

               

              (473)

               

              473

               

               

               

              473

               

              473

               

              River Aggregates, LLC

               

              Zero Coupon Secured Debt

               

              (8)

               

               

              28

               

               

              722

               

              28

               

              750

               

               

              Member Units

               

              (8)

               

              4,015

               

              (3,840)

               

              187

               

              4,990

               

               

              4,990

               

               

              Member Units

               

              (8)

               

               

              71

               

               

              3,169

               

              71

               

               

              3,240

              Tedder Industries, LLC

               

              12.00% Secured Debt

               

              (9)

               

               

               

              2,097

               

              16,912

               

              29

               

              640

               

              16,301

               

              Preferred Member Units

               

              (9)

               

               

               

               

              8,136

               

               

               

              8,136

              UnionRock Energy Fund II, LP

               

              LP Interests

               

              (9)

               

               

               

               

               

              2,894

               

               

              2,894

              Other

               

               

               

               

               

               

               

               

               

              Amounts related to investments transferred to or from other
              1940 Act classification during the period

               

               

               

              (8,069)

               

              4,251

               

              9

               

              (3,172)

               

               

               

              Total Control investments

               

               

               

              (59,594)

               

              37,924

               

              81,155

               

              1,032,721

               

              336,485

               

              258,653

               

              1,113,725

              Affiliate Investments

                                

               

               

               

               

               

               

               

               

               

                

              AAC Holdings, Inc.

               

              18.00% (10.00% Cash, 8.00% PIK) Secured Debt

               

              (7)

               

              (11,210)

               

              4,568

               

              119

               

              11,530

               

              21,359

               

              23,702

               

              9,187

               

              Common Stock

               

              (7)

               

               

               

               

               

              3,148

               

               

              3,148

               

              Warrants

               

              (7)

               

               

              2,938

               

               

               

              2,938

               

               

              2,938

              AFG Capital Group, LLC

               Warrants (8) $ $840 $ $670 $190 $ $860 

               

              10.00% Secured Debt

               

              (8)

               

               

               

              66

               

              838

               

               

              347

               

              491

               Member Units (8)  190 34 2,750 840  3,590 

               

              Preferred Member Units

               

              (8)

               

               

              630

               

               

              5,180

               

              630

               

               

              5,810

              Barfly Ventures, LLC

               12% Secured Debt (5)  176 1,005 5,827 2,888  8,715 

               Options (5)  430  490 430  920 

               Warrants (5)  240  280 240  520 

              American Trailer Rental Group LLC

               

              LIBOR Plus 7.25% (Floor 1.00%)

               

              (5)

               

               

              (182)

               

              1,119

               

              27,087

               

              182

               

              27,269

               

               

              Member Units

               

              (5)

               

               

              3,729

               

               

              8,540

               

              7,470

               

               

              16,010

              BBB Tank Services, LLC

               LIBOR Plus 8.00% (Floor 1.00%) (8)   84 797 861 880 778 

               

              LIBOR Plus 11.00% (Floor 1.00%)

               

              (8)

               

               

              (51)

               

              668

               

              4,698

               

              75

               

              51

               

              4,722

               15% Secured Debt (8)   623 3,991  115 3,876 

               Member Units (8)  (300)  800  300 500 

               

              Preferred Member Units

               

              (8)

               

               

               

              20

               

              131

               

              20

               

               

              151

               

              Member Units

               

              (8)

               

               

              (10)

               

               

              290

               

               

              10

               

              280

              Boccella Precast Products LLC

               LIBOR Plus 10.0% (Floor 1.00%) (6)  170 1,203  16,400  16,400 

               

              LIBOR Plus 10.00% (Floor 1.00%)

               

              (6)

               

               

              (138)

               

              982

               

              13,244

               

              138

               

              13,382

               

               Member Units (6)  1,280 37  3,440  3,440 

              Boss Industries, LLC

               Preferred Member Units (5)  1,476 193 2,800 1,667 537 3,930 

              Bridge Capital Solutions Corporation

               13% Secured Debt (6)   1,262 5,610 274  5,884 

               Warrants (6)  151  3,370 150  3,520 

               13% Secured Debt (6)  (2) 133 1,000 2 2 1,000 

               Preferred Member Units (6)   100 1,000   1,000 

               

              Member Units

               

              (6)

               

               

              (230)

               

              619

               

              6,270

               

               

              230

               

              6,040

              Buca C, LLC

               LIBOR Plus 7.25% (Floor 1.00%) (7)  (167) 1,891 22,671 56 2,534 20,193 

               

              LIBOR Plus 9.25% (Floor 1.00%)

               

              (7)

               

               

              (4,562)

               

              2,032

               

              18,794

               

              24

               

              4,562

               

              14,256

               Preferred Member Units (7)  (728) 240 4,660 240 728 4,172 

               

              Preferred Member Units

               

              (7)

               

               

              (4,770)

               

              69

               

              4,701

               

              69

               

              4,770

               

              CAI Software LLC

               12% Secured Debt (6)   456 3,683 800 400 4,083 

               

              12.50% Secured Debt

               

              (6)

               

               

              257

               

              3,001

               

              9,160

               

              40,830

               

              2,516

               

              47,474

               Member Units (6)  750 87 2,480 750  3,230 

               

              Member Units

               

              (6)

               

               

              636

               

              10

               

              5,210

               

              1,980

               

               

              7,190

              Chandler Signs Holdings, LLC

               12% Secured Debt (8)  (7) 555 4,500 7 7 4,500 

               

              Class A Units

               

              (8)

               

               

              (1,280)

               

              (91)

               

              2,740

               

               

              1,280

               

              1,460

               Class A Units (8)  (590) 13 3,240  590 2,650 

              Condit Exhibits, LLC

               Member Units (9)  110 41 1,840 110  1,950 

              Charlotte Russe, Inc

               

              Common Stock

               

              (9)

               

               

               

               

               

               

               

              Classic H&G Holdings, LLC

               

              12.00% Secured Debt

               

              (6)

               

               

              217

               

              3,112

               

               

              26,000

               

              1,200

               

              24,800

               

              Preferred Member Units

               

              (6)

               

               

              3,750

               

              469

               

               

              9,510

               

               

              9,510

              Congruent Credit Opportunities Funds

               LP Interests (Fund II) (8)  (3) 2 1,518  3 1,515 

               

              LP Interests (Fund II)

               

              (8)

               

               

               

               

              855

               

               

              761

               

              94

               LP Interests (Fund III) (8)  336 1,555 16,181 2,451  18,632 

               

              LP Interests (Fund III)

               

              (8)

               

               

              (515)

               

              823

               

              13,915

               

               

              2,375

               

              11,540

              Daseke, Inc.

               12% Current / 2.5% PIK Secured Debt (8)  (167) 676 21,799 255 22,054  

               Common Stock (8) 22,859 (18,849)  24,063  24,063  

              Copper Trail Fund Investments

               

              LP Interests (Copper Trail Energy Fund I, LP)

               

              (9)

               

               

              (744)

               

              698

               

              2,362

               

               

              580

               

              1,782

              Dos Rios Partners

               LP Interests (Dos Rios Partners, LP) (8)  2,240  4,925 2,240  7,165 

               

              LP Interests (Dos Rios Partners, LP)

               

              (8)

               

               

              (2,375)

               

               

              7,033

               

              759

               

              2,375

               

              5,417

               LP Interests (Dos Rios Partners—A, LP) (8)  445  1,444 445  1,889 

              Dos Rios Stone Products LLC

               Class A Units (8)  (280) 23 2,070  280 1,790 

               

              LP Interests (Dos Rios Partners - A, LP)

               

              (8)

               

               

              (754)

               

               

              2,233

               

              241

               

              754

               

              1,720

              East Teak Fine Hardwoods, Inc.

               Common Stock (7)  (230) 66 860  230 630 

               

              Common Stock

               

              (7)

               

               

              (100)

               

               

              400

               

               

              100

               

              300

              East West Copolymer & Rubber, LLC

               12% Current/2% PIK Secured Debt (8) (3,626) 961  8,630 961 9,591  

               Warrants (8) (50) 50   50 50  

              EIG Fund Investments

               LP Interests (EIG Global Private Debt fund-A, L.P.) (8) 71 (48) 90 2,804 1,160 2,909 1,055 

               

              LP Interests (EIG Global Private Debt fund-A, L.P.)

               

              (8)

               

              6

               

              (165)

               

              141

               

              720

               

              110

               

              304

               

              526

               LP Interests (EIG Traverse Co-Investment, L.P.) (8)  (100) 1,534 9,905  9,905  

              Freeport Financial Fund Investments

               LP Interests (Freeport Financial SBIC Fund LP) (5)  (6) 408 5,620  6 5,614 

               LP Interests (Freeport First Lien Loan Fund III LP) (5)  (52) 688 4,763 3,795 52 8,506 

              Gault Financial, LLC

               10.5% Current Secured Debt (7)  1,016 1,302 11,079 1,016 563 11,532 

              (RMB Capital, LLC)

               Warrants (7)        

              Glowpoint, Inc.

               12% Secured Debt (6) (6,450) 4,951 685 3,997 5,003 9,000  

               Common Stock (6) (3,974) 1,878  2,080 1,878 3,958  

              Guerdon Modular Holdings, Inc.

               13% Secured Debt (9)   1,450 10,594 38  10,632 

               Preferred Stock (9)  (1,140)  1,140  1,140  

               Common Stock (9)  (80)  80  80  

              Freeport Financial Funds

               

              LP Interests (Freeport Financial SBIC Fund LP)

               

              (5)

               

               

              (514)

               

               

              5,778

               

               

              514

               

              5,264

               

              LP Interests (Freeport First Lien Loan Fund III LP)

               

              (5)

               

               

              (204)

               

              930

               

              9,696

               

              989

               

              364

               

              10,321

              Harris Preston Fund Investments

               LP Interests (HPEP 3, L.P.) (8)     1,343 400 943 

               

              LP Interests (HPEP 3, L.P.)

               

              (8)

               

               

              187

               

               

              2,474

               

              784

               

               

              3,258

              Hawk Ridge Systems, LLC

               

              LIBOR Plus 6.00% (Floor 1.00%)

               

              (9)

               

               

               

              70

               

              600

               

              1,384

               

              1,984

               

               

              11.00% Secured Debt

               

              (9)

               

               

              (31)

               

              1,758

               

              13,400

               

              5,031

               

              31

               

              18,400

              Hawk Ridge Systems, LLC

               11% Secured Debt (9)  125 1,229 9,901 4,899 500 14,300 

               Preferred Member Units (9)  950 320 2,850 950  3,800 

               Preferred Member Units (9)  50 6 150 50  200 

               

              Preferred Member Units

               

              (9)

               

               

              130

               

              378

               

              7,900

               

              130

               

               

              8,030

               

              Preferred Member Units

               

              (9)

               

               

               

               

              420

               

               

               

              420

              Houston Plating and Coatings, LLC

               8% Unsecured Convertible Debt (8)  200 165  3,200  3,200 

               

              8.00% Unsecured Convertible Debt

               

              (8)

               

               

              (1,360)

               

              244

               

              4,260

               

               

              1,360

               

              2,900

               Member Units (8)  1,390 5 4,000 2,140  6,140 

               

              Member Units

               

              (8)

               

               

              (5,250)

               

              261

               

              10,330

               

               

              5,250

               

              5,080

              I-45 SLF LLC

               Member Units (8)  255 2,881 14,586 2,255  16,841 

               

              Member Units

               

              (8)

               

               

              (1,818)

               

              2,346

               

              14,407

               

              3,200

               

              1,818

               

              15,789

              Indianhead Pipeline Services, LLC

               12% Secured Debt (5)   947 5,079 562 5,641  

               Preferred Member Units (5)  (338) 514 2,677 514 3,191  

               Warrants (5) 134 459   459 459  

               Member Units (5) 272 1   1 1  

              L.F. Manufacturing Holdings, LLC

               Member Units (8)  620  1,380 620  2,000 

               

              Preferred Member Units

               

              (8)

               

               

               

              12

               

              81

               

              12

               

               

              93

               

              Member Units

               

              (8)

               

               

               

               

              2,050

               

               

               

              2,050

              Meisler Operating LLC

               LIBOR Plus 8.50% (Floor 1.00%) (5)   1,249  16,633  16,633 

               Member Units (5)  190   3,390  3,390 

              OnAsset Intelligence, Inc.

               

              12.00% PIK Secured Debt

               

              (8)

               

               

               

              827

               

              6,474

               

              827

               

               

              7,301

               

              10.00% PIK Secured Debt

               

              (8)

               

               

               

              6

               

              58

               

              9

               

              3

               

              64

              OnAsset Intelligence, Inc.

               12% PIK Secured Debt (8) (29)  576 4,519 575  5,094 

               10% PIK Secured Debt (8)   3  48  48 

               Preferred Stock (8)        

               Warrants (8)        

               

              Preferred Stock

               

              (8)

               

               

               

               

               

               

               

              OPI International Ltd.

               10% Unsecured Debt (8) (86) (473) 16 473  473  

               Common Stock (8)  (1,600)  1,600  1,600  

               

              Warrants

               

              (8)

               

               

               

               

               

               

               

              PCI Holding Company, Inc.

               

              12.00% Current Secured Debt

               

              (9)

               

               

               

              1,851

               

              11,356

               

               

              11,356

               

               

              Preferred Stock

               

              (9)

               

               

              1,450

               

               

              2,680

               

              1,450

               

               

              4,130


              182


              Table of Contents

               

              Preferred Stock

               

              (9)

               

              2,610

               

              (2,610)

               

               

              4,350

               

               

              4,350

               

              Rocaceia, LLC (Quality Lease and Rental Holdings, LLC)

               

              12.00% Secured Debt

               

              (8)

               

              (413)

               

               

               

               

              413

               

              413

               

               

              Preferred Member Units

               

              (8)

               

               

               

               

               

               

               

              Salado Stone Holdings, LLC

               

              Class A Preferred Units

               

              (8)

               

               

              680

               

               

              570

               

              680

               

               

              1,250

              SI East, LLC

               

              9.50% Current, Secured Debt

               

              (7)

               

               

              (74)

               

              3,285

               

              32,963

               

              73

               

              74

               

              32,962

               

              Preferred Member Units

               

              (7)

               

               

              1,580

               

              1,292

               

              8,200

               

              1,580

               

               

              9,780

              Slick Innovations, LLC

               

              13.00% Current, Secured Debt

               

              (6)

               

               

              115

               

              919

               

              6,197

               

              163

               

              641

               

              5,719

               

              Warrants

               

              (6)

               

               

              70

               

               

              290

               

              70

               

               

              360

               

              Common Stock

               

              (6)

               

               

              250

               

               

              1,080

               

              250

               

               

              1,330

              Superior Rigging & Erecting Co.

               

              12.00% Current, Secured Debt

               

              (7)

               

               

               

              1,110

               

               

              21,298

               

               

              21,298

               

              Preferred Member Units

               

              (7)

               

               

               

               

               

              4,500

               

               

              4,500

              UniTek Global Services, Inc.

               

              LIBOR Plus 6.50% (Floor 1.00%)

               

              (6)

               

               

              (283)

               

              233

               

              2,962

               

              17

               

              553

               

              2,426

               

              Preferred Stock

               

              (6)

               

               

              (2,684)

               

               

              2,684

               

               

              2,684

               

               

              Preferred Stock

               

              (6)

               

               

              (2,119)

               

              212

               

              2,282

               

              212

               

              2,119

               

              375

               

              Preferred Stock

               

              (6)

               

               

              312

               

              255

               

              1,889

               

              945

               

              2

               

              2,832

               

              Preferred Stock

               

              (6)

               

               

              (3,667)

               

               

              3,667

               

               

              3,667

               

               

              Common Stock

               

              (6)

               

               

               

               

               

               

               

              Universal Wellhead Services Holdings, LLC

               

              Preferred Member Units

               

              (8)

               

               

              (800)

               

               

              800

               

               

              800

               

               

              Member Units

               

              (8)

               

               

               

               

               

               

               

              Volusion, LLC

               

              11.50% Secured Debt

               

              (8)

               

               

              (181)

               

              2,438

               

              19,352

               

              71

               

              181

               

              19,242

               

              8.00% Unsecured Convertible Debt

               

              (8)

               

               

               

              33

               

              291

               

               

               

              291

               

              Preferred Member Units

               

              (8)

               

               

              (8,010)

               

               

              14,000

               

               

              8,010

               

              5,990

               

              Warrants

               

              (8)

               

               

              (150)

               

               

              150

               

               

              150

               

              Other

               

               

               

               

               

               

               

               

               

              Amounts related to investments transferred to or from other
              1940 Act classification during the period

               

               

               

              11,210

               

              (4,906)

               

              118

               

              (9,335)

               

               

               

              Total Affiliate investments

               

               

               

              2,203

               

              (29,038)

               

              32,435

               

              330,287

               

              159,571

               

              132,892

               

              366,301


              (1)The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.
              (2)Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts from investments transferred from other 1940 Act classifications during the period.”
              (3)Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.
              (4)Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.
              (5)Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2020 for control investments located in this region was $256,121. This represented 16.9% of net assets as of December 31, 2020. The fair value as of December 31, 2020 for affiliate investments located in this region was $31,595. This represented 2.1% of net assets as of December 31, 2020.
              (6)Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2020 for control investments located in this region was $82,476. This represented 5.4% of net assets as of December 31, 2020. The fair value as of December 31, 2020 for affiliate investments located in this region was $108,056. This represented 7.1% of net assets as of December 31, 2020.
              (7)Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2020 for control investments located in this region was $44,614. This represented 2.9% of net assets as of

              183


              Company
               
              Investment(1)(10)(11)
               Geography Amount of
              Realized
              Gain/(Loss)
               Amount of
              Unrealized
              Gain/(Loss)
               Amount of
              Interest,
              Fee or
              Dividends
              Credited to
              Income(2)
               December 31,
              2016
              Fair Value
               Gross
              Additions(3)
               Gross
              Reductions(4)
               December 31,
              2017
              Fair Value
               

              PCI Holding Company, Inc.

               12% Secured Debt (9)    (103) 1,922  13,000  345  752  12,593 

               Preferred Stock (9)    (5,028) 548  5,370  548  5,028  890 

               Preferred Stock (9)    870      2,610    2,610 

              Rocaceia, LLC (Quality Lease and

               12% Secured Debt (8)        250      250 

              Rental Holdings, LLC)

               Preferred Member Units (8)               

              Tin Roof Acquisition Company

               12% Secured Debt (7)      1,656  13,385  66  729  12,722 

               Class C Preferred Stock (7)      288  2,738  289    3,027 

              UniTek Global Services, Inc.

               LIBOR Plus 8.50% (Floor 1.00%) (6)    (5) 722  5,021  3,519  5  8,535 

               LIBOR Plus 7.50% (Floor 1.00%) (6)      9  824  3  690  137 

               15% PIK Unsecured Debt (6)      129  745  120    865 

               Preferred Stock (6)    (637) 1,547  6,410  1,547  637  7,320 

               Preferred Stock (6)    (8) 339    2,858  8  2,850 

               Common Stock (6)    (520)   3,010    520  2,490 

              Universal Wellhead Services

               Preferred Member Units (8)    109    720  110    830 

              Holdings, LLC

               Member Units (8)    1,300    610  1,300    1,910 

              Valley Healthcare Group, LLC

               LIBOR Plus 12.50% (Floor 0.50%) (8)      1,728  12,844  31  1,190  11,685 

               Preferred Member Units (8)        1,600      1,600 

              Volusion, LLC

               11.5% Secured Debt (8)      2,659  15,298  668  766  15,200 

               Preferred Member Units (8)        14,000      14,000 

               Warrants (8)    (496)   2,576    496  2,080 

              Other

                                        

              Amounts related to investments transferred to or from other 1940 Act classification during the period

                    (1,077) (3,582) 1,615  24,321       

              Total Affiliate investments

                   $8,044 $(11,330)$37,509 $375,948 $100,290 $113,063 $338,854 

              (1)
              The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.

              (2)
              Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in "Amounts from investments transferred from other 1940 Act classifications during the period."

              (3)
              Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.

              (4)
              Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

              (5)
              Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2017 for control investments located in this region was $176,505. This represented 12.8% of net assets as of December 31, 2017. The fair value as of December 31, 2017 for affiliate investments located in this region was $48,228. This represented 3.5% of net assets as of December 31, 2017.

              (6)
              Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2017 for control investments located in this region was $28,374. This represented 2.1% of net assets as of December 31, 2017. The fair value as of December 31, 2017 for affiliate investments located in this region was $60,754. This represented 4.4% of net assets as of December 31, 2017.

              (7)
              Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of December 31, 2017 for control investments located in this region was $33,916. This represented 2.5% of net assets as of December 31, 2017. The fair value as of December 31, 2017 for affiliate investments located in this region was $52,276. This represented 3.8% of net assets as of December 31, 2017.

              (8)
              Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2017 for control investments located in this region was $302,097. This represented 21.9% of net assets as of December 31, 2017. The fair value as of December 31, 2017 for affiliate investments located in this region was $130,621. This represented 9.5% of net assets as of December 31, 2017.

              (9)
              Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of December 31, 2017 for control investments located in this region was $209,814. This represented 15.2% of net assets as of December 31, 2017. The fair value as of December 31, 2017 for affiliate investments located in this region was $46,975. This represented 3.4% of net assets as of December 31, 2017.

              (10)
              All Company's portfolio investments are generally subject to restrictions on resale as "restricted securities," unless otherwise noted.

              (11)
              This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can be located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs.

              Table of Contents

              December 31, 2020. The fair value as of December 31, 2020 for affiliate investments located in this region was $98,369. This represented 6.5% of net assets as of December 31, 2020.
              (8)Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of December 31, 2020 for control investments located in this region was $442,075. This represented 29.2% of net assets as of December 31, 2020. The fair value as of December 31, 2020 for affiliate investments located in this region was $95,519. This represented 6.3% of net assets as of December 31, 2020.
              (9)Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of December 31, 2020 for control investments located in this region was $288,439. This represented 19.0% of net assets as of December 31, 2020. The fair value as of December 31, 2020 for affiliate investments located in this region was $32,762. This represented 2.2% of net assets as of December 31, 2020.
              (10)All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.
              (11)This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can be located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs.

              184


              Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

              Not applicable.

              Item 9A. Controls and Procedures

              (a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this annual report on Form 10-K, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer, conducted an evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e)13a-15 of the Securities Exchange Act of 1934)Act). Based upon thison that evaluation, our Chief Executive Officer, President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer have concluded that our current disclosure controls and procedures are effective to allowin timely decisions regarding required disclosurealerting them of any material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934.Act.

              (b) Management'sManagement’s Report on Internal Control Over Financial Reporting. The management of Main Street Capital Corporation and its subsidiaries (the Company) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of the Company'sCompany’s internal control over financial reporting based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the Company'sCompany’s evaluation under the framework in Internal Control — Integrated Framework, management concluded that the Company'sCompany’s internal control over financial reporting was effective as of December 31, 2018.2021. Grant Thornton LLP, the Company'sCompany’s independent registered public accounting firm, has issued an attestation report on the effectiveness of the Company'sCompany’s internal control over financial reporting as of December 31, 2018,2021, as stated in its report which is included herein.

              (c) Attestation Report of the Registered Public Accounting Firm. Our independent registered public accounting firm, Grant Thornton LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting, which is set forth above under the heading "Reports“Reports of Independent Registered Public Accounting Firm"Firm” in Item 8. “Consolidated Financial Statements and Supplementary Data” of this Annual Report on Form 10-K.

              (d) Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) that occurred during our most recently completedthe fiscal quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

              Item 9B. Other Information

                     None.Director Departure and Reduction in Size of Board


              On February 22, 2022, Mr. Arthur French informed our Board of Directors that after over fourteen years of excellent service to our Board since our initial public offering in 2007, he has decided not to stand for re-election to the Board of Directors at the end of his current term on the date of our 2022 Annual Meeting of Stockholders. Mr. French’s decision not to stand for re-election was not the result of any disagreement with management or the Board of Directors. In connection with Mr. French’s departure, the Board of Directors passed a resolution reducing the number of directors that constitutes the full Board of Directors from nine to eight directors, effective as of the date of our 2022 Annual Meeting of Stockholders.

              Fees and Expenses

              The following table is being provided to update, as of December 31, 2021, certain information in the Company’s effective shelf registration statement on Form N-2 (File No. 333-231146) filed with the SEC on April 30, 2019 as supplemented by the prospectus supplements relating to our ATM Program and to the direct stock purchase feature of the Plan. The information is intended to assist you in understanding the costs and expenses that an investor in

              185


              the Company will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever this Annual Report on Form 10-K contains a reference to fees or expenses paid by “you,” “us” or “Main Street,” or that “we” will pay fees or expenses, stockholders will indirectly bear such fees or expenses as investors in us.

              Stockholder Transaction Expenses:

                  

                  

               

              Sales load (as a percentage of offering price)

               

              %(1)

              Offering expenses (as a percentage of offering price)

               

              %(2)

              Dividend reinvestment and direct stock purchase plan expenses

               

              %(3)

              Total stockholder transaction expenses (as a percentage of offering price)

               

              %(4)

              Annual Expenses of the Company (as a percentage of net assets attributable to common stock):

               

                

              Operating expenses

               

              3.23

              %(5)

              Interest payments on borrowed funds

               

              3.57

              %(6)

              Income tax expense

               

              1.84

              %(7)

              Acquired fund fees and expenses

               

              0.30

              %(8)

              Total annual expenses

               

              8.94

              %


              (1)

              The maximum agent commission with respect to the shares of our common stock sold by us in the ATM Program is 1.00%. Purchasers of shares of common stock through the direct stock purchase feature of the Plan will not pay any sales load. In the event that our securities are sold to or through underwriters, a corresponding prospectus or prospectus supplement will disclose the applicable sales load.

              (2)

              Estimated offering expenses payable by us for the estimated duration of the ATM Program are approximately $0.6 million. In the event that we conduct an offering of our securities, a corresponding prospectus or prospectus supplement will disclose the estimated offering expenses.

              (3)

              The expenses of administering the Plan are included in operating expenses. Additional costs may be charged to participants in the direct stock purchase feature of the plan for certain types of transactions.

              (4)

              Total stockholder transaction expenses may include sales load and will be disclosed in a future prospectus or prospectus supplement, if any.

              (5)

              Operating expenses in this table represent our estimated expenses.

              (6)

              Interest payments on borrowed funds represent our estimated annual interest payments on borrowed funds based on current debt levels as adjusted for projected increases (but not decreases) in debt levels over the next twelve months.

              (7)

              Income tax expense relates to the accrual of (a) deferred tax provision (benefit) primarily related to loss carryforwards, timing differences in net unrealized appreciation or depreciation and other temporary book-tax differences from our portfolio investments held in Taxable Subsidiaries and (b) excise, state and other taxes. Deferred taxes are non-cash in nature and may vary significantly from period to period. We are required to include deferred taxes in calculating our annual expenses even though deferred taxes are not currently payable or receivable. Due to the variable nature of deferred tax expense, which can be a large portion of the income tax expense, and the difficulty in providing an estimate for future periods, this income tax expense estimate is based upon the actual amount of income tax expense for the year ended December 31, 2021.

              (8)

              Acquired fund fees and expenses represent the estimated indirect expense incurred due to investments in other investment companies and private funds.

              Example

              The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we would have no additional leverage and that our annual operating

              186


              expenses would remain at the levels set forth in the table above and that you would pay either no sales load or a sales load of up to 1.00% (the commission to be paid by us with respect to common stock sold by us in the ATM Program).

                  

              1 Year

                  

              3 Years

                  

              5 Years

                  

              10 Years

              You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return and no sales load

              $

              88

              $

              253

              $

              405

              $

              736

              You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return and a 1.00% sales load

              $

              98

              $

              263

              $

              415

              $

              746

              The example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses may be greater or less than those shown. While the example assumes, as required by the SEC, a 5.0% annual return, our performance will vary and may result in a return greater or less than 5.0%. In addition, while the example assumes reinvestment of all dividends at net asset value, participants in our dividend reinvestment plan will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by (i) the market price per share of our common stock at the close of trading on a valuation date determined by our Board of Directors for each dividend in the event that we use newly issued shares to satisfy the share requirements of the dividend reinvestment plan or (ii) the average purchase price of all shares of common stock purchased by the plan administrator in the event that shares are purchased in the open market to satisfy the share requirements of the dividend reinvestment plan, which may be at, above or below net asset value. See the description in “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Common Stock and Holders” for additional information regarding our dividend reinvestment plan.

              Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

              Not applicable.

              PART III

              Item 10. Directors, Executive Officers and Corporate Governance

              The information required by this Item will be contained in the definitive proxy statement relating to our 2019 annual meeting2022 Annual Meeting of stockholdersStockholders (the "Proxy Statement"“Proxy Statement”) under the headings "Election“Election of Directors," "Corporate Governance," "Executive Officers"” “Corporate Governance” and "Section 16(a) Beneficial Ownership Reporting Compliance,"“Executive Officers” to be filed with the Securities and Exchange Commission on or prior to April 30, 2019,2022, and is incorporated herein by reference.

              We have adopted a code of business conduct and ethics that applies to directors, officers and employees of Main Street. This code of ethics is published on our Web sitewebsite atwww.mainstcapital.com. We intend to disclose any substantive amendments to, or waivers from, this code of conduct within four business days of the waiver or amendment through a Web sitewebsite posting.

              Item 11. Executive Compensation

              The information required by this Item will be contained in the Proxy Statement under the headings "Compensation“Compensation of Executive Officers," "Compensation” “Compensation of Directors," "Compensation” “Compensation Discussion and Analysis," "Compensation” “Compensation Committee Interlocks and Insider Participation"Participation” and "Compensation“Compensation Committee Report," to be filed with the Securities and Exchange Commission on or prior to April 30, 2019,2022, and is incorporated herein by reference.

              187


              Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

              The following table provides information regarding our equity compensation plans as of December 31, 2018:2021:

                  

                  

                  

              Number of Securities 

              Remaining Available for

              Number of Securities to be

              WeightedAverage Exercise 

               Future Issuance Under

               Issued Upon Exercise of

              Price of Outstanding

               Equity Compensation Plans 

               Outstanding Options,

               Options, Warrants and

              (Excluding Securities 

              Plan Category

                  

               Warrants and Rights

                  

               Rights

                  

              Reflected in Column)

              Equity compensation plans approved by security holders(1)

              $

              $

              $

              1,436,233

              Equity compensation plans not approved by security holders(2)

               

              162,040

               

               

              Total

              $

              162,040

              $

              $

              1,436,233

              Plan Category
               Number of Securities to be
              Issued Upon Exercise of
              Outstanding Options,
              Warrants and Rights
               Weighted-Average Exercise
              Price of Outstanding
              Options, Warrants and
              Rights
               Number of Securities
              Remaining Available for
              Future Issuance Under
              Equity Compensation Plans
              (Excluding Securities
              Reflected in Column)
               

              Equity compensation plans approved by security holders(1)

               $ $ $2,545,117 

              Equity compensation plans not approved by security holders(2)

                119,639     

              Total

               $119,639 $ $2,545,117 

              (1)Consists of our Main Street Capital Corporation 2015 Equity and Incentive Plan and our Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan. As of December 31, 2021, we had issued 1,921,088 shares of restricted stock pursuant to these plans, of which 855,028 had vested and 57,015 shares were forfeited. Pursuant to each of these plans, if any award issued thereunder shall for any reason expire or otherwise terminate or be forfeited, in whole or in part, the shares of stock not acquired under such award shall revert to and again become available for issuance under such plan. For more information regarding these plans, see “Note J — Share-Based Compensation” in the notes to the consolidated financial statements.
              (2)Consists of our 2015 Deferred Compensation Plan. For more information regarding this plan, see “Note M — Related Party Transactions” in the notes to the consolidated financial statements.
              (1)
              Consists of our Main Street Capital Corporation 2015 Equity and Incentive Plan and our Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan. As of December 31, 2018, we had issued 764,224 shares of restricted stock pursuant to these plans, of which 285,053 had vested and 9,128 shares were forfeited. Pursuant to each of these plans, if any award issued thereunder shall for any reason expire or otherwise terminate or be forfeited, in whole or in part, the shares of stock not acquired under such award shall revert to and again become available for issuance under such plan. For more information regarding these plans, see "Note J — Share-Based Compensation" in the notes to the consolidated financial statements.

              (2)
              Consists of our 2015 Deferred Compensation Plan. For more information regarding this plan, see "Note M — Related Party Transactions" in the notes to the consolidated financial statements.

              Table of Contents

              The other information required by this Item will be contained in the Proxy Statement under the heading "Security“Security Ownership of Certain Beneficial Owners and Management," to be filed with the Securities and Exchange Commission on or prior to April 30, 2019,2022, and is incorporated herein by reference.

              Item 13.Certain Relationships and Related Transactions, and Director Independence

              The information required by this Item will be contained in the Proxy Statement under the headings "Certain“Certain Relationships and Related Party Transactions"Transactions” and "Corporate“Corporate Governance," to be filed with the Securities and Exchange Commission on or prior to April 30, 2019,2022, and is incorporated herein by reference.

              Item 14. Principal Accountant Fees and Services

              The information required by this Item will be contained in the Proxy Statement under the heading "Ratification“Ratification of Appointment of Independent Registered Public Accounting Firm for Year Ending December 31, 2018,"2022,” to be filed with the Securities and Exchange Commission on or prior to April 30, 2019,2022, and is incorporated herein by reference.


              188



              PART IV

              Item 15. Exhibits and Consolidated Financial Statement Schedules

              The following documents are filed or incorporated by reference as part of this Annual Report:

              1.

              Consolidated Financial Statements

              1.    Consolidated Financial Statements

              Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 248)

              80

              76

              Consolidated Balance Sheets asSheets—As of December 31, 20182021 and 2017December 31, 2020


              82

              81

              Consolidated Statements of Operations forOperations—For the Years Endedyears ended December 31, 2018, 20172021, 2020 and 20162019


              83

              82

              Consolidated Statements of Changes in Net Assets forAssets—For the Years Endedyears ended December 31, 2018, 20172021, 2020 and 20162019


              84

              83

              Consolidated Statements of Cash Flows forFlows—For the Years Endedyears ended December 31, 2018, 20172021, 2020 and 20162019


              85

              84

              Consolidated SchedulesSchedule of Investments as of Investments—December 31, 2018 and 20172021


              86

              Consolidated Schedule of Investments—December 31, 2020

              108

              Notes to Consolidated Financial Statements


              144

              130

              2.    Consolidated Financial Statement Schedule

              2.

              Consolidated Financial Statement Schedule

              Report of Independent Registered Public Accounting Firm

              190

              174

              Schedule of Investments in and Advances to Affiliates for the Years Ended December 31, 20182021 and 20172020


              191

              175

              3.    Exhibits

                     The following3.Exhibits

              Listed below are the exhibits which are filed as part of this report or hereby incorporated by reference(according to exhibits previously filed with the SEC:number assigned to them in Item 601 of Regulation S-K):

              Exhibit
              Number

              Description

              3.1*

                3.1*

              Articles of Amendment and Restatement of Main Street Capital Corporation (previously filed as Exhibit (a) to Main Street Capital Corporation'sCorporation’s Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on August 15, 2007 (Reg. No. 333-142879))


              3.2*


                3.2*



              Amended and Restated Bylaws of Main Street Capital Corporation (previously filed as Exhibit 3.1 to Main Street Capital Corporation'sCorporation’s Current Report on Form 8-K filed on March 6, 2013 (File No. 1-33723))


              4.1*


                4.1*



              Form of Common Stock Certificate (previously filed as Exhibit (d) to Main Street Capital Corporation'sCorporation’s Pre-Effective Amendment No. 2 to the Registration Statement on Form N-2 filed on August 15, 2007 (Reg. No. 333-142879))


              4.2*


                4.2*



              Dividend Reinvestment and Direct Stock Purchase Plan, dated July 18, 2017effective May 10, 2019 (previously filed as Exhibit (e)99.1 to Main Street Capital Corporation's Post-Effective Amendment No. 12 to the Registration StatementCorporation’s Current Report on Form N-28-K filed on July 18, 2017 (Reg.May 10, 2019 (File No. 333-203147)1-33723))


              4.3*


                4.3*



              Main Street Mezzanine Fund, LP SBIC debentures guaranteed by the SBA (previously filed as Exhibit (f)(1) to Main Street Capital Corporation'sCorporation’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed on June 22, 2007 (Reg. No. 333-142879))


              4.4*


                4.4*



              Main Street Capital II,III, LP SBIC debentures guaranteed by the SBA (see Exhibit (f)(1) to Main Street Capital Corporation'sCorporation’s Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed on June 22, 2007 for a substantially identical copy of the form of debentures)


              4.5*


                4.5*



              Main Street Capital III, LP SBIC debentures guaranteed by the SBA (see Exhibit (f)(1) to Main Street Capital Corporation's Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 filed on June 22, 2007 for a substantially identical copy of the form of debentures)


              Table of Contents

              189


              Exhibit
              Number

              Description


              4.6*


                4.7*



              Form of Second Supplemental Indenture relating to the 4.50% Notes due 2019, between Main Street Capital Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(10) to Main Street Capital Corporation's Post-Effective Amendment No. 9 to the Registration Statement on Form N-2 filed on November 4, 2014 (Reg. No. 333-183555))



                4.8*


              Form of 4.50% Notes due 2019 (incorporated by reference to Exhibit 4.7)


                4.9*


              Form of Third Supplemental Indenture relating to the 4.50% Notes due 2022, between Main Street Capital Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(12) to Main Street Capital Corporation'sCorporation’s Post-Effective Amendment No. 14 to the Registration Statement on Form N-2 filed on November 17, 2017 (Reg. No. 333-203147))


              4.7*


              4.10*



              Form of 4.50% Notes due 2022 (incorporated by reference to Exhibit 4.9)4.6)


              4.8*


              10.1*


              Form of Fourth Supplemental Indenture relating to the 5.20% Notes due 2024, between Main Street Capital Corporation and The Bank of New York Mellon Trust Company, N.A. (previously filed as Exhibit (d)(11) to Main Street Capital Corporation’s Post-Effective Amendment No. 7 to the Registration Statement on Form N-2 filed on April 18, 2019 (Reg. No. 333-223483))

              4.9*


              Third AmendedForm of 5.20% Notes due 2024 (incorporated by reference to Exhibit 4.8)

              4.10*

              Fifth Supplemental Indenture relating to the 3.00% Notes due 2026, between Main Street Capital Corporation and Restated Credit AgreementThe Bank of New York Mellon Trust Company, N.A., as trustee (previously filed as Exhibit 4.1 to Main Street Capital Corporation’s Current Report on Form 8-K filed on January 14, 2021 (File No. 1-33723))

              4.11*

              Form of 3.00% Notes due 2026 (incorporated by reference to Exhibit 4.10)

              4.12*

              Description of Main Street Capital Corporation’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (previously filed as Exhibit 4.11 to Main Street Capital Corporation’s Annual Report on Form 10-K filed on February 28, 2020 (File No. 1-33723))

              10.1*

              Omnibus Amendment No. 1, dated June 5, 2018as of April 7, 2021, by and among Main Street, the guarantors party thereto, Truist Bank, as administrative agent, solely with respect to Section 2 thereof, the withdrawing lender, and the lenders party thereto (previously filed as Exhibit 10.1 to Main Street Capital Corporation'sCorporation’s Current Report on Form 8-K filed on June 6, 2018April 8, 2021 (File No. 1-33723))


              10.2*


              10.2*



              Third Amended and Restated General Security Agreement dated June 5, 2018 (previously filed as Exhibit 10.2 to Main Street Capital Corporation'sCorporation’s Current Report on Form 8-K filed on June 6, 2018 (File No. 1-33723))


              10.3*


              10.3*



              Third Amended and Restated Equity Pledge Agreement dated June 5, 2018 (previously filed as Exhibit 10.3 to Main Street Capital Corporation'sCorporation’s Current Report on Form 8-K filed on June 6, 2018 (File No. 1-33723))


              10.4*


              10.4*



              Amended and Restated Custodial Agreement dated September 20, 2010 (previously filed as Exhibit 10.3 to Main Street Capital Corporation'sCorporation’s Current Report on Form 8-K filed September 21, 2010 (File No. 1-33723))


              10.5*


              10.5*



              Third Amendment to Amended and Restated Credit Agreement and First Amendment to Amended and Restated Custodial Agreement dated November 21, 2011 (previously filed as Exhibit 10.1 to Main Street Capital Corporation'sCorporation’s Current Report on Form 8-K filed November 22, 2011 (File No. 1-33723))


              10.6*†


              10.6*



              Supplement Agreement dated July 19, 2018 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on July 20, 2018 (File No. 1-33723))



              10.7*


              Supplement Agreement dated November 15, 2018 (previously filed as Exhibit 10.1 to Main Street Capital Corporation's Current Report on Form 8-K filed on November 15, 2018 (File No. 1-33723))


              10.8*†


              Main Street Capital Corporation 2015 Equity and Incentive Plan (previously filed as Exhibit 4.4 to Main Street Capital Corporation'sCorporation’s Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))


              10.7*†


              10.9*†



              Main Street Capital Corporation 2015 Non-Employee Director Restricted Stock Plan (previously filed as Exhibit 4.5 to Main Street Capital Corporation'sCorporation’s Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))


              10.8*†


              10.10*†



              Form of Restricted Stock Agreement for Executive Officers — Main Street Capital Corporation 2015 Equity and Incentive Plan (previously filed as Exhibit 4.6 to Main Street Capital Corporation'sCorporation’s Registration Statement on Form S-8 filed on May 5, 2015 (Reg. No. 333-203893))


              Table of Contents


              Exhibit
              Number

              Description


              10.10*


              10.12*



              Custodian Agreement (previously filed as Exhibit (j) to Main Street Capital Corporation'sCorporation’s Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No. 333-142879))


              10.11*†


              10.13*†



              Form of Confidentiality and Non-Compete Agreement by and between Main Street Capital Corporation and Vincent D. Foster (previously filed as Exhibit (k)(12) to Main Street Capital Corporation'sCorporation’s Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No. 333-142879))


              10.12*†


              10.14*†



              Form of Indemnification Agreement by and between Main Street Capital Corporation and each executive officer and director (previously filed as Exhibit (k)(13) to Main Street Capital Corporation'sCorporation’s Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on September 21, 2007 (Reg. No. 333-142879))


              10.13*


              10.15*



              Investment Sub-AdvisoryAdvisory and Administrative Services Agreement dated May 31, 2012October 30, 2020 by and among HMSMSC Adviser LP, Main Street Capital Partners,I, LLC Main Street Capital Corporation and HMSMSC Income Fund, Inc. (previously filed as Exhibit (g)(2) to HMS Income Fund, Inc.'s Pre-Effective Amendment No. 3 to the Registration Statement on Form N-2 filed on May 31, 2012 (Reg. No. 333-178548))



              10.16*


              Assignment and Assumption of Investment Sub-Advisory Agreement dated December 31, 2013 by and among MSC Adviser I,  LLC, HMS Adviser, LP, Main Street Capital Partners, LLC, Main Street Capital Corporation and HMS Income Fund, Inc. (previously filed as Exhibit 10.1410.1 to Main Street Capital Corporation's AnnualCorporation’s Current Report on Form 10-K for the year ended December 31, 20138-K filed on February 28, 2014November 3, 2020 (File No. 1-33723))


              10.14*†


              10.17*†



              Main Street Capital Corporation Deferred Compensation Plan Adoption Agreement and Plan Document (previously filed as Exhibit 4.1 to Main Street Capital Corporation'sCorporation’s Registration Statement on Form S-8 filed on December 18, 2015 (File No. 333-208643))


              10.15*


              10.18*



              Form of Equity Distribution Agreement dated May 10, 201816, 2019 (previously filed as Exhibit (h)(3)1.1 to Main Street Capital Corporation's Post-Effective Amendment No. 1 to the Registration StatementCorporation’s Current Report on Form N-28-K filed on May 10, 2018 (Reg.16, 2019 (File No. 333-223483)1-33723))


              14.1**


              14.1*



              Code of Business Conduct and Ethics (previously filed as Exhibit 14.1 to Main Street Capital Corporation's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 filed on November 2, 2018 (File No. 1-33723))


              21.1**


              21.1



              List of Subsidiaries


              23.1**


              23.1



              Consent of Grant Thornton LLP, independent registered public accounting firm


              31.1**


              31.1



              Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer


              31.2**


              31.2



              Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer


              32.1**


              32.1



              Section 1350 certification of Chief Executive Officer


              32.2**


              32.2



              Section 1350 certification of Chief Financial Officer


              *
              Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference.

              Management contract or compensatory plan or arrangement.

              *

              Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference.

              **

              Furnished herewith.

              Management contract or compensatory plan or arrangement.


              191


              SIGNATURES


              SIGNATURES

              Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

              MAIN STREET CAPITAL CORPORATION




              By:



              /s/ DWAYNE L. HYZAK


              Dwayne L. Hyzak

              Chief Executive Officer and Director

              Date: February 25, 2022

              Date: March 1, 2019

              Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

              Signature
              Title
              Date





              Signature

              Title

              Date

              /s/ DWAYNE L. HYZAK


              Dwayne L. Hyzak

              Chief Executive Officer and Director

              February 25, 2022

              Dwayne L. Hyzak

              (principal executive officer)

              March 1, 2019


              /s/ VINCENT D. FOSTER

              Vincent D. Foster



              Executive Chairman of the Board of Directors



              March 1, 2019


              /s/ BRENT D. SMITH


              Brent D. SmithJESSE E. MORRIS



              Chief Financial Officer, and Treasurer
              Chief Operating Officer

              February 25, 2022

              Jesse E. Morris

              (principal financial officer)



              March 1, 2019


              /s/ SHANNON D. MARTIN


              Shannon D. MartinLANCE A. PARKER



              Vice President, Chief Accounting Officer

              February 25, 2022

              Lance A. Parker

              (principal accounting officer)



              March 1, 2019


              /s/ JOSEPH E. CANON

              Joseph E. Canon



              Director



              March 1, 2019


              /s/ MICHAEL APPLING JR.


              Michael Appling Jr.VINCENT D. FOSTER



              Director

              Chairman of the Board



              March 1, 2019

              February 25, 2022


              Vincent D. Foster

              /s/ ARTHUR L. FRENCH


              Director

              February 25, 2022

              Arthur L. French



              Director



              March 1, 2019


              /s/ J. KEVIN GRIFFIN


              Director

              February 25, 2022

              J. Kevin Griffin



              Director



              March 1, 2019


              /s/ JOHN E. JACKSON


              Director

              February 25, 2022

              John E. Jackson



              Director



              March 1, 2019


              /s/ BRIAN E. LANE


              Director

              February 25, 2022

              Brian E. Lane



              Director



              March 1, 2019


              /s/ STEVEN B. SOLCHER

              Steven B. Solcher



              Director



              March 1, 2019


              /s/ VALERIE L. BANNER


              Valerie L. BannerKAY MATTHEWS



              Director



              March 1, 2019

              February 25, 2022

              Kay Matthews

              /s/ DUNIA A. SHIVE

              Director

              February 25, 2022

              Dunia A. Shive

              /s/ STEPHEN B. SOLCHER

              Director

              February 25, 2022

              Stephen B. Solcher


              192