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

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

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: Yesý No¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes¨ No¨

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

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 7(a)(2)(B) of the Securities Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes¨ Nox

The number of outstanding shares of common stock of the registrant as of ~~November 1, 2017~~May 2, 2024 was ~~37,339,224.~~9,306,125.

~~KCAP FINANCIAL, INC.~~In this Quarterly Report on Form 10-Q, the “Company”, “Portman Ridge”, “we”, “us” and “our” refer to Portman Ridge Finance Corporation and its wholly-owned subsidiaries, unless the context otherwise requires.

The information contained in this item should be read in conjunction with our consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report and in conjunction with the financial statements and notes thereto in the Company’s Form 10-K for the year ended December 31, 2023, as filed with the U.S. Securities and Exchange Commission (the “Commission” or the “SEC”). In addition, some of the statements in this report constitute forward-looking statements. The matters discussed in this Quarterly Report, as well as in future oral and written statements by management of Portman Ridge Finance Corporation, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could cause actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “outlook, ”believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans or objectives will be achieved. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including without limitation:

For a more detailed discussion of factors that could cause our actual results to differ from forward-looking statements contained in this Quarterly Report, please see the discussion in Part II, “Item 1A. Risk Factors” of this Quarterly Report, and in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date this Quarterly Report is filed with the SEC.

PORTMAN RIDGE FINANCE CORPORATION

~~KCAP FINANCIAL, INC.~~

CONSOLIDATED STATEMENTS OF OPERATIONS

~~(unaudited)~~(in thousands, except share and per share amounts)

Three Months Ended Nine Months Ended
September 30, September 30,
2017 2016 2017 2016

Investment Income:
Interest from investments in debt securities $ 2,439,671 $ 5,186,745 $ 11,764,702 $ 16,106,654
Interest from cash and short-term investments 21,043 7,168 51,250 21,521
Investment income on CLO Fund Securities managed by affiliates 2,693,547 3,307,950 8,378,785 9,595,522
Investment income on CLO Fund Securities managed by non-affiliates 99,578 195,182 329,108 503,358
Dividends from Asset Manager Affiliates 180,000 — 180,000 1,400,000
Investment income - Joint Venture 685,000 — 685,000 —
Capital structuring service fees 134,504 321,744 298,629 481,456

Total investment income 6,253,343 9,018,789 21,687,474 28,108,510

Expenses:
Interest and amortization of debt issuance costs 1,371,953 2,122,325 5,790,242 6,960,355
Compensation 1,072,812 1,199,412 3,473,841 3,212,886
Professional fees 802,507 699,607 2,545,195 1,913,722
Insurance 80,794 102,254 256,473 315,307
Administrative and other 395,783 372,164 1,265,317 1,310,424

Total expenses 3,723,849 4,495,762 13,331,068 13,712,694

Net Investment Income 2,529,495 4,523,027 8,356,404 14,395,816
Realized And Unrealized Gains (Losses) On Investments:
Net realized (losses) gains from investment transactions (1,906,537 ) 4,647,841 (2,871,941 ) (6,046,199 )
Net change in unrealized appreciation (depreciation) on:
Debt securities 1,759,152 456,530 4,172,723 2,539,345
Equity securities (186,368 ) (4,579,566 ) (606,179 ) (4,896,852 )
CLO Fund securities managed by affiliates (1,590,062 ) (993,011 ) (3,695,876 ) 5,890,984
CLO Fund securities managed by non-affiliates (34,655 ) (137,193 ) (328,552 ) (136,490 )
Asset Manager Affiliates investments 2,922,000 (1,113,000 ) 1,481,000 (12,706,000 )
Joint Venture investment (147,751 ) — (147,751 ) —
Total net change in unrealized appreciation (depreciation) 2,722,316 (6,366,240 ) 875,365 (9,309,013 )

Net realized and unrealized appreciation (depreciation) on investments 815,779 (1,718,399 ) (1,996,576 ) (15,355,212 )

Realized losses on extinguishments of debt (4,014,723 ) (88,015 ) (4,121,998 ) (159,206 )
Net Increase (Decrease) In Stockholders’ Equity Resulting From Operations $ (669,449 ) $ 2,716,613 $ 2,237,830 $ (1,118,601 )

Net Increase (Decrease) In Stockholders' Equity Resulting from Operations per Common Share:
Basic: $ (0.02 ) $ 0.07 $ 0.06 $ (0.03 )
Diluted: $ (0.02 ) $ 0.07 $ 0.06 $ (0.03 )
Net Investment Income Per Common Share:
Basic: $ 0.07 $ 0.12 $ 0.23 $ 0.39
Diluted: $ 0.07 $ 0.12 $ 0.23 $ 0.39

Weighted Average Shares of Common Stock Outstanding—Basic 37,196,621 37,152,622 37,202,011 37,142,002
Weighted Average Shares of Common Stock Outstanding—Diluted 37,196,621 37,152,622 37,202,011 37,142,002

(Unaudited)


	For the Three Months Ended March 31,
	2024			2023
INVESTMENT INCOME
Interest income:
Non-controlled/non-affiliated investments	$	12,621		$	14,846
Non-controlled affiliated investments		95			849
Total interest income	$	12,716		$	15,695
Payment-in-kind income:
Non-controlled/non-affiliated investments(1)	$	1,894		$	1,527
Non-controlled affiliated investments		112			73
Total payment-in-kind income	$	2,006		$	1,600
Dividend income:
Non-controlled affiliated investments	$	1,653		$	1,384
Controlled affiliated investments		-			1,075
Total dividend income	$	1,653		$	2,459
Fees and other income
Non-controlled/non-affiliated investments	$	151		$	573
Total fees and other income	$	151		$	573
Total investment income	$	16,526		$	20,327
EXPENSES
Management fees	$	1,729		$	1,953
Performance-based incentive fees		1,234			1,808
Interest and amortization of debt issuance costs		5,725			6,332
Professional fees		766			603
Administrative services expense		356			671
Other general and administrative expenses		490			431
Total expenses	$	10,300		$	11,798
NET INVESTMENT INCOME	$	6,226		$	8,529
REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS
Net realized gains (losses) from investment transactions:
Non-controlled/non-affiliated investments	$	(1,641	)	$	(3,085	)
Controlled affiliated investments		(416	)		-
Net realized gain (loss) on investments	$	(2,057	)	$	(3,085	)
Net change in unrealized appreciation (depreciation) on:
Non-controlled/non-affiliated investments	$	(659	)	$	(3,057	)
Non-controlled affiliated investments		140			(311	)
Controlled affiliated investments		590			(2,592	)
Net change in unrealized gain (loss) on investments	$	71		$	(5,960	)
Tax (provision) benefit on realized and unrealized gains (losses) on investments	$	459		$	571
Net realized and unrealized appreciation (depreciation) on investments, net of taxes	$	(1,527	)	$	(8,474	)
Net realized gain (loss) on extinguishment of debt	$	(213	)	$	-
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	4,486		$	55
Net Increase (Decrease) In Net Assets Resulting from Operations per Common Share:
Basic and Diluted:	$	0.48		$	0.01
Net Investment Income Per Common Share:
Basic and Diluted:	$	0.67		$	0.89
Weighted Average Shares of Common Stock Outstanding—Basic and Diluted		9,344,994			9,555,125

(1)

During the three months ended March 31, 2024, the Company received $0.1 million of non-recurring fee income that was paid in-kind and included in this financial statement line item. During the period ended March 31, 2023, the Company received $0.3 million of non-recurring fee income that was paid in-kind and included in this financial statement line item.

See accompanying notes to unaudited consolidated financial statements.

PORTMAN RIDGE FINANCE CORPORATION

~~KCAP FINANCIAL, INC.~~

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS(1)

~~(unaudited)~~(in thousands, except share and per share amounts)

(Unaudited)

	Nine Months Ended September 30,
	2017			2016			For the Three Months Ended March 31,
							2024			2023
Operations:
Net investment income	$	8,356,404		$	14,395,816		$	6,226		$	8,529
Net realized losses from investment transactions		(2,871,941	)		(6,046,199	)
Realized losses from extinguishments of debt		(4,121,998	)		(159,206	)
Net realized gain (loss) on investments								(2,057	)		(3,085	)
Net realized gain (loss) from extinguishment of debt								(213	)		-
Net change in unrealized appreciation (depreciation) on investments		875,365			(9,309,013	)		71			(5,960	)
Tax (provision) benefit on realized and unrealized gains (losses) on investments								459			571
Net increase (decrease) in net assets resulting from operations		2,237,830			(1,118,602	)	$	4,486		$	55

Stockholder distributions:		(13,315,561	)		(16,534,320	)
Distributions declared							$	(6,444	)	$	(6,495	)
Net decrease in net assets resulting from stockholder distributions							$	(6,444	)	$	(6,495	)

Capital share transactions:
(Repurchase) issuance of common stock for:
Common stock withheld for payroll taxes upon vesting of restricted stock		(224,944	)		(247,926	)
Dividend reinvestment plan		288,192			549,627
Stock based compensation		875,002			1,154,123

Net increase in net assets resulting from capital transactions		938,250			1,455,824
Stock issued under dividend reinvestment plan							$	-		$	215
Stock repurchases								(953	)		(792	)
Net increase (decrease) in net assets resulting from capital share transactions							$	(953	)	$	(577	)

Net assets at beginning of period		194,924,925			216,100,470		$	213,518		$	232,123

Net assets at end of period (including undistributed net investment income of $0 in 2017 and $0 in 2016)	$	184,785,444		$	199,903,372

Net assets at end of period							$	210,607		$	225,106
Net asset value per common share	$	4.95		$	5.38		$	22.57		$	23.56
Common shares outstanding at end of period		37,317,815			37,160,770			9,332,117			9,556,356

(1)

Refer to Note 9 "Stockholders' Equity" for additional information on changes in components of Stockholders' Equity

See accompanying notes to unaudited consolidated financial statements.

PORTMAN RIDGE FINANCE CORPORATION

~~KCAP FINANCIAL, INC.~~

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~(unaudited)~~(in thousands, except share and per share amounts)

(Unaudited)

Nine Months Ended
September 30,

2017 2016

OPERATING ACTIVITIES:
Net increase (decrease) in stockholder's equity resulting from operations $ 2,237,829 $ (1,118,601 )
Adjustments to reconcile net increase (decrease) in stockholder’s equity resulting from operations to net cash provided by in operating activities:
Net realized losses on investment transactions 2,871,941 6,046,199
Net change in unrealized depreciation on investments (875,365 ) 9,309,013
Purchases of investments (202,774,324 ) (54,437,487 )
Proceeds from sales and redemptions of investments 252,169,877 75,555,567
Net accretion of amortization on investments (707,654 ) 1,859,301
Amortization of original issue discount on indebtedness 352,340 464,320
Amortization of debt issuance costs 557,527 651,298
Realized losses on extinguishments of debt 4,121,998 159,206
Payment-in-kind interest income (829,774 ) (975,661 )
Stock-based compensation 875,002 1,154,376
Changes in operating assets and liabilities:
Decrease in receivable for open trades 2,950,658 —
Increase in payable for open trades 27,065,785 9,652,500
Decrease in interest receivable 110,574 654,614
(Increase) in accounts receivable (2,000,021 ) —
Decrease in other assets 294,509 286,607
(Increase) decrease in due from affiliates (546,905 ) 373,558
Increase (decrease) in due to affiliates 78,384 (554,243 )
(Decrease) in accounts payable (397,876 ) (219,587 )
(Decrease) in accrued interest payable (930,086 ) (353,444 )

Net cash provided by operating activities 84,624,419 48,507,536

FINANCING ACTIVITIES:
Issuance of 6.125% Notes Due 2022 77,407,200 —
Debt issuance costs (2,798,940 ) —
Issuance (forfeitures) of restricted shares 1,303 (254 )
Distributions to stockholders (13,027,367 ) (15,984,693 )
Repayment/repurchase of Senior Funding Notes (147,350,000 ) (19,299,000 )
Repurchase of 7.375% Notes Due 2019 (6,530,925 ) (7,399,650 )
Common stock withheld for payroll taxes upon vesting of restricted stock (224,944 ) (247,926 )
Decrease (increase) in restricted cash — (3,771,347 )

Net cash used in financing activities (92,523,674 ) (46,702,870 )

CHANGE IN CASH AND RESTRICTED CASH (7,899,255 ) 1,804,666
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD 9,835,555 —

CASH AND RESTRICTED CASH, END OF PERIOD $ 1,936,300 $ 1,804,666

Supplemental Information:
Interest paid during the period $ 5,810,461 $ 6,173,626
Dividends paid during the period under the dividend reinvestment plan $ 289,478 $ 549,627


	For the Three Months Ended March 31,
	2024			2023
OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations	$	4,486		$	55
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash (used in) provided by in operations:
Net realized (gains) losses on investment transactions		2,057			2,995
Net change in unrealized (appreciation) depreciation from investments		(71	)		5,960
Tax provision (benefit) on realized and unrealized gains (losses) on investments		(459	)		-
Purchases of investments		(37,188	)		(13,279	)
Proceeds from sales and redemptions of investments		35,481			45,793
Net accretion of investments		(1,276	)		(2,512	)
Amortization of debt issuance costs		273			308
Net realized (gain) loss on extinguishment of debt		213			-
Net payment-in-kind income		(1,894	)		(1,600	)
Change in operating assets and liabilities:
(Increase) decrease in receivable for unsettled trades		(668	)		705
(Increase) decrease in interest receivable		27			1,051
(Increase) decrease in due from affiliates		195			(446	)
(Increase) decrease in other assets		(401	)		166
Increase (decrease) in payable for unsettled trades		8,224			(431	)
Increase (decrease) in accrued interest payable		965			1,215
Increase (decrease) in management and incentive fees payable		(1,119	)		218
Increase (decrease) in due to affiliates		442			401
Increase (decrease) in accounts payable and accrued expenses		104			(677	)
Net cash (used in) provided by operating activities	$	9,391		$	39,922
FINANCING ACTIVITIES:
Stock repurchase program		(953	)		(792	)
Distributions to stockholders		-			(6,280	)
Distribution paid in advance to the transfer agent		(6,366	)		-
Repayment of 2018-2 Secured Notes		(34,032	)		(6,875	)
Repayment of Revolving Credit Facilities		-			(17,500	)
Borrowings from Revolving Credit Facilities		-			4,500
Net cash (used in) provided by financing activities	$	(41,351	)	$	(26,947	)
CHANGE IN CASH AND RESTRICTED CASH	$	(31,960	)	$	12,975
CASH AND RESTRICTED CASH, BEGINNING OF PERIOD		71,564			33,131
CASH AND RESTRICTED CASH, END OF PERIOD	$	39,604		$	46,106
Amounts per balance sheet:
Cash and cash equivalents	$	20,829		$	11,865
Restricted cash		18,775			34,241
Total Cash and Restricted cash	$	39,604		$	46,106
Supplemental Information and non-cash activities:
Cash paid for interest during the period	$	4,487		$	4,809
Reinvestment of distributions	$	-		$	215

See accompanying notes to unaudited consolidated financial statements.

PORTMAN RIDGE FINANCE CORPORATION

~~KCAP FINANCIAL, INC.~~

CONSOLIDATED SCHEDULE OF ~~INVESTMENS~~INVESTMENTS

As of ~~September 30, 2017~~March 31, 2024

~~(unaudited)~~(in thousands, except share and per share amounts)

(Unaudited)

Debt Securities Portfolio


Portfolio Company14	Investment	Industry	Interest Rate	Reference Rate and Spread1		Floor		Maturity	Initial Acquisition Date	Par/Shares		Cost			Fair Value2			Footnote Refs
Senior Secured Loans
Accordion Partners LLC	Term Loan	Finance	11.3% Cash	SOFR+6.00%		0.75%		8/29/29	8/31/22		7,889	$	7,751		$	7,856		(7)(12)(13)
Accordion Partners LLC	Revolver	Finance	11.6% Cash	SOFR+6.25%		0.75%		8/31/28	8/31/22		765		740			759		(7)(12)(20)
Accordion Partners LLC	Delayed Draw Term Loan	Finance	11.6% Cash	SOFR+6.25%		0.75%		8/29/29	8/31/22		692		686			692		(7)(12)(13)
Accordion Partners LLC	Delayed Draw Term Loan	Finance	11.3% Cash	SOFR+6.00%		0.75%		8/29/29	8/31/22		868		860			864		(7)(12)(13)
Accurate Background, LLC	Term Loan	Services: Business	11.6% Cash	SOFR+6.00%		1.00%		3/26/27	10/20/21		2,924		2,775			2,857		(7)(12)(13)
Accurate Background, LLC	First Lien Term Loan	Services: Business	11.6% Cash	SOFR+6.00%		1.00%		3/26/27	9/7/22		1,478		1,395			1,444		(7)(12)(13)
Advantage Capital Holdings LLC	Term Loan	Banking, Finance, Insurance & Real Estate	8.0% Cash + 5.0% PIK		-		-	4/14/27	4/14/22		14,036		14,036			13,615		(7)(12)(13)
AIDC IntermediateCo 2, LLC	First Lien Term Loan	Services: Business	11.7% Cash	SOFR+6.40%		1.00%		7/22/27	9/9/22		988		976			971		(7)(12)(13)
AIS Holdco, LLC	First Lien Term Loan A	Banking, Finance, Insurance & Real Estate	10.3% Cash	SOFR+5.00%			-	8/15/25	10/28/20		2,172		2,044			2,125		(7)(13)
AMCP Pet Holdings, Inc.	First Lien Term Loan	Beverage, Food and Tobacco	11.7% Cash + 0.8% PIK	SOFR+6.25%		1.00%		10/6/26	12/9/20		4,866		4,824			4,726		(7)(12)(13)
AMCP Pet Holdings, Inc.	Revolving Loan	Beverage, Food and Tobacco	11.7% Cash	SOFR+6.25%		1.00%		10/6/26	12/9/20		727		719			698		(7)(12)(20)
American Academy Holdings, LLC	First Lien Term Loan	Healthcare & Pharmaceuticals	11.2% Cash + 5.3% PIK	SOFR+5.75%		1.00%		1/1/25	3/1/22		3,163		3,155			3,191		(7)(12)
American Academy Holdings, LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	11.2% Cash + 5.3% PIK	SOFR+5.75%		1.00%		1/1/25	3/1/22		628		626			633		(7)(12)(13)
Ancile Solutions, Inc.	First Lien Term Loan	High Tech Industries	15.6% Cash	SOFR+10.00%		1.00%		6/11/26	6/11/21		6,230		6,153			6,285		(7)(12)(13)
Anthem Sports & Entertainment Inc.	Term Loan	Media: Broadcasting & Subscription	3.0% Cash + 12.1% PIK	SOFR+3.00%		1.00%		11/15/26	11/15/21		13,240		13,091			10,444		(7)(12)(13)
Anthem Sports & Entertainment Inc.	Revolver	Media: Broadcasting & Subscription	15.1% Cash	SOFR+9.50%		1.00%		11/15/26	11/15/21		1,115		1,102			863		(7)(12)(20)
Anthem Sports & Entertainment Inc.	Revolver	Media: Broadcasting & Subscription	15.1% Cash	SOFR+9.50%		1.00%		6/30/24	8/9/22		563		563			444		(7)(12)
Appfire Technologies, LLC	Term Loan	High Tech Industries	11.0% Cash	SOFR+5.50%		1.00%		3/9/27	12/20/21		5,879		5,872			5,838		(7)(12)(13)
BetaNXT, Inc.	First Lien Term Loan	Banking, Finance, Insurance & Real Estate	11.1% Cash	SOFR+5.75%			-	7/1/29	7/1/22		12,576		11,963			12,034		(7)(12)(13)
BetaNXT, Inc.	Revolver	Banking, Finance, Insurance & Real Estate	9.6% Cash	SOFR+4.25%			-	7/1/27	7/1/22		966		966			862		(7)(12)(20)
Bradshaw International Parent Corp.	Term Loan	Consumer goods: Durable	11.2% Cash	SOFR+5.75%			-	10/21/27	10/29/21		495		487			488		(7)(12)(13)
Bradshaw International Parent Corp.	Revolver	Consumer goods: Durable	0.5% Cash		-	1.00%		10/21/26	10/29/21		-		(23	)		(13	)	(7)(12)(20)
Bristol Hospice	Unitranche	Healthcare & Pharmaceuticals	11.9% Cash	SOFR+6.50%		1.00%		12/22/26	12/22/20		2,066		2,047			2,026		(7)(12)(13)
Bristol Hospice	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	11.9% Cash	SOFR+6.50%		1.00%		12/22/26	12/22/20		736		732			722		(7)(12)(13)
C.P. Converters, Inc.	Term Loan	Chemicals, Plastics and Rubber	12.3% Cash + 1.0% PIK	SOFR+6.50%		1.00%		9/30/24	11/17/21		5,966		5,966			5,966		(7)(12)(13)
C.P. Converters, Inc.	Term Loan	Chemicals, Plastics and Rubber	12.1% Cash + 1.0% PIK	SOFR+6.50%		1.00%		9/30/24	7/29/21		984		984			984		(7)(12)(13)
C.P. Converters, Inc.	Seventh Amendment Acquisition Loan	Chemicals, Plastics and Rubber	12.1% Cash + 1.0% PIK	SOFR+6.50%		1.00%		9/30/24	6/26/20		2,548		2,548			2,548		(7)(12)(13)
CB Midco, LLC	Term Loan	Consumer goods: Durable	11.2% Cash	SOFR+5.75%		1.00%		9/27/27	10/8/21		3,792		3,770			3,576		(7)(12)(13)
Cenexel Clinical Research, Inc.	Term Loan	Healthcare & Pharmaceuticals	11.2% Cash	SOFR+5.75%		1.00%		11/8/25	6/15/22		5,773		5,746			5,752		(7)(12)(13)
Centric Brands Inc.	Term Loan	Machinery (Non-Agrclt/Constr/Electr)	10.8% Cash + 2.0% PIK	SOFR+5.50%		1.00%		8/6/29	10/28/20		3,689		3,689			3,689		(7)(12)(13)
Centric Brands Inc.	Term Loan	Machinery (Non-Agrclt/Constr/Electr)	10.8% Cash + 2.0% PIK	SOFR+5.50%		1.00%		2/6/31	10/28/20		3,807		3,807			3,807		(7)(12)(13)
Centric Brands Inc.	Term Loan	Machinery (Non-Agrclt/Constr/Electr)	10.8% Cash + 2.0% PIK	SOFR+5.50%		1.00%		2/6/31	10/28/20		3,136		3,136			3,136		(7)(12)(13)

Portfolio Company / Principal Business Investment
Interest Rate¹ / Maturity Principal Amortized
Cost Fair Value²

Advanced Lighting Technologies, Inc,^(8)(14)(15)
Consumer goods: Durable First Lien Bond — 12.500% - 6/2019 - 00753CAG7 5.3% Cash, 7.3% PIK, Due 6/19 $ 3,157,500 $ 3,054,337 $ 1,063,761

Advantage Sales & Marketing Inc.^(8)(14)
Services: Business Junior Secured Loan — Term Loan (Second Lien) 7.7% Cash, 1 month LIBOR(1.24%) + 6.50%; LIBOR Floor 1.00% , Due 7/22 1,000,000 1,001,518 962,300

Anaren, Inc.⁽⁸⁾
Aerospace and Defense Senior Secured Loan — Term Loan (First Lien) 5.8% Cash, 3 month LIBOR(1.33%) + 4.50%; LIBOR Floor 1.00% , Due 2/21 1,513,396 1,529,286 1,529,286

Asurion, LLC (fka Asurion Corporation)⁽⁸⁾
Banking, Finance, Insurance & Real Estate Senior Secured Loan — Replacement B-5 Term Loan 4.2% Cash, 3 month LIBOR(1.24%) + 3.00%; LIBOR Floor 0.00% , Due 11/23 1,994,987 2,007,456 2,007,556

Avalign Technologies, Inc.^(8)(14)
Healthcare & Pharmaceuticals Senior Secured Loan — Initial Term Loan (First Lien) 5.7% Cash, 1 month LIBOR(1.24%) + 4.50%; LIBOR Floor 1.00% , Due 7/21 1,078,170 1,075,612 1,078,170

Avalign Technologies, Inc.^(8)(14)
Healthcare & Pharmaceuticals Junior Secured Loan — Initial Term Loan (Second Lien) 9.7% Cash, 6 month LIBOR(1.46%) + 8.25%; LIBOR Floor 1.00% , Due 7/22 1,500,000 1,488,351 1,479,000

Carolina Beverage Group LLC^(8)(14)
Beverage, Food and Tobacco Senior Secured Bond — 10.625% - 08/2018 - 143818AA0 144A 10.6% Cash, Due 8/18 1,500,000 1,503,404 1,494,600

CSM Bakery Solutions Limited (fka CSM Bakery Supplies Limited)^(8)(14)
Beverage, Food and Tobacco Junior Secured Loan — Term Loan (Second Lien) 9.1% Cash, 3 month LIBOR(1.30%) + 7.75%; LIBOR Floor 1.00% , Due 7/21 3,000,000 3,009,449 2,851,800

CT Technologies Intermediate Holdings, Inc. (Smart Holdings Corp.) (aka HealthPort)⁽⁸⁾
Healthcare & Pharmaceuticals Senior Secured Loan — New Term Loan Facility 5.5% Cash, 3 month LIBOR(1.24%) + 4.25%; LIBOR Floor 1.00% , Due 12/21 1,994,898 2,004,872 2,004,872

DigiCert Holdings, Inc.⁽⁸⁾
High Tech Industries Junior Secured Loan — Term Loan (Second Lien) 9.0% Cash, 3 month LIBOR(1.24%) + 7.76%; LIBOR Floor 1.00% , Due 9/25 1,000,000 995,000 995,000

Drew Marine Group Inc.^(8)(14)
Transportation: Cargo Junior Secured Loan — Term Loan (Second Lien) 8.2% Cash, 1 month LIBOR(1.24%) + 7.00%; LIBOR Floor 1.00% , Due 5/21 2,500,000 2,496,958 2,500,000

See accompanying notes to unaudited consolidated financial statements.


Portfolio Company14	Investment	Industry	Interest Rate		Reference Rate and Spread1		Floor		Maturity	Initial Acquisition Date	Par/Shares		Cost			Fair Value2			Footnote Refs
Colonnade Intermediate, LLC	Term Loan	Services: Business	12.4% Cash		SOFR+7.00%		1.00%		4/27/24	3/2/22		399	$	399		$	379		(7)(12)(13)
Colonnade Intermediate, LLC	Term Loan	Services: Business	12.4% Cash		SOFR+7.00%		1.00%		4/27/24	3/1/21		696		696			660		(7)(12)
Colonnade Intermediate, LLC	First Lien Term Loan	Services: Business	12.4% Cash		SOFR+7.00%		1.00%		4/27/24	10/28/20		4,886		4,886			4,637		(7)(12)(13)
Colonnade Intermediate, LLC	Revolver	Services: Business	14.5% Cash		PRIME+7.00%		1.00%		4/27/24	10/28/20		110		110			104		(7)(12)(13)
Colonnade Intermediate, LLC	Revolver	Services: Business	12.4% Cash		SOFR+7.00%		1.00%		4/27/24	10/28/20		575		575			546		(7)(12)(13)
Colonnade Intermediate, LLC	Delayed Draw Term Loan	Services: Business	12.4% Cash		SOFR+7.00%		1.00%		4/27/24	3/1/21		739		739			701		(7)(12)
Colonnade Intermediate, LLC	Delayed Draw Term Loan	Services: Business	12.4% Cash		SOFR+7.00%		1.00%		4/27/24	10/28/20		447		447			424		(7)(12)(13)
Critical Nurse Staffing, LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	12.0% Cash		SOFR+6.50%		1.00%		10/30/26	11/1/21		623		618			615		(7)(12)(13)
Critical Nurse Staffing, LLC	Term Loan	Healthcare & Pharmaceuticals	11.9% Cash		SOFR+6.50%		1.00%		10/30/26	11/1/21		8,062		7,989			7,959		(7)(12)(13)
Critical Nurse Staffing, LLC	Revolver	Healthcare & Pharmaceuticals	0.5% Cash			-	1.00%		10/30/26	11/1/21		-		(35	)		(26	)	(7)(12)(20)
Critical Nurse Staffing, LLC	Term Loan	Healthcare & Pharmaceuticals	11.9% Cash		SOFR+6.50%		1.00%		11/1/26	11/1/21		3,980		3,909			3,929		(7)(12)(13)
Datalink, LLC	First Lien Term Loan	Healthcare & Pharmaceuticals	12.2% Cash		SOFR+6.75%		1.00%		11/23/26	12/8/20		2,696		2,663			2,615		(7)(12)(13)
Dentive, LLC	First Lien Term Loan	Healthcare & Pharmaceuticals	12.3% Cash		SOFR+7.00%		0.75%		12/26/28	12/23/22		1,504		1,468			1,477		(7)(12)(13)
Dentive, LLC	Delayed Draw Term Loan - First Lien	Healthcare & Pharmaceuticals	12.3% Cash		SOFR+7.00%		0.75%		12/26/28	12/23/22		501		492			488		(7)(12)(13)(20)
Dentive, LLC	Revolver	Healthcare & Pharmaceuticals	12.3% Cash		SOFR+7.00%		0.75%		12/23/28	12/23/22		-		(6	)		(4	)	(7)(12)(20)
Dodge Data & Analytics LLC	Term Loan	Construction & Building	9.8% Cash		SOFR+4.75%		0.50%		2/10/29	2/10/22		1,474		1,457			1,220		(7)(13)
ELO Touch Solutions, Inc.	First Lien Term Loan	High Tech Industries	11.9% Cash		SOFR+6.50%			-	12/14/25	10/28/20		2,049		1,944			2,046		(7)(13)
Florida Food Products, LLC	First Lien Term Loan	Beverage, Food and Tobacco	10.3% Cash		SOFR+5.00%		0.75%		10/18/28	6/9/22		1,975		1,888			1,754		(7)(13)
Florida Food Products, LLC	Term Loan	Beverage, Food and Tobacco	10.4% Cash		SOFR+5.00%		0.75%		10/18/28	3/22/22		4,900		4,857			4,353		(7)(13)
Fortis Payment Systems, LLC	Term Loan	Diversified Financial Services	11.2% Cash		SOFR+5.75%		1.00%		2/13/26	2/13/20		2,625		2,576			2,573		(7)(12)(13)
Fortis Payment Systems, LLC	Delayed Draw Term Loan	Diversified Financial Services	11.2% Cash		SOFR+5.75%		1.00%		2/13/26	2/13/20		131		123			123		(7)(12)(20)
Franchise Group, Inc.	Term Loan	Retail	10.4% Cash		SOFR+4.75%		0.75%		3/10/26	3/18/22		2,900		2,891			2,617		(13)
Global Integrated Flooring Systems Inc.	Revolver	Consumer goods: Durable	13.7% Cash		SOFR+8.36%			-	5/15/24	10/28/20		51		44			29		(7)(12)
Global Integrated Flooring Systems Inc.	First Lien Term Loan	Consumer goods: Durable	13.7% Cash + 1.0% PIK		SOFR+8.36%			-	5/15/24	10/28/20		6,742		6,013			3,851		(7)(12)
H.W. LOCHNER, INC.	Term Loan	Services: Business	11.7% Cash		SOFR+6.25%			-	7/2/27	7/2/21		14,625		14,466			14,299		(7)(12)(13)
H.W. LOCHNER, INC.	Revolver	Services: Business	11.7% Cash		SOFR+6.25%		1.00%		7/2/27	7/2/21		5,858		5,771			5,679		(7)(12)(20)
H-CA II, LLC	Term Loan	Banking, Finance, Insurance & Real Estate	16.0% Cash			-		-	4/1/24	2/16/21		1,808		1,808			1,800		(7)(12)
HDC/HW Intermediate Holdings, LLC	Term Loan	High Tech Industries	6.6% Cash + 2.5% PIK		SOFR+1.00%		5.25%		6/21/26	10/28/20		5,525		4,535			5,290		(7)(12)(13)
HDC/HW Intermediate Holdings, LLC	First Lien Term Loan	High Tech Industries		-		-		-	6/21/26	10/28/20		3,827		937			-		(5)(7)(12)(13)
Help Systems Holdings, Inc.	First Lien Term Loan	High Tech Industries	9.4% Cash		SOFR+4.00%		0.75%		11/19/26	11/17/22		1,969		1,855			1,909		(7)(13)
Hollander Intermediate LLC	First Lien Term Loan	Consumer goods: Durable	14.2% Cash		SOFR+8.75%		2.00%		9/19/26	9/19/22		5,541		5,437			5,215		(7)(12)(13)
IDC Infusion Services	Term Loan	Healthcare & Pharmaceuticals	11.9% Cash		SOFR+6.50%		1.00%		7/7/28	7/20/23		2,920		2,869			2,880		(7)(12)(13)
IDC Infusion Services	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	12.0% Cash		SOFR+6.50%		1.00%		7/7/28	7/20/23		260		241			245		(7)(12)(20)
Intermedia Holdings, Inc.	First Lien Term Loan B	High Tech Industries	11.4% Cash		SOFR+6.00%		1.00%		7/21/25	10/28/20		2,606		2,510			2,580		(7)(13)
Ivanti Software, Inc.	First Lien Term Loan	High Tech Industries	9.8% Cash		SOFR+4.25%		0.75%		12/1/27	10/12/22		985		822			925		(7)(13)
JO ET Holdings Limited	Term Loan	Telecommunications	11.3% Cash + 7.0% PIK		SOFR+6.00%		1.00%		12/15/26	12/15/21		2,295		2,273			2,295		(3)(12)
Keg Logistics LLC	Term Loan	Services: Business	11.5% Cash		SOFR+6.00%		1.00%		11/23/27	11/23/21		11,969		11,859			11,770		(7)(12)(13)
Keg Logistics LLC	Revolver	Services: Business	11.5% Cash		SOFR+6.00%		1.00%		11/23/27	11/23/21		872		859			858		(7)(12)
Lifescan Global Corporation	First Lien Term Loan A	Healthcare & Pharmaceuticals	12.0% Cash		SOFR+6.50%		1.00%		12/31/26	10/28/20		2,327		2,215			1,454		(7)(13)
Lucky Bucks, LLC	Term Loan	Hotel, Gaming & Leisure	13.0% Cash		SOFR+7.65%		1.00%		10/2/29	10/2/23		890		890			853		(7)(12)(13)
Lucky Bucks, LLC	Term Loan	Hotel, Gaming & Leisure	13.0% Cash		SOFR+7.65%		1.00%		10/2/28	10/2/23		468		457			472		(7)(12)(13)
Luminii LLC	First Lien Term Loan B	Construction & Building	12.7% Cash		SOFR+7.35%		1.00%		4/11/25	10/28/20		5,918		5,918			5,918		(7)(12)(13)

Portfolio Company / Principal Business Investment
Interest Rate¹ / Maturity Principal Amortized
Cost Fair Value

EagleTree-Carbide Acquisition Corp. (aka Corsair Components, Inc.)⁽⁸⁾
High Tech Industries Senior Secured Loan — First Lien Term Loan 5.7% Cash, 3 month LIBOR(1.23%) + 4.50%; LIBOR Floor 0.00% , Due 9/24 5,000,000 4,950,000 4,950,000

EagleTree-Carbide Acquisition Corp. (aka Corsair Components, Inc.)⁽⁸⁾
High Tech Industries Junior Secured Loan — Term Loan (Second Lien) 9.8% Cash, 3 month LIBOR(1.33%) + 8.50%; LIBOR Floor 1.00% , Due 8/25 5,000,000 4,925,000 4,925,000

Eastern Power, LLC (Eastern Covert Midco, LLC) (aka TPF II LC, LLC)⁽⁸⁾
Utilities: Electric Senior Secured Loan — Term Loan 5.0% Cash, 1 month LIBOR(1.24%) + 3.75%; LIBOR Floor 1.00% , Due 10/23 1,981,386 1,979,983 1,991,015

EWT Holdings III Corp. (fka WTG Holdings III Corp.)⁽⁸⁾
Environmental Industries Senior Secured Loan — Term Loan (First Lien) 5.1% Cash, 3 month LIBOR(1.33%) + 3.75%; LIBOR Floor 1.00% , Due 1/21 2,992,385 3,037,271 3,037,271

Exela Technologies, Inc.⁽⁸⁾
Services: Business Senior Secured Loan — Term Loan B 8.8% Cash, 3 month LIBOR(1.30%) + 7.50%; LIBOR Floor 1.00% , Due 6/23 2,000,000 1,961,345 1,986,200

First American Payment Systems, L.P.^(8)(14)
Banking, Finance, Insurance & Real Estate Junior Secured Loan — Term Loan (Second Lien) 11.7% Cash, 1 month LIBOR(1.23%) + 10.50%; LIBOR Floor 1.00% , Due 7/24 1,500,000 1,459,320 1,435,950

Flexera Software LLC (fka Flexera Software, Inc.)⁽⁸⁾
High Tech Industries Senior Secured Loan — Term Loan (First Lien) 4.8% Cash, 3 month LIBOR(1.33%) + 3.50%; LIBOR Floor 1.00% , Due 4/20 2,000,000 1,995,000 1,995,000

GI Advo Opco, LLC^(8)(14)
Healthcare & Pharmaceuticals Senior Secured Loan — Term Loan 5.8% Cash, 3 month LIBOR(1.33%) + 4.50%; LIBOR Floor 1.00% , Due 11/21 236,732 235,090 236,684

GK Holdings, Inc. (aka Global Knowledge)^(8)(14)
Services: Business Junior Secured Loan — Initial Term Loan (Second Lien) 11.6% Cash, 3 month LIBOR(1.33%) + 10.25%; LIBOR Floor 1.00% , Due 1/22 1,500,000 1,481,433 1,476,600

Global Tel*Link Corporation^(8)(14)
Telecommunications Junior Secured Loan — Term Loan (Second Lien) 9.1% Cash, 3 month LIBOR(1.33%) + 7.75%; LIBOR Floor 1.25% , Due 11/20 4,000,000 3,965,663 3,939,200

Grupo HIMA San Pablo, Inc.^(8)(14)
Healthcare & Pharmaceuticals Senior Secured Loan — Term B Loan (First Lien) 8.5% Cash, 3 month LIBOR(1.50%) + 7.00%; LIBOR Floor 1.50% , Due 1/18 2,860,000 2,856,176 2,745,600

See accompanying notes to unaudited consolidated financial statements.


Portfolio Company14	Investment	Industry	Interest Rate		Reference Rate and Spread1		Floor		Maturity	Initial Acquisition Date	Par/Shares		Cost			Fair Value2			Footnote Refs
Luminii LLC	Revolver	Construction & Building	12.7% Cash		SOFR+7.35%		1.00%		4/11/25	10/28/20		343	$	343		$	343		(7)(12)(13)(20)
MAG DS Corp.	First Lien Term Loan	Aerospace and Defense	10.9% Cash		SOFR+5.50%		1.00%		4/1/27	10/28/20		3,654		3,362			3,526		(7)(12)(13)
Money Transfer Acquisition, Inc.	First Lien Term Loan	Finance	13.7% Cash		SOFR+8.25%		1.00%		12/14/27	12/14/22		9,750		9,606			9,531		(7)(12)(13)
Morae Global Corporation	Term Loan	IT Consulting & Other Services	13.5% Cash		SOFR+8.00%		2.00%		10/26/26	10/26/23		2,263		2,136			2,167		(7)(12)(13)
Morae Global Corporation	Revolver	IT Consulting & Other Services	0.5% Cash			-	2.00%		10/26/26	10/26/23		-		(10	)		(9	)	(7)(12)(20)
MSM Acquisitions, Inc.	First Lien Term Loan	Services: Business	11.3% Cash		SOFR+6.00%		1.00%		12/9/26	12/31/20		7,005		6,966			6,655		(7)(12)(13)
MSM Acquisitions, Inc.	Delayed Draw Term Loan	Services: Business	11.3% Cash		SOFR+6.00%		1.00%		12/9/26	1/1/22		2,922		2,924			2,776		(7)(12)(13)
Neptune BidCo US Inc.	First Lien Term Loan	Media: Broadcasting & Subscription	10.4% Cash		SOFR+5.00%		0.50%		4/11/29	11/22/22		2,481		2,261			2,293		(7)(13)
Netwrix Corporation	First Lien Term Loan	High Tech Industries	10.4% Cash		SOFR+5.00%		0.75%		6/9/29	6/9/22		4,281		4,262			4,223		(7)(12)(13)
Netwrix Corporation	Revolver	High Tech Industries	0.3% Cash			-	0.75%		6/9/29	6/9/22		-		(9	)		(15	)	(7)(12)(20)
Netwrix Corporation	Delayed Draw Term Loan - First Lien	High Tech Industries	1.0% Cash			-	0.75%		6/9/29	6/9/22		-		-			-		(7)(12)(13)(20)
Northeast Metal Works LLC	Term Loan	Metals & Mining	8.0% Cash			-		-	4/5/28	1/27/22		4,500		4,500			3,369		(7)(12)(17)
Northeast Metal Works LLC	Term Loan	Metals & Mining	8.0% Cash			-		-	1/1/25	2/21/24		500		500			500		(7)(12)
One Stop Mailing LLC	First Lien Term Loan	Transportation: Consumer	11.7% Cash		SOFR+6.25%		1.00%		4/29/27	5/7/21		7,530		7,452			7,385		(7)(12)(13)
PhyNet Dermatology LLC	Term Loan	Healthcare & Pharmaceuticals	12.0% Cash		SOFR+6.50%		1.00%		10/20/29	5/10/23		1,304		1,280			1,289		(7)(12)(13)
PhyNet Dermatology LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	1.0% Cash			-		-	10/20/29	5/10/23		-		(6	)		(8	)	(7)(12)(20)
Pomeroy Technologies, LLC	Term Loan	High Tech Industries	10.0% PIK			-		-	4/4/26	5/3/22		433		431			411		(7)(12)
Pomeroy Technologies, LLC	Term Loan	High Tech Industries	10.0% PIK			-		-	4/4/26	4/4/22		62		62			23		(7)(12)
Pomeroy Technologies, LLC	Senior Term Loan A	High Tech Industries	5.0% PIK			-		-	4/4/26	5/29/20		1,728		1,587			652		(7)(12)
Pomeroy Technologies, LLC	Senior Term Loan B	High Tech Industries	7.0% PIK			-		-	4/4/26	5/29/20		1,621		1,499			-		(5)(7)(12)
Pomeroy Technologies, LLC	Super Senior Term Loan B	High Tech Industries	9.0% PIK			-		-	4/4/26	5/29/20		1,289		1,283			1,206		(7)(12)
Premier Imaging, LLC	Term Loan	Healthcare & Pharmaceuticals	11.6% Cash		SOFR+6.00%		1.00%		1/2/25	12/30/21		2,081		2,076			1,954		(7)(12)(13)
Premier Imaging, LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	11.6% Cash		SOFR+6.00%		1.00%		1/2/25	12/30/21		564		559			531		(7)(12)(13)
Priority Holdings, LLC	First Lien Term Loan	High Tech Industries	11.2% Cash		SOFR+5.75%		1.00%		4/22/27	4/21/21		5,597		5,578			5,592		(7)(12)(13)
Project Castle, Inc.	First Lien Term Loan	Transportation: Cargo	10.8% Cash		SOFR+5.50%		0.50%		6/8/29	6/9/22		7,154		6,611			6,516		(7)(13)
Project Leopard Holdings, Inc.	Term Loan	High Tech Industries	10.7% Cash		SOFR+5.25%		0.50%		7/20/29	6/15/22		7,900		7,482			7,329		(7)(13)
PVHC Holding Corp	Term Loan	Containers, Packaging and Glass	11.0% Cash + 0.8% PIK		SOFR+5.50%		2.50%		2/17/27	12/23/19		2,735		2,733			2,673		(7)(12)(13)
Qualtek LLC	Term Loan	High Tech Industries	6.2% Cash + 9.0% PIK		SOFR+1.00%		1.00%		7/14/25	7/14/23		4,473		4,473			4,041		(7)(13)
Radiology Partners, Inc	Term Loan	Healthcare & Pharmaceuticals	10.6% Cash		SOFR+5.00%		1.00%		1/31/29	1/26/21		6,229		5,919			6,033		(7)(13)
Radius Aerospace, Inc.	Initial Term Loan	Aerospace and Defense	11.2% Cash		SOFR+5.75%		1.00%		3/29/25	12/23/19		6,114		6,098			6,067		(7)(12)(13)
Reception Purchaser, LLC	First Lien Term Loan	Transportation: Cargo	11.5% Cash		SOFR+6.00%		0.75%		3/24/28	4/28/22		4,427		4,351			2,900		(7)(13)
Riddell Inc	First Lien Term Loan	Consumer goods: Durable	11.3% Cash		SOFR+6.00%			-	3/29/29	3/29/24		6,364		6,246			6,246		(7)(12)(13)
Riddell Inc	Delayed Draw Term Loan - First Lien	Consumer goods: Durable		-		-		-	3/29/29	3/29/24		-		4			4		(7)(12)(20)
Riskonnect Parent LLC	Term Loan	Application Software	11.0% Cash		SOFR+5.50%		0.75%		12/7/28	12/7/21		1,225		1,212			1,212		(7)(12)(13)
Riskonnect Parent LLC	Delayed Draw Term Loan	Application Software	0.5% Cash			-		-	12/7/28	12/7/21		-		(49	)		(50	)	(7)(12)(20)
South Street Securities Holdings, Inc	Senior Notes	Banking, Finance, Insurance & Real Estate	9.0% Cash			-		-	9/20/27	9/20/22		3,150		2,786			2,552		(7)(12)
Sundance Holdings Group, LLC	Term Loan	Retail	13.5% Cash + 1.5% PIK		SOFR+8.00%		1.00%		5/1/24	10/1/21		6,639		6,619			6,412		(7)(12)(13)
Symplr Software, Inc.	Term Loan	Healthcare & Pharmaceuticals	9.9% Cash		SOFR+4.50%		0.75%		12/22/27	2/2/22		1,666		1,663			1,572		(7)(13)

Portfolio Company / Principal Business Investment
Interest Rate¹ / Maturity Principal Amortized
Cost Fair Value

Grupo HIMA San Pablo, Inc.^(8)(14)
Healthcare & Pharmaceuticals Junior Secured Loan — Term Loan (Second Lien) 13.8% Cash, 3 month LIBOR(0.00%) + 13.75%; LIBOR Floor 0.00% , Due 7/18 7,191,667 7,167,268 6,544,417

Harland Clarke Holdings Corp. (fka Clarke American Corp.)⁽⁸⁾
Media: Advertising, Printing & Publishing Senior Secured Loan — Tranche B-6 Term Loan 6.8% Cash, 3 month LIBOR(1.33%) + 5.50%; LIBOR Floor 1.00% , Due 2/22 3,477,848 3,510,198 3,512,627

Hoffmaster Group, Inc.^(8)(14)
Forest Products & Paper Junior Secured Loan — Initial Term Loan (Second Lien) 10.8% Cash, 3 month LIBOR(1.33%) + 9.50%; LIBOR Floor 1.00% , Due 11/24 1,600,000 1,557,040 1,600,960

Industrial Services Acquisition, LLC (aka Evergreen / NAIC)^(8)(14)
Environmental Industries Senior Secured Loan — Term Loan 6.3% Cash, 1 month LIBOR(1.25%) + 5.00%; LIBOR Floor 1.00% , Due 6/22 1,183,955 1,189,840 1,183,955

Ivanti Software, Inc. (fka LANDesk Group, Inc.)^(8)(14)
High Tech Industries Junior Secured Loan — Loan (Second Lien) 10.2% Cash, 1 month LIBOR(1.24%) + 9.00%; LIBOR Floor 1.00% , Due 1/25 3,228,619 3,228,619 3,186,970

MB Aerospace ACP Holdings II Corp.⁽⁸⁾
Aerospace and Defense Senior Secured Loan — Initial Term Loan 6.8% Cash, 1 month LIBOR(1.25%) + 5.50%; LIBOR Floor 1.00% , Due 12/22 982,500 983,720 993,602

National Home Health Care Corp.^(8)(14)
Healthcare & Pharmaceuticals Junior Secured Loan — Term Loan (Second Lien) 10.2% Cash, 1 month LIBOR(1.23%) + 9.00%; LIBOR Floor 1.00% , Due 12/22 1,500,728 1,481,090 1,469,813

Onex Carestream Finance LP^(8)(14)
Healthcare & Pharmaceuticals Junior Secured Loan — Term Loan (Second Lien) 9.8% Cash, 3 month LIBOR(1.33%) + 8.50%; LIBOR Floor 1.00% , Due 12/19 1,704,810 1,704,810 1,685,205

Playpower, Inc.⁽⁸⁾
Construction & Building Senior Secured Loan — Initial Term Loan (First Lien) 6.1% Cash, 3 month LIBOR(1.33%) + 4.75%; LIBOR Floor 1.00% , Due 6/21 997,449 1,007,336 1,007,423

Roscoe Medical, Inc.^(8)(14)
Healthcare & Pharmaceuticals Junior Secured Loan — Term Loan (Second Lien) 11.3% Cash, 3 month LIBOR(0.00%) + 11.25%; LIBOR Floor 0.00% , Due 9/19 6,700,000 6,675,833 6,492,300

SCSG EA Acquisition Company, Inc.⁽⁸⁾
Healthcare & Pharmaceuticals Senior Secured Loan — Initial Term Loan (First Lien) 5.5% Cash, 3 month LIBOR(1.24%) + 4.25%; LIBOR Floor 1.00% , Due 9/23 4,000,000 3,980,220 3,980,000

See accompanying notes to unaudited consolidated financial statements.

Portfolio Company / Principal Business Investment
Interest Rate¹ / Maturity Principal Amortized
Cost Fair Value

SCSG EA Acquisition Company, Inc.⁽⁸⁾
Healthcare & Pharmaceuticals Junior Secured Loan — Initial Term Loan (Second Lien) 9.5% Cash, 3 month LIBOR(1.24%) + 8.25%; LIBOR Floor 1.00% , Due 9/24 5,000,000 4,950,470 4,950,000

Stafford Logistics, Inc. (dba Custom Ecology, Inc.)^(8)(14)(15)
Environmental Industries Senior Secured Loan — Term Loan 9.8% Cash, 3 month LIBOR(4.25%) + 5.50%; LIBOR Floor 1.00% , Due 8/21 2,709,639 2,695,841 1,935,225

Tank Partners Holdings, LLC^(8)(13)(14)
Energy: Oil & Gas Senior Secured Loan — Loan 14.3% Cash, 4.0% Cash, 10.25% PIK, 1 month Prime Rate 4.0% 11,640,915 11,255,256 8,220,814

Tex-Tech Industries, Inc.⁽⁸⁾
Textiles and Leather Junior Secured Loan — Term Loan (Second Lien) 10.2% Cash, 1 month LIBOR(1.24%) + 9.00%; LIBOR Floor 1.00% , Due 8/24 8,008,000 7,948,833 7,847,840

Time Manufacturing Acquisition, LLC⁽⁸⁾
Capital Equipment Senior Secured Loan — Term Loan 6.4% Cash, 3 month LIBOR(1.38%) + 5.00%; LIBOR Floor 1.00% , Due 2/23 997,494 995,017 995,000

Trimaran Advisors, L.L.C.⁽⁸⁾⁽⁹⁾
Related Party Loan Senior Unsecured Loan — Revolving Credit Facility 9.0% Cash, 3 month LIBOR(0.00%) + 7.89%; LIBOR Floor 0.00% , Due 11/17 20,000,000 20,000,000 20,000,000

TRSO I, Inc.^(8)(14)
Energy: Oil & Gas Junior Secured Loan — Term Loan (Second Lien) 14.0% Cash, 3 month LIBOR(1.00%) + 13.00%; LIBOR Floor 1.00% , Due 12/19 1,000,000 993,631 1,000,000

Weiman Products, LLC^(8)(14)
Consumer goods: Non-durable Senior Secured Loan — Term Loan (2013) 5.8% Cash, 3 month LIBOR(1.33%) + 4.50%; LIBOR Floor 1.00% , Due 11/18 734,613 732,896 734,613

WireCo WorldGroup Inc.^(8)(14)
Capital Equipment Junior Secured Loan — Initial Term Loan (Second Lien) 10.3% Cash, 3 month LIBOR(1.32%) + 9.00%; LIBOR Floor 1.00% , Due 9/24 3,000,000 2,960,569 3,001,200

Total Investment in Debt Securities
(69% of net asset value at fair value) $ 134,967,691 $ 134,031,011 $ 127,026,829


Portfolio Company14	Investment	Industry	Interest Rate		Reference Rate and Spread1		Floor		Maturity	Initial Acquisition Date	Par/Shares		Cost			Fair Value2			Footnote Refs
Synamedia Americas Holdings, Inc.	Term Loan	Interactive Media & Services	13.1% Cash		SOFR+7.75%		1.00%		12/5/28	12/5/23		2,714		2,625			2,639		(7)(12)(13)
TA/WEG Holdings, LLC	Delayed Draw Term Loan	Banking, Finance, Insurance & Real Estate	10.8% Cash		SOFR+5.50%		1.00%		10/2/27	10/1/21		7,853		7,842			7,853		(7)(12)(13)(20)
TA/WEG Holdings, LLC	Delayed Draw Term Loan	Banking, Finance, Insurance & Real Estate	10.8% Cash		SOFR+5.50%		1.00%		10/2/27	5/2/22		1,713		1,710			1,713		(7)(12)(13)(20)
TA/WEG Holdings, LLC	Revolver	Banking, Finance, Insurance & Real Estate	0.5% Cash			-	1.00%		10/2/27	5/2/22		-		(2	)		-		(7)(12)(20)
Tactical Air Support, Inc.	Term Loan	Aerospace and Defense	14.0% Cash		SOFR+8.50%		1.00%		12/22/28	12/22/23		1,714		1,674			1,674		(7)(12)(13)
Tactical Air Support, Inc.	Delayed Draw Term Loan	Aerospace and Defense	0.8% Cash			-		-	12/22/28	12/22/23		-		-			(7	)	(7)(12)(20)
TLE Holdings, LLC	Delayed Draw Term Loan	Healthcare, Education and Childcare	10.9% Cash		SOFR+5.50%		1.00%		6/29/26	12/23/19		720		720			719		(7)(12)(13)
TLE Holdings, LLC	Term Loan	Healthcare, Education and Childcare	10.9% Cash		SOFR+5.50%		1.00%		6/29/26	12/8/20		5,443		5,441			5,431		(7)(12)(13)
VBC Spine Opco LLC	Term Loan	Healthcare & Pharmaceuticals	13.5% Cash		SOFR+8.00%		2.00%		6/14/28	6/14/23		3,491		3,433			3,430		(7)(12)(13)
VBC Spine Opco LLC	Revolver	Healthcare & Pharmaceuticals	13.5% Cash		SOFR+8.00%		2.00%		6/14/28	6/14/23		387		381			380		(7)(12)
VBC Spine Opco LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	1.0% Cash			-	2.00%		6/14/28	6/14/23		-		(32	)		(33	)	(7)(12)(20)
Wonder Love, Inc.	Term Loan	Media: Diversified & Production	10.3% Cash		SOFR+5.00%		1.00%		11/18/24	12/18/19		750		748			750		(7)(12)(13)
Total Senior Secured Loans (166% of net asset value at fair value)													$	364,981		$	349,844
Junior Secured Loans
American Academy Holdings, LLC	Term Loan Second Lien	Healthcare & Pharmaceuticals	14.5% PIK			-		-	3/1/28	3/1/22		6,122		6,033			5,487		(7)(12)
Confluence Technologies, Inc.	Term Loan Second Lien	Services: Business	12.0% Cash		SOFR+6.50%		0.50%		7/23/29	7/22/21		4,000		3,980			3,670		(7)(12)(13)
Dcert Buyer, Inc.	Term Loan (Second Lien)	High Tech Industries	12.3% Cash		SOFR+7.00%			-	2/16/29	3/16/21		5,400		5,391			4,904		(7)(13)
Global Tel*Link Corporation	Term Loan (Second Lien)	Telecommunications	15.3% Cash		SOFR+10.00%			-	11/29/26	12/23/19		1,500		1,491			1,430		(7)(13)
Idera, Inc.	Term Loan (Second Lien)	High Tech Industries	12.2% Cash		SOFR+6.75%		0.75%		2/4/29	4/29/21		6,000		5,962			5,873		(7)(12)(13)
Ivanti Software, Inc.	Term Loan Second Lien	High Tech Industries	12.8% Cash		SOFR+7.25%		0.50%		12/1/28	10/26/21		6,000		5,967			5,213		(7)(13)
Lucky Bucks Holdings LLC	Promissory Note	Hotel, Gaming & Leisure		-		-		-	5/29/28	1/14/22		6,258		5,565			1,212		(5)(7)(12)
ProAir, LLC	Sub Note	Capital Equipment		-		-		-	1/31/23	3/8/22		2,020		1,931			-		(5)(7)(8)(12)
Project Leopard Holdings, Inc.	2nd Lien TL	High Tech Industries	13.1% Cash		SOFR+7.75%		0.50%		7/20/30	7/20/22		5,000		4,921			4,793		(7)(12)
Qualtek LLC	Term Loan Second Lien	High Tech Industries		-	SOFR+1.00%		1.00%		1/14/27	7/14/23		4,242		4,146			752		(5)(7)(12)(13)
Redstone Holdco 2 LP	Term Loan (Second Lien)	High Tech Industries	13.2% Cash		SOFR+7.75%		0.75%		4/16/29	9/28/21		4,566		4,512			2,747		(7)(13)
Robertshaw US Holding Corp.	Term Loan Second Lien	Capital Equipment		-		-		-	2/28/26	2/15/18		3,000		2,976			189		(5)(7)(12)
TRSO II, Inc.	Promissory Note	Energy: Oil & Gas		-		-		-	1/24/25	1/24/20		76		76			-		(5)(7)(12)
Total Junior Loans (17% of net asset value at fair value)													$	52,951		$	36,270

See accompanying notes to unaudited consolidated financial statements.

Equity Securities Portfolio

Portfolio Company / Principal Business Investment Percentage
Ownership/Shares Amortized Cost Fair Value²
Advanced Lighting Technologies, Inc,^(5)(8)(14)
Consumer goods: Durable Preferred Stock Series C 1.8 % $ 1 $ 1,000

Aerostructures Holdings L.P.^(5)(8)(14)
Aerospace and Defense Partnership Interests 1.2 % 1,000,000 1,000

Aerostructures Holdings L.P.^(5)(8)(14)
Aerospace and Defense Series A Preferred Interests 1.2 % 250,961 742,902

Caribe Media Inc. (fka Caribe Information Investments Incorporated)^(5)(8)(14)
Media: Advertising, Printing & Publishing Common 1.3 % 359,765 362,411

DBI Holding LLC^(5)(8)(14)
Services: Business Class A Warrants 3.2 % 1 1,000

eInstruction Acquisition, LLC^(5)(8)(14)
Services: Business Membership Units 1.1 % 1,079,617 1,000

FP WRCA Coinvestment Fund VII, Ltd.^(3)(5)(14)
Capital Equipment Class A Shares 1,500 1,500,000 747,940

Perseus Holding Corp.^(5)(8)(14)
Hotel, Gaming & Leisure Common 0.2 % 400,000 1,000

Roscoe Investors, LLC^(5)(8)(14)
Healthcare & Pharmaceuticals Class A Units 1.6 % 1,000,000 1,234,000

Tank Partners Holdings, LLC^{(5)(8)(10)(14)}
Aerospace and Defense Class B Units 5.8 % 980,000 1,000

Tank Partners Holdings, LLC^(5)(8)(14)
Aerospace and Defense Warrants 1.3 % 185,205 1,000

TRSO II, Inc.^(5)(8)(14)
Energy: Oil & Gas Common Stock 5.4 % 1,680,158 1,354,924

New Millennium Holdco, Inc. (Millennium Health, LLC)^(5)(8)(14)
Healthcare & Pharmaceuticals Common 0.2 % 1,953,299 1,000

Total Investment in Equity Securities (2% of net asset value at fair value) $ 10,389,007 $ 4,450,177

Equity Securities Portfolio


Portfolio Company14	Investment	Industry	Interest Rate	Initial Acquisition Date	Par/Shares		Cost		Fair Value2		Footnote Refs
4L Ultimate Topco Corporation	Common	Services: Business		5/29/20		321		29		29	(7)(12)(18)
AAPC Holdings, LLC	Equity	Healthcare & Pharmaceuticals		5/18/22		-		-		509	(7)(12)(18)(22)
AAPC Holdings, LLC	Preferred Equity	Healthcare & Pharmaceuticals	18.0% PIK	5/18/22		146,214		4		201	(7)(12)(22)
Advantage Capital Holdings LLC	Class A Membership Units	Banking, Finance, Insurance & Real Estate		3/31/20		658		-		1,883	(7)(12)(18)(19)(22)
Advantage Capital Holdings LLC	Class A Membership Units	Banking, Finance, Insurance & Real Estate		4/14/22		164		500		649	(7)(12)(18)(22)
Advantage Capital Holdings LLC	Preferred Equity	Banking, Finance, Insurance & Real Estate	12.5% PIK	4/14/22		2,547,193		2,549		2,548	(7)(12)(22)
Anthem Sports & Entertainment Inc.	Warrant Class A	Media: Broadcasting & Subscription		9/9/19		263		46		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrant Class B	Media: Broadcasting & Subscription		9/9/19		46		-		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrant Common Stock	Media: Broadcasting & Subscription		9/9/19		859		-		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrants	Media: Broadcasting & Subscription		11/15/21		42		-		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrants	Media: Broadcasting & Subscription		11/15/21		247		-		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrants	Media: Broadcasting & Subscription		11/15/21		785		-		-	(7)(12)(18)
Aperture Dodge 18 LLC	Equity	Banking, Finance, Insurance & Real Estate		4/22/22		3,067,908		3,068		3,317	(7)(12)(18)
ATP Oil & Gas Corporation	Limited Term Royalty Interest	Energy: Oil & Gas		12/18/19		-		-		-	(7)(11)(12)
BMP Slappey Holdco, LLC	Preferred Stock	Telecommunications		6/9/21		200,000		467		631	(7)(12)(17)(18)(21)
BMP Slappey Investment II	Preferred Stock	Telecommunications		6/9/21		88,946		208		281	(7)(12)(17)(18)(21)
Carestream Health Holdings, Inc.	Common Stock	Healthcare & Pharmaceuticals		9/30/22		4,099		53		91	(7)(12)(18)
Centric Brands, L.P.	Equity	Machinery (Non-Agrclt/Constr/Electr)		10/28/20		81,770		746		1,343	(7)(12)(13)
DxTx Pain and Spine LLC	Common	Healthcare & Pharmaceuticals		6/14/23		158,166		258		259	(7)(12)(22)
EBSC Holdings LLC	Preferred Equity	Consumer goods: Durable	10.0% PIK	3/29/24		2,000		1,974		1,974	(7)(12)
Everyware Global, Inc.	Common	Consumer goods: Durable		10/28/20		1,085,565		346		175	(7)(12)(18)
FP WRCA Coinvestment Fund VII, Ltd.	Class A Shares	Capital Equipment		2/2/07		100		1,500		783	(3)(12)(18)
Fusion Connect, Inc.	Common	Telecommunications		1/14/20		14		866		-	(7)(12)(13)(18)
GreenPark Infrastructure, LLC	Preferred Equity	Energy: Electricity		6/10/22		1,000		500		500	(7)(12)(17)(18)(22)
GreenPark Infrastructure, LLC	Preferred Equity	Energy: Electricity		6/10/22		500		171		171	(7)(12)(17)(18)(20)(22)
HDC/HW Holdings, LLC	Common Stock	High Tech Industries		10/28/20		148,826		-		-	(7)(12)(13)
Kleen-Tech Acquisition, LLC	Common Stock	Services: Business		6/9/21		250,000		1,264		1,148	(7)(12)(17)(18)(21)
LB NewHoldCo LLC	Common Stock	Hotel, Gaming & Leisure		10/2/23		96,523		1,441		1,497	(7)(12)(13)
Morae Global Holdings Inc.	Warrants	IT Consulting & Other Services		10/26/23		1		87		109	(7)(12)
Northeast Metal Works LLC	Preferred Stock	Metals & Mining		6/9/21		2,368		-		-	(7)(12)(17)(18)(21)
Northeast Metal Works LLC	Preferred Stock	Metals & Mining	10.0% PIK	4/5/23		4,500,000		4,500		4,182	(7)(12)(17)
Ohene Holdings B.V.	Warrants	High Tech Industries		3/13/19		4		-		-	(3)(12)(18)
ProAir HoldCo, LLC	Common Stock	Capital Equipment		2/11/22		2,749,997		4,261		-	(7)(8)(12)(18)
Prosper Marketplace	Class B Preferred Units	Consumer goods: Durable		9/23/13		912,865		279		324	(6)(7)(12)(18)
Qualtek LLC	Equity	High Tech Industries		7/14/23		150,262		1,277		-	(7)(12)(13)
Roscoe Investors, LLC	Class A Units	Healthcare & Pharmaceuticals		3/26/14		10,000		1,000		443	(7)(12)(18)
South Street Securities Holdings, Inc	Warrants	Banking, Finance, Insurance & Real Estate		9/20/22		3,966		455		381	(7)(12)(18)
Sundance Holdings Group, LLC	Common Stock	Retail		10/1/21		14,603		-		-	(7)(12)(13)
Tank Partners Equipment Holdings LLC	Class A Units	Energy: Oil & Gas		2/15/19		49,000		6,228		-	(7)(8)(12)(18)
World Business Lenders, LLC	Common Stock	Banking, Finance, Insurance & Real Estate		6/9/21		49,209		-		-	(12)(18)
Total Equities (11% of net asset value at fair value)							$	34,077	$	23,428

CLO Subordinated Investments


Portfolio Company14	Investment10	Industry	Maturity	Percentage Ownership	Initial Acquisition Date	Cost		Fair Value2		Footnote Refs
Catamaran CLO 2014-1 Ltd.	Subordinated Securities, effective interest 43.4%	CLO Fund Securities	4/20/30	22.2%	5/6/14	$	702	$	702	(3)(12)
Catamaran CLO 2018-1 Ltd	Subordinated Securities, effective interest 21.7%	CLO Fund Securities	10/27/31	24.8%	9/27/18		3,846		3,757	(3)(12)
Dryden 30 Senior Loan Fund	Subordinated Securities, effective interest 32.6%	CLO Fund Securities	11/1/28	6.8%	10/10/13		246		246	(3)(12)
JMP Credit Advisors CLO IV LTD	Subordinated Securities, effective interest 13.2%	CLO Fund Securities	7/17/29	57.2%	10/22/21		715		668	(3)(12)
JMP Credit Advisors CLO V LTD	Subordinated Securities, effective interest 24.5%	CLO Fund Securities	7/17/30	57.2%	10/22/21		3,253		3,176	(3)(12)
Total CLO Fund Securities (4% of net asset value at fair value)						$	8,762	$	8,549

Asset Manager Affiliates


Portfolio Company14	Investment	Percentage Ownership	Initial Acquisition Date	Cost		Fair Value2		Footnote Refs
Asset Manager Affiliates	Asset Management Company	100.0%	12/11/06	$	17,791	$	-	(8)(12)
Total Asset Manager Affiliates (0% of net asset value at fair value)				$	17,791	$	-

See accompanying notes to unaudited consolidated financial statements.

CLO Fund Securities

CLO Subordinated Investments
Portfolio Company Investment⁽¹¹⁾
Percentage
Ownership
Amortized Cost Fair Value
Grant Grove CLO, Ltd.^(3)(12)(14) Subordinated Securities, effective interest N/M, 1/21 maturity 22.2 % $ 2,485,886 $ 1,000
Katonah III, Ltd.^(3)(12)(14) Subordinated Securities, effective interest N/M, 5/15 maturity 23.1 % 1,287,155 369,000
Katonah 2007-I CLO Ltd.^(3)(6)(14) Subordinated Securities, effective interest 20.8%, 4/22 maturity 100.0 % 31,123,451 21,447,386
Trimaran CLO VII, Ltd.^{(3)(6)(13)(14)} Subordinated Securities, effective interest N/M, 6/21 maturity 10.5 % 379,830 10,000
Catamaran CLO 2012-1 Ltd.^(3)(6)(14) Subordinated Securities, effective interest 17.1%, 12/23 maturity 24.9 % 5,759,981 2,239,810
Catamaran CLO 2013- 1 Ltd.^(3)(6)(14) Subordinated Securities, effective interest 14.1%, 1/25 maturity 23.5 % 4,786,050 3,806,100
Catamaran CLO 2014-1 Ltd.^(3)(6)(14) Subordinated Securities, effective interest 10.2%, 4/26 maturity 32.4 % 8,681,740 4,847,620
Dryden 30 Senior Loan Fund^(3)(14) Subordinated Securities, effective interest 31.0%, 11/25 maturity 7.5 % 1,276,135 1,499,682
Catamaran CLO 2014-2 Ltd.^(3)(6)(14) Subordinated Securities, effective interest 12.8%, 10/26 maturity 24.9 % 6,699,877 4,484,009
Catamaran CLO 2015-1 Ltd.^(3)(6)(14) Subordinated Securities, effective interest 9.2%, 4/27 maturity 9.9 % 4,416,694 3,033,719
Catamaran CLO 2016-1 Ltd.^(3)(6)(14) Subordinated Securities, effective interest 6.8%, 1/29 maturity 24.9 % 10,196,554 8,585,018

Total Investment in CLO Subordinated Securities $ 77,093,353 $ 50,323,344

CLO Rated-Note Investment
Portfolio Company Investment
Percentage
Ownership
Amortized Cost Fair Value
Catamaran CLO 2014-1 Ltd.^(3)(6)(14) Float - 04/2026 - E - 14889FAC7, Par Value of $1,525,000, 7.1% cash, 4/26 maturity 15.1 % 1,451,386 1,520,000

Total Investment in CLO Rated-Note $ 1,451,386 $ 1,520,000

Total Investment in CLO Fund Securities (28% of net asset value at fair value) $ 78,544,739 $ 51,843,344

Joint Ventures


Portfolio Company14	Investment	Percentage Ownership	Initial Acquisition Date	Cost		Fair Value2		Footnote Refs
KCAP Freedom 3 LLC	Joint Ventures	62.8%	12/11/18	$	26,446	$	13,523	(8)(12)
Series A-Great Lakes Funding II LLC	Joint Ventures	12.5%	8/5/22		38,562		39,641	(9)(16)(17)(20)
Total Joint Venture (25% of net asset value at fair value)				$	65,008	$	53,164

Derivatives


Portfolio Company14	Investment	Industry	Initial Acquisition Date	Cost		Fair Value2		Footnote Refs
HDNet Holdco LLC (Anthem)	Derivatives	Media: Broadcasting & Subscription	9/9/19	$	31	$	-	(12)(19)
Advantage Capital Holdings LLC	Derivatives	Banking, Finance, Insurance & Real Estate	4/14/22		-		-	(12)(19)
Total Derivatives (0% of net asset value at fair value)				$	31	$	-

Total Investments4 (224% of net asset value at fair value)				$	543,601	$	471,255

(1)

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 SOFR 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 March 31, 2024 loan. L loans are typically indexed to 12 month, 6 month, 3 month, 2 month or 1 month S rates. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at March 31, 2024. As noted in the table above, 79.5% (based on par) of debt securities contain floors which range between 0.50% and 5.25%.

(2)

Reflects the fair market value of all investments as of March 31, 2024 as determined in good faith using significant unobservable inputs by the Adviser in its role as “valuation designee” in accordance with Rule 2a-5 under the 1940 Act, pursuant to valuation policies and procedures that have been approved by the Company’s board of directors (the “Board”).

(3)

Non-U.S. company or principal place of business outside the U.S.

(4)

The aggregate cost of investments for federal income tax purposes is approximately $513.6 million. The aggregate gross unrealized appreciation is approximately $31.5 million, the aggregate gross unrealized depreciation is approximately $0.2 million and the net unrealized depreciation is approximately $31.3 million.

(5)

Loan or debt security is on non-accrual status and therefore is considered non-income producing.

(6)

Held through Garrison Capital Equity Holdings II LLC and net of non-controlling member’s interest of 17.5% pursuant to the Amended and Restated Limited Liability Company Agreement of Garrison Capital Equity Holdings II LLC.

(7)

Qualified asset for purposes of section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Qualifying assets represent approximately 87.1% of the total assets at March 31, 2024.

(8)

As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” and has “Control” of this portfolio company as the Company owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). Other than for purposes of the 1940 Act, the Company does not believe that it has control over this portfolio company.

(9)

Non-voting.

(10)

CLO Subordinated Investments are entitled to periodic distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s investments less contractual payments to debt holders and fund expenses. The estimated annualized effective yield indicated is based upon a current projection of the amount and timing of these distributions. Such projections are updated on a quarterly basis and the estimated effective yield is adjusted prospectively.

(11)

This investment receives a 5% royalty interest on oil being produced on certain fields. All production payments received were applied to the cost basis and considered return of capital. Production payments received in excess of cost basis are recognized as realized gain.

(12)

Fair value of this investment was determined using significant unobservable inputs.

(13)

As of March 31, 2024, this investment is pledged to secure the Company’s debt obligations.

(14)

The Company's investments are generally acquired in private transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) and, therefore, are generally subject to limitations on resale, and may be deemed to be “restricted securities'' under the Securities Act of 1933.

(15)

(16)

See Note 4 - Investments for additional information regarding the Company's investment in Series A-Great Lakes Funding II LLC.

(17)

Under the 1940 Act, the Company is deemed to be an “Affiliated Person” of, as defined in the 1940 Act, this portfolio company as the Company owns at least 5% of the portfolio company’s outstanding voting securities or is under common control with such portfolio company.

(18)

Non-income producing.

(19)

Information related to the Company’s derivatives is presented below as of March 31, 2024:

($ in thousands)

Description

Counterparty

Number of shares

Notional amount

Exercise price

Expiration date

Value

Call option

HDNet Holdco LLC

0.2

0.01

N/A

Description

Counterparty

Number of shares

Notional amount

Exercise price

Expiration date

Value

Put option

Advantage Capital Holdings LLC

164

563

4/24/24

See accompanying notes to unaudited consolidated financial statements.

(20)

Security has an unfunded commitment in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 8 for additional information on the Company’s commitments and contingencies.

(21)

This investment is owned by HCAP Equity Holdings, LLC, one of the Company’s taxable blocker subsidiaries.

(22)

This investment is owned by PTMN Sub Holdings LLC, one of the Company’s taxable blocker subsidiaries.

Asset Manager Affiliates
Portfolio Company / Principal Business Investment Percentage
Ownership Cost Fair Value²
Asset Manager Affiliates^(8)(9)(14) Asset Management Company 100 % $ 53,341,230 $ 39,679,000

Total Investment in Asset Manager Affiliates
(21% of net asset value at fair value) $ 53,341,230 $ 39,679,000

Joint Ventures

Portfolio Company / Principal Business Investment Percentage
Ownership Cost Fair Value
KCAP Freedom 3 LLC⁽¹⁴⁾ Joint Venture 60 % $ 36,738,873 $ 36,591,122

Total Investment in Joint Ventures (20% of net asset value at fair value) $ 36,738,873 $ 36,591,122

Short-term Investments

Short-term Investments Investment Yield Par /Amortized Cost Fair Value²
JP Morgan Business Money Market Account⁽⁷⁾⁽⁸⁾ Money Market Account 0.10 % $ 14,269 $ 14,269

US Bank Money Market Account⁽⁷⁾⁽⁸⁾ Money Market Account 0.10 % 32,001,559 32,001,559
U.S Treasury Bills⁽⁸⁾ U.S Treasury Bills, 912796LY3,10/19/17 maturity 0.883 % 15,007,000 15,007,000
U.S Treasury Bills⁽⁸⁾ U.S Treasury Bills, 912796KR9, 10/12/17 maturity 0.801 % 10,002,000 10,002,000

Total Short-term Investments
(31% of net asset value at fair value) $ 57,024,828 $ 57,024,828
Total Investments⁴ $ 370,069,689 $ 316,615,300

¹	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 September 30, 2017. As noted in the table above, 83% (based on par) of debt securities contain LIBOR floors which range between 1.00% and 3.0%.

²	~~Reflects the fair market value of all investments as of September 30, 2017, as determined by the Company’s Board of Directors.~~

³	~~Non-U.S. company or principal place of business outside the U.S.~~

⁴	The aggregate cost of investments for federal income tax purposes is approximately $377 million. The aggregate gross unrealized appreciation is approximately $0.9 million, the aggregate gross unrealized depreciation is approximately $61.2 million, and the net unrealized depreciation is approximately $60.3 million.

⁵	~~Non-income producing.~~

⁶	~~An affiliate CLO Fund managed by an Asset Manager Affiliate (as such term is defined in the notes to the consolidated financial statements).~~

⁷	~~Money market account holding cash.~~

See accompanying notes to unaudited consolidated financial statements.

⁸	~~Qualified asset for purposes of section 55(a) of the Investment Company Act of 1940.~~

⁹	Other than the Asset Manager Affiliate, which we are deemed to “control”, we do not “control” and are not an “affiliate” of any of our portfolio companies, each as defined in the Investment Company Act of 1940 (the “1940 Act”). In general, under the 1940 Act, we would be presumed to “control” a portfolio company if we owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company if we owned 5% or more of its voting securities.

¹⁰	~~Non-voting.~~

¹¹	CLO Subordinated Investments are entitled to periodic distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s investments less contractual payments to debt holders and fund expenses. The estimated annualized effective yield indicated is based upon a current projection of the amount and timing of these distributions. Such projections are updated on a quarterly basis and the estimated effective yield is adjusted prospectively.

¹²	~~Notice of redemption has been received for this security.~~

¹³	~~Loan or security was on partial nonaccrual status, whereby we have recognized income on a portion of~~ ~~contractual PIK amounts due.~~

¹⁴	~~Fair value of this investment was determined using significant unobservable inputs.~~

¹⁵	~~Loan or debt security is on non-accrual status and is therefore considered non-income producing.~~

PORTMAN RIDGE FINANCE CORPORATION

CONSOLIDATED SCHEDULE OF INVESTMENTS

As of December 31, 2023

(in thousands, except share and per share amounts)

Debt Securities Portfolio


Portfolio Company14	Investment	Industry	Interest Rate	Reference Rate and Spread1	Floor	Maturity	Initial Acquisition Date	Par/Shares		Cost			Fair Value2			Footnote Refs
Senior Secured Loans
Accordion Partners LLC	Term Loan	Finance	11.6% Cash	SOFR+6.25%	0.75%	8/29/29	8/31/22		7,908	$	7,765		$	7,899		(7)(12)(13)
Accordion Partners LLC	Revolver	Finance	0.5% Cash		0.75%	8/31/28	8/31/22		-		(27	)		(2	)	(7)(12)(20)
Accordion Partners LLC	Delayed Draw Term Loan	Finance	11.6% Cash	SOFR+6.25%	0.75%	8/29/29	8/31/22		694		688			700		(7)(12)(13)
Accordion Partners LLC	Delayed Draw Term Loan	Finance	11.6% Cash	SOFR+6.25%	0.75%	8/29/29	8/31/22		870		862			869		(7)(12)(13)
Accurate Background, LLC	Term Loan	Services: Business	11.6% Cash	SOFR+6.00%	1.00%	3/26/27	10/20/21		2,931		2,770			2,818		(7)(12)(13)
Accurate Background, LLC	First Lien Term Loan	Services: Business	11.6% Cash	SOFR+6.00%	1.00%	3/26/27	9/7/22		1,481		1,392			1,424		(7)(12)(13)
Advantage Capital Holdings LLC	Term Loan	Banking, Finance, Insurance & Real Estate	8.0% Cash + 5.0% PIK			4/14/27	4/14/22		14,036		14,036			13,773		(7)(12)(13)
AIDC IntermediateCo 2, LLC	First Lien Term Loan	Services: Business	11.8% Cash	SOFR+6.40%	1.00%	7/22/27	9/9/22		990		977			976		(7)(12)(13)
AIS Holdco, LLC	First Lien Term Loan A	Banking, Finance, Insurance & Real Estate	10.6% Cash	SOFR+5.00%		8/15/25	10/28/20		2,223		2,068			2,220		(7)(12)(13)
AMCP Pet Holdings, Inc.	First Lien Term Loan	Beverage, Food and Tobacco	11.8% Cash + 0.8% PIK	SOFR+6.25%	1.00%	10/6/26	12/9/20		4,869		4,823			4,766		(7)(12)(13)
AMCP Pet Holdings, Inc.	Revolving Loan	Beverage, Food and Tobacco	12.4% Cash	SOFR+7.00%	1.00%	10/6/26	12/9/20		651		641			630		(7)(12)(20)
American Academy Holdings, LLC	First Lien Term Loan	Healthcare & Pharmaceuticals	11.2% Cash + 5.3% PIK	SOFR+5.75%	1.00%	1/1/25	3/1/22		3,124		3,114			3,144		(7)(12)
American Academy Holdings, LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	11.2% Cash + 5.3% PIK	SOFR+5.75%	1.00%	1/1/25	3/1/22		620		618			624		(7)(12)(13)
Ancile Solutions, Inc.	First Lien Term Loan	High Tech Industries	15.7% Cash	SOFR+10.00%	1.00%	6/11/26	6/11/21		6,274		6,187			6,305		(7)(12)(13)
Anthem Sports & Entertainment Inc.	Term Loan	Media: Broadcasting & Subscription	3.0% Cash + 12.1% PIK	SOFR+9.50%	1.00%	11/15/26	11/15/21		12,880		12,718			10,965		(7)(12)(13)
Anthem Sports & Entertainment Inc.	Revolver	Media: Broadcasting & Subscription	15.1% Cash	SOFR+9.50%	1.00%	11/15/26	11/15/21		1,084		1,068			910		(7)(12)(20)
Anthem Sports & Entertainment Inc.	Revolver	Media: Broadcasting & Subscription	15.1% Cash	SOFR+9.50%	1.00%	6/30/24	8/9/22		547		547			465		(7)(12)
Appfire Technologies, LLC	Term Loan	High Tech Industries	11.0% Cash	SOFR+5.50%	1.00%	3/9/27	12/20/21		5,894		5,887			5,859		(7)(12)(13)
Aventiv Technologies, LLC	Term Loan	Alternative Carriers	10.5% Cash	SOFR+4.89%	1.00%	11/1/24	12/29/23		989		971			937		(7)(12)
BetaNXT, Inc.	First Lien Term Loan	Banking, Finance, Insurance & Real Estate	11.1% Cash	SOFR+5.75%		7/1/29	7/1/22		12,608		11,964			12,104		(7)(12)(13)
BetaNXT, Inc.	Revolver	Banking, Finance, Insurance & Real Estate	9.6% Cash	SOFR+4.25%		7/1/27	7/1/22		242		242			145		(7)(12)(20)
Bradshaw International Parent Corp.	Term Loan	Consumer goods: Durable	11.2% Cash	SOFR+5.75%	1.00%	10/21/27	10/29/21		496		488			482		(7)(12)(13)
Bradshaw International Parent Corp.	Revolver	Consumer goods: Durable	0.5% Cash		1.00%	10/21/26	10/29/21		-		(22	)		(25	)	(7)(12)(20)
Bristol Hospice	Unitranche	Healthcare & Pharmaceuticals	12.0% Cash	SOFR+6.50%	1.00%	12/22/26	12/22/20		2,071		2,051			2,017		(7)(12)(13)
Bristol Hospice	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	12.0% Cash	SOFR+6.50%	1.00%	12/22/26	12/22/20		738		734			718		(7)(12)(13)(20)
BW NHHC Holdco Inc.	First Lien Term Loan	Healthcare & Pharmaceuticals	12.9% Cash	SOFR+7.50%	2.00%	1/15/26	12/21/22		952		946			969		(7)
C.P. Converters, Inc.	Term Loan	Chemicals, Plastics and Rubber	12.3% Cash + 1.0% PIK	SOFR+6.50%	1.00%	9/30/24	11/17/21		6,117		6,117			6,178		(7)(12)(13)
C.P. Converters, Inc.	Term Loan	Chemicals, Plastics and Rubber	12.0% Cash + 1.0% PIK	SOFR+6.50%	1.00%	9/30/24	7/29/21		1,009		1,009			1,019		(7)(12)(13)
C.P. Converters, Inc.	Seventh Amendment Acquisition Loan	Chemicals, Plastics and Rubber	12.2% Cash + 1.0% PIK	SOFR+6.50%	1.00%	9/30/24	6/26/20		2,612		2,612			2,638		(7)(12)(13)
CB Midco, LLC	Term Loan	Consumer goods: Durable	11.2% Cash	SOFR+5.75%	1.00%	9/27/27	10/8/21		3,802		3,778			3,525		(7)(12)(13)
Cenexel Clinical Research, Inc.	Term Loan	Healthcare & Pharmaceuticals	11.2% Cash	SOFR+5.75%	1.00%	11/8/25	6/15/22		5,773		5,742			5,773		(7)(12)(13)
Centric Brands Inc.	Revolver	Machinery (Non-Agrclt/Constr/Electr)	0.8% Cash		1.00%	10/9/24	10/28/20		-		(14	)		-		(7)(12)(13)(20)
Centric Brands Inc.	Term Loan	Machinery (Non-Agrclt/Constr/Electr)	7.9% Cash + 7.0% PIK	SOFR+2.50%		10/9/25	10/28/20		10,487		9,851			9,976		(7)(12)(13)

See accompanying notes to unaudited consolidated financial statements.


Portfolio Company14	Investment	Industry	Interest Rate	Reference Rate and Spread1	Floor	Maturity	Initial Acquisition Date	Par/Shares		Cost			Fair Value2			Footnote Refs
Centric Brands Inc.	Revolver	Machinery (Non-Agrclt/Constr/Electr)	0.8% Cash		1.00%	10/9/24	8/22/22		-	$	(1	)	$	-		(7)(12)(13)(20)
Colonnade Intermediate, LLC	Term Loan	Services: Business	12.5% Cash	SOFR+7.00%	1.00%	2/27/24	3/2/22		400		400			398		(7)(12)(13)
Colonnade Intermediate, LLC	Term Loan	Services: Business	12.5% Cash	SOFR+7.00%	1.00%	2/27/24	3/1/21		698		698			693		(7)(12)
Colonnade Intermediate, LLC	First Lien Term Loan	Services: Business	12.5% Cash	SOFR+7.00%	1.00%	2/27/24	10/28/20		4,899		4,898			4,866		(7)(12)(13)
Colonnade Intermediate, LLC	Revolver	Services: Business	12.6% Cash	SOFR+7.00%	1.00%	2/27/24	10/28/20		576		576			571		(7)(12)(13)(20)
Colonnade Intermediate, LLC	Revolver	Services: Business	12.6% Cash	PRIME+7.00%	1.00%	2/27/24	10/28/20		41		41			41		(7)(12)(13)(20)
Colonnade Intermediate, LLC	Delayed Draw Term Loan	Services: Business	12.5% Cash	SOFR+7.00%	1.00%	2/27/24	3/1/21		740		740			735		(7)(12)
Colonnade Intermediate, LLC	Delayed Draw Term Loan	Services: Business	12.5% Cash	SOFR+7.00%	1.00%	2/27/24	10/28/20		448		448			445		(7)(12)(13)
Critical Nurse Staffing, LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	11.9% Cash	SOFR+6.50%	1.00%	10/30/26	11/1/21		625		619			615		(7)(12)(13)
Critical Nurse Staffing, LLC	Term Loan	Healthcare & Pharmaceuticals	12.0% Cash	SOFR+6.50%	1.00%	10/30/26	11/1/21		8,082		8,002			7,961		(7)(12)(13)
Critical Nurse Staffing, LLC	Revolver	Healthcare & Pharmaceuticals	0.5% Cash		1.00%	10/30/26	11/1/21		-		(35	)		(30	)	(7)(12)(20)
Critical Nurse Staffing, LLC	Term Loan	Healthcare & Pharmaceuticals	12.0% Cash	SOFR+6.50%	1.00%	11/1/26	11/1/21		3,990		3,912			3,930		(7)(12)(13)
Datalink, LLC	First Lien Term Loan	Healthcare & Pharmaceuticals	12.2% Cash	SOFR+6.75%	1.00%	11/23/26	12/8/20		2,715		2,679			2,715		(7)(12)(13)
Dentive, LLC	First Lien Term Loan	Healthcare & Pharmaceuticals	12.4% Cash	SOFR+7.00%	0.75%	12/26/28	12/23/22		1,507		1,470			1,482		(7)(12)(13)
Dentive, LLC	Delayed Draw Term Loan - First Lien	Healthcare & Pharmaceuticals	12.4% Cash	SOFR+7.00%	0.75%	12/26/28	12/23/22		317		307			304		(7)(12)(13)(20)
Dentive, LLC	Revolver	Healthcare & Pharmaceuticals	12.4% Cash	SOFR+7.00%	0.75%	12/23/28	12/23/22		48		42			44		(7)(12)(20)
Dodge Data & Analytics LLC	Term Loan	Construction & Building	10.3% Cash	SOFR+4.75%	0.50%	2/10/29	2/10/22		1,478		1,461			1,165		(7)(13)
ELO Touch Solutions, Inc.	First Lien Term Loan	High Tech Industries	12.0% Cash	SOFR+6.50%		12/14/25	10/28/20		2,049		1,928			1,983		(7)(13)
Florida Food Products, LLC	First Lien Term Loan	Beverage, Food and Tobacco	10.4% Cash	SOFR+5.00%	0.75%	10/18/28	6/9/22		1,980		1,888			1,737		(7)(13)
Florida Food Products, LLC	Term Loan	Beverage, Food and Tobacco	10.5% Cash	SOFR+5.00%	0.75%	10/18/28	3/22/22		4,913		4,868			4,311		(7)(13)
Franchise Group, Inc.	First Out Term Loan	Retail	10.4% Cash	SOFR+4.75%	0.75%	2/25/26	3/18/22		2,900		2,890			2,350		(13)
Global Integrated Flooring Systems Inc.	Revolver	Consumer goods: Durable	13.7% Cash	SOFR+8.36%		5/15/24	10/28/20		51		44			31		(7)(12)
Global Integrated Flooring Systems Inc.	First Lien Term Loan	Consumer goods: Durable	13.8% Cash + 1.0% PIK	SOFR+8.36%		5/15/24	10/28/20		6,852		6,124			4,127		(7)(12)
H.W. Lochner, Inc.	Term Loan	Services: Business	11.8% Cash	SOFR+6.25%	1.00%	7/2/27	7/2/21		14,663		14,491			14,149		(7)(12)(13)
H.W. Lochner, Inc.	Revolver	Services: Business	11.8% Cash	SOFR+6.25%	1.00%	7/2/27	7/2/21		3,858		3,764			3,578		(7)(12)(20)
H-CA II, LLC	Term Loan	Banking, Finance, Insurance & Real Estate	16.0% Cash			4/1/24	2/16/21		1,854		1,854			1,854		(7)(12)
HDC/HW Intermediate Holdings, LLC	First Lien Term Loan A	High Tech Industries	12.8% Cash + 2.0% PIK	SOFR+7.50%	1.00%	12/21/23	10/28/20		7,525		7,087			4,252		(5)(7)(12)(13)
HDC/HW Intermediate Holdings, LLC	Revolver	High Tech Industries	12.8% Cash + 2.0% PIK	SOFR+7.50%	1.00%	12/21/23	10/28/20		773		728			437		(5)(7)(12)(13)
Help Systems Holdings, Inc.	First Lien Term Loan	High Tech Industries	9.5% Cash	SOFR+4.00%	0.75%	11/19/26	11/17/22		1,974		1,849			1,876		(7)(13)
Hollander Intermediate LLC	First Lien Term Loan	Consumer goods: Durable	14.2% Cash	SOFR+8.75%	2.00%	9/19/26	9/19/22		5,508		5,395			5,260		(7)(12)(13)
IDC Infusion Services	Term Loan	Healthcare & Pharmaceuticals	12.0% Cash	SOFR+6.50%	0.50%	7/7/28	7/20/23		2,928		2,873			2,880		(7)(12)(13)
IDC Infusion Services	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	1.0% Cash		1.00%	7/7/28	7/20/23		-		(20	)		(17	)	(7)(12)(20)
Intermedia Holdings, Inc.	First Lien Term Loan B	High Tech Industries	11.5% Cash	SOFR+6.00%	1.00%	7/21/25	10/28/20		2,613		2,498			2,531		(7)(13)
Ivanti Software, Inc.	First Lien Term Loan	High Tech Industries	9.9% Cash	SOFR+4.25%	0.75%	12/1/27	10/12/22		987		813			940		(7)(13)
JO ET Holdings Limited	Term Loan	Telecommunications	11.4% Cash + 7.0% PIK	SOFR+6.00%	1.00%	12/15/26	12/15/21		2,260		2,236			2,254		(3)(12)
Keg Logistics LLC	Term Loan	Services: Business	11.5% Cash	SOFR+6.00%	1.00%	11/23/27	11/23/21		11,999		11,882			11,579		(7)(12)(13)
Keg Logistics LLC	Revolver	Services: Business	11.5% Cash	SOFR+6.00%	1.00%	11/23/27	11/23/21		872		859			842		(7)(12)
Lifescan Global Corporation	First Lien Term Loan A	Healthcare & Pharmaceuticals	12.0% Cash	SOFR+6.50%	1.00%	12/31/26	10/28/20		2,381		2,256			1,792		(7)(13)
Lucky Bucks, LLC	Term Loan	Hotel, Gaming & Leisure	13.0% Cash	SOFR+7.65%	1.00%	10/2/29	10/2/23		892		892			853		(7)(12)(13)
Lucky Bucks, LLC	Term Loan	Hotel, Gaming & Leisure	13.0% Cash	SOFR+7.65%	1.00%	10/2/28	10/2/23		469		457			473		(7)(12)(13)
Luminii LLC	First Lien Term Loan B	Construction & Building	12.7% Cash	SOFR+7.25%	1.00%	4/11/25	10/28/20		5,933		5,933			5,933		(7)(12)(13)

See accompanying notes to unaudited consolidated financial statements.


Portfolio Company14	Investment	Industry	Interest Rate	Reference Rate and Spread1	Floor	Maturity	Initial Acquisition Date	Par/Shares		Cost			Fair Value2			Footnote Refs
Luminii LLC	Revolver	Construction & Building	12.7% Cash	SOFR+7.35%	1.00%	4/11/25	10/28/20		343	$	343		$	343		(7)(12)(13)(20)
MAG DS Corp.	First Lien Term Loan	Aerospace and Defense	11.0% Cash	SOFR+5.50%	1.00%	4/1/27	10/28/20		3,664		3,347			3,520		(7)(13)
Money Transfer Acquisition, Inc.	First Lien Term Loan	Finance	13.7% Cash	SOFR+8.25%	1.00%	12/14/27	12/14/22		9,750		9,596			9,506		(7)(12)(13)
Morae Global Corporation	Term Loan	IT Consulting & Other Services	13.5% Cash	SOFR+8.00%	2.00%	10/26/26	10/26/23		2,277		2,138			2,169		(7)(12)(13)
Morae Global Corporation	Revolver	IT Consulting & Other Services	0.5% Cash		2.00%	10/26/26	10/26/23		-		(11	)		(10	)	(7)(12)(20)
MSM Acquisitions, Inc.	First Lien Term Loan	Services: Business	11.5% Cash	SOFR+6.00%	1.00%	12/9/26	12/31/20		6,935		6,892			6,649		(7)(12)(13)
MSM Acquisitions, Inc.	Delayed Draw Term Loan	Services: Business	11.5% Cash	SOFR+6.00%	1.00%	12/9/26	1/1/22		2,893		2,895			2,774		(7)(12)(13)
Neptune BidCo US Inc.	First Lien Term Loan	Media: Broadcasting & Subscription	10.5% Cash	SOFR+5.00%	0.50%	4/11/29	11/22/22		2,488		2,257			2,279		(7)(13)
Netwrix Corporation	First Lien Term Loan	High Tech Industries	10.4% Cash	SOFR+5.00%		6/9/29	6/9/22		3,379		3,360			3,367		(7)(12)(13)
Netwrix Corporation	Revolver	High Tech Industries	0.3% Cash		0.75%	6/9/29	6/9/22		-		(9	)		(4	)	(7)(12)(20)
Netwrix Corporation	Delayed Draw Term Loan - First Lien	High Tech Industries	1.0% Cash		0.75%	6/9/29	6/9/22		-		(2	)		(3	)	(7)(12)(13)(20)
Northeast Metal Works LLC	Term Loan	Metals & Mining	8.0% Cash			4/5/28	1/27/22		4,500		4,500			3,560		(7)(12)(17)
One Stop Mailing LLC	First Lien Term Loan	Transportation: Consumer	11.7% Cash	SOFR+6.25%	1.00%	4/29/27	5/7/21		7,550		7,465			7,409		(7)(12)(13)
PhyNet Dermatology LLC	Term Loan	Healthcare & Pharmaceuticals	12.0% Cash	SOFR+6.50%	1.00%	10/20/29	5/10/23		1,307		1,282			1,294		(7)(12)(13)
PhyNet Dermatology LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	1.0% Cash		1.00%	10/20/29	5/10/23		-		(7	)		(7	)	(7)(12)(20)
Pomeroy Technologies, LLC	Term Loan	High Tech Industries	10.0% PIK			4/4/26	5/3/22		422		420			398		(7)(12)
Pomeroy Technologies, LLC	Term Loan	High Tech Industries	10.0% PIK			4/4/26	4/4/22		60		60			36		(7)(12)
Pomeroy Technologies, LLC	Senior Term Loan A	High Tech Industries	5.0% PIK			4/4/26	5/29/20		1,706		1,548			1,007		(7)(12)
Pomeroy Technologies, LLC	Senior Term Loan B	High Tech Industries	7.0% PIK			4/4/26	5/29/20		1,593		1,456			193		(5)(7)(12)
Pomeroy Technologies, LLC	Super Senior Term Loan B	High Tech Industries	9.0% PIK			4/4/26	5/29/20		1,261		1,254			1,170		(7)(12)
Premier Imaging, LLC	Term Loan	Healthcare & Pharmaceuticals	11.6% Cash	SOFR+6.00%	1.00%	1/2/25	12/30/21		2,022		2,015			1,944		(7)(12)(13)
Premier Imaging, LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	11.6% Cash	SOFR+6.00%	1.00%	1/2/25	12/30/21		548		543			527		(7)(12)(13)
Priority Holdings, LLC	First Lien Term Loan	High Tech Industries	11.2% Cash	SOFR+5.75%	1.00%	4/22/27	4/21/21		5,612		5,590			5,591		(7)(12)(13)
Project Castle, Inc.	First Lien Term Loan	Transportation: Cargo	10.9% Cash	SOFR+5.50%	0.50%	6/8/29	6/9/22		7,900		7,249			7,018		(7)(12)(13)
Project Leopard Holdings, Inc.	Term Loan	High Tech Industries	10.7% Cash	SOFR+5.25%	0.50%	7/20/29	6/15/22		7,920		7,481			7,201		(7)(13)
PVHC Holding Corp	Term Loan	Containers, Packaging and Glass	11.0% Cash + 0.8% PIK	SOFR+5.50%	2.50%	2/17/27	12/23/19		2,736		2,734			2,665		(7)(12)(13)
Qualtek LLC	Term Loan	High Tech Industries	6.4% Cash + 9.0% PIK	SOFR+1.00%	1.00%	7/14/25	7/14/23		4,373		4,373			4,209		(7)
Radiology Partners, Inc	Term B Loan (First Lien)	Healthcare & Pharmaceuticals	10.2% Cash	SOFR+4.25%		7/9/25	1/26/21		6,966		6,575			5,654		(7)(13)
Radius Aerospace, Inc.	Initial Term Loan	Aerospace and Defense	11.3% Cash	SOFR+5.75%	1.00%	3/29/25	12/23/19		6,131		6,111			6,064		(7)(12)(13)
Reception Purchaser, LLC	First Lien Term Loan	Transportation: Cargo	11.5% Cash	SOFR+6.00%	0.75%	3/24/28	4/28/22		4,439		4,357			3,285		(7)(13)
South Street Securities Holdings, Inc	Senior Notes	Banking, Finance, Insurance & Real Estate	9.0% Cash			9/20/27	9/20/22		3,150		2,760			2,528		(7)(12)
Sundance Holdings Group, LLC	Term Loan	Retail	13.5% Cash + 9.5% PIK	SOFR+8.00%	1.00%	5/1/24	10/1/21		6,528		6,445			6,313		(7)(12)(13)
Symplr Software, Inc.	Term Loan	Healthcare & Pharmaceuticals	10.0% Cash	SOFR+4.50%	0.75%	12/22/27	2/2/22		1,670		1,667			1,502		(7)(13)
Synamedia Americas Holdings, Inc.	Term Loan	Interactive Media & Services	13.1% Cash	SOFR+7.75%	1.00%	12/5/28	12/5/23		2,759		2,663			2,662		(7)(12)(13)
TA/WEG Holdings, LLC	Delayed Draw Term Loan	Banking, Finance, Insurance & Real Estate	10.9% Cash	SOFR+5.50%	1.00%	10/2/27	10/1/21		7,873		7,861			7,873		(7)(12)(13)(20)
TA/WEG Holdings, LLC	Delayed Draw Term Loan	Banking, Finance, Insurance & Real Estate	11.2% Cash	SOFR+5.75%	1.00%	10/2/27	5/2/22		4,219		4,210			4,219		(7)(12)(13)(20)
TA/WEG Holdings, LLC	Revolver	Banking, Finance, Insurance & Real Estate	0.5% Cash		1.00%	10/2/27	5/2/22		-		(3	)		-		(7)(12)(20)
Tactical Air Support, Inc.	Term Loan	Aerospace and Defense	14.0% Cash	SOFR+8.50%	1.00%	12/22/28	12/22/23		1,714		1,672			1,671		(7)(12)(13)
Tactical Air Support, Inc.	Delayed Draw Term Loan	Aerospace and Defense	0.8% Cash		1.00%	12/22/28	12/22/23		-		-			-		(7)(12)(20)

See accompanying notes to unaudited consolidated financial statements.


Portfolio Company14	Investment	Industry	Interest Rate	Reference Rate and Spread1	Floor	Maturity	Initial Acquisition Date	Par/Shares		Cost			Fair Value2			Footnote Refs
TLE Holdings, LLC	Initial Term Loan	Healthcare, Education and Childcare	11.0% Cash	SOFR+5.50%	1.00%	6/28/24	12/8/20		5,458		5,455			5,444		(7)(12)(13)
TLE Holdings, LLC	Delayed Draw Term Loan	Healthcare, Education and Childcare	11.0% Cash	SOFR+5.50%	1.00%	6/28/24	12/23/19		722		720			718		(7)(12)(13)
VBC Spine Opco LLC	Term Loan	Healthcare & Pharmaceuticals	13.5% Cash	SOFR+8.00%	2.00%	6/14/28	6/14/23		3,500		3,438			3,456		(7)(12)(13)
VBC Spine Opco LLC	Revolver	Healthcare & Pharmaceuticals	13.5% Cash	SOFR+8.00%	2.00%	6/14/28	6/14/23		129		122			124		(7)(12)(20)
VBC Spine Opco LLC	Delayed Draw Term Loan	Healthcare & Pharmaceuticals	1.0% Cash		2.00%	6/14/28	6/14/23		-		(34	)		(24	)	(7)(12)(20)
Wonder Love, Inc.	Term Loan	Media: Diversified & Production	10.4% Cash	SOFR+5.00%	1.00%	11/18/24	12/18/19		1,125		1,121			1,124		(7)(12)(13)
Total Senior Secured Loans (159% of net asset value at fair value)										$	356,358		$	340,159
Junior Secured Loans
American Academy Holdings, LLC	Term Loan Second Lien	Healthcare & Pharmaceuticals	14.5% PIK			3/1/28	3/1/22		5,909		5,814			5,237		(7)(12)
Confluence Technologies, Inc.	Term Loan Second Lien	Services: Business	12.0% Cash	SOFR+6.50%	0.50%	7/23/29	7/22/21		4,000		3,979			3,605		(7)(12)(13)
Dcert Buyer, Inc.	Term Loan (Second Lien)	High Tech Industries	12.4% Cash	SOFR+7.00%		2/16/29	3/16/21		5,400		5,391			4,941		(7)(13)
Global Tel*Link Corporation	Term Loan (Second Lien)	Telecommunications	15.5% Cash	SOFR+10.00%		11/29/26	12/23/19		1,500		1,491			1,336		(7)(13)
Idera, Inc.	Term Loan (Second Lien)	High Tech Industries	12.3% Cash	SOFR+6.75%	0.75%	2/4/29	4/29/21		6,000		5,960			5,811		(7)(12)(13)
Ivanti Software, Inc.	Term Loan Second Lien	High Tech Industries	12.9% Cash	SOFR+7.25%	0.50%	12/1/28	10/26/21		6,000		5,965			4,870		(7)(13)
Lucky Bucks Holdings LLC	Promissory Note	Hotel, Gaming & Leisure	12.5% PIK			5/29/28	1/14/22		6,198		5,568			1,181		(5)(7)(12)
Phoenix Guarantor Inc.	Term Loan Second Lien	Healthcare & Pharmaceuticals	14.0% Cash	SOFR+8.50%	1.00%	3/5/27	12/18/19		1,200		1,149			1,131		(7)(13)
ProAir, LLC	Sub Note	Capital Equipment	17.8% PIK			1/31/23	3/8/22		2,020		1,931			-		(5)(7)(8)(12)
Project Leopard Holdings, Inc.	2nd Lien TL	High Tech Industries	13.1% Cash	SOFR+7.75%	0.50%	7/20/30	7/20/22		5,000		4,918			4,719		(7)(12)
Qualtek LLC	Term Loan Second Lien	High Tech Industries	6.4% Cash + 9.0% PIK	SOFR+1.00%	1.00%	1/14/27	7/14/23		4,146		4,146			2,913		(7)(13)
Redstone Holdco 2 LP	Term Loan (Second Lien)	High Tech Industries	13.2% Cash	SOFR+7.75%	0.75%	4/16/29	9/28/21		4,566		4,509			2,831		(7)(13)
Robertshaw US Holding Corp.	Initial Term Loan (Second Lien)	Capital Equipment	13.5% Cash	SOFR+8.00%	1.00%	2/28/26	2/15/18		3,000		2,992			300		(7)(12)
TRSO II, Inc.	Promissory Note	Energy: Oil & Gas	1.7% PIK			1/24/25	1/24/20		75		75			-		(5)(7)(12)
Total Junior Loans (18% of net asset value at fair value)										$	53,888		$	38,875
Senior Unsecured Bond
Tank Partners Equipment Holdings LLC	10.00% - 02/2022 - TankConvert	Energy: Oil & Gas	10.0% PIK			2/15/22	2/15/19		511		416			43		(5)(7)(8)(12)
Total Senior Unsecured Bond (0% of net asset value at fair value)										$	416		$	43

See accompanying notes to unaudited consolidated financial statements.

Equity Securities Portfolio


Portfolio Company14	Investment	Industry	Interest Rate	Initial Acquisition Date	Par/Shares		Cost		Fair Value2		Footnote Refs
4L Ultimate Topco Corporation	Common	Services: Business		5/29/20		321	$	29	$	29	(7)(12)(18)
AAPC Holdings, LLC	Equity	Healthcare & Pharmaceuticals		5/18/22		-		-		493	(7)(12)(18)(22)
AAPC Holdings, LLC	Preferred Equity	Healthcare & Pharmaceuticals	18.0% PIK	5/18/22		146,214		4		195	(7)(12)(22)
Advantage Capital Holdings LLC	Class A Membership Units	Banking, Finance, Insurance & Real Estate		3/31/20		658		-		2,128	(7)(12)(18)(19)(22)
Advantage Capital Holdings LLC	Class A Membership Units	Banking, Finance, Insurance & Real Estate		4/14/22		164		502		700	(7)(12)(18)(22)
Advantage Capital Holdings LLC	Preferred Equity	Banking, Finance, Insurance & Real Estate	12.5% PIK	4/14/22		2,470,210		2,470		2,733	(7)(12)(22)
Anthem Sports & Entertainment Inc.	Warrant Class A	Media: Broadcasting & Subscription		9/9/19		263		46		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrant Class B	Media: Broadcasting & Subscription		9/9/19		46		-		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrant Common Stock	Media: Broadcasting & Subscription		9/9/19		859		-		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrants	Media: Broadcasting & Subscription		11/15/21		42		-		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrants	Media: Broadcasting & Subscription		11/15/21		247		-		-	(7)(12)(18)
Anthem Sports & Entertainment Inc.	Warrants	Media: Broadcasting & Subscription		11/15/21		785		-		-	(7)(12)(18)
Aperture Dodge 18 LLC	Equity	Banking, Finance, Insurance & Real Estate		4/22/22		3,067,908		3,068		3,237	(7)(12)(18)
ATP Oil & Gas Corporation	Limited Term Royalty Interest	Energy: Oil & Gas		12/18/19		-		-		57	(7)(11)(12)
BMP Slappey Holdco, LLC	Preferred Stock	Telecommunications		6/9/21		200,000		467		553	(7)(12)(17)(18)(21)
BMP Slappey Investment II	Preferred Stock	Telecommunications		6/9/21		88,946		208		246	(7)(12)(17)(18)(21)
Carestream Health Holdings, Inc.	Common Stock	Healthcare & Pharmaceuticals		9/30/22		4,099		53		93	(7)(12)(18)
Centric Brands Inc.	Common	Machinery (Non-Agrclt/Constr/Electr)		10/28/20		36,342		-		121	(7)(12)(13)(18)(21)
DxTx Pain and Spine LLC	Common	Healthcare & Pharmaceuticals		6/14/23		158,166		258		258	(7)(12)
Everyware Global, Inc.	Common	Consumer goods: Durable		10/28/20		1,085,565		346		174	(7)(12)(18)
FP WRCA Coinvestment Fund VII, Ltd.	Class A Shares	Capital Equipment		2/2/07		100		1,500		903	(3)(12)(18)
Fusion Connect, Inc.	Common	Telecommunications		1/14/20		121,871		866		-	(7)(12)(13)(18)
GreenPark Infrastructure, LLC	Preferred Equity	Energy: Electricity		6/10/22		1,000		500		500	(7)(12)(17)(18)(22)
GreenPark Infrastructure, LLC	Preferred Equity	Energy: Electricity		6/10/22		500		171		171	(7)(12)(17)(18)(20)(22)
Kleen-Tech Acquisition, LLC	Common Stock	Services: Business		6/9/21		250,000		1,264		998	(7)(12)(17)(18)(21)
LB NewHoldCo LLC	Common Stock	Hotel, Gaming & Leisure		10/2/23		96,523		1,441		1,442	(7)(12)(13)
Morae Global Holdings Inc.	Warrant	IT Consulting & Other Services		10/26/23		1		87		99	(7)(12)
Northeast Metal Works LLC	Preferred Stock	Metals & Mining		6/9/21		2,368		-		-	(7)(12)(17)(18)(21)
Northeast Metal Works LLC	Preferred Stock	Metals & Mining		4/5/23		4,500,000		4,500		4,182	(7)(12)(17)
Ohene Holdings B.V.	Warrants	High Tech Industries		3/13/19		4		-		-	(3)(12)(18)
ProAir HoldCo, LLC	Common Stock	Capital Equipment		2/11/22		2,749,997		4,261		-	(7)(8)(12)(18)
Prosper Marketplace	Class B Preferred Units	Consumer goods: Durable		9/23/13		912,865		279		324	(6)(7)(12)(18)
Qualtek LLC	Equity	High Tech Industries		7/14/23		150,262		1,277		-	(7)(12)(13)
Roscoe Investors, LLC	Class A Units	Healthcare & Pharmaceuticals		3/26/14		10,000		1,000		425	(7)(12)(18)
South Street Securities Holdings, Inc	Warrants	Banking, Finance, Insurance & Real Estate		9/20/22		3,966		455		403	(7)(12)(18)
Sundance Holdings Group, LLC	Common Stock	Retail		10/1/21		14,603		-		69	(7)(12)(13)
Tank Partners Equipment Holdings LLC	Class A Units	Energy: Oil & Gas		2/15/19		49,000		6,228		-	(7)(8)(12)(18)
World Business Lenders, LLC	Common Stock	Banking, Finance, Insurance & Real Estate		6/9/21		49,209		-		-	(12)(18)
Total Equities (10% of net asset value at fair value)							$	31,280	$	20,533

CLO Fund Securities


Portfolio Company14	Investment10	Industry	Maturity	Percentage Ownership	Initial Acquisition Date	Cost		Fair Value2		Footnote Refs
Catamaran CLO 2014-1 Ltd.	Subordinated Securities, effective interest 13.7%	CLO Fund Securities	4/20/30	22.2%	5/6/14	$	1,024	$	904	(3)(12)
Catamaran CLO 2018-1 Ltd	Subordinated Securities, effective interest 25%	CLO Fund Securities	10/27/31	24.8%	9/27/18		3,923		3,923	(3)(12)
Dryden 30 Senior Loan Fund	Subordinated Securities, effective interest 25.4%	CLO Fund Securities	11/1/28	6.8%	10/10/13		424		409	(3)(12)
JMP Credit Advisors CLO IV LTD	Subordinated Securities, effective interest 19.8%	CLO Fund Securities	7/17/29	57.2%	10/22/21		683		683	(3)(12)
JMP Credit Advisors CLO V LTD	Subordinated Securities, effective interest 25.3%	CLO Fund Securities	7/17/30	57.2%	10/22/21		3,049		3,049	(3)(12)
Total CLO Fund Securities (4% of net asset value at fair value)						$	9,103	$	8,968

Asset Manager Affiliates


Portfolio Company14	Investment	Percentage Ownership	Initial Acquisition Date	Cost		Fair Value2		Footnote Refs
Asset Manager Affiliates	Asset Management Company	100.0%	12/11/06	$	17,791	$	-	(8)(12)
Total Asset Manager Affiliates (0% of net asset value at fair value)				$	17,791	$	-

~~KCAP FINANCIAL, INC.~~

~~CONSOLIDATED SCHEDULE OF INVESTMENTS~~
See accompanying notes to unaudited consolidated financial statements.

Joint Venture
Portfolio Company14
Investment
Percentage Ownership
Initial Acquisition Date
Cost

Fair Value2

Footnote Refs
KCAP Freedom 3 LLC
Joint Ventures
62.8%
12/11/18
$
27,415

$
14,275

(8)(12)
Series A-Great Lakes Funding II LLC
Joint Ventures
12.5%
8/5/22

44,000

45,012

(9)(16)(17)(20)
Total Joint Venture (28% of net asset value at fair value)

$
71,415

$
59,287

Derivatives
Portfolio Company14
Investment
Industry
Initial Acquisition Date
Cost

Fair Value2

Footnote Refs
HDNet Holdco LLC (Anthem)
Derivatives
Media: Broadcasting & Subscription
9/9/19
$
31

$
-

(12)(19)
Advantage Capital Holdings LLC
Derivatives
Banking, Finance, Insurance & Real Estate
4/14/22

-

-

(12)(19)
Total Derivatives (0% of net asset value at fair value)

$
31

$
-

Total Investments4 (219% of net asset value at fair value)

$
540,282

$
467,865

(1)
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 SOFR 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 December 31, 2023 loan. L loans are typically indexed to 12 month, 6 month, 3 month, 2 month, or 1 month S rates. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at December 31, 2023. As noted in the table above, 77.4% (based on par) of debt securities contain floors which range between 0.50% and 2.50%.
(2)
Reflects the fair market value of all investments as of December 31, 2023 as determined by the Company’s Board.
(3)
Non-U.S. company or principal place of business outside the U.S.
(4)
The aggregate cost of investments for federal income tax purposes is approximately $539.8 million. The aggregate gross unrealized appreciation is approximately $36.3 million, the aggregate gross unrealized depreciation is approximately $34.7 million, and the net unrealized depreciation is approximately $1.6 million.
(5)
Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(6)
Held through Garrison Capital Equity Holdings II LLC and net of non-controlling member’s interest of 17.5% pursuant to the Amended and Restated Limited Liability Company Agreement of Garrison Capital Equity Holdings II LLC.
(7)
Qualified asset for purposes of section 55(a) of the Investment Company Act of 1940, as amended (the “1940 Act”). Qualifying assets represent approximately 86.6% of the total assets at December 31, 2023.
(8)
As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” and has “Control” of this portfolio company as the Company owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). Other than for purposes of the 1940 Act, the Company does not believe that it has control over this portfolio company.
(9)
Non-voting.
(10)
CLO Subordinated Investments are entitled to periodic distributions which are generally equal to the remaining cash flow of the payments made by the underlying fund’s investments less contractual payments to debt holders and fund expenses. The estimated annualized effective yield indicated is based upon a current projection of the amount and timing of these distributions. Such projections are updated on a quarterly basis and the estimated effective yield is adjusted prospectively.
(11)
This investment is on non-accrual status and receives a 5% royalty interest on oil being produced on certain fields. All production payments received are being applied to the cost basis and are considered return of capital.
(12)
Fair value of this investment was determined using significant unobservable inputs.

(13)

As of December 31, ~~2016~~2023, this investment is pledged to secure the Company’s debt obligations.

(14)

(15)

(16)

Ownership of LP interest held through the holding company BCP Great Lakes Fund, L.P., a non-U.S. company or principal place of business outside the U.S.

(17)

(18)

Non-income producing.

(19)

Information related to the Company’s derivatives is presented below as of December 31, 2023:

($ in thousands)

Description

Counterparty

Number of shares

Notional amount

Exercise price

Expiration date

Value

Call option

HDNet Holdco LLC

0.2

0.01

N/A

Description

Counterparty

Number of shares

Notional amount

Exercise price

Expiration date

Value

Put option

Advantage Capital Holdings LLC

164

563

4/24/24

(20)

Debt ~~Securities Portfolio~~

security has an unfunded commitment in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 8 for additional information on the Company’s commitments and contingencies.

Portfolio Company/Principal Business Investment
Interest Rate⁽¹⁾/Maturity Principal Amortized
Cost Fair Value⁽²⁾
1A Smart Start LLC^{(8), (9)}
Consumer goods: Non-durable Senior Secured Loan — Initial Term Loan (First Lien) 5.8% Cash, 1.0% Libor Floor, Due 2/22 $ 2,970,000 $ 2,946,408 $ 2,919,807
4L Technologies Inc. (fka Clover Holdings, Inc.)^{(8), (9)}
Consumer goods: Non-durable Senior Secured Loan — Term Loan 5.5% Cash, 1.0% Libor Floor,
Due 5/20 2,720,465 2,705,259 2,606,194
Advanced Lighting Technologies, Inc,^{(8), (9), (14)}
Consumer goods: Durable First Lien Bond — 12.500% – 6/2019 — 00753CAG7 5.3% Cash, 7.3% PIK, Due 6/19 3,060,919 3,060,919 1,089,338
Advantage Sales & Marketing Inc.⁽⁸⁾
Services: Business Junior Secured Loan — Term Loan (Second Lien) 7.5% Cash, 1.0% Libor Floor, Due 7/22 1,000,000 1,001,753 995,300
Alere Inc. (fka IM US Holdings, LLC)⁽⁹⁾
Healthcare & Pharmaceuticals Senior Secured Loan — B Term Loan 4.3% Cash, 1.0% Libor Floor,
Due 6/22 3,030,277 3,024,429 3,034,489
American Seafoods Group LLC^{(8), (9)}
Beverage, Food and Tobacco Senior Secured Loan — Term Loan (First Lien) 6.0% Cash, 1.0% Libor Floor, Due 8/21 3,853,704 3,838,792 3,874,899
Anaren, Inc.^{(8), (9)}
Aerospace and Defense Senior Secured Loan — Term Loan (First Lien) 5.5% Cash, 1.0% Libor Floor, Due 2/21 1,871,912 1,860,822 1,864,237
Apco Holdings, Inc.^{(8), (9)}
Services: Business Senior Secured Loan — Initial Term Loan 7.0% Cash, 1.0% Libor Floor, Due 1/22 3,867,838 3,769,454 3,900,714
API Technologies Corp.^{(8), (9)}
High Tech Industries Senior Secured Loan — Initial Term Loan 7.5% Cash, 1.0% Libor Floor, Due 4/22 3,482,500 3,420,642 3,480,759
Aristotle Corporation, The^{(8), (9)}
Consumer goods: Non-durable Senior Secured Loan — Term Loan 5.5% Cash, 1.0% Libor Floor,
Due 6/21 3,665,860 3,652,075 3,604,274
Asurion, LLC (fka Asurion Corporation)^{(8), (9)}
Banking, Finance, Insurance & Real Estate Senior Secured Loan — Incremental Tranche B-4 Term Loan 5.0% Cash, 1.0% Libor Floor, Due 8/22 876,911 873,399 889,736
Asurion, LLC (fka Asurion Corporation)^{(8), (9)}
Banking, Finance, Insurance & Real Estate Senior Secured Loan — Replacement B-2 Term Loan 4.0% Cash, 0.8% Libor Floor, Due 7/20 187,812 188,275 189,719
Avalign Technologies, Inc.⁽⁸⁾
Healthcare & Pharmaceuticals Junior Secured Loan — Initial Term Loan (Second Lien) 9.5% Cash, 1.0% Libor Floor, Due 7/22 1,000,000 992,078 985,000
Avalign Technologies, Inc.^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — Initial Term Loan (First Lien) 5.5% Cash, 1.0% Libor Floor, Due 7/21 2,925,000 2,913,921 2,915,640
Bankruptcy Management Solutions, Inc.⁽⁸⁾
Services: Business Senior Secured Loan — Term B Loan 7.0% Cash, 1.0% Libor Floor,
Due 6/18 665,654 665,654 655,935
BarBri, Inc. (Gemini Holdings,
Inc.)^{(8), (9)}
Services: Consumer Senior Secured Loan — Term Loan 4.5% Cash, 1.0% Libor Floor,
Due 7/19 2,619,636 2,614,056 2,578,508
BBB Industries US Holdings, Inc.^{(8), (9)}
Automotive Senior Secured Loan — Initial Term Loan (First Lien) 6.0% Cash, 1.0% Libor Floor, Due 11/21 2,947,500 2,906,715 2,800,125
Bestop, Inc.^{(8), (9)}
Automotive Senior Secured Loan — Delayed Draw Term Loan 6.3% Cash, 1.0% Libor Floor, Due 7/21 34,660 32,776 34,466
Bestop, Inc.^{(8), (9)}
Automotive Senior Secured Loan — First Amendment Term Loan 6.3% Cash, 1.0% Libor Floor, Due 7/21 500,000 495,290 497,200

See accompanying notes to unaudited consolidated financial statements.

(21)

This investment is owned by HCAP Equity Holdings, LLC, one of the Company’s taxable blocker subsidiaries.

(22)

This investment is held by PTMN Sub Holdings LLC, one of the company's taxable blocker subsidiaries.

Portfolio Company/Principal Business Investment
Interest Rate⁽¹⁾/Maturity Principal Amortized
Cost Fair Value⁽²⁾
Bestop, Inc.^{(8), (9)}
Automotive Senior Secured Loan — Term Loan 6.3% Cash, 1.0% Libor Floor,
Due 7/21 $ 1,520,000 $ 1,498,330 $ 1,452,512
Carolina Beverage Group LLC⁽⁸⁾
Beverage, Food and Tobacco Senior Secured Bond — 10.625% – 08/2018 –
143818AA0 144A 10.6% Cash,
Due 8/18 1,500,000 1,506,461 1,487,400
CCS Intermediate Holdings, LLC^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — Initial Term Loan (First Lien) 5.0% Cash, 1.0% Libor Floor, Due 7/21 2,932,500 2,922,875 2,470,338
Cengage Learning, Inc.^{(8), (9)}
Media: Advertising, Printing & Publishing Senior Secured Loan — 2016 Refinancing Term Loan 5.3% Cash, 1.0% Libor Floor, Due 6/23 3,793,913 3,788,981 3,702,043
Checkout Holding Corp. (fka Catalina Marketing)^{(8), (9)}
Media: Advertising, Printing & Publishing Senior Secured Loan — Term B Loan (First Lien) 4.5% Cash, 1.0% Libor Floor, Due 4/21 975,000 972,021 853,125
CHS/Community Health Systems, Inc.⁽⁹⁾
Healthcare & Pharmaceuticals Senior Secured Loan — Incremental 2021 Term H Loan 4.0% Cash, 1.0% Libor Floor, Due 1/21 2,878,621 2,853,070 2,796,465
Consolidated Communications, Inc.⁽⁹⁾
Telecommunications Senior Secured Loan — Initial Term Loan 4.0% Cash, 1.0% Libor Floor, Due 10/23 2,067,444 2,062,450 2,067,444
CRGT Inc.^{(8), (9)}
High Tech Industries Senior Secured Loan — Term Loan 7.5% Cash, 1.0% Libor Floor,
Due 12/20 3,224,017 3,190,360 3,224,339
CSM Bakery Solutions Limited (fka CSM Bakery Supplies Limited)⁽⁸⁾
Beverage, Food and Tobacco Junior Secured Loan — Term Loan (Second Lien) 8.8% Cash, 1.0% Libor Floor, Due 7/21 3,000,000 3,011,328 2,463,000
CT Technologies Intermediate Holdings, Inc. (Smart Holdings Corp.) (aka HealthPort)^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — New Term Loan Facility 5.3% Cash, 1.0% Libor Floor, Due 12/21 2,940,225 2,917,719 2,818,941
Drew Marine Group Inc.⁽⁸⁾
Transportation: Cargo Junior Secured Loan — Term Loan (Second Lien) 8.0% Cash, 1.0% Libor Floor, Due 5/21 2,500,000 2,496,331 2,380,000
Eastern Power, LLC (Eastern Covert Midco, LLC) (aka TPF II LC, LLC)^{(8), (9)}
Utilities: Electric Senior Secured Loan — Term Loan 5.0% Cash, 1.0% Libor Floor,
Due 10/21 2,796,756 2,814,422 2,826,122
Electric Lightwave Holdings, Inc. (f.k.a. Integra Telecom Holdings, Inc.)^{(8), (9)}
Telecommunications Senior Secured Loan — Term B-1 Loan 5.3% Cash, 1.0% Libor Floor, Due 8/20 2,932,538 2,924,968 2,945,734
ELO Touch Solutions, Inc.^{(8), (9)}
High Tech Industries Senior Secured Loan — Term Loan (First Lien) 8.5% Cash, 1.5% Libor Floor, Due 6/18 1,420,897 1,397,046 1,380,544
Empower Payments Acquisition,
Inc^{(8), (9)}
Services: Business Senior Secured Loan — Term Loan 6.5% Cash, 1.0% Libor Floor,
Due 11/23 3,000,000 2,940,565 2,940,000
EWT Holdings III Corp. (fka WTG Holdings III Corp.)^{(8), (9)}
Ecological Senior Secured Loan — Term Loan (First Lien) 4.8% Cash, 1.0% Libor Floor, Due 1/21 1,745,501 1,741,292 1,760,783
Fender Musical Instruments Corporation^{(8), (9)}
Consumer goods: Durable Senior Secured Loan — Initial Loan 5.8% Cash, 1.3% Libor Floor,
Due 4/19 1,339,534 1,345,751 1,322,254
FHC Health Systems, Inc.^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — Initial Term Loan 5.0% Cash, 1.0% Libor Floor, Due 12/21 3,838,768 3,811,221 3,742,799
First American Payment Systems, L.P.⁽⁸⁾
Banking, Finance, Insurance & Real Estate Junior Secured Loan — Term Loan (Second Lien) 10.8% Cash, 1.3% Libor Floor,
Due 4/19 1,796,448 1,783,840 1,742,555
Getty Images, Inc.^{(8), (9)}
Media: Advertising, Printing & Publishing Senior Secured Loan — Initial Term Loan 4.8% Cash, 1.3% Libor Floor, Due 10/19 2,140,569 2,147,692 1,874,775
GI Advo Opco, LLC⁽⁸⁾
Healthcare & Pharmaceuticals Senior Secured Loan — Term Loan 5.5% Cash, 1.0% Libor Floor,
Due 11/21 247,500 245,474 223,913

See accompanying notes to unaudited consolidated financial statements.

PORTMAN RIDGE FINANCE CORPORATION

CONSOLIDATED FINANCIAL HIGHLIGHTS

Portfolio Company/Principal Business Investment
Interest Rate⁽¹⁾/Maturity Principal Amortized
Cost Fair Value⁽²⁾
GI Advo Opco, LLC^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — Term Loan 5.5% Cash, 1.0% Libor Floor,
Due 11/21 $ 2,722,500 $ 2,700,224 $ 2,463,046
GK Holdings, Inc. (aka Global Knowledge)⁽⁸⁾
Services: Business Junior Secured Loan — Initial Term Loan (Second Lien) 10.5% Cash, 1.0% Libor Floor, Due 1/22 1,500,000 1,478,209 1,465,650
GK Holdings, Inc. (aka Global Knowledge)^{(8), (9)}
Services: Business Senior Secured Loan — Initial Term Loan (First Lien) 6.5% Cash, 1.0% Libor Floor, Due 1/21 2,450,000 2,433,329 2,446,080
Global Tel*Link Corporation⁽⁸⁾
Telecommunications Junior Secured Loan — Term Loan (Second Lien) 9.0% Cash, 1.3% Libor Floor, Due 11/20 4,000,000 3,957,505 3,894,500
Gold Standard Baking, Inc.^{(8), (9)}
Beverage, Food and Tobacco Senior Secured Loan — Term Loan 5.3% Cash, 1.0% Libor Floor,
Due 4/21 2,462,500 2,453,554 2,461,269
Grande Communications Networks LLC^{(8), (9)}
Telecommunications Senior Secured Loan — Initial Term Loan 4.5% Cash, 1.0% Libor Floor, Due 5/20 3,860,145 3,864,877 3,860,145
Grupo HIMA San Pablo, Inc.⁽⁸⁾
Healthcare & Pharmaceuticals Senior Secured Loan — Term B Loan (First Lien) 8.5% Cash, 1.5% Libor Floor, Due 1/18 2,887,500 2,875,001 2,743,125
Grupo HIMA San Pablo, Inc.⁽⁸⁾
Healthcare & Pharmaceuticals Junior Secured Loan — Term Loan (Second Lien) 13.8% Cash, Due 7/18 7,000,000 6,953,618 6,370,000
Gymboree Corporation., The^{(8), (9)}
Retail Senior Secured Loan — Term Loan 5.0% Cash, 1.5% Libor Floor,
Due 2/18 1,421,105 1,415,457 759,581
Hargray Communications Group, Inc. (HCP Acquisition LLC)^{(8), (9)}
Media: Broadcasting &
Subscription Senior Secured Loan — Term B-1 Loan 4.8% Cash, 1.0% Libor Floor, Due 6/19 2,887,075 2,860,733 2,926,166
Harland Clarke Holdings Corp.
(fka Clarke American Corp.)^{(8), (9)}
Media: Advertising, Printing & Publishing Senior Secured Loan — Tranche B-3 Term Loan 7.0% Cash, 1.5% Libor Floor, Due 5/18 1,697,272 1,690,708 1,703,637
Harland Clarke Holdings Corp.
(fka Clarke American Corp.)^{(8), (9)}
Media: Advertising, Printing & Publishing Senior Secured Loan — Tranche B-4 Term Loan 7.0% Cash, 1.0% Libor Floor, Due 8/19 1,387,500 1,384,229 1,391,545
Harland Clarke Holdings Corp.
(fka Clarke American Corp.)^{(8), (9)}
Media: Advertising, Printing & Publishing Senior Secured Loan — Tranche B-5 Term Loan 7.0% Cash, 1.0% Libor Floor, Due 12/19 1,385,417 1,369,287 1,395,980
Highland Acquisition Holdings, LLC (aka HealthSun Health Plans,
Inc.)^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — Term Loan B 6.5% Cash, 1.0% Libor Floor,
Due 11/22 2,000,000 1,903,216 1,910,000
Hoffmaster Group, Inc.⁽⁸⁾
Forest Products & Paper Junior Secured Loan — Initial Term Loan (Second Lien) 10.5% Cash, 1.0% Libor Floor, Due 11/24 1,600,000 1,552,544 1,524,640
Hoffmaster Group, Inc.^{(8), (9)}
Forest Products & Paper Senior Secured Loan — Initial Term Loan (First Lien) 5.5% Cash, 1.0% Libor Floor, Due 11/23 2,666,667 2,640,345 2,668,267
Industrial Services Acquisition, LLC (aka Evergreen/NAIC)^{(8), (9)}
Environmental Industries Senior Secured Loan — Term Loan 6.0% Cash, 1.0% Libor Floor,
Due 6/22 2,925,000 2,898,235 2,925,000
Kellermeyer Bergensons Services, LLC^{(8), (9)}
Services: Business Senior Secured Loan — Initial Term Loan (First Lien) 6.0% Cash, 1.0% Libor Floor, Due 10/21 1,950,120 1,936,641 1,943,100
Key Safety Systems, Inc.^{(8), (9)}
Automotive Senior Secured Loan — Initial Term Loan 5.5% Cash, 1.0% Libor Floor, Due 8/21 1,394,077 1,389,440 1,411,851
Landslide Holdings, Inc.^{(8), (9)}
High Tech Industries Senior Secured Loan — Term Loan (First Lien) 5.5% Cash, 1.0% Libor Floor, Due 9/22 1,850,467 1,846,044 1,850,467
MB Aerospace ACP Holdings II Corp.^{(8), (9)}
Aerospace and Defense Senior Secured Loan — Initial Term Loan 6.5% Cash, 1.0% Libor Floor, Due 12/22 1,342,500 1,331,454 1,342,366

(in thousands, except share and per share amounts)

(Unaudited)


	For the Three Months Ended March 31,
	2024			2023(4)
Per Share Data:
Net asset value, at beginning of period	$	22.76		$	24.23
Net investment income(1)		0.67			0.89
Net realized gains (losses) from investments(1)		(0.22	)		(0.32	)
Net change in unrealized (depreciation) appreciation on investments(1)		-			(0.62	)
Tax (provision) benefit on realized and unrealized gains (losses) on investments(1)		0.05			0.06
Realized gains (losses) from extinguishment of debt(1)		(0.02	)		-
Net (decrease) increase in net assets resulting from operations	$	0.48		$	0.01
Net decrease in net assets resulting from distributions		(0.69	)		(0.68	)
Accretive effect of common stock repurchases(1)		0.02			-
Net asset value, end of period	$	22.57		$	23.56
Total net asset value return(2)		2.7	%		0.4	%
Total market return(3)		8.1	%		(7.4	)%
Ratio/Supplemental Data:
Per share market value at beginning of period	$	18.19		$	23.00
Per share market value at end of period	$	18.98		$	20.61
Shares outstanding at end of period		9,332,117			9,556,356
Net assets at end of period	$	210,607		$	225,106
Portfolio turnover rate(5)		7.5	%		8.2	%
Asset coverage ratio		171	%		162	%
Ratio of net investment income to average net assets (annualized)		11.8	%		15.1	%
Ratio of total expenses to average net assets (annualized)		19.5	%		20.9	%
Ratio of interest expense to average net assets (annualized)		10.8	%		11.2	%
Ratio of non-interest expenses to average net assets (annualized)		8.7	%		9.7	%

(1)

Based on weighted average number of common shares outstanding-basic for the period.

(2)

Total net asset value return (not annualized) equals the change in the net asset value per share over the period plus distributions (including any return of capital), divided by the beginning net asset value per share.

(3)

Total market return (not annualized) equals the change in market price, per share during the period plus distributions, divided by the beginning market price per share.

(4)

Totals may not sum due to rounding.

(5)

Portfolio turnover rate equals the lesser of year-to-date sales and paydowns over the average of the invested assets at fair value.

See accompanying notes to ~~financial statements.~~

Portfolio Company/Principal Business Investment
Interest Rate⁽¹⁾/Maturity Principal Amortized
Cost Fair Value⁽²⁾
Medrisk, Inc.^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — Term Loan 6.3% Cash, 1.0% Libor Floor,
Due 2/23 $ 1,985,000 $ 1,967,461 $ 1,985,000
MGOC, Inc. (fka Media General, Inc.)⁽⁹⁾
Media: Broadcasting &
Subscription Senior Secured Loan — Term B Loan 4.0% Cash, 1.0% Libor Floor, Due 7/20 2,417,989 2,419,940 2,417,989
National Home Health Care Corp.⁽⁸⁾
Healthcare & Pharmaceuticals Junior Secured Loan — Term Loan (Second Lien) 11.8% Cash, 1.0% Libor Floor, Due 12/22 1,500,000 1,477,675 1,477,500
National Home Health Care Corp.^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — Term Loan (First Lien) 5.5% Cash, 1.0% Libor Floor, Due 12/21 3,000,000 2,970,280 2,970,000
Nellson Nutraceutical, LLC^{(8), (9)}
Beverage, Food and Tobacco Senior Secured Loan — Term A-1 Loan (First Lien) 6.0% Cash, 1.0% Libor Floor, Due 12/21 2,350,684 2,335,796 2,350,449
Nellson Nutraceutical, LLC^{(8), (9)}
Beverage, Food and Tobacco Senior Secured Loan — Term A-2 Loan (First Lien) 6.0% Cash, 1.0% Libor Floor, Due 12/21 2,066,562 2,052,899 2,066,355
Nielsen & Bainbridge, LLC^{(8), (9)}
Consumer goods: Durable Senior Secured Loan — Term Loan (First Lien) 6.2% Cash, 1.0% Libor Floor, Due 8/20 5,361,360 5,326,136 5,199,447
NM Z Parent Inc. (aka Zep, Inc.)^{(8), (9)}
Chemicals, Plastics and Rubber Senior Secured Loan — 2016 Term Loan 5.0% Cash, 1.0% Libor Floor, Due 6/22 3,447,500 3,459,466 3,481,630
Novitex Acquisition, LLC (fka ARSloane Acquisition, LLC)^{(8), (9)}
Services: Business Senior Secured Loan — Tranche B-2 Term Loan (First Lien) 8.0% Cash, 1.3% Libor Floor, Due 7/20 1,941,336 1,899,875 1,882,707
Onex Carestream Finance LP⁽⁸⁾
Healthcare & Pharmaceuticals Junior Secured Loan — Term Loan (Second Lien) 9.5% Cash, 1.0% Libor Floor, Due 12/19 1,932,311 1,932,311 1,647,295
Onex Carestream Finance LP^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — Term Loan (First Lien 2013) 5.0% Cash, 1.0% Libor Floor, Due 6/19 1,750,135 1,753,387 1,704,920
Otter Products, LLC (OtterBox Holdings, Inc.)^{(8), (9)}
Consumer goods: Durable Senior Secured Loan — Term B Loan 5.8% Cash, 1.0% Libor Floor,
Due 6/20 2,600,266 2,587,099 2,507,697
PGX Holdings, Inc.^{(8), (9)}
Services: Consumer Senior Secured Loan — Initial Term Loan (First Lien) 6.3% Cash, 1.0% Libor Floor, Due 9/20 3,620,714 3,598,052 3,626,381
Playpower, Inc.^{(8), (9)}
Construction & Building Senior Secured Loan — Initial Term Loan (First Lien) 5.8% Cash, 1.0% Libor Floor, Due 6/21 1,970,000 1,958,956 1,969,606
PrimeLine Utility Services LLC
(fka FR Utility Services LLC)^{(8), (9)}
Energy: Electricity Senior Secured Loan — Initial Term Loan 6.5% Cash, 1.0% Libor Floor, Due 11/22 3,935,672 3,904,453 3,937,247
Priority Payment Systems Holdings, LLC^{(8), (9)}
Banking, Finance, Insurance & Real Estate Senior Secured Loan — Initial Term Loan 7.0% Cash, 1.0% Libor Floor, Due 1/23 4,000,000 3,960,000 3,960,000
PSC Industrial Holdings Corp.^{(8), (9)}
Environmental Industries Senior Secured Loan — Term Loan (First Lien) 5.8% Cash, 1.0% Libor Floor, Due 12/20 2,974,300 2,953,559 2,941,583
Q Holding Company (fka Lexington Precision Corporation)^{(8), (9)}
Chemicals, Plastics and Rubber Senior Secured Loan — Term B Loan 6.0% Cash, 1.0% Libor Floor,
Due 12/21 2,992,366 2,962,443 2,962,443
Quad-C JH Holdings Inc. (aka Joerns Healthcare)^{(8), (9)}
Healthcare & Pharmaceuticals Senior Secured Loan — Term Loan A 6.0% Cash, 1.0% Libor Floor,
Due 5/20 3,900,079 3,883,565 3,666,075
Ravn Air Group, Inc.^{(8), (9)}
Transportation: Consumer Senior Secured Loan — Initial Term Loan 5.3% Cash, 1.0% Libor Floor, Due 7/21 2,421,875 2,412,614 2,324,516
Roscoe Medical, Inc.⁽⁸⁾
Healthcare & Pharmaceuticals Junior Secured Loan — Term Loan (Second Lien) 11.3% Cash, Due 9/19 6,700,000 6,666,733 6,499,000
Sandy Creek Energy Associates,
L.P.^{(8), (9)}
Utilities: Electric Senior Secured Loan — Term Loan 5.0% Cash, 1.0% Libor Floor,
Due 11/20 2,613,239 2,606,016 2,204,921
Stafford Logistics, Inc.(dba Custom Ecology, Inc.)^{(8), (9)}
Environmental Industries Senior Secured Loan — Term Loan 7.5% Cash, 1.0% Libor Floor,
Due 8/21 $ 2,709,639 $ 2,694,201 $ 2,677,395

~~See accompanying notes to financial statements.~~

Portfolio Company/Principal Business Investment
Interest Rate⁽¹⁾/Maturity Principal Amortized
Cost Fair Value⁽²⁾
Tank Partners Holdings, LLC^{(8), (14)}
Energy: Oil & Gas Senior Secured Loan — Loan 10.0% Cash, 4.0% PIK, 3.0% Libor Floor, Due 8/19 10,750,808 10,656,975 6,550,311
Terra Millennium Corporation^{(8), (9)}
Construction & Building Senior Secured Loan — First Out Term Loan 7.3% Cash, 1.0% Libor Floor, Due 10/22 4,000,000 3,960,202 3,960,000
TronAir Parent Inc.^{(8), (9)}
Aerospace and Defense Senior Secured Loan — Initial Term Loan (First Lien) 5.8% Cash, 1.0% Libor Floor, Due 9/23 3,960,000 3,923,893 3,959,208
TRSO I, Inc.⁽⁸⁾
Energy: Oil & Gas Junior Secured Loan — Term Loan (Second Lien) 14.0% Cash, 1.0% Libor Floor, Due 12/19 1,000,000 991,495 1,000,000
U.S. Shipping Corp (fka U.S. Shipping Partners LP)^{(8), (9)}
Transportation: Cargo Senior Secured Loan — Tranche B-2 Term Loan 5.3% Cash, 1.0% Libor Floor, Due 6/21 1,392,213 1,391,361 1,312,857
USJ-IMECO Holding Company, LLC^{(8), (9)}
Transportation: Cargo Senior Secured Loan — Term Loan 7.0% Cash, 1.0% Libor Floor,
Due 4/20 3,679,796 3,669,622 3,497,278
Verdesian Life Sciences, LLC^{(8), (9)}
Environmental Industries Senior Secured Loan — Initial Term Loan 6.0% Cash, 1.0% Libor Floor, Due 7/20 3,766,302 3,733,929 3,641,261
Weiman Products, LLC⁽⁸⁾
Consumer goods: Non-durable Senior Secured Loan — Term Loan 5.8% Cash, 1.0% Libor Floor,
Due 11/18 916,023 912,479 889,000
Weiman Products, LLC^{(8), (9)}
Consumer goods: Non-durable Senior Secured Loan — Term Loan 5.8% Cash, 1.0% Libor Floor,
Due 11/18 4,567,552 4,550,168 4,432,809
WideOpenWest Finance, LLC^{(8), (9)}
Media: Broadcasting &
Subscription Senior Secured Loan — New Term B Loan 4.5% Cash, 1.0% Libor Floor, Due 8/23 2,992,500 2,992,500 3,028,829
WireCo WorldGroup Inc.⁽⁸⁾
Capital Equipment Junior Secured Loan — Initial Term Loan (Second Lien) 10.0% Cash, 1.0% Libor Floor, Due 9/24 3,000,000 2,956,358 3,000,000
WireCo WorldGroup Inc. (WireCo WorldGroup Finance LP)^{(8), (9)}
Capital Equipment Senior Secured Loan — Initial Term Loan (First Lien) 6.5% Cash, 1.0% Libor Floor, Due 9/23 1,745,625 1,728,771 1,763,780
Total Investment in Debt Securities (122% of net asset value at fair value) $ 251,222,570 $ 249,520,234 $ 238,343,330

~~See accompanying notes to financial statements.~~

~~Equity Securities Portfolio~~

Portfolio Company/Principal Business Investment Percentage
Interest/Shares Amortized
Cost Fair Value⁽²⁾
Aerostructures Holdings L.P.^{(5), (8)}
Aerospace and Defense Partnership Interests 1.2 % $ 1,000,000 $ 100,549
Aerostructures Holdings L.P.^{(5), (8)}
Aerospace and Defense Series A Preferred Interests 1.2 % 250,960 1,183,746
Caribe Media Inc. (fka Caribe Information Investments Incorporated)^{(5), (8)}
Media: Advertising, Printing & Publishing Common 1.3 % 359,765 532,342
DBI Holding LLC^{(5), (8)}
Services: Business Class A Warrants 3.2 % 1 1,000
eInstruction Acquisition, LLC^{(5), (8)}
Healthcare, Education and Childcare Membership Units 1.1 % 1,079,617 1,000
FP WRCA Coinvestment Fund VII,
Ltd.^{(3), (5)}
Capital Equipment Class A Shares 1,500 1,500,000 811,268
Perseus Holding Corp.^{(5), (8)}
Hotel, Gaming & Leisure Common 0.2 % 400,000 1,000
Roscoe Investors, LLC^{(5), (8)}
Healthcare & Pharmaceuticals Class A Units 1.6 % 1,000,000 1,169,000
Tank Partners Holdings, LLC^{(5), (8), (11)}
Energy: Oil & Gas Unit 5.8 % 980,000 1,000
Tank Partners Holdings, LLC^{(5), (8)}
Energy: Oil & Gas Warrants 1.3 % 185,205 1,000
TRSO II, Inc.^{(5), (8)}
Energy: Oil & Gas Common Stock 5.4 % 1,680,161 1,253,450
New Millennium Holdco, Inc. (Millennium Health, LLC)⁽⁵⁾,⁽⁸⁾
Healthcare & Pharmaceuticals Common 0.2 % 1,953,299 1,000
Total Investment in Equity
Securities (3% of net asset value at fair value) $ 10,389,007 $ 5,056,355

~~See accompanying notes to financial statements.~~

~~CLO Fund Securities~~

~~CLO Subordinated Securities, Preferred Shares and Income Notes Investments~~

Portfolio Company Investment⁽¹²⁾ Percentage
Ownership Amortized
Cost Fair Value⁽²⁾
Grant Grove CLO, Ltd.^{(3), (13)} Subordinated Securities, effective interest 0.1%, 1/21 maturity 22.2 % $ 2,485,886 $ 1,000
Katonah III, Ltd.^{(3), (13)} Preferred Shares, effective interest 0.1%, 5/15 maturity 23.1 % 1,287,155 369,000
Katonah 2007-I CLO Ltd.^{(3), (6)} Preferred Shares, effective interest 30.8%, 4/22 maturity 100 % 28,022,646 20,453,099
Trimaran CLO VII, Ltd.^{(3), (6), (13)} Income Notes, effective interest 47.9%, 6/21 maturity 10.5 % 1,643,920 1,195,152
Catamaran CLO 2012-1 Ltd.^{(3), (6)} Subordinated Notes, effective interest 3.1%, 12/23 maturity 24.9 % 5,919,933 2,819,412
Catamaran CLO 2013- 1 Ltd.^{(3), (6)} Subordinated Notes, effective interest 14.9%, 1/25 maturity 23.5 % 5,237,222 4,918,807
Catamaran CLO 2014-1 Ltd.^{(3), (6)} Subordinated Notes, effective interest 10.0%, 4/26 maturity 24.9 % 7,818,484 4,546,682
Catamaran CLO 2014-2 Ltd.^{(3), (6)} Subordinated Notes, effective interest 10.9%, 10/26 maturity 24.9 % 6,967,560 5,092,087
Dryden 30 Senior Loan Fund⁽³⁾ Subordinated Notes, effective interest 36.2%, 11/25 maturity 7.5 % 1,343,467 1,895,566
Catamaran CLO 2015-1 Ltd.^{(3), (6)} Subordinated Notes, effective interest 9.5%, 4/27 maturity 9.9 % 4,543,317 3,223,255
Catamaran CLO 2016-1 Ltd.^{(3), (6)} Subordinated Notes, effective interest 13.9%, 1/29 maturity 24.9 % 10,140,000 8,350,290
Total Investment in CLO Subordinated Securities $ 75,409,590 $ 52,864,350

~~CLO Rated-Note Investments~~

Portfolio Company Investment Percentage
Ownership Amortized
Cost Fair Value⁽²⁾
CRMN 2014 – 1A^{(3), (6)} Float – 04/2026 – E –
14889FAC7, 6.6%, 4/26 maturity 15.1 % $ 1,441,727 $ 1,310,000
Total Investment in CLO
Rated-Note $ 1,441,727 $ 1,310,000
Total Investment in CLO Fund Securities (28% of net asset value at fair value) $ 76,851,317 $ 54,174,350

~~Asset Manager Affiliates~~

Portfolio Company/Principal Business Investment Percentage Ownership Cost Fair Value⁽²⁾
Asset Manager Affiliates^{(8), (10)} Asset Management Company 100 % $ 55,341,230 $ 40,198,000
Total Investment in Asset Manager Affiliates (21% of net asset value at fair value) $ 55,341,230 $ 40,198,000

~~See accompanying notes to financial statements.~~

~~Time Deposits and Money Market Account~~

Time Deposit and Money Market Accounts Investment Yield Par/Amortized
Cost Fair Value⁽²⁾
JP Morgan Business Money Market Account^{(7), (8)} Money Market Account 0.1 % $ 14,268 $ 14,268
US Bank Money Market Account⁽⁸⁾ Money Market Account 0.1 % 28,685,001 28,685,001
Total Investment in Time Deposit and Money Market Accounts (15% of net asset value at fair value) $ 28,699,269 $ 28,699,269
Total Investments⁽⁴⁾ (188% of net asset value at fair value) $ 420,801,057 $ 366,471,304

~~(1)~~

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, 2016. As noted in the table above, 93% (based on par) of debt securities contain LIBOR floors which range between 0.75% and 3.0%.

~~(2)~~

~~Reflects the fair market value of all investments as of December 31, 2016, as determined by the Company’s Board of Directors.~~

~~(3)~~

~~Non-U.S. company or principal place of business outside the U.S.~~

~~(4)~~

The aggregate cost of investments for federal income tax purposes is approximately $429 million. The aggregate gross unrealized appreciation is approximately $2.1 million, the aggregate gross unrealized depreciation is approximately $65.0 million, and the net unrealized depreciation is approximately $62.9 million.

~~(5)~~

~~Non-income producing.~~

~~(6)~~

~~An affiliate CLO Fund managed by an Asset Manager Affiliate (as such term is defined in the notes to the financial statements).~~

~~(7)~~

~~Money market account holding restricted cash and security deposits for employee benefit plans.~~

~~(8)~~

~~Qualified asset for purposes of section 55(a) of the Investment Company Act of 1940.~~

~~(9)~~

~~As of December 31, 2016, this investment is owned by KCAP Senior Funding I, LLC and was pledged to secure KCAP Senior Funding I, LLC’s obligation.~~

~~(10)~~

Other than the Asset Manager Affiliate, which we are deemed to “control”, we do not “control” and are not an “affiliate” of any of our portfolio companies, each as defined in the Investment Company Act of 1940 (the “1940 Act”). In general, under the 1940 Act, we would be presumed to “control” a portfolio company if we owned 25% or more of its voting securities and would be an “affiliate” of a portfolio company if we owned 5% or more of its voting securities.

~~(11)~~

~~Non-voting.~~

~~(12)~~

~~(13)~~

~~Notice of redemption has been received for this transaction.~~

~~(14)~~

~~Loan or security was on partial non-accrual status, whereby we have recognized income on a portion of contractual PIK amounts due.~~

~~See accompanying notes to financial statements.~~

~~KCAP FINANCIAL, INC.~~

~~CONSOLIDATED FINANCIAL HIGHLIGHTS~~

~~(unaudited)~~

Nine Months Ended
September 30,

2017 2016

Per Share Data:
Net asset value, at beginning of period $ 5.24 $ 5.82
Net investment income¹ 0.23 0.39
Net realized losses from investments¹ (0.08 ) (0.17 )
Realized losses from extinguishment of debt¹ (0.11 ) -
Net change in unrealized depreciation on investments¹ 0.02 (0.25 )
Net decrease in net assets resulting from operations 0.06 (0.03 )
Stockholder Distributions (0.36 ) (0.45 )
Net increase (decrease) in net assets relating to stock-based transactions:
Common stock withheld for payroll taxes upon vesting of restricted stock (0.01 ) (0.01 )
Dividend reinvestment plan 0.01 0.01
Stock based compensation - 0.04
Net increase (decrease) in net assets relating to stock-based transactions⁶ - 0.04

Net asset value, end of period $ 4.95 $ 5.38
Total net asset value return² 1.3 % 0.2 %

Ratio/Supplemental Data:
Per share market value at beginning of period $ 3.98 $ 4.07
Per share market value at end of period $ 3.65 $ 4.63
Total market return³ 0.7 % 24.8 %
Shares outstanding at end of period 37,317,815 37,160,770
Net assets at end of period $ 184,785,444 $ 199,903,373
Portfolio turnover rate⁴ 73.8 % 19.3 %
Average par debt outstanding $ 144,298,499 $ 192,692,951
Asset coverage ratio 274 % 207 %
Ratio of net investment income to average net assets⁵ 5.9 % 9.2 %
Ratio of total expenses to average net assets⁵ 9.4 % 8.8 %
Ratio of interest expense to average net assets⁵ 4.1 % 4.5 %
Ratio of non-interest expenses to average net assets⁵ 5.3 % 4.3 %

~~Based on weighted average number of common shares outstanding-basic for the period.~~

Total net asset value return (not annualized) equals the change in the ending of period net asset value per share over the beginning of period net asset value per share plus distributions (including any return of capital), divided by the beginning of period net asset value per share.

Total market return equals the change in the ending of period market price per share over the beginning of period price per share plus distributions (including any return of capital), divided by the beginning of period market price per share.

⁴

~~Not annualized. Portfolio turnover rate equals the year-to-date sales and paydowns over the average of the invested assets at fair value.~~

⁵

~~Annualized~~

⁶

~~Totals may not sum due to rounding.~~

~~See~~~~accompanying~~ ~~notes to~~unaudited consolidated financial statements.

PORTMAN RIDGE FINANCE CORPORATION

~~KCAP FINANCIAL, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~(unaudited)~~(Unaudited)

1. ORGANIZATION

~~KCAP Financial, Inc.~~Portman Ridge Finance Corporation (“~~KCAP”~~Portman Ridge” or the “Company”), formerly known as KCAP Financial, Inc., is an ~~internally~~externally managed, non-diversified closed-end investment company that ishas elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). The Company was formed as a Delaware limited liability company on August 8, 2006 and, prior to the issuance of shares of the Company’s common stock in its initial public offering (“IPO”), converted to a corporation incorporated in Delaware on December 11, 2006. Prior to its IPO, the Company did not have material operations. The Company’s IPO of 14,462,000 shares of common stock raised net proceeds of approximately $200 million. Prior to the IPO, the Company issued 3,484,333 shares to affiliates of Kohlberg & Co., L.L.C., a leading middle market private equity firm, in exchange for the contribution to the Company of their ownership interests in Katonah Debt Advisors, L.L.C., and related affiliates (collectively, “Katonah Debt Advisors”) and in securities issued by collateralized loan obligation funds (“CLO Funds”) managed by Katonah Debt Advisors and two other asset managers.

~~On April 28, 2008, the Company completed a rights offering that resulted in the issuance of 3.1 million shares of the Company’s common stock, and net proceeds of $27 million.~~

On February 29, 2012, the Company purchased Trimaran Advisors, L.L.C. (“Trimaran Advisors”), an asset manager similar to Katonah Debt Advisors, for total consideration of $13.0 million in cash and 3,600,000 shares of the Company’s common stock. Contemporaneously with the acquisition of Trimaran Advisors, the Company acquired from Trimaran Advisors equity interests in certain CLO Funds managed by Trimaran Advisors for an aggregate purchase price of $12.0 million in cash.

On February 14, 2013, the Company completed a public offering of 5,232,500 shares of common stock, which included the underwriters’ full exercise of their option to purchase up to 682,500 shares of common stock, at a price of $9.75 per share, raising approximately $51.0 million in gross proceeds. In conjunction with this offering, the Company also sold 200,000 shares of common stock to a member of its Board of Directors, at a price of $9.31125 per share, raising approximately $1.9 million in gross proceeds.

~~On October 6, 2014, the Company completed a follow-on public offering of 3.0 million shares of its common stock at a price of $8.02 per share.~~ The ~~offering raised net proceeds of approximately $23.8 million, after deducting underwriting discounts and offering expenses.~~

As of September 30, 2017, Katonah Debt Advisors and Trimaran Advisors, as well as affiliated management companies Katonah 2007-1 Management, L.L.C., Trimaran Advisors Management, L.L.C. and KCAP Management L.L.C., (collectively the “Asset Manager Affiliates”), had approximately $2.8 billion of par value assets under management. The Asset Manager Affiliates are each managed independently from KCAP by a separate management team (however, certain of the Company’s executive officers also act in similar capacities for one or both of the Asset Manager Affiliates). The Asset Manager Affiliates provide investment management services to CLO Funds, making day-to-day investment decisions concerning the assets of the CLO Funds. The Asset Manager Affiliates do not have any investments in the CLO Funds they manage; however, KCAP holds investments in a portion of the securities issued by the CLO Funds managed by the Asset Manager Affiliates.

During the third quarter of 2017, the Company formed a joint venture with Freedom 3 Opportunities LLC (“Freedom 3 Opportunities”), an affiliate of Freedom 3 Capital LLC, to create KCAP Freedom 3 LLC (the “Joint Venture”). The Company and Freedom 3 Opportunities LLC contributed approximately $37 million and $25 million, respectively, in assets to the Joint Venture, which in turn used the assets to capitalize a new fund (the "Fund") managed by KCAP Management, LLC, one of the Company's indirectly wholly-owned Asset Manager Affiliate subsidiaries. In addition, the Fund used cash on hand and borrowings under a credit facility to purchase approximately $184 million of loans from the Company and the Company used the proceeds from such sale to redeem approximately $147 million in debt issued by KCAP Senior Funding. The Joint Venture may originate loans from time to time and sell them to the Fund.

~~The Company has three principal areas of investment:~~

~~First, the~~ Company originates, structures, and invests in ~~senior~~ secured term loans, bonds or notes and mezzanine debt primarily in privately-held middle market companies ~~(the “Debt Securities Portfolio”). In addition, from time to time the Company may invest in the equity securities of privately-held middle market companies.~~

~~Second, the Company has invested in the Asset Manager Affiliates, which manage CLO Funds.~~

~~Third, the Company invests in debt and subordinated securities issued by CLO Funds (“CLO Fund Securities”). These CLO Fund Securities are primarily managed by our Asset Manager Affiliates,~~ but from time-to-time the Company makes investments in CLO Fund Securities managed by other asset managers. The CLO Funds typically invest in broadly syndicated loans, high-yield bonds and other credit instruments.

~~The Company~~ may also invest in other investments such as loans to publicly-traded companies, high-yield bonds, and distressed debt ~~securities.~~securities (collectively the “Debt Securities Portfolio”). The Company also invests in debt and subordinated securities issued by collateralized loan obligation funds (“CLO Fund Securities”). In addition, from time to time the Company may invest in the equity securities of privately held middle market companies and may also receive warrants or options to purchase common stock in connection with its debt investments.

The Company has elected to be treated and intends to continue to qualify as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). To qualify as a RIC, the Company must, among other things, meet certain source-of-income, ~~and~~ asset diversification and annual distribution requirements. As a RIC, the Company generally will not have to pay corporate-level U.S. federal income taxes on any income that it distributes in a timely manner to its stockholders.

On March 29, 2018, the Company’s Board of Directors (the “Board”), including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of the Board, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the Small Business Credit Availability Act (“SBCA”). As a result, the Company’s asset coverage requirement for senior securities changed from 200% to 150%, effective as of March 29, 2019.

During the third quarter of 2017, the Company formed a joint venture with Freedom 3 Opportunities LLC (“Freedom 3 Opportunities”), an affiliate of Freedom 3 Capital LLC, to create KCAP Freedom 3 LLC (the “F3C Joint Venture”). The F3C Joint Venture may originate loans from time to time and sell them to the fund capitalized by the F3C Joint Venture.

On November 8, 2018, the Company entered into an agreement with LibreMax Intermediate Holdings, LP (“LibreMax”) under which Commodore Holdings, LLC (“Commodore”), a wholly-owned subsidiary of the Company, sold the Company’s wholly-owned asset manager subsidiaries Katonah Debt Advisors, LLC (“Katonah Debt Advisors”), Trimaran Advisors, L.L.C. (“Trimaran Advisors”), and Trimaran Advisors Management, L.L.C. (“Trimaran Advisors Management” and, together with Katonah Debt Advisors and Trimaran Advisors, the “Disposed Manager Affiliates”), for a cash purchase price of approximately $37.9 million (the “LibreMax Transaction”). The LibreMax Transaction closed on December 31, 2018. As of March 31, 2024, the Company’s remaining wholly-owned asset management subsidiaries (the “Asset Manager Affiliates”) were comprised of Commodore, Katonah Management Holdings, LLC, Katonah X Management LLC, Katonah 2007-1 Management, LLC and KCAP Management, LLC. Prior to their sale in the LibreMax Transaction, the Disposed Manager Affiliates represented substantially all of the Company’s investment in the Asset Manager Affiliates.

The Externalization Agreement

On December 14, 2018, the Company entered into a stock purchase and transaction agreement (the “Externalization Agreement”) with BC Partners Advisors L.P. (“BCP”), an affiliate of BC Partners LLP, (“BC Partners”), through which Sierra Crest Investment Management LLC (the “Adviser”), an affiliate of BC Partners, became the Company’s investment adviser pursuant to an investment advisory Agreement (the “Advisory Agreement”) with the Company. At a special meeting of the Company’s stockholders (the “Special Meeting”) held on February 19, 2019, the Company’s stockholders approved the Advisory Agreement. The transactions contemplated by the Externalization Agreement closed on April 1, 2019 (the “Closing”), and the Company commenced operations as an externally managed BDC managed by the Adviser on that date.

On the date of the Closing, the Company changed its name from KCAP Financial, Inc. to Portman Ridge Finance Corporation and on April 2, 2019, began trading on the NASDAQ Global Select Market under the symbol “PTMN.”

About the Adviser

The Adviser is an affiliate of BC Partners. Subject to the overall supervision of the Board, the Adviser is responsible for managing the Company’s business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring the Company’s investments, and monitoring the Company’s portfolio companies on an ongoing basis through a team of investment professionals.

The Adviser seeks to invest on behalf of the Company in performing, well-established middle market businesses that operate across a wide range of industries (i.e., no concentration in any one industry). The Adviser employs fundamental credit analysis, targeting investments in businesses with relatively low levels of cyclicality and operating risk. The holding size of each position will generally be dependent upon a number of factors including total facility size, pricing and structure, and the number of other lenders in the facility. The Adviser has experience managing levered vehicles, both public and private, and seeks to enhance the Company’s returns through the use of leverage with a prudent approach that prioritizes capital preservation. The Adviser believes this strategy and approach offers attractive risk/return with lower volatility given the potential for fewer defaults and greater resilience through market cycles.

During the fourth quarter of 2020, LibreMax Intermediate Holdings, LP (“LibreMax”) sold its minority stake in the Adviser to a wholly-owned subsidiary of Mount Logan Capital Inc. (“Mount Logan”). An affiliate of BC Partners serves as administrator to Mount Logan.

GARS Transaction

On October 28, 2020, the Company completed its acquisition of Garrison Capital Inc., a publicly traded BDC (“GARS”, and such transaction, the “GARS Acquisition”). To effect the acquisition, a wholly owned merger subsidiary of the Company merged with and into GARS, with GARS surviving the merger as the Company’s wholly owned subsidiary. Immediately thereafter and as a single integrated transaction, GARS consummated a second merger, whereby GARS merged with and into the Company, with the Company surviving the merger. Under the terms of the merger agreement for the GARS Acquisition, dated June 24, 2020 (the "GARS Merger Agreement"), each share of common stock, par value $0.001 per share, of GARS (the "GARS Common Stock") issued and outstanding was converted into the right to receive (i) an amount in cash, without interest, equal to approximately $1.19 and (ii) approximately 1.917 shares of common stock, par value $0.01 per share, of the Company (plus any applicable cash in lieu of fractional shares). Each share of GARS Common Stock issued and outstanding received, as additional consideration funded by the Adviser, an amount in cash, without interest, equal to approximately $0.31.

HCAP Acquisition and Assumption and Redemption of HCAP Notes

On June 9, 2021, the Company completed its acquisition of Harvest Capital Credit Corporation, a publicly traded BDC (“HCAP”, and such transaction, the “HCAP Acquisition”). To effect the acquisition, the Company’s wholly owned merger subsidiary (“Acquisition Sub”) merged with HCAP, with HCAP surviving the merger as the Company’s wholly owned subsidiary. Immediately thereafter and as a single integrated transaction, HCAP consummated a second merger, whereby HCAP merged with and into the Company, with the Company surviving the merger. As a result of, and as of the effective time of, the second merger, HCAP’s separate corporate existence ceased.

Under the terms of the merger agreement for the HCAP Acquisition, dated December 23, 2020 (the “HCAP Merger Agreement”), HCAP stockholders as of immediately prior to the effective time of the first merger (other than shares held by a subsidiary of HCAP or held, directly or indirectly, by the Company or Acquisition Sub, and all treasury shares (collectively, “Cancelled Shares”)) received a combination of (i) $18.54 million in cash paid by the Company, (ii) 15,252,453 validly issued, fully paid and non-assessable shares of the Company’s common stock, par value $0.01 per share, and (iii) an additional cash payment from the Adviser of $2.15 million in the aggregate. Shares of common stock issued and market price have not been adjusted to reflect the Reverse Stock Split.

With respect to the merger consideration from the Company, HCAP stockholders as of immediately prior to the effective time of the first merger (other than Cancelled Shares) were entitled, with respect to all or any portion of the shares of HCAP common stock they held as of the effective time of the first merger, to elect to receive the merger consideration in the form of cash (an “Election”) or in the form of the Company's common stock, subject to certain conditions and limitations in the merger agreement. Any HCAP stockholder who did not validly make an Election was deemed to have elected to receive shares of the Company’s common stock with respect to the merger consideration as payment for their shares of HCAP common stock. Each share of HCAP common stock (other than Cancelled Shares) with respect to which an Election was made was treated as an “Electing Share” and each share of HCAP Common Stock (other than a Cancelled Share) with respect to which an Election was not made or that was transferred after the election deadline on June 2, 2021 was treated as a “Non-Electing Share.”

Pursuant to the conditions of and adjustment mechanisms in the HCAP Merger Agreement, 475,806 Electing Shares were converted to Non-Electing Shares for purposes of calculating the total mix of consideration to be paid to each Electing Share in order to ensure that the value of the aggregate cash consideration paid to holders of the Electing Shares equaled the aggregate cash consideration that HCAP received from the Company under the terms of the HCAP Merger Agreement. Accordingly, as a result of the Elections received from HCAP stockholders and any resulting adjustment under the terms of the HCAP Merger Agreement, each Electing Share received, in aggregate, approximately $7.43 in cash and 0.74 shares of the Company's common stock, while each Non-Electing Share received, in aggregate, approximately 3.86 shares of the Company's common stock.

On June 9, 2021, the Company entered into a third supplemental indenture (the “HCAP Third Supplemental Indenture”) by and between the Company and U.S. Bank National Association, as trustee (the “Trustee”), effective as of the closing of the HCAP Acquisition. The HCAP Third Supplemental Indenture relates to the Company’s assumption of $28.75 million in aggregate principal amount of HCAP’s 6.125% Notes due September 15, 2022 (the “HCAP Notes”).

Pursuant to the HCAP Third Supplemental Indenture, the Company expressly assumed the due and punctual payment of the principal of (and premium, if any) and interest, if any, on the HCAP Notes and the performance of HCAP’s covenants under the base indenture, dated as of January 27, 2015, by and between HCAP and the Trustee, as supplemented by the second supplemental indenture, dated as of August 24, 2017, by and between HCAP and the Trustee. No change of control offer was required to be made in respect of the HCAP Notes in connection with the consummation of the HCAP Acquisition.

The HCAP Notes could be redeemed by the Company at any time at par value plus accrued and unpaid interest. On July 23, 2021, the Company redeemed the entire notional amount of $28.75 million of the HCAP Notes.

Reverse Stock Split

On August 23, 2021, the Company filed a Certificate of Amendment (the “Reverse Stock Split Certificate of Amendment”) to the Company’s Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a 1-for-10 reverse stock split of the issued and outstanding (or held in treasury) shares of the Company’s common stock, par value $0.01 per share (the “Reverse Stock Split”). The Reverse Stock Split became effective as of 12:01 a.m. (Eastern Time) on August 26, 2021.

As a result of the Reverse Stock Split, every ten shares of issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split. Instead, any stockholder who would have been entitled to receive a fractional share as a result of the Reverse Stock Split received cash payments in lieu of such fractional shares (without interest and subject to backup withholding and applicable withholding taxes).

On August 23, 2021, the Company filed a Certificate of Amendment to decrease the number of authorized shares of common stock by one half of the reverse stock split ratio (the “Decrease Shares Certificate of Amendment”) with the Secretary of State of the State of Delaware. The Decrease Shares Certificate of Amendment became effective as of 12:05 a.m. (Eastern Time) on August 26, 2021. Following the effectiveness of the Decrease Shares Certificate of Amendment, the number of authorized shares of common stock under the Company’s Certificate of Incorporation was reduced from 100 million shares to 20 million shares.

The Reverse Stock Split Certificate of Amendment and the Decrease Shares Certificate of Amendment were approved by the Company’s stockholders at its annual meeting held on June 7, 2021 and were approved by the Board on August 4, 2021.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared on the accrual basis of accounting in conformity with ~~accounting principles~~U.S. generally accepted ~~in the United States of America~~accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required for annual consolidated financial statements. The unaudited interim consolidated financial statements (“consolidated financial statements”) and notes thereto should be read in conjunction with the financial statements and notes thereto in the Company’s Form 10-K for the year ended December 31, ~~2016,~~2023, as filed with the U.S. Securities and Exchange Commission (the “Commission” or the “SEC”). The Company is an investment company and follows accounting and reporting guidance in Accounting Standards Codification (“ASC”) topic 946 – Financial Services – Investment Companies.

The consolidated financial statements reflect all adjustments, both normal and recurring which, in the opinion of management, are necessary for the fair presentation of the Company’s results of operations and financial condition for the periods presented. Furthermore, the preparation of the consolidated financial statements requires the Company to make significant estimates and assumptions including with respect to the fair value of investments that do not have a readily available market value. Actual results could differ from those estimates, and the differences could be material. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for the full year. ~~Certain prior period amounts have been reclassified to conform to the current year presentation.~~

The Company consolidates the financial statements of its wholly-owned special purpose financing subsidiaries Portman Ridge Funding 2018-2 Ltd. (“PRF CLO 2018-2”) (formerly known as Garrison Funding 2018-2 Ltd.), Great Lakes KCAP Funding ~~Kolhberg~~I LLC, Kohlberg Capital Funding I LLC, I, KCAP Senior Funding I, LLC, ~~and~~ KCAP ~~Senior~~ Funding I Holdings, LLC, Great Lakes Portman Ridge Funding, LLC and HCAP ICC, LLC in its consolidated financial statements as they are operated solely for investment activities of

the Company. The creditors of ~~KCAP Senior~~Great Lakes Portman Ridge Funding, I, LLC ~~have~~ received security interests in the assets which are owned by ~~KCAP Senior Funding I, LLC~~them and such assets are not intended to be available to the creditors of ~~KCAP Financial, Inc.~~Portman Ridge Finance Corporation., or any other affiliate. The Company also consolidates various subsidiaries (KCAP Coastal, LLC, PTMN Sub Holdings, LLC, OHA Funding, LP, Garrison Capital Equity Holdings I LLC, Garrison Capital Equity Holdings II, LLC, Garrison Capital Equity Holdings VIII LLC, Garrison Capital Equity Holdings XI LLC, GIG Rooster Holdings, LLC, HCAP Equity Holdings, LLC and PTMN Sub Holdings LLC) created primarily to provide specific tax treatment for the equity and other investments held by these entities.

In accordance with Article 6 of Regulation S-X under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company does not consolidate portfolio company investments, including those in which it has a controlling ~~interest (e.g., the Asset Manager Affiliates), unless the portfolio company is another investment company.~~interest.

The Asset Manager Affiliates are subject to Accounting Standards Codification Topic 810, “Consolidation” and although the Company cannot consolidate the financial statements of portfolio company investments, this guidance impacts the Company’s required disclosures relating to the Asset Manager Affiliates. The Asset Manager Affiliates qualify as a “significant subsidiary” and, as a result, the Company is required to include additional financial information regarding the Asset Manager Affiliates in its filings with the SEC. This additional financial information regarding the Asset Manager Affiliates does not directly impact the financial position or results of operations of the Company.

On February 18, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2015-2 (“ASU 2015-2”), which updated consolidation standards under ASC Topic 810, “Consolidation”. Under this update, a new consolidation analysis is required for variable interest entities (“VIEs”) and will limit the circumstances in which investment managers and similar entities are required to consolidate the entities that they manage. The FASB decided to eliminate some of the criteria under which their management fees are considered a variable interest and limit the circumstances in which variable interests in a VIE held by related parties of a reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. The Asset Manager Affiliates adopted ASU 2015-2 in 2016 which resulted in the deconsolidation of the CLO Funds managed by them.

In addition, in accordance with Regulation S-X promulgated by the SEC, additional financial information with respect to one of the CLO Funds in which the Company has an investment, Katonah 2007-I CLO Ltd. (“Katonah 2007-I CLO”), is required to be included in the Company’s SEC filings. The additional financial information regarding the Asset Manager Affiliates and Katonah 2007-I CLO is set forth in Note 5 to these consolidated financial statements.

Stockholder distributions on the Statement of Changes in Net Assets reflect the distributions made during the reporting period, excluding the distribution declared in a quarter with a record date occurring after the quarter-end. The determination of the tax character of distributions is made on an annual (full ~~calendar-year)~~calendar year) basis at the end of the year based upon our taxable income for the full year and the distributions paid during the full year. Therefore, an estimate of tax attributes made on a quarterly basis may not be representative of the actual tax attributes of distributions for a full year.

It is the Company’s primary investment objective to generate current income and capital appreciation by lending directly to privately-held middle market companies. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2024, the Company ~~provided~~made approximately ~~$17~~$37.2 million ~~to portfolio companies to support their growth objectives, none~~ of ~~which was contractually obligated. See also Note 8 – Commitments~~investments and ~~Contingencies.~~ had approximately $35.5 million in repayments and sales, resulting in net deployment of approximately $1.7 million for the period. During the quarter ended March 31, 2023, the Company made approximately $13.3 million of investments and had approximately $45.8 million in repayments and sales, resulting in net repayment and sales of approximately $32.5 million for the period.

As of ~~September 30, 2017,~~March 31, 2024, the Company held loans it has made to 3879 investee companies with aggregate principal amounts of ~~$135~~approximately $430.4 million. ~~The details~~As of ~~such loans have been disclosed on the consolidated schedule of investments as well as in Note 4 – Investments. In addition to providing loans to investee companies, from time to time~~December 31, 2023, the Company ~~assists investee companies in securing financing from other sources by introducing such investee companies~~held loans it has made to ~~sponsors or by, among other things, leading a syndicate of lenders to provide the~~80 investee companies with ~~financing. During the nine months ended September 30, 2017, the Company did not engage in any such or similar activities.~~

FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers, which updated accounting guidance for all revenue recognition arising from contracts with customers, and also affects entities that enter into contracts to provide goods or services to their customers (unless the contracts are in the scopeaggregate principal amounts of other US GAAP requirements). This update provides a model for the measurement and recognition of gains and losses on the sale of certain nonfinancial assets, such as property and equipment, including real estate. The FASB also issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which deferred the effective date of the standard for one year. As a result, the guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Management has concluded that the majority of its revenues associated with financial instruments are scoped out of ASC 606. Management is evaluating the impact of the standard on certain fees earned by the Company.approximately $420.9 million.

In March 2016, the FASB issued ASU 2016-09 Compensation — Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The amendments in ASU 2016-09 affect all entities that issue share-based payment awards to their employees and involve multiple aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For public business entities, ASU 2016-09 is effective for annual periods beginning after December 15 2016, and interim periods within those annual periods. Early adoption is permitted. We adopted 2016-09 during the first quarter of 2017 and there was no impact from adoption.

In November 2016, the FASB issued Accounting Standards Update 2016-18, Restricted Cash (“ASU 2016-18”) which requires entities to show the changes in the total cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those years. Early adoption is permitted, and entities will be required to apply the guidance retrospectively when adopted. We have early adopted ASU 2016-18 retrospectively during the first quarter of 2017 and earlier periods were restated. The following table depicts the retroactive application of ASU 2016-18:

Investments

~~Consolidated Statements of Cash Flows~~

Nine Months Ended
September 30, 2016

Net cash (used in) financing activities as reported $ (46,702,870 )
Impact of Adoption 3,771,347

Net cash (used in) financing activities after adoption $ (42,931,523 )

In March 2017, the Financial Accounting Standards Board issued an Accounting Standards Update, ASU 2017-08, Receivables— Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities (“ASU-2017-08”) which amends the amortization period for certain purchased callable debt securities held at a premium, shortening such period to the earliest call date. ASU-2017-08 does not require any accounting change for debt securities held at a discount; the discount continues to be amortized to maturity. ASU-2017-08 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. At this time, management is evaluating the implications of these changes on the financial statements.

~~Investments~~

Investment transactions are recorded on the applicable trade date. Realized gains or losses are determined using the specific identification method.

Valuation of Portfolio Investments. The ~~Company’s~~ Board has designated the Adviser as its "valuation designee" pursuant to Rule 2a-5 under the 1940 Act, and in that role the Adviser is responsible for performing fair value determinations relating to all of ~~Directors is~~the Company's investments, including periodically assessing and managing any material valuation risks and establishing and applying fair value methodologies, in accordance with valuation policies and procedures that have been approved by the Board. The Board remains ultimately ~~and solely~~ responsible for making ~~a good faith determination~~fair value determinations under the 1940 Act and satisfies its responsibility through oversight of the ~~fair value of portfolio investments on a quarterly basis.~~valuation designee in accordance with Rule 2a-5. Debt and equity securities for which market quotations are readily available are generally valued at such market quotations. Debt and equity securities that are not publicly traded or whose market price is not readily available are valued by the ~~Board of Directors~~Adviser based on detailed analyses prepared by management and, in certain circumstances, third parties with valuation expertise. Valuations are conducted by management on ~~100%~~100% of the investment portfolio at the end of each quarter. The Company follows the provisions of ASC 820: Fair Value Measurements and Disclosures (“ASC 820: Fair Value”). This standard defines fair value, establishes a framework for measuring fair value, and expands disclosures about assets and liabilities measured at fair value. ASC 820: Fair Value defines “fair value” as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ~~Subsequent to the adoption of ASC 820: Fair Value, the FASB has issued various staff positions clarifying the initial standard as noted below.~~

The FASB issued guidance that clarified and required disclosures about fair value measurements. These include requirements to disclose the amounts and reasons for significant transfers between Level I and Level II, as well as significant transfers in and out of Level III of the fair value hierarchy (see Note 4 – “Investments – Fair Value Measurements” for further information relating to Level I, Level II and Level III). The guidance also required that purchases, sales, issuances and settlements be presented gross in the Level III reconciliation.

ASC 820: Fair Value requires the disclosure in interim and annual periods of the inputs and valuation techniques used to measure fair value and a discussion of changes in valuation techniques and related inputs, if any, during the period.

~~The Company~~Adviser utilizes anone or more independent valuation firm to provide an annual third-party review of the Company’s CLO Securities fair value model relative to its functionality, model inputs and calculations as a reasonable method to determine fair values of CLO Securities, in the absence of Level I or Level II trading activity or observable market inputs. The independent valuation firm’s 2016 annual review concluded that the Company’s model appropriately factors in all the necessary inputs required to build an equity cash flow model for CLO Securities for fair value purposes and that the inputs were being employed correctly.

~~The Company utilizes an independent valuation firm~~firms to provide third party valuation consulting services. Each quarter the independent valuation ~~firm will~~firms perform third party valuations of the Company’s investments in material illiquid securities such that they are reviewed at least once during a trailing 12-month period. These ~~third party~~third-party valuation estimates are considered as one of the relevant data points in the ~~Company’s~~Adviser’s determination of fair value.

The Company intends to continue to engage an independent valuation firm in the future to provide certain valuation services, including the review of certain portfolio assets, as part of the quarterly and annual year-end valuation process.

~~The Board of Directors~~Adviser may consider other methods of valuation than those set forth below to determine the fair value of Level III investments as appropriate in conformity with GAAP. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Company’s investments may differ materially from the values that would have been used had a readily available market existed for such investments. Further, such investments may be generally subject to legal and other restrictions on resale or otherwise be less liquid than publicly traded securities. In addition, changes in the market environment and other events may occur over the life of the investments that may cause the value realized on such investments to be different from the currently assigned valuations.

The majority of the Company’s investment portfolio is composed of debt and equity securities with unique contract terms and conditions and/or complexity that requires a valuation of each individual investment that considers multiple levels of market and asset specific inputs, which may include historical and forecasted financial and operational performance of the individual investment, projected cash flows, market multiples, comparable market transactions, the priority of the security compared with those of other securities for such issuers, credit risk, interest rates, and independent valuations and reviews.

Debt Securities. To the extent that the Company’s investments are ~~exchange traded~~liquid and are priced or have sufficient price indications from normal course trading at or around the valuation date (financial reporting date), such pricing will be used to determine the fair value of the investments. Valuations from third party pricing services may be used as an indication of fair value, depending on the volume and reliability of the valuation, sufficient and reasonable correlation of bid and ask quotes, and, most importantly, the level of actual trading activity. However, if the Company has been unable to identify directly comparable market indices or other market guidance that correlate directly to the types of investments the Company owns, the Company will determine fair value using alternative methodologies such as available market data, as adjusted, to reflect the types of assets the Company owns, their structure, qualitative and credit attributes and other asset-specific characteristics.

The Company derives fair value for its illiquid investments that do not have indicative fair values based upon active trades primarily by using a present value technique that discounts the estimated contractual cash flows for the subject assets with discount rates imputed by broad market indices, bond spreads and yields for comparable issuers relative to the subject assets (the “Income Approach”). The Company also considers, among other things, recent loan amendments or other activity specific to the subject asset. Discount rates applied to estimated contractual cash flows for an underlying asset vary by specific investment, industry, priority and nature of the debt security (such as the seniority or security interest of the debt security) and are assessed relative to ~~two indices, a~~ leveraged loan ~~index~~ and a high-yield bond ~~index,~~indices, at the valuation date. The Company has identified these ~~two~~ indices as benchmarks for broad market information related to its loan and debt securities. Because the Company has not identified any market index that directly correlates to the loan and debt securities held by the Company and therefore uses these benchmark indices, these market indices may require significant adjustment to better correlate such market data for the calculation of fair value of the investment under the Income Approach. Such adjustments require judgment and may be material to the calculation of fair value. Further adjustments to the discount rate may be applied to reflect other market conditions or the perceived credit risk of the borrower. When broad market indices are used as part of the valuation methodology, their use is subject to adjustment for many factors, including priority, collateral used as security, structure, performance and other quantitative and qualitative attributes of the asset being valued. The resulting present value determination is then weighted along with any quotes from observable transactions and broker/pricing quotes. If such quotes are indicative of actual transactions with reasonable trading volume at or near the valuation date that are not liquidation or distressed sales, relatively more reliance will be put on such quotes to determine fair value. If such quotes are not indicative of market transactions or are insufficient as to volume, reliability, consistency or other relevant factors, such quotes will be compared with other fair value indications and given relatively less weight based on their relevancy. Other significant assumptions, such as coupon and maturity, are asset-specific and are noted for each investment in the Consolidated Schedules of ~~Investments.~~Investments included herein.

Equity Securities. The Company’s equity securities in portfolio companies for which there is no liquid public market are carried at fair value based on the ~~Enterprise Value~~enterprise value of the portfolio company, which is determined using various factors, including EBITDA (earnings before interest, taxes, depreciation and amortization) and discounted cash flows from operations, less capital expenditures and other pertinent factors, such as recent offers to purchase a portfolio company’s securities or other liquidation events. The determined fair values are generally discounted to account for restrictions on resale and minority ownership positions. In the event market quotations are readily available for the Company’s equity securities in public companies, those investments may be valued using the Market Approach (as defined below). In cases where the Company receives warrants to purchase equity securities, a market standard Black-Scholes model is utilized.

The significant inputs used to determine the fair value of equity securities include prices, EBITDA and cash flows after capital expenditures for similar peer comparables and the investment entity itself. Equity securities are classified as Level III, when there is limited activity or less transparency around inputs to the valuation given the lack of information related to such equity investments held in nonpublic companies. Significant assumptions observed for comparable companies are applied to relevant financial data for the specific investment. Such assumptions, such as model discount rates or price/earnings multiples, vary by the specific investment, equity position and industry and incorporate adjustments for risk premiums, liquidity and company specific attributes. Such adjustments require judgment and may be material to the calculation of fair value.

Derivatives. The Company recognizes all derivative instruments as assets or liabilities at fair value in its financial statements. Derivative contracts entered into by the Company are not designated as hedging instruments, and as a result the Company presents changes in fair value and realized gains or losses through current period earnings. Derivative instruments are measured in terms of the notional contract amount and derive their value based upon one or more underlying instruments. Derivative instruments are subject to various risks similar to non-derivative instruments including market, credit, liquidity, and operational risks. The Company manages these risks on an aggregate basis as part of its risk management process. The derivatives may require the Company to pay or receive an upfront fee or premium. These upfront fees or premiums are carried forward as cost or proceeds to the derivatives. The Company generally records a realized gain or loss on the expiration, termination, or settlement of a derivative contract. The periodic payments for the securities Swap and Option Agreement (excluding collateral) are included as a realized gain or loss.

The Company values derivative contracts using various pricing models that take into account the terms of the contract (including notional amount and contract maturity) and observable and unobservable inputs such as interest rates and changes in fair value of the reference asset.

Asset Manager Affiliates. The Company sold all of its investment in the Disposed Manager Affiliates on December 31, 2018. Previously, the Company’s investments in its wholly-owned ~~asset management companies, the~~ Asset Manager Affiliates, ~~are~~were carried at fair value, which iswas primarily determined utilizing the ~~Discounted Cash Flow~~discounted cash flow approach, ~~(as defined below),~~ which ~~incorporates~~incorporated different levels of discount rates depending on the hierarchy of fees earned (including the likelihood of realization of senior, subordinate and incentive fees) and prospective modeled performance. Such valuation ~~takes~~took into consideration an analysis of comparable asset management companies and the amount of assets under management. The Asset Manager Affiliates ~~are~~were classified as a Level III investment. Any change in value from period to period iswas recognized as net change in unrealized appreciation or depreciation.

CLO Fund Securities. The Company typically makes a ~~minority~~non-controlling investment in the most junior class of securities of CLO ~~Funds raised and managed by the Asset Manager Affiliates and may selectively invest in securities issued by funds managed by other asset management companies.~~Funds. The investments held by CLO Funds generally relate to non-investment grade credit instruments issued by corporations.

The Company’s investments in CLO Fund ~~securities~~Securities are carried at fair value, which is based either on (i) the present value of the net expected cash inflows for interest income and principal repayments from underlying assets and cash outflows for interest expense, debt pay-down and other fund costs for the CLO Funds that are approaching or past the end of their reinvestment period and therefore are selling assets and/or using principal repayments to pay down CLO Fund debt (or will begin to do so shortly), and for which there continue to be net cash distributions to the class of securities owned by the Company, a Discounted Cash Flow approach, (ii) a discounted cash flow model that utilizes prepayment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow and comparable yields for similar securities or preferred shares to those in which the Company has invested, or (iii) indicative prices provided by the underwriters or brokers who arrange CLO Funds, a Market Approach. The Company recognizes unrealized appreciation or depreciation on the Company’s investments in CLO Fund ~~securities~~Securities as comparable yields in the market change and/or based on changes in net asset values or estimated cash flows resulting from changes in prepayment or loss assumptions in the underlying collateral pool. As each investment in CLO Fund ~~securities~~Securities ages, the expected amount of losses and the expected timing of recognition of such losses in the underlying collateral pool are updated and the revised cash flows are used in determining the fair value of the CLO Fund investment. The Company determines the fair value of its investments in CLO Fund ~~securities~~Securities on a security-by-security basis.

Due to the individual attributes of each CLO Fund ~~security,~~Security, they are classified as a Level III investment unless specific trading activity can be identified at or near the valuation date. When available, observable market information will be identified, evaluated and weighted accordingly in the application of such data to the present value models and fair value determination. Significant assumptions to the present value calculations include default rates, recovery rates, prepayment rates, investment/reinvestment rates and spreads and the discount rate by which to value the resulting underlying cash flows. Such assumptions can vary significantly, depending on market data sources which often vary in depth and level of analysis, understanding of the CLO market, detailed or broad characterization of the CLO market and the application of such data to an appropriate framework for analysis. The application of data points are based on the specific attributes of each individual CLO Fund ~~security’s~~Security’s underlying assets, historic, current and prospective performance, vintage, and other quantitative and qualitative factors that would be evaluated by market participants. The Company evaluates the source of market data for reliability as an indicative market input, consistency amongst other inputs and results and also the context in which such data is presented.

For rated note tranches of CLO Fund ~~securities~~Securities (those above the junior class) without transactions to support a fair value for the specific CLO Fund and tranche, fair value is based on discounting estimated bond payments at current market yields, which may reflect the adjusted yield on the leveraged loan index for similarly rated tranches, as well as prices for similar tranches for other CLO Funds and also other factors such as indicative prices provided by underwriters or brokers who arrange CLO Funds, and the default and recovery rates of underlying assets in the CLO Fund, as may be applicable. Such model assumptions may vary and incorporate adjustments for risk premiums and CLO Fund specific attributes.

Short-term investments. Short-term investments are generally comprised of money market accounts, time deposits, and U.S. treasury bills.

Joint ~~Venture~~Ventures. ~~The Company’s investment in KCAP Freedom 3 LLC (“Joint Venture”), is a joint venture with Freedom 3 Opportunities.~~ The Company carries investments in joint ventures (“Joint Ventures”) at fair value based upon the fair value of the investments held by the joint ~~venture.~~venture, or the net asset value as a practical expedient. See Note 4 below, for more information regarding the Joint ~~Venture.~~Ventures.

Cash and Cash Equivalents

Cash~~. The Company defines~~ and cash equivalents include short-term, highly liquid investments, readily convertible to known amounts of cash, with an original maturity of three months or less in accounts such as demand ~~deposits.~~deposit accounts and certain overnight investment sweep accounts. The ~~Company places its~~company records cash ~~with financial institutions~~ and cash equivalents at ~~times, cash held in checking accounts may exceed the Federal Deposit Insurance Corporation insured limit.~~cost, which approximates fair value.

Restricted Cash.

Restricted cash and cash equivalents ~~(e.g., money market funds)~~generally consists of cash held for ~~reinvestment and quarterly~~ interest and principal ~~distribution (if any)~~payments on the Company’s borrowings.

Foreign Currency Translations

The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the foreign exchange rate on the date of valuation. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. The Company’s investments in foreign securities may involve certain risks, including without limitation: foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to ~~holders~~the U.S. dollar can significantly affect the value of ~~notes issued by KCAP Senior Funding I, LLC.~~these investments and therefore the earnings of the Company.

Investment Income

~~Short-term investments~~~~. Short-term investments are generally comprised of money market accounts, time deposits, and U.S. treasury bills.~~

Interest Income. Interest income, including the amortization of premium and accretion of discount and accrual of payment-in-kind (“PIK”) interest, is recorded on the accrual basis to the extent that such amounts are expected to be collected. The Company generally places a loan or security on non-accrual status and ceases recognizing ~~cash~~ interest income on such loan or security when a loan or security becomes 90 days or more past due or if the Company otherwise does not expect the debtor to be able to service its debt obligations. ~~Non-accrual loans~~For investments with PIK interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at maturity, we will not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not collectible (i.e. via a partial or full non-accrual). Loans which are on partial or full non-accrual remain in such status until the borrower has demonstrated the ability and intent to pay contractual amounts due or such loans become current. As of ~~September 30, 2017, two issuers representing 1%~~March 31, 2024, seven of our debt investments were on non-accrual status with an aggregate amortized cost of $17.1 million and an aggregate fair value of $2.2 million, which represented 3.2% and 0.5% of the ~~Company’s total~~investment portfolio, respectively. As of December 31, 2023, seven of our debt investments atwere on non-accrual status with an aggregate amortized cost of $17.3 million and an aggregate fair value ~~were on a non-accrual status,~~of $6.1 million, which represented 3.2% and ~~one of our investments, representing 2%~~1.3% of the ~~Company’s investments at fair value, was on partial non-accrual status, whereby we have recognized~~investment portfolio, respectively. Generally, the Company will capitalize loan origination fees, then amortize these fees into interest income ~~on a portion of contractual payment-in-kind (PIK) amounts due.~~

~~Distributions from Asset Manager Affiliates~~~~. The Company records distributions from our Asset Manager Affiliates on~~over the ~~declaration date, which represents the ex-dividend date. Distributions in excess of tax-basis earnings and profits~~term of the ~~distributing affiliate company are recognized~~loan using the effective interest rate method, recognize prepayment and liquidation fees upon receipt and equity structuring fees as tax-basis return of capital. For interim periods, the Company estimates the tax attributes of any distributions as being either tax-basis earnings and profits (i.e., dividend income) or return of capital (i.e., adjustment to the Company’s cost basis in the Asset Manager Affiliates). The final determination of the tax attributes of distributions from our Asset Manager Affiliates is made onearned, which generally occurs when an annual (full calendar year) basis at the end of the year based upon taxable income and distributions for the full-year. Therefore, any estimate of tax attributes of distributions made on a quarterly basis may not be representative of the actual tax attributes of distributions for a full year.investment transaction closes.

Investment Income on CLO Fund Securities. The Company generates investment income from its investments in the most junior class of securities ofissued by CLO Funds (typically preferred shares or subordinated securities) ~~managed by the Asset Manager Affiliates and select investments in securities issued by funds managed by other asset management companies.~~. The Company’s CLO Fund junior class securities are subordinated to senior note holders who typically receive a stated interest rate of return based on a floating rate index, such as the ~~London Interbank Offered~~Secured Overnight Financing Rate (“~~LIBOR”~~SOFR”) on their investment. The CLO Funds are leveraged funds and any excess cash flow or “excess spread” (interest earned by the underlying securities in the fund less payments made to senior note holders and less fund expenses and management fees) is paid to the holders of the CLO Fund’s subordinated securities or preferred shares.

GAAP-basis investment income on CLO equity investments is recorded using the effective interest method in accordance with the provisions of ASC 325-40, based on the anticipated yield and the estimated cash flows over the projected life of the investment. Yields are revised when there are changes in actual or estimated projected future cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing. Changes in estimated yield are recognized as an adjustment to the estimated yield prospectively over the remaining life of the investment from the date the estimated yield was changed. Accordingly, investment income recognized on CLO equity securities in the GAAP statement of operations differs from both the tax–basis investment income and from the cash distributions actually received by the Company during the period.

For non-junior class CLO Fund ~~securities, such as the Company’s investment in the Class E Notes of the Catamaran CLO 2014-1,~~Securities, interest is earned at a fixed spread relative to the ~~LIBOR~~SOFR index.

Investment Income on Joint ~~Venture~~Ventures. ~~For interim periods, the~~The Company recognizes investment income on its investment in the Joint ~~Venture~~Ventures based upon its share of the estimated ~~tax-basis~~ earnings and profits of the Joint ~~Venture. Any distributions in excess of tax-basis earnings and profits are recognized as a return of capital (adjustment to~~Venture on the ~~Company’s cost basis in the investment).~~ex-dividend or ex-distribution date. The final determination of the tax attributes of distributions from the Joint ~~Venture~~Ventures is made on an annual (full calendar year) basis at ~~year-end~~the end of the year based upon taxable income and distributions for the full year. Therefore, any estimate of tax attributes of distributions made on an interim basis may not be representative of the actual tax attributes of distributions for the full year.

~~Capital Structuring Service~~ Fees and other income. ~~The Company may~~Origination fees (to the extent services are performed to earn ~~ancillary structuring~~such income), amendment fees, consent fees, and other fees ~~related to the origination, investment, disposition or liquidation of debt and investment securities. Generally,~~associated with investments in portfolio companies are recognized as income when they are earned. Prepayment penalties received by the Company ~~will capitalize loan origination fees, then amortize these fees into interest~~for debt instruments repaid prior to maturity date are recorded as income ~~over the term of the loan using the effective interest rate method, recognize prepayment and liquidation fees~~ upon ~~receipt and equity structuring fees as earned, which generally occurs when an investment transaction closes.~~receipt.

Debt Issuance Costs.

Debt issuance costs represent fees and other direct costs incurred in connection with the Company’s borrowings. These amounts are capitalized, presented as a reduction of debt, and amortized using the effective interest method over the expected term of the borrowing.

Extinguishment of ~~debt~~. Debt

The Company ~~must derecognize~~derecognizes a liability if and only if it has been extinguished through delivery of cash, delivery of other financial assets, delivery of goods or services, or reacquisition by the Company of its outstanding debt securities whether the securities are cancelled or held. If the debt contains a cash conversion option, the Company ~~must allocate~~allocates the consideration transferred and transaction costs incurred to the extinguishment of the liability component and the reacquisition of the equity component and recognize a gain or loss in the statement of operations.

Expenses

~~Expenses~~. The Company is ~~internally~~externally managed and ~~expenses costs, as incurred,~~in connection with ~~regard to~~ the ~~running of its operations. Primary operating~~Advisory Agreement, pays the Adviser certain investment advisory fees and reimburses the Adviser and Administrator for certain expenses include employee salaries and benefits, the costs of identifying, evaluating, negotiating, closing, monitoring and servicing the Company’s investments and related overhead charges and expenses, including rental expense, and any interest expense incurred in connection with ~~borrowings. The Company~~the services they provide. See Note 5 “Related Party Transactions - Payment of Expenses under the Advisory and the Asset Manager Affiliates share office space and certain other operating expenses. The Company has entered into an Overhead Allocation Agreement with the Asset Manager Affiliates which provides for the sharing of such expenses based on an allocation of office lease costs and the ratable usage of other shared resources.Administration Agreements.”

Shareholder Distributions.

Distributions to common stockholders are recorded on the ex-dividend date. The amount of distributions, if any, is determined by the Board ~~of Directors~~ each quarter.

The Company has adopted a dividend reinvestment plan ~~the “DRIP”~~(the "DRIP") that provides for reinvestment of its distributions on behalf of its stockholders, unless a stockholder “opts out” of the DRIP to receive cash in lieu of having their cash distributions automatically reinvested in additional shares of the Company’s common stock.

3. EARNINGS (LOSSES) PER SHARE

In accordance with the provisions of ASC 260,~~“Earnings~~ “Earnings per Share” (“ASC 260”), basic earnings per share is computed by dividing earnings available to common shareholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis.

The following information sets forth the computation of basic and diluted net increase (decrease) in ~~stockholders’ equity~~net assets per share for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016 (unaudited):~~2023:


	For the Three Months Ended March 31,
($ in thousands)	2024		2023
Net increase (decrease) in net assets resulting from operations	$	4,486	$	55
Weighted average number of common and common stock equivalent shares outstanding for basic and diluted shares computation		9,344,994		9,555,125
Net increase (decrease) in net assets per basic common shares and diluted shares:
Net increase (decrease) in net assets from operations	$	0.48	$	0.01

(unaudited) (unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016

Net increase (decrease) in net assets resulting from operations $ (669,449 ) $ 2,716,613 $ 2,237,830 $ (1,118,600 )
Net (increase) decrease in net assets allocated to unvested share awards 3,260 (30,313 ) (18,094 ) 16,701

Net increase (decrease) in net assets available to common stockholders $ (666,189 ) $ 2,686,300 $ 2,219,736 $ (1,101,900 )
Weighted average number of common shares outstanding for basic shares computation 37,196,621 37,152,622 37,202,011 37,142,002

Weighted average number of common and common stock equivalent shares outstanding for diluted shares computation 37,196,621 37,152,622 37,202,011 37,142,002

Net increase (decrease) in net assets per basic common shares:
Net increase (decrease) in net assets from operations $ (0.02 ) $ 0.07 $ 0.06 $ (0.03 )
Net increase (decrease) in net assets per diluted shares:
Net increase (decrease) in net assets from operations $ (0.02 ) $ 0.07 $ 0.06 $ (0.03 )

Share-based awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities and included in the computation of both basic and diluted earnings per share. Grants of restricted stock awards to the Company’s employees and directors are considered participating securities when there are earnings in the period and the earnings per share calculations include outstanding unvested restricted stock awards in the basic weighted average shares outstanding calculation.

There were 50,000 options to purchase shares of common stock considered for the computation of the diluted per share information for the three months and nine months ended September 30, 2017 and 2016. Since the effects are anti-dilutive for both periods, the options were not considered in the computation. For the three months ended September 30, 2017 and 2016, the Company purchased 349 and 309 shares of common stock, respectively. For the nine months ended September 30, 2017 and 2016 the Company purchased 64,176 and 67,654 shares of common stock, respectively, in connection with the vesting of employee restricted stock, such shares are treated as treasury shares and reduce the weighted average shares outstanding in the computation of earnings per share.

The Company’s Convertible Notes were included in the computation of the diluted net increase or decrease in net assets resulting from operations per share by application of the “if-converted method” for periods when the Convertible Notes were outstanding. Under the if-converted method, interest charges applicable to the convertible notes for the period are added to reported net increase or decrease in net assets resulting from operations and the full amount of shares (pro-rata if not outstanding for the full period) that would be issued are added to weighted average basic shares. Convertible notes are considered anti-dilutive only when its interest per share upon conversion exceeds the basic net increase or decrease in net assets resulting from operations per share. For the nine month period ended September 30, 2016, the effects of the convertible notes were anti-dilutive. The Convertible Notes matured and were repaid in March 2016.

4. INVESTMENTS

The following table shows the Company’s portfolio by security type at ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016:~~2023:

September 30, 2017 (unaudited) December 31, 2016
Security Type
Cost/
Amortized Cost
Fair Value %¹
Cost/
Amortized Cost
Fair Value %¹
Short-term Investments² 57,024,828 $ 57,024,828 18 28,699,269 $ 28,699,269 8
Senior Secured Loan 49,982,415 46,124,914 15 207,701,078 200,322,152 55
Junior Secured Loan 59,490,855 58,343,554 18 37,251,776 35,444,440 10
Senior Unsecured Loan 20,000,000 20,000,000 6 - - -
First Lien Bond 3,054,337 1,063,762 - 3,060,919 1,089,338 -
Senior Secured Bond 1,503,404 1,494,600 - 1,506,461 1,487,400 -
CLO Fund Securities 78,544,739 51,843,344 16 76,851,317 54,174,350 15
Equity Securities 10,389,007 4,450,177 1 10,389,007 5,056,355 1
Asset Manager Affiliates³ 53,341,230 39,679,000 13 55,341,230 40,198,000 11
Joint Venture 36,738,873 36,591,122 13 - - -

Total $ 370,069,689 $ 316,615,300 100 % $ 420,801,057 $ 366,471,304 100 %



($ in thousands)	March 31, 2024 (Unaudited)							December 31, 2023
Security Type	Cost/Amortized Cost		Fair Value		%(¹)			Cost/Amortized Cost		Fair Value		%(¹)
Senior Secured Loan	$	364,981	$	349,844		74		$	356,358	$	340,159		73
Junior Secured Loan		52,951		36,270		8			53,888		38,875		8
Senior Unsecured Bond		-		-		-			416		43		0
Equity Securities		34,077		23,428		5			31,280		20,533		4
CLO Fund Securities		8,762		8,549		2			9,103		8,968		2
Asset Manager Affiliates(2)		17,791		-		-			17,791		-		-
Joint Ventures		65,008		53,164		11			71,415		59,287		13
Derivatives		31		-		-			31		-		-
Total	$	543,601	$	471,255		100	%	$	540,282	$	467,865		100	%

(1)

Represents percentage of total portfolio at fair value.

~~Represents percentage of total portfolio at fair value.~~

~~Includes money market accounts and U.S. treasury bills.~~

~~Represents the equity investment in the Asset Manager Affiliates.~~

(2)

Represents the equity investment in the Asset Manager Affiliates.

The ~~industry-related information,~~industry concentrations based on the fair value of the Company’s investment portfolio as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016, for~~2023 were as follows:


($ in thousands)	March 31, 2024 (Unaudited)							December 31, 2023
Industry Classification	Cost/Amortized Cost		Fair Value		%(¹)			Cost/Amortized Cost		Fair Value		%(¹)
Aerospace and Defense	$	11,134	$	11,260		2		$	11,130	$	11,256		2
Alternative Carriers		-		-		-			971		937		0
Application Software		1,163		1,162		0			-		-		-
Asset Management Company(2)		17,791		-		-			17,791		-		-
Banking, Finance, Insurance & Real Estate		49,725		51,332		11			51,486		53,918		11
Beverage, Food and Tobacco		12,288		11,531		2			12,220		11,444		2
Capital Equipment		10,668		972		0			10,684		1,203		0
Chemicals, Plastics and Rubber		9,498		9,498		2			9,738		9,836		2
CLO Fund Securities		8,762		8,549		2			9,103		8,968		2
Construction & Building		7,718		7,481		2			7,737		7,441		2
Consumer goods: Durable		24,577		21,869		4			16,431		13,898		3
Containers, Packaging and Glass		2,733		2,673		1			2,734		2,665		1
Diversified Financial Services		2,699		2,696		1
Energy: Electricity		671		671		0			671		671		0
Energy: Oil & Gas		6,304		-		-			6,721		100		0
Finance		19,643		19,702		4			18,884		18,972		4
Healthcare & Pharmaceuticals		57,350		56,094		12			59,189		57,224		12
Healthcare, Education and Childcare		6,161		6,150		1			6,175		6,163		1
High Tech Industries		83,452		72,617		15			84,676		73,430		16
Hotel, Gaming & Leisure		8,353		4,034		1			8,358		3,948		1
Interactive Media & Services		2,625		2,639		1			2,663		2,662		1
IT Consulting & Other Services		2,213		2,267		1			2,213		2,259		1
Joint Venture		65,008		53,164		11			71,415		59,287		13
Machinery (Non-Agrclt/Constr/Electr)		11,378		11,975		2			9,836		10,097		2
Media: Broadcasting & Subscription		17,094		14,044		3			16,665		14,618		3
Media: Diversified & Production		748		750		0			1,121		1,125		0
Metals & Mining		9,500		8,051		2			9,000		7,742		2
Retail		9,510		9,029		2			9,334		8,732		2
Services: Business		61,116		59,607		13			58,997		57,168		12
Telecommunications		5,305		4,637		1			5,268		4,389		1
Transportation: Cargo		10,962		9,416		2			11,606		10,303		2
Transportation: Consumer		7,452		7,385		2			7,465		7,409		2
Total	$	543,601	$	471,255		100	%	$	540,282	$	467,865		100	%

(1)

Calculated as a percentage of total portfolio at fair value.

(2)

Represents the ~~Company’s~~equity investment ~~portfolio was as follows:~~

September 30, 2017 (unaudited) December 31, 2016
Industry Classification
Cost/
Amortized Cost
Fair Value %¹
Cost/
Amortized Cost
Fair Value %
Aerospace and Defense $ 4,929,171 $ 3,268,788 1 % $ 8,394,633 $ 8,450,106 2 %
Asset Management Company² 53,341,230 39,679,000 13 55,341,230 40,198,000 11
Automotive - - - 6,322,551 6,196,154 2
Banking, Finance, Insurance & Real Estate 3,466,776 3,443,506 1 6,805,514 6,782,010 2
Beverage, Food and Tobacco 4,512,854 4,346,400 1 15,198,830 14,703,372 4
Capital Equipment 5,455,586 4,744,140 1 6,185,129 5,575,048 2
Chemicals, Plastics and Rubber - - - 6,421,909 6,444,073 2
CLO Fund Securities 78,544,739 51,843,344 16 76,851,317 54,174,350 15
Construction & Building 1,007,336 1,007,423 - 5,919,158 5,929,606 2
Consumer goods: Durable 3,054,338 1,064,762 - 12,319,905 10,118,736 3
Consumer goods: Non-durable 732,896 734,613 - 14,766,390 14,452,096 4
Ecological - - - 1,741,292 1,760,783 -
Energy: Electricity - - - 3,904,453 3,937,247 1
Energy: Oil & Gas 13,929,048 10,575,738 3 14,493,835 8,805,761 2
Environmental Industries 6,922,952 6,156,451 2 12,279,924 12,185,239 3
Forest Products & Paper 1,557,040 1,600,960 1 4,192,889 4,192,907 1
Healthcare & Pharmaceuticals 36,573,091 33,901,061 11 58,769,668 53,594,534 15
High Tech Industries 16,093,619 16,051,970 5 9,854,093 9,936,109 3
Hotel, Gaming & Leisure 400,000 1,000 - 400,000 1,000 -
Joint Venture 36,738,873 36,591,122 12 - - -
Media: Advertising, Printing & Publishing 3,869,962 3,875,038 1 11,712,682 11,453,447 3
Media: Broadcasting & Subscription - - - 8,273,174 8,372,984 2
Related Party Loan 20,000,000 20,000,000 6 - - -
Retail - - - 1,415,457 759,581 -
Services: Business 5,523,913 4,427,100 1 16,125,481 16,230,486 4
Services: Consumer - - - 6,212,108 6,204,889 2
Telecommunications 3,965,663 3,939,200 1 12,809,799 12,767,823 3
Textiles and Leather 7,948,833 7,847,841 3 - - -
Money Market Accounts 32,015,828 32,015,828 11 28,699,269 28,699,269 8
Transportation: Cargo 2,496,958 2,500,000 1 7,557,315 7,190,135 2
Transportation: Consumer - - - 2,412,614 2,324,516 1
U.S. Government Obligation 25,009,000 25,009,000 8 - -
Utilities: Electric 1,979,983 1,991,015 1 5,420,438 5,031,043 1

Total $ 370,069,689 $ 316,615,300 100 % $ 420,801,057 $ 366,471,304 100 %

in the Asset Manager Affiliates.

~~Calculated as a percentage of total portfolio at fair value.~~

~~Represents the equity investment in the Asset Manager Affiliates.~~

The Company may invest up to ~~30%~~30% of the ~~its total assets~~investment portfolio in “non-qualifying” opportunistic investments, including investments in debt and equity securities of CLO Funds, distressed debt or debt and equity securities of large cap public companies. Within this ~~30%,~~30% of the portfolio, the Company also may invest in debt of middle market companies located outside of the United States.

At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, the total amount of non-qualifying assets was approximately ~~28%~~12.9% and ~~17%~~13.4% of ~~the~~ total ~~investment portfolio,~~assets, respectively. The majority of non-qualifying assets ~~were foreign~~are the Company’s investments in joint ventures which were approximately ~~17%~~10.1% and ~~14%~~10.8% of ~~the~~its total ~~investment portfolio, respectively (including the~~assets, respectively. The Company’s investments in CLO Funds, which are typically domiciled outside the U.S. ~~and~~, represented approximately ~~16%~~1.6% and ~~15%~~1.6% of its total assets ~~on such dates, respectively).~~

~~The following tables detail the ten largest portfolio investments (at fair value) as of September 30, 2017~~at March 31, 2024 and December 31, ~~2016:~~2023, respectively.

September 30, 2017 (unaudited)
Investment Cost/Amortized Cost Fair Value % of FMV
Asset Manager Affiliates $ 53,341,230 $ 39,679,000 13 %
KCAP Freedom 3 LLC 36,738,873 36,591,122 12
US Bank Money Market Account 32,001,559 32,001,559 10
Katonah 2007-I CLO Ltd. 31,123,451 21,447,386 7
Trimaran Advisors, L.L.C. 20,000,000 20,000,000 6
U.S Treasury Bills - CUSIP: 912796LY3 15,007,000 15,007,000 5
U.S Treasury Bills - CUSIP: 912796KR9 10,002,000 10,002,000 3
Tank Partners Holdings, LLC 12,420,461 8,222,814 3
Catamaran CLO 2016-1 Ltd. 10,196,554 8,585,018 3
Grupo HIMA San Pablo, Inc. 10,023,444 9,290,017 3
Total $ 230,854,572 $ 200,825,916 65 %

December 31, 2016
Investment Cost/Amortized Cost Fair Value % of FMV
Asset Manager Affiliates $ 55,341,230 $ 40,198,000 11 %
US Bank Money Market Account 28,685,001 28,685,001 8
Katonah 2007-I CLO Ltd. 28,022,646 20,453,099 6
Grupo HIMA San Pablo, Inc. 9,828,619 9,113,125 2
Catamaran CLO 2016-1 Ltd. 10,140,000 8,350,290 2
Tank Partners Holdings, LLC 11,822,180 6,552,311 2
Roscoe Medical, Inc. 6,666,733 6,499,000 2
Weiman Products, LLC 5,462,647 5,321,809 1
Nielson & Bainbrige, LLC 5,326,136 5,199,447 1
Catamaran CLO 2014-2 Ltd. 6,967,560 5,092,087 1

Total $ 168,262,752 $ 135,464,169 36 %

Excluding the Asset Manager Affiliates and CLO Fund securities, the Company’s ten largest portfolio companies represented approximately 49% and 13% of the total fair value of the Company’s investments at September 30, 2017 and December 31, 2016, respectively.

Investments in CLO Fund Securities

The Company ~~typically makes a minority investment~~has made non-controlling investments in the most junior class of securities (typically preferred shares or subordinated securities) of CLO ~~Funds managed by the Asset Manager Affiliates and may selectively invest in securities issued by CLO funds managed by other asset management companies.~~Funds. These securities also are entitled to recurring distributions which generally equal the net remaining cash flow of the payments made by the underlying CLO ~~Fund’s~~Fund's securities less contractual payments to senior bond holders, management fees and CLO Fund expenses. CLO Funds invest primarily in broadly syndicated non-investment grade loans, high-yield bonds and other credit instruments of corporate issuers. The underlying assets in each of the CLO Funds in which the Company has an investment are generally diversified secured or unsecured corporate debt. The CLO Funds are leveraged funds and any excess cash flow or “excess spread” (interest earned by the underlying securities in the ~~fund~~CLO Funds less payments made to senior bond holders, fund expenses and management fees) is paid to the holders of the CLO Fund’s subordinated securities or preferred shares.

~~In December 2016, the Company purchased $10.1 million of the notional value of the Subordinated Notes of Catamaran 2016-1 CLO (“Catamaran 2016-1”) managed by Trimaran Advisors.~~

~~In the third quarter of 2017, the Company purchased $3.8 million notional value of the Subordinated Notes of Catamaran 2014-1 CLO managed by Trimaran Advisors.~~

On February 29, 2016, Katonah X CLO Ltd. was fully liquidated and all of its outstanding obligations were satisfied. The Company received approximately $1.0 million in connection therewith related to its investment in the subordinated securities issued by Katonah X CLO Ltd. Accordingly, the Company recorded a realized loss during the first quarter of 2016 of approximately $6.6 million on its investment in Katonah X CLO Ltd. and a corresponding unrealized gain of the same amount in order to reverse the approximately $6.6 million of previously recorded unrealized depreciation with respect to the investment.

All CLO Funds managed by the Asset Manager Affiliates are currently making quarterly distributions to the Company with respect to its interests in the CLO Funds and are paying all senior and subordinate management fees to the Asset Manager Affiliates. In January 2017, the trustees of Trimaran CLO VII, Ltd. (Trimaran VII) received notice that the holders of a majority of the income notes issued by Trimaran VII had exercised their right of optional redemption. With the exception of Katonah III, Ltd. and Grant Grove CLO, Ltd. (both of which have been called), all third-party managed CLO Funds are making distributions to the Company.

~~Affiliate Investments~~

The following table details investments in ~~affiliates:~~CLO Fund Securities at March 31, 2024 (unaudited) and December 31, 2023:


($ in thousands)					March 31, 2024							December 31, 2023
CLO Fund Securities	Investment	Percentage Ownership(1)			Amortized Cost		Fair Value		Percentage Ownership(1)			Amortized Cost		Fair Value
Catamaran CLO 2014-1 Ltd.	Subordinated Notes		22.2	%	$	702	$	702		22.2	%	$	1,024	$	904
Catamaran CLO 2018-1 Ltd.	Subordinated Notes		24.8	%		3,846		3,757		24.8	%		3,923		3,923
Dryden 30 Senior Loan Fund	Subordinated Notes		6.8	%		246		246		6.8	%		424		409
JMP Credit Advisors CLO IV Ltd.	Subordinated Notes		57.2	%		715		668		57.2	%		683		683
JMP Credit Advisors CLO V Ltd.	Subordinated Notes		57.2	%		3,253		3,176		57.2	%		3,049		3,049
Total					$	8,762	$	8,549				$	9,103	$	8,968

(1)

Represents percentage of class held at March 31, 2024 and December 31, 2023, respectively.

Affiliate Investments:

Fair Value
at
December
31, 2016 Purchases/(Sales) of or
Advances/(Distributions) Net
Accretion Unrealized
Gain/(Loss) Fair Value
at of
September
30, 2017
(unaudited) Interest
Income Dividend
Income

Asset Manager Affiliates $ 40,198,000 $ (2,000,000 ) $ - $ 1,481,000 $ 39,679,000 $ - $ 180,000
Trimaran Advisors, LLC Related Party Loan - 20,000,000 - - 20,000,000 506,306 -
Katonah 2007-I CLO, Ltd. 20,453,099 (1,841,861 ) 4,942,665 (2,106,519 ) 21,447,386 4,942,665 -
Trimaran CLO VII, Ltd. 1,195,152 (1,264,090 ) - 78,938 10,000 - -
Catamaran CLO 2012-1, Ltd. 2,819,412 (636,377 ) 476,425 (419,650 ) 2,239,810 476,425 -
Catamaran CLO 2013-1, Ltd. 4,918,807 (985,219 ) 534,047 (661,535 ) 3,806,101 534,047 -
Catamaran CLO 2014-1, Ltd. 4,546,682 303,037 560,220 (562,318 ) 4,847,621 560,220 -
Catamaran CLO 2014-2, Ltd. 5,092,087 (880,468 ) 612,786 (340,395 ) 4,484,010 612,786 -
Catamaran CLO 2015-1, Ltd. 3,223,255 (442,803 ) 316,181 (62,913 ) 3,033,719 316,181 -
Catamaran CLO 2016-1, Ltd. 8,350,290 (791,935 ) 848,489 178,174 8,585,018 848,489 -
CRMN 2014-1A 1,310,000 - 9,659 200,341 1,520,000 87,974 -
KCAP Freedom 3, LLC - 36,738,873 - (147,751 ) 36,591,122 - 685,000

Total Affiliated Investments $ 92,106,784 $ 48,199,157 $ 8,300,472 $ (2,362,628 ) $ 146,243,787 $ 8,885,093 $ 865,000

The following table details investments in affiliates at March 31, 2024 (unaudited):


($ in thousands)	Industry Classification	Fair Value as of December 31, 2023		Purchases/ (Sales) of or Advances/ (Distributions)			Net Accretion		Transfers In/(Out) of Affiliates		Net Change in Unrealized Gain/(Loss)			Realized Gain/(Loss)			Fair Value as of March 31, 2024		Principal / Shares at March 31, 2024		Interest and Fee Income		Dividend Income
Asset Manager Affiliates(1)(3)	Asset Management Company	$	-	$	-		$	-	$	-	$	-		$	-		$	-		-	$	-	$	-
Tank Partners Equipment Holdings, LLC(1)(2)(3)(6)	Energy: Oil & Gas		-		-			-		-		-			-			-		49,000		-		-
Tank Partners Equipment Holdings, LLC(1)(2)(3)	Energy: Oil & Gas		43		-			-		-		373			(416	)		-		-		-		-
Flight Lease VII (1)(2)(4)(6)	Aerospace and Defense		-		(1	)		-		-		1			-			-		-		-		-
ProAir, LLC(1)(2)(3)(6)	Capital Equipment		-		-			-		-		-			-			-		2,749,997		-		-
ProAir, LLC(1)(2)(3)	Capital Equipment		-		-			-		-		-			-			-		2,020		-		-
KCAP Freedom 3, LLC (1)(3)	Joint Venture		14,275		(968	)		-		-		216			-			13,523		27,220		-		-
Total controlled affiliates		$	14,318	$	(969	)	$	-	$	-	$	590		$	(416	)	$	13,523			$	-	$	-

Series A-Great Lakes Funding II LLC(5)(6)(7)	Joint Venture	$	45,012	$	(5,439	)	$	-	$	-	$	68		$	-		$	39,641		38,562	$	-	$	1,653
GreenPark Infrastructure, LLC(1)(2)(5)(6)	Energy: Electricity		500		-			-		-		-			-			500		1,000		-		-
GreenPark Infrastructure, LLC(1)(2)(5)(6)(7)	Energy: Electricity		171		-			-		-		-			-			171		500		-		-
Kleen-Tech Acquisition, LLC (1)(2)(5)(6)	Services: Business		998		-			-		-		150			-			1,148		250,000		-		-
Northeast Metal Works LLC (1)(2)(5)(6)	Metals & Mining		-		-			-		-		-			-			-		2,368		-		-
Northeast Metal Works LLC (1)(2)(5)(6)	Metals & Mining		4,182		-			-		-		-			-			4,182		4,500,000		112		-
Northeast Metal Works LLC (1)(2)(5)	Metals & Mining		3,560		-			-		-		(191	)		-			3,369		4,500		91		-
Northeast Metal Works LLC (1)(2)(5)	Metals & Mining		-		500			-		-		-			-			500		500		4		-
BMP Slappey Holdco, LLC (1)(2)(5)(6)	Telecommunications		553		-			-		-		78			-			631		200,000		-		-
BMP Slappey Investment II (1)(2)(5)(6)	Telecommunications		246		-			-		-		35			-			281		88,946		-		-
Total Non-controlled affiliates		$	55,222	$	(4,939	)	$	-	$	-	$	140		$	-		$	50,423			$	207	$	1,653

Total Affiliated Investments		$	69,540	$	(5,908	)	$	-	$	-	$	730		$	(416	)	$	63,946			$	207	$	1,653

(1)

Fair value of this investment was determined using significant unobservable inputs.

(2)

Qualified asset for purposes of section 55(a) of the Investment Company Act of 1940.

(3)

As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” and has “Control” of this portfolio company as the Company owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). Other than for purposes of the 1940 Act, the Company does not believe that it has control over this portfolio company.

(4)

(5)

(6)

Number of shares held.

(7)

Ownership of LP interest held through the holding company BCP Great Lakes Fund, L.P., a non-U.S. company or principal place of business outside the U.S.

(8)

The following table details investments in affiliates at December 31, 2023:


($ in thousands)	Industry Classification	Fair Value as of December 31, 2022		Purchases/ (Sales) of or Advances/ (Distributions)			Net Accretion		Transfers In/(Out) of Affiliates			Net Change in Unrealized Gain/(Loss)			Realized Gain/(Loss)			Fair Value as of December 31, 2023		Principal / Shares at December 31, 2023		Interest and Fee Income		Dividend Income
Asset Manager Affiliates(1)(3)	Asset Management Company	$	-	$	-		$	-	$	-		$	-		$	-		$	-		-	$	-	$	-
Tank Partners Equipment Holdings, LLC(1)(2)(3)(6)	Energy: Oil & Gas		-		-			-		-			-			-			-		49,000		-		-
Tank Partners Equipment Holdings, LLC(1)(2)(3)	Energy: Oil & Gas		43		-			-		-			-			-			43		511		-		-
Flight Lease VII (1)(2)(4)(6)	Aerospace and Defense		242		(248	)		-		-			39			(33	)		-		-		-		-
ProAir, LLC(1)(2)(3)(6)	Capital Equipment		-		-			-		-			-			-			-		2,749,997		-		-
ProAir, LLC(1)(2)(3)	Capital Equipment		-		-			-		-			-			-			-		2,020		-		-
KCAP Freedom 3, LLC (1)(3)	Joint Venture		18,668		-			-		-			(4,393	)		-			14,275		27,220		-		2,184
Total controlled affiliates		$	18,953	$	(248	)	$	-	$	-		$	(4,354	)	$	(33	)	$	14,318			$	-	$	2,184

Series A-Great Lakes Funding II LLC(5)(6)(7)	Joint Venture	$	40,287	$	2,565		$	-	$	-		$	2,160		$	-		$	45,012		44,000	$	-	$	6,764
GreenPark Infrastructure, LLC(1)(2)(5)(6)	Energy: Electricity		500		-			-		-			-			-			500		1,000		-		-
GreenPark Infrastructure, LLC(1)(2)(5)(6)(7)	Energy: Electricity		171		-			-		-			-			-			171		500		-		-
Kleen-Tech Acquisition, LLC (1)(2)(5)(6)	Services: Business		1,300		-			-		-			(302	)		-			998		250,000		-		-
Northeast Metal Works LLC (1)(2)(5)	Metals & Mining		13,445		(4,428	)		-		(9,000	)		1,107			(1,124	)		-		-		377		-
Northeast Metal Works LLC (1)(2)(5)(6)	Metals & Mining		-		-			-		-			-			-			-		2,368		-		-
Northeast Metal Works LLC (1)(2)(5)(6)	Metals & Mining		-		-			-		4,500			(318	)		-			4,182		4,500,000		333		-
Northeast Metal Works LLC (1)(2)(5)	Metals & Mining		-		-			-		4,500			(940	)		-			3,560		4,500		270		-
BMP Slappey Holdco, LLC (1)(2)(5)(6)	Telecommunications		464		-			-		-			89			-			553		200,000		-		-
BMP Slappey Investment II (1)(2)(5)(6)	Telecommunications		206		-			-		-			40			-			246		88,946		-		-
Surge Hippodrome Partners LP(1)(2)(5)(6)	Services: Business		811		(813	)		-		-			(386	)		388			-		-		-		-
Surge Hippodrome Holdings LLC(1)(2)(5)(6)	Services: Business		484		(496	)		-		-			(325	)		337			-		-		-		-
Surge Hippodrome Holdings LLC(1)(2)(5)	Services: Business		5,165		(5,460	)		328		-			(33	)		-			-		-		675		-
Navex Topco, Inc.(2)(5)	Electronics		7,604		(7,700	)		310		-			(214	)		-			-		-		804		-
Zest Acquisition Corp.(1)(2)(5)	Healthcare, Education and Childcare		3,390		(3,501	)		9		-			102			-			-		-		42		-
Total Non-controlled affiliates		$	73,827	$	(19,833	)	$	647	$	-		$	980		$	(399	)	$	55,222			$	2,501	$	6,764

Total Affiliated Investments		$	92,780	$	(20,081	)	$	647	$	-		$	(3,374	)	$	(432	)	$	69,540			$	2,501	$	8,948

(1)

Fair value of this investment was determined using significant unobservable inputs.

(2)

Qualified asset for purposes of section 55(a) of the Investment Company Act of 1940.

(3)

As defined in the 1940 Act, the Company is deemed to be both an “Affiliated Person” and has “Control” of this portfolio company as the Company owns more than 25% of the portfolio company’s outstanding voting securities or has the power to exercise control over management or policies of such portfolio company securities or has the power to exercise control over management or policies of such portfolio company (including through a management agreement). Other than for purposes of the 1940 Act, the Company does not believe that it has control over this portfolio company.

(4)

(5)

(6)

Number of shares held.

(7)

Ownership of LP interest held through the holding company BCP Great Lakes Fund, L.P., a non-U.S. company or principal place of business outside the U.S.

(8)

Security has an unfunded commitment in addition to the amounts shown in consolidated schedule of investments. See Note 8 for additional information on the Company's commitments and contingencies

Investments in Joint ~~Venture:~~Ventures

For the three months ended March 31, 2024 and 2023, the Company recognized $1.7 million and $2.5 million, respectively, in investment income from its investments in Joint Ventures. As of March 31, 2024 and December 31, 2023, the aggregate fair value of the Company’s investments in Joint Ventures was approximately $53.2 million and $59.3 million, respectively.

KCAP Freedom 3 LLC

During the third quarter of 2017, the Company and Freedom 3 Opportunities LLC (“Freedom 3 Opportunities”), an affiliate of Freedom 3 Capital LLC, entered into an agreement to create KCAP Freedom 3 LLC (the “F3C Joint Venture”). The fund capitalized by the F3C Joint Venture invests primarily in middle-market loans and the F3C Joint Venture partners may source middle-market loans from time-to-time for the fund.

The Company owns a 62.8% equity investment in the F3C Joint Venture. The Company and Freedom 3 Opportunities contributed approximately $37 million and $25 million, respectively, in assets to the Joint Venture, which in turn used the assets to capitalize a new fund (the "Fund") managed by KCAP Management, LLC, one of the Company's Asset Manager Affiliates. In addition, the Fund used cash on hand and borrowings under a credit facility to purchase approximately $184 million of loans from the Company and the Company used the proceeds from such sale to redeem approximately $147 million in debt issued by KCAP Senior Funding. The Joint Venture may originate loans from time to time and sell them to the Fund.

~~The~~F3C Joint Venture is structured as an unconsolidated Delaware limited liability company. All portfolio and other material decisions regarding the F3C Joint Venture must be submitted to its board of managers, which is comprised of four members, two of whom were selected by the Company and two of whom were selected by Freedom 3 Opportunities, and must be approved by at least one member appointed by the Company and one appointed by Freedom 3 Opportunities. In addition, certain matters may be approved by the F3C Joint Venture’s investment committee, which is comprised of one member appointed by the Company and one member appointed by Freedom 3 Opportunities.

The Company has determined that the F3C Joint Venture is an investment company under Accounting Standards Codification (“ASC”), Financial Services — Investment Companies (“ASC ~~946,~~946”), however, in accordance with such ~~guidance;~~guidance, the Company will generally not consolidate its investment in a company other than a wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. ~~Accordingly, the~~The Company does not consolidate its ~~non-controlling~~ interest in the F3C Joint ~~Venture.~~

~~KCAP Freedom 3 LLC~~

~~Summarized Balance Sheet (unaudited)~~

As of
September 30, 2017
Investment at fair value $ 62,591,610
Total Assets $ 62,591,610

Total Liabilities $ 1,026,962
Total Equity 61,564,648
Total Liabilities and Equity $ 62,591,610

~~KCAP Freedom 3 LLC~~

~~Summarized Statements of Operations Information (unaudited)~~

For the period from July 20,
2017 (date of inception) to
September 30, 2017
Investment income $ 1,026,962
Operating Expenses 10,000
Net Investment Income 1,016,962
Unrealized appreciation on Investments 79,258
Net Income $ 1,096,220

~~During~~Venture because the ~~three months ended September 30, 2017, KCAP Management LLC recognized approximately $185 thousand of management fees from~~Company does not control the ~~Fund, which is a wholly-owned subsidiary~~F3C Joint Venture due to allocation of the voting rights among the F3C Joint Venture partners.

The fair value of the Company’s investment in the F3C Joint Venture at March 31, 2024 was $13.5 million. The fair value of the Company’s investment in the F3C Joint Venture at December 31, 2023 was $14.3 million.

Series A – Great Lakes Funding II LLC

In August 2022, the Company invested in Series A – Great Lakes Funding II LLC (the “Great Lakes II Joint Venture,” collectively with the F3C Joint Venture the “Joint Ventures”), a joint venture with an investment strategy to underwrite and hold senior, secured unitranche loans made to middle-market companies. The Company treats its investment in the Great Lakes II Joint Venture as a joint venture since an affiliate of the Adviser controls a 50% voting interest in the Great Lakes II Joint Venture. In ~~turn,~~connection with the launch of the Great Lakes II Joint Venture, the Company entered into a series of transactions pursuant to which the Company’s prior investment in BCP Great Lakes Holdings LP, a vehicle formed as a co-investment vehicle to facilitate the participation of certain co-investors to invest, directly or indirectly, in BCP Great Lakes Funding, LLC (the “Prior Great Lakes Joint Venture”), and the corresponding assets held by the Prior Great Lakes Joint Venture in respect of the Company’s investment in BCP Great Lakes Holdings LP, were transferred to the Great Lakes II Joint Venture in complete redemption of the Company’s investment in BCP Great Lakes Holdings LP.

The Great Lakes II Joint Venture is a Delaware series limited liability company, and pursuant to the terms of the Great Lakes Funding II LLC Limited Liability Company Agreement (the “Great Lakes II LLC Agreement”), prior to the end of the investment period with respect to each series established under the Great Lakes II LLC Agreement, each member of the predecessor series would be offered the opportunity to roll its interests into any subsequent series of the Great Lakes II Joint Venture. The Company does not pay any advisory fees in connection with its investment in the Great Lakes II Joint Venture. Certain other funds managed by the Adviser or its affiliates have also invested in the Great Lakes II Joint Venture.

The fair value of the Company’s investment in the Great Lakes II Joint Venture at March 31, 2024 was $39.6 million. The fair value of the Company’s investment in the Great Lakes II Joint Venture at December 31, 2023 was $45.0 million. Fair value has been determined utilizing the practical expedient pursuant to ASC 820-10. Pursuant to the terms of the Great Lakes II LLC Agreement, the Company generally may not effect any direct or indirect sale, transfer, assignment, hypothecation, pledge or other disposition of or encumbrance upon its interests in the Great Lakes II Joint Venture, except that the Company may sell or otherwise transfer its interests with the consent of the managing members of the Great Lakes II Joint Venture or to an affiliate or a successor to substantially all of the assets of the Company.

As of March 31, 2024, the Company has ~~recognized dividend income~~a $10.9 million unfunded commitment to the Great Lakes II Joint Venture. As of ~~approximately $180 thousand during~~December 31, 2023, the ~~three months ended September 30, 2017 (included in Dividends from Asset Manager Affiliates) related~~Company had a $5.5 million unfunded commitment to ~~distributions from KCAP Management, LLC.~~the Great Lakes II Joint Venture.

Fair Value Measurements

The Company follows the provisions of ASC 820: Fair Value, which among other matters, requires enhanced disclosures about investments that are measured and reported at fair value. This standard defines fair value and establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value and expands disclosures about assets and liabilities measured at fair value. ASC 820: Fair Value defines “fair value” as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This fair value definition focuses on an exit price in the ~~principal,~~principle, or most advantageous market, and prioritizes, within a measurement of fair value, the use of market-based inputs (which may be weighted or adjusted for relevance, reliability and specific attributes relative to the subject investment) over entity-specific inputs. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. ~~Subsequent to the adoption of ASC 820: Fair Value, the FASB has issued various staff positions clarifying the initial standard (see Note 2 – “Significant Accounting Policies—Investments”).~~

ASC 820: Fair Value establishes the following three-level hierarchy, based upon the transparency of inputs to the fair value measurement of an asset or liability as of the measurement date:

Level I – Unadjusted quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include listed equities and listed securities. As required by ASC 820: Fair Value, the Company does not adjust the quoted price for these investments, even in situations where the Company holds a large position and a sale could reasonably affect the quoted price.

Level II – Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information. Investments which are generally included in this category include illiquid debt securities and less liquid, privately held or restricted equity securities for which some level of recent trading activity has been observed.

Level III – Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs may be based on the Company’s own assumptions about how market participants would price the asset or liability or may use Level II inputs, as adjusted, to reflect specific investment attributes relative to a broader market assumption. These inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data for comparable performance or valuation measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level III if any significant data point that is not also market observable (private company earnings, cash flows, etc.) is used in the valuation methodology.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and the Company considers factors specific to the investment. A majority of the Company’s investments are classified as Level III. The Company evaluates the source of inputs, including any markets in which its investments are trading, in determining fair value. Inputs that are highly correlated to the specific investment being valued and those derived from reliable or knowledgeable sources will tend to have a higher weighting in determining fair value. The Company’s fair value determinations may include factors such as an assessment of each underlying investment, its current and prospective operating and financial performance, consideration of financing and sale transactions with third parties, expected cash flows and market-based information, including comparable transactions, performance factors, and other investment or industry specific market data, among other factors.

The following table summarizes the fair value of investments by ~~the above~~fair value hierarchy levels provided by ASC 820: Fair Value ~~hierarchy levels~~ as of ~~September 30, 2017~~March 31, 2024 (unaudited) and December 31, ~~2016,~~2023, respectively:


	As of March 31, 2024
($ in thousands)	Level I		Level II		Level III		NAV		Total
Debt securities	$	-	$	65,961	$	320,153	$	-	$	386,114
Equity securities		-		-		23,428		-		23,428
CLO Fund securities		-		-		8,549		-		8,549
Joint Ventures		-		-		13,523		39,641		53,164
Derivatives		-		-		-		-		-
Total	$	-	$	65,961	$	365,653	$	39,641	$	471,255


	As of December 31, 2023
($ in thousands)	Level I		Level II		Level III		NAV		Total
Debt securities	$	-	$	65,325	$	313,752	$	-	$	379,077
Equity securities		-		-		20,533		-		20,533
CLO Fund securities		-		-		8,968		-		8,968
Joint Ventures		-		-		14,275		45,012		59,287
Derivatives		-		-		-		-		-
Total	$	-	$	65,325	$	357,528	$	45,012	$	467,865

As of September 30, 2017 (unaudited)
Level I Level II Level III Total
Money market accounts $ — $ 32,015,828 $ — $ 32,015,828
U.S. Treasury Bills 25,009,000 — — 25,009,000
Debt securities — 68,707,692 58,319,137 127,026,829
CLO Fund securities — — 51,843,344 51,843,344
Equity securities — — 4,450,177 4,450,177
Asset Manager Affiliates — — 39,679,000 39,679,000
Joint Venture — — 36,591,122 36,591,122

Total $ 25,009,000 $ 100,723,520 $ 190,882,780 $ 316,615,300

As of December 31, 2016
Level I Level II Level III Total
Money market accounts $ — $ 28,699,269 $ — $ 28,699,269
Debt securities — 84,601,585 153,741,745 238,343,330
CLO Fund securities — — 54,174,350 54,174,350
Equity securities — — 5,056,355 5,056,355
Asset Manager Affiliates — — 40,198,000 40,198,000

Total $ — $ 113,300,854 $ 253,170,450 $ 366,471,304

As a BDC, the Company is required to invest primarily in the debt and equity of non-public companies for which there is little, if any, market-observable information. As a result, a significant portion of the Company’s investments at any given time will likely be deemed Level III investments.

Investment values derived by a ~~third party~~third-party pricing service are generally deemed to be Level III values. For those that have observable trades, the Company considers them to be Level II.

The fair value of the Company’s investment in the Great Lakes II Joint Venture at March 31, 2024 was $39.6 million. The fair value of the Company's investment in the Prior Great Lakes Joint Venture at December 31, 2023 was $45.0 million. Fair value has been determined utilizing the practical expedient pursuant to ASC 820-10.

~~Values~~Subject to the limitations noted above, values derived for debt and equity securities using comparable public/private companies generally utilize market-observable data from such comparables and specific, non-public and non-observable financial measures (such as earnings or cash flows) for the private, underlying company/issuer. Such non-observable company/issuer data is typically provided on a monthly or quarterly basis, is certified as correct by the management of the company/issuer and/or audited by an independent accounting firm on an annual basis. Since such private company/issuer data is not publicly available it is not deemed market-observable data and, as a result, such investment values are grouped as Level III assets.

Values derived for the Asset Manager Affiliates using comparable public/private companies utilize market-observable data and specific, non-public and non-observable financial measures (such as assets under management, historical and prospective earnings) for the Asset Manager Affiliates. The Company recognizes that comparable asset managers may not be fully comparable to the Asset Manager Affiliates and typically identifies a range of performance measures and/or adjustments within the comparable population with which to determine value. Since any such ranges and adjustments are entity specific they are not considered market-observable data and thus require a Level III grouping. Illiquid investments that have values derived through the use of discounted cash flow models and residual enterprise value models are grouped as Level III assets.

The Company’s policy for determining transfers between levels is based solely on the previously defined three-level hierarchy for fair value measurement. Transfers between the levels of the fair value hierarchy are separately noted in the tables below and the reason for such transfer described in each table’s respective footnotes. Certain information relating to investments measured at fair value for which the Company has used unobservable inputs to determine fair value is as follows:


	Three Months Ended March 31, 2024
($ in thousands)	Debt Securities			Equity Securities			CLO Fund Securities			Joint Ventures			Derivatives		Total
Balance, December 31, 2023	$	313,752		$	20,533		$	8,968		$	14,275		$	-	$	357,528
Transfers out of Level III¹		(9,239	)		-			-			-			-		(9,239	)
Transfers into Level III²		6,433			-			-			-			-		6,433
Net accretion		444			-			556			-			-		1,000
Purchases		34,377			2,797			-			-			-		37,174
Sales/Paydowns/Return of Capital		(22,566	)		(503	)		(392	)		(968	)		-		(24,429	)
Total realized gain (loss) included in earnings		(1,660	)		503			(505	)		-			-		(1,662	)
Change in unrealized gain (loss) included in earnings		(1,388	)		98			(78	)		216			-		(1,152	)
Balance, March 31, 2024	$	320,153		$	23,428		$	8,549		$	13,523		$	-	$	365,653
Changes in unrealized gains (losses) included in earnings related to investments still held at reporting date	$	(1,388	)	$	98		$	(78	)	$	216		$	-	$	(1,152	)

(1)

Nine Months Ended September 30, 2017 (unaudited)
Debt Securities CLO Fund
Securities Equity
Securities Asset Manager
Affiliate Joint Venture Total
Balance, December 31, 2016 $ 153,741,745 $ 54,174,350 $ 5,056,355 $ 40,198,000 $ — $ 253,170,450
Transfers out of Level III⁽¹⁾ — — — — — —
Transfers into Level III⁽²⁾ 6,372,000 — — — — 6,372,000
Net accretion (amortization) 206,241 443,434 — — — 649,675
Purchases 20,048,575 1,249,988 1 — 36,738,873 58,037,437
Sales/Paydowns/Return of Capital (126,670,826 ) — — (2,000,000 ) — (128,670,826 )
Total realized gain (loss) included in earnings (995,630 ) — — — — (995,630 )
Total unrealized gain (loss) included in earnings 5,617,032 (4,024,428 ) (606,179 ) 1,481,000 (147,751 ) 2,319,674
Balance, September 30, 2017 $ 58,319,137 $ 51,843,344 $ 4,450,177 $ 39,679,000 $ 36,591,122 190,882,780
Changes in unrealized gains (losses) included in earnings related to investments still held at reporting date $ 1,174,559 $ (4,024,428 ) $ (1 ) $ 1,481,000 $ (147,751 ) $ (1,368,870 )

¹Transfers out of Level III represent a transfer of ~~$0 relating to debt and equity securities for which pricing inputs, other than their quoted prices in active markets were observable as of September 30, 2017.~~

²Transfers into Level III represent a transfer of $6,372,000 relating to debt and equity securities for which pricing inputs, other than their quoted prices in active markets were unobservable as of September 30, 2017.

Year Ended December 31, 2016
Debt Securities CLO Fund
Securities Equity
Securities Asset Manager
Affiliate Joint Venture Total
Balance, December 31, 2015 $ 183,400,465 $ 55,872,382 $ 9,103,003 $ 57,381,000 $ — $ 305,756,850
Transfers out of Level III (14,855,471 )¹ — — — — (14,855,471 )
Transfers into Level III 22,107,141 ² — 445,485 — — 22,552,626
Net accretion (amortization) 318,999 (2,192,069 ) — — — (1,873,070 )
Purchases 33,641,315 10,140,000 180,161 — — 43,961,476
Sales/Paydowns/Return of Capital (66,559,349 ) (4,200,000 ) (4,743,682 ) (1,250,000 ) — (76,753,031 )
Total realized gain (loss) included in earnings (366,924 ) (10,111,560 ) 4,484,742 — — (5,993,742 )
Total unrealized gain (loss) included in earnings (3,944,431 ) 4,665,597 (4,413,354 ) (15,933,000 ) — (19,625,188 )
Balance, December 31, 2016 $ 153,741,745 $ 54,174,350 $ 5,056,355 $ 40,198,000 $ — 253,170,450
Changes in unrealized gains (losses) included in
earnings related to investments still held at reporting date $ (6,969,509 ) $ 4,665,597 $ (4,413,354 ) $ (15,933,000 ) $ — $ (22,650,266 )

~~¹Transfers out of Level III represent a transfer of $14,855,471~~$9.2 million relating to debt securities for which pricing inputs, other than their quoted prices in active markets were observable as of ~~December~~March 31, ~~2016.~~

²2024.

(2)

Transfers into Level III represent a transfer of ~~$22,107,141~~$6.4 million relating to debt securities for which pricing inputs, other than their quoted prices in active markets were unobservable as of March 31, 2024.


	Three Months Ended March 31, 2023
($ in thousands)	Debt Securities			Equity Securities			CLO Fund Securities			Joint Ventures			Derivatives		Total
Balance, December 31, 2022	$	410,144		$	21,905		$	20,453		$	18,668		$	-	$	471,170
Transfers out of Level III¹		(5,585	)		-			-			-			-		(5,585	)
Transfers into Level III²		6,519			-			-			-			-		6,519
Net accretion		2,197			-			548			-			-		2,745
Purchases		8,880			68			-			-			-		8,948
Sales/Paydowns/Return of Capital		(29,317	)		(5,429	)		(457	)		-			-		(35,203	)
Total realized gain (loss) included in earnings		(31	)		858			(3,881	)		-			-		(3,054	)
Change in unrealized gain (loss) included in earnings		(3,318	)		(2,082	)		2,578			(2,592	)		-		(5,414	)
Balance, March 31, 2023	$	389,489		$	15,320		$	19,241		$	16,076		$	-	$	440,126
Changes in unrealized gains (losses) included in earnings related to investments still held at reporting date	$	(6,986	)	$	(1,032	)	$	2,578		$	(2,592	)	$	-	$	(8,033	)

(1)

Transfers out of Level III represent a transfer of $5.6 million relating to debt securities for which pricing inputs, other than their quoted prices in active markets were observable as of March 31, 2023.

(2)

Transfers into Level III represent a transfer of $6.5 million relating to debt securities for which pricing inputs, other than their quoted prices in active markets were unobservable as of March 31, 2023.

As of March 31, 2024 and December 31, ~~2016.~~

~~As of September 30, 2017,~~2023, the Company’s Level II portfolio investments were valued by a ~~third party~~third-party pricing services for which the prices are not adjusted and for which inputs are observable or can be corroborated by observable market data for substantially the full character of the financial instrument, or by inputs that are derived principally from, or corroborated by, observable market information. The fair value of the Company’s Level II portfolio investments was ~~$100,723,520~~$66.0 million and $65.3 million as of ~~September 30, 2017.~~

March 31, 2024 and December 31, 2023, respectively.

As of ~~September 30, 2017,~~March 31, 2024, the Company’s Level III portfolio investments had the following valuation techniques and significant ~~inputs:~~inputs (dollars in thousands):

Type Fair Value Primary Valuation
Methodology Unobservable
Inputs Range of Inputs
(Weighted Average)

Debt Securities $   11,219,800 Enterprise Value Average EBITDA Multiple / WACC
5.2x - 6.7x (5.5x)
13.3% - 17.7% (16.8%)

47,099,337 Income Approach Implied Discount Rate 6.0% - 26.4% (13.8%)
Equity Securities 4,442,177 Enterprise Value Average EBITDA Multiple / WACC
4.6x – 16.1x (10.4x)
10.6% - 14.6% (12.2%)

8,000 Options Value Qualitative Inputs⁽¹⁾
CLO Fund Securities 30,395,957 Discounted Cash Flow Discount Rate 12.0%
Probability of Default 2.0%
Loss Severity 25.9%
Recovery Rate 74.1%
Prepayment Rate 25.0%
21,447,386 Liquidation Value Qualitative Inputs⁽²⁾
Asset Manager Affiliate      39,679,000 Discounted Cash Flow Discount Rate 2.5% - 12.0% (6.5%)
Joint Venture 36,591,122 Enterprise Value Qualitative Inputs⁽²⁾
Total Level III Investments $   190,882,780


Type	Fair Value		Primary Valuation Techniques	Unobservable Inputs	Range of Inputs (Weighted Average)
	$	40,404	Enterprise Value	Average EBITDA Multiple	0.4x-8.8x (5.7x)
Debt Securities				Expected Sale Proceeds	$6.3-$90.3 ($87.4)
				Average Settlement Value	$47.1-$47.1($47.1)
		279,749	Income Approach	Implied Discount Rate	0.5%-21.49% (11.9%)
		18,574	Enterprise Value	Average EBITDA Multiple	1.5x-18.3x (6.2x)
				Average EBITDA Multiple / WACC	0.4x-3.7x (1.1x)
				Book Value of Equity	1x-8x (6.3x)
Equity Securities				Expected Sale Proceeds	90.25x-110x (0x)
		4,182	Income Approach	Implied Discount Rate	15%-17.95% (18%)
		672	Recent Transaction	Implied Discount Rate	12.4%-12.4% (12.4%)
				Discount Rate	18.1%-24.9% (20.9%)
				Probability of Default	1.8%-2.5% (2.0%)
CLO Fund Securities		8,549	Discounted Cash Flow	Recovery Rate	65.0%-75.0% (70.0%)
				Prepayment Rate	15.0%-25.0% (20.0%)
				Discount Rate	19.6%-21.1% (20.3%)
				Probability of Default	2.8%-3.3% (3.0%)
Joint Ventures		13,523	Discounted Cash Flow	Recovery Rate	65.0%-75.0% (70.0%)
				Prepayment Rate	15.0%-25.0% (20.0%)
Derivatives		-	Enterprise Value	Average EBITDA Multiple	2.5x
Total Level III Investments	$	365,653

¹ The qualitative inputs used in the fair value measurements of Equity Securities include estimates of the distressed liquidation value of the pledged collateral. In cases where KCAP’s analysis ascribes no residual value to a portfolio company’s equity, KCAP typically elects to mark its position at a nominal amount to account for the investment’s option value.

² ~~The qualitative inputs used in the fair value measurements include the value of the pledged collateral.~~

As of December 31, ~~2016,~~2023, the Company’s Level III portfolio investments had the following valuation techniques and significant ~~inputs:~~inputs (dollars in thousands):

~~Type~~	~~Fair Value~~	~~Primary Valuation~~ ~~Methodology~~	~~Unobservable~~ ~~Inputs~~	~~Range of Inputs~~ ~~(Weighted Average)~~
~~Type~~	~~Fair Value~~	~~Primary Valuation~~ ~~Methodology~~	~~Unobservable~~ ~~Inputs~~	~~Range of Inputs~~ ~~(Weighted Average)~~
~~Debt Securities~~	~~$ 7,639,648~~	~~Enterprise Value~~	~~Average EBITDA Multiple~~	~~5.3x~~
~~Debt Securities~~	~~146,102,097~~	~~Income Approach~~	~~Implied Discount Rate~~	~~5.6% - 21.5% (9.15%)~~
~~Equity Securities~~	~~5,050,355~~	~~Enterprise Value~~	~~Average EBITDA Multiple/WACC~~	~~4.8x/7.4% - 14.1x/13.9%~~ ~~(9.3x/12.0%)~~
~~Equity Securities~~	~~6,000~~	~~Options Value~~	~~Qualitative Inputs~~⁽¹⁾
~~CLO Fund Securities~~	~~45,824,060~~	~~Discounted Cash Flow~~	~~Discount Rate~~	~~11.3% - 13.0% (13.0%)~~
			~~Probability of Default~~	~~2.0% - 2.5% (2.0%)~~
			~~Loss Severity~~	~~25.0% - 25.9% (25.9%)~~
			~~Recovery Rate~~	~~74.1% - 75.% (74.2%)~~
			~~Prepayment Rate~~	~~25.0% - 29.1% (25.1%)~~
	~~8,350,290~~	~~Market Approach~~	3^rd ~~Party Quote~~	~~82.35% (82.35%)~~
~~Asset Manager Affiliate~~	~~40,198,000~~	~~Discounted Cash Flow~~	~~Discount Rate~~	~~2.5% - 13.0% (7.6%)~~
~~Total Level III Investments~~	~~$ 253,170,450~~


Type	Fair Value		Primary Valuation Techniques	Unobservable Inputs	Range of Inputs (Weighted Average)
	$	10,371	Enterprise Value	Average EBITDA Multiple	0.4x-9.5x (1.0x)
Debt Securities				Recovery Rate Multiple	0.1x
				Expected Sale Proceeds	$97.6
				Average Settlement Value	$61.0
		298,111	Income Approach	Implied Discount Rate	5.3%-40.7% (12.4%)
		5,270	Recent Transaction	Implied Discount Rate	13.8%-14.2% (14.0%)
		19,805	Enterprise Value	Average EBITDA Multiple	5.0x-18.0x (6.9x)
				Average EBITDA Multiple / WACC	0.4x-3.7x (1.1x)
Equity Securities				Book Value of Equity	1.0x-1.6x (1.6x)
		57	Income Approach	Implied Discount Rate	15.0%
		671	Recent Transaction	Implied Discount Rate	12.4%
				Discount Rate	18.4%-25.2% (21.1%)
				Probability of Default	1.8%-2.5% (2.0%)
CLO Fund Securities		8,968	Discounted Cash Flow	Recovery Rate	65.0%-75.0% (70.0%)
				Prepayment Rate	15.0%-25.0% (20.0%)
				Discount Rate	20.5%-22.1% (21.3%)
				Probability of Default	2.8%-3.3% (3.0%)
Joint Ventures		14,275	Discounted Cash Flow	Recovery Rate	65.0%-75.0% (70.0%)
				Prepayment Rate	15.0%-25.0% (20.0%)
Derivatives		-	Enterprise Value	Average EBITDA Multiple	2.5x
Total Level III Investments	$	357,528

~~¹ The qualitative inputs used in the fair value measurements of the Debt Securities include estimates of the distressed liquidation value of the pledged collateral.~~

The significant unobservable inputs used in the fair value measurement of the Company’s debt securities may include, among other things, broad market indices, the comparable yields of similar investments in similar industries, effective discount rates, average EBITDA multiples, and weighted average cost of capital. Significant increases or decreases in such comparable yields would result in a significantly lower or higher fair value ~~measurement.~~measurement, respectively.

The significant unobservable inputs used in the fair value measurement of the Company’s equity securities include the EBITDA multiple of similar investments in similar industries and the weighted average cost of capital. Significant increases or decreases in such inputs would result in a significantly lower or higher fair value measurement.

~~The significant~~Significant unobservable inputs used in the fair value measurement of the Asset Manager Affiliates is the discount rate used to present value prospective cash flows. Prospective revenues are generally based on a fixed percentage of the par value of CLO Fund assets under management and are recurring in nature for the term of the CLO Fund so long as the Asset Manager Affiliates manage the fund. As a result, the fees earned by the Asset Manager Affiliates are generally not subject to market value fluctuations in the underlying collateral. The discounted cash flow model incorporates different levels of discount rates depending on the hierarchy of fees earned (including the likelihood of realization of senior, subordinate and incentive fees) and prospective modeled performance. Significant increases or decreases in such discount rate would result in a significantly lower or higher fair value measurement.

~~Significant unobservable input~~ used in the fair value measurement of the Company’s CLO Fund ~~securities~~Securities include default rates, recovery rates, prepayment rates, spreads, and the discount rate by which to value the resulting underlying cash flows. Such assumptions can vary significantly, depending on market data sources which often vary in depth and level of analysis, understanding of the CLO market, detailed or broad characterization of the CLO market and the application of such data to an appropriate framework for analysis. The application of data points are based on the specific attributes of each individual CLO Fund ~~security’s~~Security’s underlying assets, historic, current and prospective performance, vintage, and other quantitative and qualitative factors that would be evaluated by market participants. The Company evaluates the source of market data for reliability as an indicative market input, consistency amongst other inputs and results and also the context in which such data is presented. Significant increases or decreases in probability of default and loss severity inputs in isolation would result in a significantly lower or higher fair value ~~measurement.~~measurement, respectively. In general, a change in the assumption of the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity in an event of default. Significant increases or decreases in the discount rate in isolation would result in a significantly lower or higher fair value measurement.

The Company’s investment in the F3C Joint Venture is carried at fair value based upon the fair value of the investments held by the F3C Joint Venture.

~~5. ASSET MANAGER AFFILIATES~~

~~Wholly-Owned Asset Managers~~

The ~~Asset Manager Affiliates are wholly-owned portfolio companies.~~ Company values derivative contracts using various pricing models that take into account the terms of the contract (including notional amount and contract maturity) and observable and unobservable inputs such as interest rates and changes in fair value of the reference asset.

The Asset Manager Affiliates manage CLO Funds primarily for third party investors that invest in broadly syndicated loans, high yield bonds and other credit instruments issued by corporations. At September 30, 2017following table details derivative investments at March 31, 2024 and December 31, ~~2016, the Asset Manager Affiliates had approximately $2.8 billion and $3.0 billion of par value of assets under~~2023;


($ in thousands)	March 31, 2024
Types of contracts	Notional amounts		Derivative assets (liabilities)		Realized gain(loss)		Unrealized gain(loss)
Call option(1)	$	8	$	-	$	-	$	-
Put option(1)		563		-		-		-
Total	$	571	$	-	$	-	$	-
(1) Net amount included in non-controlled/non- affiliated investments on the consolidated balance sheets

($ in thousands)	December 31, 2023
Types of contracts	Notional amounts		Derivative assets (liabilities)		Realized gain(loss)		Unrealized gain(loss)
Call option(1)	$	8	$	-	$	-	$	-
Put option(1)		563		-		-		-
Total	$	571	$	-	$	-	$	-
(1) Net amount included in non-controlled/non- affiliated investments on the consolidated balance sheets

5.RELATED PARTY TRANSACTIONS

Advisory Agreement

The Adviser provides management ~~respectively, and the Company’s 100% equity interest in the Asset Manager Affiliates had a fair value of approximately $39.7 million and $40.2 million, respectively.~~

As a manager of the CLO Funds, the Asset Manager Affiliates receive contractual and recurring management fees from the CLO Funds for their management and advisory services. The annual fees which the Asset Manager Affiliates receive are generally based on a fixed percentage of assets under management (at par value and not subject to changes in market value), and the Asset Manager Affiliates generate net income equal to the amount by which their fee income exceeds their operating expenses, including compensation of their employees and income taxes. The management fees the Asset Manager Affiliates receive have three components - a senior management fee, a subordinated management fee and an incentive fee. Currently, all CLO Funds managed by the Asset Manager Affiliates are paying both their senior and subordinated management fees on a current basis.

~~For the three months ended September 30, 2017 and 2016, the Asset Manager Affiliates declared cash distributions of $880,000 and $750,000~~services to the Company ~~respectively. For~~pursuant to the ~~nine months ended September 30, 2017~~Advisory Agreement. Under the terms of the Advisory Agreement, the Adviser is responsible for the following:

•

managing the Company’s assets in accordance with our investment objective, policies and ~~2016,~~restrictions;

•

determining the ~~Asset Manager Affiliates declared cash distributions~~composition of ~~approximately $2.2 million~~the Company’s portfolio, the nature and ~~$2.7 million~~timing of the changes to the portfolio and the manner of implementing such changes;

•

identifying, evaluating and negotiating the structure of the Company’s investments;

•

monitoring the Company’s investments;

•

determining the securities and other assets that the Company will purchase, retain or sell;

•

assisting the Board with its valuation of the Company’s assets;

•

directing investment professionals of the Adviser to provide managerial assistance to the Company’s portfolio companies;

•

performing due diligence on prospective portfolio companies;

•

exercising voting rights in respect of portfolio securities and other investments for the Company;

•

serving on, and exercising observer rights for, boards of directors and similar committees of our portfolio companies; and

•

providing the Company with such other investment advisory, research and related services as we may, from time to time, reasonably require for the investment of capital.

The Adviser’s services under the Advisory Agreement are not exclusive, and it is free to furnish similar services to other entities so long as its services to the Company ~~respectively. Any distributions~~are not impaired.

Term

Unless earlier terminated as described below, the Investment Advisory Agreement will remain in effect from year-to-year if approved annually by a majority of the Board or by the holders of a majority of the outstanding shares, and, in each case, a majority of the independent directors.

The Advisory Agreement will automatically terminate within the meaning of the 1940 Act and related Securities and Exchange Commission (“SEC”) guidance and interpretations in the event of its assignment. In accordance with the 1940 Act, without payment of any penalty, we may terminate the Advisory Agreement with the Adviser upon 60 days’ written notice. The decision to terminate the agreement may be made by a majority of the Board or the stockholders holding a majority of the outstanding shares of our common stock. See “Advisory Agreement—Removal of Adviser” below. In addition, without payment of any penalty, the Adviser may generally terminate the Advisory Agreement upon 60 days’ written notice and, in certain circumstances, the Adviser may only be able to terminate the Advisory Agreement upon 120 days’ written notice.

Removal of Adviser

The Adviser may be removed by the Board or by the affirmative vote of a Majority of the Outstanding Shares. “Majority of the Outstanding Shares” means the lesser of (1) 67% or more of the outstanding shares of our common stock present at a meeting, if the holders of more than 50% of the outstanding shares of our common stock are present or represented by proxy or (2) a majority of outstanding shares of our common stock.

Compensation of Adviser

Pursuant to the terms of the Advisory Agreement, the Company pays the Adviser (i) a base management fee (the “Base Management Fee”) and (ii) an incentive fee (the “Incentive Fee”). For the period from the ~~Asset Manager Affiliates out~~date of ~~their estimated tax-basis earnings~~the Advisory Agreement (the “Effective Date”) through the end of the first calendar quarter after the Effective Date, the Base Management Fee will be calculated at an annual rate of 1.50% of the Company’s gross assets, excluding cash and ~~profits are recorded~~cash equivalents, but including assets purchased with borrowed amounts, as ~~“Dividends from Asset Manager Affiliates”~~of the end of such calendar quarter. Subsequently, the Base Management Fee will be 1.50% of the Company’s average gross assets, excluding cash and cash equivalents, but including assets purchased with borrowed amounts, at the end of the two most recently completed calendar quarters; provided, however, that the Base Management Fee will be 1.00% of the Company’s average gross assets, excluding cash and cash equivalents, but including assets purchased with borrowed amounts, that exceed the product of (i) 200% and (ii) the value of the Company’s net asset value at the end of the most recently completed calendar quarter.The Incentive Fee consists of two parts: (1) a portion based on the Company’s ~~statement~~pre-incentive fee net investment income (the “Income-Based Fee”) and (2) a portion based on the net capital gains received on the Company’s portfolio of ~~operations.~~securities on a cumulative basis for each calendar year, net of all realized capital losses and all unrealized capital depreciation on a cumulative basis, in each case calculated from the Effective Date, less the aggregate amount of any previously paid capital gains Incentive Fee (the “Capital Gains Fee”). The Income-Based Fee is 17.50% of pre-incentive fee net investment income with a 7.00% hurdle rate. The Capital Gains Fee is 17.50%.

Pre-incentive fee net investment income means dividends (including reinvested dividends), interest and fee income accrued by the Company during the calendar quarter, minus operating expenses for the quarter (including the management fee, expenses payable under the administration agreement, and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount, debt instruments with payment-in-kind (“PIK”) interest and zero coupon securities), accrued income that the Company may not have received in cash. The Adviser is not obligated to return the incentive fee it receives on PIK interest that is later determined to be uncollectible in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation.

To determine the income incentive fee, pre-incentive fee net investment income is expressed as a rate of return on the value of our net assets at the end of the immediately preceding calendar quarter. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a calendar quarter in which the Company incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the quarterly hurdle rate, the Company will pay the applicable incentive fee even if the Company has incurred a loss in that calendar quarter due to realized capital losses and unrealized capital depreciation. In addition, because the quarterly hurdle rate is calculated based on our net assets, decreases in the Company’s net assets due to realized capital losses or unrealized capital depreciation in any given calendar quarter may increase the likelihood that the hurdle rate is reached and therefore the likelihood of the Company paying an incentive fee for the subsequent quarter. The Company’s net investment income used to calculate this component of the incentive fee is also included in the amount of the Company’s gross assets used to calculate the management fee because gross assets are total assets (including cash received) before deducting liabilities (such as declared dividend payments).

The second component of the incentive fee, the capital gains incentive fee, payable at the end of each calendar year in arrears, equals 17.50% of cumulative realized capital gains through the end of such calendar year commencing with the calendar year ending December 31, 2019, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, in each case calculated from the Effective Date, less the aggregate amount of any previously paid capital gains incentive fee for prior periods. The Company ~~recognized $180,000~~will accrue, but will not pay, a capital gains incentive fee with respect to unrealized appreciation because a capital gains incentive fee would be owed to the Adviser if the Company were to sell the relevant investment and realize a capital gain. In no event will the capital gains incentive fee payable pursuant to the Investment Advisory Agreement be in excess of ~~Dividends~~the amount permitted by the Investment Advisers Act of 1940, as amended (the “Advisers Act”) including Section 205 thereof.

The fees that are payable under the Investment Advisory Agreement for any partial period will be appropriately prorated.

Limitations of Liability and Indemnification

Under the Advisory Agreement, the Adviser, its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser, including without limitation its managing member, will not be liable to the Company for acts or omissions performed in accordance with and pursuant to the Advisory Agreement, except those resulting from ~~Asset Manager Affiliates~~acts constituting criminal conduct, gross negligence, willful misfeasance, bad faith or reckless disregard of the duties that the Adviser owes to the Company under the Advisory Agreement. In addition, as part of the Advisory Agreement, the Company has agreed to indemnify the Adviser and each of its officers, managers, partners, agents, employees, controlling persons, members and any other person or entity affiliated with the Adviser, including without limitation its general partner, and the Administrator from and against any damages, liabilities, costs and expenses, including reasonable legal fees and other expenses reasonably incurred, in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the ~~Statement~~right of ~~Operations~~the Company or its security holders) arising out of or otherwise based upon the performance of any of the Adviser’s duties or obligations under the Advisory Agreement or otherwise as an investment adviser of the Company, except where attributable to criminal conduct, gross negligence, willful misfeasance, bad faith or reckless disregard of such person’s duties under the Advisory Agreement.

Board Approval of the Advisory Agreement

On December 12, 2018, the then-current Board of the Company held an in-person meeting to consider and approve the Advisory Agreement and related matters, and on April 1, 2019 the Company entered into the Advisory Agreement with the Adviser. The Board most recently determined to re-approve the Advisory Agreement at a meeting held on March 11, 2024. In reaching a decision to re-approve the Advisory Agreement, the Board was provided the information required to consider the Advisory Agreement, including: (a) the nature, quality and extent of the advisory and other services to be provided to the Company by the Adviser; (b) comparative data with respect to advisory fees or similar expenses paid by other BDCs with similar investment objectives; (c) the Company projected operating expenses and expense ratio compared to BDCs with similar investment objectives; (d) any existing and potential sources of indirect income to the Adviser from its relationship with the Company and the profitability of that relationship; (e) information about the services to be performed and the personnel performing such services under the Advisory Agreement; and (f) the organizational capability and financial condition of the Adviser and its affiliates.

The Board, including a majority of independent directors will oversee and monitor the Company’s investment performance and annually reviews the compensation we pay to the Adviser.

Management fees for the three months ended ~~September 30, 2017.For~~March 31, 2024 and 2023, were approximately $1.7 million and $2.0 million, respectively. Incentive fees for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, were approximately $1.2 million and $1.8 million, respectively.

Administration Agreement

Under the terms of the administration agreement (the “Administration Agreement”) between the Company ~~recognized $180,000~~ and ~~$1.4 million, respectively~~BC Partners Management LLC (the “Administrator”), the Administrator will perform, or oversee the performance of, ~~Dividends from Asset Manager Affiliates in~~required administrative services, which includes providing office space, equipment and office services, maintaining financial records, preparing reports to stockholders and reports filed with the ~~Statement~~SEC, and managing the payment of ~~Operations. The difference between cash distributions received~~expenses and the ~~tax-basis earnings~~performance of administrative and ~~profits~~professional services rendered by others. The Company will reimburse the Administrator for services performed for us pursuant to the terms of the ~~distributing affiliate, are recorded as an adjustment~~Administration Agreement. In addition, pursuant to the terms of the Administration Agreement, the Administrator may delegate its obligations under the Administration Agreement to an affiliate or to a third party and the Company will reimburse the Administrator for any services performed for it by such affiliate or third party.

Payments under the Administration Agreement are equal to an amount that reimburses the Administrator for its costs and expenses in performing its obligations and providing personnel and facilities (including rent, office equipment and utilities) for the Company’s use under the Administration Agreement, including an allocable portion of the compensation paid to the Company’s chief compliance officer and chief financial officer and their respective staff who provide services to the Company. The Board, including the independent directors, will review the general nature of the services provided by the Administrator as well as the related cost ~~basis~~to the Company for those services and consider whether the cost is reasonable in light of the ~~Asset Manager Affiliate (i.e.~~services provided.

Unless earlier terminated as described below, the Administration Agreement will remain in effect from year-to-year if approved annually by a majority of the Board or by the holders of a Majority of the Outstanding Shares, and, in each case, a majority of the independent directors. On April 1, 2019, the Board approved the Administration Agreement with the Administrator and the Board most recently determined to re-approve the Administration Agreement at a meeting held on March 11, 2024.

The Company may terminate the Administration Agreement, without payment of any penalty, upon 60 days’ written notice. The decision to terminate the agreement may be made by a majority of the Board or the stockholders holding a Majority of the Outstanding Shares. In addition, the Adviser may terminate the Administration Agreement, without payment of any penalty, upon 60 days’ written notice.

Administrative services expense for the three months ended March 31, 2024 and 2023, was $0.4 million and $0.7 million, respectively.

Payment of Expenses under the Advisory and Administration Agreements

Except as specifically provided below, all investment professionals and staffs of the Adviser, when and to the extent engaged in providing investment advisory and management services to the Company, and the compensation and routine overhead expenses (including rent, office equipment and utilities), ~~tax-basis return~~ of ~~capital). Distributions receivable, if any, are reflected in~~such personnel allocable to such services, is provided and paid for by the ~~Due from Affiliates account~~Adviser. The Company bears an allocable portion of the compensation paid by the Adviser (or its affiliates) to the Company’s chief compliance officer and chief financial officer and their respective staffs (based on ~~the consolidated balance sheets.~~

~~The tax attributes~~a percentage of ~~distributions received from the Asset Manager Affiliates are determined~~time such individuals devote, on an ~~annual basis.~~estimated basis, to our business affairs). The Company ~~makes~~also bears all other costs and expenses of our operations, administration and transactions, including, but not limited to (i) investment advisory fees, including management fees and incentive fees, to the Adviser, pursuant to the Advisory Agreement; (ii) an ~~estimate~~allocable portion of overhead and other expenses incurred by the Adviser (or its affiliates) in performing its administrative obligations under the Advisory Agreement, and (iii) all other expenses of our operations and transactions including, without limitation, those relating to:

•

the cost of calculating the Company’s net asset value, including the cost of any third-party valuation services;

•

the cost of effecting any sales and repurchases of the ~~tax-basis earnings~~Company’s common stock and ~~profits of~~other securities;

•

fees and expenses payable under any dealer manager or placement agent agreements, if any;

•

administration fees payable under the ~~Asset Manager Affiliates on a quarterly basis,~~Administration Agreement and any ~~quarterly distributions received in excess~~sub-administration agreements, including related expenses;

•

debt service and other costs of borrowings or other financing arrangements;

•

costs of hedging;

•

expenses, including travel expense, incurred by the ~~estimated earnings and profits are recorded as return of capital (reduction in the cost basis~~Adviser, or members of the investment team, or payable to third parties, performing due diligence on prospective portfolio companies and, if necessary, enforcing our rights;

•

transfer agent and custodial fees;

•

fees and expenses associated with marketing efforts;

•

federal and state registration fees, any stock exchange listing fees and fees payable to rating agencies;

•

federal, state and local taxes;

•

independent directors’ fees and expenses including certain travel expenses;

•

costs of preparing financial statements and maintaining books and records and filing reports or other documents with the SEC (or other regulatory bodies) and other reporting and compliance costs, including registration and listing fees, and the compensation of professionals responsible for the preparation of the foregoing;

•

the costs of any reports, proxy statements or other notices to stockholders (including printing and mailing costs), the costs of any stockholder or director meetings and the compensation of personnel responsible for the preparation of the foregoing and related matters;

•

commissions and other compensation payable to brokers or dealers;

•

research and market data;

•

fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums;

•

direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;

•

fees and expenses associated with independent audits, outside legal and consulting costs;

•

costs of winding up our affairs;

•

costs incurred by either the Administrator or us in connection with administering our business, including payments under the Administration Agreement;

•

extraordinary expenses (such as litigation or indemnification);

•

costs associated with reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws; and

•

costs associated with the Company’s legacy lease.

Co-investment Exemptive Relief

As a BDC, we are subject to certain regulatory restrictions in making investments. For example, BDCs generally are not permitted to co-invest with certain affiliated entities in transactions originated by the BDC or its affiliates in the ~~Asset Manager Affiliate).~~absence of an exemptive order from the SEC. However, BDCs are permitted to, and may, simultaneously co-invest in transactions where price is the only negotiated term.

~~The Asset Manager Affiliates’ fair value is determined quarterly. The valuation is primarily determined utilizing~~On April 10, 2023, superseding a ~~discounted cash flow model. See Note 2 - “Significant Accounting Policies”~~prior exemptive order granted on October 23, 2018, the SEC issued an order granting an application for exemptive relief to us and ~~Note 4 - “Investments” for further information relating~~certain of our affiliates that allows BDCs managed by the Adviser, including us, to co-invest, subject to the ~~Company’s valuation methodology.~~

~~On February 18, 2015,~~satisfaction of certain conditions, in certain private placement transactions, with other funds managed by the FASB issued Accounting Standards Update 2015-2 (“ASU 2015-2”), which updated consolidation standards under ASC Topic 810, “Consolidation”. Under this update, a new consolidation analysis is required for VIEs and will limit the circumstances in which investment managers and similar entities are required to consolidate the entities that they manage. The FASB decided to eliminate someAdviser or its affiliates, certain proprietary accounts of the ~~criteria under which their management fees~~Adviser or its affiliates and any future funds that are ~~considered a variable interest and limit~~advised by the ~~circumstances~~Adviser or its affiliated investment advisers.

Under the terms of the exemptive order, in ~~which variable interests~~order for the Company to participate in a ~~VIE held by related parties of~~co-investment transaction a ~~reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods~~“required majority” (as defined in ~~fiscal years beginning after December 15, 2015, early adoption is permitted. The Asset Manager Affiliates adopted ASU 2015-2 in 2016 which resulted in the deconsolidation~~Section 57(o) of the ~~CLO Funds. Prior year amounts have been restated~~1940 Act) of the Company's independent directors must conclude that (i) the terms of the proposed transaction, including the consideration to ~~reflect~~be paid, are reasonable and fair to the ~~retrospective adoption of ASU 2015-2. In addition, in accordance with Regulation S-X, additional financial information~~Company and its stockholders and do not involve overreaching with respect to the ~~Asset Manager Affiliates~~Company or its stockholders on the part of any person concerned, and ~~one~~(ii) the proposed transaction is consistent with the interests of the ~~CLO Funds in which the Company has an investment, Katonah 2007-I CLO,~~Company's stockholders and is required to be included in the Company’s SEC Filings. This additional financial information regarding the Asset Manager Affiliates and Katonah 2007-1 CLO does not directly impact the financial position, results of operations, or cash flows of the Company.

~~Asset Manager Affiliates~~

~~Summarized Balance Sheet (unaudited)~~

As of As of
September 30, 2017 December 31, 2016
Cash $ 14,532,648 $ 3,425,709
Investments 10,000,000 -
Intangible Assets 22,830,000 23,157,541
Other Assets 3,762,880 5,024,174
Total Assets $ 51,125,528 $ 31,607,424

Total Liabilities $ 25,970,228 $ 6,619,619
Total Equity 25,155,300 24,987,805
Total Liabilities and Equity $ 51,125,528 $ 31,607,424

~~Asset Manager Affiliates~~

~~Summarized Statements of Operations Information (unaudited)~~

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016
Fee Revenue $ 3,027,460 $ 3,148,353 $ 12,000,010 $ 9,707,075
Interest Income 25,298 570,865 31,208 1,138,483
Total Income 3,052,758 3,719,218 12,031,218 10,845,558
Operating Expenses 2,547,545 2,789,654 7,852,377 8,618,839
Amortization of Intangibles - 327,541 327,541 982,623
Interest Expense 121,468 485,355 525,034 1,353,135
Total Expenses 2,669,013 3,602,550 8,704,952 10,954,597
Pre-Tax Income (Loss) 383,745 116,668 3,326,266 (109,039 )
Income Tax (Benefit) Expense (79,791 ) (100,862 ) 978,769 (346,447 )
Net Income $ 463,536 $ 217,530 $ 2,347,497 $ 237,408

~~Katonah 2007-I CLO Ltd.~~

~~Summarized Balance Sheet Information (unaudited)~~

As of As of
September 30, 2017 December 31, 2016
Total investments at fair value $ 80,158,889 $ 176,684,976
Cash 24,632,168 34,982,770
Total Assets 105,370,828 212,160,163
CLO Debt at fair value 104,216,372 208,812,164
Total liabilities 105,374,980 210,463,954
Total Net Assets (deficit) (4,151 ) 1,696,209

~~Katonah 2007-I CLO Ltd.~~

~~Summarized Statements of Operations Information (unaudited)~~

For the three months ended For the nine months ended
September 30, September 30,
2017 2016 2017 2016
Interest income from investments $ 1,185,765 $ 2,330,108 $ 4,336,891 $ 7,338,815
Total income 1,203,940 2,373,500 4,392,101 7,683,808
Interest expense 1,275,068 2,184,144 4,289,994 6,724,410
Total expenses 1,401,622 2,400,770 4,885,278 7,497,100
Net realized and unrealized gains (losses) (48,669 ) 1,397,748 (1,207,183 ) 3,783,015
Increase in net assets resulting from operations (246,351 ) 1,370,478 (1,700,360 ) 3,969,723

~~Except for KCAP Management, LLC, which is a designated entity whose tax results are included~~consistent with the Company’s tax results, as separately regarded entities for tax purposes, the Asset Manager Affiliates are taxed at normal corporate rates. In order to maintain the Company’s RIC status, any tax-basis dividends paidCompany's investment objectives and strategies and certain criteria established by the Asset Manager Affiliates to the Company would generally need to be distributed to the Company’s shareholders. Generally, such tax-basis dividends of the Asset Manager Affiliates’ income which was distributed to the Company’s shareholders will be considered as qualified dividends for tax purposes. The Asset Manager Affiliates’ taxable net income will differ from U.S. GAAP net income because of deferred tax temporary differences and permanent tax adjustments. Deferred tax temporary differences may include differences for the recognition and timing of amortization and depreciation, compensation related expenses, and net loss carryforward, among other things. Permanent differences may include adjustments, limitations or disallowances for meals and entertainment expenses, penalties, tax goodwill amortization and net operating loss carryforward.Board.

Goodwill amortization for tax purposes was created upon the purchase of 100% of the equity interests in Katonah Debt Advisors prior to the Company’s IPO in exchange for shares of the Company’s stock valued at $33 million. Although this transaction was a stock transaction rather than an asset purchase and thus no goodwill was recognized for U.S. GAAP purposes, such exchange was considered an asset purchase under Section 351(a) of the Code. At the time of the transfer, Katonah Debt Advisors had equity of approximately $1 million resulting in tax goodwill of approximately $32 million which is being amortized for tax purposes on a straight-line basis over 15 years.

Additional goodwill amortization for tax purposes was created upon the purchase of 100% of the equity interests in Trimaran Advisors by one of KCAP’s affiliates, in exchange for shares of the Company’s stock valued at $25.5 million and cash of $13.0 million. The transaction was considered an asset purchase under Section 351(a) of the Code and resulted in tax goodwill of approximately $22.8 million, and tax basis intangible assets of $15.7 million, of both which are being amortized for tax purposes on a straight-line basis over 15 years.

6.BORROWINGS

During the second quarter of 2016, KCAP contributed 100% of its ownership interests in Katonah Debt Advisors and Trimaran Advisors Management to Commodore Holdings, a wholly-owned subsidiary of KCAP. These transactions simplify the tax structure of the AMAs and facilitate the consolidation of tax basis goodwill deductions for the AMAs, which may impact the tax character of distributions from the AMAs.

~~Related Party Transactions~~

On February 26, 2013, the Company entered into a senior credit agreement (the “Trimaran Credit Facility”) with Trimaran Advisors, pursuant to which Trimaran Advisors may borrow from time to time up to $20 million from the Company in order to provide capital necessary to support one or more of Trimaran Advisors’ warehouse lines of credit and/or working capital in connection with Trimaran Advisors’ warehouse activities. The Trimaran Credit Facility expires on November 20, 2017 and bears interest at an annual rate of 9.0%. Outstanding borrowings on the Trimaran Credit Facility are callable by the Company at any time. On April 15, 2013, the Trimaran Credit Facility was amended and upsized from $20 million to $23 million. At September 30, 2017 and December 31, 2016, there was $20 million and $0 million, respectively, outstanding under the Trimaran Credit Facility. For the three months ended September 30, 2017 and 2016, the Company recognized interest income of approximately $126,000 and $485,000, respectively, related to the Trimaran Credit Facility. For the nine months ended September 30, 2017 and 2016, the Company recognized interest income of approximately $529,000 and $1.3 million, respectively, related to the Trimaran Credit Facility.

~~6. BORROWINGS~~

The Company’s debt obligations consist of the following:


	As of		As of
	March 31, 2024		December 31, 2023
($ in thousands)	(Unaudited)
2018-2 Secured Notes (net of discount of: 2024 - $500; 2023 - $712)	$	91,151	$	124,971
4.875% Notes Due 2026 (net of discount of: 2024 - $1,100; 2023 - $1,225; net of deferred financing costs of: 2024 - $496; 2023 - $561)		106,404		106,214
Great Lakes Portman Ridge Funding LLC Revolving Credit Facility (net of deferred financing costs of: 2024 - $692; 2023 - $775)		91,308		91,225
	$	288,863	$	322,410

As of
September 30, 2017
(unaudited)

As of
December 31, 2016

Notes issued by KCAP Senior Funding I, LLC (net of discount and offering costs of: 2016 - $2,286,425 and $2,459,156, respectively) $ - $ 142,604,419
7.375 Notes (net of offering costs of: 2017 - $306,073; 2016 - $550,774) 26,693,927 32,980,151
6.125 Notes (net of offering costs of: 2017 - $2,757,357) 74,649,843 -
Total $ 101,343,770 $ 175,584,570

The weighted average stated interest rate and weighted average maturity on all our debt outstanding as of ~~September 30, 2017 were 6.4%~~March 31, 2024 was 6.9% and ~~4.2~~3.2 years, respectively, and as of December 31, ~~2016~~2023 were ~~3.9%~~7.0% and ~~6.7~~3.7 years, respectively.

~~KCAP Senior Funding I, LLC (Debt Securitization)~~

On June 18, 2013, the Company completed the sale of notes in a $140,000,000 debt securitization financing transaction. The notes offered in this transaction (the “KCAP Senior Funding I Notes”) were issued by KCAP Senior Funding I, LLC, a newly formed special purpose vehicle (the “Issuer”), in which KCAP Senior Funding I Holdings, LLC, a wholly-owned subsidiary of the Company (the “Depositor”), owns all of the KCAP Senior Funding I Subordinated Notes (as defined below), and are backed by a diversified portfolio of bank loans. The indenture governing the KCAP Senior Funding I Notes contains an event of default that is triggered in the event that certain coverage tests are not met.

The secured notes (the “KCAP Senior Funding I Secured Notes”) were issued as Class A senior secured floating rate notes which have an initial face amount of $77,250,000, are rated AAA (sf)/Aaa (sf) by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest at the three-month LIBOR plus 1.50%, Class B senior secured floating rate notes which have an initial face amount of $9,000,000, are rated AA (sf)/Aa2 (sf) by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest at three-month LIBOR plus the 3.25%, Class C secured deferrable floating rate notes which have an initial face amount of $10,000,000, are rated A (sf)/A2 (sf) by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest at three-month LIBOR plus 4.25%, and Class D secured deferrable floating rate notes which have an initial face amount of $9,000,000, are rated BBB (sf)/Baa2 (sf) by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest at three-month LIBOR plus 5.25%. The Depositor retained all of the subordinated notes of the Issuer (the “KCAP Senior Funding I Subordinated Notes”), which have an initial face amount of $34,750,000. The KCAP Senior Funding I Subordinated Notes do not bear interest and are not rated. Both the KCAP Senior Funding I Secured Notes and the KCAP Senior Funding I Subordinated Notes have a stated maturity on the payment date occurring in July, 2024, and are subject to a two year non-call period. The Issuer has a four year reinvestment period. The stated interest rate re-sets on a quarterly basis based upon the then-current level of the benchmark three-month LIBOR.

Notes Offering

On December 8, 2014, the Company completed the sale of additional notes (“Additional Issuance Securities”) in a $56,000,000 increase to the collateralized loan obligation transaction that originally closed on June 18, 2013 (the “Original Closing Date”). The issuance of additional notes was proportional across all existing classes of notes issued on the Original Closing Date.

Each class of secured Additional Issuance Securities (all such classes, collectively, the “Additional Issuance Offered Securities”) was issued as a pari passu sub-class of an existing class of notes issued on the Original Closing Date. Accordingly, the ratings given by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc. to each existing class of notes issued on the Original Closing Date will apply to each class of Additional Issuance Offered Securities that constitutes a related pari passu sub-class of such existing class of notes issued on the Original Closing Date.

The Additional Issuance Offered Securities were issued as Class A-2 senior secured floating rate notes which have an initial face amount of $30,900,000, have a rating of AAA (sf)/Aaa (sf) by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest at the three-month LIBOR plus 1.50%, Class B-2 senior secured floating rate notes which have an initial face amount of $3,600,000, a rating of AA (sf)/Aa2 (sf) by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest at three-month LIBOR plus 3.25%, Class C-2 secured deferrable floating rate notes which have an initial face amount of $4,000,000, a rating of A (sf)/A2 (sf) by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest at three-month LIBOR plus 4.25%, and Class D-2 secured deferrable floating rate notes which have an initial face amount of $3,600,000, a rating of BBB (sf)/Baa2 (sf) by Standard & Poor’s Ratings Services and Moody’s Investors Service, Inc., respectively, and bear interest at three-month LIBOR plus 5.25%. The Depositor retained all of the subordinated Additional Issuance Securities of the Issuer (the “Additional Issuance Subordinated Notes”), which have an initial face amount of $13,900,000. The Additional Issuance Subordinated Notes do not bear interest and are not rated. The Additional Issuance Securities have a stated maturity date of July 20, 2024 and are subject to a non-call period until the payment date on the Additional Issuance Securities occurring in July 2015. The Issuer has a reinvestment period to and including the payment date on the Additional Issuance Securities occurring in July 2017, or such earlier date as is provided in the indenture relating to the Additional Issuance Securities. In connection with the Additional Issuance Offered Securities, the Company incurred issuance costs and OID costs of approximately $584,000 and $896,000, respectively.

As part of this transaction, the Company entered into a master loan sale agreement with the Depositor and the Issuer under which the Company sold or contributed certain bank loans to the Depositor, and the Depositor sold such loans to the Issuer in exchange for a combination of cash and the issuance of the KCAP Senior Funding I Subordinated Notes to the Depositor.

In connection with the issuance and sale of the KCAP Senior Funding I Notes, the Company has made customary representations, warranties and covenants in the purchase agreement by and between the Company, the Depositor, the Issuer and Guggenheim Securities, LLC, which served as the initial purchaser of the KCAP Senior Funding I Secured Notes. The KCAP Senior Funding I Secured Notes are the secured obligations of the Issuer, and an indenture governing the KCAP Senior Funding I Notes includes customary covenants and events of default. The KCAP Senior Funding I Notes were sold in a private placement transaction and have not been, and will not be, registered under the Securities Act of 1933, as amended, or any state “blue sky” laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from registration.

The Company serves as collateral manager to the Issuer under a collateral management agreement, which contains customary representations, warranties and covenants. Under the collateral management agreement, the Company will perform certain investment management functions, including supervising and directing the investment and reinvestment of the Issuer’s assets, as well as perform certain administrative and advisory functions.

In addition, because each of the Issuer and the Depositor are consolidated subsidiaries, the Company did not recognize any gain or loss on the transfer of any of our portfolio assets to such vehicles in connection with the issuance and sale of the KCAP Senior Funding I Notes.

All of the Class A,B,C and D notes were repaid in the third quarter of 2017. In connection there with, the Company recorded a realized loss from the extinguishment of debt of $4.0 million in the third quarter of 2017.

~~For the three months ended September~~April 30, 2017, interest expense, including the amortization of deferred debt issuance costs and the OID was approximately $337,000 consisting of stated interest expense of approximately $263,000, accreted discount of approximately $35,000, and deferred debt issuance costs of approximately $38,000. For the nine months ended September 30, 2017, interest expense, including the amortization of deferred debt issuance costs and the discount on the face amount of the notes, was approximately $3.4 million consisting of stated interest expense of approximately $2.7 million, accreted discount of approximately $352,000, and deferred debt issuance costs of approximately $379,000.

~~Fair Value of KCAP Senior Funding I.~~ The Company carried the KCAP Senior Funding I Notes at cost, net of unamortized discount and offering costs. The fair value of the KCAP Senior Funding I Notes was approximately $146.3 million at December 31, 2016. The fair value was determined based on third party indicative values. The KCAP Senior Funding I L.L.C. Notes were categorized as Level III under ASC 820: Fair Value.

~~7.375% Notes Due 2019~~

~~On October 10, 2012,~~2021, the Company issued ~~$41.4~~$80 million in aggregate principal amount of unsecured ~~7.375% Notes Due 2019 (the “7.375%~~4.875% Notes due ~~2019”~~2026 (the “4.875% Notes due 2026”). in a private placement exempt from registration under the Section 4(a)(2) of the Securities Act. The 4.875% Notes due 2026 were not registered under the Securities Act or any state securities laws and may not be reoffered or resold in the United States absent registration or an applicable exemption from such registration requirements. The net proceeds ~~for these Notes, after~~to the ~~payment of underwriting expenses,~~Company were approximately ~~$39.9 million. Interest on~~$77.7 million, after deducting estimated offering expenses. The Company used the ~~7.375%~~net proceeds of the offering to redeem in full its 6.125% Notes ~~Due 2019 is paid quarterly~~due 2022, to make investments in ~~arrears on March~~portfolio companies in accordance with its investment objectives, and for general corporate purposes.

On April 30, ~~June 30, September 30~~2021, the Company and ~~December 30, at~~U.S. Bank National Association (the “Trustee”) entered into a ~~rate~~Supplemental Indenture (the “Third Supplemental Indenture”), which supplements that certain Base Indenture, dated as of ~~7.375%, commencing December 30, 2012.~~October 10, 2012 (as may be further amended, supplemented or otherwise modified from time to time, the “Base Indenture” and, together with the Third Supplemental Indenture, the “Indenture”). The ~~7.375%~~Third Supplemental Indenture relates to the Company’s issuance of the 4.875% Notes ~~Due 2019~~due 2026.

The 4.875% Notes due 2026 will mature on ~~September,~~April 30, ~~2019~~2026 and ~~are unsecured obligations of the Company. The 7.375% Notes Due 2019 are subject to redemption~~may be redeemed in whole or in part at the Company’s option at any time or from time to time at the ~~option~~redemption prices set forth in the Indenture and bear interest at a rate of 4.875% per year payable semi-annually on March 16 and September 16 of each year, commencing on September 16, 2021. The 4.875% Notes due 2026 are general unsecured obligations of the Company that rank senior in right of payment to all of the Company’s existing and future indebtedness that is expressly subordinated in right of payment to the 4.875% Notes due 2026, rank pari passu with all existing and future unsecured unsubordinated indebtedness issued by the Company, rank effectively junior to any of the Company’s secured indebtedness (including unsecured indebtedness that the Company later secures) to the extent of the value of the assets securing such indebtedness, and rank structurally junior to all existing and future indebtedness (including trade payables) incurred by the Company’s subsidiaries, financing vehicles or similar facilities.

The Indenture contains certain covenants, including covenants requiring the Company to comply with the asset coverage requirements of Sections 18(a)(1)(A) and 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act, whether or not it is subject to those requirements, and to provide financial information to the holders of the Notes and the Trustee if the Company is no longer subject to the reporting requirements under the Exchange Act. Additionally, the Company has agreed to use its commercially reasonable efforts to maintain a rating of the 4.875% Notes due 2026 from a rating agency, as long as the notes are outstanding. These covenants are subject to important limitations and exceptions that are described in the Indenture.

In addition, on ~~or after September 30, 2015,~~the occurrence of a “change of control repurchase event,” as defined in the Indenture, the Company will generally be required to make an offer to purchase the outstanding notes at a ~~redemption~~ price ~~per security~~ equal to ~~100%~~100% of the ~~outstanding~~ principal amount ~~thereof~~of such notes plus accrued and unpaid interest ~~payments otherwise payable for the then-current quarterly interest period accrued~~ to the ~~date fixed for redemption. In addition,~~repurchase date.

Sale of Additional 4.875% Notes due to2026

On June 23, 2021, the ~~asset coverage test~~Company issued $28 million in aggregate principal amount of its 4.875% Notes due 2026 (the “New Notes”) in a private placement exempt from registration under the Section 4(a)(2) of the Securities Act. The New Notes have not been registered under the Securities Act or any state securities laws and may not be reoffered or resold in the United States absent registration or an applicable exemption from such registration requirements. The net proceeds to the Company were approximately $27.4 million, after deducting estimated offering expenses. The Company intends to use the net proceeds of the offering to redeem in full its HCAP Notes (as defined below), make investments in portfolio companies in accordance with its investment objectives, and for general corporate purposes.

The New Notes were issued under the Indenture governing the 4.875% Notes due 2026. The New Notes were issued as “Additional Notes” under the Indenture and have identical terms to Company’s $80.0 million of aggregate principal amount of 4.875% Notes due 2026 that were issued on April 30, 2021, other than the issue date. The New Notes will be treated as a ~~BDC and a covenant that the Company agreed to in connection~~single class of notes with the ~~issuance of~~Company’s existing 4.875% Notes due 2026 for all purposes under the 7.375% Notes Due 2019, the Company is limited in its ability to make distributions in certain circumstances. The indenture governing the 7.375% Notes Due 2019 contains certain restrictive covenants, including compliance with certain provisions of the 1940 Act relating to borrowing and dividends. At September 30, 2017, the Company was in compliance with all of its debt covenants.Indenture.

For the three months ended September 30, 2017 and 2016, interest expense related to the 7.375% Notes Due 2019 was approximately $498,000 and $712,000, respectively. For the nine months ended September 30, 2017 and 2016, interest expense related to the 7.375% Notes Due 2019 was approximately $1.7 million and $2.2 million, respectively.

In connection with the issuance of the ~~7.375%~~4.875% Notes Due ~~2019,~~2026, (including the New Notes) the Company incurred approximately ~~$1.5~~$2.4 million of original issue discount, and $1.2 million of debt offering costs, both of which are being amortized over the expected term of the facility on an effective yield ~~method,~~method.

Exchange of 4.875% Notes due 2026

On October 5, 2021, the Company filed with the SEC a registration statement relating to an offer to exchange the 4.875% Notes due 2026 for new notes issued by the Company that are registered under the Securities Act (the “Exchange Offer”), which ~~approximately $306,000 remains~~registration statement was declared effective on December 2, 2021. Upon the terms and subject to ~~be amortized, and is included on~~ the ~~consolidated balance sheets as a reduction~~conditions in the ~~related debt liability.~~prospectus relating to the Exchange Offer, the Company accepted any existing 4.875% Notes due 2026 (the “Restricted Notes”) validly tendered and not withdrawn prior to January 3, 2022, the expiration date of the Exchange Offer, and issued new 4.875% Notes due 2026 that have been registered under the Securities Act (the “Exchange Notes”). The form and terms of the Exchange Notes are substantially identical to those of the Restricted Notes, except that the transfer restrictions and registration rights relating to the Restricted Notes do not apply to the Exchange Notes, and the Exchange Notes do not provide for the payment of additional interest in the event of a registration default. In addition, the Exchange Notes bear a different CUSIP number than the Restricted Notes. The Exchange Notes are issued under and entitled to the benefits of the same indenture that authorized the issuance of the Restricted Notes.

On the expiration date of the Exchange Offer, all of the Restricted Notes had been validly tendered, and all of the outstanding Restricted Notes were exchanged for newly issued Exchange Notes.

~~During~~Fair Value of 4.875% Notes due 2026.

The 4.875% Notes due 2026 were issued during the second quarter of 2016, the Company repurchased approximately $2.4 million par value of the 7.375% Notes Due 2019 at a weighted average price of $25.23 per $25.00 note, resulting in a realized loss on extinguishment of $71,190. KCAP subsequently surrendered these notes to the Trustee for cancellation.

During the third quarter of 2016, $5.0 million par value of the 7.375% Notes Due 2019 was redeemed by the Company, resulting in a realized loss on extinguishment of $88,015. KCAP subsequently surrendered these notes to the Trustee for cancellation.

During the fourth quarter of 2016, approximately $469,000 par value of the 7.375% Notes Due 2019 was redeemed by the Company, resulting in a realized loss on extinguishment of $15,006. KCAP subsequently surrendered these notes to the Trustee for cancellation.

During the second quarter of 2017, approximately $6.5 million par value of the 7.375% Notes Due 2019 was redeemed by the Company, resulting in a realized loss on extinguishment of approximately $107,000. KCAP subsequently surrendered these notes to the Trustee for cancellation.

~~Fair Value of 7.375% Notes Due 2019~~~~. The 7.375% Notes Due 2019 were issued in a public offering on October 10, 2012~~2021 and are carried at ~~cost.~~cost, net of unamortized discount of approximately $1.1 million and unamortized offering costs of approximately $0.5 million as of March 31, 2024. The fair value of the Company’s outstanding ~~7.375%~~4.875% Notes ~~Due 2019~~due 2026 disclosed, but not carried, was approximately ~~$27.1~~$100.5 million at ~~September 30, 2017.~~March 31, 2024. The ~~fair value was determined based on the closing price on September 30, 2017 for the 7.375%~~4.875% Notes ~~Due 2019. The 7.375% Notes Due 2019 are~~due 2026 were categorized as Level IIII under the ASC 820 Fair Value.

As of December 31, 2023, the 4.875% Notes due 2026 were carried net of unamortized discount of approximately $1.2 million and unamortized offering costs of approximately $561 thousand. The fair value of the 4.875% Notes due 2026 was approximated at carrying value on the consolidated balance sheets and the 4.875% Notes due 2026 were categorized as Level III under the ASC 820 Fair Value Hierarchy. The fair value of the Company’s outstanding 4.875% Notes due 2026 was approximately $106.2 million at December 31, 2023.

The following table summarizes the interest expense, amortization of original issue discount, deferred financing costs, average outstanding balance, and average stated interest rate on the 4.875% Notes due 2026 for the three months ended March 31, 2024 and 2023.


	For the Three Months Ended March 31,
($ in thousands)	2024			2023
Interest expense	$	1,316		$	1,316
Amortization of original issue discount		124			117
Deferred financing costs		66			63
Total interest and financing expenses	$	1,506		$	1,496
Average outstanding balance	$	108,000		$	108,000
Average stated interest rate		4.88	%		4.88	%

Revolving Credit Facility

~~6.125% Notes Due 2022~~On December 18, 2019, Great Lakes Portman Ridge Funding LLC (“GLPRF LLC”), our wholly-owned subsidiary, entered into a senior secured revolving credit facility (the “Revolving Credit Facility”) with JPMorgan Chase Bank, National Association (“JPM”). JPM serves as administrative agent, U.S. Bank National Association serves as collateral agent, securities intermediary and collateral administrator, and we serve as portfolio manager under the Revolving Credit Facility.

GLPRF LLC is required to utilize a minimum of 80% of the commitments under the Revolving Credit Facility, after an initial six-month ramp-up period during which a lesser minimum utilization requirement applies. Unused amounts below such minimum utilization amount accrue interest as if such amounts are outstanding as borrowings under the Revolving Credit Facility. In addition, GLPRF LLC will pay a non-usage fee during the first three years after the closing date in an amount not to exceed 0.50% per annum on the average daily unborrowed portion of the financing commitments in excess of such minimum utilization amount.

~~During the third quarter of 2017, the Company issued $77.4 million in aggregate~~The initial principal amount of ~~unsecured 6.125% Notes due 2022 (“~~the ~~6.125 Notes Due 2022”).~~Revolving Credit Facility is $115 million. The ~~net proceeds for these Notes, after~~Revolving Credit Facility has an accordion feature, subject to the ~~payment~~satisfaction of ~~underwriting expenses, were approximately $74.6~~various conditions, which could bring total commitments under the Revolving Credit Facility to up to $215 million. ~~Interest on~~Proceeds from borrowings under the ~~6.125% Notes Due 2022~~Revolving Credit Facility may be used to fund portfolio investments by GLPRF LLC and to make advances under delayed draw term loans where GLPRF LLC is ~~paid quarterly~~a lender.

GLPRF LLC’s obligations to the lenders under the Revolving Credit Facility are secured by a first priority security interest in ~~arrears on March 30, June 30, September 30~~all of GLPRF LLC’s portfolio of investments and ~~December 30, at a rate of 6.125%, commencing September 30, 2017.~~cash. The ~~6.125% Notes Due 2022 mature on September, 30, 2022 and are unsecured~~ obligations of GLPRF LLC under the ~~Company. The 6.125% Notes Due 2022~~Revolving Credit Facility are ~~subject~~non-recourse to ~~redemption in whole or in part at any time or from time to time, at~~us, and our exposure under the option of the Company, on or after September 30, 2019, at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accruedRevolving Credit Facility is limited to the ~~date fixed for redemption.~~value of our investment in GLPRF LLC. In ~~addition, Due to the asset coverage test applicable to the Company as a BDC and a covenant that the Company agreed to in~~ connection with the ~~issuance~~Revolving Credit Facility, GLPRF LLC has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The Revolving Credit Facility contains customary events of default for similar financing transactions, including if a change of control of GLPRF LLC occurs or if we are no longer the portfolio manager of GLPRF LLC.

On April 29, 2022, GLPRF LLC amended the Revolving Credit Facility with JPM as administrative agent. The amended agreement replaces three-month SOFR as the benchmark interest rate and reduces the applicable margin to 2.80% per annum from 2.85% per annum. Other amendments include the extension of the ~~6.125% Notes Due 2022, the Company is limited in its ability~~reinvestment period and scheduled termination date to make distributions in certain circumstances. The indenture governing the 6.125% Notes Due 2022 contains certain restrictive covenants, including compliance with certain provisions of the 1940 Act relating to borrowingApril 29, 2025 and ~~dividends.~~ April 29, 2026, respectively.

At ~~September 30, 2017, the Company~~March 31, 2024, GLPRF LLC was in compliance with all of its debt ~~covenants.~~

~~For~~covenants and $92.0 million principal amount of borrowings was outstanding under the ~~three months and nine months ended September 30, 2017 interest expense related to the 6.125% Notes Due 2022~~Revolving Credit Facility. The fair value of GLPRF LLC disclosed, but not carried, was approximately ~~$450,000.~~$92.5 million at March 31, 2024 and categorized as Level III under the ASC 820 Fair Value Hierarchy.

~~In connection~~At December 31, 2023, GLPRF LLC was in compliance with all of its debt covenants and $92.0 million principal amount of borrowings was outstanding under the ~~issuance~~Revolving Credit Facility. The fair value of the 6.125% Notes Due 2022, the Company incurred approximately $2.8 million of debt offering costs which are being amortized over the expected term of the facility on an effective yield method, of which approximately $2.8 million remains to be amortized as of September 30, 2017, and is includedGLPRF LLC was approximated at carrying value on the consolidated balance sheets and is categorized as Level III under the ASC 820 Fair Value Hierarchy. The fair value of GLPRF LLC was approximately $91.2 million at December 31, 2023.

The following table summarizes the interest expense, deferred financing costs, average outstanding balance, and average stated interest rate on the Revolving Credit Facility for the three months ended March 31, 2024 and 2023.


	For the Three Months Ended March 31,
($ in thousands)	2024			2023
Interest expense	$	1,935		$	1,733
Deferred financing costs		83			83
Total interest and financing expenses	$	2,018		$	1,816
Average outstanding balance	$	92,000		$	79,578
Average stated interest rate		8.13	%		7.36	%

2018-2 Secured Notes


($ in thousands)
March 31, 2024	Amortized Carrying Value		Outstanding Principal at Par		Spread(4)	Rating(1)	Stated Maturity(2)
2018-2 Secured Notes:
Class A-1R-R Notes	$	4,482	$	4,519	Reference Rate + 1.58%(3)	AAA(sf)	11/20/2029
Class A-1T-R Notes		13,884		13,782	Reference Rate + 1.58%	AAA(sf)	11/20/2029
Class A-2-R Notes		54,682		55,100	Reference Rate + 2.45%	AA (sf)	11/20/2029
Class B-R Notes		18,103		18,250	Reference Rate + 3.17%	A (sf)	11/20/2029
	$	91,151	$	91,651

(1)

Represents ratings from each of S&P and DBRS for the Class A-1R-R Notes and the Class A-1T-R Notes and from S&P for the Class A-2-R Notes and Class B-R Notes as of the closing of the CLO on October 18, 2018.

(2)

The indenture governing our CLO permits the repricing or refinancing of the secured notes after November 20, 2020, which may result in the redemption of the outstanding notes occurring prior to their stated maturity.

(3)

Interest may be indexed to either the CP Rate (as defined in the governing indenture) or Reference Rate.

(4)

Reference Rate is defined as the sum of the Term SOFR Rate plus 0.26161%, or 5.56% as of March 31, 2024.


($ in thousands)
December 31, 2023	Amortized Carrying Value		Outstanding Principal at Par		Spread(4)	Rating(1)	Stated Maturity(2)
2018-2 Secured Notes:
Class A-1R-R Notes	$	12,818	$	12,922	Reference Rate + 1.58%(3)	AAA(sf)	11/20/2029
Class A-1T-R Notes		39,369		39,411	Reference Rate + 1.58%	AAA(sf)	11/20/2029
Class A-2-R Notes		54,681		55,100	Reference Rate + 2.45%	AA (sf)	11/20/2029
Class B-R Notes		18,103		18,250	Reference Rate + 3.17%	A (sf)	11/20/2029
	$	124,971	$	125,683

(1)

(2)

(3)

Interest may be indexed to either the CP Rate (as defined in the governing indenture) or Reference Rate.

(4)

Reference Rate is defined as the sum of the Term SOFR Rate plus 0.26161%.

October 28, 2020 the Company completed the GARS Acquisition, pursuant to the terms and conditions of the GARS Merger Agreement. In connection therewith, the Company now consolidates the financial statements the 2018-2 CLO a $420.0 million par value CLO facility. On the date of the transaction the debt assumed was recognized at fair value, resulting in a $2.4 million discount which is amortized over the remaining term of the borrowings.

The CLO was executed by GF 2018-2 (the “Issuer”) and Portman Ridge Funding 2018-2 LLC (formerly known as Garrison Funding 2018-2 LLC, together with the Issuer, the “Co-Issuers”) who issued $312.0 million of senior secured notes (collectively referred to as the “2018-2 Secured Notes” individually defined above in the table) and $108.0 million of subordinated notes (the “2018-2 Subordinated Notes” and, together with the 2018-2 Secured Notes, the “2018-2 Notes”) backed by a diversified portfolio of primarily senior secured loans. The Company owns all $108.0 million of the 2018-2 Subordinated Notes and $18.3 million of the Class B-R Notes and serves as collateral manager for the Co-Issuers. The Company is entitled to receive interest from the Class B-R Notes, distributions from the 2018-2 Subordinated Notes and fees for serving as collateral manager in accordance with the CLO’s governing documents and to the extent funds are available for such purposes. However, as a ~~reduction~~result of retaining all of the 2018-2 Subordinated Notes, the Company consolidates the accounts of the Co-Issuers into its financial statements and all transactions between the Company and the Co-Issuers are eliminated on consolidation. As a result of this consolidation, the 2018-2 Secured Notes issued by the CLO is treated as the Company’s indebtedness, except any 2018-2 Secured Notes owned by the Company, which are eliminated in consolidation. The 2018-2 Notes are scheduled to mature on November 20, 2029, however the ~~related~~Co-Issuers may redeem the 2018-2 Notes on any business day after November 20, 2020. The indenture governing the 2018-2 Notes provides that, to the extent cash is available from cash collections, the holders of the 2018-2 Notes are to receive quarterly interest payments on the 20th day or, if not a business day, the next succeeding business day of February, May, August and November of each year until the stated maturity or earlier redemption. On July 18, 2019, $25.0 million outstanding of the aggregate $50.0 million Class A-1R-R Notes available under the CLO converted to Class A-1T-R Notes. On November 18, 2022, the Company drew $14.3 million of the $25.0 million unfunded Class A-1R-R Notes. The Reinvestment Period ended on November 20, 2022, and the remaining amount of the unfunded Class A1 R-R Notes terminated. During the first quarter of 2021, the Company redeemed approximately $88.0 million of the 2018-2 Secured Notes. In connection therewith, the Company recognized a realized loss on extinguishment of debt ~~liability.~~of approximately $0.9 million. During 2023, the Company redeemed approximately $52.5 million of the par value of 2018-2 Secured Notes. In connection therewith, the Company recognized a realized loss on extinguishment of approximately $0.4 million.

During the three months ended March 31, 2024, the Company redeemed approximately $34.0 million of the par value of 2018-2 Secured Notes. In connection therewith, the Company recognized a realized loss on extinguishment of approximately $0.2 million.

During the three months ended March 31, 2023, the Company redeemed approximately $6.9 million of the par value of 2018-2 Secured Notes. In connection therewith, no realized loss on extinguishment was recognized.

At March 31, 2024, the fair value of the 2018-2 Notes disclosed, but not carried, approximated $91.5 million, and the 2018-2 Notes were categorized as Level III under the ASC 820 Fair Value Hierarchy.

At December 31, 2023, the fair value of ~~6.125%~~the 2018-2 Notes ~~Due 2022.~~ ~~The 6.125%~~approximated their carrying value on the consolidated balance sheets and the 2018-2 Notes ~~Due 2022~~ were ~~issued via public offering during~~categorized as Level III under the ~~third quarter of 2017 and are carried at cost.~~ASC 820 Fair Value Hierarchy. The fair value of the Company's outstanding 2018-2 Notes was approximately $125.0 million at December 31, 2023.

The following table summarizes the interest expense, amortization of original issue discount, average outstanding balance, and average stated interest rate on the 2018-2 Secured Notes for the three months ended March 31, 2024 and 2023.


	For the Three Months Ended March 31,
($ in thousands)	2024			2023
Interest expense	$	2,201		$	2,976
Amortization of original issue discount		-			44
Total interest and financing expenses	$	2,201		$	3,020
Average outstanding balance	$	110,516		$	175,260
Average stated interest rate		7.90	%		6.80	%

Collateralized Loan Obligation Financing Covenants

The documents governing the CLO include three overcollateralization tests which are comprised of the Class A Overcollateralization Test, the Class B Overcollateralization Test and the EoD Overcollateralization Test, each of which are individually defined below.

The documents governing the CLO include two coverage tests applicable to the 2018-2 Secured Notes as of March 31, 2024. The first test compares the amount of interest received on the collateral loans held by 2018-2 CLO to the amount of interest payable on the 2018-2 Secured Notes in respect of the amounts drawn and certain expenses. To meet this first test, at any time, the aggregate amount of interest received on the collateral loans must equal, after the payment of certain fees and expenses, at least 135.0% of the aggregate amount of interest payable on the Class A-1R-R Notes, the Class A-1T-R Notes and the Class A-2-R Notes (collectively, the “Class A-R Notes”) and 125.0% of the interest payable on the Class A-R Notes and Class B-R Notes, taken together.

The second test compares the aggregate assets that serve as collateral for the 2018-2 Secured Notes, or the Total Capitalization, as defined and calculated in accordance with the indenture, to the aggregate outstanding principal amount of the 2018-2 Secured Notes in respect of the amounts drawn. To meet this second test at any time, the Total Capitalization must equal at least (1) 128.0% of the aggregate outstanding principal amount of the Class A-R Notes (“Class A Overcollateralization Test”), and (2) 118.2% of the aggregate principal amount of the Class A-R Notes and Class B-R Notes, taken together (the test in clause (2), the “Class B Overcollateralization Test”).

If the coverage tests are not satisfied with respect to a quarterly payment date, the CLO may be required to apply amounts to the repayment of interest on and principal of the 2018-2 Notes prior to their maturity to the extent necessary to satisfy the applicable coverage tests. As a result, there may be reduced funds available for 2018-2 CLO to make additional investments or to make distributions on the 2018-2 Notes held by the Company. Additionally, compliance was measured on each day collateral loans are purchased, originated or sold and in connection with monthly reporting to the note holders.

Furthermore, if under the second coverage test the Total Capitalization equals 125.0% or less of the aggregate outstanding principal amount on the Class A-1R-R and Class A-1T-R Notes (“EoD Overcollateralization Test”), taken together remained so for ten business days, an event of default would be deemed to have occurred.

As of March 31, 2024, the trustee for the CLO has asserted that the Class A Overcollateralization Test, Class B Overcollateralization, and the EoD Overcollateralization Test were met.

Senior Securities

Information about the Company’s senior securities is shown as of the dates indicated in the below table.


Class and Period	Total Amount Outstanding Exclusive of Treasury Securities(1)		Asset Coverage per Unit(2)		Involuntary Liquidating Preference per Unit(3)		Average Market Value per Unit(4)
($ in thousands)
Fiscal 2013	$	192,592		2,264		—	N/A
Fiscal 2014		223,885		2,140		—	N/A
Fiscal 2015		208,049		2,025		—	N/A
Fiscal 2016		180,881		2,048		—	N/A
Fiscal 2017		104,407		2,713		—	N/A
Fiscal 2018		103,763		2,490		—	N/A
Fiscal 2019(5)		156,978		1,950		—	N/A
Fiscal 2020(6)		377,910		1,560		—	N/A
Fiscal 2021(7)		352,434		1,780		—	N/A
Fiscal 2022(8)		378,163		1,601		—	N/A
Fiscal 2023(9)		325,683		1,646		—	N/A
March 31, 2024(10)		291,651		1,713		—	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 PTMN’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 which the SEC expressly does not require to be disclosed for certain types of senior securities.

(4)

Not applicable, except with respect to the 7.375% Notes Due 2019 and the 6.125% Notes Due 2022, as other debt securities are not registered for public trading. For the years ended December 31, 2017, 2016, 2015, 2014, and 2013, the average market value per $1,000 of par value of the 7.375% Notes Due 2019 was $1,016.04, $1,000.00, $1,011.96, $1,037.72, and $1,032.96, respectively. For the years-ended December 31, 2020, 2019 and 2018 and for the period from August 14, 2017 (date of issuance) to December 31, 2017, the average market value per $1,000 of par value of the 6.125% Notes Due 2022 was $953.20, $1,009.93, $1,009.20 and $1,006.00, respectively. Average market value is computed by taking the daily average of the closing prices for the period.

(5)

As of December 31, 2019, the Total Amount Outstanding Exclusive of Treasury Securities consisted of 6.125% Notes Due 2022 ~~was approximately $77.3 million at September 30, 2017.The fair value was determined based on~~of $77,407 and Revolving Credit Facilities of $79,571.

(6)

As of December 31, 2020, the ~~closing price on September 30, 2017 for the 6.125% Notes Due 2022. The~~Total Amount Outstanding Exclusive of Treasury Securities consisted of 6.125% Notes Due 2022 ~~are categorized as Level I under~~of $76,726, Revolving Credit Facilities of $49,321 and 2018-2 Secured Notes of $251,863.

(7)

As of December 31, 2021, the ~~ASC 820 Fair Value.~~Total Amount Outstanding Exclusive of Treasury Securities consisted of 4.875% Notes due 2026 of $108,000, Revolving Credit Facilities of $80,571 and 2018-2 Secured Notes of $163,863.

(8)

As of December 31, 2022, the Total Amount Outstanding Exclusive of Treasury Securities consisted of 4.875% Notes due 2026 of $108,000, Revolving Credit Facilities of $92,000 and 2018-2 Secured Notes of $178,163.

(9)

As of December 31, 2023, the Total Amount Outstanding Exclusive of Treasury Securities consisted of 4.875% Notes due 2026 of $108,000, Revolving Credit Facilities of $92,000 and 2018-2 Secured Notes of $125,683.

(10)

As of March 31, 2024, the Total Amount Outstanding Exclusive of Treasury Securities consisted of 4.875% Notes due 2026 of $108,000, Revolving Credit Facilities of $92,000 and 2018-2 Secured Notes of $91,651.

~~Convertible Notes~~

On March 16, 2011, the Company issued $55 million in aggregate principal amount of unsecured 8.75% convertible notes Due March 2016 (“Convertible Notes”). On March 23, 2011, pursuant to an over-allotment option, the Company issued an additional $5 million of such Convertible Notes for a total of $60 million in aggregate principal amount. The net proceeds from the sale of the Convertible Notes, after the payment of underwriting expenses, were approximately $57.7 million. Interest on the Convertible Notes is due semi-annually in arrears on March 15 and September 15, at a rate of 8.75%, commencing September 15, 2011. The Convertible Notes matured and were repaid on March 15, 2016. The Convertible Notes were senior unsecured obligations of the Company.

In connection with the issuance of the Convertible Notes, the Company incurred approximately $2.4 million of debt offering costs, which were amortized over the term of the Convertible Notes on an effective yield method. On April 4, 2013, approximately $9 million of the Company’s 8.75% Convertible Notes were converted at a price per share of $8.159 into 1,102,093 shares of KCAP common stock. On September 4, 2013, the Company purchased $2.0 million face value of its own Convertible Notes at a price of $114.50 plus accrued interest. KCAP subsequently surrendered these notes to the Trustee for cancellation effective September 13, 2013. During 2015, the Company repurchased approximately $19.3 million face value of its own Convertible Notes at a price ranging from $101.500 to $102.375. KCAP subsequently surrendered these notes to the Trustee for cancellation. Due to the cash conversion option embedded in the Convertible Notes, the Company applied the guidance in ASC 470-20-40,~~Debt with Conversion and Other Options~~and realized a loss on the extinguishment of this debt. The indenture governing the Convertible Notes contains certain restrictive covenants, including compliance with certain provisions of the 1940 Act and conditions governing the undertaking of new debt.

~~The Convertible Notes matured and were fully repaid on March 15, 2016.~~

~~For the nine months ended September 30, 2016, interest expense related to the Convertible Notes was approximately $378,000.~~

7. DISTRIBUTABLE TAXABLE INCOME

Effective December 11, 2006, the Company elected to be treated as a RIC under the Code and adopted a December 31 tax-calendar year end. As a RIC, the Company is not subject to federal income tax on the portion of its taxable income and gains distributed currently to its stockholders as a dividend. The Company’s quarterly distributions, if any, are determined by the ~~Board of Directors.~~Board. The Company anticipates distributing substantially all of its taxable income and gains, within the Subchapter M rules, and thus the Company anticipates that it will not incur any federal or state income tax at the RIC level. As a RIC, the Company is also subject to a federal excise tax based on distributive requirements of its taxable income on a calendar year basis (e.g., calendar year ~~2017)~~2021). Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4%4% excise tax on such income, to the extent required.

The Company may distribute taxable dividends that are payable in cash or shares of its common stock at the election of each stockholder. Under certain applicable provisions of the Code and the Treasury regulations, distributions payable in cash or in shares of stock at the election of stockholders are treated as taxable dividends. The Internal Revenue Service has published guidance with respect to publicly offered RICs 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. Under this guidance, if too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the balance of the distribution paid in stock). If the Company decides to make any distributions consistent with this guidance that are payable in part in its stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, shares of the Company’s stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of the Company’s 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 the Company’s stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, the Company 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 the Company’s stockholders determine to sell shares of its stock in order to pay taxes owed on dividends, it may put downward pressure on the trading price of the Company’s stock.

The following reconciles net increase ~~(decrease)~~ in net assets resulting from operations to taxable income for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016:~~2023 :

Nine Months Ended September 30,
2017 2016
(unaudited) (unaudited)

Net increase (decrease) in net assets resulting from operations $ 2,237,830 $ (1,118,601 )
Net change in unrealized depreciation from investments (875,365 ) 9,309,013
Excess capital gains over capital losses 6,993,940 6,205,405
Book/tax differences on CLO equity investments (1,697,865 ) 1,050,658
Other book/tax differences 224,785 (673,454 )

Taxable income before deductions for distributions $ 6,883,325 $ 14,773,021

Taxable income before deductions for distributions per weighted average basic shares for the period $ 0.19 $ 0.40
Taxable income before deductions for distributions per weighted average diluted shares for the period $ 0.19 $ 0.40


	Three Months Ended March 31,
($ in thousands)	2024			2023

Net (decrease) increase in net assets resulting from operations	$	4,486		$	55
Tax (provision) benefit on realized and unrealized gains (losses) on investments		(459	)		(571	)
Net change in unrealized depreciation (appreciation) from investments		(71	)		5,960
Net realized losses		2,270			3,085
Book/tax differences on CLO equity investments		(164	)		(92	)
Book/tax differences related to mergers and partnership investments		622			(1,763	)
Other book/tax differences		127			360
Taxable income before deductions for distributions	$	6,811		$	7,034
Taxable income before deductions for distributions per weighted average basic and diluted shares for the period	$	0.73		$	0.74

Dividends from Asset Manager Affiliates are recorded based upon a quarterly estimate of tax-basis earnings and profits of each Asset Manager Affiliate. Distributions in excess of the estimated tax-basis quarterly earnings and profits of each distributing Asset Manager Affiliate are recognized as tax-basis return of capital. The actual tax-basis earnings and profits and resulting dividend and/or return of capital for the year will be determined at the end of the tax year for each distributing Asset Manager Affiliate. For the ~~nine~~three months ended ~~September 30, 2017 and 2016,~~March 31, 2024, the Asset Manager Affiliates ~~declared~~did not make any cash distributions ~~of $2.2 million and $2.7 million~~ to the Company, respectively. The Company recognized $1.4 million, respectively, of dividends from Asset Manager Affiliates in the Statement of Operations for the nine months ended September 30, 2016. The difference of $2.0 million and $1.3 million, respectively, between cash distributions received and the tax-basis earnings and profits of the distributing affiliate, are recorded as an adjustment to the cost basis in the Asset Manager Affiliate (i.e. tax-basis return of capital), for the nine months ended September 30, 2017 and 2016, respectively.Company.

Distributions to shareholders that exceed tax-basis distributable income (tax-basis net investment income and realized gains, if any) are reported as distributions of paid-in capital (i.e., return of capital). The tax character of distributions is made on an annual (full calendar-year) basis. The determination of the tax attributes of our distributions is made at the end of the year based upon our taxable income for the full year and the distributions paid during the full year. Therefore, a determination of tax attributes made on a quarterly basis may not be representative of the actual tax attributes of distributions for a full year.

At ~~September 30, 2017,~~March 31, 2024, the Company had a net capital loss carryforward of ~~approximately $98.0~~$450.5 million to offset net capital ~~gains, to the extent provided by federal tax law. Of the~~gains. This net capital loss carryforward ~~$66.7 million~~ is not subject to ~~expiration~~expiration. A portion of the Company’s capital loss carryovers are subject to an annual use limitation under the ~~RIC Modernization Act of 2010.~~Code and related regulations.

On September 22, 2017 the Company’s Board of Directors declared a distribution to shareholders of $0.12 per share for a total of approximately $4.4 million. The record date was October 10, 2017 and the distribution was paid on October 26, 2017.

The Company ~~adopted Financial Accounting Standards Board~~ has certain taxable subsidiaries which have elected to be taxed as corporations for U.S. tax purposes. For the three months ended March 31, 2024, the taxable subsidiaries’ activity resulted in a benefit for income taxes of $0.5 million. As of March 31, 2024, the taxable subsidiaries have, in aggregate, $0.9 million of net deferred tax liabilities. A portion of the taxable subsidiaries’ net operating loss and capital loss carryovers are subject to an annual use limitation under the Code and related regulations.

ASC Topic 740 Accounting for Uncertainty in Income Taxes (“ASC 740”) ~~as of January 1, 2007. ASC 740~~ provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. The Company recognizes the tax benefits of uncertain tax positions only where the position is “more likely than not” to be sustained assuming examination by tax authorities. Management has analyzed the Company’s tax positions, and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on returns filed for open tax years (the last three fiscal years) or expected to be taken in the Company’s current year tax return. The Company identifies its major tax jurisdictions as U.S. Federal and New York State, and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an ongoing analysis of tax laws, regulations and interpretations thereof.

8. COMMITMENTS AND CONTINGENCIES

From time-to-time the Company is a party to financial instruments with off-balance sheet risk in the normal course of business in order to meet the needs of the Company’s investment in portfolio companies. Such instruments include commitments to extend credit and may involve, in varying degrees, elements of credit risk in excess of amounts recognized on the Company’s balance sheet. Prior to extending such credit, the Company attempts to limit its credit risk by conducting extensive due diligence, obtaining collateral where necessary and negotiating appropriate financial covenants. As of ~~September 30, 2017~~March 31, 2024, and December 31, ~~2016,~~2023, the Company had ~~approximately $3~~$33.3 million and ~~$565,000~~$28.6 million unfunded commitments, respectively.

The Company has made an aggregate commitment to the Great Lakes II Joint Venture of $50 million, subject to certain limitations (including that the Company is not obligated to fund capital calls if such funding would cause the Company to be out of compliance with certain provisions of the 1940 Act). As of March 31, 2024, the Company had a $10.9 million unfunded commitment to the Great Lakes II Joint Venture. As of December 31, 2023, the Company had a $5.5 million unfunded commitment to the Great Lakes II Joint Venture.

The Company is involved in litigation in the normal course of its operations and does not expect that the outcome of those litigations to have a material adverse impact to the Company’s financial position or results of operations.

The Company may, from time to time, enter into commitments to fund investments. These unfunded commitments are assessed for fair value in accordance with ASC 820. As of March 31, 2024 and December 31, 2023, the Company had the following outstanding commitments to fund investments ~~respectively.~~in current portfolio companies:


($ in thousands)		Par Value			Par Value
Portfolio Company	Investment	March 31, 2024			December 31, 2023
Accordion Partners LLC	Revolver		$	765		$	1,531
AMCP Pet Holdings, Inc.	Revolving Loan			275			350
Anthem Sports & Entertainment Inc.	Revolver			83			83
BetaNXT, Inc.	Revolver			1,449			2,174
Bradshaw International Parent Corp.	Delayed Draw Term Loan			922			922
Centric Brands Inc.	Delayed Draw Term Loan			-			1,069
Centric Brands Inc.	Revolver			-			97
Colonnade Intermediate, LLC	Revolver			-			68
Critical Nurse Staffing, LLC	Revolver			2,000			2,000
Dentive, LLC	Delayed Draw Term Loan - First Lien			245			430
Dentive, LLC	Revolver			234			186
Fortis Payment Systems, LLC	Delayed Draw Term Loan			744			-
GreenPark Infrastructure, LLC	Preferred Equity			1,829			1,829
H.W. Lochner, Inc.	Revolver			2,142			4,142
IDC Infusion Services	Delayed Draw Term Loan			805			1,065
Luminii LLC	Revolver			172			172
Morae Global Corporation	Revolver			208			208
Netwrix Corporation	Revolver			1,148			1,148
Netwrix Corporation	Delayed Draw Term Loan - First Lien			30			941
PhyNet Dermatology LLC	Delayed Draw Term Loan			690			690
Riddell Inc	Delayed Draw Term Loan - First Lien			636
Riskonnect Parent LLC	Delayed Draw Term Loan			5,000			-
Series A-Great Lakes Funding II LLC	Joint Ventures			10,912			5,473
TA/WEG Holdings, LLC	Delayed Draw Term Loan			-			758
TA/WEG Holdings, LLC	Delayed Draw Term Loan			77			784
TA/WEG Holdings, LLC	Revolver			784
Tactical Air Support, Inc.	Delayed Draw Term Loan			286			286
VBC Spine Opco LLC	Revolver			-			258
VBC Spine Opco LLC	Delayed Draw Term Loan			1,902			1,902
Total Unfunded Portfolio Company Commitments			$	33,338		$	28,566

9. STOCKHOLDERS’ EQUITY

The following table details the components of Stockholders’ Equity for the three months ended March 31, 2024 and 2023 :


	For the Three Months Ended March 31, 2024
($ in thousands)	Common Stock			Capital in Excess of Par Value			Total Distributable (loss) earnings			Total Stockholders' Equity
Balance, January 1, 2024	$	94		$	717,835		$	(504,411	)	$	213,518
Net investment income		-			-		$	6,226			6,226
Net change in unrealized appreciation on investments		-			-		$	71			71
Net realized (losses) from investment transactions and extinguishment of debt		-			-		$	(2,270	)		(2,270	)
Tax (provision) benefit on realized and unrealized gains (losses) on investments		-			-		$	459			459
Distributions to Stockholders		-			-		$	(6,444	)		(6,444	)
Reinvested Dividends		-			-		$	—			-
Stock-repurchase		(1	)		(952	)	$	—			(953	)
Balance, March 31, 2024	$	93		$	716,883		$	(506,369	)	$	210,607


	For the Three Months Ended March 31, 2023
($ in thousands)	Common Stock		Capital in Excess of Par Value			Total Distributable (loss) earnings			Total Stockholders' Equity
Balance, January 1, 2023	$	96	$	736,784		$	(504,757	)	$	232,123
Net investment income		-		-			8,529			8,529
Net change in unrealized appreciation on investments		-		-			(5,960	)		(5,960	)
Net realized (losses) from investment transactions and extinguishment of debt		-		-			(3,085	)		(3,085	)
Tax (provision) benefit on realized and unrealized gains (losses) on investments		-		-			571			571
Distributions to Stockholders		-		-			(6,495	)		(6,495	)
Reinvested Dividends		-		215			-			215
Stock-repurchase		-		(792	)		-			(792	)
Balance, March 31, 2023	$	96	$	736,207		$	(511,197	)	$	225,106

On March 6, 2023, the Board of Directors of the Company approved a $10 million stock repurchase program (the “Stock Repurchase Program”) for an approximately one-year period effective March 6, 2023 and terminating on March 31, 2024. Under this repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise subject to any agreement to which we are party including any restrictions in the indenture for our 4.875% Notes due 2026. The timing and actual number of shares repurchased will depend on a variety of factors, including legal requirements, price, and economic and market conditions. This Stock Repurchase Program may be suspended or discontinued at any time. On March 11, 2024, the Board of Directors of the Company authorized a renewed stock repurchase program of up to $10 million (the “Renewed Stock Repurchase Program”) for an approximately one-year period, effective March 11, 2024 and terminating on March 31, 2025. The terms and conditions of the Renewed Stock Repurchase Program are substantially similar to the prior Stock Repurchase Program. The Renewed Stock Repurchase Program may be suspended or discontinued at any time. Subject to these restrictions, we will selectively pursue opportunities to repurchase shares which are accretive to net asset value per share.

During the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, the Company issued ~~75,059~~0 and ~~153,792~~10,433 shares, respectively, of common stock under its dividend reinvestment plan. For the nine months ended September 30, 2017, there were 139,620 grants, 10,982 forfeitures, and 242,918 shares vested plan with respect to restricted stock.. On February 14, 2013, the Company completed a public offering of 5,232,500 shares of common stock, which included the underwriters’ full exercise of their option to purchase up to 682,500 shares of common stock, at a price of $9.75 per share. In conjunction with this offering, the Company also sold 200,000 shares of common stock to a member of its Board of Directors, at a price of $9.31125 per share, raising approximately $1.9 million in gross proceeds. On April 4, 2013, approximately $9 million of the Company’s 8.75% Convertible Notes were converted at a price basis per share of $8.159 into 1,102,093 shares of KCAP common stock. On October 6, 2014, the Company priced a follow-on public offering of 3.0 million shares of its common stock at a price of $8.02 per share. The offering raised net proceeds were approximately $23.8 million, after deducting underwriting discounts and offering expenses. The total number of shares of the Company’s common stock outstanding as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023, was ~~37,317,815~~9,332,117 and ~~37,178,294,~~9,383,132, respectively.

During the ~~nine~~three months ended ~~September 30, 2017 and 2016,~~March 31, 2024, the Company repurchased ~~64,176 and 67,654~~51,015 shares ~~respectively,~~under the Renewed Stock Repurchase program at an aggregate cost of approximately ~~$225,000 and $248,000, respectively, in connection with~~$1.0 million. During the ~~vesting of restricted stock awards.~~

~~10. EQUITY INCENTIVE PLAN~~

The Company has an equity incentive plan, established in 2006 and as amended in 2008, 2014, 2015 and most recently in May 2017 (the “Equity Incentive Plan”). The Company reserved 2,000,000 shares of common stock for issuance under the Equity Incentive Plan. The purpose of the Equity Incentive Plan is to provide officers and employees of the Company with additional incentives and align the interests of its employees with those of its shareholders. Options granted under the Equity Incentive Plan are exercisable at a price equal to the fair market value (market closing price) of the shares on the day the option is granted. Restricted stock granted under the Equity Incentive Plan is granted at a price equal to the fair market value (market closing price) of the shares on the day such restricted stock is granted. Vesting of restricted stock awarded under the 2008 amendment of the Equity Incentive Plan will occur in two equal installments of 50%, on each of the third and fourth anniversaries of the grant date; vesting of restricted stock subsequent to the 2014 amendment of the Equity Incentive Plan will vest in four equal installments of 25%, on each of the first four anniversaries of the grant date, except for the grant in September of 2017, which will occur in two equal installments of 50%, on each of the third and fourth anniversaries of the grant date.

~~Stock Options~~

On June 20, 2014, the Company’s Board of Directors approved the amended and restated the 2011 Non-Employee Director Plan, which was approved by shareholders on June 10, 2011. Accordingly, the annual grant of options to non-employee directors has been discontinued and replaced with an annual grant of shares of restricted stock as partial annual compensation for the services of the non-employee directors.

On March 21, 2017, the Company’s Board of Directors approved the 2017 Non-Employee Director Plan, which extended the term of the 2011 Non-Employee Director Plan (together, the “Non-Employee Director Plan”). The Company’s shareholders approved the Non-Employee Director Plan on May 4, 2017.

~~Information with respect to options granted, exercised and forfeited under the Equity Incentive Plan for the period January 1, 2016 through September 30, 2017 is as follows:~~

Shares Weighted Average
Exercise Price per
Share Weighted Average
Contractual
Remaining Term
(years) Aggregate
Intrinsic Value¹
Options outstanding at January 1, 2016 50,000 $ 7.72 3.4
Granted — —
Exercised — —
Forfeited — —
Options outstanding at December 31, 2016 50,000 $ 7.72 2.4 $ —
Granted — —
Exercised — —
Forfeited — —
Outstanding at September 30, 2017 50,000 $ 7.72 1.6 $ —

Total vested at September 30, 2017 50,000 $ 7.72 1.6

~~Represents the difference between the market value of shares of the Company and the exercise price of the options.~~

~~The Company uses a Binary Option Pricing Model (American, call option) to establish the expected value of all stock option grants. For the nine~~three months ended September 30, 2017 and 2016, the Company did not recognize any non-cash compensation expense related to stock options. At September 30, 2017, the Company had no remaining compensation costs related to unvested stock option awards.

~~Restricted Stock~~

~~Awards of restricted stock granted under the Non-Employee Director Plan vest as follows: 50% of the shares vest on the grant date and the remaining 50% of the shares vest on the earlier of:~~

~~(i)~~

~~the first anniversary of such grant, or~~

~~(ii)~~

~~the date immediately preceding the next annual meeting of shareholders.~~

On May 5, 2013, the Company’s Board of Directors approved the grant of 240,741 shares of restricted stock to the employees of the Company as partial compensation for their services. 50% of such awards will vest on the third anniversary of the grant date and the remaining 50% of the shares will vest on the fourth anniversary of the grant date.

~~On June 14, 2013, 5,000 shares of restricted stock were awarded to the Company’s Board of Directors.~~

~~On May 5, 2014, 5,000 shares of restricted stock were awarded to the Company’s Board of Directors.~~

On June 20, 2014, the Company’s Board of Directors approved the grant of 355,289 shares of restricted stock to the employees of the Company as partial compensation for their services. 25% of such awards will vest on each of the first four anniversaries of the grant date.

~~On May 21, 2015, 6,000 shares of restricted stock were awarded to the Company’s Board of Directors.~~

~~On May 3, 2016, 6,000 shares of restricted stock were awarded to the Company’s Board of Directors.~~

~~On May 4, 2017, 6,000 shares of restricted stock were awarded to the Company’s Board of Directors.~~

On June 16, 2015, the Company received exemptive relief to repurchase shares of its common stock from its employees in connection with certain equity compensation plan arrangements. During the nine months ended September 30, 2017 and 2016,March 31, 2023, the Company repurchased ~~64,176 and 67,654~~35,613 shares ~~respectively, of common stock~~under the Stock Repurchase Program at an aggregate cost of approximately ~~$225,000~~$0.7 million.

10. ACQUISITIONS OF GARRISON CAPITAL INC. AND HARVEST CAPITAL CREDIT CORPORATION

GARS acquisition

On October 28, 2020, the Company completed the GARS Acquisition, pursuant to the terms and ~~$248,000, respectively,~~conditions of the GARS Merger Agreement. To effect the acquisition, a wholly owned merger subsidiary of the Company merged with and into GARS, with GARS surviving the merger as the Company’s wholly owned subsidiary. Immediately thereafter and as a single integrated transaction, GARS consummated a second merger, whereby GARS merged with and into the Company, with the Company surviving the merger. Under the terms of the GARS Merger Agreement, each share of GARS Common Stock issued and outstanding was converted into the right to receive (i) an amount in cash, without interest, equal to approximately $1.19 and (ii) approximately 1.917 shares of common stock, par value $0.01 per share, of the Company (plus any applicable cash in lieu of fractional shares). Each share of GARS Common Stock issued and outstanding received, as additional consideration funded by the Adviser, an amount in cash, without interest, equal to approximately $0.31. Shares of common stock issued and market price have not been adjusted to reflect the Reverse Stock Split.

The merger was accounted for in accordance with the asset acquisition method of accounting as detailed in ASC Topic 805-50. The fair value of the consideration paid, and transaction costs incurred to complete the merger by the Company, including $5.0 million of cash payment (deemed capital contribution) paid at closing directly to shareholders of GARS from the Adviser, was allocated to the GARS investments acquired, based on their relative fair values as of the date of acquisition. The fair value of the purchase consideration paid by the Company below the fair value of net assets acquired is considered the purchase discount. Immediately following the acquisition of GARS, the Company recorded GARS net assets at their respective fair values and, as a result, the purchase discount was allocated to the cost basis of the GARS investments acquired and was immediately recognized as unrealized gain on the Company's Consolidated Statement of Operations. The purchase discount was allocated to the acquired investments on a relative fair value basis and, for performing debt investments, will amortize over the life of the investments through interest income with a corresponding reversal of the unrealized appreciation on the GARS investments acquired through their maturity. Upon the sale of any of the GARS acquired investments, the Company will recognize a realized gain or a reduction in realized losses with a corresponding reversal of the unrealized losses.


($ in thousands)
Common stock issued by the Company (1)	$	38,765
Cash consideration to GARS shareholders		24,100
Transaction costs (excluding offering costs $432)		1,168
Total purchase consideration	$	64,033
Assets acquired:
Investments, at fair value (amortized cost of $277,380)	$	317,803
Cash		35,361
Interest receivable		1,871
Other assets		2,088
Total assets acquired	$	357,123
Liabilities assumed:
Debt	$	251,213
Other liabilities		1,455
Total liabilities assumed	$	252,668
Net assets acquired	$	104,455
Total purchase discount	$	(40,422	)

(1)

Based on the market price at closing of $1.26 as of October 28, 2020 and the 30,765,640 shares of common stock issued by the Company in conjunction with the merger.

HCAP Acquisition and Assumption and Redemption of HCAP Notes

On June 9, 2021 the Company completed the HCAP Acquisition, pursuant to the terms and conditions of the HCAP Merger Agreement. To effect the acquisition, the Acquisition Sub merged with and into HCAP, with HCAP surviving the merger as the Company’s wholly owned subsidiary. Immediately thereafter and as a single integrated transaction, HCAP consummated a second merger, whereby HCAP merged with and into the Company, with the Company surviving the merger. As a result of, and as of the effective time of, the second merger, HCAP’s separate corporate existence ceased.

Under the terms of the HCAP Merger Agreement, HCAP stockholders as of immediately prior to the effective time of the first merger (other than shares held by a subsidiary of HCAP or held, directly or indirectly, by the Company or Acquisition Sub, and all treasury shares (collectively, “Cancelled Shares”)) received a combination of (i) $18,537,512.65 in cash payable by Company, (ii) 15,252,453 validly issued, fully paid and non-assessable shares of the Company’s common stock, par value $0.01 per share, and (iii) an additional cash payment from the Adviser of $2.15 million in the aggregate. Shares of common stock issued and market price have not been adjusted to reflect the Reverse Stock Split.

With respect to the merger consideration from the Company, HCAP stockholders as of immediately prior to the effective time of the first merger (other than Cancelled Shares) were entitled, with respect to all or any portion of the shares of HCAP common stock they held as of the effective time of the first merger, to elect to receive the merger consideration in the form of cash (an “Election”) or in the form of the Company's common stock, subject to certain conditions and limitations in the merger agreement. Any HCAP stockholder who did not validly make an Election was deemed to have elected to receive shares of the Company’s common stock with respect to the merger consideration as payment for their shares of HCAP common stock. Each share of HCAP common stock (other than Cancelled Shares) with respect to which an Election was made was treated as an “Electing Share” and each share of HCAP Common Stock (other than Cancelled Shares) with respect to which an Election was not made or that was transferred after the election deadline on June 2, 2021 was treated as a “Non-Electing Share.”

The HCAP Acquisition was accounted for in accordance with the asset acquisition method of accounting as detailed in ASC Topic 805-50. The fair value of the consideration paid, and transaction costs incurred to complete the merger by the Company, including $2.15 million of cash payment (deemed capital contribution) paid at closing directly to shareholders of HCAP from the Adviser, was allocated to the HCAP investments acquired, based on their relative fair values as of the date of acquisition. The fair value of the purchase consideration paid by the Company below the fair value of net assets acquired is considered the purchase discount. Immediately following the acquisition of HCAP, the Company recorded HCAP net assets at their respective fair values and, as a result, the purchase discount was allocated to the cost basis of the HCAP investments acquired and was immediately recognized as unrealized gain on the Company's Consolidated Statement of Operations. The purchase discount was allocated to the acquired investments on a relative fair value basis and, for performing debt investments, will amortize over the life of the investments through interest income with a corresponding reversal of the unrealized appreciation on the HCAP investments acquired through their maturity. Upon the sale of any of the HCAP acquired investments, the Company will recognize a realized gain or a reduction in realized losses with a corresponding reversal of the unrealized losses.


($ in thousands)
Common stock issued by the Company (1)	$	37,063
Cash consideration to HCAP shareholders (2)		20,688
Transaction costs (excluding offering costs $519)		881
Total purchase consideration	$	58,632
Assets acquired:
Investments, at fair value (amortized cost of $53,812)	$	57,621
Cash		32,119
Interest receivable		431
Other assets		2,665
Total assets acquired	$	92,836
Liabilities assumed:
Debt	$	28,750
Other liabilities		1,645
Total liabilities assumed	$	30,395
Net assets acquired	$	62,441
Total purchase discount	$	(3,809	)

(1)

Based on the market price at closing of $2.43 as of June 9, 2021 and the 15,252,453 shares of common stock issued by the Company in conjunction with the merger.

(2)

Approximately $18.5 million cash consideration paid by the Company plus $2.15 million cash payment paid at closing directly to shareholders of HCAP from the Adviser.

On June 9, 2021, the Company entered into the HCAP Third Supplemental Indenture, effective as of the closing of the HCAP Acquisition. The HCAP Third Supplemental Indenture relates to the Company’s assumption of $28.75 million in aggregate principal amount of the HCAP Notes.

~~On June 23, 2015, the Company’s Board of Directors approved the grant of 190,166 shares, with a fair value of approximately $1.2 million, of restricted stock to the employees~~consummation of the ~~Company as partial compensation for their services. 25% of such awards will vest on each of the first four anniversaries of the grant date.~~HCAP Acquisition.

~~On June 23, 2015, the Company’s Board of Directors also voted to amend the Equity Incentive Plan to specify that shares repurchased~~The HCAP Notes could be redeemed by the Company ~~to satisfy employee tax withholding requirements would not be returned to~~at any time at par value plus accrued and unpaid interest. On July 23, 2021, the ~~Equity Incentive Plan reserve and could not be reissued under~~Company redeemed the ~~Company’s Equity Incentive Plan.~~

~~On September 19, 2017, the Company’s Board~~entire notional amount of ~~Directors approved the grant of 133,620 shares of restricted stock to the employees~~$28.75 million of the Company as partial compensation for their services. 50% of such awards will vest on the third anniversary of the grant date and the remaining 50% of the shares will vest on the fourth anniversary of the grant date.HCAP Notes.

11. SUBSEQUENT EVENTS

During the nine months ended September 30, 2017, 242,918 shares of restricted stock vested and 10,982 shares of restricted stock were forfeited. As of September 30, 2017, after giving effect to these restricted stock awards, there were 297,199 shares of restricted stock outstanding. Information with respect to restricted stock granted, exercised and forfeited under the Plan for the period January 1, 2016 through September 30, 2017 is as follows:

	~~Non-vested~~ ~~Restricted Shares~~
~~Non-vested shares outstanding at January 1, 2016~~		~~700,539~~
~~Granted~~		~~6,000~~
~~Vested~~		~~(260,607~~	)
~~Forfeited~~		~~(34,453~~	)
~~Non-vested shares outstanding at December 31, 2016~~		~~411,479~~
~~Granted~~		~~139,620~~
~~Vested~~		~~(242,918~~	)
~~Forfeited~~		~~(10,982~~	)
~~Non-Vested Outstanding at September 30, 2017~~		~~297,199~~

~~For the three months ended September 30, 2017, non-cash compensation expense related to restricted stock was approximately $226,000 of this amount approximately $83,000 was expensed at~~On May 8, 2024, the Company and approximately $143,000 was a reimbursable expense allocated to the Asset Manager Affiliates. For the three months ended September 30, 2016, non-cash compensation expense related to restricted stock was approximately $394,000 of this amount approximately $161,000 was expensed at the Company, and approximately $233,000 was a reimbursable expense allocated to the Asset Manager Affiliates. For the nine months ended September 30, 2017, non-cash compensation expense related to restricted stock was approximately $878,000 of this amount approximately $330,000 was expensed at the Company, and approximately $548,000 was a reimbursable expense allocated to the Asset Manager Affiliates. For the nine months ended September 30, 2016, non-cash compensation expense related to restricted stock was approximately $1.2 million; of this amount approximately $472,000 was expensed at the Company and approximately $682,000 was a reimbursable expense allocated to the Asset Manager Affiliates.

Distributions are paid on all outstanding shares of restricted stock, whether or not vested. In general, shares of unvested restricted stock are forfeited upon the recipient’s termination of employment. As of September 30, 2017, the Company had approximately $1.4 million of total unrecognized compensation cost related to non-vested restricted share awards. That cost is expected to be recognized over the remaining weighted average period of 1.6 years.

~~11. OTHER EMPLOYEE COMPENSATION~~

The Company adopted a 401(k) plan (“401K Plan”) effective January 1, 2007. The 401K Plan is open to all full time employees. The 401K Plan permits an employee to defer a portion of their total annual compensation up to the Internal Revenue Service annual maximum based on age and eligibility. The Company makes contributions to the 401K Plan of up to 2% of the Internal Revenue Service’s annual maximum eligible compensation, which fully vests at the time of contribution. Approximately $1,000 and $1,000 was expensed during the three months ended September 30, 2017 and 2016, respectively, related to the 401K Plan. During the nine months ended September 30, 2017 and 2016, approximately $35,000 and $19,000 was expensed related to the 401K Plan.

The Company has also adopted a deferred compensation plan (“Profit-Sharing Plan”) effective January 1, 2007. Employees are eligible for the Profit-Sharing Plan provided that they are employed and working with the Company to participate in at least 100 days during the year and remain employed as of the last day of the year. Employees do not make contributions to the Profit-Sharing Plan. On behalf of the employee, the Company may contribute to the Profit-Sharing Plan 1) up to 8.0% of all compensation up to the Internal Revenue Service annual maximum and 2) up to 5.7% excess contributions on any incremental amounts above the social security wage base limitation and up to the Internal Revenue Service annual maximum. Employees vest 100% in the Profit-Sharing Plan after five years of service. Approximately $46,000 and $46,000 was expensed during the three months ended September 30, 2017 and 2016, respectively, related to the Profit-Sharing Plan. During the nine months ended September 30, 2017 and 2016, approximately $139,000 and $138,000, respectively, was expensed related to the Profit-Sharing Plan.

~~12. SUBSEQUENT EVENTS~~

~~On October 31, 2017, the Joint Venture made~~declared a cash distribution of $0.69 per share of common stock. The distribution is payable on May 31, 2024to ~~the Company~~stockholders of approximately $12.6 million. The Company expects that approximately $11.8 million of this distribution will be return of capital, reducing the cost basis of its investment in the JV by that amount. The final determination of the tax attributes of distributions from the Joint Venture is made on an annual (full calendar year) basisrecord at the ~~end~~close of ~~the year, therefore, any estimate~~business as of ~~tax attributes of distributions made on an interim basis may not be representative of the actual tax attributes of distributions for the full year.~~May 21, 2024.

On October 30, 2017, the Company entered into a new term loan agreement with Trimaran Advisors, one of the Asset Manager Affiliates. Trimaran Advisors borrowed $8.4 million under this agreement, which bears interest at a rate of 10.5% annually, payable quarterly. The loan matures on April 30, 2030, can be repaid at any time, and must be repaid upon the occurrence of certain events.

On October 31, 2017, Trimaran Advisors capitalized Trimaran Risk Retention Holdings, LLC, a newly-formed wholly-owned subsidiary, with $8.4 million of equity capital. In turn, Trimaran Risk Retention Holdings capitalized Trimaran RR I, LLC, a wholly-owned subsidiary of Trimaran Risk Retention Holdings, LLC, with $8.4 million of equity capital. With this equity contribution and other borrowed funds, Trimaran RR I, LLC purchased $34.8 million notional amount of notes issued by Catamaran CLO 2014-1, Ltd. for aggregate consideration of $35.5 million.

~~On October 31, 2017, the Company purchased an additional $4.3 million of notional amount of Subordinated Notes issued by Catamaran CLO 2014-1 at a cost of $5.4 million.~~

The Company has evaluated events and transactions occurring subsequent to ~~September 30, 2017~~March 31, 2024, for items that should potentially be recognized or disclosed in these financial statements. Other than as ~~noted~~described above, management has determined that there are no other material subsequent events that would require adjustment to, or disclosure in, these unaudited consolidated financial statements.

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~In this Quarterly Report on Form 10-Q, “KCAP Financial,” “Company,” “we,” “us,”~~The following discussion and ~~“our” refer to KCAP Financial, Inc., and its wholly-owned subsidiaries.~~

~~The information contained in this section~~analysis should be read in conjunction with our consolidated financial statements and related notes ~~thereto appearing elsewhere~~included in this Quarterly Report ~~and in conjunction with the financial~~on Form 10-Q. This discussion contains forward-looking statements and ~~notes thereto~~involves numerous risks and uncertainties, including but not limited to those described in ~~the Company’s~~Part I, Item 1A of our annual report on Form 10-K for the year ended December 31, ~~2016, as filed with the U.S. Securities~~2023 and ~~Exchange Commission (the “Commission” or the “SEC”). In addition, some~~Part II, Item 1A of ~~the statements in~~ this ~~report constitute forward-looking statements. The matters discussed in~~Form 10-Q of this Quarterly Report, as well as in future oral and written statements by management of KCAP Financial, that are forward-looking statements are based on current management expectations that involve substantial risks and uncertainties which could causeReport. Our actual results to differ materially from the results expressed in, or implied by, these forward-looking statements. Forward-looking statements relate to future events or our future financial performance. We generally identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar words. Important assumptions include our ability to originate new investments, achieve certain margins and levels of profitability, the availability of additional capital, and the ability to maintain certain debt to asset ratios. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this Quarterly Report should not be regarded as a representation by us that our plans or objectives will be achieved. The forward-looking statements contained in this Quarterly Report include statements as to:

~~our future operating results;~~

~~our business prospects and the prospects of our existing and prospective portfolio companies;~~

~~the return or impact of current and future investments;~~

~~our contractual arrangements and other relationships with third parties;~~

~~the dependence of our future success on the general economy and its impact on the industries in which we invest;~~

~~the financial condition and ability of our existing and prospective portfolio companies to achieve their objectives;~~

~~our expected financings and investments;~~

~~our regulatory structure and tax treatment;~~

our ability to operate as a business development company and a regulated investment company, including the impact of changes in laws or regulations governing our operations, or the operations of our portfolio companies;

~~the adequacy of our cash resources and working capital;~~

~~the timing of cash flows, if any, from the operations of our portfolio companies;~~

~~the impact of a protracted decline in the liquidity of credit markets on our business;~~

~~the impact of fluctuations in interest rates on our business;~~

~~the valuation of our investments in portfolio companies, particularly those having no liquid trading market;~~

~~our ability to recover unrealized losses;~~

~~market conditions and our ability to access additional capital; and~~

~~the timing, form and amount of any distributions.~~

~~There are a number of important risks and uncertainties that~~ could ~~cause our actual results to~~ differ materially from those ~~indicated~~anticipated by such forward-looking ~~statements. For a discussion of~~statements due to factors ~~that could cause~~discussed under the “Risk Factors” section included in our ~~actual results to differ from forward-looking statements contained~~SEC filings and “Note About Forward-Looking Statements” appearing elsewhere in this ~~Quarterly Report, please see the discussion in Part I, “Item 1A. Risk Factors” in our Annual Report on~~ Form 10-K for the fiscal year ended December 31, 2016. You should not place undue reliance on these forward-looking statements. The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances occurring after the date this Quarterly Report is filed with the SEC.10-Q.

GENERAL

~~GENERAL~~

We are an ~~internally~~externally managed, non-diversified closed-end investment company that ishas elected to be regulated as a business development company ~~or BDC,~~(“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). Sierra Crest Investment Management LLC (the “Adviser”) is an affiliate of BC Partners LLP (“BC Partners”). Subject to the overall supervision of the Board, the Adviser is responsible for managing our business and activities, including sourcing investment opportunities, conducting research, performing diligence on potential investments, structuring our investments, and monitoring our portfolio companies on an ongoing basis through a team of investment professionals.

We ~~have three principal areas of investments:~~

~~First, the Company originates, structures,~~originate, structure, and ~~invests~~invest in ~~senior~~ secured term loans, bonds or notes and mezzanine debt primarily in privately-held middle market companies ~~(the “Debt Securities Portfolio”). In addition, from time to time the Company may invest in the equity securities of privately held middle market companies.~~

Second, the Company has invested in asset management companies (Katonah Debt Advisors and Trimaran Advisors, collectively the “Asset Manager Affiliates”) that manage collateralized loan obligation funds (“CLO Funds”).

Third, the Company invests in debt and subordinated securities issued by collateralized loan obligation funds (“CLO Fund Securities”). These CLO Fund Securities are primarily managed by our Asset Manager Affiliates, but from time-to-time the Company makes investments in CLO Fund Securities managed by other asset managers. The CLO Funds typically invest in broadly syndicated loans, high-yield bonds and other credit instruments.

~~The Company~~ may also invest in other investments such as loans to publicly-traded companies, high-yield bonds, and distressed debt ~~securities. The Company~~securities (collectively the “Debt Securities Portfolio”). We also invest in debt and subordinated securities issued by collateralized loan obligation funds (“CLO Fund Securities”). In addition, from time to time we may invest in the equity securities of privately held middle market companies and may also receive warrants or options to purchase common stock in connection with ~~its~~our debt investments.

In our Debt Securities Portfolio, our investment objective is to generate current income and, to a lesser extent, capital appreciation from the investments ~~made by our middle market business~~ in senior secured term loans, mezzanine debt and selected equity investments in privately-held middle market companies. We define the middle market as comprising of companies with ~~earnings before interest, taxes, depreciation and amortization (“EBITDA”)~~EBITDA of $10 million to $50 million and/or total debt of $25 million to $150 million. We primarily invest in first and second lien term loans which, because of their priority in a company’s capital structure, we expect will have lower default rates and higher rates of recovery of principal if there is a default and which we expect will create a stable stream of interest income. While there is no specific collateral associated with senior unsecured debt, such positions are senior in payment priority over subordinated debt investments. The investments in our Debt Securities Portfolio are all or predominantly below investment grade, and have speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal. ~~While our primary investment focus is on making loans to, and selected equity~~

From time-to-time we have also made investments in privately-held middle market companies, we may also invest in other investments such as loans to smaller private companies or publicly-traded companies, high-yield bonds and distressed debt securities. We may also receive warrants or options to purchase common stock in connection with our debt investments.

~~From our Asset Manager Affiliates investment, we expect to receive recurring cash distributions and to generate capital appreciation through the addition of new~~ CLO ~~Funds~~Fund Securities managed by ~~our Asset Manager Affiliates. We may also seek to monetize our investment in the Asset Manager Affiliates if and when business conditions warrant. The Asset Manager Affiliates manage~~ other asset managers. Our collateralized loan obligation funds (“CLO ~~Funds that~~Funds”) typically invest in broadly syndicated loans, high-yield bonds and other credit instruments. ~~Collectively,~~

Our portfolio may include “covenant-lite” loans which generally refer to loans that do not have a complete set of financial maintenance covenants. Generally, “covenant-lite” loans provide borrower companies more freedom to negatively impact lenders because their covenants are incurrence-based, which means they are only tested and can only be breached following an affirmative action of the Asset Manager Affiliates have approximately $2.8 billion of par value assets under management as of September 30, 2017. The Asset Manager Affiliates are registered under the Investment Advisers Act of 1940, and are each managed independently from KCAPborrower, rather than by a ~~separate management team (however, certain~~deterioration in the borrower’s financial condition. Accordingly, to the extent we invest in “covenant-lite” loans, we may have fewer rights against a borrower and may have a greater risk of ~~the Company’s executive officers also act in similar capacities for one or both of the Asset Manager Affiliates).~~

~~In addition, our~~loss on such investments as compared to investments in ~~CLO Fund Securities, which are primarily made up of a minority investment in the subordinated securities~~ or ~~preferred stock of CLO Funds raised and managed by our Asset Manager Affiliates, are anticipated~~exposure to ~~provide the Company~~loans with ~~recurring cash distributions and complement our investment in the Asset Manager Affiliates.~~financial maintenance covenants.

Subject to market conditions, we intend to grow our entire portfolio of investments by raising additional capital, including through the prudent use of leverage available to us. As a BDC, we are limited in the amount of leverage we can incur under the 1940 Act. We are only allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowing.

We have elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") and intend to operate in a manner to maintain our RIC status. As a RIC, we intend to distribute to our stockholders substantially all of our net ordinary taxable income and the excess of realized net short-term capital gains over realized net long-term capital losses, if any, for each year. To qualify as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements. Pursuant to this election, we generally will not have to pay corporate-level U.S. federal income taxes on any income that we timely distribute to our stockholders.

From time to time, we may seek to retire, repurchase, or exchange debt securities in open market purchases or by other means dependent on market conditions, liquidity, contractual obligations, and other matters. In addition, we evaluate strategic opportunities available to us, including mergers with unaffiliated funds and affiliated funds, divestures, spin-offs, joint ventures and other similar transactions from time to time. An example of an opportunity we are currently in the initial stages of evaluating is a potential merger with one or more of our affiliated 1940 Act funds, which may result in the use of an exchange ratio other than NAV-for-NAV (including but not limited to relative market price) in connection therewith.

The Externalization

On April 1, 2019 (the “Closing”), we became externally managed (the “Externalization”) by the Adviser, pursuant to a stock purchase and transaction agreement (the “Externalization Agreement”) with BC Partners Advisors L.P. (“BCP”), an affiliate of BC Partners. In connection with the Externalization, our stockholders approved an investment advisory agreement (the “Advisory Agreement”) with the Adviser. See “-Advisory Agreement” below.

Pursuant to the Externalization Agreement with BCP, the Adviser became our investment adviser in exchange for a cash payment from BCP, or its affiliate, of $25 million, or $0.669672 per share of our common stock, directly to our stockholders. In addition, the Adviser (or its affiliate) will use up to $10 million of the incentive fee actually paid to the Adviser prior to the second anniversary of the Closing to buy newly issued shares of our common stock at the most recently determined net asset value per share of our common stock at the time of such purchase. In November 2020, the Adviser purchased approximately $570 thousand newly issued shares of our common stock in connection therewith, and in May 2021, the Adviser purchased approximately $4.0 million of newly issued shares of our common stock in connection therewith. In both cases, the shares were issued at the most recently determined net asset value per share of our common stock. The obligations of the Advisor to use incentive fees to purchase shares expired on April 1, 2021. For the period of one year from the first day of the first quarter following the quarter in which the Closing occurred, the Adviser will permanently forego up to the full amount of the incentive fees earned by the Adviser without recourse against or reimbursement by us, to the extent necessary in order to achieve aggregate net investment income per share of common stock for such one-year period to be at least equal to $0.40 per share, subject to certain adjustments. BCP and the Adviser’s total financial commitment to the transactions contemplated by the Externalization Agreement was $35.0 million.

GARS Transaction

On October 28, 2020, we completed our acquisition of Garrison Capital Inc., a publicly traded BDC (“GARS”, and such transaction, the “GARS Acquisition”). To effect the acquisition, our wholly owned merger subsidiary merged with and into GARS, with GARS surviving the merger as our wholly owned subsidiary. Immediately thereafter and as a single integrated transaction, GARS consummated a second merger, whereby GARS merged with and into us, with the Company surviving the merger.

In accordance with the terms of the merger agreement for the GARS Acquisition, dated June 24, 2020 (the “GARS Merger Agreement”), each share of common stock, par value $0.001 per share, of GARS (the “GARS Common Stock”) issued and outstanding was converted into the right to receive (i) an amount in cash, without interest, equal to approximately $1.19 and (ii) approximately 1.917 shares of common stock, par value $0.01 per share, of the Company (plus any applicable cash in lieu of fractional shares). Each share of GARS Common Stock issued and outstanding received, as additional consideration funded by the Adviser, an amount in cash, without interest, equal to

approximately $0.31. In connection with the closing of the GARS Acquisition, the Board approved an increase in the size of the Board from seven members to nine members, and appointed each of Matthew Westwood and Joseph Morea to serve on the Board.

HCAP Acquisition and Assumption and Redemption of HCAP Notes

On June 9, 2021 we completed our acquisition of Harvest Capital Credit Corporation, a publicly traded BDC (“HCAP”, and such transaction, the “HCAP Acquisition”). To effect the acquisition, our wholly owned merger subsidiary (“Acquisition Sub”) merged with and into HCAP, with HCAP surviving the merger as the Company’s wholly owned subsidiary. Immediately thereafter and as a single integrated transaction, HCAP consummated a second merger, whereby HCAP merged with and into the Company, with the Company surviving the merger. As a result of, and as of the effective time of, the second merger, HCAP’s separate corporate existence ceased.

With respect to the merger consideration from the Company, HCAP stockholders as of immediately prior to the effective time of the first merger (other than Cancelled Shares) were entitled, with respect to all or any portion of the shares of HCAP common stock they held as of the effective time of the first merger, to elect to receive the merger consideration in the form of cash (an “Election”) or in the form of our common stock, subject to certain conditions and limitations in the merger agreement. Any HCAP stockholder who did not validly make an Election was deemed to have elected to receive shares of the Company’s common stock with respect to the merger consideration as payment for their shares of HCAP common stock. Each share of HCAP common stock (other than Cancelled Shares) with respect to which an Election was made was treated as an “Electing Share” and each share of HCAP Common Stock (other than Cancelled Shares) with respect to which an Election was not made or that was transferred after the election deadline on June 2, 2021 was treated as a “Non-Electing Share.”

PORTFOLIO AND INVESTMENT ACTIVITY

Our primary investments ~~are: (1)~~are lending to and investing in middle-market businesses through investments in senior secured loans, junior secured loans, subordinated/mezzanine debt investments, and other equity investments, which may include warrants, ~~(2) our~~ investments in ~~our Asset Manager Affiliates, which manage portfolios of broadly syndicated loans, high-yield bonds~~joint ventures, and ~~other credit instruments, and (3)~~investments in CLO Fund Securities.

Total portfolio investment activity (excluding activity in ~~time deposit and money market~~short-term investments) for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 (unaudited) and for the year ended December 31, ~~2016~~2023 was as follows:

Debt Securities CLO Fund
Securities Equity
Securities Asset Manager
Affiliates Joint Venture Total Portfolio
Fair Value at December 31, 2015 $ 284,639,244 $ 55,872,382 $ 9,548,488 $ 57,381,000 $ — $ 407,441,114
2016 Activity:
Purchases / originations /draws 74,584,952 10,140,000 — — — 84,724,952
Sales / Pay-downs / Return of Capital (123,240,416 ) (4,200,000 ) (4,563,521 ) (1,250,000 ) — (133,253,937 )
Net accretion (amortization) 407,492 (2,192,071 ) — — — (1,784,579 )
Net realized (losses) gains (540,649 ) (10,111,560 ) 4,484,742 — — (6,167,467 )
Net increase (decrease) in fair value 2,492,707 4,665,599 (4,413,354 ) (15,933,000 ) — (13,188,048 )

Fair Value at December 31, 2016 238,343,330 54,174,350 5,056,355 40,198,000 — 337,772,035
Year to Date 2017 Activity:
Purchases / originations /draws 137,288,374 1,249,988 1 — 36,738,873 175,277,236
Sales / Pay-downs / Return of Capital (250,169,877 ) — — (2,000,000 ) — (252,169,877 )
Net accretion (amortization) 264,220 443,434 — — — 707,654
Net realized gains (losses) (2,871,941 ) — — — — (2,871,941 )
Net increase (decrease) in fair value 4,172,723 (4,024,428 ) (606,179 ) 1,481,000 (147,751 ) 875,365

Fair Value at September 30, 2017 $ 127,026,829 $ 51,843,344 $ 4,450,177 $ 39,679,000 $ 36,591,122 $ 259,590,472


($ in thousands)	Debt Securities			Equity Securities			CLO Fund Securities			Joint Ventures			Derivatives(1)		Total Portfolio
Fair Value at December 31, 2022 2023 Activity:	$	475,165		$	21,905		$	20,453		$	58,955		$	-	$	576,478
Purchases / originations / draws		51,061			7,867			-			7,564			-		66,492
Pay-downs / pay-offs / sales		(144,645	)		(8,770	)		(2,097	)		(4,999	)		-		(160,511	)
Net accretion of interest		6,982			-			1,998			-			-		8,980
Net realized gains (losses)		(4,784	)		3,334			(25,446	)		-			-		(26,896	)
Increase (decrease) in fair value		(4,702	)		(3,803	)		14,060			(2,233	)		-		3,322
Fair Value at December 31, 2023	$	379,077		$	20,533		$	8,968		$	59,287		$	-	$	467,865
Purchases / originations / draws		36,283			2,797			-			-			-		39,080
Pay-downs / pay-offs / sales		(28,137	)		(503	)		(392	)		(6,408	)		-		(35,440	)
Net accretion of interest		720			-			556			-			-		1,276
Net realized gains (losses)		(1,595	)		503			(505	)		-			-		(1,597	)
Increase (decrease) in fair value		(234	)		98			(78	)		285			-		71
Fair Value at March 31, 2024	$	386,114		$	23,428		$	8,549		$	53,164		$	-	$	471,255

(1)

Certain of the Company's derivatives are included in the non-controlled/non-affiliated investments on the consolidated balance sheets and statement of operations.

The level of investment activity for investments funded and principal repayments for our investments can vary substantially from period to period depending on the number and size of investments that we invest in or divest of, and many other factors, including the amount and competition for the debt and equity securities available to middle market companies, the level of merger and acquisition activity for such companies and the general economic environment.

The following table shows the Company’s portfolio by security type at ~~September 30, 2017~~March 31, 2024, and December 31, ~~2016:~~2023:

September 30, 2017 (unaudited) December 31, 2016
Security Type Cost/
Amortized Cost Fair Value %¹ Cost/
Amortized Cost Fair Value %¹
Short-term Investments² 57,024,828 $ 57,024,828 18 28,699,269 $ 28,699,269 8
Senior Secured Loan 49,982,415 46,124,914 15 207,701,078 200,322,152 55
Junior Secured Loan 59,490,855 58,343,554 18 37,251,776 35,444,440 10
Senior Unsecured Loan 20,000,000 20,000,000 6 - - -
First Lien Bond 3,054,337 1,063,762 - 3,060,919 1,089,338 -
Senior Secured Bond 1,503,404 1,494,600 - 1,506,461 1,487,400 -
CLO Fund Securities 78,544,739 51,843,344 16 76,851,317 54,174,350 15
Equity Securities 10,389,007 4,450,177 1 10,389,007 5,056,355 1
Asset Manager Affiliates³ 53,341,230 39,679,000 13 55,341,230 40,198,000 11
Joint Venture 36,738,873 36,591,122 13 - - -

Total $ 370,069,689 $ 316,615,300 100 % $ 420,801,057 $ 366,471,304 100 %



($ in thousands)	March 31, 2024 (Unaudited)							December 31, 2023
Security Type	Cost/Amortized Cost		Fair Value		%(¹)			Cost/Amortized Cost		Fair Value		%(¹)
Senior Secured Loan	$	364,981	$	349,844		74		$	356,358	$	340,159		73
Junior Secured Loan		52,951		36,270		8			53,888		38,875		8
Senior Unsecured Bond		-		-		-			416		43		0
Equity Securities		34,077		23,428		5			31,280		20,533		4
CLO Fund Securities		8,762		8,549		2			9,103		8,968		2
Asset Manager Affiliates(2)		17,791		-		-			17,791		-		-
Joint Ventures		65,008		53,164		11			71,415		59,287		13
Derivatives		31		-		-			31		-		-
Total	$	543,601	$	471,255		100	%	$	540,282	$	467,865		100	%

(1)

Represents percentage of total portfolio at fair value.

(2)

Represents the equity investment in the Asset Manager Affiliates.

~~Represents percentage of total portfolio at fair value.~~

~~Includes money market accounts and U.S. treasury bills.~~

~~Represents the equity investment in the Asset Manager Affiliates.~~

The ~~industry-related information,~~industry concentrations, based on the fair value of the Company’s investment portfolio as of ~~September 30, 2017~~March 31, 2024, and December 31, ~~2016, for our investment portfolio~~2023, were as follows:


($ in thousands)	March 31, 2024 (Unaudited)							December 31, 2023
Industry Classification	Cost/Amortized Cost		Fair Value		%(¹)			Cost/Amortized Cost		Fair Value		%(¹)
Aerospace and Defense	$	11,134	$	11,260		2		$	11,130	$	11,256		2
Alternative Carriers		-		-		-			971		937		0
Application Software		1,163		1,162		0			-		-		-
Asset Management Company(2)		17,791		-		-			17,791		-		-
Banking, Finance, Insurance & Real Estate		49,725		51,332		11			51,486		53,918		11
Beverage, Food and Tobacco		12,288		11,531		2			12,220		11,444		2
Capital Equipment		10,668		972		0			10,684		1,203		0
Chemicals, Plastics and Rubber		9,498		9,498		2			9,738		9,836		2
CLO Fund Securities		8,762		8,549		2			9,103		8,968		2
Construction & Building		7,718		7,481		2			7,737		7,441		2
Consumer goods: Durable		24,577		21,869		4			16,431		13,898		3
Containers, Packaging and Glass		2,733		2,673		1			2,734		2,665		1
Diversified Financial Services		2,699		2,696		1
Energy: Electricity		671		671		0			671		671		0
Energy: Oil & Gas		6,304		-		-			6,721		100		0
Finance		19,643		19,702		4			18,884		18,972		4
Healthcare & Pharmaceuticals		57,350		56,094		12			59,189		57,224		12
Healthcare, Education and Childcare		6,161		6,150		1			6,175		6,163		1
High Tech Industries		83,452		72,617		15			84,676		73,430		16
Hotel, Gaming & Leisure		8,353		4,034		1			8,358		3,948		1
Interactive Media & Services		2,625		2,639		1			2,663		2,662		1
IT Consulting & Other Services		2,213		2,267		1			2,213		2,259		1
Joint Venture		65,008		53,164		11			71,415		59,287		13
Machinery (Non-Agrclt/Constr/Electr)		11,378		11,975		2			9,836		10,097		2
Media: Broadcasting & Subscription		17,094		14,044		3			16,665		14,618		3
Media: Diversified & Production		748		750		0			1,121		1,125		0
Metals & Mining		9,500		8,051		2			9,000		7,742		2
Retail		9,510		9,029		2			9,334		8,732		2
Services: Business		61,116		59,607		13			58,997		57,168		12
Telecommunications		5,305		4,637		1			5,268		4,389		1
Transportation: Cargo		10,962		9,416		2			11,606		10,303		2
Transportation: Consumer		7,452		7,385		2			7,465		7,409		2
Total	$	543,601	$	471,255		100	%	$	540,282	$	467,865		100	%

(1)

Calculated as a percentage of total portfolio at fair value.

(2)

Represents the equity investment in the Asset Manager Affiliates.

September 30, 2017 (unaudited) December 31, 2016
Industry Classification Cost/
Amortized Cost Fair Value %¹ Cost/
Amortized Cost Fair Value %
Aerospace and Defense $ 4,929,171 $ 3,268,788 1 % $ 8,394,633 $ 8,450,106 2 %
Asset Management Company² 53,341,230 39,679,000 13 55,341,230 40,198,000 11
Automotive - - - 6,322,551 6,196,154 2
Banking, Finance, Insurance & Real Estate 3,466,776 3,443,506 1 6,805,514 6,782,010 2
Beverage, Food and Tobacco 4,512,854 4,346,400 1 15,198,830 14,703,372 4
Capital Equipment 5,455,586 4,744,140 1 6,185,129 5,575,048 2
Chemicals, Plastics and Rubber - - - 6,421,909 6,444,073 2
CLO Fund Securities 78,544,739 51,843,344 16 76,851,317 54,174,350 15
Construction & Building 1,007,336 1,007,423 - 5,919,158 5,929,606 2
Consumer goods: Durable 3,054,338 1,064,762 - 12,319,905 10,118,736 3
Consumer goods: Non-durable 732,896 734,613 - 14,766,390 14,452,096 4
Ecological - - - 1,741,292 1,760,783 -
Energy: Electricity - - - 3,904,453 3,937,247 1
Energy: Oil & Gas 13,929,048 10,575,738 3 14,493,835 8,805,761 2
Environmental Industries 6,922,952 6,156,451 2 12,279,924 12,185,239 3
Forest Products & Paper 1,557,040 1,600,960 1 4,192,889 4,192,907 1
Healthcare & Pharmaceuticals 36,573,091 33,901,061 11 58,769,668 53,594,534 15
High Tech Industries 16,093,619 16,051,970 5 9,854,093 9,936,109 3
Hotel, Gaming & Leisure 400,000 1,000 - 400,000 1,000 -
Joint Venture 36,738,873 36,591,122 12 - - -
Media: Advertising, Printing & Publishing 3,869,962 3,875,038 1 11,712,682 11,453,447 3
Media: Broadcasting & Subscription - - - 8,273,174 8,372,984 2
Related Party Loans 20,000,000 20,000,000 6 - - -
Retail - - - 1,415,457 759,581 -
Services: Business 5,523,913 4,427,100 1 16,125,481 16,230,486 4
Services: Consumer - - - 6,212,108 6,204,889 2
Telecommunications 3,965,663 3,939,200 1 12,809,799 12,767,823 3
Textiles and Leather 7,948,833 7,847,841 3 - - -
Money Market Accounts 32,015,828 32,015,828 11 28,699,269 28,699,269 8
Transportation: Cargo 2,496,958 2,500,000 1 7,557,315 7,190,135 2
Transportation: Consumer - - - 2,412,614 2,324,516 1
U.S. Government Obligation 25,009,000 25,009,000 8 - -
Utilities: Electric 1,979,983 1,991,015 1 5,420,438 5,031,043 1

Total $ 370,069,689 $ 316,615,300 100 % $ 420,801,057 $ 366,471,304 100 %

~~Calculated as a percentage of total portfolio at fair value.~~

~~Represents the equity investment in the Asset Manager Affiliates.~~

Debt Securities Portfolio

At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016, our investments in income producing debt securities portfolio, excluding CLO Fund securities, had a~~2023, the weighted average contractual interest rate ~~of approximately 9.2% and 7.0%, respectively. For the nine months ended September 30, 2017, our total net asset value return per share was 1.3% and our total market return based~~ on our ~~stock price~~interest earning Debt Securities Portfolio was ~~0.7%. For the year ended December 31, 2016, our total net asset value return per share was 0.2%~~approximately 12.1% and ~~our total market return based on stock price was 12.3%. Total net asset value return per share and total market return based on stock price do not reflect the sales load paid by stockholders.~~12.5%, respectively.

The investment portfolio (excluding our investments in the ~~Company’s investment in Asset Manager Affiliates,~~ CLO ~~Fund Securities, the~~Funds, Joint ~~Venture,~~Ventures and ~~Short-term~~short-term investments) at ~~September 30, 2017~~March 31, 2024 was spread across 1929 different industries and 19103 different entities with an average par balance per entity of approximately ~~$5.3~~$3.1 million. As of ~~September 30, 2017, all but two~~March 31, 2024, seven of our ~~portfolio companies~~investments were ~~current~~ on ~~their debt service obligations.~~non-accrual status. As of December 31, 2023, seven of our investments were on non-accrual status.

We may invest up to 30% of our ~~total assets~~investment portfolio in ~~“Non-qualifying”~~“non-qualifying” opportunistic investments such as high-yield bonds, debt and equity securities of CLO Funds, foreign investments, joint ventures, managed funds, partnerships and distressed debt or equity securities of large cap public companies. At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, the total amount of non-qualifying assets ~~were~~to total assets was approximately ~~28%~~12.9% and ~~17%~~13.4% of ~~the~~ total ~~investment portfolio,~~assets, respectively. The majority of non-qualifying assets were ~~foreign~~the Company’s investments ~~which were~~in Joint Ventures, in the aggregate representing approximately ~~16%~~10.1% and ~~14%~~10.8%, of the ~~Company’s~~ total ~~investment portfolio,~~assets as of March 31, 2024 and December 31, 2023, respectively, ~~(including the Company’s~~and our total assets including our investments in CLO Funds, which are typically domiciled outside the U.S. ~~and~~, represented approximately ~~16%~~1.6% and ~~14%~~1.6% of ~~its~~ total assets on such dates, respectively). The investments in our Debt Securities Portfolio are all or predominantly below investment grade, and therefore have speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.respectively.

Asset Manager Affiliates

~~The~~As of March 31, 2024, our remaining asset management affiliates (the “Asset Manager Affiliates”) have limited operations and are expected to be liquidated. As of March 31, 2024, the Asset Manager Affiliates ~~are our wholly-owned asset management companies that~~ manage CLO Funds that invest in broadly syndicated loans, high yield bonds and other credit instruments. The CLO Funds managed by our Asset Manager Affiliates consist primarily of credit instruments issued by corporations. As of September 30, 2017 and December 31, 2016, our Asset Manager Affiliates had approximately $2.8 billion and $3.0 billion of par value respectively, of assets under management on which they earn management fees, and were valued at approximately $39.7 million and $40.2 million, respectively.

All CLO Funds managed by the Asset Manager Affiliates are currently paying all senior and subordinate management fees. In addition, in the nine months ended September 30, 2017 our Asset Manager Affiliates recognized $3.0 million of incentive fees from one fund.

CLO Fund Securities

We ~~typically make a~~have made minority ~~investment~~investments in the subordinated securities or preferred ~~stock~~shares of CLO Funds ~~raised and~~ managed by ~~our Asset~~the Disposed Manager Affiliates and may selectively invest in securities issued by CLO Funds managed by other asset management companies. As of ~~September 30, 2017, we had approximately $52 million invested in~~March 31, 2024 and December 31, 2023, the fair value of the CLO Fund Securities ~~issued primarily by funds managed by our Asset Manager Affiliates.~~was $8.5 million and $9.0 million, respectively.

The CLO Funds invest primarily in broadly syndicated non-investment grade loans, high-yield bonds and other credit instruments of corporate issuers. The underlying assets in each of the CLO Fund Securities in which we have an investment are generally diversified secured or unsecured corporate debt.

The structure of CLO Funds, which are highly levered, is extremely complicated. Since we primarily invest in securities representing the residual interests of CLO Funds, our investments are much riskier than the risk profile of the loans by which such CLO Funds are collateralized. Our investments in CLO Funds may be riskier and less transparent to us and our stockholders than direct investments in the underlying loans. For a more detailed discussion of the risks related to our investments in CLO Funds, please see “Risk Factors — Risks Related to Our Investments — Our investments may be risky, and you could lose all or part of your investment” included in our annual report on Form 10-K for the year ended December 31, 2023.

Our CLO Fund Securities as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016 are~~2023 were as follows:


($ in thousands)					March 31, 2024							December 31, 2023
CLO Fund Securities	Investment	Percentage Ownership(1)			Amortized Cost		Fair Value		Percentage Ownership(1)			Amortized Cost		Fair Value
Catamaran CLO 2014-1 Ltd.	Subordinated Notes		22.2	%	$	702	$	702		22.2	%	$	1,024	$	904
Catamaran CLO 2018-1 Ltd.	Subordinated Notes		24.8	%		3,846		3,757		24.8	%		3,923		3,923
Dryden 30 Senior Loan Fund	Subordinated Notes		6.8	%		246		246		6.8	%		424		409
JMP Credit Advisors CLO IV Ltd.	Subordinated Notes		57.2	%		715		668		57.2	%		683		683
JMP Credit Advisors CLO V Ltd.	Subordinated Notes		57.2	%		3,253		3,176		57.2	%		3,049		3,049
Total					$	8,762	$	8,549				$	9,103	$	8,968

(1)

September 30, 2017 December 31, 2016
CLO Fund Securities Investment %¹ Cost/Amortized
Cost Fair Value Cost/Amortized
Cost Fair Value
Grant Grove CLO, Ltd.³ Subordinated Securities 22.2 % $ 2,485,886 $ 1,000 $ 2,485,886 $ 1,000
Katonah III, Ltd.³ Preferred Shares 23.1 1,287,155 369,000 1,287,155 369,000
Katonah 2007-I CLO Ltd.² Preferred Shares 100.0 31,123,451 21,447,386 28,022,646 20,453,099
Trimaran CLO VII, Ltd.² Income Notes 10.5 379,830 10,000 1,643,920 1,195,152
Catamaran CLO 2012-1 Ltd.² Subordinated Notes 24.9 5,759,981 2,239,810 5,919,933 2,819,412
Catamaran CLO 2013-1 Ltd.² Subordinated Notes 23.5 4,786,050 3,806,100 5,237,222 4,918,807
Catamaran CLO 2014-1 Ltd.² Subordinated Notes 32.4 8,681,740 4,847,620 7,818,484 4,546,682
Catamaran CLO 2014-1 Ltd.² Class E Notes 15.1 1,451,386 1,520,000 1,441,727 1,310,000
Dryden 30 Senior Loan Fund Subordinated Notes 7.5 1,276,135 1,499,682 1,343,467 1,895,566
Catamaran CLO 2014-2 Ltd.² Subordinated Notes 24.9 6,699,877 4,484,009 6,967,560 5,092,087
Catamaran CLO 2015-1 Ltd.² Subordinated Notes 9.9 4,416,694 3,033,719 4,543,317 3,223,255
Catamaran CLO 2016-1 Ltd.² Subordinated Notes 24.9 10,196,554 8,585,018 10,140,000 8,350,290
Total $ 78,544,739 $ 51,843,344 $ 76,851,317 $ 54,174,350

¹ Represents percentage of class held ~~as of September 30, 2017.~~

at March 31, 2024 and December 31, 2023, respectively.

~~² A CLO Fund managed by an Asset Manager Affiliate.~~

~~³ As of September 30, 2017, this CLO Fund security was not providing a distribution.~~

Investment in Joint ~~Venture:~~Ventures

KCAP Freedom 3 LLC

During the third quarter of 2017, ~~the Company~~we and Freedom 3 Opportunities LLC (“Freedom 3 Opportunities”), an affiliate of Freedom 3 Capital LLC, entered into an agreement to create KCAP Freedom 3 LLC (the “F3C Joint Venture”). The fund capitalized by the F3C Joint Venture invests primarily in middle-market loans and the F3C Joint Venture partners may source middle-market loans from time-to-time for the fund.

We own a 62.8% economic interest in the F3C Joint Venture. The Company and Freedom 3 Opportunities contributed approximately $37 million and $25 million, respectively, in assets to the Joint Venture, which in turn used the assets to capitalize a new fund (the "Fund") managed by KCAP Management, LLC, one of the Company's Asset Manager Affiliates. In addition, the Fund used cash on hand and borrowings under a credit facility to purchase approximately $184 million of loans from the Company and the Company used the proceeds from such sale to redeem approximately $147 million in debt issued by KCAP Senior Funding. The Joint Venture may originate loans from time to time and sell them to the Fund.

~~The~~F3C Joint Venture is structured as an unconsolidated Delaware limited liability company. All portfolio and other material decisions regarding the F3C Joint Venture must be submitted to its board of managers, which is comprised of four members, two of whom were selected by ~~the Company~~us and two of whom were selected by Freedom 3 Opportunities, and must be approved by at least one member appointed by ~~the Company~~us and one appointed by Freedom 3 Opportunities. In addition, certain matters may be approved by the F3C Joint Venture’s investment committee, which is comprised of one member appointed by ~~the Company~~us and one member appointed by Freedom 3 Opportunities.

~~The Company has~~We have determined that the F3C Joint Venture is an investment company under Accounting Standards Codification (“ASC”), Financial Services — Investment Companies (“ASC ~~946,~~946”), however, in accordance with such guidance, ~~the Company~~we will generally not consolidate ~~its~~our investment in a company other than a wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to ~~the Company. Accordingly, the Company does~~us. We do not consolidate its ~~non-controlling~~ interest in the F3C Joint ~~Venture.~~

~~The following tables detail~~Venture because we do not control the ~~ten largest portfolio companies (at fair value) as of September 30, 2017 and December 31, 2016:~~

December 31, 2016
Investment Cost/Amortized Cost Fair Value % of FMV
Asset Manager Affiliates $ 55,341,230 $ 40,198,000 11 %
US Bank Money Market Account¹ 28,685,001 28,685,001 8
Katonah 2007-I CLO Ltd. 28,022,646 20,453,099 6
Grupo HIMA San Pablo, Inc. 9,828,619 9,113,125 2
Catamaran CLO 2016-1 Ltd. 10,140,000 8,350,290 2
Tank Partners Holdings, LLC 11,822,180 6,552,311 2
Roscoe Medical, Inc. 6,666,733 6,499,000 2
Weiman Products, LLC 5,462,647 5,321,809 1
Nielson & Bainbrige, LLC 5,326,136 5,199,447 1
Catamaran CLO 2014-2 Ltd. 6,967,560 5,092,087 1

Total $ 168,262,752 $ 135,464,169 36 %

~~Excluding the Asset Manager Affiliates and CLO Fund Securities, the Company’s ten largest portfolio companies represented approximately 49% and 13%~~F3C Joint Venture due to allocation of the ~~total~~voting rights among the F3C Joint Venture partners.

The fair value of the Company’s ~~investments~~investment in the F3C Joint Venture at ~~September 30, 2017 and~~March 31, 2024 was $13.5 million. The fair value of the Company’s investment in the F3C Joint Venture at December 31, ~~2016, respectively.~~2023 was $14.3 million.

Series A – Great Lakes Funding II LLC

In August 2022, we invested in Series A – Great Lakes Funding II LLC (the “Great Lakes II Joint Venture,” collectively with the F3C Joint Venture the “Joint Ventures”), a joint venture with an investment strategy to underwrite and hold senior, secured unitranche loans made to middle-market companies. We treat our investment in the Great Lakes II Joint Venture as a joint venture since an affiliate of the Adviser controls a 50% voting interest in the Great Lakes II Joint Venture. In connection with the launch of the Great Lakes II Joint Venture, we entered into a series of transactions pursuant to which our prior investment in BCP Great Lakes Holdings LP, a vehicle formed as a co-investment vehicle to facilitate the participation of certain co-investors to invest, directly or indirectly, in BCP Great Lakes Funding, LLC (the “Prior Great Lakes Joint Venture”), and the corresponding assets held by the Prior Great Lakes Joint Venture in respect of our investment in BCP Great Lakes Holdings LP, were transferred to the Great Lakes II Joint Venture in complete redemption of our investment in BCP Great Lakes Holdings LP.

The Great Lakes II Joint Venture is a Delaware series limited liability company, and pursuant to the terms of the Great Lakes Funding II LLC Limited Liability Company Agreement (the “Great Lakes II LLC Agreement”), prior to the end of the investment period with respect to each series established under the Great Lakes II LLC Agreement, each member of the predecessor series would be offered the opportunity to roll its interests into any subsequent series of the Great Lakes II Joint Venture. We do not pay any advisory fees in connection with our investment in the Great Lakes II Joint Venture. Certain other funds managed by the Adviser or its affiliates have also invested in the Great Lakes II Joint Venture.

The fair value of our investment in the Great Lakes II Joint Venture at March 31, 2024, was $39.6 million. The fair value of our investment in the Great Lakes II Joint Venture at December 31, 2023, was $45.0 million. Fair value has been determined utilizing the practical expedient pursuant to ASC 820-10. Pursuant to the terms of the Great Lakes II LLC Agreement, we generally may not effect any direct or indirect sale, transfer, assignment, hypothecation, pledge or other disposition of or encumbrance upon our interests in the Great Lakes II Joint Venture, except that we may sell or otherwise transfer our interests with the consent of the managing members of the Great Lakes II Joint Venture or to an affiliate or a successor to substantially all of our assets.

As of March 31, 2024, we have a $10.9 million unfunded commitment to the Great Lakes II Joint Venture. As of December 31, 2023, we had a $5.5 million unfunded commitment to the Great Lakes II Joint Venture.

RESULTS OF OPERATIONS

The principal measure of our financial performance is the net increase (decrease) in ~~stockholders’ equity~~net assets resulting from operations, which includes net investment income (loss) and net realized and unrealized appreciation (depreciation). Net investment income (loss) is the difference between our income from interest, distributions, fees, and other investment income and our operating expenses. Net realized gain (loss) on investments is the difference between the proceeds received from dispositions of portfolio investments and their amortized cost. Net change in unrealized appreciation (depreciation) on investments is the net change in the fair value of our investment portfolio.

Set forth below is a discussion of our results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016.~~2023.

Revenue


	For the Three Months Ended March 31,
($ in thousands)	2024		2023
INVESTMENT INCOME
Interest income:
Non-controlled/non-affiliated investments	$	12,621	$	14,846
Non-controlled affiliated investments		95		849
Total interest income	$	12,716	$	15,695
Payment-in-kind income:
Non-controlled/non-affiliated investments	$	1,894	$	1,527
Non-controlled affiliated investments		112		73
Total payment-in-kind income	$	2,006	$	1,600
Dividend income:
Non-controlled affiliated investments	$	1,653	$	1,384
Controlled affiliated investments		-		1,075
Total dividend income	$	1,653	$	2,459
Fees and other income
Non-controlled/non-affiliated investments	$	151	$	573
Total fees and other income	$	151	$	573
Total investment income	$	16,526	$	20,327

~~Revenue~~

Revenues consist primarily of investment income from interest and dividends on our investment portfolio and various ancillary fees related to our investment holdings. Investment income for the three months ended March 31, 2024 and 2023 was approximately $16.5 million and 20.3 million, respectively.

Interest from Investments in Debt Securities. We generate interest income from our investments in debt securities that consist primarily of senior and junior secured loans. Our Debt Securities Portfolio is spread across multiple industries and geographic locations and, as such, we are broadly exposed to market conditions and business environments. As a result, although our investments are exposed to market risks, we continuously seek to limit concentration of exposure in any particular sector or issuer.

The majority of investment income is attributable to interest income on our Debt Securities Portfolio. For the three months ended March 31, 2024 and 2023, approximately $14.2 million and $16.7 million, respectively, of investment income was attributable to interest income on our Debt Securities Portfolio.

At March 31, 2024 and December 31, 2023, the weighted average contractual interest rate on our interest earning Debt Securities Portfolio was approximately 12.1% and 12.5%, respectively.

Investment income is primarily dependent on the composition and credit quality of our investment portfolio. Generally, our Debt Securities Portfolio is expected to generate predictable, recurring interest income in accordance with the contractual terms of each loan. Corporate equity securities may pay a dividend and may increase in value for which a gain may be recognized; generally, such dividend payments and gains are less predictable than interest income on our loan portfolio.

Investment income is comprised of coupon interest, accretion of discount and accelerated accretion resulting from paydowns and other revenue earned from operations. Recent acquisitions of GARS (October 2020) and HCAP (June 2021) have had a significant positive impact on earnings as a result of amortization of purchase discount established at the time of the merger. The table below illustrates that impact.

For the Three Months Ended March 31,

($ in thousands)

2024

2023

Interest from investments in debt excluding accretion

$
12,088

$
14,105

Purchase discount accounting

73

1,042

PIK Investment Income

2,006

1,600

CLO Income

555

548

JV Income

1,653

2,459

Service Fees

151

573

Investment Income

$
16,526

$
20,327

Less : Purchase discount accounting

$
(73
)
$
(1,042
)

Core Investment Income

$
16,453

$
19,285

Core investment income excludes the impact of purchase discount amortization in connection with the GARS and HCAP mergers which is investment income as determined in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), excluding the impact of purchase discount amortization associated with the GARS and HCAP mergers. We believe presenting investment income excluding the impact of the GARS and HCAP merger-related purchase discount amortization and the related per share amount is useful and appropriate supplemental disclosure for analyzing our financial performance due to the unique circumstance giving rise to the purchase accounting adjustment. However, this measure is a non-U.S. GAAP measure and should not be considered as a replacement for net investment income and other earnings measures presented in accordance with U.S. GAAP. Instead, this measure should be reviewed only in connection with such U.S. GAAP measures in analyzing Portman Ridge’s financial performance. A reconciliation of net investment income in accordance with U.S. GAAP to net investment income excluding the impact of purchase accounting is detailed in the table above.

Investment Income on Investments in CLO Fund Securities. For the three months ended March 31, 2024 and 2023, approximately $0.6 million and $0.5 million, respectively, of investment income was attributable to investments in CLO Fund Securities. We generate investment income from our investments in the securities (typically preferred shares or subordinated securities) of CLO ~~Funds managed by our Asset Manager Affiliates and select investments in securities issued by~~Funds. CLO Funds ~~managed by other asset management companies. CLO Funds managed by our Asset Manager Affiliates and those managed by non-affiliates~~ invest primarily in broadly syndicated non-investment grade loans, high-yield bonds and other credit instruments of corporate issuers. ~~The Company distinguishes CLO Funds managed by its Asset Manager Affiliates as “CLO Fund Securities Managed by Affiliates”, in its financial consolidated statements.~~ The underlying assets in each of the CLO Funds in which we have an investment are generally diversified secured or unsecured corporate debt. Our CLO Fund Securities that are subordinated securities or preferred shares (“junior securities”) are subordinated to senior note holders who typically receive a return on their investment at a fixed spread relative to the ~~LIBOR~~SOFR index. The CLO Funds are leveraged funds and any excess cash flow or “excess spread” (interest earned by the underlying securities in the fund less payments made to senior bond holders and less fund expenses and management fees) is paid to the holders of the CLO Fund’s subordinated securities or preferred shares. The level of excess spread from CLO Fund Securities can be impacted by the timing and level of the resetting of the benchmark interest rate for the underlying assets (which reset at various times throughout the quarter) in the CLO Fund and the related CLO Fund note liabilities (which reset at each quarterly distribution date); in periods of short-term and volatile changes in the benchmark interest rate, the levels of excess spread and resulting cash distributions to us can vary significantly.

Interest income on investments in CLO equity investments is recorded using the effective interest method in accordance with the provisions of ASC 325-40, Beneficial Interests in Securitized Financial Assets (“ASC 325-40”), based on the anticipated yield and the estimated cash flows over the projected life of the investment. Yields are revised when there are changes in actual or estimated projected future cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing. Changes in estimated yield are recognized as an adjustment to the estimated yield prospectively over the remaining life of the investment from the date the estimated yield was changed. Accordingly, investment income recognized on CLO equity securities in ~~the GAAP~~our U.S. generally accepted accounting principles (“GAAP”) statement of operations differs from both the tax–basis investment income and from the cash distributions actually received by ~~the Company~~us during the period. As a RIC, ~~the Company anticipates~~we anticipate a timely distribution of ~~its~~our tax-basis taxable income.

~~For non-junior class CLO Fund Securities, such as our investment~~Investments in ~~the Class E notes of Catamaran CLO 2014-1 Ltd, interest is earned at a fixed spread relative to the LIBOR index.~~

~~Distributions from Asset Manager Affiliates.~~ We receive cash distributions from our investment in our Asset Manager Affiliates, which are wholly-owned and manage CLO Funds that invest primarily in broadly syndicated non-investment grade loans, high yield bonds and other credit instruments issued by corporations. As managers of CLO Funds, our Asset Manager Affiliates receive contractual and recurring management fees from the CLO Funds for their management and advisory services. In addition, our Asset Manager Affiliates may also earn income related to net interest on assets accumulated for future CLO issuances on which they have taken a first loss position in connection with loan warehouse arrangements for their CLO Funds. The annual management fees that our Asset Manager Affiliates receive are generally based on a fixed percentage of the par value of assets under management and are recurring in nature for the term of the CLO Fund so long as the Asset Manager Affiliates manage the fund. As a result, the annual management fees earned by our Asset Manager Affiliates generally are not subject to market value fluctuations in the underlying collateral. Our Asset Manager Affiliates may receive incentive fees provided such CLO Funds have achieved a minimum investment return to holders of their subordinated securities or preferred shares as per the terms of each CLO Fund management agreement. During the three and nine months ended September 30, 2017, the Asset Manager Affiliates received incentive fees from one fund.

The Asset Manager Affiliates are expected to pay future distributions to the Company based upon their after-tax free cash flow, which generally will be dependent upon the maintenance and growth in their assets under management and incentive fees. As a result of tax-basis goodwill amortization and certain other tax-related adjustments, portions of distributions received may be deemed return of capital. As amortizing funds which are paying incentive fees are redeemed, we expect incentive fees available for distribution to diminish. The fair value of our investment in our Asset Manager Affiliates was approximately $39.7 million at September 30, 2017, with an unrealized gain during the nine months ended September 30, 2017 of approximately $1.5 million. Joint Ventures. For the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, we recognized dividend income of approximately $180,000 and $0 from the Asset Manager Affiliates, respectively, while cash distributions received were $880,000 and $750,000 for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, we recognized dividend income of approximately $180,000 and $1.4 million from the Asset Manager Affiliates, respectively, while cash distributions received were approximately $2.2$1.7 million and ~~$2.7~~$2.5 million, ~~for~~respectively, in investment income from our investments in Joint Ventures. As of March 31, 2024, and December 31, 2023, the ~~three months ended September 30, 2017~~fair value of our investments in Joint Ventures was approximately $53.2 million and ~~2016,~~$59.3 million, respectively. The difference between cash distributions received and the tax-basis earnings and profits is recorded as an adjustment to the cost basis of the Asset Manager Affiliates investments. For interim periods, the Company estimates the tax attributes of any distributions as being either tax-basis earnings and profits (i.e., dividend income) or return of capital (i.e., adjustment to the Company’s cost basis in the Asset Manager Affiliates). The final determination of the tax attributes of distributions from ~~our Asset Manager Affiliates~~Joint Ventures is made on an annual (full calendar year) basis at the end of the year based upon taxable income and distributions for the ~~full-year.~~full year. Therefore, any estimate of tax attributes of distributions made on ~~a quarterly~~an interim basis may not be representative of the actual tax attributes of distributions for athe full year. CLO Funds typically have automatic orderly wind-down features following an initial period of reinvestment. Thus, with all else being equal, as managed CLO Fund portfolios age, projected future assets under management (and associated management fees) will naturally decline, resulting in a reduction in fair value of our Asset Manager Affiliates. On the other hand, mandates to manage new CLO Fund portfolios will generally result in an increase in the fair value of our investment in our Asset Manager Affiliates. The aggregate of par value of assets under management by our Asset Manager Affiliates was $2.8 billion and $3.0 billion as of September 30, 2017 and December 31, 2016, respectively.

~~Investment in Joint Venture.~~ For the three months ended September 30, 2017, the Company recognized $685,000 in investment income from its investment in the Joint Venture. As of September 30, 2017, the fair value of the Company’s investment in Joint venture was $36.6 million.

Capital Structuring Service Fees. We may earn ancillary structuring and other fees related to the origination, investment, disposition or liquidation of debt and investment securities.

~~Investment Income~~

Investment income for the three months ended September 30, 2017 and 2016 was approximately $6.3 million and $9.0 million, respectively. Of these amounts, approximately $2.4 million and $5.2 million was attributable to interest income on our Debt Securities Portfolio.

Investment income for the nine months ended September 30, 2017 and 2016 was approximately $21.7 million and $28.1 million, respectively. Of these amounts, approximately $11.8 million and $16.1 million was attributable to interest income on our Debt Securities Portfolio.

The weighted average interest rate on our income producing Debt Securities Portfolio was 9.2% and 7.0% as of September 30, 2017 and December 31, 2016, respectively. For the nine months ended September 30, 2017, our total net asset value return per share was 1.3% and our total market return based on stock price was 0.7%. For the nine months ended September 30, 2016, our total net asset value return per share was 0.2% and our total market return based on stock price was 24.8%. Total net asset value return per share and total market return based on stock price do not reflect the sales load paid by stockholders.

Investment income is primarily dependent on the composition and credit quality of our investment portfolio. Generally, our Debt Securities Portfolio is expected to generate predictable, recurring interest income in accordance with the contractual terms of each loan. Corporate equity securities may pay a dividend and may increase in value for which a gain may be recognized; generally such dividend payments and gains are less predictable than interest income on our loan portfolio.

For the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, approximately ~~$2.8~~$0.2 million and ~~$3.5~~$0.6 million, respectively, of investment income was attributable to ~~investments~~Capital Structuring Fees.

Expenses


	For the Three Months Ended March 31,
($ in thousands)	2024		2023
EXPENSES
Management fees	$	1,729	$	1,953
Performance-based incentive fees		1,234		1,808
Interest and amortization of debt issuance costs		5,725		6,332
Professional fees		766		603
Administrative services expense		356		671
Other general and administrative expenses		490		431
Total expenses	$	10,300	$	11,798

In connection with the Advisory Agreement, we pay the Adviser certain investment advisory fees and reimburse the Adviser and Administrator for certain expenses incurred in ~~CLO Fund Securities. For~~connection with the nine months ended September 30, 2017 and 2016, approximately $8.7 million and $10.1 million, respectively, of investment income was attributable to investments in CLO Fund Securities. On a tax-basis, the Company recognized $2.3 million and $7.0 million of taxable distributable income on distributions fromservices they provide. We bear our ~~CLO Fund Securities during the three and nine months ended September 30, 2017, respectively. Distributions from CLO Fund Securities are dependent on the performance~~allocable portion of the underlying assets in each CLO Fund; interest payments, principal amortization and prepayments of the underlying loans in each CLO Fund are primary factors which determine the level of distributions on our CLO Fund Securities. The level of excess spread from CLO Fund Securities can be impactedcompensation paid by the ~~timing~~Adviser (or its affiliates) to our chief compliance officer and ~~level~~chief financial officer and their respective staffs (based on a percentage of time such individuals devote, on an estimated basis, to our business affairs). We also bear all other costs and expenses of our operations, administration and transactions, including, but not limited to (i) investment advisory fees, including management fees and incentive fees, to the ~~resetting~~Adviser, pursuant to the Advisory Agreement; (ii) our allocable portion of overhead and other expenses incurred by the ~~benchmark interest rate for~~Adviser (or its affiliates) in performing its administrative obligations under the ~~underlying assets (which reset at various times throughout the quarter) in the CLO Fund~~Advisory Agreement, and ~~the related CLO Fund bond liabilities (which reset at each quarterly distribution date); in periods~~(iii) all other expenses of ~~short-term~~our operations and ~~volatile changes in the benchmark interest rate, the levels of excess spread and distributions to us can vary significantly.~~transactions including, without limitation, those relating to:

~~Expenses~~

~~Because we are internally managed, we directly incur~~

•

the cost of ~~management~~calculating our net asset value, including the cost of any third-party valuation services;

•

the cost of effecting any sales and ~~operations. As a result, we pay no investment management~~ repurchases of our common stock and other securities;

•

fees and expenses payable under any dealer manager or placement agent agreements, if any;

•

administration fees payable under the Administration Agreement and any sub-administration agreements, including related expenses;

•

debt service and other costs of borrowings or other ~~fees to an external advisor. Our expenses consist primarily~~financing arrangements;

•

costs of ~~interest expense on outstanding borrowings, compensation expense and general and administrative~~ hedging;

•

expenses, including ~~professional fees. Interest~~travel expense, incurred by the Adviser, or members of the investment team, or payable to third parties, performing due diligence on prospective portfolio companies and, if necessary, enforcing our rights;

•

transfer agent and custodial fees;

•

fees and expenses associated with marketing efforts;

•

federal and state registration fees, any stock exchange listing fees and fees payable to rating agencies;

•

federal, state and local taxes;

•

independent directors’ fees and expenses including certain travel expenses;

•

costs of preparing financial statements and maintaining books and records and filing reports or other documents with the SEC (or other regulatory bodies) and other reporting and compliance costs, including registration and listing fees, and the compensation ~~expense are typically~~of professionals responsible for the preparation of the foregoing;

•

commissions and other compensation payable to brokers or dealers;

•

research and market data;

•

fidelity bond, directors and officers errors and omissions liability insurance and other insurance premiums;

•

direct costs and expenses of administration, including printing, mailing, long distance telephone and staff;

•

fees and expenses associated with independent audits, outside legal and consulting costs;

•

costs of winding up our ~~largest~~affairs;

•

costs incurred by either the Administrator or us in connection with administering our business, including payments under the Administration Agreement;

•

extraordinary expenses ~~each period.~~(such as litigation or indemnification); and

•

costs associated with reporting and compliance obligations under the 1940 Act and applicable federal and state securities laws.

Management Fees and Incentive Fees. Management fees for the three months ended March 31, 2024 and 2023 were approximately $1.7 million and $2.0 million, respectively. Incentive fees for the three months ended March 31, 2024 and 2023 were approximately $1.2 million and $1.8 million, respectively.

Interest and Amortization of Debt Issuance Costs. Interest expense is dependent on the average outstanding balance on our borrowings and the base index rate for the period. Debt issuance costs represent fees and other direct costs incurred in connection with ~~the Company’s~~our borrowings. These amounts are capitalized and amortized ~~ratably~~ over the expected term of the borrowing. For the three months ended March 31, 2024 and 2023, interest expense and amortization on debt issuance costs and discount for the period was approximately $5.7 million and $6.3 million, respectively, on average debt outstanding of $310.5 million and $364.6 million, respectively

~~Compensation Expense~~. Compensation expense includes base salaries, bonuses, stock compensation, employee benefits and employer-related payroll costs. The largest components of total compensation costs are base salaries and bonuses; generally, base salaries are expensed as incurred and annual bonus expenses are estimated and accrued. Our compensation arrangements with our employees contain a profit sharing and/or performance based bonus component. Therefore, as our net revenues increase, our compensation costs may also rise. In addition, our compensation expenses may also increase to reflect increased investment in personnel as we grow our products and businesses.

Professional Fees and General and Administrative ~~Expenses~~. Expenses. The balance of our expenses includes professional fees (primarily legal, accounting, director fees, valuation and other professional services), ~~occupancy~~insurance costs, Administrative services expense under the Administration Agreement and general administrative and other costs.

Total expenses for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023 were approximately ~~$3.7~~$10.3 million and ~~$4.5~~$11.8 million, respectively. ~~Interest expense and amortization on debt issuance costs~~The decrease in total expenses for the ~~periods, were approximately $1.4 million and $2.1 million, respectively, on average debt outstanding of $34 million and $186 million, respectively.~~three months ended March 31, 2024, in comparison to the prior year was primarily driven by the decrease in assets under management.

For the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, professional fees totaled approximately ~~$1.1~~$0.8 million and ~~$1.2~~$0.6 million, ~~respectively, of expenses were attributable to employee compensation, including salaries, bonuses, employee benefits, payroll taxes and stock-based compensation expense.~~ respectively.

For the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016, respectively, professional fees~~2023, administrative services expense was approximately $0.4 million and ~~insurance~~$0.7 million, respectively.

Other general and administrative expenses, ~~totaled approximately $883,000 and $802,000. Administrative costs,~~ which ~~include occupancy expense,~~includes insurance, technology and other office and administrative expenses, totaled approximately ~~$396,000~~$0.5 million and ~~$372,000~~$0.4 million for the three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016,~~2023, respectively.

Total expenses for the nine months ended September 30, 2017 and 2016 were approximately $13.3 million and $13.7 million, respectively. Interest expense and amortization on debt issuance costs for the periods, were approximately $5.8 million and $7.0 million, respectively, on average debt outstanding of $131 million and $193 million, respectively.

For the nine months ended September 30, 2017 and 2016, approximately $3.5 million and $3.2 million, respectively, of expenses were attributable to employee compensation, including salaries, bonuses, employee benefits, payroll taxes and stock-based compensation expense. For the nine months ended September 30, 2017 and 2016, respectively, professional fees and insurance expenses totaled approximately $2.8 million and $2.2 million. Administrative costs, which include occupancy expense, technology and other office expenses, totaled approximately $1.3 million and $1.3 million for the nine months ended September 30, 2017 and 2016, respectively.

Net Investment Income and Net Realized Gains (Losses)

Net investment income and net realized gains (losses) on investments represents the change in net assets before net change in ~~stockholder’s equity before net~~ unrealized appreciation or depreciation on investments. For the three months ended ~~September 30, 2017, net investment income and net realized losses were approximately $623,000, or $0.02 per share. For the three months ended September 30, 2016,~~March 31, 2024, net investment income and net realized gains (losses) on investments were approximately ~~$9.2~~$4.2 million, or ~~$0.25~~$0.45 per basic and diluted share. For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023, net investment income and net realized ~~losses~~gains (losses) on investments were approximately ~~$5.5~~$5.4 million, or ~~$0.15~~$0.57 per ~~share. For the nine months ended September 30, 2016, net investment income~~basic and ~~net realized losses were approximately $8.3 million or $0.22 per~~diluted share. Net investment income represents the income earned on our investments less operating and interest expense before net realized gains or losses on investments and change in unrealized appreciation or depreciation on investments. ~~On February 29, 2016, Katonah X CLO Ltd. was fully liquidated and all of its outstanding obligations were satisfied. The Company received approximately $1.0 million~~

Investments are carried at fair value, with changes in ~~connection therewith related to its investment~~fair value recorded as unrealized appreciation (depreciation) in the ~~subordinated securities issued by Katonah X CLO Ltd. Accordingly, the Company recorded a realized loss during the first quarter~~statement of ~~2016 of approximately $6.6 million on its~~operations. When an investment ~~in Katonah X CLO Ltd.~~is sold or liquidated, any previously recognized unrealized appreciation/depreciation is reversed and a corresponding ~~unrealized~~amount is recognized as realized gain ~~of the same amount in order to reverse the approximately $6.6 million of previously recorded unrealized depreciation with respect to the investment.~~(loss). For the three months ended ~~September 30, 2017 and 2016,~~March 31, 2024, GAAP-basis net investment income was approximately ~~$2.5~~$6.2 million, or ~~$0.07~~$0.67 per ~~share,~~basic and ~~$4.5 million or $0.12 per~~diluted share, ~~respectively,~~ while tax-basis distributable income was approximately ~~$2.3~~$6.8 million, or ~~$0.07~~$0.73 per ~~share~~basic and ~~$4.6 million or $0.12 per share, respectively.~~diluted share. For the ~~nine~~three months ended ~~September 30, 2017 and 2016,~~March 31, 2023, GAAP-basis net investment income was approximately ~~$8.4~~$8.5 million, or ~~$0.23~~$0.89 per ~~share,~~basic and ~~$14.4 million or $0.39 per~~diluted share, ~~respectively,~~ while tax-basis distributable income was approximately ~~$6.9~~$7.0 million, or ~~$0.19~~$0.74 per ~~share~~basic and ~~$14.9 million or $0.40 per share, respectively.~~diluted share.

Net Unrealized (Depreciation) Appreciation on Investments


	For the Three Months Ended March 31,
($ in thousands)	2024			2023
Unrealized Gains (Losses) On Investments:
Net change in unrealized appreciation (depreciation) on:
Non-controlled/non-affiliated investments	$	(659	)	$	(3,057	)
Non-controlled affiliated investments		140			(311	)
Controlled affiliated investments		590			(2,592	)
Total net change in unrealized gain (loss) from investment transactions	$	71		$	(5,960	)

During the three months ended ~~September 30, 2017,~~March 31, 2024, our total investments had net change in unrealized appreciation (depreciation) of approximately ~~$2.7~~$0.1 million. The net change in unrealized appreciation (depreciation) on investments is made up of approximately ($0.1) million on CLO Fund Securities, $0.1 million on equity securities, $0.3 million on our Joint Ventures investments, and ($0.2) million on our debt securities. During the three months ended ~~September 30, 2016,~~March 31, 2023, our total investments had net change in unrealized ~~depreciation~~appreciation (depreciation) of approximately ~~$6.4~~($6.0) million. ~~For the three months ended September 30, 2017, our Asset Manager Affiliates had~~The net change in unrealized appreciation (depreciation) on investments was made up of approximately $2.9 million. For the three months ended September 30, 2016, our Asset Manager Affiliates had net unrealized depreciation of approximately $1.1 million. For the three months ended September 30, 2017, our portfolio of debt securities and equity securities had net unrealized appreciation of approximately $1.6$2.6 million ~~compared with net unrealized depreciation of $4.1 million during the third quarter of 2016. For the three months ended September 30, 2017, our~~on CLO Fund Securities, ~~had net unrealized depreciation of approximately $1.6~~($2.1) million compared with net unrealized depreciation of $1.1 million during the third quarter of 2016. For the three months ended September 30, 2017, our investment in the Joint Venture had net unrealized depreciation of $147,000.

During the nine months ended September 30, 2017, our total investments had net unrealized appreciation of approximately $875,000. During the nine months ended September 30, 2016, our total investments had net unrealized depreciation of approximately $9.3 million. For the nine months ended September 30, 2017, our Asset Manager Affiliates had net unrealized appreciation of approximately $1.5 million. For the nine months ended September 30, 2016, our Asset Manager Affiliates had net unrealized depreciation of approximately $12.7 million. For the nine months ended September 30, 2017, our portfolio of debt securities andon equity securities, ~~had net unrealized appreciation of approximately $3.6~~($2.8) million ~~compared with net unrealized depreciation of $2.4~~on our Joint Ventures investments, and ($3.7) million ~~during the nine months ended September 30, 2016. For the nine months ended September 30, 2017,~~on our CLO Fund Securities had net unrealized depreciation of approximately $4.0 million compared with net unrealized appreciation of $5.8 million during the nine months ended September 30, 2016. For the nine months ended September 30, 2017, our investment in the Joint Venture had net unrealized depreciation of $147,000.debt securities.

Net Change in ~~Stockholder’s Equity~~Net Assets Resulting From Operations

The net ~~decrease~~increase (decrease) in ~~stockholders’ equity~~net assets resulting from operations for the three months ended ~~September 30, 2017~~March 31, 2024, was ~~$669,000,~~$4.5 million, or ~~$0.02~~$0.48 per basic and diluted share. ~~Net decrease~~The net increase (decrease) in ~~stockholders’ equity~~net assets resulting from operations for the three months ended ~~September 30, 2016~~March 31, 2023, was ~~$2.7~~$0.1 million, or ~~$0.07~~$0.01 per basic and diluted share.

The net increase in stockholders’ equity resulting from operations for the nine months ended September 30, 2017 was $2.2 million, or $0.08 per share. Net decrease in stockholders’ equity resulting from operations for the nine months ended September 30, 2016 was $1.1 million, or $0.03) per share.

FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings, fund and maintain investments, pay distributions to our stockholders and other general business needs. We recognize the need to have funds available for operating our business and to make investments. We seek to have adequate liquidity at all times to cover normal cyclical swings in funding availability and to allow us to meet irregular and unexpected funding requirements. We plan to satisfy our liquidity needs through normal operations with the goal of avoiding unplanned sales of assets or emergency borrowing of funds.

As of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016~~2023 the fair value of investments and cash were as follows:


($ in thousands)
Security Type	March 31, 2024		December 31, 2023
Cash and cash equivalents	$	20,829	$	26,912
Restricted Cash		18,775		44,652
Senior Secured Loan		349,844		340,159
Junior Secured Loan		36,270		38,875
Senior Unsecured Bond		-		43
Equity Securities		23,428		20,533
CLO Fund Securities		8,549		8,968
Asset Manager Affiliates		-		-
Joint Ventures		53,164		59,287
Derivatives		-		-
Total	$	510,859	$	539,429

Subject to market conditions, we intend to grow our portfolio of assets by raising additional capital, including through the prudent use of leverage available to us. As a BDC, we are limited in the amount of leverage we can incur under the 1940 Act. Effective March 29, 2019, we are allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act, equals at least 150% after such borrowing. Because we also recognize the need to have funds available for operating our business and to make investments, we seek to have adequate liquidity at all times to cover normal cyclical swings in funding availability and to allow us to meet abnormal and unexpected funding requirements. As a result, we may hold varying amounts of cash and other short-term investments from time-to-time for liquidity purposes.

Investments at Fair Value
Security Type September 30, 2017 December 31, 2016

Cash $ 1,186,838 $ 1,307,257
Restricted Cash — 8,528,298
Short-term Investments 57,024,828 28,699,269
Senior Secured Loan 46,124,913 200,322,152
Junior Secured Loan 58,343,554 35,444,440
Senior Unsecured Loan 20,000,000 —
First Lien Bond 1,063,762 1,089,338
Senior Secured Bond 1,494,600 1,487,400
CLO Fund Securities 51,843,344 54,174,350
Equity Securities 4,450,177 5,056,355
Asset Manager Affiliates 39,679,000 40,198,000
Joint Venture 36,591,122 —

Total $ 317,802,138 $ 376,306,859

Borrowings

We use borrowed funds, known as “leverage,” to make investments and to attempt to increase returns to our shareholders by reducing our overall cost of capital. As a BDC, we are limited in the amount of leverage we can incur under the 1940 Act. We are only allowed to borrow amounts such that our asset coverage, as defined in the 1940 Act, equals at least ~~200%~~150% after such borrowing. As of ~~September 30, 2017,~~March 31, 2024, we had approximately ~~$104.4~~$291.7 million of par value of outstanding borrowings and our asset coverage ratio of total assets to total borrowings was ~~274%~~171%, compliant with the minimum asset coverage level of ~~200%~~150% generally required for a BDC by the 1940 Act. We may also borrow amounts of up to 5% of the value of our total assets for temporary purposes.

The Small Business Credit Availability Act (the “SBCA”) 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. On March ~~15, 2016,~~29, 2018, the ~~Convertible~~Board, including a “required majority” (as such term is defined in Section 57(o) of the 1940 Act) of its Board, approved the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act, as amended by the SBCA. As a result, our asset coverage requirements for senior securities changed from 200% to 150%, effective as of March 29, 2019.

Outstanding Notes ~~matured and were repaid in full.~~

~~On October 10, 2012,~~During the ~~Company~~second quarter of 2021, we issued ~~$41.4~~$108.0 million in aggregate principal amount of ~~unsecured 7.375%~~our 4.875% Notes ~~Due 2019 (“the 7.375 Notes Due 2019”).~~due 2026. The net proceeds for the ~~7.375%~~4.875% Notes ~~Due 2019, following~~due 2026, after the payment of underwriting expenses, were approximately ~~$39.9~~$104.6 million. Interest on the ~~7.375%~~4.875% Notes ~~Due 2019~~due 2026 is paid ~~quarterly in arrears~~semi-annually on March ~~30, June 30,~~16 and September ~~30 and December 30,~~16, at a rate of ~~7.375%,~~4.875% commencing ~~December 30, 2012.~~September 16, 2021. The ~~7.375%~~4.875% Notes ~~Due 2019~~due 2026 mature on ~~September~~April 30, ~~2019,~~2026 and are ~~senior~~general unsecured obligations of the Company. In addition, due to the coverage test applicable to the Company as a BDC and a covenant that the Company agreed to in connection with the issuance of the 7.375% Notes Due 2019, the Company is limited in its ability to make distributions if its asset coverage, as defined in the 1940 Act, is below 200% at the time of the declaration of the distribution. At September 30, 2017, the Company was in compliance with all of its debt covenants.obligations. The indenture governing the ~~7.375%~~4.875% Notes Due ~~2019~~2026 contains certain restrictive covenants, including compliance with certain provisions of the 1940 Act relating to borrowing and dividends. ~~During~~At March 31, 2024, there was approximately $108.0 million of principal amount outstanding, and we were in compliance with all of our debt covenants on the ~~second quarter~~4.875% Notes due 2026.

Revolving Credit Facility

On December 18, 2019, Great Lakes Portman Ridge Funding LLC (“GLPRF LLC”), a wholly-owned subsidiary of ~~2016,~~ the Company, ~~repurchased~~entered into a senior secured revolving credit facility (the “Revolving Credit Facility”) with JPMorgan Chase Bank, National Association (“JPM”). JPM serves as administrative agent, U.S. Bank National Association serves as collateral agent, securities intermediary and collateral administrator, and the Company serves as portfolio manager under the Revolving Credit Facility.

Advances under the Revolving Credit Facility bear interest at a per annum rate equal to the three-month SOFR in effect, plus the applicable margin of 2.85% per annum. GLPRF LLC is required to utilize a minimum of 80% of the commitments under the Revolving Credit Facility, after an initial six-month ramp-up period during which a lesser minimum utilization requirement applies. Unused amounts below such minimum utilization amount accrue interest as if such amounts are outstanding as borrowings under the Revolving Credit Facility. In addition, GLPRF LLC will pay a non-usage fee during the first three years after the closing date in an amount not to exceed 0.50% per annum on the average daily unborrowed portion of the financing commitments in excess of such minimum utilization amount.

The initial principal amount of the Revolving Credit Facility is $115 million. The Revolving Credit Facility has an accordion feature, subject to the satisfaction of various conditions, which could bring total commitments under the Revolving Credit Facility to up to $215 million. Proceeds from borrowings under the Revolving Credit Facility may be used to fund portfolio investments by GLPRF LLC and to make advances under delayed draw term loans where GLPRF LLC is a lender.

GLPRF LLC’s obligations to the lenders under the Revolving Credit Facility are secured by a first priority security interest in all of GLPRF LLC’s portfolio of investments and cash. The obligations of GLPRF LLC under the Revolving Credit Facility are non-recourse to the Company, and the Company’s exposure under the Revolving Credit Facility is limited to the value of the Company’s investment in GLPRF LLC.

In connection with the Revolving Credit Facility, GLPRF LLC has made certain customary representations and warranties and is required to comply with various covenants, reporting requirements and other customary requirements for similar facilities. The Revolving Credit Facility contains customary events of default for similar financing transactions, including if a change of control of GLPRF LLC occurs or if the Company is no longer the portfolio manager of GLPRF LLC. Upon the occurrence and during the continuation of an event of default, JPM may declare the outstanding advances and all other obligations under the Revolving Credit Facility immediately due and payable.

The occurrence of an event of default (as described above) or a market value event (as defined in the Revolving Credit Facility) triggers a requirement that GLPRF LLC obtain the consent of JPM prior to entering into certain sales or dispositions with respect to portfolio assets, and the occurrence of a market value event triggers the right of JPM to direct GLPRF LLC to enter into sales or dispositions with respect to any portfolio assets, in each case in JPM’s sole discretion.

At March 31, 2024, GLPRF LLC was in compliance with all of its debt covenants and there was approximately $92.0 million principal amount of borrowings was outstanding under the Revolving Credit Facility.

2018-2 Secured Notes

On October 28, 2020 the Company completed the GARS Acquisition, pursuant to the terms and conditions of the GARS Merger Agreement. In connection therewith, the Company now consolidates the financial statements the 2018-2 CLO a $420.0 million par value CLO facility. On the date of the transaction the debt assumed was recognized at fair value, resulting in a $2.4 million discount which is amortized over the remaining term of the borrowings.

The CLO was executed by GF 2018-2 (the “Issuer”) and Portman Ridge Funding 2018-2 LLC (formerly known as Garrison Funding 2018-2 LLC, together with the Issuer, the “Co-Issuers”) who issued $312.0 million of senior secured notes (collectively referred to as the “2018-2 Secured Notes”) and $108.0 million of subordinated notes (the “2018-2 Subordinated Notes” and, together with the 2018-2 Secured Notes, the “2018-2 Notes”) backed by a diversified portfolio of primarily senior secured loans. The Company owns all $108.0 million of the par value of the ~~7.375% notes due 2019 at a weighted average price~~2018-2 Subordinated Notes and $18.3 million of ~~$25.23 per $25.00 note, resulting in a realized loss on extinguishment of $71,190. During~~ the ~~third quarter of 2016, $5.0 million~~ par value of the ~~7.375%~~Class B-R Notes ~~due 2019 was redeemed~~and serves as collateral manager for the Co-Issuers. The Company is entitled to receive interest from the Class B-R Notes, distributions from the 2018-2 Subordinated Notes and fees for serving as collateral manager in accordance with the CLO’s governing documents and to the extent funds are available for such purposes. However, as a result of retaining all of the 2018-2 Subordinated Notes, the Company consolidates the accounts of the Co-Issuers into its financial statements and all transactions between the Company and the Co-Issuers are eliminated on consolidation. As a result of this consolidation, the 2018-2 Secured Notes issued by the CLO is treated as the Company’s indebtedness, except any 2018-2 Secured Notes owned by the Company, ~~resulting~~which are eliminated in consolidation. The 2018-2 Notes are scheduled to mature on November 20, 2029, however the Co-Issuers may redeem the 2018-2 Notes on any business day after November 20, 2020. The indenture governing the 2018-2 Notes provides that, to the extent cash is available from cash collections, the holders of the 2018-2 Notes are to receive quarterly interest payments on the 20th day or, if not a ~~realized loss~~business day, the next succeeding business day of February, May, August and November of each year until the stated maturity or earlier redemption. On July 18, 2019, $25.0 million outstanding of the aggregate $50.0 million Class A-1R-R Notes available under the CLO converted to Class A-1T-R Notes. On November 18, 2022, the Company drew $14.3 million of the $25 million unfunded Class A-1 R-R Notes. The Reinvestment Period ended on ~~extinguishment~~November 20, 2022, and the remaining amount of ~~$88,015.~~the unfunded Class A-1 R-R Notes terminated. During the ~~fourth~~first quarter of ~~2016, $469,000 par value of the 7.375% Notes due 2019 was redeemed by the Company, resulting in a realized loss on extinguishment of $15,000. During the second quarter of 2017,~~2021, the Company redeemed ~~$6.5~~approximately $88.0 million ~~par value~~ of the ~~7.375% Notes due 2019 resulting in~~2018-2 Secured Notes. In connection therewith, the Company recognized a realized loss on extinguishment of debt of ~~$107,276. KCAP subsequently surrendered all~~approximately $0.9 million. During 2023, the Company redeemed approximately $52.5 million of ~~these notes to~~ the ~~Trustee for cancellation.~~

~~On July 20, 2017 $147.4 million~~ par value of ~~notes issued by KCAP Senior Funding were repaid in full, resulting in~~the 2018-2 Secured Notes. In connection therewith, the Company recognized a realized loss on extinguishment of ~~debt of $4~~approximately $0.4 million.

During the ~~third quarter of 2017,~~three months ended March 31, 2024, the ~~company issued $77.4~~Company redeemed approximately $34.0 million aggregate principal amount of 6.125% Notes Due 2022 (“the 6.125 Notes Due 2022”). The net proceeds for these Notes, after the payment of underwriting expenses, were approximately $74.6 million. Interest on the 6.125% Notes Due 2022 is paid quarterly in arrears on March 30, June 30, September 30 and December 30, at a rate of 6.125% commencing September 30, 2017. The 6.125% Notes Due 2022 mature on September 30, 2022, and are senior unsecured obligations of the ~~Company.~~par value of 2018-2 Secured Notes. In ~~addition, due to the coverage test applicable to~~connection therewith, the Company asrecognized a ~~BDC and a covenant that the Company agreed to in connection with the issuance~~realized loss on extinguishment of the 6.125% Notes Due 2022, the Company is limited in its ability to make distributions if its asset coverage, as defined in the 1940 Act, is below 200% at the time of the declaration of the distribution. At September 30, 2017, the Company was in compliance with all of its debt covenants. The indenture governing the 6.125% Notes Due 2022 contains certain restrictive covenants, including compliance with certain provisions of the 1940 Act relating to borrowing and dividends.approximately $0.2 million.

On October 6, 2014, the Company priced a follow-on public offering of 3.0 million shares of its common stock at a price of $8.02 per share. The offering raised net proceeds were approximately $23.8 million, after deducting underwriting discounts and offering expenses.

Subject to prevailing market conditions, we intend to grow our portfolio of assets by raising additional capital, including through the prudent use of leverage available to us. However, we may face difficulty in obtaining a new debt and equity financing as a result of current market conditions. In this regard, because our common stock has traded at a price below our current net asset value per share over the last year or so and we are limited in our ability to sell our common stock at a price below net asset value per share without stockholder approval (which we currently do not have), we have been and may continue to be limited in our ability to raise equity capital. From time to time, we may seek to retire, repurchase, or exchange debt securities in open market purchases or by other means dependent on market conditions, liquidity, contractual obligations, and other matters. In addition, we evaluate strategic opportunities available to us and/or the Asset Manager Affiliates, including mergers, divestures, spin-offs, joint ventures and other similar transactions from time to time.

Stockholder Distributions

We intend to continue to make quarterly distributions to our stockholders. To avoid certain excise taxes imposed on RICs, we generally endeavor to distribute during each calendar year an amount at least equal to the sum of:

•

98% of our ordinary net taxable income for the calendar year;

•

98.2% of our capital gains, if any, in excess of capital losses for the one-year period ending on October 31 of the calendar year; and

•

any net ordinary income and net capital gains for the preceding year that were not distributed during such year and on which we do not pay corporate tax.

~~98% of our ordinary net taxable income for the calendar year;~~

~~98.2% of our capital gains, if any, in excess of capital losses for the one-year period ending on October 31 of the calendar year; and~~

~~any net ordinary income and net capital gains for the preceding year that were not distributed during such year and on which we do not pay corporate tax.~~

We may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income, to the extent required.

The amount of our declared distributions, as evaluated by management and approved by our Board, ~~of Directors,~~ is based primarily on our evaluation of our net investment income and distributable taxable ~~income~~income.

We may distribute taxable dividends that are payable in cash or shares of our common stock at the election of each stockholder. Under certain applicable provisions of the Code and the ~~after-tax free~~Treasury regulations, distributions payable in cash ~~flow from~~or in shares of stock at the election of stockholders are treated as taxable dividends. The Internal Revenue Service has published 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. Under this guidance, if too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the balance of the distribution paid in stock). If we decide to make any distributions consistent with this guidance that are payable in part in our ~~Asset Manager Affiliates.~~

Westock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, shares of our stock, or a combination thereof) as ordinary income (or as 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.

We are also prohibited by the 1940 Act and the indenture governing our ~~7.375%~~4.875% Notes due 2026 from declaring dividends (except a dividend payable in our stock) or making distributions on our common stock, or purchasing any such stock, if, at the time of declaration or at the time of any such purchase, our asset coverage, as defined in the 1940 Act, ~~falls~~is below ~~200%.~~the threshold specified in Section 18(a)(1)(B) as modified by Section 61(a)(2) of the 1940 Act or any successor provisions thereto of the 1940 Act, after deducting the amount of such dividend, distribution or purchase price, as the case may be, and giving effect, in each case (i) to any exemptive relief granted to us by the SEC and (ii) to any no-action relief granted by the SEC to another BDC (or to the Company if it determines to seek such similar no-action or other relief) permitting the BDC to declare any cash dividend or distribution notwithstanding the prohibition contained in Section 18(a)(1)(B) as modified by Section 61(a)(1) of the 1940 Act in order to maintain its status as a RIC under the Code. In any such event, we would be prohibited from making distributions required in order to maintain our status as a ~~RIC.~~RIC unless made in accordance with any such exemptive or no-action relief granted by the SEC.

The following table sets forth the quarterly distributions ~~declared~~paid by us since ~~for the two most recently completed fiscal years and the current fiscal year to date.~~2021.


	Distribution		Declaration Date	Record Date	Pay Date
2024:
First quarter	$	0.69	3/13/2024	3/25/2024	4/2/2024
Total declared in 2024	$	0.69
2023:
Fourth quarter	$	0.69	11/8/2023	11/20/2023	11/30/2023
Third quarter		0.69	8/8/2023	8/22/2023	8/31/2023
Second quarter		0.69	5/10/2023	5/22/2023	5/31/2023
First quarter		0.68	3/9/2023	3/20/2023	3/31/2023
Total declared in 2023	$	2.75
2022:
Fourth quarter	$	0.67	11/8/2022	11/24/2022	12/13/2022
Third quarter		0.63	8/9/2022	8/16/2022	9/2/2022
Second quarter		0.63	5/10/2022	5/24/2022	6/7/2022
First quarter		0.63	3/10/2022	3/21/2022	3/30/2022
Total declared in 2022	$	2.56
2021:
Fourth quarter	$	0.62	11/3/2021	11/15/2021	11/30/2021
Third quarter		0.60	8/4/2021	8/17/2021	8/31/2021
Second quarter		0.60	5/6/2021	5/19/2021	6/1/2021
First quarter		0.60	2/12/2021	2/22/2021	3/2/2021
Total declared in 2021	$	2.42

Stock Repurchase Program

Distribution Declaration
Date Record
Date Pay Date
2017:
Third quarter $ 0.12 9/22/2017 10/10/2017 10/26/2017
Second quarter 0.12 6/20/2017 7/7/2017 7/27/2017
First quarter 0.12 3/21/2017 4/7/2017 4/28/2017

Total declared in 2017 $ 0.36

2016:
Fourth quarter $ 0.12 12/14/2016 1/6/2017 ¹ 1/27/2017
Third quarter 0.15 9/20/2016 10/14/2016 10/27/2016
Second quarter 0.15 6/21/2016 7/7/2016 7/28/2016
First quarter 0.15 3/18/2016 4/7/2016 4/28/2016

Total declared in 2016 $ 0.57

2015:
Fourth quarter $ 0.15 12/16/2015 1/6/2016 ¹ 1/28/2016
Third quarter 0.21 9/22/2015 10/14/2015 10/27/2015
Second quarter 0.21 6/23/2015 7/6/2015 7/27/2015
First quarter 0.21 3/24/2015 4/6/2015 4/27/2015

Total declared in 2015 $ 0.78

On March 6, 2023, the Board of Directors of the Company approved a $10 million stock repurchase program (the “Stock Repurchase Program”) for an approximately one-year period, effective March 6, 2023 and terminating on March 31, 2024. Under this repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise subject to any law or agreement to which we are party including any restrictions under the 1940 Act and in the indenture for our 4.875% Notes due 2026. The timing and actual number of shares repurchased will depend on a variety of factors, including legal requirements, price, and economic and market conditions. This Stock Repurchase Program may be suspended or discontinued at any time. On March 11, 2024, the Board of Directors of the Company authorized a renewed stock repurchase program of up to $10 million (the “Renewed Stock Repurchase Program”) for an approximately one-year period, effective March 11, 2024 and terminating on March 31, 2025. The terms and conditions of the Renewed Stock Repurchase Program are substantially similar to the prior Stock Repurchase Program. The Renewed Stock Repurchase Program may be suspended or discontinued at any time. Subject to these restrictions, we will selectively pursue opportunities to repurchase shares which are accretive to net asset value per share.

~~¹ Since~~During the ~~record date~~three months ended March 31, 2024, the Company repurchased 51,015 shares under the Renewed Stock Repurchase program at an aggregate cost of ~~this distribution is subsequent to year-end, it is a subsequent year tax event.~~approximately $1.0 million. During the three months ended March 31, 2023, the Company repurchased 35,613 shares under the Stock Repurchase program at an aggregate cost of approximately $0.8 million.

OFF-BALANCE SHEET ARRANGEMENTS

WeFrom time-to-time we are a party to financial instruments with off-balance sheet risk in the normal course of business in order to meet the needs of ~~the Company’s~~our investment ~~objectives.~~in portfolio companies. Such instruments include commitments to extend credit and may involve, in varying degrees, elements of credit risk in excess of amounts recognized on our balance sheet. Prior to extending such credit, we attempt to limit our credit risk by conducting extensive due diligence, obtaining collateral where necessary and negotiating appropriate financial covenants. As of ~~September 30, 2017~~March 31, 2024, and December 31, ~~2016,~~2023, we had approximately $33.3 million and $28.6 million commitments to fund investments, respectively. We may also enter into derivative contracts with off-balance sheet risk in connection with its investing activities.

We have made an aggregate commitment to the Great Lakes II Joint Venture of $50 million, subject to certain limitations (including that we are not obligated to fund capital calls if such funding would cause us to be out of compliance with certain provisions of the 1940 Act). As of March 31, 2024, we had a $10.9 million unfunded commitment to the Great Lakes II Joint Venture. As of December 31, 2023, the Company had ~~approximately $3~~a $5.5 million ~~and $565,000 of commitments~~unfunded commitment to ~~make such investments, respectively.~~the Great Lakes II Joint Venture.

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual cash obligations and other commercial commitments as of ~~September 30, 2017:~~March 31, 2024 :

	Payments Due by Period
($ in thousands)											Payments Due by Period
Contractual Obligations	Total		Less than one year		1 - 3 years		3 - 5 years		More than 5 years		Total		Less than two years		2 - 3 years		4 - 5 years		More than 5 years
Long-term debt obligations	$	104,407,200	$	—	$	27,000,000	$	77,407,200	$	—	$	291,651	$	—	$	200,000	$	—	$	91,651

CRITICAL ACCOUNTING POLICIES

The consolidated financial statements are based on the selection and application of critical accounting policies, which require management to make significant estimates and assumptions. Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex, or subjective judgments. Our critical accounting policies are those applicable to the basis of presentation, valuation of investments, and certain revenue recognition matters as discussed below. See Note 2 to our consolidated financial statements, ~~contained elsewhere herein: Significant~~“Significant Accounting Policies — ~~Investments.~~Investments” contained elsewhere herein.

Valuation of Portfolio Investments

The most significant estimate inherent in the preparation of our consolidated financial statements is the valuation of investments and the related amounts of unrealized appreciation and depreciation of investments recorded.

Value, as defined in Section 2(a)(41) of 1940 Act, is (1) the market price for those securities for which a market quotation is readily available and (2) for all other securities and assets, fair value as determined in good faith by our ~~Board of Directors~~Adviser pursuant to procedures approved by our Board. In December 2020, the SEC adopted Rule 2a-5 under the 1940 Act, which permits a BDC's board of directors to designate its 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 has designated our Adviser as its "valuation designee" pursuant to Rule 2a-5 under the 1940 Act, and in that role our Adviser is responsible for performing fair value determinations relating to all of ~~Directors.~~the Company's investments, including periodically assessing and managing any material valuation risks and establishing and applying fair value methodologies, in accordance with valuation policies and procedures that have been approved by the Board. Our Board remains ultimately responsible for making fair value determinations under the 1940 Act and satisfies its responsibility through oversight of the valuation designee in accordance with Rule 2a-5. Our valuation policy is intended to provide a consistent basis for determining the fair value of the portfolio based on the nature of the security, the market for the security and other considerations including the financial performance and enterprise value of the portfolio company. Because of the inherent uncertainty of valuation, the ~~Board of Directors’~~Adviser determined values may differ significantly from the values that would have been used had a ready market existed for the investments, and the differences could be material.

Pursuant to ~~the AICPA Guide,~~ASC 946: Financial Services — Investment Companies (“ASC 946”), we reflect our investments on our balance sheet at their determined fair value with unrealized gains and losses resulting from changes in fair value reflected as a component of unrealized gains or losses on our statements of operations. Fair value is the amount that would be received to sell the investments in an orderly transaction between market participants at the measurement date (i.e., the exit price).

See Note 4 to the consolidated financial statements for the additional information about the level of market observability associated with investments carried at fair value.

~~The Company follows~~We follow the provisions of ASC 820: Fair Value Measurements and Disclosures (“ASC 820: Fair Value”), which among other matters, requires enhanced disclosures about investments that are measured and reported at fair value. This standard defines fair value and establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value and expands disclosures about assets and liabilities measured at fair value. ASC 820: Fair Value defines “fair value” as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This fair value definition focuses on an exit price in the ~~principal,~~principle, or most advantageous market, and prioritizes, within a measurement of fair value, the use of market-based inputs (which may be weighted or adjusted for relevance, reliability and specific attributes relative to the subject investment) over entity-specific inputs. Market price observability is affected by a number of factors, including the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Subsequent to the adoption of ASC 820: Fair Value, the FASB has issued various staff positions clarifying the initial standard (see Note 2 to the consolidated financial statements: “Significant Accounting Policies — Investments”).

ASC 820: Fair Value establishes the following three-level hierarchy, based upon the transparency of inputs to the fair value measurement of an asset or liability as of the measurement date:

•

Level I –Unadjusted quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include listed equities and listed securities. As required by ASC 820: Fair Value, ~~the Company does~~we do not adjust the quoted price for these investments, even in situations where ~~the Company holds~~we hold a large position and a sale could reasonably affect the quoted price.

•

Level II –Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. Such inputs may be quoted prices for similar assets or liabilities, quoted markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full character of the financial instrument, or inputs that are derived principally from, or corroborated by, observable market information. Investments which are generally included in this category include illiquid debt securities and less liquid, privately held or restricted equity securities, for which some level of recent trading activity has been observed.

•

Level III – Pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment. The inputs may be based on ~~the Company’s~~our own assumptions about how market participants would price the asset or liability or may use Level II inputs, as adjusted, to reflect specific investment attributes relative to a broader market assumption. These inputs into the determination of fair value may require significant management judgment or estimation. Even if observable market data for comparable performance or valuation measures (earnings multiples, discount rates, other financial/valuation ratios, etc.) are available, such investments are grouped as Level III if any significant data point that is not also market observable (private company earnings, cash flows, etc.) is used in the valuation methodology.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. ~~The Company’s assessment~~We assess of the significance of a particular input to the fair value measurement in its entirety requires judgment, and ~~the Company considers~~we consider factors specific to the investment. The majority of ~~the Company’s~~our investments are classified as Level III. ~~The Company evaluates~~We evaluate the source of inputs, including any markets in which its investments are trading, in determining fair value. Inputs that are backed by actual transactions, those that are highly correlated to the specific investment being valued and those derived from reliable or knowledgeable sources will tend to have a higher weighting in determining fair value. ~~The Company’s~~Our fair value determinations may include factors such as an assessment of each underlying investment, its current and prospective operating and financial performance, consideration of financing and sale transactions with third parties, expected cash flows and market-based information, including comparable transactions, performance factors, and other investment or industry specific market data, among other factors.

We have valued our investments, in the absence of observable market prices, using the valuation methodologies described below applied on a consistent basis. For some investments, little market activity may exist; management’s determination of fair value is then based on the best information available in the circumstances, and may incorporate management’s own assumptions and involves a significant degree of management’s judgment.

Our investments in CLO Fund Securities are carried at fair value, which is based either on (i) the present value of the net expected cash inflows for interest income and principal repayments from underlying assets and the cash outflows for interest expense, debt paydown and other fund costs for the CLO Funds which are approaching or past the end of their reinvestment period and therefore are selling assets and/or using principal repayments to pay-down CLO Fund debt, and for which there continue to be net cash distributions to the class of securities we own, or (ii) a discounted cash flow model that utilizes prepayment and loss assumptions based on historical experience and projected performance, economic factors, the characteristics of the underlying cash flow and comparable yields for similar securities or preferred shares to those in which ~~the Company has~~we have invested, or (iii) indicative prices provided by the underwriters or brokers who arrange CLO Funds. We recognize unrealized appreciation or depreciation on our investments in CLO Fund Securities as comparable yields in the market change and/or based on changes in net asset values or estimated cash flows resulting from changes in prepayment or loss assumptions in the underlying collateral pool. As each investment in CLO Fund Securities ages, the expected amount of losses and the expected timing of recognition of such losses in the underlying collateral pool are updated and the revised cash flows are used in determining the fair value of the CLO Fund Securities. We determine the fair value of our investments in CLO Fund Securities on a security-by-security basis.

~~The Company’s~~Our investments in ~~its~~our wholly-owned Asset Manager Affiliates are carried at fair value, which is primarily determined utilizing a discounted cash flow model which incorporates different levels of discount rates depending on the hierarchy of fees earned (including the likelihood of realization of senior, subordinate and incentive fees) and prospective modeled performance (“Discounted Cash Flow”). Such valuation takes into consideration an analysis of comparable asset management companies and a percentage of assets under management. The Asset Manager Affiliates are classified as a Level III investment (as described above). Any change in value from period to period is recognized as net change in unrealized appreciation or depreciation.

~~KCAP carries~~We carry investments in joint ventures at fair value based upon the fair value of the investments held by the joint venture.

Fair values of other investments for which market prices are not observable are determined by reference to public market or private transactions or valuations for comparable companies or assets in the relevant asset class and/or industry when such amounts are available. Generally, these valuations are derived by multiplying a key performance metric of the investee company or asset (e.g., EBITDA) by the relevant valuation multiple observed for comparable companies or transactions, adjusted by management for differences between the investment and the referenced comparable. Such investments may also be valued at cost for a period of time after an acquisition as the best indicator of fair value. If the fair value of such investments cannot be valued by reference to observable valuation measures for comparable companies, then the primary analytical method used to estimate the fair value is a discounted cash flow method and/or cap rate analysis. A sensitivity analysis is applied to the estimated future cash flows using various factors depending on the investment, including assumed growth rates (in cash flows), capitalization rates (for determining terminal values) and appropriate discount rates to determine a range of reasonable values or to compute projected return on investment.

For bond rated note tranches of CLO Fund ~~Securities~~securities (those above the junior class) without transactions to support a fair value for the specific CLO Fund and tranche, fair value is based on discounting estimated bond payments at current market yields, which may reflect the adjusted yield on the leveraged loan index for similarly rated tranches, as well as prices for similar tranches for other CLO Funds and also other factors such as indicative prices provided by underwriters or brokers who arrange CLO Funds, and the default and recovery rates of underlying assets in the CLO Fund, as may be applicable. Such model assumptions may vary and incorporate adjustments for risk premiums and CLO Fund specific attributes.

We derive fair value for our illiquid loan investments that do not have indicative fair values based upon active trades primarily by using the Income Approach, and also consider recent loan amendments or other activity specific to the subject asset as described above. Other significant assumptions, such as coupon and maturity, are asset-specific and are noted for each investment in the Schedules of Investments.

The determination of fair value using this methodology takes into consideration a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public exchanges for comparable securities, current and projected operating performance and financing transactions subsequent to the acquisition of the investment. This valuation methodology involves a significant degree of ~~management’s~~our judgment.

Our ~~Board of Directors~~Adviser may consider other methods of valuation to determine the fair value of investments as appropriate in conformity with GAAP.

Interest Income

Interest income, including amortization of premium and accretion of discount and accrual payment-in-kind (“PIK”) interest, is recorded on the accrual basis to the extent that such amounts are expected to be collected. We generally place a loan on non-accrual status and cease recognizing interest income on such loan or security when a loan or security becomes 90 days or more past due or if we otherwise do not expect the debtor to be able to service its debt obligations. ~~Non-accrual loans~~For investments with PIK interest, which represents contractual interest accrued and added to the principal balance that generally becomes due at maturity, we will not accrue PIK interest if the portfolio company valuation indicates that the PIK interest is not collectible (i.e. via a partial or full non-accrual). Loans which are on partial or full non-accrual remain in such status until the borrower has demonstrated the ability and intent to pay contractual amounts due or such loans become current. As of ~~September 30, 2017, two issuers representing 1% of the Company’s total investments at fair value were on a non-accrual status, and one~~March 31, 2024, seven of our investments ~~representing 2% of the Company’s investments at fair value, was~~were on ~~partial~~ non-accrual ~~status, whereby we have recognized income on a portion of contractual payment-in-kind (PIK) amounts due.~~status.

Investment Income on CLO Fund Securities

We receive distributions from our investments in the most junior class of securities of CLO Funds (typically preferred shares or subordinated securities) ~~managed by the Asset Manager Affiliates and selective investments in securities issued by funds managed by other asset management companies.~~. Our CLO Fund junior class securities are subordinated to senior note holders who typically receive a return on their investment at a fixed spread relative to the ~~LIBOR~~SOFR index. The CLO Funds are leveraged funds and any excess cash flow or “excess spread” (interest earned by the underlying securities in the fund less payments made to senior note holders and less fund expenses and management fees) is paid to the holders of the CLO Fund’s subordinated securities or preferred shares. The level of excess spread from CLO Fund ~~securities~~Securities can be impacted from the timing and level of the resetting of the benchmark interest rate for the underlying assets (which reset at various times throughout the quarter) in the CLO Fund and the related CLO Fund note liabilities (which reset at each quarterly distribution date); in periods of short-term and volatile changes in the benchmark interest rate, the levels of excess spread and distributions to us can vary significantly. In addition, the failure of CLO Funds in which we invest to comply with certain financial covenants may lead to the temporary suspension or deferral of cash distributions to us.

GAAP-basis investment income on CLO equity investments is recorded using the effective interest method in accordance with the provisions of ASC 325-40, based on the anticipated yield and the estimated cash flows over the projected life of the investment. Yields are revised when there are changes in actual or estimated projected future cash flows due to changes in prepayments and/or re-investments, credit losses or asset pricing. Changes in estimated yield are recognized as an adjustment to the estimated yield prospectively over the remaining life of the investment from the date the estimated yield was changed. Accordingly, investment income recognized on CLO equity securities in the GAAP statement of operations differs from both the tax-basis investment income and from the cash distributions actually received by ~~the Company~~us during the period. For U.S. tax purposes, these CLO equity investments are treated as PFICs. Taxable income is provided on a PFIC statement, where income and capital gains are determined based on the U.S. shareholder's proportionate ownership of the PFIC.

For non-junior class CLO Fund Securities ~~such as our investment in the class E notes of Catamaran CLO 2014-1 Ltd,~~ interest is earned at a fixed spread relative to the ~~LIBOR~~SOFR index.

~~Distributions from Asset Manager Affiliates~~

We record distributions from our Asset Manager Affiliates on the declaration date, which represents the ex-dividend date. Distributions in excess of tax-basis earnings and profits are recorded as tax-basis return of capital. For interim periods, the Company estimates the tax attributes of any distributions as being either tax-basis earnings and profits (i.e. dividend income) or return of capital (i.e. adjustment to the Company’s cost basis in the Asset Manager Affiliates). The final determination of the tax attributes of distributions from our Asset Manager Affiliates is made on an annual (full calendar year) basis at the end of the year based upon taxable income and distributions for the full-year. Therefore, any estimate of tax attributes of distributions made on a quarterly basis may not be representative of the actual tax attributes of distributions for a full year.

~~Distributions from Joint Venture~~

We recognize investment income from our joint venture based on the Company’s share of thr tax-basis earnings and profits on the joint venture entity. For interim periods, the Company estimates the tax attributes of any distributions as being either tax-basis earnings and profits (i.e. dividend income) or return of capital (i.e. adjustment to the Company’s cost basis in the Joint Venture). The final determination of the tax attributes of distributions from our Joint Venture is made on an annual (full calendar year) basis at the end of the year based upon taxable income and distributions for the full-year. Therefore, any estimate of tax attributes of distributions made on a quarterly basis may not be representative of the actual tax attributes of distributions for a full year.

Payment in Kind Interest

We may have loans in our portfolio that contain a ~~payment-in-kind (“PIK”)~~PIK provision. PIK interest, computed at the contractual rate specified in each loan agreement, is added to the principal balance of the loan and recorded as interest income. To maintain our RIC status, this non-cash source of income must be distributed to stockholders in the form of cash dividends, even though ~~the Company has~~we have not yet collected any cash.

Fee Income

Fee income includes fees, if any, for due diligence, structuring, commitment and facility fees, and fees, if any, for transaction services and management services rendered by us to portfolio companies and other third parties. Commitment and facility fees are generally recognized as income over the life of the underlying loan, whereas due diligence, structuring, transaction service and management service fees are generally recognized as income when the services are rendered.

~~Management Compensation~~

We may, from time to time, issue stock options or restricted stock, under the Equity Incentive Plan, to officers and employees for services rendered to us. We follow Accounting Standards Codification 718, Compensation — Stock Compensation, a method by which the fair value of options or restricted stock is determined and expensed.

United States Federal Income Taxes

~~The Company has~~We have elected to be treated as a RIC and ~~intends~~intend to continue to qualify for the tax treatment applicable to RICs under Subchapter M of the Code and, among other things, ~~intends~~intend to make the required distributions to ~~its~~our stockholders as specified therein. In order to qualify for tax treatment as a RIC, the Company is required to timely distribute to its stockholders at least 90% of investment company taxable income, as defined by the Code, for each year. 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% excise tax on such income, to the extent required.

~~Distributions to Shareholders~~

The amount of our declared distributions, as evaluated by management and approved by our Board of Directors, is based primarily on our evaluation of distributable taxable income and after-tax free cash flow from our Asset Manager Affiliates.

~~The following table sets forth the quarterly distributions declared by us since the most recent completed calendar year.~~

Distribution Declaration
Date Record
Date Pay Date

2017⁽¹⁾:
Third quarter $ 0.12 9/22/2017 10/10/2017 10/26/2017
Second quarter 0.12 6/20/2017 7/7/2017 7/27/2017
First quarter 0.12 3/21/2017 4/7/2017 4/28/2017

Total declared in 2017 $ 0.36

2016⁽²⁾:
Fourth quarter $ 0.12 12/14/2016 1/6/2017 ¹ 1/27/2017
Third quarter 0.15 9/20/2016 10/14/2016 10/27/2016
Second quarter 0.15 6/21/2016 7/7/2016 7/28/2016
First quarter 0.15 3/18/2016 4/7/2016 4/28/2016

Total declared in 2016 $ 0.57

2015⁽³⁾ :
Fourth quarter $ 0.15 12/16/2015 1/6/2016 ¹ 1/28/2016
Third quarter 0.21 9/22/2015 10/14/2015 10/27/2015
Second quarter 0.21 6/23/2015 7/6/2015 7/27/2015
First quarter 0.21 3/24/2015 4/6/2015 4/27/2015

Total declared in 2015 $ 0.78

~~Percentage of distributions representing a return of capital will be determined on a full-year basis for 2017 in early 2018~~

~~Approximately 33.7% of 2016 distributions represented a return of capital.~~

~~Approximately 0.0% of 2015 distributions represented a return of capital.~~

~~The following table depicts the composition of shareholder distributions on a per share basis:~~

Three Months Ended September
30, Nine Months Ended September
30,
2017¹ 2016¹ 2017¹ 2016¹
Net investment income $ 0.07 $ 0.12 $ 0.23 $ 0.39
Tax Accounting Difference on CLO Equity Investments (0.01 ) - (0.05 ) 0.03
Other tax accounting differences 0.01 - 0.01 (0.02 )
Taxable distributable income 0.06 0.12 0.19 0.40
Cash distributed to the Company by Asset Manager Affiliates in excess of their taxable earnings 0.02 0.02 0.05 0.03
Cash received from CLO Equity Investments in excess of their taxable earnings - - 0.03 -
Available for distribution² 0.08 0.14 0.27 0.43
Distributed 0.12 0.15 0.36 0.45
Difference $ (0.04 ) $ (0.01 ) $ (0.09 ) $ (0.02 )

~~Table may not foot due to rounding.~~

The "Available for distribution" financial measure is a non-GAAP financial measure that is calculated by including the cash distributed to the Company by the Asset Manager Affiliates in excess of their taxable earnings to the Company's taxable distributable income, which is the most directly comparable GAAP financial measure. In order to reconcile the "Available for distribution" financial measure to taxable distributable income per share in accordance with GAAP, the $0.02 and $0.05 per share of cash distributed to the Company by the Asset Manager Affiliates in excess of their taxable earnings is subtracted from the "Available for distribution" financial measure for the three and nine months ended September, 30, 2017, respectively. The Company's management believes that the presentation of the non-GAAP "Available for distribution" financial measure provides useful information to investors.

~~Recent Developments~~

On October 31, 2017, the Joint Venture made a cash distribution to the Company of approximately $12.6 million. The Company expects that approximately $11.8 million of this distribution will be return of capital, reducing the cost basis of its investment in the Joint Venture by that amount. The final determination of the tax attributes of distributions from the Joint Venture is made on an annual (full calendar year) basis at the end of the year, therefore, any estimate of tax attributes of distributions made on an interim basis may not be representative of the actual tax attributes of distributions for the full year.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our business activities contain elements of market risks. We consider our principal market ~~risk~~risks to be fluctuations in interest ~~rates.~~rates and the valuations of our investment portfolio. Managing these risks is essential to our business. Accordingly, we have systems and procedures designed to identify and analyze our risks, to establish appropriate policies and thresholds and to continually monitor these risks and thresholds by means of administrative and information technology systems and other policies and processes.

Interest Rate Risk

Interest rate risk is defined as the sensitivity of our current and future earnings to interest rate volatility, variability of spread relationships, the difference in re-pricing intervals between our assets and liabilities and the effect that interest rates may have on our cash flows. Changes in the general level of interest rates can affect our net interest income, which is the difference between the interest income earned on interest earning assets and our interest expense incurred in connection with our ~~interest bearing~~interest-bearing debt and liabilities. Changes in interest rates can also affect, among other things, our ability to acquire and originate loans and securities and the value of our investment portfolio.

Our investment income is affected by fluctuations in various interest rates, including ~~LIBOR~~SOFR and prime rates. As of ~~September 30, 2017,~~March 31, 2024, approximately ~~98.1%~~91.1% of our ~~debt securities portfolio~~Debt Securities Portfolio were either ~~fixed rate or~~ floating rate with a spread to an interest rate index such as ~~LIBOR~~SOFR or the prime rate. ~~Most~~79.5% of these floating rate loans contain ~~LIBOR~~ floors ranging between ~~1.00%~~0.50% and ~~3.00%~~5.25%. We generally expect that future portfolio investments will predominately be floating rate investments. As of ~~September 30, 2017,~~March 31, 2024, we had ~~$104.4~~$291.7 million (par value) of borrowings outstanding at a current weighted average interest rate of ~~6.4%.~~6.9%, of which $108.0 million par value had a fixed rate and $183.7 million par value has a floating rate.

Because we borrow money to make investments, our net investment income is dependent upon the difference between our borrowing rate and the rate we earn on the invested proceeds borrowed. In periods of rising or lowering interest rates, the cost of the portion of our debt associated with our ~~7.375% Notes Due 2019 and 6.125% Notes Due 2022~~fixed rate borrowings would remain the same, ~~given that this debt is at a fixed rate.~~while the interest rate on borrowings under the Revolving Credit Facility would fluctuate with changes in interest rates.

Generally, we would expect that an increase in the base rate index for our floating rate investment assets would increase our gross investment income and that a decrease in the base rate index for such assets would decrease our gross investment income (in either case, such increase/decrease may be limited by interest rate floors/minimums for certain investment assets).

We have analyzed the potential impact of changes in interest rates on interest income net of interest expense. Assuming that our balance sheet at ~~September 30, 2017~~March 31, 2024 was to remain constant and no actions were taken to alter the existing interest rate sensitivity, the table below illustrates the impact on net investment income on our Debt Securities Portfolio for various hypothetical increases in interest rates:

	Impact on net investment income from a change in interest rates at:
	1%			2%			3%			Impact on net investment income from a change in interest rates at:
($ in thousands)										1%			2%			3%
Increase in interest rate	$	864,592		$	1,700,553		$	2,536,515		$	1,731		$	3,461		$	5,192

Decrease in interest rate	$	(220,059	)	$	(220,059	)	$	(220,059	)	$	(1,693	)	$	(3,368	)	$	(5,042	)

As shown above, net investment income assuming a 1% increase in interest rates would increase by approximately ~~$865,000~~$1.7 million on an annualized basis, reflecting the impact to investments in our portfolio that are either fixed rate or which have embedded floors that would be unaffected by a 1% change in the underlying interest rate while our interest expense would be increasing. However, ifbasis. If the increase in rates was more significant, such as 2% or 3%, the net effect on net investment income would be an increase of approximately ~~$1.7~~$3.5 million and ~~$2.5~~$5.2 million, respectively. ~~Since LIBOR underlying certain investments, as well as certain~~

On an annualized basis, a decrease in interest rates of ~~our borrowings, is currently low, it is unlikely that the underlying rate will decrease by~~ 1% ~~or 2% or even 3%. If the underlying rate decreased to 0%, it~~ would result in ~~approximately~~ a ~~$220,000~~ decrease in net investment ~~income.~~income of approximately $1.7 million. A decrease in interest rates of 2% and 3% would result in a decrease in net investment income of approximately $3.4 million and $5.0 million, respectively. The effect on net investment income from declines in interest rates is impacted by interest rate floors on certain of our floating rate investments, as there is no floor on our floating rate debt facility and the 2018-2 Secured Notes.

Although management believes that this measure is indicative of sensitivity to interest rate changes on our Debt Securities Portfolio, it does not adjust for potential changes in credit quality, size and composition of the assets on the balance sheet and other business developments that could affect a net change in assets resulting from operations or net income. Accordingly, no assurances can be given that actual results would not materially differ from the potential outcome simulated by this estimate.

~~We did not hold any derivative financial instruments for hedging purposes as of September 30, 2017.~~

Portfolio Valuation

We carry our investments at fair value, as determined in good faith by our ~~Board of Directors~~Adviser pursuant to a valuation ~~methodology~~procedures approved by our ~~Board of Directors.~~Board. Investments for which market quotations are generally readily available are generally valued at such market quotations. Investments for which there is not a readily available market value are valued at fair value as determined in good faith by our ~~Board of Directors~~Adviser under a valuation policy and consistently applied valuation process. However, due to the inherent uncertainty of determining the fair value of investments that cannot be marked to market, the fair value of our investments may differ materially from the values that would have been used had a ready market existed for such investments. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the value realized on these investments to be different than the valuations that are assigned. The types of factors that we may take into account in fair value pricing of our investments include, as relevant, the nature and realizable value of any collateral, third party valuations, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business, comparison to publicly-traded securities, recent sales of or offers to buy comparable companies, and other relevant factors.

The ~~Company~~Adviser has engaged an independent valuation firm to provide third party valuation consulting ~~services to the Company’s Board of Directors.~~services. Each quarter, the independent valuation firm will perform third party valuations on the Company’s material investments in illiquid securities such that they are reviewed at least once during a trailing 12-month period. These ~~third party~~third-party valuation estimates were considered as one of the relevant data inputs in the Company’s determination of fair value. The Company intends to continue to engage an independent valuation firm in the future to provide certain valuation services, including the review of certain portfolio assets, as part of the quarterly and annual year-end valuation process.

~~Item 4.~~

~~Changes in and Disagreements with Accountants on Accounting and Financial Disclosure~~

Item 4.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

~~Item 5.~~

~~Controls and Procedures~~

Item 5. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, under the supervision and with the participation of various members of management, including its Chief Executive Officer (“CEO”) and its Chief Financial Officer (“CFO”), has evaluated the effectiveness of its disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO have concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Acts recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the ~~three months~~quarter ended ~~September 30, 2017~~March 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. Other Information

~~Item 1.~~

~~Legal Proceedings~~

Item 1.Legal Proceedings

The Company is not currently a party to any material legal ~~proceedings.~~proceedings except as set forth below.

~~Item 1A.~~

~~Risk Factors~~

HCAP and certain of its officers and directors as well as JMP Group LLC were named as defendants in two putative stockholder class action lawsuits, both filed in the Court of Chancery in the State of Delaware, captioned Stewart Thompson v. Joseph Jolson, et al., Case No. 2021-0164 and Ronald Tornese v. Joseph Jolson, et al., Case No. 2021-0167 (the “Delaware Actions”). The complaints in the Delaware Actions allege certain breaches of fiduciary duties against the defendants as well as aiding and abetting claims against JMP Group LLC and HCAP’s Chief Executive Officer concerning HCAP’s proposed merger with the Company and Acquisition Sub that resulted in the merger with and into the Company.

On June 9, 2021, HCAP merged with and into the Company with the Company as the surviving corporation. As a result, the Company became responsible for any claims against HCAP as well as for any advancement and/or indemnification owed to the former officers and directors of HCAP. On or about May 10, 2022, plaintiffs in the Delaware Actions filed a consolidated amended complaint seeking damages against defendants for allegedly breaching their fiduciary duties in connection with the proposed merger. On or about May 31, 2022, defendants moved to dismiss the Delaware Actions.

Thereafter, in December 2022, plaintiffs in the Delaware Action again amended their complaint, and defendants again moved to dismiss the Delaware Action. On June 7, 2023, the Court heard oral argument on defendants’ motions to dismiss. The Court dismissed all claims against HCAP’s former independent directors but denied the motions of the remaining defendants.

On February 26, 2024, the parties in the Delaware Action entered into a stipulation of settlement pursuant to which all claims will be dismissed with prejudice, subject to approval by the Court. The Company will not be responsible for paying any portion of the settlement amount, either directly or through indemnification of former officers or directors of HCAP. A settlement hearing is scheduled for July 2, 2024.

Item 1A. Risk Factors

There have been no material changes ~~from~~during the quarter ended March 31, 2024 to the risk factors ~~previously disclosed in Part I, “Item 1A. Risk Factors”~~that were included in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2023.

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

~~While~~63

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Other than the shares issued pursuant to our dividend reinvestment plan (“DRIP”), we did not engage in any sales of unregistered securities during the three months ended ~~September 30, 2017, we~~March 31, 2024, except as previously reported by us on our current reports on Form 8-K. We issued a total of ~~18,141~~0 shares of common stock under our dividend reinvestment plan (“DRIP”). during the three months ended March 31, 2024. This issuance was not subject to the registration requirements of the Securities ~~Act of 1933.~~Act. For the three months ended ~~September 30, 2017,~~March 31, 2024, no shares of our common stock were issued under our DRIP. For the three months ended March 31, 2024, the aggregate value of the shares of our common stock issued under our DRIP was $0.

The following table sets forth information regarding recent repurchases of shares of our common stock.


	Total Number of Shares Purchased		Average Price Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (Dollars in Thousands) (1)
January 1-March 31, 2024		38,735	$	18.58		38,735	$	5,600

February 1-February 28, 2024		5,657	$	19.01		5,657	$	5,493

March 1-March 31, 2024		6,623	$	18.90		6,623	$	9,875

Total, March 31, 2024		51,015				51,015

(1)

On March 6, 2023, the Board of Directors of the Company approved a $10 million stock repurchase program for an approximately ~~$64,000.~~one-year period, effective March 6, 2023 and terminating on March 31, 2024. Under this repurchase program, shares could be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise subject to any law or agreement to which we were party including any restrictions under the 1940 Act and in the indentures for our debt securities. On March 11, 2024, the Board of Directors of the Company authorized a renewed stock repurchase program of up to $10 million (the “Renewed Stock Repurchase Program”) for an approximately one-year period, effective March 11, 2024 and terminating on March 31, 2025. Under this repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise subject to any law or agreement to which we are party including any restrictions in the 1940 Act or the indenture for our 4.875% Notes due 2026. The timing and actual number of shares repurchased will depend on a variety of factors, including legal requirements, price, and economic and market conditions. This Renewed Stock Repurchase Program may be suspended or discontinued at any time. Subject to these restrictions, we will selectively pursue opportunities to repurchase shares which are accretive to net asset value per share.

~~Item 3.~~

~~Defaults Upon Senior Securities~~

As permitted by our policies and procedures governing transactions in our securities by our directors, executive officers and other employees, from time to time some of these persons may establish plans or arrangements complying with Rule 10b5-1 under the Exchange Act, and similar plans and arrangements relating to our common stock.

~~None.~~Item 3. Defaults Upon Senior Securities

~~Item 4.~~

~~Mine Safety Disclosures~~

None.

Item 4. Mine Safety Disclosures

Not Applicable.

~~Item 5.~~

~~Other Information~~

Item 5. Other Information

~~None.~~During the three months ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

~~Item 6.~~

~~Exhibits~~

Item 6. Exhibits

Reference is made to the Exhibit List filed as a part of this report beginning on page E-1. Each of such exhibits is incorporated by reference herein.

Exhibit Index

~~SIGNATURES~~

~~Pursuant to the requirements 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.~~

	~~KCAP FINANCIAL, INC.~~
Exhibit Number
~~Date: November 7, 2017~~	By	~~/s/ Dayl W. Pearson~~
		~~Dayl W. Pearson~~
		~~President and Chief Executive Officer~~
		~~(Principal Executive Officer)~~

~~Date: November 7, 2017~~	By	~~/s/ Edward U. Gilpin~~
		~~Edward U. Gilpin~~
		~~Chief Financial Officer~~
		~~(Principal Financial and Accounting Officer)~~

~~* * * * *~~

~~Exhibit Index~~

~~Exhibit~~
~~Number~~

Description of Document

~~2.1~~		Purchase and Sale Agreement, dated February 29, 2012, by and among Kohlberg Capital Corporation (the “Company”), Commodore Holdings, L.L.C., Trimaran Advisors, L.L.C., HBK Caravelle, L.L.C., Trimaran Fund Management, L.L.C., Jay R. Bloom, and Dean C. Kehler.⁽¹⁾

~~3.1~~
3.1		Form of Certificate of Incorporation of Company (incorporated by reference to the ~~Company.~~⁽²⁾Exhibit A included in Pre-Effective Amendment No. 1 on Form N-2, as filed on October 6, 2006 ).

~~3.2~~3.1.1		Certificate of Amendment to Certificate of Incorporation of Portman Ridge Finance Corporation (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K, as filed on April 2, 2019).

3.1.2		Certificate of Amendment to Certificate of Incorporation of Portman Ridge Finance Corporation (the Reverse Stock Split Certificate of Amendment) (incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed on August 26, 2021).

3.1.3		Certificate of Amendment to Certificate of Incorporation of Portman Ridge Finance Corporation (the Decrease Shares Certificate of Amendment) (incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed on August 26, 2021).

3.2		Third Amended and Restated Bylaws of Portman Ridge Finance Corporation, dated as of July 20, 2021 (incorporated by reference to Exhibit 3.1 of the ~~Company,~~Current Report on Form 8-K, as ~~amended and restated effective February 29, 2012.~~⁽³⁾filed on July 21, 2021).

~~4.1~~31.1**		~~Form of Dividend Reinvestment Plan.~~⁽⁴⁾

~~4.2~~		~~Form of Base Indenture between the Company, as Issuer, and U.S. Bank National Association, as Trustee~~⁽⁵⁾

~~4.3~~		~~Form of First Supplemental Indenture between the Company and U.S. Bank National Association relating to the 7.375% Senior Notes Due 2019~~⁽⁵⁾

~~4.4~~		~~Form of Note relating to the 7.375% Senior Notes Due 2019 (included as part of Exhibit 4.3)~~⁽⁵⁾

~~4.5~~		~~Second Supplemental Indenture between the Company and U.S. Bank National Association relating to the 6.125% Notes Due 2022~~⁽⁶⁾

~~4.6~~		~~Form of 6.125% Notes Due 2022 (included as part of Exhibit 4.5).~~⁽⁶⁾

~~11.1~~		~~Computation of Per Share Earnings (included in the notes to the unaudited financial statements contained in this report).~~

~~31.1~~		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**

~~31.2~~31.2**		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**

~~32.1~~32.1**		Certification of Chief Executive Officer Pursuant to 18 U. S. C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. **

~~32.2~~32.2**		Certification of Chief Financial Officer Pursuant to 18 U. S. C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS		Inline XBRL Instance Document (filed herewith)

101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents (filed herewith)
104		Cover Page Interactive Data File (embedded within the Inline XBRL document) (filed herewith)

** Submitted herewith.

SIGNATURES

Pursuant to the requirements 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.


	** PORTMAN RIDGE FINANCE CORPORATION
	~~Submitted herewith~~
Date: May 8, 2024	By	/s/ Ted Goldthorpe
		Ted Goldthorpe
		President and Chief Executive Officer
		(Principal Executive Officer)


Date: May 8, 2024	~~(1)~~ By	~~Incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K, as filed on March 1, 2012 (File No. 814-00735).~~	/s/ Brandon Satoren
			Brandon Satoren
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

~~(2)~~

~~Incorporated by reference to the exhibit included in Pre-Effective Amendment No. 1 on Form N-2, as filed on October 6, 2006 (File No. 333-136714).~~

~~(3)~~

~~Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K, as filed on March 1, 2012 (File No. 814-00735).~~

~~(4)~~

~~Incorporated by reference to the exhibit included in Pre-Effective Amendment No. 2 on Form N-2, as filed on November 20, 2006 (File No. 333-136714).~~

~~(5)~~

~~Incorporated by reference to exhibit included in the Registration Statement in Form N-2, as filed on October 3, 2012 (File No. 333-183032).~~

~~(6)~~

~~Incorporated by reference to the exhibit included in Post-Effective Amendment No. 1 on Form N-2, as filed on August 14, 2017 (File No. 333-218596).~~

* * * * *

ý	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~
	~~For the quarterly period ended September 30, 2017~~

¨	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~
	~~For the transition period from to~~


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	PTMN	The NASDAQ Global Select Market


Large accelerated filer	¨ ☐		Accelerated filer	x ☐

Non-accelerated filer	¨ ☒	~~(Do not check if a smaller reporting company)~~	Smaller reporting company	¨ ☐

Emerging growth company	¨ ☐

	As of September 30, 2017			As of December 31, 2016
	(unaudited)
ASSETS
Investments at fair value:
Short-term investments (cost: 2017 - $57,024,828; 2016 - $28,699,269)	$	57,024,828		$	28,699,269
Debt securities (cost: 2017 - $134,031,011; 2016 - $249,520,234)		127,026,829			238,343,330
CLO Fund securities managed by affiliates (cost: 2017 - $73,495,563; 2016 - $71,734,809)		49,973,662			51,908,784
CLO Fund securities managed by non-affiliates (cost: 2017 - $5,049,176; 2016 - $5,116,508)		1,869,682			2,265,566
Equity securities (cost: 2017 - $10,389,008; 2016 - $10,389,007)		4,450,177			5,056,355
Asset Manager Affiliates (cost: 2017 - $53,341,230; 2016 - $55,341,230)		39,679,000			40,198,000
Joint Venture (cost: 2017 - $36,738,873; 2016 - $0)		36,591,122			—
Total Investments at Fair Value (cost: 2017 - $370,069,689; 2016 - $420,801,057)		316,615,300			366,471,304
Cash		1,936,300			1,307,257
Restricted cash		—			8,528,298
Interest receivable		923,344			1,033,917
Receivable for open trades		—			2,950,658
Accounts receivable		2,000,021			—
Due from affiliates		1,159,759			612,854
Other assets		173,185			467,695

Total Assets	$	322,807,909		$	381,371,983

LIABILITIES
Notes issued by KCAP Senior Funding I, LLC (net of discount and offering costs of: 2016 - $2,286,425 and $2,459,156, respectively)	$	—		$	142,604,419
7.375% Notes due 2019 (net of offering costs of: 2017 - $306,073; 2016 - $550,774)		26,693,927			32,980,151
6.125% Notes due 2022 (net of offering costs of: 2017 - $2,757,357)		74,649,843			—
Payable for open trades		34,950,728			7,884,943
Accounts payable and accrued expenses		1,649,529			2,047,405
Accrued interest payable		—			930,086
Due to affiliates		78,438			54

Total Liabilities		138,022,465			186,447,058
COMMITMENTS AND CONTINGENCIES (Note 8)
STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share, 100,000,000 common shares authorized; 37,485,993 issued, and 37,317,815 outstanding at September 30, 2017, and 37,282,296 issued, and 37,178,294 outstanding at December 31, 2016		373,178			371,783
Capital in excess of par value		354,341,009			353,404,155
Excess distribution of net investment income		(19,589,473	)		(14,630,319	)
Accumulated net realized losses		(95,485,836	)		(88,491,896	)
Net unrealized depreciation on investments		(54,853,434	)		(55,728,798	)

Total Stockholders' Equity		184,785,444			194,924,925

Total Liabilities and Stockholders' Equity	$	322,807,909		$	381,371,983

NET ASSET VALUE PER COMMON SHARE	$	4.95		$	5.24


		Page

	Part I. Financial Information

Item 1.	Consolidated Financial Statements	3

	~~ConsolidatedBalance~~Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2024 (unaudited) and December 31, ~~2016~~2023	3 4

	~~ConsolidatedStatements~~Consolidated Statements of Operations (unaudited) for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023	4 5

	~~ConsolidatedStatements~~Consolidated Statements of Changes in Net Assets (unaudited) for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023	5 6

	~~ConsolidatedStatements~~Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023	6 7

	~~ConsolidatedSchedules~~Consolidated Schedules of Investments (unaudited) as of ~~September 30, 2017 (unaudited)~~March 31, 2024 and December 31, ~~2016~~2023	7 8

	~~ConsolidatedFinancial~~Consolidated Financial Highlights (unaudited) for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2024 and ~~2016~~2023	23 22

	Notes to Consolidated Financial Statements (unaudited)	24 23

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	55 49

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	75 61

Item 4.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	77 62

Item 5.	Controls and Procedures	77 62

	Part II. Other Information

Item 1.	Legal Proceedings	78 63

Item 1A.	Risk Factors	78 63

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78 64

Item 3.	Defaults Upon Senior Securities	78 64

Item 4.	Mine Safety Disclosures	78 64

Item 5.	Other Information	78 64

Item 6.	Exhibits	78 64

Signatures	79	65

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2017			2016			2017			2016

Investment Income:
Interest from investments in debt securities	$	2,439,671		$	5,186,745		$	11,764,702		$	16,106,654
Interest from cash and short-term investments		21,043			7,168			51,250			21,521
Investment income on CLO Fund Securities managed by affiliates		2,693,547			3,307,950			8,378,785			9,595,522
Investment income on CLO Fund Securities managed by non-affiliates		99,578			195,182			329,108			503,358
Dividends from Asset Manager Affiliates		180,000			—			180,000			1,400,000
Investment income - Joint Venture		685,000			—			685,000			—
Capital structuring service fees		134,504			321,744			298,629			481,456

Total investment income		6,253,343			9,018,789			21,687,474			28,108,510

Expenses:
Interest and amortization of debt issuance costs		1,371,953			2,122,325			5,790,242			6,960,355
Compensation		1,072,812			1,199,412			3,473,841			3,212,886
Professional fees		802,507			699,607			2,545,195			1,913,722
Insurance		80,794			102,254			256,473			315,307
Administrative and other		395,783			372,164			1,265,317			1,310,424

Total expenses		3,723,849			4,495,762			13,331,068			13,712,694

Net Investment Income		2,529,495			4,523,027			8,356,404			14,395,816
Realized And Unrealized Gains (Losses) On Investments:
Net realized (losses) gains from investment transactions		(1,906,537	)		4,647,841			(2,871,941	)		(6,046,199	)
Net change in unrealized appreciation (depreciation) on:
Debt securities		1,759,152			456,530			4,172,723			2,539,345
Equity securities		(186,368	)		(4,579,566	)		(606,179	)		(4,896,852	)
CLO Fund securities managed by affiliates		(1,590,062	)		(993,011	)		(3,695,876	)		5,890,984
CLO Fund securities managed by non-affiliates		(34,655	)		(137,193	)		(328,552	)		(136,490	)
Asset Manager Affiliates investments		2,922,000			(1,113,000	)		1,481,000			(12,706,000	)
Joint Venture investment		(147,751	)		—			(147,751	)		—
Total net change in unrealized appreciation (depreciation)		2,722,316			(6,366,240	)		875,365			(9,309,013	)

Net realized and unrealized appreciation (depreciation) on investments		815,779			(1,718,399	)		(1,996,576	)		(15,355,212	)

Realized losses on extinguishments of debt		(4,014,723	)		(88,015	)		(4,121,998	)		(159,206	)
Net Increase (Decrease) In Stockholders’ Equity Resulting From Operations	$	(669,449	)	$	2,716,613		$	2,237,830		$	(1,118,601	)

Net Increase (Decrease) In Stockholders' Equity Resulting from Operations per Common Share:
Basic:	$	(0.02	)	$	0.07		$	0.06		$	(0.03	)
Diluted:	$	(0.02	)	$	0.07		$	0.06		$	(0.03	)
Net Investment Income Per Common Share:
Basic:	$	0.07		$	0.12		$	0.23		$	0.39
Diluted:	$	0.07		$	0.12		$	0.23		$	0.39

Weighted Average Shares of Common Stock Outstanding—Basic		37,196,621			37,152,622			37,202,011			37,142,002
Weighted Average Shares of Common Stock Outstanding—Diluted		37,196,621			37,152,622			37,202,011			37,142,002

Portfolio Company / Principal Business	Investment Interest Rate¹ / Maturity	Principal		Amortized Cost		Fair Value²

Advanced Lighting Technologies, Inc,^(8)(14)(15) Consumer goods: Durable	First Lien Bond — 12.500% - 6/2019 - 00753CAG7 5.3% Cash, 7.3% PIK, Due 6/19	$	3,157,500	$	3,054,337	$	1,063,761

Advantage Sales & Marketing Inc.^(8)(14) Services: Business	Junior Secured Loan — Term Loan (Second Lien) 7.7% Cash, 1 month LIBOR(1.24%) + 6.50%; LIBOR Floor 1.00% , Due 7/22		1,000,000		1,001,518		962,300

Anaren, Inc.⁽⁸⁾ Aerospace and Defense	Senior Secured Loan — Term Loan (First Lien) 5.8% Cash, 3 month LIBOR(1.33%) + 4.50%; LIBOR Floor 1.00% , Due 2/21		1,513,396		1,529,286		1,529,286

Asurion, LLC (fka Asurion Corporation)⁽⁸⁾ Banking, Finance, Insurance & Real Estate	Senior Secured Loan — Replacement B-5 Term Loan 4.2% Cash, 3 month LIBOR(1.24%) + 3.00%; LIBOR Floor 0.00% , Due 11/23		1,994,987		2,007,456		2,007,556

Avalign Technologies, Inc.^(8)(14) Healthcare & Pharmaceuticals	Senior Secured Loan — Initial Term Loan (First Lien) 5.7% Cash, 1 month LIBOR(1.24%) + 4.50%; LIBOR Floor 1.00% , Due 7/21		1,078,170		1,075,612		1,078,170

Avalign Technologies, Inc.^(8)(14) Healthcare & Pharmaceuticals	Junior Secured Loan — Initial Term Loan (Second Lien) 9.7% Cash, 6 month LIBOR(1.46%) + 8.25%; LIBOR Floor 1.00% , Due 7/22		1,500,000		1,488,351		1,479,000

Carolina Beverage Group LLC^(8)(14) Beverage, Food and Tobacco	Senior Secured Bond — 10.625% - 08/2018 - 143818AA0 144A 10.6% Cash, Due 8/18		1,500,000		1,503,404		1,494,600

CSM Bakery Solutions Limited (fka CSM Bakery Supplies Limited)^(8)(14) Beverage, Food and Tobacco	Junior Secured Loan — Term Loan (Second Lien) 9.1% Cash, 3 month LIBOR(1.30%) + 7.75%; LIBOR Floor 1.00% , Due 7/21		3,000,000		3,009,449		2,851,800

CT Technologies Intermediate Holdings, Inc. (Smart Holdings Corp.) (aka HealthPort)⁽⁸⁾ Healthcare & Pharmaceuticals	Senior Secured Loan — New Term Loan Facility 5.5% Cash, 3 month LIBOR(1.24%) + 4.25%; LIBOR Floor 1.00% , Due 12/21		1,994,898		2,004,872		2,004,872

DigiCert Holdings, Inc.⁽⁸⁾ High Tech Industries	Junior Secured Loan — Term Loan (Second Lien) 9.0% Cash, 3 month LIBOR(1.24%) + 7.76%; LIBOR Floor 1.00% , Due 9/25		1,000,000		995,000		995,000

Drew Marine Group Inc.^(8)(14) Transportation: Cargo	Junior Secured Loan — Term Loan (Second Lien) 8.2% Cash, 1 month LIBOR(1.24%) + 7.00%; LIBOR Floor 1.00% , Due 5/21		2,500,000		2,496,958		2,500,000

CLO Rated-Note Investment
Portfolio Company	Investment	Percentage Ownership			Amortized Cost		Fair Value
Catamaran CLO 2014-1 Ltd.^(3)(6)(14)	Float - 04/2026 - E - 14889FAC7, Par Value of $1,525,000, 7.1% cash, 4/26 maturity		15.1	%		1,451,386		1,520,000

Total Investment in CLO Rated-Note					$	1,451,386	$	1,520,000

Total Investment in CLO Fund Securities (28% of net asset value at fair value)					$	78,544,739	$	51,843,344

Short-term Investments	Investment	Yield			Par /Amortized Cost		Fair Value²
JP Morgan Business Money Market Account⁽⁷⁾⁽⁸⁾	Money Market Account		0.10	%	$	14,269	$	14,269

US Bank Money Market Account⁽⁷⁾⁽⁸⁾	Money Market Account		0.10	%		32,001,559		32,001,559
U.S Treasury Bills⁽⁸⁾	U.S Treasury Bills, 912796LY3,10/19/17 maturity		0.883	%		15,007,000		15,007,000
U.S Treasury Bills⁽⁸⁾	U.S Treasury Bills, 912796KR9, 10/12/17 maturity		0.801	%		10,002,000		10,002,000

Total Short-term Investments (31% of net asset value at fair value)					$	57,024,828	$	57,024,828
Total Investments⁴					$	370,069,689	$	316,615,300

Portfolio Company/Principal Business	Investment Interest Rate⁽¹⁾/Maturity	Principal		Amortized Cost		Fair Value⁽²⁾
1A Smart Start LLC^{(8), (9)} Consumer goods: Non-durable	Senior Secured Loan — Initial Term Loan (First Lien) 5.8% Cash, 1.0% Libor Floor, Due 2/22	$	2,970,000	$	2,946,408	$	2,919,807
4L Technologies Inc. (fka Clover Holdings, Inc.)^{(8), (9)} Consumer goods: Non-durable	Senior Secured Loan — Term Loan 5.5% Cash, 1.0% Libor Floor, Due 5/20		2,720,465		2,705,259		2,606,194
Advanced Lighting Technologies, Inc,^{(8), (9), (14)} Consumer goods: Durable	First Lien Bond — 12.500% – 6/2019 — 00753CAG7 5.3% Cash, 7.3% PIK, Due 6/19		3,060,919		3,060,919		1,089,338
Advantage Sales & Marketing Inc.⁽⁸⁾ Services: Business	Junior Secured Loan — Term Loan (Second Lien) 7.5% Cash, 1.0% Libor Floor, Due 7/22		1,000,000		1,001,753		995,300
Alere Inc. (fka IM US Holdings, LLC)⁽⁹⁾ Healthcare & Pharmaceuticals	Senior Secured Loan — B Term Loan 4.3% Cash, 1.0% Libor Floor, Due 6/22		3,030,277		3,024,429		3,034,489
American Seafoods Group LLC^{(8), (9)} Beverage, Food and Tobacco	Senior Secured Loan — Term Loan (First Lien) 6.0% Cash, 1.0% Libor Floor, Due 8/21		3,853,704		3,838,792		3,874,899
Anaren, Inc.^{(8), (9)} Aerospace and Defense	Senior Secured Loan — Term Loan (First Lien) 5.5% Cash, 1.0% Libor Floor, Due 2/21		1,871,912		1,860,822		1,864,237
Apco Holdings, Inc.^{(8), (9)} Services: Business	Senior Secured Loan — Initial Term Loan 7.0% Cash, 1.0% Libor Floor, Due 1/22		3,867,838		3,769,454		3,900,714
API Technologies Corp.^{(8), (9)} High Tech Industries	Senior Secured Loan — Initial Term Loan 7.5% Cash, 1.0% Libor Floor, Due 4/22		3,482,500		3,420,642		3,480,759
Aristotle Corporation, The^{(8), (9)} Consumer goods: Non-durable	Senior Secured Loan — Term Loan 5.5% Cash, 1.0% Libor Floor, Due 6/21		3,665,860		3,652,075		3,604,274
Asurion, LLC (fka Asurion Corporation)^{(8), (9)} Banking, Finance, Insurance & Real Estate	Senior Secured Loan — Incremental Tranche B-4 Term Loan 5.0% Cash, 1.0% Libor Floor, Due 8/22		876,911		873,399		889,736
Asurion, LLC (fka Asurion Corporation)^{(8), (9)} Banking, Finance, Insurance & Real Estate	Senior Secured Loan — Replacement B-2 Term Loan 4.0% Cash, 0.8% Libor Floor, Due 7/20		187,812		188,275		189,719
Avalign Technologies, Inc.⁽⁸⁾ Healthcare & Pharmaceuticals	Junior Secured Loan — Initial Term Loan (Second Lien) 9.5% Cash, 1.0% Libor Floor, Due 7/22		1,000,000		992,078		985,000
Avalign Technologies, Inc.^{(8), (9)} Healthcare & Pharmaceuticals	Senior Secured Loan — Initial Term Loan (First Lien) 5.5% Cash, 1.0% Libor Floor, Due 7/21		2,925,000		2,913,921		2,915,640
Bankruptcy Management Solutions, Inc.⁽⁸⁾ Services: Business	Senior Secured Loan — Term B Loan 7.0% Cash, 1.0% Libor Floor, Due 6/18		665,654		665,654		655,935
BarBri, Inc. (Gemini Holdings, Inc.)^{(8), (9)} Services: Consumer	Senior Secured Loan — Term Loan 4.5% Cash, 1.0% Libor Floor, Due 7/19		2,619,636		2,614,056		2,578,508
BBB Industries US Holdings, Inc.^{(8), (9)} Automotive	Senior Secured Loan — Initial Term Loan (First Lien) 6.0% Cash, 1.0% Libor Floor, Due 11/21		2,947,500		2,906,715		2,800,125
Bestop, Inc.^{(8), (9)} Automotive	Senior Secured Loan — Delayed Draw Term Loan 6.3% Cash, 1.0% Libor Floor, Due 7/21		34,660		32,776		34,466
Bestop, Inc.^{(8), (9)} Automotive	Senior Secured Loan — First Amendment Term Loan 6.3% Cash, 1.0% Libor Floor, Due 7/21		500,000		495,290		497,200

Portfolio Company/Principal Business	Investment	Percentage Interest/Shares			Amortized Cost		Fair Value⁽²⁾
Aerostructures Holdings L.P.^{(5), (8)} Aerospace and Defense	Partnership Interests		1.2	%	$	1,000,000	$	100,549
Aerostructures Holdings L.P.^{(5), (8)} Aerospace and Defense	Series A Preferred Interests		1.2	%		250,960		1,183,746
Caribe Media Inc. (fka Caribe Information Investments Incorporated)^{(5), (8)} Media: Advertising, Printing & Publishing	Common		1.3	%		359,765		532,342
DBI Holding LLC^{(5), (8)} Services: Business	Class A Warrants		3.2	%		1		1,000
eInstruction Acquisition, LLC^{(5), (8)} Healthcare, Education and Childcare	Membership Units		1.1	%		1,079,617		1,000
FP WRCA Coinvestment Fund VII, Ltd.^{(3), (5)} Capital Equipment	Class A Shares		1,500			1,500,000		811,268
Perseus Holding Corp.^{(5), (8)} Hotel, Gaming & Leisure	Common		0.2	%		400,000		1,000
Roscoe Investors, LLC^{(5), (8)} Healthcare & Pharmaceuticals	Class A Units		1.6	%		1,000,000		1,169,000
Tank Partners Holdings, LLC^{(5), (8), (11)} Energy: Oil & Gas	Unit		5.8	%		980,000		1,000
Tank Partners Holdings, LLC^{(5), (8)} Energy: Oil & Gas	Warrants		1.3	%		185,205		1,000
TRSO II, Inc.^{(5), (8)} Energy: Oil & Gas	Common Stock		5.4	%		1,680,161		1,253,450
New Millennium Holdco, Inc. (Millennium Health, LLC)⁽⁵⁾,⁽⁸⁾ Healthcare & Pharmaceuticals	Common		0.2	%		1,953,299		1,000
Total Investment in Equity Securities (3% of net asset value at fair value)					$	10,389,007	$	5,056,355

Portfolio Company	Investment⁽¹²⁾	Percentage Ownership			Amortized Cost		Fair Value⁽²⁾
Grant Grove CLO, Ltd.^{(3), (13)}	Subordinated Securities, effective interest 0.1%, 1/21 maturity		22.2	%	$	2,485,886	$	1,000
Katonah III, Ltd.^{(3), (13)}	Preferred Shares, effective interest 0.1%, 5/15 maturity		23.1	%		1,287,155		369,000
Katonah 2007-I CLO Ltd.^{(3), (6)}	Preferred Shares, effective interest 30.8%, 4/22 maturity		100	%		28,022,646		20,453,099
Trimaran CLO VII, Ltd.^{(3), (6), (13)}	Income Notes, effective interest 47.9%, 6/21 maturity		10.5	%		1,643,920		1,195,152
Catamaran CLO 2012-1 Ltd.^{(3), (6)}	Subordinated Notes, effective interest 3.1%, 12/23 maturity		24.9	%		5,919,933		2,819,412
Catamaran CLO 2013- 1 Ltd.^{(3), (6)}	Subordinated Notes, effective interest 14.9%, 1/25 maturity		23.5	%		5,237,222		4,918,807
Catamaran CLO 2014-1 Ltd.^{(3), (6)}	Subordinated Notes, effective interest 10.0%, 4/26 maturity		24.9	%		7,818,484		4,546,682
Catamaran CLO 2014-2 Ltd.^{(3), (6)}	Subordinated Notes, effective interest 10.9%, 10/26 maturity		24.9	%		6,967,560		5,092,087
Dryden 30 Senior Loan Fund⁽³⁾	Subordinated Notes, effective interest 36.2%, 11/25 maturity		7.5	%		1,343,467		1,895,566
Catamaran CLO 2015-1 Ltd.^{(3), (6)}	Subordinated Notes, effective interest 9.5%, 4/27 maturity		9.9	%		4,543,317		3,223,255
Catamaran CLO 2016-1 Ltd.^{(3), (6)}	Subordinated Notes, effective interest 13.9%, 1/29 maturity		24.9	%		10,140,000		8,350,290
Total Investment in CLO Subordinated Securities					$	75,409,590	$	52,864,350

Time Deposit and Money Market Accounts	Investment	Yield			Par/Amortized Cost		Fair Value⁽²⁾
JP Morgan Business Money Market Account^{(7), (8)}	Money Market Account		0.1	%	$	14,268	$	14,268
US Bank Money Market Account⁽⁸⁾	Money Market Account		0.1	%		28,685,001		28,685,001
Total Investment in Time Deposit and Money Market Accounts (15% of net asset value at fair value)					$	28,699,269	$	28,699,269
Total Investments⁽⁴⁾ (188% of net asset value at fair value)					$	420,801,057	$	366,471,304

	Nine Months Ended September 30, 2016

Net cash (used in) financing activities as reported	$	(46,702,870	)
Impact of Adoption		3,771,347

Net cash (used in) financing activities after adoption	$	(42,931,523	)

	(unaudited)						(unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

Net increase (decrease) in net assets resulting from operations	$	(669,449	)	$	2,716,613		$	2,237,830		$	(1,118,600	)
Net (increase) decrease in net assets allocated to unvested share awards		3,260			(30,313	)		(18,094	)		16,701

Net increase (decrease) in net assets available to common stockholders	$	(666,189	)	$	2,686,300		$	2,219,736		$	(1,101,900	)
Weighted average number of common shares outstanding for basic shares computation		37,196,621			37,152,622			37,202,011			37,142,002

Weighted average number of common and common stock equivalent shares outstanding for diluted shares computation		37,196,621			37,152,622			37,202,011			37,142,002

Net increase (decrease) in net assets per basic common shares:
Net increase (decrease) in net assets from operations	$	(0.02	)	$	0.07		$	0.06		$	(0.03	)
Net increase (decrease) in net assets per diluted shares:
Net increase (decrease) in net assets from operations	$	(0.02	)	$	0.07		$	0.06		$	(0.03	)

	September 30, 2017 (unaudited)							December 31, 2016
Security Type	Cost/ Amortized Cost		Fair Value		%¹			Cost/ Amortized Cost		Fair Value		%¹
Short-term Investments²		57,024,828	$	57,024,828		18			28,699,269	$	28,699,269		8
Senior Secured Loan		49,982,415		46,124,914		15			207,701,078		200,322,152		55
Junior Secured Loan		59,490,855		58,343,554		18			37,251,776		35,444,440		10
Senior Unsecured Loan		20,000,000		20,000,000		6			-		-		-
First Lien Bond		3,054,337		1,063,762		-			3,060,919		1,089,338		-
Senior Secured Bond		1,503,404		1,494,600		-			1,506,461		1,487,400		-
CLO Fund Securities		78,544,739		51,843,344		16			76,851,317		54,174,350		15
Equity Securities		10,389,007		4,450,177		1			10,389,007		5,056,355		1
Asset Manager Affiliates³		53,341,230		39,679,000		13			55,341,230		40,198,000		11
Joint Venture		36,738,873		36,591,122		13			-		-		-

Total	$	370,069,689	$	316,615,300		100	%	$	420,801,057	$	366,471,304		100	%

	September 30, 2017 (unaudited)
Investment	Cost/Amortized Cost		Fair Value		% of FMV
Asset Manager Affiliates	$	53,341,230	$	39,679,000		13	%
KCAP Freedom 3 LLC		36,738,873		36,591,122		12
US Bank Money Market Account		32,001,559		32,001,559		10
Katonah 2007-I CLO Ltd.		31,123,451		21,447,386		7
Trimaran Advisors, L.L.C.		20,000,000		20,000,000		6
U.S Treasury Bills - CUSIP: 912796LY3		15,007,000		15,007,000		5
U.S Treasury Bills - CUSIP: 912796KR9		10,002,000		10,002,000		3
Tank Partners Holdings, LLC		12,420,461		8,222,814		3
Catamaran CLO 2016-1 Ltd.		10,196,554		8,585,018		3
Grupo HIMA San Pablo, Inc.		10,023,444		9,290,017		3
Total	$	230,854,572	$	200,825,916		65	%

	Fair Value at December 31, 2016		Purchases/(Sales) of or Advances/(Distributions)			Net Accretion		Unrealized Gain/(Loss)			Fair Value at of September 30, 2017 (unaudited)		Interest Income		Dividend Income

Asset Manager Affiliates	$	40,198,000	$	(2,000,000	)	$	-	$	1,481,000		$	39,679,000	$	-	$	180,000
Trimaran Advisors, LLC Related Party Loan		-		20,000,000			-		-			20,000,000		506,306		-
Katonah 2007-I CLO, Ltd.		20,453,099		(1,841,861	)		4,942,665		(2,106,519	)		21,447,386		4,942,665		-
Trimaran CLO VII, Ltd.		1,195,152		(1,264,090	)		-		78,938			10,000		-		-
Catamaran CLO 2012-1, Ltd.		2,819,412		(636,377	)		476,425		(419,650	)		2,239,810		476,425		-
Catamaran CLO 2013-1, Ltd.		4,918,807		(985,219	)		534,047		(661,535	)		3,806,101		534,047		-
Catamaran CLO 2014-1, Ltd.		4,546,682		303,037			560,220		(562,318	)		4,847,621		560,220		-
Catamaran CLO 2014-2, Ltd.		5,092,087		(880,468	)		612,786		(340,395	)		4,484,010		612,786		-
Catamaran CLO 2015-1, Ltd.		3,223,255		(442,803	)		316,181		(62,913	)		3,033,719		316,181		-
Catamaran CLO 2016-1, Ltd.		8,350,290		(791,935	)		848,489		178,174			8,585,018		848,489		-
CRMN 2014-1A		1,310,000		-			9,659		200,341			1,520,000		87,974		-
KCAP Freedom 3, LLC		-		36,738,873			-		(147,751	)		36,591,122		-		685,000

Total Affiliated Investments	$	92,106,784	$	48,199,157		$	8,300,472	$	(2,362,628	)	$	146,243,787	$	8,885,093	$	865,000

	As of
	September 30, 2017
Investment at fair value	$	62,591,610
Total Assets	$	62,591,610

Total Liabilities	$	1,026,962
Total Equity		61,564,648
Total Liabilities and Equity	$	62,591,610

	As of September 30, 2017 (unaudited)
	Level I		Level II		Level III		Total
Money market accounts	$	—	$	32,015,828	$	—	$	32,015,828
U.S. Treasury Bills		25,009,000		—		—		25,009,000
Debt securities		—		68,707,692		58,319,137		127,026,829
CLO Fund securities		—		—		51,843,344		51,843,344
Equity securities		—		—		4,450,177		4,450,177
Asset Manager Affiliates		—		—		39,679,000		39,679,000
Joint Venture		—		—		36,591,122		36,591,122

Total	$	25,009,000	$	100,723,520	$	190,882,780	$	316,615,300

	As of December 31, 2016
	Level I		Level II		Level III		Total
Money market accounts	$	—	$	28,699,269	$	—	$	28,699,269
Debt securities		—		84,601,585		153,741,745		238,343,330
CLO Fund securities		—		—		54,174,350		54,174,350
Equity securities		—		—		5,056,355		5,056,355
Asset Manager Affiliates		—		—		40,198,000		40,198,000

Total	$	—	$	113,300,854	$	253,170,450	$	366,471,304

	Year Ended December 31, 2016
	Debt Securities			CLO Fund Securities			Equity Securities			Asset Manager Affiliate			Joint Venture		Total
Balance, December 31, 2015	$	183,400,465		$	55,872,382		$	9,103,003		$	57,381,000		$	—	$	305,756,850
Transfers out of Level III		(14,855,471	)¹		—			—			—			—		(14,855,471	)
Transfers into Level III		22,107,141	²		—			445,485			—			—		22,552,626
Net accretion (amortization)		318,999			(2,192,069	)		—			—			—		(1,873,070	)
Purchases		33,641,315			10,140,000			180,161			—			—		43,961,476
Sales/Paydowns/Return of Capital		(66,559,349	)		(4,200,000	)		(4,743,682	)		(1,250,000	)		—		(76,753,031	)
Total realized gain (loss) included in earnings		(366,924	)		(10,111,560	)		4,484,742			—			—		(5,993,742	)
Total unrealized gain (loss) included in earnings		(3,944,431	)		4,665,597			(4,413,354	)		(15,933,000	)		—		(19,625,188	)
Balance, December 31, 2016	$	153,741,745		$	54,174,350		$	5,056,355		$	40,198,000		$	—		253,170,450
Changes in unrealized gains (losses) included in earnings related to investments still held at reporting date	$	(6,969,509	)	$	4,665,597		$	(4,413,354	)	$	(15,933,000	)	$	—	$	(22,650,266	)

Type	Fair Value	Primary Valuation Methodology	Unobservable Inputs	Range of Inputs (Weighted Average)
Type	Fair Value	Primary Valuation Methodology	Unobservable Inputs	Range of Inputs (Weighted Average)
Debt Securities	$ 11,219,800	Enterprise Value	Average EBITDA Multiple / WACC	5.2x - 6.7x (5.5x) 13.3% - 17.7% (16.8%)
Debt Securities	47,099,337	Income Approach	Implied Discount Rate	6.0% - 26.4% (13.8%)
Equity Securities	4,442,177	Enterprise Value	Average EBITDA Multiple / WACC	4.6x – 16.1x (10.4x) 10.6% - 14.6% (12.2%)
Equity Securities	8,000	Options Value	Qualitative Inputs⁽¹⁾
CLO Fund Securities	30,395,957	Discounted Cash Flow	Discount Rate	12.0%
			Probability of Default	2.0%
			Loss Severity	25.9%
			Recovery Rate	74.1%
			Prepayment Rate	25.0%
	21,447,386	Liquidation Value	Qualitative Inputs⁽²⁾
Asset Manager Affiliate	39,679,000	Discounted Cash Flow	Discount Rate	2.5% - 12.0% (6.5%)
Joint Venture	36,591,122	Enterprise Value	Qualitative Inputs⁽²⁾
Total Level III Investments	$ 190,882,780

	For the three months ended						For the nine months ended
	September 30,						September 30,
	2017			2016			2017		2016
Fee Revenue	$	3,027,460		$	3,148,353		$	12,000,010	$	9,707,075
Interest Income		25,298			570,865			31,208		1,138,483
Total Income		3,052,758			3,719,218			12,031,218		10,845,558
Operating Expenses		2,547,545			2,789,654			7,852,377		8,618,839
Amortization of Intangibles		-			327,541			327,541		982,623
Interest Expense		121,468			485,355			525,034		1,353,135
Total Expenses		2,669,013			3,602,550			8,704,952		10,954,597
Pre-Tax Income (Loss)		383,745			116,668			3,326,266		(109,039	)
Income Tax (Benefit) Expense		(79,791	)		(100,862	)		978,769		(346,447	)
Net Income	$	463,536		$	217,530		$	2,347,497	$	237,408

	As of September 30, 2017 (unaudited)		As of December 31, 2016

Notes issued by KCAP Senior Funding I, LLC (net of discount and offering costs of: 2016 - $2,286,425 and $2,459,156, respectively)	$	-	$	142,604,419
7.375 Notes (net of offering costs of: 2017 - $306,073; 2016 - $550,774)		26,693,927		32,980,151
6.125 Notes (net of offering costs of: 2017 - $2,757,357)		74,649,843		-
Total	$	101,343,770	$	175,584,570

	Shares		Weighted Average Exercise Price per Share		Weighted Average Contractual Remaining Term (years)		Aggregate Intrinsic Value¹
Options outstanding at January 1, 2016		50,000	$	7.72		3.4
Granted		—		—
Exercised		—		—
Forfeited		—		—
Options outstanding at December 31, 2016		50,000	$	7.72		2.4	$	—
Granted		—		—
Exercised		—		—
Forfeited		—		—
Outstanding at September 30, 2017		50,000	$	7.72		1.6	$	—

Total vested at September 30, 2017		50,000	$	7.72		1.6

	Investments at Fair Value
Security Type	September 30, 2017		December 31, 2016

Cash	$	1,186,838	$	1,307,257
Restricted Cash		—		8,528,298
Short-term Investments		57,024,828		28,699,269
Senior Secured Loan		46,124,913		200,322,152
Junior Secured Loan		58,343,554		35,444,440
Senior Unsecured Loan		20,000,000		—
First Lien Bond		1,063,762		1,089,338
Senior Secured Bond		1,494,600		1,487,400
CLO Fund Securities		51,843,344		54,174,350
Equity Securities		4,450,177		5,056,355
Asset Manager Affiliates		39,679,000		40,198,000
Joint Venture		36,591,122		—

Total	$	317,802,138	$	376,306,859

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017¹			2016¹			2017¹			2016¹
Net investment income	$	0.07		$	0.12		$	0.23		$	0.39
Tax Accounting Difference on CLO Equity Investments		(0.01	)		-			(0.05	)		0.03
Other tax accounting differences		0.01			-			0.01			(0.02	)
Taxable distributable income		0.06			0.12			0.19			0.40
Cash distributed to the Company by Asset Manager Affiliates in excess of their taxable earnings		0.02			0.02			0.05			0.03
Cash received from CLO Equity Investments in excess of their taxable earnings		-			-			0.03			-
Available for distribution²		0.08			0.14			0.27			0.43
Distributed		0.12			0.15			0.36			0.45
Difference	$	(0.04	)	$	(0.01	)	$	(0.09	)	$	(0.02	)