UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~September 30, 2018~~March 31, 2020

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

Commission file number: ~~000-55941~~814-01301

MONROE CAPITAL INCOME PLUS CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Maryland	83-0711022
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
��
311 South Wacker Drive, Suite 6400 Chicago, Illinois	60606
(Address of Principal Executive Office)	(Zip Code)

(312) 258-8300

(Registrant’s Telephone Number, Including Area Code)

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

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
None		N/A		N/A

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	x	Smaller reporting company	¨

Emerging growth company	x

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

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

As of ~~November 12, 2018,~~May 14, 2020 the registrant had ~~100~~8,947,090 shares of common stock, $0.001 par value, outstanding.

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION		3

Item 1.	Consolidated Financial Statements	3

	~~Statement~~Consolidated Statements of Assets and Liabilities as of ~~September 30, 2018~~March 31, 2020 (unaudited) and December 31, 2019	3

	~~Notes to Statement~~Consolidated Statements of ~~Assets~~Operations for the three months ended March 31, 2020 and ~~Liabilities~~2019 (unaudited)	4

	Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2020 and 2019 (unaudited)	5

	Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (unaudited)	6

	Consolidated Schedules of Investments as of March 31, 2020 (unaudited) and December 31, 2019	7

	Notes to Consolidated Financial Statements (unaudited)	14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	729

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1242

Item 4.	Controls and Procedures	1242

PART II. OTHER INFORMATION		1343

Item 1.	Legal Proceedings	1343

Item 1A.	Risk Factors	1343

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1346

Item 3.	Defaults Upon Senior Securities	1346

Item 4.	Mine Safety Disclosures	1346

Item 5.	Other Information	1346

Item 6.	Exhibits	1447

Signatures		1548

Part I. Financial Information

Item 1. Consolidated Financial Statements

MONROE CAPITAL INCOME PLUS CORPORATION

~~STATEMENT~~

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

~~AS OF SEPTEMBER 30, 2018~~

~~(UNAUDITED)~~

ASSETS
Cash $ 1,000
Total assets 1,000

LIABILITIES
Total liabilities -
Net assets $ 1,000

Commitments and contingencies (See Note 4)

ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 100,000,000 shares authorized,
100 shares issued and outstanding $ -
Capital in excess of par value 1,000
Total net assets $ 1,000

Net asset value per share $ 10.00

(in thousands, except per share data)

	March 31, 2020			December 31, 2019
	(unaudited)
ASSETS
Investments at fair value (amortized cost of $160,088 and $99,931, respectively)	$	154,640		$	100,807
Cash and cash equivalents		3,217			2,223
Restricted cash		2,230			1,841
Interest receivable		818			414
Due from affiliates		14			14
Other assets		76			6
Total assets		160,995			105,305

LIABILITIES
Debt:
Revolving credit facility		72,000			31,200
Less: Unamortized deferred financing costs		—			(84	)
Total debt, less unamortized deferred financing costs		72,000			31,116
Interest payable		458			297
Payable for unsettled trades		2,706			2,796
Management fees payable		237			302
Incentive fees payable		—			132
Distributions payable		—			1,387
Accounts payable and accrued expenses		668			530
Directors' fees payable		15			—
Total liabilities		76,084			36,560
Net assets	$	84,911		$	68,745

Commitments and contingencies (See Note 9)

ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 100,000 shares authorized, 8,947 and 6,875 shares issued and outstanding, respectively	$	9		$	7
Capital in excess of par value		89,442			68,718
Accumulated undistributed (overdistributed) earnings		(4,540	)		20
Total net assets	$	84,911		$	68,745

Net asset value per share	$	9.49		$	10.00

See Notes to ~~Statement of Assets and Liabilities.~~Consolidated Financial Statements.

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share data)

Three months ended March 31,
2020 2019
Investment income:
Interest and dividend income $ 2,689 $ 104
Total investment income 2,689 104

Operating expenses:
Interest and other debt financing expenses 545 22
Base management fees 497 47
Incentive fees 109 —
Professional fees 82 60
Administrative service fees 82 47
General and administrative expenses 84 44
Directors' fees 15 15
Expenses before fee waivers and expense reimbursement 1,414 235
Base management fee waiver (260 ) (47 )
Incentive fee waiver (241 ) —
Expense reimbursement — (166 )
Total expenses, net of fee waivers and expense reimbursement 913 22
Net investment income before incomes taxes 1,776 82
Income taxes, including excise taxes 12 —
Net investment income 1,764 82

Net gain (loss):
Net change in unrealized gain (loss) on investments (6,324 ) 126
Net gain (loss) (6,324 ) 126

Net increase (decrease) in net assets resulting from operations $ (4,560 ) $ 208

Per common share data:
Net investment income per share - basic and diluted $ 0.20 $ 0.10
Net increase (decrease) in net assets resulting from operations per share - basic and diluted $ (0.51 ) $ 0.25
Weighted average common shares outstanding - basic and diluted 8,872 848
See Notes to Consolidated Financial Statements.
4
MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(unaudited)

(in thousands)

Common Stock Capital in Accumulated
undistributed

Number
of shares
Par
value
excess
of par value
(overdistributed)
earnings Total
net assets
Balances at December 31, 2018 — $ — $ 1 $ — $ 1
Net investment income — — — 82 82
Net change in unrealized gain (loss) on investments — — — 126 126
Issuance of common stock 1,018 1 10,174 — 10,175
Distributions declared and payable to stockholders — — — (208 ) (208 )
Stock issued in connection with dividend reinvestment plan — — — — —
Balances at March 31, 2019 1,018 $ 1 $ 10,175 $ — $ 10,176

Balances at December 31, 2019 6,875 $ 7 $ 68,718 $ 20 $ 68,745
Net investment income — — — 1,764 1,764
Net change in unrealized gain (loss) on investments — — — (6,324 ) (6,324 )
Issuance of common stock 2,036 2 20,367 — 20,369
Distributions declared and payable to stockholders — — — — —
Stock issued in connection with dividend reinvestment plan 36 — 357 — 357
Balances at March 31, 2020 8,947 $ 9 $ 89,442 $ (4,540 ) $ 84,911
See Notes to Consolidated Financial Statements.
5
MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

(in thousands)

Three months ended March 31,
2020 2019
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations $ (4,560 ) $ 208
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net change in unrealized (gain) loss on investments 6,324 (126 )
Payment-in-kind interest income (29 ) —
Net accretion of discounts and amortization of premiums (125 ) (3 )
Purchases of investments (62,374 ) (8,923 )
Proceeds from principal payments and sale of investments 2,371 5
Amortization of deferred financing costs 88 18
Changes in operating assets and liabilities:
Interest receivable (404 ) (55 )
Due from affiliates — (166 )
Other assets (70 ) —
Interest payable 161 5
Payable for unsettled trades (90 ) —
Management fees payable (65 ) —
Due to broker — 10,000
Incentive fees payable (132 ) —
Accounts payable and accrued expenses 138 159
Directors' fees payable 15 15
Net cash provided by (used in) operating activities (58,752 ) 1,137

Cash flows from financing activities:
Borrowings on revolving credit facility 60,400 —
Repayments of revolving credit facility (19,600 ) —
Payments of deferred financing costs (4 ) (320 )
Proceeds from issuance of common shares 20,369 10,175
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $357 and $0, respectively (1,030 ) —
Net cash provided by (used in) financing activities 60,135 9,855

Net increase (decrease) in Cash and cash equivalents and Restricted cash 1,383 10,992
Cash, Cash equivalents and Restricted cash, beginning of period 4,064 1
Cash, Cash equivalents and Restricted cash, end of period $ 5,447 $ 10,993

Supplemental disclosure of cash flow information:
Cash interest paid during the period $ 296 $ —
Cash paid for excise taxes during the period $ 25 $ —
The following tables provide a reconciliation of cash, cash equivalents and restricted cash reported on the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts on the Consolidated Statements of Cash Flows:
March 31,
2020 December 31,
2019
Cash and cash equivalents $ 3,217 $ 2,223
Restricted cash 2,230 1,841
Total cash, cash equivalents and restricted cash shown on the Consolidated Statements of Cash Flows $ 5,447 $ 4,064
March 31,
2019 December 31,
2018
Cash and cash equivalents $ 10,962 $ 1
Restricted cash 31 —
Total cash, cash equivalents and restricted cash shown on the Consolidated Statements of Cash Flows $ 10,993 $ 1
See Notes to Consolidated Financial Statements.
6
MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
(unaudited)
March 31, 2020
(in thousands, except for shares and units)
Portfolio Company^{(a) (b)} Spread Above
Index^(c) Interest Rate Acquisition
Date^(d) Maturity Principal Amortized
Cost Fair
Value^(e) % of
Net Assets^(f)
Investments:
Senior Secured Loans
Aerospace & Defense
API Holdings III Corp. ^(g) L+ 4.25% 5.24 % 5/2/2019 5/8/2026 1,687 $ 1,680 $ 1,392 1.6 %
SI Holdings, Inc. (Integrated Polymer Solutions) ^(g) L+ 6.00% 7.45 % 12/24/2019 7/25/2025 1,039 1,019 980 1.2 %
SI Holdings, Inc. (Integrated Polymer Solutions) ^(g) L+ 6.00% 7.45 % 7/25/2019 7/25/2025 1,990 1,953 1,877 2.2 %
SI Holdings, Inc. (Integrated Polymer Solutions) (Revolver) L+ 6.00% 7.45 % 7/25/2019 7/25/2024 316 316 316 0.4 %
5,032 4,968 4,565 5.4 %
Automotive
Rough Country, LLC ^(g) L+ 3.50% 4.57 % 4/17/2019 5/25/2023 1,346 1,342 1,317 1.5 %
Truck-Lite Co., LLC ^(g) L+ 6.25% 7.32 % 3/11/2020 12/14/2026 3,478 3,444 3,444 4.1 %
Truck-Lite Co., LLC (Delayed Draw) ^{(h) (i)} L+ 6.25% 7.32 % 3/11/2020 12/14/2026 513 — — 0.0 %
Wheel Pros, LLC ^(g) L+ 4.75% 5.82 % 5/13/2019 4/4/2025 2,475 2,452 1,794 2.1 %
7,812 7,238 6,555 7.7 %
Banking, Finance, Insurance & Real Estate
777 SPV I, LLC (Delayed Draw) ^{(i) (j)} L+ 8.50% 10.25 % 4/15/2019 4/14/2023 1,735 1,717 1,739 2.0 %
Avison Young (USA), Inc. ^{(g) (j) (k)} L+ 5.00% 6.45 % 4/26/2019 1/30/2026 1,980 1,962 1,630 1.9 %
InsideRE Holdings, LLC and InsideRE, LLC ^(g) L+ 6.50% 7.95 % 9/9/2019 9/9/2024 2,985 2,931 2,994 3.5 %
InsideRE Holdings, LLC and InsideRE, LLC (Revolver) L+ 6.50% 7.50 % 9/9/2019 9/9/2024 429 429 429 0.5 %
Kudu Investment Holdings, LLC ^{(g) (j)} L+ 6.25% 7.70 % 12/23/2019 12/23/2025 2,750 2,704 2,686 3.2 %
Kudu Investment Holdings, LLC (Delayed Draw) ^{(h) (i) (j)} L+ 6.25% 7.68 % 12/23/2019 12/23/2025 1,833 579 565 0.7 %
Kudu Investment Holdings, LLC (Revolver) ^{(h) (j)} L+ 6.25% 7.70 % 12/23/2019 12/23/2025 241 — — 0.0 %
TCP-NG (U.S.), LLC ^{(g) (j)} L+ 7.25% 8.75 % 8/23/2019 8/22/2024 1,663 1,638 1,615 1.9 %
TCP-NG (U.S.), LLC (Revolver) ^{(h) (j)} L+ 7.25% 8.75 % 8/23/2019 8/22/2024 105 — — 0.0 %
Team RMS, LLC ^(g) L+ 6.00% 7.00 % 9/20/2019 9/20/2024 7,960 7,835 7,695 9.1 %
Team RMS, LLC (Delayed Draw) ^{(h) (i)} L+ 6.00% 7.00 % 9/20/2019 9/20/2024 367 73 71 0.1 %
Team RMS, LLC (Revolver) ^(h) L+ 6.00% 7.00 % 9/20/2019 9/20/2024 643 286 277 0.3 %
22,691 20,154 19,701 23.2 %
Beverage, Food & Tobacco
Huff Hispanic Food Holdings, LLC ^(g) L+ 5.50% 6.50 % 10/18/2019 10/18/2024 5,970 5,860 5,889 6.9 %
Huff Hispanic Food Holdings, LLC (Delayed Draw) ^{(h) (i)} L+ 5.50% 6.50 % 10/18/2019 10/18/2024 333 — — 0.0 %
Huff Hispanic Food Holdings, LLC (Revolver) ^(h) L+ 5.50% 6.50 % 10/18/2019 10/18/2024 1,286 729 719 0.9 %
LX/JT Intermediate Holdings, Inc. ^(g) L+ 6.00% 7.50 % 3/11/2020 3/11/2025 6,000 5,881 5,880 6.9 %
LX/JT Intermediate Holdings, Inc. (Revolver) ^(h) L+ 6.00% 7.50 % 3/11/2020 3/11/2025 500 — — 0.0 %
14,089 12,470 12,488 14.7 %
Capital Equipment
MCP Shaw Acquisitionco, LLC ^(g) L+ 6.50% 8.11 % 2/28/2020 11/28/2025 8,000 7,843 7,832 9.2 %
MCP Shaw Acquisitionco, LLC (Revolver) L+ 6.50% 8.02 % 2/28/2020 11/28/2025 1,427 1,427 1,397 1.6 %
9,427 9,270 9,229 10.8 %
Consumer Goods: Durable
Franchise Group Intermediate Holdco, LLC ^(g) L+ 9.00% 10.50 % 2/24/2020 2/14/2025 4,500 4,412 4,334 5.1 %
4,500 4,412 4,334 5.1 %
Consumer Goods: Non-Durable
Quirch Foods Holdings, LLC ^(g) L+ 6.00% 6.96 % 2/14/2019 12/19/2025 1,234 1,223 1,080 1.3 %
1,234 1,223 1,080 1.3 %
Containers, Packaging & Glass
Polychem Acquisition, LLC ^(g) L+ 5.00% 6.08 % 4/8/2019 3/17/2025 1,980 1,971 1,980 2.3 %
1,980 1,971 1,980 2.3 %
Energy: Oil & Gas
BJ Services, LLC ^(g) L+ 7.00% 8.50 % 1/28/2019 1/3/2023 1,900 1,886 1,868 2.2 %
BW Gas & Convenience Holdings, LLC ^(g) L+ 6.25% 7.18 % 11/15/2019 11/18/2024 2,116 2,035 1,778 2.1 %
Fieldwood Energy, LLC ^(g) L+ 5.25% 7.03 % 1/1/2020 4/11/2022 1,000 851 356 0.4 %
Par Petroleum, LLC ^(g) L+ 6.75% 8.60 % 1/27/2020 1/12/2026 1,000 1,007 705 0.8 %
6,016 5,779 4,707 5.5 %
Healthcare & Pharmaceuticals
Apotheco, LLC ^(g) L+ 5.50% 6.50 % 4/8/2019 4/8/2024 1,737 1,707 1,617 1.9 %
Apotheco, LLC (Delayed Draw) ^{(h) (i)} L+ 5.50% 6.50 % 4/8/2019 4/8/2024 824 — — 0.0 %
Apotheco, LLC (Revolver) L+ 5.50% 6.50 % 4/8/2019 4/8/2024 455 455 423 0.5 %
Ascent Midco, LLC ^(g) L+ 5.75% 6.75 % 2/5/2020 2/5/2025 2,494 2,445 2,399 2.8 %
Ascent Midco, LLC ^(h) L+ 5.75% 6.75 % 2/5/2020 2/5/2025 1,014 — — 0.0 %
Ascent Midco, LLC (Revolver) ^(h) L+ 5.75% 6.75 % 2/5/2020 2/5/2025 403 262 252 0.3 %
ERC Finance, LLC ^(g) L+ 4.50% 5.57 % 4/23/2019 9/20/2024 1,980 1,950 1,614 1.9 %
nThrive, Inc. ^(g) L+ 4.50% 5.50 % 5/3/2019 10/20/2022 2,474 2,428 2,097 2.5 %
QF Holdings, Inc. ^(g) L+ 7.00% 8.00 % 9/19/2019 9/19/2024 4,550 4,468 4,402 5.2 %
QF Holdings, Inc. (Delayed Draw) ^{(h) (i)} L+ 7.00% 8.00 % 9/19/2019 9/19/2024 910 — — 0.0 %
QF Holdings, Inc. (Revolver) ^(h) L+ 7.00% 8.20 % 9/19/2019 9/19/2024 546 364 352 0.4 %
WebPT, Inc. ^(g) L+ 6.75% 8.36 % 8/28/2019 8/28/2024 5,000 4,909 4,912 5.8 %
WebPT, Inc. (Delayed Draw) ^{(h) (i)} L+ 6.75% 8.36 % 8/28/2019 8/28/2024 625 — — 0.0 %
WebPT, Inc. (Revolver) L+ 6.75% 7.95 % 8/28/2019 8/28/2024 521 521 521 0.6 %
23,533 19,509 18,589 21.9 %
7
MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
(unaudited)
March 31, 2020
(in thousands, except for shares and units)
Portfolio Company^{(a) (b)} Spread Above
Index^(c) Interest Rate Acquisition
Date^(d) Maturity Principal Amortized
Cost Fair
Value^(e) % of
Net Assets^(f)
High Tech Industries
Acquia, Inc. ^(g) L+ 7.00% 8.58 % 11/1/2019 10/31/2025 5,429 $ 5,327 $ 5,433 6.4 %
Acquia, Inc. (Revolver) ^(h) L+ 7.00% 8.58 % 11/1/2019 10/31/2025 588 — — 0.0 %
Instructure, Inc. ^(g) L+ 7.00% 8.21 % 3/24/2020 3/24/2026 9,000 8,888 8,888 10.5 %
Instructure, Inc. (Revolver) ^(h) L+ 7.00% 8.21 % 3/24/2020 3/24/2026 697 — — 0.0 %
Mindbody, Inc. ^(g) L+ 7.00% 8.00 % 2/15/2019 2/14/2025 1,810 1,778 1,721 2.0 %
Mindbody, Inc. (Revolver) L+ 7.00% 8.07 % 2/15/2019 2/14/2025 190 190 181 0.2 %
Recorded Future, Inc. ^(g) L+ 6.25% 7.25 % 7/3/2019 7/3/2025 3,667 3,599 3,673 4.3 %
Recorded Future, Inc (Delayed Draw) ^{(h) (i)} L+ 6.25% 7.25 % 7/3/2019 7/3/2025 293 — — 0.0 %
Recorded Future, Inc. (Revolver) ^(h) L+ 6.25% 7.25 % 7/3/2019 7/3/2025 440 293 293 0.4 %
Transact Holdings, Inc. ^{(g) (l)} L+ 4.75% 5.74 % 4/18/2019 4/30/2026 750 739 581 0.7 %
22,864 20,814 20,770 24.5 %
Media: Advertising, Printing & Publishing
Digital Room Holdings, Inc. ^(g) L+ 5.00% 6.07 % 5/9/2019 5/21/2026 2,198 2,169 1,917 2.3 %
NTM Acquisition Corp. ^(g) L+ 6.25% 7.70 % 4/18/2019 6/7/2022 4,913 4,893 4,889 5.7 %
XanEdu Publishing, Inc. ^(g) L+ 6.50% 7.50 % 1/28/2020 1/28/2025 2,500 2,452 2,480 2.9 %
XanEdu Publishing, Inc. (Revolver) ^(h) L+ 6.50% 7.50 % 1/28/2020 1/28/2025 651 649 644 0.8 %
10,262 10,163 9,930 11.7 %
Media: Broadcasting & Subscription
Vice Group Holding, Inc. L+ 12.00%
5.92% Cash/
8.00% PIK
11/4/2019 11/2/2022 184 184 181 0.2 %
Vice Group Holding, Inc. L+ 12.00%
5.92% Cash/
8.00% PIK
5/2/2019 11/2/2022 957 950 943 1.1 %
Vice Group Holding, Inc. L+ 12.00% 13.77 % 5/2/2019 11/2/2022 300 300 296 0.4 %
Vice Group Holding, Inc. (Delayed Draw) ^{(h) (i)} L+ 12.00% 13.77 % 5/2/2019 11/2/2022 120 — — 0.0 %
1,561 1,434 1,420 1.7 %
Media: Diversified & Production
Crownpeak Technology, Inc. ^(g) L+ 6.25% 7.83 % 2/28/2019 2/28/2024 1,000 984 976 1.1 %
Crownpeak Technology, Inc. L+ 6.25% 7.83 % 2/28/2019 �� 2/28/2024 15 15 15 0.0 %
Crownpeak Technology, Inc. (Revolver) ^(h) L+ 6.25% 7.83 % 2/28/2019 2/28/2024 42 — — 0.0 %
Picture Heads Midco, LLC ^(g) L+ 6.75% 7.75 % 8/26/2019 8/31/2023 2,000 1,968 1,874 2.3 %
3,057 2,967 2,865 3.4 %
Metals & Mining
Contura Energy, Inc. ^(g) L+ 7.00% 9.00 % 1/15/2020 6/14/2024 997 829 672 0.8 %
997 829 672 0.8 %
Services: Business
Arcserve (USA), LLC ^(g) L+ 5.50% 7.41 % 5/1/2019 5/1/2024 1,417 1,393 1,361 1.6 %
Certify, Inc. ^(g) L+ 5.75% 6.75 % 2/28/2019 2/28/2024 1,000 987 989 1.2 %
Certify, Inc. (Delayed Draw) ^{(h) (i)} L+ 5.75% 6.75 % 2/28/2019 2/28/2024 136 91 90 0.1 %
Certify, Inc. (Revolver) ^(h) L+ 5.75% 6.75 % 2/28/2019 2/28/2024 46 7 7 0.0 %
Evergreen Skills LUX S.A.R.L. ^(g) L+ 4.75% 6.53 % 1/28/2020 4/28/2021 1,496 1,280 987 1.2 %
Governmentjobs.com, Inc. ^(g) L+ 6.50% 8.24 % 2/5/2020 2/5/2026 7,000 6,864 6,808 8.0 %
Governmentjobs.com, Inc. (Revolver) ^(h) L+ 6.50% 8.24 % 2/5/2020 2/5/2026 933 — — 0.0 %
HS4 Acquistionco, Inc. ^(g) L+ 6.75% 8.20 % 7/9/2019 7/9/2025 4,000 3,927 3,876 4.6 %
HS4 Acquistionco, Inc. (Revolver) ^(h) L+ 6.75% 7.75 % 7/9/2019 7/9/2025 325 187 181 0.2 %
Kaseya Traverse, Inc. ^(m) L+ 7.00%
5.91% Cash/
3.00% PIK
5/3/2019 5/2/2025 2,698 2,650 2,577 3.0 %
Kaseya Traverse, Inc. (Delayed Draw) ^{(h) (i)} L+ 7.00%
5.91% Cash/
3.00% PIK
5/3/2019 5/2/2025 301 39 38 0.0 %
Kaseya Traverse, Inc. (Delayed Draw) ^{(h) (i)} L+ 7.00% 5.91% Cash/
3.00% PIK
3/4/2020 3/4/2022 121 — — 0.0 %
Kaseya Traverse, Inc. (Revolver) ^(h) L+ 6.50% 7.50 % 5/3/2019 5/2/2025 211 209 199 0.2 %
19,684 17,634 17,113 20.1 %
Services: Consumer
Light Wave Dental Management, LLC ^(g) L+ 6.00% 8.00 % 8/1/2019 1/2/2024 1,234 1,218 1,198 1.4 %
Light Wave Dental Management, LLC ^(g) L+ 6.00% 8.00 % 12/1/2019 1/2/2024 234 231 227 0.3 %
Light Wave Dental Management, LLC ^(g) L+ 6.00% 8.00 % 12/1/2019 1/2/2024 446 440 432 0.5 %
Light Wave Dental Management, LLC ^(g) L+ 6.00% 8.00 % 12/6/2019 1/2/2024 122 122 118 0.1 %
Light Wave Dental Management, LLC ^(g) L+ 6.00% 8.00 % 12/6/2019 1/2/2024 1,300 1,300 1,262 1.5 %
Light Wave Dental Management, LLC ^(g) L+ 6.00% 8.00 % 2/12/2020 1/2/2024 64 63 62 0.1 %
Light Wave Dental Management, LLC L+ 6.00% 8.00 % 12/6/2019 1/2/2024 363 358 352 0.4 %
Light Wave Dental Management, LLC (Delayed Draw) ^{(h) (i)} L+ 6.00% 8.00 % 8/1/2019 1/2/2024 640 245 238 0.3 %
Light Wave Dental Management, LLC (Revolver) L+ 6.00% 8.00 % 8/1/2019 1/2/2024 128 128 124 0.1 %
QuoteLab, LLC (Delayed Draw) ^{(h) (i)} L+ 4.60% 5.60 % 2/28/2020 2/26/2025 47 — — 0.0 %
4,578 4,105 4,013 4.7 %
Telecommunications
DataOnline Corp. ^(g) L+ 5.50% 7.11 % 11/13/2019 11/13/2025 6,484 6,348 6,200 7.3 %
DataOnline Corp. (Revolver) ^(h) L+ 5.50% 6.70 % 11/13/2019 11/13/2025 844 633 605 0.7 %
7,328 6,981 6,805 8.0 %
Transportation: Cargo
Pasha Group ^{(g) (l)} L+ 7.50% 8.50 % 2/25/2020 1/26/2023 1,961 1,968 1,667 2.0 %
1,961 1,968 1,667 2.0 %
  Total Senior Secured Loans 168,606 153,889 148,483 174.8 %
8
MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
(unaudited)
March 31, 2020
(in thousands, except for shares and units)
Portfolio Company^{(a) (b)} Spread Above
Index^(c) Interest Rate Acquisition
Date^(d) Maturity Principal Amortized
Cost Fair
Value^(e) % of
Net Assets^(f)
  Unitranche Secured Loans⁽ⁿ⁾
Services: Consumer
QuoteLab, LLC ^(g) L+ 4.60% 5.60 % 2/26/2019 2/26/2025 997 $ 982 $ 983 1.2 %
997 982 983 1.2 %
  Total Unitranche Secured Loans 997 982 983 1.2 %

  Junior Secured Loans
ALTA Enterprises, LLC ^(g) (j) L+ 8.00% 9.80 % 2/14/2020 8/13/2025 4,000 3,863 3,889 4.6 %
4,000 3,863 3,889 4.6 %
  Total Junior Secured Loans 4,000 3,863 3,889 4.6 %

  Equity Securities^{(o) (p)}
Banking, Finance, Insurance & Real Estate
InsideRE Holdings, LLC and InsideRE, LLC (257,143 Class A common units) — — ^(q) 9/9/2019 — — 257 265 0.3 %
257 265 0.3 %
Beverage, Food & Tobacco
Huff Hispanic Food Holdings, LLC (171,429 Class A interests) — — ^(q) 10/18/2019 — — 171 117 0.1 %
171 117 0.1 %
Capital Equipment
MCP Shaw Acquisitionco, LLC (95,125 Class A-2 units) — — ^(q) 2/28/2020 — — 95 87 0.1 %
95 87 0.1 %
Healthcare & Pharmaceuticals
Ascent Midco, LLC (725,806 Class A units) — 8.00% PIK 2/5/2020 — — 726 706 0.8 %
726 706 0.8 %
High Tech Industries
Recorded Future, Inc. (40,040 Class A units) ^(r) — — ^(q) 7/3/2019 — — 40 43 0.1 %
40 43 0.1 %
Media: Advertising, Printing & Publishing
XanEdu Publishing, Inc. (65,104 Class A units) — 8.00% PIK 1/28/2020 — — 65 67 0.1 %
65 67 0.1 %
Total Equity Securities 1,354 1,285 1.5 %

TOTAL INVESTMENTS $ 160,088 $ 154,640 182.1 %
9
MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
(unaudited)
March 31, 2020
(in thousands, except for shares and units)
(a) All of the Company's investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of the Company's investments are issued by U.S. portfolio companies unless otherwise noted.
(b) All investments are non-controlled/non-affiliated investments as defined by the 1940 Act. The provisions of the 1940 Act classify investments based on the level of control that the Company maintains in a particular portfolio company.
(c) The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), which resets daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR and the current contractual interest rate in effect at March 31, 2020. Certain investments are subject to a LIBOR interest rate floor, or rate cap.
(d) Except as otherwise noted, all of the Company’s portfolio company investments, which as of March 31, 2020 represented 182.1% of the Company’s net assets or 96.1% of the Company’s total assets, are subject to legal restrictions on sales.
(e) Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith using significant unobservable inputs by the Company's board of directors as required by the 1940 Act. (See Note 4 in the accompanying notes to the consolidated financial statements.)
(f) Percentages are based on net assets of $84,911 as of March 31, 2020.
(g) This security was held in MC Income Plus Financing SPV LLC (the “SPV”) as collateral for the secured revolving credit facility (the “Credit Facility”) with KeyBank National Association. (See Note 6 in the accompanying notes to the consolidated financial statements).
(h) All or a portion of this commitment was unfunded at March 31, 2020. As such, interest is earned only on the funded portion of this commitment.
(i) This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings.
(j) This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of March 31, 2020, non-qualifying assets totaled 7.5% of the Company’s total assets.
(k) This is an international company.
(l) Investment position or portion thereof unsettled as of March 31, 2020.
(m) A portion of this loan (principal of $2,517) is held in the SPV as collateral for the Credit Facility.
(n) The Company structures its unitranche secured loans as senior secured loans. The Company obtains security interests in the assets of these portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of a portfolio company. Generally, the Company syndicates a “first out” portion of the loan to an investor and retains a “last out” portion of the loan, in which case the “first out” portion of the loan will generally receive priority with respect to payments of principal, interest and any other amounts due thereunder. Unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans and the Company’s unitranche secured loans will expose the Company to the risks associated with second lien and subordinated loans and may limit the Company’s recourse or ability to recover collateral upon a portfolio company’s bankruptcy. Unitranche secured loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche secured loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In many cases the Company, together with its affiliates, is the sole or majority lender of these unitranche secured loans, which can afford the Company additional influence with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.
(o) Represents less than 5% ownership of the portfolio company's voting securities.
(p) Ownership of certain equity investments may occur through a holding company or partnership.
(q) Represents a non-income producing security.
(r) As of March 31, 2020, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $8.
n/a - not applicable
See Notes to Consolidated Financial Statements.
10
MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS
December 31, 2019
(in thousands, except for shares and units)
Portfolio Company ^{(a) (b)} Spread Above
Index ^(c) Interest
Rate Acquisition
Date ^(d) Maturity Principal Amortized
Cost Fair
Value ^(e) % of
Net Assets ^(f)
Investments:
Senior Secured Loans
Aerospace & Defense
API Holdings III Corp. ^(g) L+4.25% 6.05 % 5/2/2019 5/8/2026 1,691 $ 1,684 $ 1,632 2.4 %
SI Holdings, Inc. (Integrated Polymer Solutions) ^(g) L+6.00% 7.94 % 12/24/2019 7/25/2025 1,041 1,021 1,041 1.5 %
SI Holdings, Inc. (Integrated Polymer Solutions) ^(g) L+6.00% 7.94 % 7/25/2019 7/25/2025 1,995 1,956 1,994 2.9 %
SI Holdings, Inc. (Integrated Polymer Solutions) (Revolver) ^(h) L+6.00% 7.94 % 7/25/2019 7/25/2024 316 79 79 0.1 %
5,043 4,740 4,746 6.9 %
Automotive
Rough Country, LLC ^(g) L+3.50% 5.30 % 4/17/2019 5/25/2023 1,346 1,342 1,339 1.9 %
Wheel Pros, LLC ^(g) L+4.75% 6.55 % 5/13/2019 4/4/2025 2,481 2,458 2,452 3.6 %
3,827 3,800 3,791 5.5 %
Banking, Finance, Insurance & Real Estate
777 SPV I LLC (Delayed Draw) ^{(i) (j)} L+8.50% 10.30 % 4/15/2019 4/14/2023 1,775 1,756 1,780 2.6 %
Avison Young (USA), Inc. ^{(g) (j) (k)} L+5.00% 6.94 % 4/26/2019 1/30/2026 1,985 1,966 1,954 2.8 %
InsideRE Holdings, LLC and InsideRE, LLC ^(g) L+6.50% 8.46 % 9/9/2019 9/9/2024 2,993 2,936 3,006 4.4 %
InsideRE Holdings, LLC and InsideRE, LLC (Revolver) ^(h) L+6.50% 8.46 % 9/9/2019 9/9/2024 429 — — 0.0 %
Kudu Investment Holdings, LLC ^(j) L+6.25% 8.18 % 12/23/2019 12/23/2025 2,750 2,702 2,702 3.9 %
Kudu Investment Holdings, LLC (Delayed Draw) ^{(h) (i) (j)} L+6.25% 8.18 % 12/23/2019 12/23/2025 1,833 — — 0.0 %
Kudu Investment Holdings, LLC (Revolver) ^{(h) (j)} L+6.25% 8.18 % 12/23/2019 12/23/2025 241 — — 0.0 %
TCP-NG (U.S.), LLC ^(j) L+7.25% 9.21 % 8/23/2019 8/22/2024 1,706 1,680 1,703 2.5 %
TCP-NG (U.S.), LLC (Revolver) ^{(h) (j)} L+7.25% 9.21 % 8/23/2019 8/22/2024 105 — — 0.0 %
Team RMS, LLC ^(g) L+6.00% 7.80 % 9/20/2019 9/20/2024 7,980 7,849 7,995 11.6 %
Team RMS, LLC (Delayed Draw) ^{(h) (i)} L+6.00% 7.80 % 9/20/2019 9/20/2024 367 73 73 0.1 %
Team RMS, LLC (Revolver) ^(h) L+6.00% 7.80 % 9/20/2019 9/20/2024 643 115 115 0.2 %
22,807 19,077 19,328 28.1 %
Beverage, Food & Tobacco
Huff Hispanic Food Holdings, LLC ^(g) L+5.50% 7.30 % 10/18/2019 10/18/2024 5,983 5,868 5,989 8.7 %
Huff Hispanic Food Holdings, LLC (Delayed Draw) ^{(h) (i)} L+5.50% 7.30 % 10/18/2019 10/18/2024 333 — — 0.0 %
Huff Hispanic Food Holdings, LLC (Revolver) ^(h) L+5.50% 7.30 % 10/18/2019 10/18/2024 1,286 471 471 0.7 %
7,602 6,339 6,460 9.4 %
Consumer Goods: Non-Durable
Quirch Foods Holdings, LLC ^(g) L+6.00% 7.79 % 2/14/2019 12/19/2025 1,238 1,226 1,238 1.8 %
1,238 1,226 1,238 1.8 %
Containers, Packaging & Glass
Polychem Acquisition, LLC ^(g) L+5.00% 6.95 % 4/8/2019 3/17/2025 1,985 1,975 1,985 2.9 %
1,985 1,975 1,985 2.9 %
Energy: Oil & Gas
BJ Services, LLC ^(g) L+7.00% 8.91 % 1/28/2019 1/3/2023 1,925 1,909 1,914 2.8 %
BW Gas & Convenience Holdings, LLC ^{(g) (l)} L+6.25% 8.05 % 11/15/2019 11/18/2024 2,143 2,057 2,138 3.1 %
4,068 3,966 4,052 5.9 %
Healthcare & Pharmaceuticals
Apotheco, LLC ^(g) L+5.50% 7.30 % 4/8/2019 4/8/2024 1,741 1,710 1,741 2.5 %
Apotheco, LLC (Delayed Draw) ^{(h) (i)} L+5.50% 7.30 % 4/8/2019 4/8/2024 824 — — 0.0 %
Apotheco, LLC (Revolver) ^(h) L+5.50% 7.30 % 4/8/2019 4/8/2024 455 170 170 0.2 %
ERC Finance, LLC ^(g) L+4.50% 6.30 % 4/23/2019 9/20/2024 1,985 1,953 1,925 2.8 %
nThrive, Inc. ^(g) L+4.50% 6.30 % 5/3/2019 10/20/2022 2,481 2,430 2,079 3.0 %
QF Holdings, Inc. ^(g) L+7.00% 8.90 % 9/19/2019 9/19/2024 4,550 4,464 4,536 6.6 %
QF Holdings, Inc. (Delayed Draw) ^{(h) (i)} L+7.00% 8.90 % 9/19/2019 9/19/2024 910 — — 0.0 %
QF Holdings, Inc. (Revolver) ^(h) L+7.00% 8.90 % 9/19/2019 9/19/2024 546 — — 0.0 %
WebPT, Inc. ^(g) L+6.75% 8.66 % 8/28/2019 8/28/2024 5,000 4,904 5,001 7.3 %
WebPT, Inc. (Delayed Draw) ^{(h) (i)} L+6.75% 8.66 % 8/28/2019 8/28/2024 625 — — 0.0 %
WebPT, Inc. (Revolver) ^(h) L+6.75% 8.66 % 8/28/2019 8/28/2024 521 — — 0.0 %
19,638 15,631 15,452 22.4 %
High Tech Industries
Acquia, Inc. ^(g) L+7.00% 8.91 % 11/1/2019 10/31/2025 5,429 5,324 5,446 7.9 %
Acquia, Inc. (Revolver) ^(h) L+7.00% 8.91 % 11/1/2019 10/31/2025 588 — — 0.0 %
Gigamon, Inc. ^(g) L+4.25% 6.04 % 4/26/2019 12/27/2024 1,489 1,438 1,476 2.1 %
Mindbody, Inc. ^(g) L+7.00% 8.79 % 2/15/2019 2/14/2025 1,810 1,777 1,803 2.6 %
Mindbody, Inc. (Revolver) ^(h) L+7.00% 8.79 % 2/15/2019 2/14/2025 190 — — 0.0 %
Recorded Future, Inc. ^(g) L+6.75% 8.55 % 7/3/2019 7/3/2025 3,667 3,596 3,666 5.4 %
Recorded Future, Inc. (Delayed Draw) ^{(h) (i)} L+6.75% 8.55 % 7/3/2019 7/3/2025 293 — — 0.0 %
Recorded Future, Inc. (Revolver) ^(h) L+6.75% 8.55 % 7/3/2019 7/3/2025 440 — — 0.0 %
Transact Holdings, Inc. ^{(g) (l)} L+4.75% 6.55 % 4/18/2019 4/30/2026 750 739 747 1.1 %
14,656 12,874 13,138 19.1 %
11
MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
December 31, 2019
(in thousands, except for shares and units)
Portfolio Company ^{(a) (b)} Spread Above
Index ^(c) Interest
Rate Acquisition
Date ^(d) Maturity Principal Amortized
Cost Fair
Value ^(e) % of
Net Assets ^(f)
Media: Advertising, Printing & Publishing
Digital Room Holdings, Inc. ^(g) L+5.00% 6.80 % 5/9/2019 5/21/2026 2,203 $ 2,173 $ 2,093 3.0 %
NTM Acquisition Corp. ^(g) L+6.25% 8.05 % 4/18/2019 6/7/2022 4,928 4,905 4,928 7.2 %
7,131 7,078 7,021 10.2 %
Media: Broadcasting & Subscription
Vice Group Holding, Inc. L+12.00%
5.92% Cash/
8.00% PIK
11/4/2019 11/2/2022 180 180 180 0.3 %
Vice Group Holding, Inc. L+12.00%
5.92% Cash/
8.00% PIK
5/2/2019 11/2/2022 938 930 938 1.3 %
Vice Group Holding, Inc. (Delayed Draw) ^{(h) (i)} L+12.00% 13.92 % 5/2/2019 11/2/2022 300 — — 0.0 %
Vice Group Holding, Inc. (Delayed Draw) ^{(h) (i)} L+12.00% 13.92 % 5/2/2019 11/2/2022 120 — — 0.0 %
1,538 1,110 1,118 1.6 %
Media: Diversified & Production
Crownpeak Technology, Inc. ^(g) L+6.25% 7.94 % 2/28/2019 2/28/2024 1,000 983 1,003 1.5 %
Crownpeak Technology, Inc. (Delayed Draw) ^{(h) (i)} L+6.25% 7.94 % 2/28/2019 2/28/2024 83 15 15 0.0 %
Crownpeak Technology, Inc. (Revolver) ^(h) L+6.25% 7.94 % 2/28/2019 2/28/2024 42 — — 0.0 %
Picture Heads Midco, LLC ^(g) L+6.75% 8.55 % 8/26/2019 8/31/2023 2,000 1,967 1,978 2.9 %
3,125 2,965 2,996 4.4 %
Services: Business
Arcserve (USA), LLC ^(g) L+6.00% 7.91 % 5/1/2019 5/1/2024 1,426 1,400 1,435 2.1 %
Certify, Inc. ^(g) L+5.75% 7.55 % 2/28/2019 2/28/2024 1,000 987 993 1.4 %
Certify, Inc. (Delayed Draw) ^{(h) (i)} L+5.75% 7.55 % 2/28/2019 2/28/2024 136 68 68 0.1 %
Certify, Inc. (Revolver) ^(h) L+5.75% 7.55 % 2/28/2019 2/28/2024 45 7 7 0.0 %
HS4 Acquistionco, Inc. ^(g) L+6.75% 8.71 % 7/9/2019 7/9/2025 4,000 3,924 3,984 5.8 %
HS4 Acquistionco, Inc. (Revolver) ^(h) L+6.75% 8.54 % 7/9/2019 7/9/2025 325 49 49 0.1 %
Kaseya Traverse, Inc. ^(g) L+6.50%
5.92% Cash/
8.00% PIK
5/3/2019 5/2/2025 2,511 2,464 2,504 3.6 %
Kaseya Traverse, Inc. (Delayed Draw) ^{(h) (i)} L+6.50%
5.92% Cash/
8.00% PIK
5/3/2019 5/2/2025 301 39 39 0.1 %
Kaseya Traverse, Inc. (Revolver) ^(h) L+6.50% 8.30 % 5/3/2019 5/2/2025 211 120 120 0.2 %
9,955 9,058 9,199 13.4 %
Services: Consumer
Light Wave Dental Management, LLC ^(g) L+6.00% 8.00 % 8/1/2019 1/2/2024 1,242 1,215 1,240 1.8 %
Light Wave Dental Management, LLC ^(g) L+6.00% 8.00 % 12/1/2019 1/2/2024 236 236 235 0.3 %
Light Wave Dental Management, LLC ^(g) L+6.00% 8.00 % 12/1/2019 1/2/2024 449 449 448 0.7 %
Light Wave Dental Management, LLC L+6.00% 8.00 % 12/6/2019 1/2/2024 365 360 364 0.5 %
Light Wave Dental Management, LLC (Delayed Draw) ^{(h) (i)} L+6.00% 8.00 % 8/1/2019 1/2/2024 641 21 21 0.0 %
Light Wave Dental Management, LLC (Delayed Draw) ^{(h) (i)} L+6.00% 8.00 % 12/6/2019 1/2/2024 122 — — 0.0 %
Light Wave Dental Management, LLC (Delayed Draw) ^{(h) (i)} L+6.00% 8.00 % 12/6/2019 1/2/2024 1,300 — — 0.0 %
Light Wave Dental Management, LLC (Revolver) ^(h) L+6.00% 8.00 % 8/1/2019 1/2/2024 128 — — 0.0 %
4,483 2,281 2,308 3.3 %
Telecommunications
DataOnline Corp. ^(g) L+5.50% 7.40 % 11/13/2019 11/13/2025 6,500 6,359 6,502 9.5 %
DataOnline Corp. (Revolver) ^(h) L+5.50% 7.40 % 11/13/2019 11/13/2025 844 — — 0.0 %
7,344 6,359 6,502 9.5 %
Total Senior Secured Loans 114,440 98,479 99,334 144.4 %

Unitranche Secured Loans ^(m)
Services: Consumer
QuoteLab, LLC ^(g) L+4.60% 6.40 % 2/26/2019 2/26/2025 1,000 984 1,001 1.5 %
1,000 984 1,001 1.5 %
Total Unitranche Secured Loans 1,000 984 1,001 1.5 %

Equity Securities ^{(n) (o)}
Banking, Finance, Insurance & Real Estate
InsideRE Holdings, LLC and InsideRE, LLC (257,143 Class A common units) — — ^(p) 9/9/2019 — — 257 261 0.4 %
257 261 0.4 %
Beverage, Food & Tobacco
Huff Hispanic Food Holdings, LLC (171,429 Class A interests)
— — ^(p) 10/18/2019 — — 171 169 0.2 %
171 169 0.2 %
High Tech Industries
Recorded Future, Inc. (40,040 Class A units) ^(q) — — ^(p) 7/3/2019 — — 40 42 0.1 %
40 42 0.1 %
Total Equity Securities 468 472 0.7 %

TOTAL INVESTMENTS $ 99,931 $ 100,807 146.6 %
12
MONROE CAPITAL INCOME PLUS CORPORATION
CONSOLIDATED SCHEDULE OF INVESTMENTS – (continued)
December 31, 2019
(a) All of the Company's investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940 (the “1940 Act”), unless otherwise noted. All of the Company's investments are issued by U.S. portfolio companies unless otherwise noted.
(b) All investments are non-controlled/non-affiliated investments as defined by the 1940 Act. The provisions of the 1940 Act classify investments based on the level of control that the Company maintains in a particular portfolio company.
(c) The majority of the investments bear interest at a rate that may be determined by reference to the London Interbank Offered Rate (“LIBOR” or “L”), which resets daily, monthly, quarterly, or semiannually. For each such investment, the Company has provided the spread over LIBOR and the current contractual interest rate in effect at December 31, 2019. Certain investments are subject to a LIBOR interest rate floor, or rate cap.
(d) Except as otherwise noted, all of the Company’s portfolio company investments, which as of December 31, 2019 represented 146.6% of the Company’s net assets or 95.7% of the Company’s total assets, are subject to legal restrictions on sales.
(e) Because there is no readily available market value for these investments, the fair value of these investments is determined in good faith using significant unobservable inputs by the Company's board of directors as required by the 1940 Act. (See Note 4 in the accompanying notes to the consolidated financial statements.)
(f) Percentages are based on net assets of $68,745 as of December 31, 2019.
(g) This security was held in MC Income Plus Financing SPV LLC (the “SPV”) as collateral for the secured revolving credit facility (the “Credit Facility”) with KeyBank National Association. (See Note 6 in the accompanying notes to the consolidated financial statements).
(h) All or a portion of this commitment was unfunded at December 31, 2019. As such, interest is earned only on the funded portion of this commitment.
(i) This delayed draw loan requires that certain financial covenants be met by the portfolio company prior to any fundings.
(j) This investment is treated as a non-qualifying investment under Section 55(a) of the 1940 Act. Under the 1940 Act, the Company may not acquire any non-qualifying asset unless, at the time the acquisition is made, qualifying assets represent at least 70% of the Company’s total assets. As of December 31, 2019, non-qualifying assets totaled 7.7% of the Company’s total assets.
(k) This is an international company.
(l) Investment position or portion thereof unsettled as of December 31, 2019.
(m) The Company structures its unitranche secured loans as senior secured loans. The Company obtains security interests in the assets of these portfolio companies that serve as collateral in support of the repayment of these loans. This collateral may take the form of first-priority liens on the assets of a portfolio company. Generally, the Company syndicates a “first out” portion of the loan to an investor and retains a “last out” portion of the loan, in which case the “first out” portion of the loan will generally receive priority with respect to payments of principal, interest and any other amounts due thereunder. Unitranche structures combine characteristics of traditional first lien senior secured as well as second lien and subordinated loans and the Company’s unitranche secured loans will expose the Company to the risks associated with second lien and subordinated loans and may limit the Company’s recourse or ability to recover collateral upon a portfolio company’s bankruptcy. Unitranche secured loans typically provide for moderate loan amortization in the initial years of the facility, with the majority of the amortization deferred until loan maturity. Unitranche secured loans generally allow the borrower to make a large lump sum payment of principal at the end of the loan term, and there is a risk of loss if the borrower is unable to pay the lump sum or refinance the amount owed at maturity. In many cases the Company, together with its affiliates, is the sole or majority lender of these unitranche secured loans, which can afford the Company additional influence with a borrower in terms of monitoring and, if necessary, remediation in the event of underperformance.
(n) Represents less than 5% ownership of the portfolio company's voting securities.
(o) Ownership of certain equity investments may occur through a holding company or partnership.
(p) Represents a non-income producing security.
(q) As of December 31, 2019, the Company was party to a subscription agreement with a commitment to fund an additional equity investment of $8.
n/a - not applicable
See Notes to Consolidated Financial Statements.
13
MONROE CAPITAL INCOME PLUS CORPORATION
NOTES TO ~~STATEMENT OF ASSETS AND LIABILITIES~~
CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands, except share and per share data)

Note 1. Organization and Principal Business

Monroe Capital Income Plus Corporation ~~(the~~(together with its subsidiaries, the “Company”) is a Maryland corporation that was formed on May 30, ~~2018.~~2018 to act as an externally managed, closed-end, non-diversified investment company. The Company is conducting a best efforts, continuous private offering (the “Private Offering”) of its common stock to accredited investors in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). At each closing, an investor will purchase shares of the Company’s common stock pursuant to a subscription agreement entered into with the Company. The Company is a specialty finance company organized to maximize the total return to the Company’s stockholders in the form of current income and capital appreciation through a variety of investments. The Company ~~intends to elect~~is managed by Monroe Capital BDC Advisors, LLC (“MC Advisors”). On January 14, 2019, the Company elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for U.S. federal income tax purposes, the Company has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its taxable year ended December 31, 2019.

AsOn March 12, 2019, the Company created a wholly-owned subsidiary, MC Income Plus Financing SPV LLC (the “SPV”), for purposes of September 30, 2018, no operations have occurred. The Company issued and sold 100 shares of common stock, par value $0.001, at an aggregate purchase price of $1,000 ($10.00 per share) to Monroe Capital Management Advisors, LLC (“MC Management”), an affiliate of Monroe Capital BDC Advisors, LLC (“MC Advisors”), the Company’s investment adviser. The sale of the Company’s common stock was approved by the unanimous consent of the Company’s Board of Directorsentering into a senior secured revolving credit facility (the ~~“Board”~~“Credit Facility”) ~~at the time.~~
The Company expects to conduct a best efforts, continuous private offering (a “Private Offering”) of the Company’s common stock to accredited investors in reliance on an exemption from the registration requirements of the Securities Act of 1933, as amended. At the closing of an offering, each investor will make a capital commitment (a “Capital Commitment”) to purchase shares of the Company’s common stock pursuant to a subscription agreement entered into with the Company. At each closing, investors will be required to fund their full subscription to purchase shares of the Company’s common stock. The Company anticipates commencing its loan origination and investment activities contemporaneously with the initial closing of the Private Offering.KeyBank National Association. See Note 6 for additional information.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying ~~statement of assets and liabilities~~consolidated financial statements of the Company ~~has~~have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The accompanying consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Articles 6 and 10 of Regulation S-X. The Company has determined it meets the definition of an investment company and follows the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 — Financial Services — Investment Companies (“ASC Topic 946”). ~~The Company’s fiscal year ends on December 31.~~Certain prior period amounts have been reclassified to conform to the current period presentation.

As an emerging growth company, the Company intends to take advantage of ~~September 30, 2018, no operations other than~~ the ~~sale~~extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
On January 15, 2019, the Company completed the initial closing of its Private Offering and ~~issuance of 100 shares of common stock, par value $0.001 at an aggregate purchase price of $1,000 ($10.00 per share) to MC Management have occurred. Accordingly,~~commenced principal operations. As such, the Company had no ~~operations~~substantive operating activities prior to January 15, 2019 and ~~therefore omitted~~any references herein to the ~~statement of operations,~~“three months ended March 31, 2019” are for the ~~statement of changes in net assets, and the statement of cash flows.~~period from January 15, 2019 to March 31, 2019.

Use of Estimates

The preparation of the ~~statement of assets and liabilities~~consolidated financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the ~~statement~~consolidated financial statements and the reported amounts of ~~assets~~revenue and ~~liabilities.~~expenses during the reporting period. Actual results could differ from those estimates.
Consolidation
As permitted under ASC Topic 946, the Company will generally not consolidate its investment in a portfolio company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of its wholly-owned subsidiaries, the SPV, MCIP Holding Company I, LLC, MCIP Holding Company II, LLC and MCIP Holding Company III, LLC, in its consolidated financial statements. All intercompany balances and transactions have been eliminated.
14
Fair Value of Financial Instruments
The Company applies fair value to substantially all of its financial instruments in accordance with ASC Topic 820 — Fair Value Measurements and Disclosures(“ASC Topic 820”). ASC Topic 820 defines fair value, establishes a framework used to measure fair value, and requires disclosures for fair value measurements, including the categorization of financial instruments into a three-level hierarchy based on the transparency of valuation inputs. See Note 4 for further discussion regarding the fair value measurements and hierarchy.
ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash and cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such instruments.
Revenue Recognition
The Company’s revenue recognition policies are as follows:
Investments and related investment income:Interest and dividend income is recorded on the accrual basis to the extent that the Company expects to collect such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. The Company records fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service has been completed.
Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, the Company will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment. For the three months ended March 31, 2020 and 2019, the Company did not receive return of capital distributions from its equity investments.
The Company has certain investments in its portfolio that contain a payment-in-kind (“PIK”) provision, which represents contractual interest or dividends that are added to the principal balance and recorded as income. The Company stops accruing PIK interest or PIK dividends when it is determined that PIK interest or PIK dividends are no longer collectible. To maintain RIC tax treatment, and to avoid corporate tax, substantially all of this income must be paid out to stockholders in the form of distributions, even though the Company has not yet collected the cash.
Loan origination fees, original issue discount and market discount or premiums are capitalized, and the Company then amortizes such amounts using the effective interest method as interest income over the life of the investment. Unamortized discounts and loan origination fees totaled $2,937 and $1,661 as of March 31, 2020 and December 31, 2019, respectively. Upfront loan origination and closing fees received for the three months ended March 31, 2020 and 2019 totaled $1,672 and $145, respectively. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees are recorded as interest income.
The components of the Company’s investment income were as follows:
Three months ended March 31,
2020 2019
Interest income $ 2,470 $ 101
PIK interest income 29 —
Dividend income⁽¹⁾ 10 —
Prepayment gain (loss) 55 —
Accretion of discounts and amortization of premium 125 3
Total investment income $ 2,689 $ 104
(1) Includes PIK dividends of $10 and zero, respectively.
Investment transactions are recorded on a trade-date basis. Realized gains or losses on portfolio investments are calculated based upon the difference between the net proceeds from the disposition and the amortized cost basis of the investment, without regard to unrealized gains or losses previously recognized. Realized gains and losses are recorded within net realized gain (loss) on investments on the consolidated statements of operations. Changes in the fair value of investments from the prior period, as determined by the Company’s board of directors (the “Board”) through the application of the Company’s valuation policy, are included within net change in unrealized gain (loss) on investments on the consolidated statements of operations.
15
Non-accrual: Loans or preferred equity securities are placed on non-accrual status when principal, interest or dividend payments become materially past due, or when there is reasonable doubt that principal, interest or dividends will be collected. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment. Non-accrual loans are restored to accrual status when past due principal, interest, or dividends are paid, and, in management’s judgment are likely to remain current. The Company had no investments on non-accrual status at March 31, 2020 and December 31, 2019.
Distributions
Distributions to common stockholders are recorded on the applicable record date. The amount, if any, to be distributed is determined by the Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are generally distributed at least annually.
The determination of the tax attributes for the Company’s distributions is made annually, based upon its taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on qualified dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and capital gains, but may also include qualified dividends or return of capital.
The Company has adopted a dividend reinvestment plan (“DRIP”) that provides for the reinvestment of dividends and other distributions on behalf of its stockholders that elect to participate in such plan. When the Company declares a dividend or distribution, the Company’s stockholders’ cash distributions will only be reinvested in additional shares of the Company’s common stock if a stockholder specifically “opts in” to the DRIP at least ten (10) days prior to the record date fixed by the Board. Shares issued under the DRIP will be issued at a price per share equal to the net asset value (“NAV”) per share as of the last day of the Company’s fiscal quarter immediately preceding the date that the distribution was declared. See Note 7 for additional information on the Company’s distributions.
Earnings per Share
In accordance with the provisions of ASC Topic 260 —Earnings per Share, basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. The weighted average shares outstanding utilized in the calculation of earnings per share take into account share issues on the issuance date and the Company’s repurchases of its common stock on the repurchase date. See Note 8 for additional information on the Company’s share activity. For the periods presented in these consolidated financial statements, there were no potentially dilutive common shares issued.
Segments
In accordance with ASC Topic 280 — Segment Reporting, the Company has determined that it has a single reporting segment and operating unit structure.

Cash

The Company deposits its cash in a financial institution, and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits.

Cash Equivalents
Cash equivalents are highly liquid investments with a current maturity of three months or less at the date of acquisition, which may include temporary investments in U.S. Treasury Bills (of varying maturities) or money market funds. At the end of each fiscal quarter, the Company may take proactive steps to preserve investment flexibility for the next quarter by investing in cash equivalents, which is dependent upon the composition of its total assets at quarter end. The Company may accomplish this in several ways, including purchasing U.S. Treasury Bills and closing out its positions on a net cash basis after quarter-end, temporarily drawing down on the Credit Facility or other balance sheet transactions as are deemed appropriate for this purpose. There were no cash equivalents outstanding on the consolidated statements of assets and liabilities as of March 31, 2020 and December 31, 2019.
Restricted Cash
Restricted cash includes amounts held within the SPV. Cash held within the SPV is generally restricted to the originations of new investments, the repayment of outstanding debt under the Credit Facility and the related payment of interest expense and the quarterly release of earnings to the Company.
16
Unamortized Deferred Financing Costs
Deferred financing costs represent fees and other direct incremental costs incurred in connection with the Company’s borrowings. As of March 31, 2020 and December 31, 2019, the Company had unamortized deferred financing costs of zero and $84, respectively, presented as a direct reduction of the carrying amount of debt on the consolidated statements of assets and liabilities. These amounts are amortized and included in interest and other debt financing expenses on the consolidated statements of operations over the estimated average life of the borrowings. Amortization of deferred financing costs for the three months ended March 31, 2020 and 2019 was $88 and $18, respectively.
Organization and Offering Costs
Organization costs include, among other things, the cost of organizing as a Maryland corporation, including the cost of legal services, directors’ fees and other fees, including travel-related expenses, pertaining to the Company’s organization. Offering costs include, among other things, legal fees and other costs pertaining to the preparation of the Company’s private placement memorandum and other offering documents. There were no organization or offering costs incurred or outstanding on the consolidated financial statements as of March 31, 2020 and December 31, 2019.
As of both March 31, 2020 and December 31, 2019, MC Management has incurred organizational and offering costs of approximately $419 on behalf of the Company. MC Management has agreed to absorb and pay, on the Company’s behalf, up to $425 for organization and offering costs. If the expenses incurred are greater than $425, the Company will reimburse MC Management for organization and offering costs incurred on behalf of the Company in excess of $425. As these costs have not exceeded the amount to be reimbursed by MC Management as of both March 31, 2020 and December 31, 2019, no such costs have been recorded by the Company.
Income Taxes

~~The~~On January 14, 2019, the Company ~~intends to file an election~~elected to be regulated as a BDC under the 1940 Act. The Company also ~~intends to elect~~elected to be treated as a ~~regulated investment company (“RIC”)~~RIC under Subchapter M of the ~~Internal Revenue~~ Code, ~~of 1986, as amended,~~ for the taxable year ending December 31, ~~2018. So~~2019 and intends to qualify annually as a RIC. As long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its ~~stockholders as dividends.~~stockholders. Rather, any tax liability related to income earned by the Company represents obligations of the Company’s ~~investors~~stockholders and will not be reflected in the consolidated financial statements of the Company.

To qualify as a RIC under Subchapter M of the Code, the Company must, among other things, meet certain source-of-income and asset diversification requirements. In addition, to qualify for RIC tax treatment, the Company must distribute to its stockholders, for each taxable year, at least 90% of its “investment company taxable income” for that year, which is generally its ordinary income plus the excess of its realized net short-term capital gains over its realized net long-term capital losses. In order for the Company not to be subject to U.S. federal excise taxes, it must distribute annually an amount at least equal to the sum of (i) 98% of its net ordinary income (taking into account certain deferrals and elections) for the calendar year, (ii) 98.2% of its capital gains in excess of capital losses for the calendar year and (iii) any net ordinary income and capital gains in excess of capital losses for preceding years that were not distributed during such years. The Company, at its discretion, may carry forward taxable income in excess of calendar year dividends and pay a 4% nondeductible U.S. federal excise tax on this income. For the three months ended March 31, 2020 and 2019, the Company recorded a net expense on the consolidated statements of operations of $12 and zero, respectively, for U.S. federal excise tax. As of March 31, 2020 and December 31, 2019, the Company recorded an accrual for excise taxes of $7 and $20, respectively.
4

Certain of the Company’s consolidated subsidiaries may be subject to U.S. federal and state corporate-level income taxes. For both the three months ended March 31, 2020 and 2019, the Company did not record a net tax expense on the consolidated statements of operations for these subsidiaries.
The Company accounts for income taxes in conformity with ASC Topic 740 —Income Taxes (“ASC Topic 740”). ASC Topic 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in the consolidated financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax benefits of positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits in income tax expense. There were no material uncertain income tax positions through March 31, 2020. The 2018 and 2019 tax years remain subject to examination by U.S. federal and state tax authorities.

Subsequent Events

The Company has evaluated the need for disclosures and/or adjustments resulting from subsequent events through the date the ~~statement of assets and liabilities~~consolidated financial statements were issued. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the ~~statement of assets and liabilities~~consolidated financial statements as of ~~September 30, 2018.~~and for the three months ended March 31, 2020, except as disclosed in Note 11.
17

Recent Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”). The primary objective of ASU 2018-13 is to improve the effectiveness of the disclosure requirements for fair value measurements in the notes to the financial statements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted. The Company ~~does~~has adopted ASU 2018-13 and the adoption did not ~~believe any recently issued, but not yet effective, accounting standards, if currently adopted, would~~ have a ~~material effect~~significant impact on the ~~accompanying statement~~Company’s consolidated financial statements and disclosures.
In March 2020, the FASB issued ASU 2020-04,Reference Rate Reform (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of ~~assets~~March 12, 2020 through December 31, 2022. Management is currently evaluating the impact of the optional guidance on the Company’s consolidated financial statements and ~~liabilities.~~disclosures. The Company did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the three months ended March 31, 2020.

Note 3. Investments
The following tables show the composition of the investment portfolio, at amortized cost and fair value (with corresponding percentage of total portfolio investments):
March 31, 2020 December 31, 2019
Amortized Cost:
Senior secured loans $ 153,889 96.1 % $ 98,479 98.5 %
Unitranche secured loans 982 0.6 984 1.0
Junior secured loans 3,863 2.4 — —
Equity securities 1,354 0.9 468 0.5
Total $ 160,088 100.0 % $ 99,931 100.0 %
March 31, 2020 December 31, 2019
Fair Value:
Senior secured loans $ 148,483 96.0 % $ 99,334 98.5 %
Unitranche secured loans 983 0.6 1,001 1.0
Junior secured loans 3,889 2.5 — —
Equity securities 1,285 0.9 472 0.5
Total $ 154,640 100.0 % $ 100,807 100.0 %
The following tables show the composition of the investment portfolio by geographic region, at amortized cost and fair value (with corresponding percentage of total portfolio investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company, which may not be indicative of the primary source of the portfolio company’s business:
March 31, 2020 December 31, 2019
Amortized Cost:
International $ 1,962 1.2 % $ 1,966 2.0 %
Midwest 28,513 17.8 11,942 12.0
Northeast 34,019 21.3 29,401 29.4
Southeast 31,928 19.9 16,122 16.1
Southwest 13,288 8.3 10,786 10.8
West 50,378 31.5 29,714 29.7
Total $ 160,088 100.0 % $ 99,931 100.0 %
March 31, 2020 December 31, 2019
Fair Value:
International $ 1,630 1.1 % $ 1,954 1.9 %
Midwest 28,248 18.3 12,187 12.1
Northeast 32,973 21.3 29,762 29.5
Southeast 31,056 20.1 15,943 15.8
Southwest 12,419 8.0 10,948 10.9
West 48,314 31.2 30,013 29.8
Total $ 154,640 100.0 % $ 100,807 100.0 %
18
The following tables show the composition of the investment portfolio by industry, at amortized cost and fair value (with corresponding percentage of total portfolio investments):
March 31, 2020 December 31, 2019
Amortized Cost:
Aerospace & Defense $ 4,968 3.1 % $ 4,740 4.7 %
Automotive 7,238 4.5 3,800 3.8
Banking, Finance, Insurance & Real Estate 20,411 12.7 19,334 19.3
Beverage, Food & Tobacco 12,641 7.9 6,510 6.5
Capital Equipment 13,228 8.3 — —
Consumer Goods: Durable 4,412 2.8 — —
Consumer Goods: Non-Durable 1,223 0.8 1,226 1.2
Containers, Packaging & Glass 1,971 1.2 1,975 2.0
Energy: Oil & Gas 5,779 3.6 3,966 4.0
Healthcare & Pharmaceuticals 20,235 12.6 15,631 15.6
High Tech Industries 20,854 13.0 12,914 12.9
Media: Advertising, Printing & Publishing 10,228 6.4 7,078 7.1
Media: Broadcasting & Subscription 1,434 0.9 1,110 1.1
Media: Diversified & Production 2,967 1.9 2,965 3.0
Metals & Mining 829 0.5 — —
Services: Business 17,634 11.0 9,058 9.1
Services: Consumer 5,087 3.2 3,265 3.3
Telecommunications 6,981 4.4 6,359 6.4
Transportation: Cargo 1,968 1.2 — —
Total $ 160,088 100.0 % $ 99,931 100.0 %
March 31, 2020 December 31, 2019
Fair Value:
Aerospace & Defense $ 4,565 3.0 % $ 4,746 4.7 %
Automotive 6,555 4.2 3,791 3.8
Banking, Finance, Insurance & Real Estate 19,966 12.9 19,589 19.4
Beverage, Food & Tobacco 12,605 8.1 6,629 6.6
Capital Equipment 13,205 8.5 — —
Consumer Goods: Durable 4,334 2.8 — —
Consumer Goods: Non-Durable 1,080 0.7 1,238 1.2
Containers, Packaging & Glass 1,980 1.3 1,985 2.0
Energy: Oil & Gas 4,707 3.0 4,052 4.0
Healthcare & Pharmaceuticals 19,295 12.5 15,452 15.3
High Tech Industries 20,813 13.5 13,180 13.1
Media: Advertising, Printing & Publishing 9,997 6.5 7,021 7.0
Media: Broadcasting & Subscription 1,420 0.9 1,118 1.1
Media: Diversified & Production 2,865 1.9 2,996 3.0
Metals & Mining 672 0.4 — —
Services: Business 17,113 11.1 9,199 9.1
Services: Consumer 4,996 3.2 3,309 3.3
Telecommunications 6,805 4.4 6,502 6.4
Transportation: Cargo 1,667 1.1 — —
Total $ 154,640 100.0 % $ 100,807 100.0 %
Note 4. Fair Value Measurements
Investments
The Company values all investments in accordance with ASC Topic 820. ASC Topic 820 requires enhanced disclosures about assets and liabilities that are measured and reported at fair value. As defined in ASC Topic 820, fair value is 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. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the assets or liabilities or market and the assets’ or liabilities’ complexity.
19
ASC Topic 820 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability of inputs used in measuring investments at fair value. 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.
Based on the observability of the inputs used in the valuation techniques, the Company is required to provide disclosures on fair value measurements according to the fair value hierarchy. The fair value hierarchy ranks the observability of the inputs used to determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:
· Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.
· Level 2 — Valuations based on inputs other than quoted prices in active markets, including quoted prices for similar assets or liabilities, which are either directly or indirectly observable.
· Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement. This includes situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant management judgment or estimation.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset’s or liability’s categorization 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 considers factors specific to the asset or liability. All investments as of March 31, 2020 and December 31, 2019, were categorized as Level 3 investments.
With respect to investments for which market quotations are not readily available, the Company’s Board undertakes a multi-step valuation process each quarter, as described below:
· the quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment professionals of MC Advisors responsible for the credit monitoring of the portfolio investment;
· the Board engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of investments for which market quotations are not readily available. The Company will consult with independent valuation firm(s) relative to each portfolio company at least once in every calendar year, but the independent appraisals are generally received quarterly;
· to the extent an independent valuation firm is not engaged to conduct an investment appraisal on an investment for which market quotations are not readily available, the investment will be valued by the MC Advisors investment professional responsible for the credit monitoring;
· preliminary valuation conclusions are then documented and discussed with the investment committee of the Company;
· the audit committee of the Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and MC Advisors adjusts or further supplements the valuation recommendations to reflect any comments provided by the audit committee; and
· the Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of MC Advisors, the independent valuation firm(s) and the audit committee.
The accompanying consolidated schedules of investments held by the Company consist primarily of private debt instruments (“Level 3 debt”). The Company generally uses the income approach to determine fair value for Level 3 debt where market quotations are not readily available, as long as it is appropriate. If there is deterioration in credit quality or a debt investment is in workout status, the Company may consider other factors in determining the fair value, including the value attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. This liquidation analysis may include probability weighting of alternative outcomes. The Company generally considers its Level 3 debt to be performing if the borrower is not in default, the borrower is remitting payments in a timely manner; the loan is in covenant compliance or is otherwise not deemed to be impaired. In determining the fair value of the performing Level 3 debt, the Company considers fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions and other relevant factors, both qualitative and quantitative. In the event that a Level 3 debt instrument is not performing, as defined above, the Company will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the Level 3 debt instrument.
20
Under the income approach, discounted cash flow models are utilized to determine the present value of the future cash flow streams of its debt investments, based on future interest and principal payments as set forth in the associated loan agreements. In determining fair value under the income approach, the Company also considers the following factors: applicable market yields and leverage levels, credit quality, prepayment penalties, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.
Under the market approach, the enterprise value methodology is typically utilized to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one portfolio company, enterprise value is generally best expressed as a range of values, from which the Company derives a single estimate of enterprise value. In estimating the enterprise value of a portfolio company, the Company analyzes various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio company’s historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public. Typically, the enterprise values of private companies are based on multiples of earnings before interest, income taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value.
In addition, for certain debt investments, the Company may base its valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that the Company and others may be willing to pay. Ask prices represent the lowest price that the Company and others may be willing to accept. The Company generally uses the midpoint of the bid/ask range as its best estimate of fair value of such investment.
The Board approved the fair value of the Company’s investment portfolio as of March 31, 2020 and these valuations were determined in accordance with the Company's valuation policy based on information known or knowable as of the valuation date. The COVID-19 pandemic is an unprecedented circumstance that materially impacts the fair value of the Company’s investments. As a result, the fair value of the Company’s portfolio investments may be further negatively impacted after March 31, 2020 by circumstances and events that are not yet known.
Fair Value Disclosures
The following table presents fair value measurements of investments, by major class, as of March 31, 2020, according to the fair value hierarchy:
Fair Value Measurements
Level 1 Level 2 Level 3 Total
Investments:
Senior secured loans $ — $ — $ 148,483 $ 148,483
Unitranche secured loans — — 983 983
Junior secured loans — — 3,889 3,889
Equity securities — — 1,285 1,285
Total investments $ — $ — $ 154,640 $ 154,640
The following table presents fair value measurements of investments, by major class, as of December 31, 2019, according to the fair value hierarchy:
Fair Value Measurements
Level 1 Level 2 Level 3 Total
Investments:
Senior secured loans $ — $ — $ 99,334 $ 99,334
Unitranche secured loans — — 1,001 1,001
Junior secured loans — — — —
Equity securities — — 472 472
Total investments $ — $ — $ 100,807 $ 100,807
Senior secured loans, unitranche secured loans and junior secured loans are collateralized by tangible and intangible assets of the borrowers. These investments include loans to entities that have some level of challenge in obtaining financing from other, more conventional institutions, such as a bank. Interest rates on these loans are either fixed or floating and are based on current market conditions and credit ratings of the borrower. The contractual interest rates on the loans ranged from 4.57% to 13.92% at March 31, 2020 and 5.30% to 13.92% at December 31, 2019. The maturity dates on the loans outstanding at March 31, 2020 range between April 2021 and December 2026.
21
The following tables provide a reconciliation of the beginning and ending balances for investments at fair value that use Level 3 inputs for the three months ended March 31, 2020 and 2019:
Investments
Senior
secured loans Unitranche
secured loans Junior
secured loans Equity
securities Total
investments
Balance as of December 31, 2019 $ 99,334 $ 1,001 $ — $ 472 $ 100,807
Net change in unrealized gain (loss) on investments (6,262 ) (15 ) 26 (73 ) (6,324 )
Purchases of investments and other adjustments to cost ⁽¹⁾ 57,779 — 3,863 886 62,528
Proceeds from principal payments and sales of investments ⁽²⁾ (2,368 ) (3 ) — — (2,371 )
Balance as of March 31, 2020 $ 148,483 $ 983 $ 3,889 $ 1,285 $ 154,640
Investments
Senior
secured loans Unitranche
secured loans Junior
secured loans Equity
securities Total
investments
Balance as of December 31, 2018 $ — $ — $ — $ — $ —
Net change in unrealized gain (loss) on investments 126 — — — 126
Purchases of investments and other adjustments to cost ⁽¹⁾ 8,926 — — — 8,926
Proceeds from principal payments and sales of investments ⁽²⁾ (5 ) — — — (5 )
Balance as of March 31, 2019 $ 9,047 $ — $ — $ — $ 9,047
(1) Includes purchases of new investments, effects of refinancing and restructurings, premium and discount accretion and amortization and PIK interest.
(2) Represents net proceeds from investments sold and principal paydowns received.
The total net change in unrealized gain (loss) on investments included on the consolidated statements of operations for the three months ended March 31, 2020 and 2019, attributable to Level 3 investments still held at March 31, 2020 and 2019, was ($6,286) and $126, respectively. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in or out of Level 3 as of the beginning of the period which the reclassifications occur. There were no transfers among Levels 1, 2 and 3 during the three months ended March 31, 2020 and 2019.
Significant Unobservable Inputs
ASC Topic 820 requires disclosure of quantitative information about the significant unobservable inputs used in the valuation of assets and liabilities classified as Level 3 within the fair value hierarchy. Disclosure of this information is not required in circumstances where a valuation (unadjusted) is obtained from a third-party pricing service and the information regarding the unobservable inputs is not reasonably available to the Company and as such, the disclosures provided below exclude those investments valued in that manner. The tables below are not intended to be all-inclusive, but rather to provide information on significant unobservable inputs and valuation techniques used by the Company.
The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of March 31, 2020 were as follows:
Unobservable Weighted
Average Range
Fair Value Valuation Technique Input Mean Minimum Maximum
Assets:
Senior secured loans $ 81,647 Discounted cash flow EBITDA multiples 9.0 x 6.5 x 18.5 x
Market yields 8.4 % 6.0 % 11.0 %
Senior secured loans 40,744 Discounted cash flow Revenue multiples 6.6 x 2.9 x 10.3 x
Market yields 8.9 % 7.4 % 15.1 %
Senior secured loans 1,615 Enterprise value Book value multiples 1.3 x 1.3 x 1.3 x
Unitranche secured loans 983 Discounted cash flow Revenue multiples 1.0 x 1.0 x 1.0 x
Market yields 7.0 % 7.0 % 7.0 %
Junior secured loans 3,889 Discounted cash flow EBITDA multiples 5.3 x 5.3 x 5.3 x
Market yields 11.2 % 11.2 % 11.2 %
Equity securities 1,242 Enterprise value EBITDA multiples 10.5 x 7.3 x 18.5 x
Equity securities 43 Enterprise value Revenue multiples 10.3 x 10.3 x 10.3 x
Total Level 3 Assets⁽¹⁾ $ 130,163
(1) Excludes loans of $24,477 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is not required.
22
The valuation techniques and significant unobservable inputs used in recurring Level 3 fair value measurements of assets and liabilities as of December 31, 2019 were as follows:
Unobservable Weighted
Average Range
Fair Value Valuation Technique Input Mean Minimum Maximum
Assets:
Senior secured loans $ 30,352 Discounted cash flow Revenue multiples 6.8 x 3.5 x 11.8 x
Market yields 8.9 % 7.9 % 14.6 %
Senior secured loans 44,981 Discounted cash flow EBITDA multiples 10.8 x 7.5 x 19.5 x
Market yields 8.0 % 6.8 % 10.6 %
Unitranche secured loans 1,001 Discounted cash flow Revenue multiples 1.4 x 1.4 x 1.4 x
Market yields 7.0 % 7.0 % 7.0 %
Equity securities 430 Enterprise value EBITDA multiples 16.3 x 11.3 x 19.5 x
Equity securities 42 Enterprise value Revenue multiples 11.8 x 11.8 x 11.8 x
Total Level 3 Assets⁽¹⁾ $ 76,806
(1) Excludes loans of $24,001 at fair value where valuation (unadjusted) is obtained from a third-party pricing service for which such disclosure is not required.
The significant unobservable inputs used in the income approach of fair value measurement of the Company’s investments is the discount rate used to discount the estimated future cash flows expected to be received from the underlying investment, which include both future principal and interest payments. Increases (decreases) in the discount rate would result in a decrease (increase) in the fair value estimate of the investment. Included in the consideration and selection of discount rates are the following factors: risk of default, rating of the investment and comparable investments, and call provisions.
The significant unobservable inputs used in the market approach of fair value measurement of the Company’s investments are the market multiples of EBITDA or revenue of the comparable guideline public companies. The Company selects a population of public companies for each investment with similar operations and attributes of the portfolio company. Using these guideline public companies’ data, a range of multiples of enterprise value to EBITDA or revenue is calculated. The Company selects percentages from the range of multiples for purposes of determining the portfolio company’s estimated enterprise value based on said multiple and generally the latest twelve months EBITDA or revenue of the portfolio company (or other meaningful measure). Increases (decreases) in the multiple will result in an increase (decrease) in enterprise value, resulting in an increase (decrease) in the fair value estimate of the investment.
Other Financial Assets and Liabilities
ASC Topic 820 requires disclosure of the fair value of financial instruments for which it is practical to estimate such value. The Company believes that the carrying amounts of its other financial instruments such as cash and cash equivalents, receivables and payables approximate the fair value of such items due to the short maturity of such instruments. Fair value of the Company’s Credit Facility is estimated by discounting remaining payments using applicable market rates or market quotes for similar instruments at the measurement date, if applicable. As of March 31, 2020 and December 31, 2019, the Company believes that the carrying value of its Credit Facility approximates fair value.
Note 5. Transactions with Related Parties

The Company ~~intends to enter~~has entered into an ~~Investment Advisory Agreement~~investment advisory agreement with MC Advisors (the “Investment Advisory Agreement”), under which MC Advisors, subject to the overall supervision of the Board, ~~will provide~~provides investment advisory services to the Company. The Company ~~will pay~~pays MC Advisors a fee for its services under the Investment Advisory Agreement consisting of two components – a base management fee and an incentive fee. The cost of both the base management fee and the incentive fee ~~will ultimately be~~are borne by the Company’s ~~stockholders.~~stockholders, unless such fees are waived by MC Advisors.

The base management fee ~~will be~~is payable quarterly in arrears and ~~will commence~~commenced with the initial ~~drawdown from investors in~~closing of the Private Offering. Prior to any future quotation or listing of the Company’s securities on a national securities exchange (an “Exchange Listing”) or any future quotation or listing of its securities on any other public trading market, the base management fee ~~will be~~is calculated at an annual rate of 1.50% of average total assets, ~~(which~~which includes assets financed using ~~leverage).~~leverage. Following an Exchange Listing, the base management fee will be calculated at an annual rate of 1.75% of average invested assets (calculated as total assets excluding cash). Base management fees for the three months ended March 31, 2020 and 2019 were $497 and $47, respectively. MC Advisors elected to voluntarily waive $260 and $47 of such base management fees for the three months ended March 31, 2020 and 2019, respectively.
23

The incentive fee ~~will consist~~consists of two parts. The first part ~~will be~~is calculated and payable quarterly in arrears based on the Company’s pre-incentive fee net investment income for the preceding quarter. Pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such as commitment, origination, structuring, diligence and consulting fees or other fees that the Company receives from portfolio companies but excluding fees for providing managerial assistance) accrued during the calendar quarter, minus operating expenses for the quarter (including the base management fee), any expenses payable under the administration agreement (the “Administration Agreement”) between ~~and~~ the Company and Monroe Capital Management Advisors, LLC (“MC ~~Management (the “Administration Agreement”~~Management”) and any interest expense and dividends paid on any outstanding preferred stock, but excluding the incentive ~~fee).~~fee. Pre-incentive fee net investment income will include, in the case of investments with a deferred interest feature such as market discount, debt instruments with ~~payment-in-kind (“PIK”)~~PIK interest, preferred stock with PIK dividends and zero-coupon securities, accrued income that the Company has not yet received in cash. MC Advisors is not under any obligation to reimburse the Company for any part of the incentive fee it ~~received~~receives that was based on accrued interest that the Company never actually receives.

Pre-incentive fee net investment income ~~will~~does not include any realized capital gains ~~realized capital~~or losses or unrealized capital gains or losses. If any distributions from portfolio companies are characterized as a return of capital, such returns of capital would affect the capital gains incentive fee to the extent a gain or loss is realized. Because of the structure of the incentive fee, it is possible that the Company may pay an incentive fee in a quarter where it incurs a loss. For example, if the Company receives pre-incentive fee net investment income in excess of the hurdle rate (as defined below) for a quarter, the Company will pay the applicable incentive fee even if it has incurred a loss in that quarter due to realized and unrealized capital losses.

Pre-incentive fee net investment income, expressed as a rate of return on the value of the Company’s net assets (defined as total assets less indebtedness and before taking into account any incentive fees payable during the period) at the end of the immediately preceding calendar quarter, is compared to a fixed “hurdle rate” of 1.50% per quarter (6% annually).

The Company ~~will pay~~pays MC Advisors an incentive fee with respect to its pre-incentive fee net investment income in each calendar quarter as follows:
· no incentive fee in any calendar quarter in which the pre-incentive fee net investment income does not exceed the hurdle rate of 1.50% (6% annually);
· 100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.76% in any calendar quarter prior to an Exchange Listing or 1.88% in any calendar quarter following an Exchange Listing. The Company refers to this portion of the Company’s pre-incentive fee net investment income as the “catch-up” provision. Prior to an Exchange Listing, the catch-up is meant to provide MC Advisors with 15% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 1.76% in any calendar quarter, and following an Exchange Listing, the catch-up is meant to provide MC Advisors with 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 1.88% in any calendar quarter; and
5
· prior to an Exchange Listing, 15% of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds 1.76% in any calendar quarter, and following an Exchange Listing, 20% of the amount of the Company’s pre-incentive fee net investment income, if any, that exceeds 1.88% in any calendar quarter.

These calculations ~~will be~~are appropriately prorated for any period of less than three months and adjusted for any share issuances or repurchases during the current quarter.

The second part of the incentive fee is a capital gains incentive fee that ~~will be~~is determined and payable in arrears as of the end of each fiscal year (or upon termination of the ~~investment advisory agreement,~~Investment Advisory Agreement, as of the termination date), and equals 15% of the Company’s realized capital gains as of the end of the fiscal year. In determining the capital gains incentive fee payable to MC Advisors, the Company ~~will calculate~~calculates the cumulative aggregate realized capital gains and cumulative aggregate realized capital losses since the Company’s inception, and the aggregate unrealized capital depreciation as of the date of the calculation, as applicable, with respect to each of the investments in the Company’s portfolio. For this purpose, cumulative aggregate realized capital gains, if any, equals the sum of the differences between the net sales price of each investment, when sold, and the amortized cost of such investment. Cumulative aggregate realized capital losses equals the sum of the amounts by which the net sales price of each investment, when sold, is less than the amortized cost of such investment since the Company’s inception. Aggregate unrealized capital depreciation equals the sum of the difference, if negative, between the valuation of each investment as of the applicable calculation date and the amortized cost of such investment. At the end of the applicable year, the amount of capital gains that will serve as the basis for the calculation of the capital gains incentive fee equals the cumulative aggregate realized capital gains less cumulative aggregate realized capital losses, less aggregate unrealized capital depreciation, with respect to the Company’s portfolio of investments. If this number is positive at the end of such year, then the capital gains incentive fee for such year equals 15% of such amount, less the aggregate amount of any capital gains incentive fees paid in respect of the Company’s portfolio in all prior years.

24
While the Investment Advisory Agreement with MC Advisors neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, the Company includes unrealized gains in the calculation of the capital gains incentive fee expense and related accrued capital gains incentive fee. This accrual reflects the incentive fees that would be payable to MC Advisors if the Company’s entire portfolio was liquidated at its fair value as of the balance sheet date even though MC Advisors is not entitled to an incentive fee with respect to unrealized gains unless and until such gains are actually realized.
The composition of the Company’s incentive fees was as follows:
For the three months ended March 31,
2020 2019
Part one incentive fees⁽¹⁾ $ 241 $ —
Part two incentive fees⁽²⁾ (132 ) —
Incentive fees, excluding the impact of the incentive fee waiver 109 —
Incentive fee waiver⁽³⁾ (241 ) —
Total incentive fees, net of incentive fee waiver $ (132 ) $ —
(1) Based on pre-incentive fee net investment income.
(2) Based upon net realized and unrealized gains and losses, or capital gains. The Company accrues, but does not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. If, on a cumulative basis, the sum of net realized gain (loss) plus net unrealized gain (loss) decreases during a period, the Company will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than 15% of the sum of net realized gain (loss) plus net unrealized gain (loss).
(3) Represents part one incentive fees voluntarily waived by MC Advisors.
The Company ~~intends to enter~~has entered into the Administration Agreement with MC Management, under which the Company reimburses MC Management, subject to the review and approval of the Board, for its allocable portion of overhead and other expenses, including the costs of furnishing the Company with office facilities and equipment and providing clerical, bookkeeping, record-keeping and other administrative services at such facilities, and the Company’s allocable portion of the cost of the chief financial officer and chief compliance officer and their respective staffs. To the extent that MC Management outsources any of its functions, the Company will pay the fees associated with such functions on a direct basis, without incremental profit, to MC Management. For the three months ended March 31, 2020 and 2019, the Company incurred $248 and $151, respectively, in administrative expenses (included within Professional fees, Administrative service fees and General and administrative expenses on the consolidated statements of operations) under the Administration Agreement, of which $82 and $47, respectively, was related to MC Management overhead and salary allocation and paid directly to MC Management. As of March 31, 2020 and December 31, 2019, $82 and $70, respectively, of expenses were due to MC Management under this agreement and are included in accounts payable and accrued expenses on the consolidated statements of assets and liabilities.
MC Management agreed to reimburse the Company for administrative expenses (not to include base management fees or credit facility expenses) incurred by the Company of zero and $166 for the three months ended March 31, 2020 and 2019, respectively. Accordingly, the Company has recorded a contra expense of zero and $166 on the consolidated statements of operations for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020 and December 31, 2019, the Company has recorded receivables for the remaining reimbursement from MC Management within due from affiliates on the consolidated statements of assets and liabilities of $14 and $14, respectively.

The Company ~~intends to enter~~has entered into a license agreement on December 5, 2018 with Monroe Capital LLC under which Monroe Capital LLC ~~will~~has agreed to grant the Company a non-exclusive, royalty-free license to use the name “Monroe Capital” for specified purposes in its business. Under this agreement, the Company ~~will have~~has the right to use the “Monroe Capital” name at no cost, subject to certain conditions, for so long as MC Advisors or one of its affiliates remains its investment ~~advisor.~~adviser. Other than with respect to this limited license, the Company ~~will have~~has no legal right to the “Monroe Capital” name or logo.

As of March 31, 2020 and December 31, 2019, the Company had accounts payable to independent members of the Board of $15 and zero, respectively, representing accrued and unpaid fees for their services.
Note ~~4. Commitments~~6. Borrowings
In accordance with the 1940 Act, the Company is permitted to borrow amounts such that its asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing. As of March 31, 2020 and ~~Contingencies~~December 31, 2019, the Company’s asset coverage ratio based on aggregate borrowings outstanding was 218% and 320%, respectively.
The Company has a $75,000 Credit Facility with KeyBank National Association through the Company’s wholly-owned subsidiary, the SPV. On March 6, 2020, the Company amended the Credit Facility to extend the reinvestment period through April 10, 2020 as the Company negotiated a larger amendment to the Credit Facility. The Company incurred expenses of $4 in conjunction with this amendment, which have been capitalized within unamortized deferred financing costs and are amortized into interest and other debt financing expenses over the estimated average life of the borrowings. See Note 11 for additional information.
25
The Company’s ability to borrow under the Credit Facility is subject to certain financial and restrictive covenants as well as availability under the borrowing base, which permits the Company to borrow up to 60% of the principal balance of its portfolio company investments depending on how many portfolio companies are pledged as collateral in the SPV. Under the terms of the Credit Facility, the SPV is allowed to reinvest available cash and make new borrowings under the Credit Facility through April 10, 2020. The maturity date of the Credit Facility is March 12, 2021. Distributions from the SPV to the Company are limited by the terms of the Credit Facility, which generally allows for the distribution of net interest income pursuant to a waterfall quarterly during the reinvestment period. As of March 31, 2020 and December 31, 2019, the fair value of investments of the Company that were held in the SPV as collateral for the Credit Facility was $141,734 and $91,441, respectively, and these investments are identified on the consolidated schedules of investments. As of March 31, 2020 and December 31, 2019, the Company had outstanding borrowings under the Credit Facility of $72,000 and $31,200, respectively.
Borrowings under the Credit Facility bear interest at an annual rate of LIBOR (one or three month, at the SPV’s option) plus 3.00% until April 10, 2020 and LIBOR plus 3.25% thereafter. In addition to the stated interest rate on borrowings, the SPV was required to pay an unused commitment fee of 0.35% from the closing date until June 11, 2019, and thereafter (i) 0.75% per annum on any unused portion of the Credit Facility when the outstanding borrowings are less than or equal to 30% of the facility amount, (ii) 0.55% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 30% of the facility amount but less than or equal to 50% of the facility amount, and (iii) 0.35% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 50% of the facility amount. As of March 31, 2020 and December 31, 2019, the outstanding borrowings were accruing at a weighted average interest rate of 4.5% and 4.7%, respectively.
The composition of the Company’s interest and other debt financing expenses and average outstanding balances were as follows:
Three months ended March 31,
2020 2019
Interest expense $ 401 $ —
Unused commitment fees 56 4
Amortization of deferred financing costs 88 18
Total interest and other debt financing expenses $ 545 $ 22
Average debt outstanding $ 34,610 $ —
Note 7. Distributions
The Company’s distributions are recorded on the applicable record date. There were no distributions declared during the three months ended March 31, 2020. The following table summarizes the distribution declared during the three months ended March 31, 2019:
Date
Declared Record
Date Payment
Date⁽¹⁾ Amount
Per Share⁽²⁾

Distribution
Declared

Three months ended March 31, 2019:
March 19, 2019 March 22, 2019 May 15, 2019 $ 0.20 $ 208
Total distributions declared $ 0.20 $ 208
(1) The portion of the Company’s distribution that is to be reinvested pursuant to the DRIP is issued to the Company’s stockholders on the payment date.
(2) The payment amount approved by the Board was equal to the net increase in net assets resulting from operations per share earned by the Company as determined in accordance with GAAP.
The following table summarizes the Company’s distributions reinvested during the three months ended March 31, 2020:
Payment Date
NAV
Per Share
DRIP Shares
Issued⁽¹⁾ DRIP Shares
Value⁽¹⁾
Three months ended March 31, 2020:
March 17, 2020 $ 10.00 35,717 $ 357
Total proceeds 35,717 $ 357
(1) The Company’s distribution reinvested pursuant to the DRIP was declared on December 13, 2019 and issued to the Company’s stockholders of record on December 20, 2019.
There were no distributions reinvested during the three months ended March 31, 2019.
26
Note 8. Stock Issuances

As of September 30, 2018, MC Management has incurred organization and offering costs of approximately $210,984 on behalf of the Company. In the event receipt of a formal commitment of external capital does not occur, initial organization and offering costs incurred will be borne by MC Management. If a formal commitment of external capital does occur, MC Management has agreed to reimburse the Company up to $250,000 for organization and offering costs. If the expenses incurred are greater than $250,000, the Company will reimburse MC Management for organization and offering costs incurred on behalf of the Company in excess of $250,000. As there has been no formal commitment of external capital as of the date of issuance of this statement of assets and liabilities, no such costs have been recorded by the Company.
~~Note 5. Net Assets~~
~~As of September 30, 2018,~~March 31, 2020, the total number of shares of all classes of capital stock ~~which~~that the Company has the authority to issue iswas 100,000,000 shares of common stock, par value $0.001 per share.
The following tables summarize the issuance of shares pursuant to the Private Offering during the three months ended March 31, 2020 and 2019:
Date NAV Per Share Shares Issued Proceeds
Three months ended March 31, 2020:
January 2, 2020 $ 10.00 2,036,841 $ 20,369
Total 2,036,841 $ 20,369
Date NAV Per Share Shares Issued Proceeds
Three months ended March 31, 2019:
January 15, 2019 $ 10.00 1,017,500 $ 10,175
Total 1,017,500 $ 10,175
During the three months ended March 31, 2020 and 2019, the Company also issued 35,717 and zero shares, respectively, with an aggregate value of $357 and zero, respectively, under the DRIP as disclosed in Note 7.
Note 9. Commitments and Contingencies
Commitments: As of March 31, 2020 and December 31, 2019, the Company had $11,940 and $14,324, respectively, in outstanding commitments to fund investments.
Indemnifications: In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties that provide general indemnifications. The Company’s maximum exposure under these agreements is unknown, as these involve future claims that may be made against the Company but that have not occurred. The Company ~~accepted $1,000~~expects the risk of any future obligations under these indemnifications to be remote.
Concentration of credit and counterparty risk: Credit risk arises primarily from the potential inability of counterparties to perform in ~~capital from MC Management. In exchange for this contribution, MC Management received 100 shares of common stock~~accordance with the terms of the contract. In the event that the counterparties do not fulfill their obligations, the Company ~~at $10 per share.~~may be exposed to risk. The risk of default depends on the creditworthiness of the counterparties or issuers of the instruments. It is the Company’s policy to review, as necessary, the credit standing of each counterparty.
Market risk: The Company’s investments and borrowings are subject to market risk. Market risk is the potential for changes in the value due to market changes. Market risk is directly impacted by the volatility and liquidity in the markets in which the investments and borrowings are traded.

Legal proceedings: In the normal course of business, the Company may be subject to legal and regulatory proceedings that are generally incidental to its ongoing operations. While there can be no assurance of the ultimate disposition of any such proceedings, the Company is not currently aware of any such proceedings or disposition that would have a material adverse effect on the Company’s consolidated financial statements.
627

Note 10. Financial Highlights
The following is a schedule of financial highlights for the three months ended March 31, 2020 and 2019:
March 31, 2020 March 31, 2019
Per share data:
Net asset value at beginning of period $ 10.00 $ 10.00
Net investment income (loss)⁽¹⁾ 0.20 0.10
Net gain (loss)⁽¹⁾ (0.71 ) 0.15
Net increase (decrease) in net assets resulting from operations⁽¹⁾ (0.51 ) 0.25
Stockholder distributions declared⁽²⁾ — (0.20 )
Other⁽³⁾ — (0.05 )
Net asset value at end of period $ 9.49 $ 10.00
Net assets at end of period $ 84,911 $ 10,176
Shares outstanding at end of period 8,947,090 1,017,600
Total return based on average net asset value⁽⁴⁾ (5.93 )% 4.10 %
Ratio/Supplemental data:
Ratio of expenses to average net assets without waivers and expense reimbursement⁽⁵⁾ 7.04 % 22.55 %
Ratio of expenses to average net assets with waivers and expense reimbursement⁽⁵⁾ 5.36 % 2.14 %
Ratio of net investment income (loss) to average net assets without waivers and expense reimbursement⁽⁵⁾ 7.04 % (12.56 )%
Ratio of net investment income (loss) to average net assets with waivers and expense reimbursement⁽⁵⁾ 8.71 % 7.86 %
Portfolio turnover⁽⁶⁾ 1.86 % 0.05 %
(1) The per share data was derived by using the weighted average shares outstanding during the periods presented.
(2) The per share data for distributions reflects the actual amount of distributions declared during the period.
(3) Represents the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of a period end or transaction date.
(4) Total return based on average net asset value is calculated by dividing the net increase in net assets resulting from operations by the average net asset value. Return calculations are not annualized.
(5) Ratios are annualized. Incentive fees included within the ratio are not annualized.
(6) Ratio is not annualized.
Note 11. Subsequent Events
The Company has evaluated subsequent events through May 15, 2020, the date on which the consolidated financial statements were issued.
On May 1, 2020, the Company entered into an amendment to its Credit Facility (the “Credit Facility Amendment”). The terms of the Credit Facility Amendment become effective as of June 1, 2020. The Credit Facility Amendment includes modifications that reduce pricing, expand the investment eligibility parameters under the Credit Facility to include certain opportunistic investments, increase the advance rates available under the Credit Facility, extend the reinvestment period of the Credit Facility to May 1, 2023, and implement various modifications related to the COVID-19 pandemic. In addition, the Credit Facility Amendment implemented an uncommitted accordion feature to upsize the Credit Facility to $300,000 in the future, if needed.
On May 13, 2020, the Board declared a quarterly distribution of $0.20 per share payable on May 20, 2020 to holders of record on May 13, 2020.
On May 15, 2020, the Company issued 1,580,867 shares of common stock at $9.29 per share for proceeds of $14,686 pursuant to the Private Offering.
28

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Except as otherwise specified, references to “we,” “us” and “our” refer to Monroe Capital Income Plus ~~Corporation.~~Corporation and its consolidated subsidiaries; MC Advisors refers to Monroe Capital BDC Advisors, LLC, our investment adviser and a Delaware limited liability company; MC Management refers to Monroe Capital Management Advisors, LLC, our administrator and a Delaware limited liability company; and Monroe Capital refers to Monroe Capital LLC, a Delaware limited liability company, and its subsidiaries and affiliates. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes appearing in our annual report on Form 10-K (the “Annual Report”) for the year ended December 31, 2019, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 10, 2020. The information contained in this section should also be read in conjunction with our unaudited consolidated financial statements and related notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q (the “Quarterly Report”).

FORWARD-LOOKING STATEMENTS

This Quarterly Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that constitute forward-looking statements, which relate to future events or our future performance or future financial condition. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about our company, our industry, our beliefs and our assumptions. The forward-looking statements contained in this Quarterly Report involve risks and uncertainties, including statements as to:

· our future operating results;

· our business prospects and the prospects of our portfolio companies;

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

· the impact of global health epidemics, such as the current novel coronavirus (“COVID-19”) pandemic, on our or our portfolio companies’ business and the global economy;
· the impact of a protracted decline in the liquidity of credit markets on our business;

· the impact of changes inLondon Interbank Offered Rate (“LIBOR”) on our operating results;
· the impact of increased competition;

· the impact of fluctuations in interest rates on our business and our portfolio companies;

· our contractual arrangements and relationships with third parties;

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

· actual and potential conflicts of interest with ~~Monroe Capital BDC~~MC Advisors, ~~LLC (“~~MC ~~Advisors”)~~Management and other affiliates of Monroe Capital;

· the ability of our portfolio companies to achieve their objectives;

· the use of borrowed money to finance a portion of our investments;

· the adequacy of our financing sources and working capital;

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

· the ability of MC Advisors to locate suitable investments for us and to monitor and administer our investments;

· the ability of MC Advisors or its affiliates to attract and retain highly talented professionals;

· our ability to qualify and maintain our qualification as a regulated investment company and as a business development company; and

· the impact of future legislation and regulation on our business and our portfolio companies.

29
We use words such as “anticipates,” “believes,” “expects,” “intends,” “seeks,” “plans,” “estimates,” ~~“targets,” “expects”~~“targets” and similar expressions to identify forward-looking statements. The ~~forward looking~~forward-looking statements contained in this Quarterly Report involve risks and uncertainties. Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in ~~“Item~~“Part I—Item 1A. Risk ~~Factors” of amendment No. 1 to~~Factors” in our ~~Registration Statement on Form 10, filed with the U.S. Securities and Exchange Commission (“SEC”) on July 30, 2018 (File No. 000-55941),~~Annual Report and “Part II—Item 1A. Risk Factors” in this Quarterly Report.

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be inaccurate. Important assumptions include our ability to originate new loans and investments, certain margins and levels of profitability and the availability of additional capital. In light of these and other uncertainties, the inclusion of a projection or forward-looking ~~statement~~statements in this Quarterly Report should not be regarded as a representation by us that our plans and objectives will be achieved.
7

We have based the forward-looking statements included in this Quarterly Report on information available to us on the date of this Quarterly Report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements in this Quarterly Report, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future ~~may file~~ with theSEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and current reports on Form 8-K.

Overview

Monroe Capital Income Plus Corporation is an externally managed, closed-end, non-diversified management investment company that was incorporated under the Maryland General Corporation Law on May 30, 2018. ~~We intend to elect~~On January 14, 2019, we elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). ~~We also intend to elect~~In addition, for U.S. federal income tax purposes we have elected to be treated ~~and intend to qualify annually thereafter,~~ as a regulated investment company (“RIC”) under the ~~subchapter M of the~~U.S. Internal Revenue Code of 1986, as amended (the “Code”)., commencing with our taxable year ended December 31, 2019 and intend to qualify annually hereafter as a RIC.

As an emerging growth company, we intend to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards.

~~As of September 30, 2018, we have not commenced operations.~~
~~Revenues~~
~~Our investment objective~~We are a specialty finance company that is focused on providing financing solutions primarily to ~~maximize the total return to our stockholders~~lower middle-market companies in the ~~form~~United States and Canada. We seek to provide investors with attractive risk-adjusted returns and downside protection associated with investing in asset based and secured corporate private credit opportunities in a manner that is decoupled from public markets’ volatility. We seek to provide attractive risk-adjusted returns and downside protection by investing primarily in secured private credit transactions and assets, targeting investments that have significant downside protection through a focus on asset coverage. We expect to invest primarily in: (i) senior secured and junior secured and unsecured loans, notes, bonds, preferred equity (including preferred partnership equity), convertible debt and other securities; (ii) unitranche secured loans (a combination of ~~current income and capital appreciation through investment in~~ senior ~~unitranche~~secured and junior secured debt in the same facility in which we syndicate a “first out” portion of the loan to an investor and toretain a ~~lesser extent, subordinated~~“last out” portion of the loan) and securities; (iii) asset-based loans and securities; (iv) small business loans and leases; (v) structured debt and structured equity; (vi) syndicated loans; (vii) securitized debt and subordinated notes of collateralized loan obligations facilities, asset-backed securities and other securitized products and warehouse loan facilities; (viii) opportunities to acquire illiquid investments from other third-party funds as a result of liquidity constraints resulting from investor redemptions and market dislocations; and (ix) capital investments in the secondary markets. As of March 31, 2020, our portfolio included approximately 96.0% senior secured loans, 0.6% unitranche secured loans, 2.5% junior secured loans and 0.9% equity ~~investments.~~securities, compared to December 31, 2019, when our portfolio included approximately 98.5% senior secured loans, 1.0% unitranche secured loans and 0.5% equity securities. We ~~seek to~~expect that the companies in which we invest may be leveraged, often as a result of leveraged buy-outs or other recapitalization transactions, and, in certain cases, will not be rated by national ratings agencies. If such companies were rated, we believe that they would typically receive a rating below investment grade (between BB and CCC under the Standard & Poor’s system) from the national rating agencies.
30
We use ~~our~~Monroe Capital’s extensive leveraged finance origination infrastructure and broad expertise in sourcing loans to invest in ~~primarily~~ senior secured, unitranche secured and junior secured debt of middle-market companies. Our ~~investments in senior, unitranche, junior secured debt and other investments generally will range between $2.0 million and $18.0 million each, although this~~ investment size ~~may~~will vary proportionately with the size of our capital base. We believe that our focus on lending to lower middle-market companies offers several advantages as compared to lending to larger companies, including more attractive economics, lower leverage, more comprehensive and restrictive covenants, more expansive events of default, relatively small debt facilities that provide us with enhanced influence over our borrowers, direct access to borrower management and improved information flow.
We are conducting a best efforts, continuous private offering of our common stock to “accredited investors” in reliance on an exemption from the registration requirements of the Securities Act (a “Private Offering”). At each closing an investor will purchase shares of our common stock pursuant to a subscription agreement entered into with us. At each closing, investors will be required to fund their full subscription to purchase shares of our common stock.
The following table summarizes the issuance of shares pursuant to the Private Offering during the three months ended March 31, 2020 (in thousands except shares and per share data):
Date NAV Per Share Shares Issued Proceeds
January 2, 2020 $ 10.00 2,036,841 $ 20,369
Total proceeds 2,036,841 $ 20,369
During the three months ended March 31, 2020, we also issued 35,717 shares with an aggregate value of $0.4 million under our Dividend Reinvestment Plan (“DRIP”).
On January 15, 2019, we completed the initial closing of our Private Offering and commenced principal operations. As such, we had no substantive operating activities prior to January 15, 2019 and any references herein to the “three months ended March 31, 2019” are for the period from January 15, 2019 to March 31, 2019.

~~Expenses~~
All investment professionals of Monroe Capital BDC Advisors, LLC (“MC Advisors”) and/or its affiliates, when and to the extent engaged in providing investment advisory and management services to us, and the compensation and routine overhead expenses of personnel allocable to these services to us, are provided and paid for by MC Advisors and not by us. We bear all other out-of-pocket costs and expenses of our operations and transactions, including, without limitation:
· ~~organization and offering;~~
· ~~calculating our net asset value (including the cost and expenses of any independent valuation firm);~~
· fees and expenses incurred by MC Advisors payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in conducting research and due diligence on prospective investments and equity sponsors, analyzing investment opportunities, structuring our investment and monitoring our investments and portfolio companies on an ongoing basis (although none of MC Advisors’ duties will be subcontracted to sub-advisors);
· any and all fees, costs and expenses incurred in connection with our incurrence of leverage and indebtedness, including borrowings, dollar rolls, reverse purchase agreements, credit facilities, securitizations, margin financing and derivatives and swaps, and including any principal or interest on our borrowings and indebtedness (including, without limitation, any fees, costs, and expenses incurred in obtaining lines of credit, loan commitments and letters of credit for our account in making, carrying, funding and/or otherwise resolving investment guarantees);
· ~~offerings of our common stock and other securities;~~
· ~~investment advisory fees;~~
· administration fees and expenses, if any, payable under the Administration Agreement (including payments under the Administration Agreement between us and Monroe Capital Management Advisors, LLC (“MC Management”) based upon our allocable portion of MC Management’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our chief financial officer and chief compliance officer, and their respective staffs);
8
· any and all fees, costs and expenses incurred in implementing or maintaining third-party or proprietary software tools, programs or other technology for the benefit of the Company (including, without limitation, any and all fees, costs and expenses of any investment, books and records, portfolio compliance and reporting systems such as “Wall Street Office,” “Everest” (Black Mountain), “Mariana,” general ledger or portfolio accounting systems and similar systems and services, including, without limitation, consultant, software licensing, data management and recovery services fees and expenses);
· ~~transfer agent, dividend agent and custodial fees and expenses;~~
· ~~federal and state registration fees;~~
· ~~all costs of registration and listing our shares on any securities exchange;~~
· ~~federal, state and local taxes;~~
· ~~costs of preparing and filing reports or other documents required by the SEC or other regulators;~~
· ~~costs of any reports, proxy statements or other notices to stockholders, including printing costs;~~
· ~~fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;~~
· ~~direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff, independent auditors and outside legal costs;~~
· ~~proxy voting expenses; and~~
· ~~all other expenses incurred by us or MC Management in connection with administering our business.~~
~~Commitments and Contingencies and Off-Balance Sheet Arrangements~~
~~Commitments and Contingencies~~
~~As of September 30, 2018, we have not commenced operations.~~
~~We intend to enter into certain contracts under which we will have material future commitments. We intend to enter into the~~ Investment Advisory Agreement with MC Advisors in accordance with the 1940 Act. Under the Investment Advisory Agreement, MC Advisors will be responsible for sourcing, reviewing and structuring investment opportunities for us, underwriting and conducting diligence on our investments and monitoring our investment portfolio on an ongoing basis. For these services, we will pay (i) a base management fee equal to a percentage of our average invested assets and (ii) an incentive fee based on our performance.
We also intend to enter into the Administration Agreement with MC Management, pursuant to which MC Management will perform, or oversee the performance of, clerical, bookkeeping, recordkeeping, and other required administrative services, including managing the payment of expenses and the performance of administrative and professional services rendered by others. We will reimburse MC Management an amount equal to our allocable portion (subject to the review of our Board of Directors (the “Board”)) of its overhead resulting from its obligations under the Administration Agreement.
~~Off-Balance Sheet Arrangements~~
~~Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not expect to have any off-balance sheet financings or liabilities.~~
9
~~Significant Accounting Estimates and Critical Accounting Policies~~
~~Revenue Recognition~~income

We ~~will record~~generate interest ~~and fee~~ income on ~~an accrual basis to~~ the ~~extent~~debt investments in portfolio company investments that we ~~expect~~originate or acquire. Our debt investments, whether in the form of senior secured, unitranche secured or junior secured debt, typically have an initial term of three to ~~collect such amounts. For loans~~seven years and bear interest at a fixed or floating rate. In some instances, we receive payments on our debt ~~securities with contractual~~investment based on scheduled amortization of the outstanding balances. In addition, we receive repayments of some of our debt investments prior to their scheduled maturity date. In some cases, our investments provide for deferred interest of payment-in-kind (“PIK”) ~~interest,~~interest. In addition, we ~~will not accrue PIK interest if~~may generate revenue in the ~~portfolio company valuation indicates that such PIK interest is not collectible. We will not accrue as a receivable interest on loans~~form of commitment, origination, amendment, structuring or due diligence fees, fees for providing managerial assistance and ~~debt securities if we have reason to doubt our ability to collect such interest.~~consulting fees. Loan origination fees, original issue discount and market discount or premium ~~will be~~are capitalized, and ~~then~~ we ~~will~~accrete or amortize such amounts using the effective interest method as interest income over the life of the investment. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees will be recorded as interest income. We ~~will~~ record prepayment premiums and prepayment gains (losses) on loans ~~and debt securities~~ as interest income. As the frequency or volume of the repayments which trigger these prepayment premiums and prepayment gains (losses) may fluctuate significantly from period to period, the associated interest income ~~when~~recorded may also fluctuate significantly from period to period. Interest and fee income is recorded on the accrual basis to the extent we ~~receive~~expect to collect such amounts. Interest income ~~will be~~is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest ~~will be~~is accrued on a daily basis. ~~All other income will be recorded into income when earned.~~ We ~~will~~ record fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee ~~will~~is generally be deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and ~~will be~~ recognized as fee income in the period ~~earned.~~the service has been completed.

Dividend income on preferred equity securities ~~will be~~is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities ~~will be~~is recorded on the record date for private portfolio companies. Each distribution received from limited liability company (“LLC”) and limited partnership (“LP”) investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital ~~will be~~are recorded as a reduction in the cost basis of the investment. The frequency and volume of the distributions on common equity securities and LLC and LP investments may fluctuate significantly from period to period.

Expenses
Our primary operating expenses include the payment of base management and incentive fees to MC Advisors under the investment advisory agreement entered into on December 5, 2018 (the “Investment Advisory Agreement”), the payment of fees to MC Management for our allocable portion of overhead and other expenses under the administration agreement entered into on December 5, 2018 (the “Administration Agreement”) and other operating costs. See Note 5 to our consolidated financial statements and “Related Party Transactions” below for additional information on our Investment Advisory Agreement and Administration Agreement. Our expenses also include interest expense on indebtedness. We bear all other out-of-pocket costs and expenses of our operations and transactions.
Net gain (loss)
We recognize realized gains or losses on investments based on the difference between the net proceeds from the disposition and the cost basis of the investment without regard to unrealized gains or losses previously recognized. We record current period changes in fair value of investments within net change in unrealized gain (loss) on investments on the consolidated statements of operations.
31
Portfolio and Investment Activity
During the three months ended March 31, 2020, we invested $55.2 million in 14 new portfolio companies, and $7.2 million in 17 existing portfolio companies, and had $2.4 million in aggregate amount of sales and principal repayments, resulting in net investments of $60.0 million for the period.
During the three months ended March 31, 2019, we invested $8.9 million in seven new portfolio companies and had $5 thousand in aggregate amount of principal repayments, resulting in net investments of $8.9 million for the period.
The following table shows portfolio yield by security type:
March 31, 2020 December 31, 2019
Weighted Average
Annualized
Contractual
Coupon
Yield⁽¹⁾ Weighted
Average
Annualized
Effective
Yield⁽²⁾ Weighted Average
Annualized
Contractual
Coupon
Yield⁽¹⁾ Weighted
Average
Annualized
Effective
Yield⁽²⁾
Senior secured loans 7.7 % 7.7 % 8.0 % 8.0 %
Unitranche secured loans 5.6 6.2 6.4 7.0
Junior secured loans 9.8 9.8 — —
Preferred equity securities 8.0 8.0 — —
Total 7.7 % 7.7 % 8.0 % 8.0 %
(1) The weighted average annualized contractual coupon yield at period end is computed by dividing (a) the interest income on debt investments and preferred equity investments (with a stated coupon rate) at the period end contractual coupon rate for each investment by (b) the par value of our debt investments and the cost basis of our preferred equity investments.
(2) The weighted average annualized effective yield on portfolio investments at period end is computed by dividing (a) interest income on debt investments and preferred equity investments (with a stated coupon rate) at the period end effective rate for each investment by (b) the par value of our debt investments and the cost basis of our preferred equity investments. The weighted average annualized effective yield on portfolio investments is a metric on the investment portfolio alone and does not represent a return to stockholders. This metric is not inclusive of our fees and expenses, the impact of leverage on the portfolio or sales load that may be paid by investors.
The following table shows the composition of our investment portfolio (in thousands):
March 31, 2020 December 31, 2019
Fair Value:
Senior secured loans $ 148,483 96.0 % $ 99,334 98.5 %
Unitranche secured loans 983 0.6 1,001 1.0
Junior secured loans 3,889 2.5 — —
Equity securities 1,285 0.9 472 0.5
Total $ 154,640 100.0 % $ 100,807 100.0 %
Our portfolio composition remained relatively consistent with December 31, 2019, with a primary focus on senior secured loans. In addition to continuing to grow the senior secured loan portfolio, during the three months ended March 31, 2020, we also added a junior secured loan and three equity securities. The decrease in total contractual and effective yields on the portfolio was primarily attributed to general decreases in LIBOR.
The following table shows our portfolio composition by industry (in thousands):
March 31, 2020 December 31, 2019
Fair Value:
Aerospace & Defense $ 4,565 3.0 % $ 4,746 4.7 %
Automotive 6,555 4.2 3,791 3.8
Banking, Finance, Insurance & Real Estate 19,966 12.9 19,589 19.4
Beverage, Food & Tobacco 12,605 8.1 6,629 6.6
Capital Equipment 13,205 8.5 — —
Consumer Goods: Durable 4,334 2.8 — —
Consumer Goods: Non-Durable 1,080 0.7 1,238 1.2
Containers, Packaging & Glass 1,980 1.3 1,985 2.0
Energy: Oil & Gas 4,707 3.0 4,052 4.0
Healthcare & Pharmaceuticals 19,295 12.5 15,452 15.3
High Tech Industries 20,813 13.5 13,180 13.1
Media: Advertising, Printing & Publishing 9,997 6.5 7,021 7.0
Media: Broadcasting & Subscription 1,420 0.9 1,118 1.1
Media: Diversified & Production 2,865 1.9 2,996 3.0
Metals & Mining 672 0.4 — —
Services: Business 17,113 11.1 9,199 9.1
Services: Consumer 4,996 3.2 3,309 3.3
Telecommunications 6,805 4.4 6,502 6.4
Transportation: Cargo 1,667 1.1 — —
Total $ 154,640 100.0 % $ 100,807 100.0 %
32
Portfolio Asset Quality
MC Advisors’ portfolio management staff closely monitors all credits, with senior portfolio managers covering agented and more complex investments. MC Advisors segregates our capital markets investments by industry. The MC Advisors’ monitoring process and projections developed by Monroe Capital both have daily, weekly, monthly and quarterly components and related reports, each to evaluate performance against historical, budget and underwriting expectations. MC Advisors’ analysts will monitor performance using standard industry software tools to provide consistent disclosure of performance. When necessary, MC Advisors will update our internal risk ratings, borrowing base criteria and covenant compliance reports.
As part of the monitoring process, MC Advisors regularly assesses the risk profile of each of our investments and rates each of them based on an internal proprietary system that uses the categories listed below, which we refer to as MC Advisors’ investment performance rating. For any investment rated in grades 3, 4 or 5, MC Advisors, through its internal Portfolio Management Group (“PMG”), will increase its monitoring intensity and prepare regular updates for the investment committee, summarizing current operating results and material impending events and suggesting recommended actions. The PMG is responsible for oversight and management of any investments rated in grades 3, 4, or 5. MC Advisors monitors and, when appropriate, changes the investment ratings assigned to each investment in our portfolio. In connection with our valuation process, MC Advisors reviews these investment ratings on a quarterly basis. The investment performance rating system is described as follows:
Investment
Performance
Risk Rating Summary Description
Grade 1 Includes investments exhibiting the least amount of risk in our portfolio. The issuer is performing above expectations or the issuer’s operating trends and risk factors are generally positive.
Grade 2 Includes investments exhibiting an acceptable level of risk that is similar to the risk at the time of origination. The issuer is generally performing as expected or the risk factors are neutral to positive.
Grade 3 Includes investments performing below expectations and indicates that the investment’s risk has increased somewhat since origination. The issuer may be out of compliance with debt covenants; however, scheduled loan payments are generally not past due.
Grade 4 Includes an issuer performing materially below expectations and indicates that the issuer’s risk has increased materially since origination. In addition to the issuer being generally out of compliance with debt covenants, scheduled loan payments may be past due (but generally not more than six months past due).
Grade 5 Indicates that the issuer is performing substantially below expectations and the investment risk has substantially increased since origination. Most or all of the debt covenants are out of compliance or payments are substantially delinquent. Investments graded 5 are not anticipated to be repaid in full.
Our investment performance risk ratings do not constitute any rating of investments by a nationally recognized statistical rating organization or reflect or represent any third-party assessment of any of our investments.
In the event of a delinquency or a decision to rate an investment grade 4 or grade 5, the PMG, in consultation with the investment committee, will develop an action plan. Such a plan may require a meeting with the borrower’s management or the lender group to discuss reasons for the default and the steps management is undertaking to address the under-performance, as well as amendments and waivers that may be required. In the event of a dramatic deterioration of a credit, MC Advisors and the PMG will form a team or engage outside advisors to analyze, evaluate and take further steps to preserve our value in the credit. In this regard, we would expect to explore all options, including in a private equity sponsored investment, assuming certain responsibilities for the private equity sponsor or a formal sale of the business with oversight of the sale process by us. The PMG and the investment committee have extensive experience in running debt work-out transactions and bankruptcies.
33
The following table shows the distribution of our investments on the 1 to 5 investment performance risk rating scale as of March 31, 2020 (in thousands):
Investment Performance Risk Rating Investments at
Fair Value Percentage of
Total Investments
1 $ — — %
2 147,286 95.2
3 7,354 4.8
4 — —
5 — —
Total $ 154,640 100.0 %
The following table shows the distribution of our investments on the 1 to 5 investment performance risk rating scale as of December 31, 2019 (in thousands):
Investment Performance Risk Rating Investments at
Fair Value Percentage of
Total Investments
1 $ — — %
2 98,728 97.9
3 2,079 2.1
4 — —
5 — —
Total $ 100,807 100.0 %
Results of Operations
Operating results were as follows (in thousands):
Three months ended March 31,
2020 2019
Total investment income $ 2,689 $ 104
Total expenses, net of fee waivers and expense reimbursement 913 22
Net investment income before income taxes 1,776 82
Income taxes, including excise taxes 12 —
Net investment income 1,764 82
Net change in unrealized gain (loss) on investments (6,324 ) 126
Net gain (loss) (6,324 ) 126
Net increase (decrease) in net assets resulting from operations $ (4,560 ) $ 208
Investment Income
The composition of our investment income was as follows (in thousands):
Three months ended March 31,
2020 2019
Interest income $ 2,470 $ 101
PIK interest income 29 —
Dividend income⁽¹⁾ 10 —
Prepayment gain (loss) 55 —
Accretion of discounts and amortization of premium 125 3
Total investment income $ 2,689 $ 104
(1) Includes PIK dividends of $10 and zero, respectively.
The increase in investment income of $2.6 million during the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, is primarily due to growth in the portfolio as we commenced operations on January 15, 2019.
34
Operating Expenses
The composition of our operating expenses was as follows (in thousands):
Three months ended March 31,
2020 2019
Interest and other debt financing expenses $ 545 $ 22
Base management fees, net of base management fee waiver⁽¹⁾ 237 —
Incentive fees, net of incentive fee waiver⁽²⁾ (132 ) —
Professional fees 82 60
Administrative service fees 82 47
General and administrative expenses 84 44
Directors’ fees 15 15
Expenses before expense reimbursement, net of fee waivers 913 188
Expense reimbursement⁽³⁾ — (166 )
Total expenses, net of fee waivers and expense reimbursement $ 913 $ 22
(1) Base management fees for the three months ended March 31, 2020 and 2019 were $497 and $47, respectively. MC Advisors elected to voluntarily waive $260 and $47 of such base management fees for the three months ended March 31, 2020 and 2019, respectively.
(2) Incentive fees for the three months ended March 31, 2020 were $109, comprised of part one incentive fees of $241 and a return of part two capital gains incentive fees previously accrued of ($132). MC Advisors elected to voluntarily waive the part one incentive fees of $241 during the three months ended March 31, 2020. There were no incentive fees for the three months ended March 31, 2019. See Note 5 to our consolidated financial statements and “Capital Gains Incentive Fee” below for additional information.
(3) MC Management agreed to reimburse us for administrative expenses (not to include base management fees or credit facility expenses) incurred by us of zero and $166 for the three months ended March 31, 2020 and 2019, respectively.
The composition of our interest and other debt financing expenses and average outstanding balances were as follows (in thousands):
Three months ended March 31,
2020 2019
Interest expense $ 401 $ —
Unused commitment fees 56 4
Amortization of deferred financing costs 88 18
Total interest and other debt financing expenses $ 545 $ 22
Average debt outstanding $ 34,610 $ —
The increase in expenses of $0.9 million during the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, is primarily the result of the growth in interest expense on our revolving credit facility and base management fees as a result of the growth of our investment portfolio. Additionally, MC Advisors waived base management fees and MC management reimbursed us for administrative expenses incurred during the three months ended March 31, 2019 to assist with our launch.
Income Taxes, Including Excise Taxes
We have elected to be treated as a RIC under Subchapter M of the Code and operate in a manner so as to qualify for the tax treatment available to RICs. To maintain qualification as a RIC, we must, among other things, meet certain source-of-income and asset diversification requirements and distribute to stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our net ordinary income plus the excess, if any, of realized net short-term capital gains over realized net long-term capital losses.
Depending on the level of taxable income earned in a tax year, we may choose to carry forward such taxable income in excess of current year dividend distributions from such current year taxable income into the next year and pay a 4% excise tax on such income, as required. To the extent that we determine that our estimated current year annual taxable income may exceed estimated current year dividend distributions, we accrue excise tax, if any, on estimated excess taxable income as such taxable income is earned. For the three months ended March 31, 2020 and 2019, we recorded a net expense on the consolidated statements of operations of $12 thousand and zero, respectively, for U.S. federal excise tax.
Certain of our consolidated subsidiaries are subject to U.S. federal and state corporate-level income taxes. For both the three months ended March 31, 2020 and 2019, we recorded a net tax expense of zero on the consolidated statements of operations for these subsidiaries.
35
Net Realized Gain (Loss)
During the three months ended March 31, 2020 and 2019, we did not have any sales of investments and therefore did not incur any realized gains or losses.
Net Change in Unrealized Gain (Loss)
For the three months ended March 31, 2020 and 2019, our investments had ($6.3) million and $0.1 million of net change in unrealized gain (loss), respectively. During the three months ended March 31, 2020, our operating results were negatively impacted by the uncertainty surrounding the COVID-19 pandemic, which has caused severe disruptions in the global economy and negatively impacted the fair value and performance of our investment portfolio. The net unrealized losses on the investment portfolio were primarily attributable to broad market movements and widening credit spreads as investors expected a higher yield on similar investments given the significant market volatility generated by the COVID-19 pandemic. The fair value of our portfolio investments may be further negatively impacted after March 31, 2020 by circumstances and events that are not yet known.
Net Increase (Decrease) in Net Assets Resulting from Operations
For the three months ended March 31, 2020 and 2019, the net increase (decrease) in net assets resulting from operations was ($4.6) million and $0.2 million, respectively. Based on the weighted average shares of common stock outstanding for the three months ended March 31, 2020 and 2019, our per share net increase (decrease) in net assets resulting from operations was ($0.51) and $0.25, respectively. The ($4.8) million decrease during the three months ended March 31, 2020, as compared to March 31, 2019, is primarily the result of an increase in net mark-to-market losses on investments in the portfolio, partially offset by an increase in net investment income.
Liquidity and Capital Resources
We generate cash primarily from (i) the net proceeds of private offerings, (ii) cash flows from our operations, and (iii) borrowings under our existing credit facility and any financing arrangements we may enter into in the future. These financings may come in the form of borrowings from banks and issuances of senior securities. Our primary uses of cash are for (i) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (ii) the cost of operations (including paying MC Advisors and reimbursements to MC Management), (iii) debt service of any borrowings and (iv) cash distributions to our stockholders.
As of March 31, 2020, we had $3.2 million in cash, $2.2 million in restricted cash at the SPV, and $72.0 million of debt outstanding on our revolving credit facility. We had $3.0 million available for additional borrowings on our revolving credit facility, subject to borrowing base availability. See “Borrowings” below for additional information.
Cash Flows
For the three months ended March 31, 2020 and 2019, we experienced a net increase in cash, cash equivalents and restricted cash of $1.4 million and $11.0 million, respectively. For the three months ended March 31, 2020, operating activities used $58.8 million of cash, primarily as a result of purchases of portfolio investments. For the three months ended March 31, 2019, operating activities provided $1.1 million, primarily as a result of an unsettled U.S. Treasury Bill purchase, partially offset by purchases of portfolio investments. For the three months ended March 31, 2020, we generated $60.1 million from financing activities, primarily as a result of proceeds from the issuance of common stock and proceeds from net borrowings on our revolving credit facility. For the three months ended March 31, 2019, we generated $9.9 million from financing activities, primary as results of proceeds from the issuance of common stock.
Capital Resources
As a BDC, we distribute substantially all of our net income to our stockholders and have an ongoing need to raise additional capital for investment purposes. We intend to generate additional cash primarily from future offerings of securities, including our current Private Offering, future borrowings and cash flows from operations, including income earned from investments in our portfolio companies. On both a short-term and long-term basis, our primary use of funds will be to invest in portfolio companies and make cash distributions to our stockholders. We may also use available funds to repay outstanding borrowings.
As a BDC, we are generally not permitted to issue and sell our common stock at a price below net asset value (“NAV”) per share. We may, however, sell our common stock, or warrants, options or rights to acquire our common stock, at a price below the then-current NAV per share of our common stock if our board of directors (“Board”), including independent directors, determines that such sale is in the best interests of us and our stockholders, and if our stockholders have approved such sales. As of March 31, 2020 and December 31, 2019, we had 8,947,090 and 6,874,532 shares outstanding, respectively.
In accordance with the 1940 Act, we are permitted to borrow amounts such that our asset coverage ratio, as defined in the 1940 Act, is at least 150% after such borrowing. As of March 31, 2020 and December 31, 2019, our asset coverage ratio based on aggregate borrowings outstanding was 218% and 320%, respectively.
36
Borrowings
We have a $75.0 million senior secured revolving credit facility (the “Credit Facility”) with KeyBank National Association through our wholly owned subsidiary, the SPV. On March 6, 2020, we amended the Credit Facility to extend the reinvestment period through April 10, 2020 as we negotiated a larger amendment to the Credit Facility. We incurred expenses of $4 thousand in conjunction with this amendment, which have been capitalized within unamortized deferred financing costs and are amortized into interest and other debt financing expenses over the estimated average life of the borrowings. See “Recent Developments” below for additional information.
Our ability to borrow under the Credit Facility is subject to certain financial and restrictive covenants as well as availability under the borrowing base, which permits us to borrow up to 60% of the principal balance of our portfolio company investments depending on how many portfolio companies are pledged as collateral in the SPV. Under the terms of the Credit Facility, the SPV is permitted to reinvest available cash and make new borrowings under the Credit Facility through April 10, 2020. The maturity date of the Credit Facility is March 12, 2021. Distributions from the SPV to us are limited by the terms of the Credit Facility, which generally allows for the distribution of net interest income pursuant to a waterfall quarterly during the reinvestment period. As of March 31, 2020 and December 31, 2019, the fair value of our investments held in the SPV as collateral for the Credit Facility was $141.7 million and $91.4 million, respectively, and these investments are identified on the accompanying consolidated schedules of investments. As of March 31, 2020 and December 31, 2019, we had outstanding borrowings under the Credit Facility of $72.0 million and $31.2 million, respectively.
Borrowings under the Credit Facility bear interest at an annual rate of LIBOR (one or three month, at the SPV’s option) plus 3.00% until April 10, 2020 and LIBOR plus 3.25% thereafter. In addition to the stated interest rate on borrowings, the SPV was required to pay an unused commitment fee of 0.35% from the closing date until June 11, 2019, and thereafter (i) 0.75% per annum on any unused portion of the Credit Facility when the outstanding borrowings are less than or equal to 30% of the facility amount, (ii) 0.55% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 30% of the facility amount but less than or equal to 50% of the facility amount, and (iii) 0.35% per annum on any unused portion of the Credit Facility when the outstanding borrowings are greater than 50% of the facility amount. As of March 31, 2020 and December 31, 2019, the outstanding borrowings were accruing at a weighted average interest rate of 4.5% and 4.7%, respectively.
Distributions
Distributions to common stockholders are recorded on the applicable record date. The amount, if any, to be distributed is determined by our Board each quarter and is generally based upon the earnings estimated by management. Net realized capital gains, if any, are generally distributed at least annually.
The determination of the tax attributes for our distributions is made annually, based upon our taxable income for the full year and distributions paid for the full year. Ordinary dividend distributions from a RIC do not qualify for the preferential tax rate on qualified dividend income from domestic corporations and qualified foreign corporations, except to the extent that the RIC received the income in the form of qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income and capital gains, but may also include qualified dividends or return of capital. Distributions declared to stockholders for the three months ended March 31, 2020 and 2019 totaled zero and $0.2 million ($0.20 per share), respectively. The tax character of such distributions is determined at the end of the fiscal year.
We have adopted a DRIP that provides for the reinvestment of dividends and other distributions on behalf of its stockholders that elect to participate in such plan. As a result, if we declare a dividend or distribution, our stockholders’ cash distributions will only be reinvested in additional shares of our common stock if a stockholder specifically “opts in” to the DRIP at least ten (10) days prior to the record date fixed by our Board. Shares issued under the DRIP will be issued at a price per share equal to the NAV per share as of the last day of our fiscal quarter immediately preceding the date that the distribution was declared.
Related Party Transactions
We have a number of business relationships with affiliated or related parties, including the following:
· We have an Investment Advisory Agreement with MC Advisors, an investment advisor registered with the SEC, to manage our day-to-day operating and investing activities. We pay MC Advisors a fee for its services under the Investment Advisory Agreement consisting of two components — a base management fee and an incentive fee. See Note 5 to our consolidated financial statements and “Significant Accounting Estimates and Critical Accounting Policies –Capital Gains Incentive Fee” for additional information.
37
· We have an Administration Agreement with MC Management to provide us with the office facilities and administrative services necessary to conduct our day-to-day operations. See Note 5 to our consolidated financial statements for additional information.
· Theodore L. Koenig, our Chief Executive Officer and Chairman of our Board, is also a manager of MC Advisors and the President and Chief Executive Officer of MC Management. Aaron D. Peck, our Chief Financial Officer and Chief Investment Officer, is also a managing director of MC Management.
· We have a license agreement with Monroe Capital LLC, under which Monroe Capital LLC has agreed to grant us a non-exclusive, royalty-free license to use the name “Monroe Capital” for specified purposes in our business.
In addition, we have adopted a formal code of ethics that governs the conduct of MC Advisors’ officers, directors and employees. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and Maryland General Corporation Law.
Commitments and Contingencies and Off-Balance Sheet Arrangements
Commitments and Contingencies
As of March 31, 2020, and December 31, 2019, we had outstanding commitments to fund investments totaling $11.9 million and $14.3 million, respectively. Additionally, we have entered into certain contracts with other parties that contain a variety of indemnifications. Our maximum exposure under these arrangements is unknown. However, we have not experienced claims or losses pursuant to these contracts and believe the risk of loss related to such indemnifications to be remote.
Off-Balance Sheet Arrangements
Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any off-balance sheet financings or liabilities.
Market Trends
In late 2019 and early 2020, COVID-19 emerged in China and spread rapidly across the world, including to the United States. This outbreak has led to disruptions in local, regional, national and global markets and economies affected thereby and will continue to cause disruptions for an unknown and potentially significant amount of time. To date, cross border commercial activity and market sentiment have been negatively impacted by the outbreak and government and other measures seeking to contain its spread. The federal government and the Federal Reserve, as well as foreign governments and central banks, have implemented significant fiscal and monetary policies in response to these disruptions, and additional government and regulatory responses may be possible. It is currently impossible to determine the scope of this or any future outbreak, how long any such outbreak and market disruption, volatility or uncertainty may last, the effect any governmental actions and changes in base interest rates will have or the full potential impact on us, our industry and our portfolio companies.
We have also identified the following general trends that may affect our business:
Target Market: We believe that small and middle-market companies in the United States with annual revenues between $10.0 million and $2.5 billion represent a significant growth segment of the U.S. economy and often require substantial capital investments to grow. Middle-market companies have generated a significant number of investment opportunities for investment funds managed or advised by Monroe Capital, and we believe that this market segment will continue to produce significant investment opportunities for us.
Specialized Lending Requirements:We believe that several factors render many U.S. financial institutions ill-suited to lend to U.S. middle-market companies. For example, based on the experience of our management team, lending to U.S. middle-market companies (1) is generally more labor intensive than lending to larger companies due to the smaller size of each investment and the fragmented nature of information for such companies, (2) requires due diligence and underwriting practices consistent with the demands and economic limitations of the middle-market and (3) may also require more extensive ongoing monitoring by the lender.
Demand for Debt Capital: We believe there is a large pool of uninvested private equity capital for middle-market companies. We expect private equity firms will seek to leverage their investments by combining equity capital with senior secured loans and mezzanine debt from other sources, such as us.
Competition from Other Lenders: We believe that many traditional bank lenders, in recent years, de-emphasized their service and product offerings to middle-market businesses in favor of lending to large corporate clients and managing capital market transactions. In addition, many commercial banks face significant balance sheet constraints as they seek to build capital and meet future regulatory capital requirements. These factors may result in opportunities for alternative funding sources to middle-market companies and therefore drive increased new investment opportunities for us. Conversely, there has been a significant amount of capital raised over the past several years dedicated to middle market lending which has increased competitive pressure in the BDC and investment company marketplace for senior and subordinated debt which could result in lower yields and weaker financial covenants for new assets.
38
Pricing and Deal Structures: We believe that the volatility in global markets over the last several years and current macroeconomic issues including changes in bank regulations for middle-market banks has reduced access to, and availability of, debt capital to middle-market companies, causing a reduction in competition and generally more favorable capital structures and deal terms. Recent capital raises in the BDC and investment company marketplace have created increased competition; however, we believe that current market conditions may continue to create favorable opportunities to invest at attractive risk-adjusted returns.
Recent Developments
On March 11, 2020, the World Health Organization declared the novel coronavirus COVID-19 as a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19. The outbreak of COVID-19 has severely impacted global economic activity and caused significant volatility and negative pressure in financial markets. We are actively monitoring the situation and continue to assess what additional adverse financial and operational consequences may result from the global spread of COVID-19 and the associated economic turbulence, however, the extent of such consequences remains uncertain as of the filing of this Form 10-Q.
On May 1, 2020, we entered into an amendment to our Credit Facility (the “Credit Facility Amendment”). The terms of the Credit Facility Amendment become effective as of June 1, 2020. The Credit Facility Amendment includes modifications that reduce pricing, expand the investment eligibility parameters under the Credit Facility to include certain opportunistic investments, increase the advance rates available under the Credit Facility, extend the reinvestment period of the Credit Facility to May 1, 2023, and implement various modifications related to the COVID-19 pandemic. In addition, the Credit Facility Amendment implemented an uncommitted accordion feature to upsize the Credit Facility to $300.0 million in the future, if needed.
On May 13, 2020, our Board declared a quarterly distribution of $0.20 per share payable on May 20, 2020 to holders of record on May 13, 2020.
On May 15, 2020, we issued 1,580,867 shares of common stock at $9.29 per share for proceeds of $14.7 million pursuant to the Private Offering.
Significant Accounting Estimates and Critical Accounting Policies
Revenue Recognition
We record interest and fee income on an accrual basis to the extent that we expect to collect such amounts. For loans and debt securities with contractual PIK interest, we do not accrue PIK interest if the portfolio company valuation indicates that such PIK interest is not collectible. We do not accrue as a receivable interest on loans and debt securities if we have reason to doubt our ability to collect such interest. Loan origination fees, original issue discount and market discount or premium are capitalized, and then we amortize such amounts using the effective interest method as interest income over the life of the investment. Upon the prepayment of a loan or debt security, any unamortized premium or discount or loan origination fees are recorded as interest income. We record prepayment premiums on loans and debt securities as interest income when we receive such amounts. Interest income is accrued based upon the outstanding principal amount and contractual terms of debt and preferred equity investments. Interest is accrued on a daily basis. We record fees on loans based on the determination of whether the fee is considered a yield enhancement or payment for a service. If the fee is considered a yield enhancement associated with a funding of cash on a loan, the fee is generally deferred and recognized into interest income using the effective interest method if captured in the cost basis or using the straight-line method if the loan is unfunded and therefore there is no cost basis. If the fee is not considered a yield enhancement because a service was provided, and the fee is payment for that service, the fee is deemed earned and recognized as fee income in the period the service has been completed.
Dividend income on preferred equity securities is recorded as dividend income on an accrual basis to the extent that such amounts are payable by the portfolio company and are expected to be collected. Dividend income on common equity securities is recorded on the record date for private portfolio companies. Each distribution received from LLC and LP investments is evaluated to determine if the distribution should be recorded as dividend income or a return of capital. Generally, we will not record distributions from equity investments in LLCs and LPs as dividend income unless there are sufficient accumulated tax-basis earnings and profits in the LLC or LP prior to the distribution. Distributions that are classified as a return of capital are recorded as a reduction in the cost basis of the investment.
39
Valuation of Portfolio Investments

As a BDC, we ~~will~~ generally invest in illiquid securities including debt and, to a lesser extent, equity securities of middle-market companies. Under procedures established by our Board, we ~~will~~ value investments for which market quotations are readily available and within a recent date at such market quotations. We will obtain these market values from an independent pricing service or at the mean between the bid and ask prices obtained from at least two brokers or dealers (if available, otherwise by a principal market maker or a primary market dealer). When doing so, we ~~will~~ determine whether the quote obtained is sufficient in accordance with generally accepted accounting principles in the United States of America to determine the fair value of the security. Debt and equity securities that are not publicly traded or whose market prices are not readily available or whose market prices are not regularly updated ~~will be~~are valued at fair value as determined in good faith by our Board. Such determination of fair values may involve subjective judgments and estimates. Investments purchased within 60 days of maturity are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value.

Our Board ~~will be~~is ultimately and solely responsible for determining the fair value of the portfolio investments that are not publicly traded, whose market prices are not readily available on a quarterly basis in good faith or any other situation where portfolio investments require a fair value determination. Because we expect that there will not be a readily available market for many of the investments in our portfolio, we expect to value many of our portfolio investments at fair value as determined in good faith by our Board using a documented valuation policy and a consistently applied valuation process. 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 our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments, and the differences could be material.

With respect to investments for which market quotations are not readily available, our Board ~~will undertake~~undertakes a multi-step valuation process each quarter, as described below:

· the quarterly valuation process ~~will begin~~begins with each portfolio company or investment being initially evaluated and rated by the investment professionals of MC Advisors responsible for the credit monitoring of the portfolio investment;

· ~~preliminary valuation conclusions will then be documented and discussed with the investment committee of MC Advisors;~~
· our Board ~~may engage~~engages one or more independent valuation firm(s) to conduct ~~fair value~~independent appraisals of ~~material~~a selection of investments for which market quotations are not readily available. ~~These fair value appraisals for material investments, if any,~~We will ~~be received~~consult with independent valuation firm(s) relative to each portfolio company at least once in every calendar year, ~~for each portfolio company investment,~~ but ~~will~~the independent appraisals are generally be received quarterly;

· to the extent an independent valuation firm is not engaged to conduct an investment appraisal on an investment for which market quotations are not readily available, the investment will be valued by the MC Advisors investment professional responsible for the credit monitoring;
· preliminary valuation conclusions are then documented and discussed with the investment committee;
· the audit committee of our Board ~~will review~~reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and ~~will respond and supplement~~MC Advisors adjusts or further supplements the valuation recommendations to reflect any ~~comments;~~comments provided by the audit committee; and

· our Board ~~will discuss~~discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of MC Advisors, the independent valuation firm(s) and the audit committee.
We generally use the income approach to determine fair value for loans where market quotations are not readily available, as long as it is appropriate. If there is deterioration in credit quality or a debt investment is in workout status, we may consider other factors in determining the fair value, including the value attributable to the debt investment from the enterprise value of the portfolio company or the proceeds that would be received in a liquidation analysis. This liquidation analysis may also include probability weighting of alternative outcomes. We generally consider our debt to be performing if the borrower is not in default, the borrower is remitting payments in a timely manner, the loan is in covenant compliance and is otherwise not deemed to be impaired. In determining the fair value of the performing debt, we consider fluctuations in current interest rates, the trends in yields of debt instruments with similar credit ratings, financial condition of the borrower, economic conditions and other relevant factors, both qualitative and quantitative. In the event that a debt instrument is not performing, as defined above, we will evaluate the value of the collateral utilizing the same framework described above for a performing loan to determine the value of the debt instrument.
Under the income approach, discounted cash flow models are utilized to determine the present value of the future cash flow streams of our debt investments, based on future interest and principal payments as set forth in the associated loan agreements. In determining fair value under the income approach, we also consider the following factors: applicable market yields and leverage levels, credit quality, prepayment penalties, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, and changes in the interest rate environment and the credit markets that generally may affect the price at which similar investments may be made.
1040

Under the market approach, the enterprise value methodology is typically utilized to determine the fair value of an investment. There is no one methodology to estimate enterprise value and, in fact, for any one portfolio company, enterprise value is generally best expressed as a range of values, from which we derive a single estimate of enterprise value. In estimating the enterprise value of a portfolio company, we analyze various factors consistent with industry practice, including but not limited to original transaction multiples, the portfolio company’s historical and projected financial results, applicable market trading and transaction comparables, applicable market yields and leverage levels, the nature and realizable value of any collateral, the markets in which the portfolio company does business, and comparisons of financial ratios of peer companies that are public. Typically, the enterprise values of private companies are based on multiples of earnings before interest, income taxes, depreciation and amortization, cash flows, net income, revenues, or in limited cases, book value.
In addition, for certain debt investments, we may base our valuation on indicative bid and ask prices provided by an independent third-party pricing service. Bid prices reflect the highest price that we and others may be willing to pay. Ask prices represent the lowest price that we and others may be willing to accept. We generally use the midpoint of the bid/ask range as our best estimate of fair value of such investment.
Our Board approved the fair value of our investment portfolio as of March 31, 2020 and these valuations were determined in accordance with our valuation policy based on information known or knowable as of the valuation date. The COVID-19 pandemic is an unprecedented circumstance that materially impacts the fair value of our investments. As a result, the fair value of our portfolio investments may be further negatively impacted after March 31, 2020 by circumstances and events that are not yet known.
Net Realized Gain or Loss and Net Change in Unrealized Gain or Loss

We ~~will~~ measure realized gain or loss by the difference between the net proceeds from the sale and the amortized cost basis of the investment, without regard to unrealized gain or loss previously recognized. Net change in unrealized gain or loss reflects the change in portfolio investment values during the reporting period, including any reversal of previously recorded unrealized gain or loss, when ~~gains~~gain or ~~losses are~~loss is realized. ~~Additionally, we will not isolate the portion of the change in fair value resulting from foreign currency exchange rate fluctuations from the changes in fair values of the underlying investment.~~ All fluctuations in fair value ~~will be~~are included in net change in unrealized gain (loss) on investments on our consolidated statements of operations.

~~Management and~~Capital Gains Incentive ~~Fees~~Fee

~~We will~~Pursuant to the terms of the Investment Advisory Agreement with MC Advisors, the incentive fee on capital gains earned on liquidated investments of our portfolio is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement). This fee equals 15% of our incentive fee capital gains (i.e., our realized capital gains on a cumulative basis from inception, calculated as of the end of the applicable period, net of all realized capital losses and unrealized capital depreciation on a cumulative basis), less the aggregate amount of any previously paid capital gains incentive fees. On a quarterly basis, we accrue for the ~~base management fee and~~capital gains incentive fee by calculating such fee as if ~~any. The accrual for~~it were due and payable as of the end of such period.
While the Investment Advisory Agreement with MC Advisors neither includes nor contemplates the inclusion of unrealized gains in the calculation of the capital gains incentive fee, ~~includes~~pursuant to an interpretation of an American Institute for Certified Public Accountants Technical Practice Aid for investment companies, we include unrealized gains in the ~~recognition~~calculation of ~~(i) ordinary income~~the capital gains incentive fee expense and ~~(ii)~~related accrued capital gains incentive fee. ~~The~~This accrual ~~for~~reflects the incentive ~~fee includes the recognition of incentive fee on unrealized capital gains, even though such incentive fee is neither earned nor~~fees that would be payable to MC Advisors if our entire portfolio was liquidated at its fair value as of the balance sheet date even though MC Advisors is not entitled to an incentive fee with respect to unrealized gains unless and until ~~the~~such gains are ~~both realized and in excess~~actually realized.
During the three months ended March 31, 2020, we reversed the accrual of ~~unrealized depreciation~~the capital gains incentive fee based on ~~investments.~~the performance of our portfolio. During the three months ended March 31, 2019, we did not accrue capital gains incentive fees.

Organization and Offering Costs and Expenses

As of September 30, 2018, MC Management has incurred organization and offering costs of approximately $210,984 on our behalf. In the event receipt of a formal commitment of external capital does not occur, initial organization and offering costs and expenses incurred will be borne by MC Management. If a formal commitment of external capital does occur, MC Management has agreed to reimburse us up to $250,000 for organization and offering costs. If the expenses incurred are greater than $250,000, we will reimburse MC Management for organization and offering costs incurred on our behalf in excess of $250,000.
Organization costs ~~include, among other things,~~refer to the cost of organizing as a Maryland corporation, including, among other things, the cost of legal services, directors’ fees and other fees, including travel-related expenses, pertaining to our organization. Offering costs include, among other things, legal fees and other costs pertaining to the preparation of our private placement memorandum and other offering documents.

~~Federal Income Taxes~~New Accounting Pronouncements

~~We intend~~In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework – Changes to ~~elect~~the Disclosure Requirements for Fair Value Measurement(“ASU 2018-13”). The primary objective of ASU 2018-13 is to ~~be treated, and intend to qualify annually thereafter, as a RIC under Subchapter M~~improve the effectiveness of the Code as soon as practicable. Generally, a RIC is not subject to federal income taxes on distributed income and gains if it distributes at least 90% of its net ordinary income and net short-term capital gains in excess of its net long-term capital losses, if any, to its stockholders. We intend to distribute sufficient dividends to maintain our RIC status each year and we do not anticipate paying any material federal income taxesdisclosure requirements for fair value measurements in the ~~future.~~notes to the financial statements. ASU 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019, although early adoption is permitted. We have adopted ASU 2018-13 and the adoption did not have a significant impact on our consolidated financial statements and disclosures.

~~Financial Condition, Liquidity~~In March 2020, the FASB issued ASU 2020-04,Reference Rate Reform (“ASU 2020-04”). The amendments in ASU 2020-04 provide optional expedients and ~~Capital Resources~~exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The standard is effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the impact of the optional guidance on our consolidated financial statements and disclosures. We did not utilize the optional expedients and exceptions provided by ASU 2020-04 during the three months ended March 31, 2020.

As we have not yet commenced investment activities, we have not substantiated any transactions to date. We expect to generate cash primarily from (i) the net proceeds of private offerings, (ii) cash flows from our operations, and (iii) any financing arrangements we may enter into in the future. We may fund a portion of our investments through borrowings from banks and issuances of senior securities. Our primary uses of cash will be for (i) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (ii) the cost of operations (including paying MC Advisors and reimbursements to MC Management), (iii) debt service of any borrowings and (iv) cash distributions to our stockholders.
1141

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~As of September 30, 2018, we had not commenced investment activities.~~
We ~~will be~~are subject to financial market risks, including changes in interest ~~rates. We plan to invest primarily in illiquid debt~~rates and ~~equity securities of private companies. Most~~the valuations of our ~~investments will not~~investment portfolio. Uncertainty with respect to the economic effects of the COVID-19 outbreak has introduced significant volatility in the financial markets, and the effects of this volatility could materially impact our market risks. For additional information concerning the COVID-19 pandemic and its potential impact on our business and our operating results, see Part II – Other Information, Item 1A. Risk Factors, “Risk Factors – The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a ~~readily available market price,~~negative impact on our portfolio companies and our business and operations.”
The majority of the loans in our portfolio have floating interest rates and we expect that our loans in the future may also have floating interest rates. These loans are usually based on a floating LIBOR and typically have interest rate re-set provisions that adjust applicable interest rates under such loans to current market rates on a monthly or quarterly basis. The majority of the loans in our current portfolio have interest rate floors, which will ~~value these investments at fair value as determined~~effectively convert the loans to fixed rate loans in ~~good faith~~the event interest rates decrease. In addition, our Credit Facility has a floating interest rate provision and other credit facilities into which we may enter in the future may also have floating interest rate provisions.
The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to phase out LIBOR by the ~~Board in accordance~~end of 2021. It is unclear if at that time LIBOR will cease to exist or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. At this time, it is not possible to predict the effect of any such changes, any establishment of alternative reference rates or any other reforms to LIBOR that may be enacted. The elimination of LIBOR or any other changes or reforms to the determination or supervision of LIBOR could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, and other financial obligations or extensions of credit held by or due to us or on our overall financial condition or results of operations. In addition, if LIBOR ceases to exist, we may need to renegotiate agreements extending beyond 2021 with our ~~valuation policy. There~~portfolio companies that utilize LIBOR as a factor in determining the interest rate, in order to replace LIBOR with the new standard that is established, which may have an adverse effect on our overall financial condition or results of operations. Following the replacement of LIBOR, some or all of these agreements may bear interest a lower interest rate, which could have an adverse impact on our results of operations. Moreover, if LIBOR ceases to exist, we may need to renegotiate certain terms of our credit facilities. If we are unable to do so, amounts drawn under our credit facilities may bear interest at a higher rate, which would increase the cost of our borrowings and, in turn, affect our results of operations.
Assuming that the consolidated statement of assets and liabilities as of March 31, 2020 was to remain constant and that we took no ~~single~~actions to alter our existing interest rate sensitivity, the following table shows the annualized impact of hypothetical base rate changes in interest rates:
Increase
(decrease) in Increase
(decrease) in
Net increase
(decrease) in net
investment

Change in Interest Rates interest income interest expense income
Down 25 basis points $ (225 ) $ (180 ) $ (45 )
Up 100 basis points 1,075 720 355
Up 200 basis points 2,692 1,440 1,252
Up 300 basis points 4,309 2,160 2,149
Although we believe that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit market, credit quality, the size and composition of the assets in our portfolio and other business developments, including borrowing under the Credit Facility or other borrowings that could affect net increase in net assets resulting from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.
We may in the future hedge against interest rate fluctuations by using standard ~~for determining fair value in good faith. As a result, determining fair value requires that judgment be applied~~hedging instruments such as futures, options and forward contracts to the ~~specific facts~~extent permitted under the 1940 Act and ~~circumstances~~applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of ~~each~~lower interest rates with respect to the investments in our portfolio ~~investment while employing a consistently applied valuation process for the types of investments we make.~~with fixed interest rates or interest rate floors.

ITEM 4. CONTROLS AND PROCEDURES

In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that, at the end of the period covered by our Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Notwithstanding the foregoing, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that it will detect or uncover failures within the Company to disclose material information otherwise required to be set forth in the Company’s periodic reports.

No change occurred in our internal control over financial reporting (as defined in ~~Rule~~Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the three months ended ~~September 30, 2018~~March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

1242

PART II
OTHER INFORMATION

Item 1. Legal Proceedings

Neither we, our subsidiaries nor ~~MC Advisors~~our investment adviser are currently subject to any material legal proceedings.

Item 1A. Risk Factors

~~As of September 30, 2018,~~In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 10, 2020, which could materially affect our business, financial condition and/or operating results. The risks described in our Annual Report on Form 10-K are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results. Other than as set forth below, there have been no material changes ~~from~~during the three months ended March 31, 2020 to the risk factors ~~set forth~~discussed in ~~amendment no. 1 to~~Item 1A. Risk Factors in our ~~Registration Statement~~Annual Report on Form ~~10 filed with~~10-K for the ~~SEC on July 30, 2018.~~year ended December 31, 2019.

The COVID-19 pandemic has caused severe disruptions in the global economy, which has had, and may continue to have, a negative impact on our portfolio companies and our business and operations.
In late 2019 and early 2020, COVID-19 emerged in China and spread rapidly to across the world, including to the United States. This outbreak has led and for an unknown period of time will continue to lead to disruptions in local, regional, national and global markets and economies affected thereby. With respect to the U.S. credit markets (in particular for middle market loans), this outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things: (i) government imposition of various forms of “stay at home” orders and the closing of “non-essential” businesses, resulting in significant disruption to the businesses of many middle-market loan borrowers including supply chains, demand and practical aspects of their operations, as well as in lay-offs of employees, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of these markets including greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility, and liquidity issues; and (v) rapidly evolving proposals and/or actions by state and federal governments to address problems being experienced by the markets and by businesses and the economy in general which will not necessarily adequately address the problems facing the loan market and middle market businesses. This outbreak is having, and any future outbreaks could have, an adverse impact on our portfolio companies and us and on the markets and the economy in general, and that impact could be material. Such effects will likely continue for the duration of the pandemic, which is uncertain, and for some period thereafter.
The COVID-19 pandemic (including the preventative measures taken in response thereto) has to date (i) created significant business disruption issues for certain of our portfolio companies, and (ii) adversely impacted the value and performance of certain of our portfolio companies. The COVID-19 pandemic is continuing as of the filing date of this Quarterly Report, and its extended duration may have further adverse impacts on our portfolio companies after March 31, 2020, including for the reasons described below. As a result of this disruption and the pressures on their liquidity, certain of our portfolio companies have been, or may continue to be, incentivized to draw on most, if not all, of the unfunded portion of any revolving or delayed draw term loans made by us, subject to availability under the terms of such loans.
The effects described above on our portfolio companies have, for certain of our portfolio companies to date, impacted their ability to make payments on their loans on a timely basis and in some cases have required us to amend certain terms, including payment terms. In addition, an extended duration of the COVID-19 pandemic may impact the ability of our portfolio companies to continue making their loan payments on a timely basis or meeting their loan covenants. The inability of portfolio companies to make timely payments or meet loan covenants may in the future require us to undertake similar amendment actions with respect to other of our investments or to restructure our investments. The amendment or restructuring of our investments may include the need for us to make additional investments in our portfolio companies (including debt or equity investments) beyond any existing commitments, exchange debt for equity, or change the payment terms of our investments to permit a portfolio company to pay a portion of its interest through payment-in-kind, which would defer the cash collection of such interest and add it to the principal balance, which would generally be due upon repayment of the outstanding principal.
The COVID-19 pandemic has adversely impacted the fair value of our investments as of March 31, 2020 and the values assigned as of this date may differ materially from the values that we may ultimately realize with respect to our investments. Our Board approved the fair value of our investment portfolio as of March 31, 2020 and these valuations were determined in accordance with our valuation policy based on information known or knowable as of the valuation date. As a result, the long term impacts of the COVID-19 pandemic may not yet be fully reflected in the valuation of our investments and the fair value of our portfolio investments may be further negatively impacted after March 31, 2020 by circumstances and events that are not yet known, including the complete or continuing impact of the COVID-19 pandemic and the resulting measures taken in response thereto. In addition, write downs in the value of our investments have reduced, and any additional write downs may further reduce, our net asset value (and, as a result, our asset coverage calculation). Accordingly, we may continue to incur additional net unrealized losses or may incur realized losses after March 31, 2020, which could have a material adverse effect on our business, financial condition and results of operations.
43
The volatility and disruption to the global economy from the COVID-19 pandemic has affected, and is expected to continue to affect, the pace of our investment activity, which may have a material adverse impact on our results of operations. Such volatility and disruption have also led to the increased credit spreads in the private debt capital markets.
Further, from an operational perspective, MC Advisors’ investment professionals are currently working remotely. An extended period of remote work arrangements could strain our business continuity plans, introduce operational risk, including but not limited to cybersecurity risks, and impair our ability to manage our business. In addition, we are highly dependent on third party service providers for certain communication and information systems. As a result, we rely upon the successful implementation and execution of the business continuity planning of such providers in the current environment. If one or more of these third parties to whom we outsource certain critical business activities experience operational failures as a result of the impacts from the spread of COVID-19, or claim that they cannot perform due to a force majeure, it may have a material adverse effect on our business, financial condition, results of operations, liquidity and cash flows.
We are currently operating in a period of capital markets disruption and economic uncertainty.
The U.S. capital markets have experienced extreme volatility and disruption following the spread of COVID-19 in the United States. Some economists and major investment banks have expressed concern that the continued spread of the virus globally could lead to a long-term world-wide economic downturn. Disruptions in the capital markets have increased the spread between the yields realized on risk-free and higher risk securities, resulting in illiquidity in parts of the capital markets. These and future market disruptions and/or illiquidity would be expected to have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also would be expected to increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. These events have limited and could continue to limit our investment originations, limit our ability to grow and have a material negative impact on our operating results and the fair values of our debt and equity investments.
44
The 1940 Act allows us to incur additional leverage, which could increase the risk of investing in us.
The 1940 Act generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our total assets). However, on March 23, 2018, the 1940 Act was amended to allow BDCs to decrease their asset coverage requirement from 200% to 150% (i.e. the amount of debt may not exceed 66.7% of the value of our total assets), if certain requirements are met.
Our Board and MC Advisors, our initial stockholder, approved a proposal to adopt an asset coverage ratio of 150% in connection with our organization. Incurring additional indebtedness could increase the risk of investing in us.
Leverage is generally considered a speculative investment technique and may increase the risk of investing in our securities. Leverage magnifies the potential for loss on investments in our indebtedness and on invested equity capital. As we use leverage to partially finance our investments, you will experience increased risks of investing in our securities. If the value of our assets increases, then leveraging would cause the net asset value attributable to our common stock to increase more sharply than it would have had we not leveraged. Conversely, if the value of our assets decreases, leveraging would cause net asset value to decline more sharply than it otherwise would have had we not leveraged our business. Similarly, any increase in our income in excess of interest payable on the borrowed funds would cause our net investment income to increase more than it would without the leverage, while any decrease in our income would cause net investment income to decline more sharply than it would have had we not borrowed. Such a decline could negatively affect our ability to pay distributions, scheduled debt payments or other payments related to our securities. The effects of leverage would cause any decrease in net asset value for any losses to be greater than any increase in net asset value for any corresponding gains. If we incur additional leverage, you will experience increased risks of investing in our common stock.
We maintain a revolving credit facility and may use other borrowed funds to make investments or fund our business operations, which exposes us to risks typically associated with leverage and increases the risk of investing in us.
We maintain a revolving credit facility and may borrow money, which is generally considered a speculative investment technique. As a result:
· our common stock is exposed to an increased risk of loss because a decrease in the value of our investments would have a greater negative impact on the value of our common stock than if we did not use leverage;
· if we do not appropriately match the assets and liabilities of our business, adverse changes in interest rates could reduce or eliminate the incremental income we make with the proceeds of any leverage;
· our ability to pay distributions on our common stock may be restricted if our asset coverage ratio, as provided in the 1940 Act, is not at least 150% and any amounts used to service indebtedness would not be available for such distributions;
· any credit facility is subject to periodic renewal by its lenders, whose continued participation cannot be guaranteed;
· our revolving credit facility with KeyBank National Association, as agent, is, and any other credit facility we may enter into would be, subject to various financial and operating covenants; and
· we bear the cost of issuing and paying interest on the revolving credit facility, which costs are entirely borne by our common stockholders.
The following table illustrates the effect of leverage on returns from an investment in our common stock assuming various annual returns, net of expenses. The calculations in the table below are hypothetical and actual returns may be higher or lower than those appearing in the table below.

Assumed Return on Our Portfolio
(Net of Expenses)⁽¹⁾

-10% -5% 0% 5% 10%
Corresponding return to common stockholder⁽²⁾⁽³⁾ -17.83 % -10.17 % -2.50 % 5.16 % 12.82 %
(1) The assumed return on our portfolio is required by regulation of the SEC to assist investors in understanding the effects of leverage and is not a prediction of, and does not represent, our projected or actual performance.
(2) Assumes $105.3 million in total assets, $36.6 million in debt outstanding, of which $31.2 million is senior securities outstanding, $68.7 million in net assets and an average cost of funds of 4.70%, which was the weighted average interest rate of borrowings on our revolving credit facility as of December 31, 2019. The interest rate on our revolving credit facility is a variable rate. Actual interest payments may be different.
(3) In order for us to cover our annual interest payments on indebtedness, we must achieve annual returns on our December 31, 2019 total portfolio assets of at least 1.63%.
We may be subject to risks associated with our investments in the business services industry.
Portfolio companies in the business services sector are subject to many risks, including the negative impact of regulation, changing technology, a competitive marketplace and difficulty in obtaining financing. Portfolio companies in the business services industry must respond quickly to technological changes and understand the impact of these changes on customers’ preferences. Adverse economic, business, or regulatory developments affecting the business services sector could have a negative impact on the value of our investments in portfolio companies operating in this industry, and therefore could negatively impact our business and results of operations.
45
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~On January 2, 2020, we issued 2,036,841 shares of our common stock, par value $0.001 per share, at a price of $10.00 per share for proceeds of $20,368,410.

Except as previously reported by us on our current reports on Form 8-K, we did not sell any securities during the period covered by this Form 10-Q that were not registered under the Securities Act.
Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

~~None.~~On May 15, 2020, we issued 1,580,867 shares of our common stock, par value $0.001 per share, at a price of $9.29 per share for proceeds of $14,686,250.

The sale of shares of our common stock was made pursuant to subscription agreements entered into by us, on the one hand, and each of our investors, on the other hand. The issuance and sale of the shares of our common stock are exempt from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof and Regulation D or Regulation S thereunder, as applicable.
1346

Item 6. Exhibits

Exhibit
Number Description of Document

3.1 Articles of Incorporation⁽¹⁾

3.2 ~~Bylaws~~⁽¹⁾Articles of Amendment and Restatement (2)

~~10.1~~3.3 ~~Expense Agreement between the Company and MC Management~~^{Bylaws (1)}

~~21.1~~10.1 ~~List of Subsidiaries-None~~Amended and Restated Revolving Credit and Security Agreement among MC Income Plus Financing SPV LLC, as borrower; the Company, as collateral manager; the lenders from time to time parties thereto; KeyBank National Association, as administrative agent and lead arranger; and U.S. Bank National Association as collateral agent, collateral administrator and document custodian. (3)

31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*2002 (filed herewith)

31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*2002 (filed herewith)

32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*2002 (filed herewith)

(1) Previously filed as an exhibit to amendment no. 1 to the registration Statement on Form 10 (File No. 000-55941) filed with the SEC on July 30, 2018.

*(2) ~~Filed herewith~~Previously filed as an exhibit to the current report on Form 8-K filed with the SEC on December 7, 2018.
(3) Previously filed as an exhibit to the current report on Form 8-K filed with the SEC on May 1, 2020.

1447

SIGNATURES

Pursuant to the requirements ~~of Section 12~~ of the Securities Exchange Act of 1934, the registrant has duly caused this ~~Registration Statement~~report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 15, 2020 ~~Monroe Capital Income Plus Corporation~~
~~By:~~ By /s/ Theodore L. Koenig
~~Name:~~ Theodore L. Koenig
~~Title:~~Chairman, Chief Executive Officer and Director
~~Date: November 13, 2018~~
~~By:~~ (Principal Executive Officer)
Monroe Capital Income Plus Corporation
Date: May 15, 2020 By /s/ Aaron D. Peck
~~Name:~~ Aaron D. Peck
~~Title:~~ Chief Financial Officer and Chief Investment Officer
(Principal Financial and Accounting Officer)
Monroe Capital Income Plus Corporation

1548

ASSETS
Cash	$	1,000
Total assets		1,000

LIABILITIES
Total liabilities		-
Net assets	$	1,000

Commitments and contingencies (See Note 4)

ANALYSIS OF NET ASSETS
Common stock, $0.001 par value, 100,000,000 shares authorized,
100 shares issued and outstanding	$	-
Capital in excess of par value		1,000
Total net assets	$	1,000

Net asset value per share	$	10.00

	Three months ended March 31,
	2020			2019
Investment income:
Interest and dividend income	$	2,689		$	104
Total investment income		2,689			104

Operating expenses:
Interest and other debt financing expenses		545			22
Base management fees		497			47
Incentive fees		109			—
Professional fees		82			60
Administrative service fees		82			47
General and administrative expenses		84			44
Directors' fees		15			15
Expenses before fee waivers and expense reimbursement		1,414			235
Base management fee waiver		(260	)		(47	)
Incentive fee waiver		(241	)		—
Expense reimbursement		—			(166	)
Total expenses, net of fee waivers and expense reimbursement		913			22
Net investment income before incomes taxes		1,776			82
Income taxes, including excise taxes		12			—
Net investment income		1,764			82

Net gain (loss):
Net change in unrealized gain (loss) on investments		(6,324	)		126
Net gain (loss)		(6,324	)		126

Net increase (decrease) in net assets resulting from operations	$	(4,560	)	$	208

Per common share data:
Net investment income per share - basic and diluted	$	0.20		$	0.10
Net increase (decrease) in net assets resulting from operations per share - basic and diluted	$	(0.51	)	$	0.25
Weighted average common shares outstanding - basic and diluted		8,872			848

MONROE CAPITAL INCOME PLUS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

(in thousands)

	Three months ended March 31,
	2020			2019
Cash flows from operating activities:
Net increase (decrease) in net assets resulting from operations	$	(4,560	)	$	208
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net change in unrealized (gain) loss on investments		6,324			(126	)
Payment-in-kind interest income		(29	)		—
Net accretion of discounts and amortization of premiums		(125	)		(3	)
Purchases of investments		(62,374	)		(8,923	)
Proceeds from principal payments and sale of investments		2,371			5
Amortization of deferred financing costs		88			18
Changes in operating assets and liabilities:
Interest receivable		(404	)		(55	)
Due from affiliates		—			(166	)
Other assets		(70	)		—
Interest payable		161			5
Payable for unsettled trades		(90	)		—
Management fees payable		(65	)		—
Due to broker		—			10,000
Incentive fees payable		(132	)		—
Accounts payable and accrued expenses		138			159
Directors' fees payable		15			15
Net cash provided by (used in) operating activities		(58,752	)		1,137

Cash flows from financing activities:
Borrowings on revolving credit facility		60,400			—
Repayments of revolving credit facility		(19,600	)		—
Payments of deferred financing costs		(4	)		(320	)
Proceeds from issuance of common shares		20,369			10,175
Stockholder distributions paid, net of stock issued under the dividend reinvestment plan of $357 and $0, respectively		(1,030	)		—
Net cash provided by (used in) financing activities		60,135			9,855

Net increase (decrease) in Cash and cash equivalents and Restricted cash		1,383			10,992
Cash, Cash equivalents and Restricted cash, beginning of period		4,064			1
Cash, Cash equivalents and Restricted cash, end of period	$	5,447		$	10,993

Supplemental disclosure of cash flow information:
Cash interest paid during the period	$	296		$	—
Cash paid for excise taxes during the period	$	25		$	—

	March 31, 2020		December 31, 2019
Cash and cash equivalents	$	3,217	$	2,223
Restricted cash		2,230		1,841
Total cash, cash equivalents and restricted cash shown on the Consolidated Statements of Cash Flows	$	5,447	$	4,064

	March 31, 2019		December 31, 2018
Cash and cash equivalents	$	10,962	$	1
Restricted cash		31		—
Total cash, cash equivalents and restricted cash shown on the Consolidated Statements of Cash Flows	$	10,993	$	1

Portfolio Company^{(a) (b)}	Spread Above Index^(c)	Interest Rate		Acquisition Date^(d)	Maturity	Principal		Amortized Cost		Fair Value^(e)		% of Net Assets^(f)
Investments:
Senior Secured Loans
Aerospace & Defense
API Holdings III Corp. ^(g)	L+ 4.25%	5.24	%	5/2/2019	5/8/2026		1,687	$	1,680	$	1,392		1.6	%
SI Holdings, Inc. (Integrated Polymer Solutions) ^(g)	L+ 6.00%	7.45	%	12/24/2019	7/25/2025		1,039		1,019		980		1.2	%
SI Holdings, Inc. (Integrated Polymer Solutions) ^(g)	L+ 6.00%	7.45	%	7/25/2019	7/25/2025		1,990		1,953		1,877		2.2	%
SI Holdings, Inc. (Integrated Polymer Solutions) (Revolver)	L+ 6.00%	7.45	%	7/25/2019	7/25/2024		316		316		316		0.4	%
							5,032		4,968		4,565		5.4	%
Automotive
Rough Country, LLC ^(g)	L+ 3.50%	4.57	%	4/17/2019	5/25/2023		1,346		1,342		1,317		1.5	%
Truck-Lite Co., LLC ^(g)	L+ 6.25%	7.32	%	3/11/2020	12/14/2026		3,478		3,444		3,444		4.1	%
Truck-Lite Co., LLC (Delayed Draw) ^{(h) (i)}	L+ 6.25%	7.32	%	3/11/2020	12/14/2026		513		—		—		0.0	%
Wheel Pros, LLC ^(g)	L+ 4.75%	5.82	%	5/13/2019	4/4/2025		2,475		2,452		1,794		2.1	%
							7,812		7,238		6,555		7.7	%
Banking, Finance, Insurance & Real Estate
777 SPV I, LLC (Delayed Draw) ^{(i) (j)}	L+ 8.50%	10.25	%	4/15/2019	4/14/2023		1,735		1,717		1,739		2.0	%
Avison Young (USA), Inc. ^{(g) (j) (k)}	L+ 5.00%	6.45	%	4/26/2019	1/30/2026		1,980		1,962		1,630		1.9	%
InsideRE Holdings, LLC and InsideRE, LLC ^(g)	L+ 6.50%	7.95	%	9/9/2019	9/9/2024		2,985		2,931		2,994		3.5	%
InsideRE Holdings, LLC and InsideRE, LLC (Revolver)	L+ 6.50%	7.50	%	9/9/2019	9/9/2024		429		429		429		0.5	%
Kudu Investment Holdings, LLC ^{(g) (j)}	L+ 6.25%	7.70	%	12/23/2019	12/23/2025		2,750		2,704		2,686		3.2	%
Kudu Investment Holdings, LLC (Delayed Draw) ^{(h) (i) (j)}	L+ 6.25%	7.68	%	12/23/2019	12/23/2025		1,833		579		565		0.7	%
Kudu Investment Holdings, LLC (Revolver) ^{(h) (j)}	L+ 6.25%	7.70	%	12/23/2019	12/23/2025		241		—		—		0.0	%
TCP-NG (U.S.), LLC ^{(g) (j)}	L+ 7.25%	8.75	%	8/23/2019	8/22/2024		1,663		1,638		1,615		1.9	%
TCP-NG (U.S.), LLC (Revolver) ^{(h) (j)}	L+ 7.25%	8.75	%	8/23/2019	8/22/2024		105		—		—		0.0	%
Team RMS, LLC ^(g)	L+ 6.00%	7.00	%	9/20/2019	9/20/2024		7,960		7,835		7,695		9.1	%
Team RMS, LLC (Delayed Draw) ^{(h) (i)}	L+ 6.00%	7.00	%	9/20/2019	9/20/2024		367		73		71		0.1	%
Team RMS, LLC (Revolver) ^(h)	L+ 6.00%	7.00	%	9/20/2019	9/20/2024		643		286		277		0.3	%
							22,691		20,154		19,701		23.2	%
Beverage, Food & Tobacco
Huff Hispanic Food Holdings, LLC ^(g)	L+ 5.50%	6.50	%	10/18/2019	10/18/2024		5,970		5,860		5,889		6.9	%
Huff Hispanic Food Holdings, LLC (Delayed Draw) ^{(h) (i)}	L+ 5.50%	6.50	%	10/18/2019	10/18/2024		333		—		—		0.0	%
Huff Hispanic Food Holdings, LLC (Revolver) ^(h)	L+ 5.50%	6.50	%	10/18/2019	10/18/2024		1,286		729		719		0.9	%
LX/JT Intermediate Holdings, Inc. ^(g)	L+ 6.00%	7.50	%	3/11/2020	3/11/2025		6,000		5,881		5,880		6.9	%
LX/JT Intermediate Holdings, Inc. (Revolver) ^(h)	L+ 6.00%	7.50	%	3/11/2020	3/11/2025		500		—		—		0.0	%
							14,089		12,470		12,488		14.7	%
Capital Equipment
MCP Shaw Acquisitionco, LLC ^(g)	L+ 6.50%	8.11	%	2/28/2020	11/28/2025		8,000		7,843		7,832		9.2	%
MCP Shaw Acquisitionco, LLC (Revolver)	L+ 6.50%	8.02	%	2/28/2020	11/28/2025		1,427		1,427		1,397		1.6	%
							9,427		9,270		9,229		10.8	%
Consumer Goods: Durable
Franchise Group Intermediate Holdco, LLC ^(g)	L+ 9.00%	10.50	%	2/24/2020	2/14/2025		4,500		4,412		4,334		5.1	%
							4,500		4,412		4,334		5.1	%
Consumer Goods: Non-Durable
Quirch Foods Holdings, LLC ^(g)	L+ 6.00%	6.96	%	2/14/2019	12/19/2025		1,234		1,223		1,080		1.3	%
							1,234		1,223		1,080		1.3	%
Containers, Packaging & Glass
Polychem Acquisition, LLC ^(g)	L+ 5.00%	6.08	%	4/8/2019	3/17/2025		1,980		1,971		1,980		2.3	%
							1,980		1,971		1,980		2.3	%
Energy: Oil & Gas
BJ Services, LLC ^(g)	L+ 7.00%	8.50	%	1/28/2019	1/3/2023		1,900		1,886		1,868		2.2	%
BW Gas & Convenience Holdings, LLC ^(g)	L+ 6.25%	7.18	%	11/15/2019	11/18/2024		2,116		2,035		1,778		2.1	%
Fieldwood Energy, LLC ^(g)	L+ 5.25%	7.03	%	1/1/2020	4/11/2022		1,000		851		356		0.4	%
Par Petroleum, LLC ^(g)	L+ 6.75%	8.60	%	1/27/2020	1/12/2026		1,000		1,007		705		0.8	%
							6,016		5,779		4,707		5.5	%
Healthcare & Pharmaceuticals
Apotheco, LLC ^(g)	L+ 5.50%	6.50	%	4/8/2019	4/8/2024		1,737		1,707		1,617		1.9	%
Apotheco, LLC (Delayed Draw) ^{(h) (i)}	L+ 5.50%	6.50	%	4/8/2019	4/8/2024		824		—		—		0.0	%
Apotheco, LLC (Revolver)	L+ 5.50%	6.50	%	4/8/2019	4/8/2024		455		455		423		0.5	%
Ascent Midco, LLC ^(g)	L+ 5.75%	6.75	%	2/5/2020	2/5/2025		2,494		2,445		2,399		2.8	%
Ascent Midco, LLC ^(h)	L+ 5.75%	6.75	%	2/5/2020	2/5/2025		1,014		—		—		0.0	%
Ascent Midco, LLC (Revolver) ^(h)	L+ 5.75%	6.75	%	2/5/2020	2/5/2025		403		262		252		0.3	%
ERC Finance, LLC ^(g)	L+ 4.50%	5.57	%	4/23/2019	9/20/2024		1,980		1,950		1,614		1.9	%
nThrive, Inc. ^(g)	L+ 4.50%	5.50	%	5/3/2019	10/20/2022		2,474		2,428		2,097		2.5	%
QF Holdings, Inc. ^(g)	L+ 7.00%	8.00	%	9/19/2019	9/19/2024		4,550		4,468		4,402		5.2	%
QF Holdings, Inc. (Delayed Draw) ^{(h) (i)}	L+ 7.00%	8.00	%	9/19/2019	9/19/2024		910		—		—		0.0	%
QF Holdings, Inc. (Revolver) ^(h)	L+ 7.00%	8.20	%	9/19/2019	9/19/2024		546		364		352		0.4	%
WebPT, Inc. ^(g)	L+ 6.75%	8.36	%	8/28/2019	8/28/2024		5,000		4,909		4,912		5.8	%
WebPT, Inc. (Delayed Draw) ^{(h) (i)}	L+ 6.75%	8.36	%	8/28/2019	8/28/2024		625		—		—		0.0	%
WebPT, Inc. (Revolver)	L+ 6.75%	7.95	%	8/28/2019	8/28/2024		521		521		521		0.6	%
							23,533		19,509		18,589		21.9	%

Portfolio Company ^{(a) (b)}	Spread Above Index ^(c)	Interest Rate		Acquisition Date ^(d)	Maturity	Principal		Amortized Cost		Fair Value ^(e)		% of Net Assets ^(f)
Investments:
Senior Secured Loans
Aerospace & Defense
API Holdings III Corp. ^(g)	L+4.25%	6.05	%	5/2/2019	5/8/2026		1,691	$	1,684	$	1,632		2.4	%
SI Holdings, Inc. (Integrated Polymer Solutions) ^(g)	L+6.00%	7.94	%	12/24/2019	7/25/2025		1,041		1,021		1,041		1.5	%
SI Holdings, Inc. (Integrated Polymer Solutions) ^(g)	L+6.00%	7.94	%	7/25/2019	7/25/2025		1,995		1,956		1,994		2.9	%
SI Holdings, Inc. (Integrated Polymer Solutions) (Revolver) ^(h)	L+6.00%	7.94	%	7/25/2019	7/25/2024		316		79		79		0.1	%
							5,043		4,740		4,746		6.9	%
Automotive
Rough Country, LLC ^(g)	L+3.50%	5.30	%	4/17/2019	5/25/2023		1,346		1,342		1,339		1.9	%
Wheel Pros, LLC ^(g)	L+4.75%	6.55	%	5/13/2019	4/4/2025		2,481		2,458		2,452		3.6	%
							3,827		3,800		3,791		5.5	%
Banking, Finance, Insurance & Real Estate
777 SPV I LLC (Delayed Draw) ^{(i) (j)}	L+8.50%	10.30	%	4/15/2019	4/14/2023		1,775		1,756		1,780		2.6	%
Avison Young (USA), Inc. ^{(g) (j) (k)}	L+5.00%	6.94	%	4/26/2019	1/30/2026		1,985		1,966		1,954		2.8	%
InsideRE Holdings, LLC and InsideRE, LLC ^(g)	L+6.50%	8.46	%	9/9/2019	9/9/2024		2,993		2,936		3,006		4.4	%
InsideRE Holdings, LLC and InsideRE, LLC (Revolver) ^(h)	L+6.50%	8.46	%	9/9/2019	9/9/2024		429		—		—		0.0	%
Kudu Investment Holdings, LLC ^(j)	L+6.25%	8.18	%	12/23/2019	12/23/2025		2,750		2,702		2,702		3.9	%
Kudu Investment Holdings, LLC (Delayed Draw) ^{(h) (i) (j)}	L+6.25%	8.18	%	12/23/2019	12/23/2025		1,833		—		—		0.0	%
Kudu Investment Holdings, LLC (Revolver) ^{(h) (j)}	L+6.25%	8.18	%	12/23/2019	12/23/2025		241		—		—		0.0	%
TCP-NG (U.S.), LLC ^(j)	L+7.25%	9.21	%	8/23/2019	8/22/2024		1,706		1,680		1,703		2.5	%
TCP-NG (U.S.), LLC (Revolver) ^{(h) (j)}	L+7.25%	9.21	%	8/23/2019	8/22/2024		105		—		—		0.0	%
Team RMS, LLC ^(g)	L+6.00%	7.80	%	9/20/2019	9/20/2024		7,980		7,849		7,995		11.6	%
Team RMS, LLC (Delayed Draw) ^{(h) (i)}	L+6.00%	7.80	%	9/20/2019	9/20/2024		367		73		73		0.1	%
Team RMS, LLC (Revolver) ^(h)	L+6.00%	7.80	%	9/20/2019	9/20/2024		643		115		115		0.2	%
							22,807		19,077		19,328		28.1	%
Beverage, Food & Tobacco
Huff Hispanic Food Holdings, LLC ^(g)	L+5.50%	7.30	%	10/18/2019	10/18/2024		5,983		5,868		5,989		8.7	%
Huff Hispanic Food Holdings, LLC (Delayed Draw) ^{(h) (i)}	L+5.50%	7.30	%	10/18/2019	10/18/2024		333		—		—		0.0	%
Huff Hispanic Food Holdings, LLC (Revolver) ^(h)	L+5.50%	7.30	%	10/18/2019	10/18/2024		1,286		471		471		0.7	%
							7,602		6,339		6,460		9.4	%
Consumer Goods: Non-Durable
Quirch Foods Holdings, LLC ^(g)	L+6.00%	7.79	%	2/14/2019	12/19/2025		1,238		1,226		1,238		1.8	%
							1,238		1,226		1,238		1.8	%
Containers, Packaging & Glass
Polychem Acquisition, LLC ^(g)	L+5.00%	6.95	%	4/8/2019	3/17/2025		1,985		1,975		1,985		2.9	%
							1,985		1,975		1,985		2.9	%
Energy: Oil & Gas
BJ Services, LLC ^(g)	L+7.00%	8.91	%	1/28/2019	1/3/2023		1,925		1,909		1,914		2.8	%
BW Gas & Convenience Holdings, LLC ^{(g) (l)}	L+6.25%	8.05	%	11/15/2019	11/18/2024		2,143		2,057		2,138		3.1	%
							4,068		3,966		4,052		5.9	%
Healthcare & Pharmaceuticals
Apotheco, LLC ^(g)	L+5.50%	7.30	%	4/8/2019	4/8/2024		1,741		1,710		1,741		2.5	%
Apotheco, LLC (Delayed Draw) ^{(h) (i)}	L+5.50%	7.30	%	4/8/2019	4/8/2024		824		—		—		0.0	%
Apotheco, LLC (Revolver) ^(h)	L+5.50%	7.30	%	4/8/2019	4/8/2024		455		170		170		0.2	%
ERC Finance, LLC ^(g)	L+4.50%	6.30	%	4/23/2019	9/20/2024		1,985		1,953		1,925		2.8	%
nThrive, Inc. ^(g)	L+4.50%	6.30	%	5/3/2019	10/20/2022		2,481		2,430		2,079		3.0	%
QF Holdings, Inc. ^(g)	L+7.00%	8.90	%	9/19/2019	9/19/2024		4,550		4,464		4,536		6.6	%
QF Holdings, Inc. (Delayed Draw) ^{(h) (i)}	L+7.00%	8.90	%	9/19/2019	9/19/2024		910		—		—		0.0	%
QF Holdings, Inc. (Revolver) ^(h)	L+7.00%	8.90	%	9/19/2019	9/19/2024		546		—		—		0.0	%
WebPT, Inc. ^(g)	L+6.75%	8.66	%	8/28/2019	8/28/2024		5,000		4,904		5,001		7.3	%
WebPT, Inc. (Delayed Draw) ^{(h) (i)}	L+6.75%	8.66	%	8/28/2019	8/28/2024		625		—		—		0.0	%
WebPT, Inc. (Revolver) ^(h)	L+6.75%	8.66	%	8/28/2019	8/28/2024		521		—		—		0.0	%
							19,638		15,631		15,452		22.4	%
High Tech Industries
Acquia, Inc. ^(g)	L+7.00%	8.91	%	11/1/2019	10/31/2025		5,429		5,324		5,446		7.9	%
Acquia, Inc. (Revolver) ^(h)	L+7.00%	8.91	%	11/1/2019	10/31/2025		588		—		—		0.0	%
Gigamon, Inc. ^(g)	L+4.25%	6.04	%	4/26/2019	12/27/2024		1,489		1,438		1,476		2.1	%
Mindbody, Inc. ^(g)	L+7.00%	8.79	%	2/15/2019	2/14/2025		1,810		1,777		1,803		2.6	%
Mindbody, Inc. (Revolver) ^(h)	L+7.00%	8.79	%	2/15/2019	2/14/2025		190		—		—		0.0	%
Recorded Future, Inc. ^(g)	L+6.75%	8.55	%	7/3/2019	7/3/2025		3,667		3,596		3,666		5.4	%
Recorded Future, Inc. (Delayed Draw) ^{(h) (i)}	L+6.75%	8.55	%	7/3/2019	7/3/2025		293		—		—		0.0	%
Recorded Future, Inc. (Revolver) ^(h)	L+6.75%	8.55	%	7/3/2019	7/3/2025		440		—		—		0.0	%
Transact Holdings, Inc. ^{(g) (l)}	L+4.75%	6.55	%	4/18/2019	4/30/2026		750		739		747		1.1	%
							14,656		12,874		13,138		19.1	%

	March 31, 2020				December 31, 2019
Amortized Cost:
Senior secured loans	$	153,889	96.1	%	$	98,479	98.5	%
Unitranche secured loans		982	0.6			984	1.0
Junior secured loans		3,863	2.4			—	—
Equity securities		1,354	0.9			468	0.5
Total	$	160,088	100.0	%	$	99,931	100.0	%

	March 31, 2020				December 31, 2019
Fair Value:
Senior secured loans	$	148,483	96.0	%	$	99,334	98.5	%
Unitranche secured loans		983	0.6			1,001	1.0
Junior secured loans		3,889	2.5			—	—
Equity securities		1,285	0.9			472	0.5
Total	$	154,640	100.0	%	$	100,807	100.0	%

	·	Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date.

	·	Level 2 — Valuations based on inputs other than quoted prices in active markets, including quoted prices for similar assets or liabilities, which are either directly or indirectly observable.

	·	Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement. This includes situations where there is little, if any, market activity for the assets or liabilities. The inputs into the determination of fair value are based upon the best information available and may require significant management judgment or estimation.

	·	the quarterly valuation process begins with each portfolio company or investment being initially evaluated and rated by the investment professionals of MC Advisors responsible for the credit monitoring of the portfolio investment;

	·	the Board engages one or more independent valuation firm(s) to conduct independent appraisals of a selection of investments for which market quotations are not readily available. The Company will consult with independent valuation firm(s) relative to each portfolio company at least once in every calendar year, but the independent appraisals are generally received quarterly;

	·	to the extent an independent valuation firm is not engaged to conduct an investment appraisal on an investment for which market quotations are not readily available, the investment will be valued by the MC Advisors investment professional responsible for the credit monitoring;

	·	preliminary valuation conclusions are then documented and discussed with the investment committee of the Company;

	·	the audit committee of the Board reviews the preliminary valuations of MC Advisors and of the independent valuation firm(s) and MC Advisors adjusts or further supplements the valuation recommendations to reflect any comments provided by the audit committee; and

	·	the Board discusses these valuations and determines the fair value of each investment in the portfolio in good faith, based on the input of MC Advisors, the independent valuation firm(s) and the audit committee.

	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
Investments:
Senior secured loans	$	—	$	—	$	148,483	$	148,483
Unitranche secured loans		—		—		983		983
Junior secured loans		—		—		3,889		3,889
Equity securities		—		—		1,285		1,285
Total investments	$	—	$	—	$	154,640	$	154,640

	Investments
	Senior secured loans			Unitranche secured loans			Junior secured loans		Equity securities			Total investments
Balance as of December 31, 2019	$	99,334		$	1,001		$	—	$	472		$	100,807
Net change in unrealized gain (loss) on investments		(6,262	)		(15	)		26		(73	)		(6,324	)
Purchases of investments and other adjustments to cost ⁽¹⁾		57,779			—			3,863		886			62,528
Proceeds from principal payments and sales of investments ⁽²⁾		(2,368	)		(3	)		—		—			(2,371	)
Balance as of March 31, 2020	$	148,483		$	983		$	3,889	$	1,285		$	154,640

(1)	Includes purchases of new investments, effects of refinancing and restructurings, premium and discount accretion and amortization and PIK interest.
(2)	Represents net proceeds from investments sold and principal paydowns received.

				Unobservable	Weighted Average			Range
	Fair Value		Valuation Technique	Input	Mean			Minimum			Maximum
Assets:
Senior secured loans	$	81,647	Discounted cash flow	EBITDA multiples		9.0	x		6.5	x		18.5	x
				Market yields		8.4	%		6.0	%		11.0	%
Senior secured loans		40,744	Discounted cash flow	Revenue multiples		6.6	x		2.9	x		10.3	x
				Market yields		8.9	%		7.4	%		15.1	%
Senior secured loans		1,615	Enterprise value	Book value multiples		1.3	x		1.3	x		1.3	x
Unitranche secured loans		983	Discounted cash flow	Revenue multiples		1.0	x		1.0	x		1.0	x
				Market yields		7.0	%		7.0	%		7.0	%
Junior secured loans		3,889	Discounted cash flow	EBITDA multiples		5.3	x		5.3	x		5.3	x
				Market yields		11.2	%		11.2	%		11.2	%
Equity securities		1,242	Enterprise value	EBITDA multiples		10.5	x		7.3	x		18.5	x
Equity securities		43	Enterprise value	Revenue multiples		10.3	x		10.3	x		10.3	x
Total Level 3 Assets⁽¹⁾	$	130,163


	·	100% of the Company’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 1.76% in any calendar quarter prior to an Exchange Listing or 1.88% in any calendar quarter following an Exchange Listing. The Company refers to this portion of the Company’s pre-incentive fee net investment income as the “catch-up” provision. Prior to an Exchange Listing, the catch-up is meant to provide MC Advisors with 15% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 1.76% in any calendar quarter, and following an Exchange Listing, the catch-up is meant to provide MC Advisors with 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply if this net investment income exceeds 1.88% in any calendar quarter; and

	For the three months ended March 31,
	2020			2019
Part one incentive fees⁽¹⁾	$	241		$	—
Part two incentive fees⁽²⁾		(132	)		—
Incentive fees, excluding the impact of the incentive fee waiver		109			—
Incentive fee waiver⁽³⁾		(241	)		—
Total incentive fees, net of incentive fee waiver	$	(132	)	$	—

(1)	Based on pre-incentive fee net investment income.
(2)	Based upon net realized and unrealized gains and losses, or capital gains. The Company accrues, but does not pay, a capital gains incentive fee in connection with any unrealized capital appreciation, as appropriate. If, on a cumulative basis, the sum of net realized gain (loss) plus net unrealized gain (loss) decreases during a period, the Company will reverse any excess capital gains incentive fee previously accrued such that the amount of capital gains incentive fee accrued is no more than 15% of the sum of net realized gain (loss) plus net unrealized gain (loss).
(3)	Represents part one incentive fees voluntarily waived by MC Advisors.

Date Declared	Record Date	Payment Date⁽¹⁾	Amount Per Share⁽²⁾		Distribution Declared
Three months ended March 31, 2019:
March 19, 2019	March 22, 2019	May 15, 2019	$	0.20	$	208
Total distributions declared			$	0.20	$	208

	(1)	The portion of the Company’s distribution that is to be reinvested pursuant to the DRIP is issued to the Company’s stockholders on the payment date.
	(2)	The payment amount approved by the Board was equal to the net increase in net assets resulting from operations per share earned by the Company as determined in accordance with GAAP.

Payment Date	NAV Per Share		DRIP Shares Issued⁽¹⁾		DRIP Shares Value⁽¹⁾
Three months ended March 31, 2020:
March 17, 2020	$	10.00		35,717	$	357
Total proceeds				35,717	$	357

Date	NAV Per Share		Shares Issued		Proceeds
Three months ended March 31, 2020:
January 2, 2020	$	10.00		2,036,841	$	20,369
Total				2,036,841	$	20,369

	March 31, 2020			March 31, 2019
Per share data:
Net asset value at beginning of period	$	10.00		$	10.00
Net investment income (loss)⁽¹⁾		0.20			0.10
Net gain (loss)⁽¹⁾		(0.71	)		0.15
Net increase (decrease) in net assets resulting from operations⁽¹⁾		(0.51	)		0.25
Stockholder distributions declared⁽²⁾		—			(0.20	)
Other⁽³⁾		—			(0.05	)
Net asset value at end of period	$	9.49		$	10.00
Net assets at end of period	$	84,911		$	10,176
Shares outstanding at end of period		8,947,090			1,017,600
Total return based on average net asset value⁽⁴⁾		(5.93	)%		4.10	%
Ratio/Supplemental data:
Ratio of expenses to average net assets without waivers and expense reimbursement⁽⁵⁾		7.04	%		22.55	%
Ratio of expenses to average net assets with waivers and expense reimbursement⁽⁵⁾		5.36	%		2.14	%
Ratio of net investment income (loss) to average net assets without waivers and expense reimbursement⁽⁵⁾		7.04	%		(12.56	)%
Ratio of net investment income (loss) to average net assets with waivers and expense reimbursement⁽⁵⁾		8.71	%		7.86	%
Portfolio turnover⁽⁶⁾		1.86	%		0.05	%

(1)	The per share data was derived by using the weighted average shares outstanding during the periods presented.
(2)	The per share data for distributions reflects the actual amount of distributions declared during the period.
(3)	Represents the impact of different share amounts used in calculating per share data as a result of calculating certain per share data based on weighted average shares outstanding during the period and certain per share data based on shares outstanding as of a period end or transaction date.
(4)	Total return based on average net asset value is calculated by dividing the net increase in net assets resulting from operations by the average net asset value. Return calculations are not annualized.
(5)	Ratios are annualized. Incentive fees included within the ratio are not annualized.
(6)	Ratio is not annualized.

	March 31, 2020						December 31, 2019
	Weighted Average Annualized Contractual Coupon Yield⁽¹⁾			Weighted Average Annualized Effective Yield⁽²⁾			Weighted Average Annualized Contractual Coupon Yield⁽¹⁾			Weighted Average Annualized Effective Yield⁽²⁾
Senior secured loans		7.7	%		7.7	%		8.0	%		8.0	%
Unitranche secured loans		5.6			6.2			6.4			7.0
Junior secured loans		9.8			9.8			—			—
Preferred equity securities		8.0			8.0			—			—
Total		7.7	%		7.7	%		8.0	%		8.0	%

Investment Performance Risk Rating		Summary Description
Grade 1		Includes investments exhibiting the least amount of risk in our portfolio. The issuer is performing above expectations or the issuer’s operating trends and risk factors are generally positive.

Grade 2		Includes investments exhibiting an acceptable level of risk that is similar to the risk at the time of origination. The issuer is generally performing as expected or the risk factors are neutral to positive.

Grade 3		Includes investments performing below expectations and indicates that the investment’s risk has increased somewhat since origination. The issuer may be out of compliance with debt covenants; however, scheduled loan payments are generally not past due.

Grade 4		Includes an issuer performing materially below expectations and indicates that the issuer’s risk has increased materially since origination. In addition to the issuer being generally out of compliance with debt covenants, scheduled loan payments may be past due (but generally not more than six months past due).

Grade 5		Indicates that the issuer is performing substantially below expectations and the investment risk has substantially increased since origination. Most or all of the debt covenants are out of compliance or payments are substantially delinquent. Investments graded 5 are not anticipated to be repaid in full.

Investment Performance Risk Rating	Investments at Fair Value		Percentage of Total Investments
1	$	—		—	%
2		147,286		95.2
3		7,354		4.8
4		—		—
5		—		—
Total	$	154,640		100.0	%

(1)	Base management fees for the three months ended March 31, 2020 and 2019 were $497 and $47, respectively. MC Advisors elected to voluntarily waive $260 and $47 of such base management fees for the three months ended March 31, 2020 and 2019, respectively.
(2)	Incentive fees for the three months ended March 31, 2020 were $109, comprised of part one incentive fees of $241 and a return of part two capital gains incentive fees previously accrued of ($132). MC Advisors elected to voluntarily waive the part one incentive fees of $241 during the three months ended March 31, 2020. There were no incentive fees for the three months ended March 31, 2019. See Note 5 to our consolidated financial statements and “Capital Gains Incentive Fee” below for additional information.
(3)	MC Management agreed to reimburse us for administrative expenses (not to include base management fees or credit facility expenses) incurred by us of zero and $166 for the three months ended March 31, 2020 and 2019, respectively.

	Increase (decrease) in			Increase (decrease) in			Net increase (decrease) in net investment
Change in Interest Rates	interest income			interest expense			income
Down 25 basis points	$	(225	)	$	(180	)	$	(45	)
Up 100 basis points		1,075			720			355
Up 200 basis points		2,692			1,440			1,252
Up 300 basis points		4,309			2,160			2,149