UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Form 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 1-35040
PHENIXFIN CORPORATION
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 27-4576073 | |
| (State or Other Jurisdiction of | (I.R.S. Employer | |
| Incorporation or Organization) | Identification No.) |
| 445 Park Avenue, 9th Floor, New York, NY | ||
| (Address of Principal Executive Offices) | (Zip Code) |
(212) 759-0777
(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 | ||
| Common Stock, par value $0.001 per share | The | |||
| 6.125% Notes due 2023 | The |
Securities registered pursuant to Section 12(g) of the Act: None
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 ☒ý 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 ☐¨ 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 ☒ | Smaller reporting company ☐ | Emerging growth company ☐ |
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 Securities Exchange Act of 1934). Yes ☐ ¨No ☒ý
The Registrant had 54,474,2112,703,936 shares of common stock, $0.001 par value, outstanding as of May 11, 2020.12, 2021.
PHENIXFIN CORPORATION
TABLE OF CONTENTS
| Part I. Financial Information | |
| Item 1. Financial Statements | |
| 1 | |
| 2 | |
| 3 | |
| 5 | |
| 6 | |
| 20 | |
| 57 | |
| 74 | |
| 74 | |
| Part II. Other Information | 75 |
| 75 | |
| 76 | |
| 80 | |
| 80 | |
| 80 | |
| 80 | |
| 81 | |
| SIGNATURES | 85 |
i
Consolidated Statements of Assets and Liabilities
| March 31, 2020 | September 30, 2019 | ||||||
| (unaudited) | |||||||
| ASSETS | |||||||
| Investments at fair value | |||||||
| Non-controlled/non-affiliated investments (amortized cost of $143,309,568 and $204,736,370, respectively) | $ | 112,666,094 | $ | 189,895,466 | |||
| Affiliated investments (amortized cost of $96,625,681 and $108,310,029, respectively) | 82,276,524 | 99,539,605 | |||||
| Controlled investments (amortized cost of $156,551,909 and $154,601,177, respectively) | 60,953,188 | 107,453,927 | |||||
| Total investments at fair value | 255,895,806 | 396,888,998 | |||||
| Cash and cash equivalents | 61,104,407 | 68,245,213 | |||||
| Restricted cash (see Note 2) | — | 16,038,690 | |||||
| Other assets | 966,076 | 2,973,731 | |||||
| Interest receivable | 488,956 | 1,592,406 | |||||
| Receivable for dispositions and investments sold | 12,500 | 419,299 | |||||
| Fees receivable | 44,682 | 108,305 | |||||
| Total assets | $ | 318,512,427 | $ | 486,266,642 | |||
| LIABILITIES | |||||||
| Notes payable (net of debt issuance costs of $1,842,578 and $5,274,164, respectively) | $ | 171,172,722 | $ | 251,731,729 | |||
| Accounts payable and accrued expenses | 2,258,418 | 11,956,755 | |||||
| Interest and fees payable | 801,805 | 2,904,748 | |||||
| Management and incentive fees payable (see Note 6) | 1,641,271 | 2,231,175 | |||||
| Administrator expenses payable (see Note 6) | 576,362 | 861,785 | |||||
| Deferred revenue | 37,664 | 103,583 | |||||
| Due to affiliate | 196,253 | 44,337 | |||||
| Deferred tax liability | 85,664 | — | |||||
| Total liabilities | $ | 176,770,159 | $ | 269,834,112 | |||
| Guarantees and Commitments (see Note 8) | |||||||
| NET ASSETS | |||||||
| Common stock, par value $0.001 per share, 100,000,000 common shares authorized, 54,474,211 and 54,474,211 common shares issued and outstanding, respectively | $ | 54,474 | $ | 54,474 | |||
| Capital in excess of par value | 673,532,717 | 673,532,717 | |||||
| Total distributable earnings/(loss) | (531,844,923 | ) | (457,154,661 | ) | |||
| Total net assets | 141,742,268 | 216,432,530 | |||||
| Total liabilities and net assets | $ | 318,512,427 | $ | 486,266,642 | |||
| NET ASSET VALUE PER SHARE | $ | 2.60 | $ | 3.97 | |||
| March 31, 2021 (Unaudited) | September 30, 2020 | |||||||
| Assets: | ||||||||
| Investments at fair value | ||||||||
| Non-controlled, non-affiliated investments (amortized cost of $95,301,443 and $117,360,954, respectively) | $ | 93,283,110 | $ | 114,321,948 | ||||
| Affiliated investments (amortized cost of $79,845,752 and $92,898,755, respectively) | 68,233,836 | 84,873,023 | ||||||
| Controlled investments (amortized cost of $38,487,321 and $117,874,821, respectively) | 6,727,597 | 47,548,578 | ||||||
| Total Investments at fair value | 168,244,543 | 246,743,549 | ||||||
| Cash and cash equivalents | 59,092,731 | 56,522,148 | ||||||
| Receivables: | ||||||||
| Interest receivable | 299,655 | 624,524 | ||||||
| Fees receivable | 106,528 | 119,028 | ||||||
| Other receivable | 398,551 | - | ||||||
| Prepaid share repurchases | 164,258 | - | ||||||
| Other assets | 1,210,724 | 2,093,559 | ||||||
| Total Assets | $ | 229,516,990 | $ | 306,102,808 | ||||
| Liabilities: | ||||||||
| Notes payable (net of debt issuance costs of $551,142 and $905,624, respectively) | $ | 77,295,658 | $ | 150,960,662 | ||||
| Interest and fees payable | - | 801,805 | ||||||
| Due to affiliates | - | 53,083 | ||||||
| Management and incentive fees payable (see Note 6) | - | 1,392,022 | ||||||
| Administrator expenses payable (see Note 6) | 94,958 | 156,965 | ||||||
| Accounts payable and accrued expenses | 918,279 | 2,108,225 | ||||||
| Deferred revenue | 30,970 | 10,529 | ||||||
| Total Liabilities | 78,339,865 | 155,483,291 | ||||||
| Commitments and Contingencies (see Note 8) | ||||||||
| Net Assets: | ||||||||
| Common Shares, $0.001 par value; 5,000,000 shares authorized; 2,703,936 and 2,723,709 common shares issued and outstanding, respectively | 2,704 | 2,724 | ||||||
| Capital in excess of par value | 671,589,690 | 672,381,617 | ||||||
| Total distributable earnings/(loss) | (520,415,269 | ) | (521,764,824 | ) | ||||
| Total Net Assets | $ | 151,177,125 | $ | 150,619,517 | ||||
| Total Liabilities and Net Assets | $ | 229,516,990 | $ | 306,102,808 | ||||
| Net Asset Value Per Common Share | $ | 55.91 | $ | 55.30 | ||||
The accompanying notes toare an integral part of these consolidated financial statements.
1
Consolidated Statements of Operations (Unaudited) The accompanying notes 2 Consolidated Statements of Changes in Net Assets (Unaudited) PHENIXFIN CORPORATION Consolidated Statements of Changes in Net Assets (Unaudited) The accompanying notes Consolidated Statements of Cash Flows (Unaudited) The accompanying notes As of March 31, (Unaudited) Unsecured Debt (10.00% Cash)(17) The tax cost basis of investments is $213,875,881 as of March 31, 2021. The accompanying notes are an integral part of these consolidated financial statements. PHENIXFIN CORPORATION Consolidated Schedule of Investments September 30, 2020 See accompanying notes to consolidated financial statements. Notes to Consolidated Financial Statements March 31, (unaudited) Note 1. Organization PhenixFIN Corporation (f/k/a Medley Capital On March 26, 2013, our wholly owned subsidiary, Medley SBIC, LP (“SBIC LP”), a Delaware limited partnership that we own directly and through our wholly owned subsidiary, Medley SBIC GP, LLC, received a license from the Small Business Administration (“SBA”) to operate as a Small Business Investment Company (“SBIC”) under Section 301(c) of the Small Business Investment Company Act of 1958, as amended. Effective July 1, 2019, SBIC LP surrendered its SBIC license and changed its name to Medley Small Business Fund, The Company has formed and expects to continue to form certain taxable subsidiaries (the “Taxable Subsidiaries”), which are taxed as corporations for federal income tax purposes. These Taxable Subsidiaries allow us to, among other things, hold equity securities of portfolio companies organized as pass-through entities while continuing to satisfy the requirements of a RIC under the Code. The Company’s investment objective is to generate current income and capital Reverse Stock Split; Authorized Share Reduction At the Company’s 2020 Annual Meeting of Following the 2020 Annual Meeting, on July 7, 2020, the board of directors determined that it was in the best interests of the 20 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 1. Organization (continued) Pursuant to the Certificate of Amendment, effective as of On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of its shares of common stock to the NASDAQ Global Market. The listing and trading of the common stock on the NYSE ceased at the close of trading on December 31, 2020. Sale of MCC On October 8, 2020, the Company, Great American Life Insurance Company (“GALIC”), MCC Senior Loan Strategy JV I LLC (the “MCC JV”), and COVID-19 Developments The global outbreak of PHENIXFIN CORPORATION Notes to March 31, 2021 (unaudited) Note 2. Significant Accounting Policies Basis of Presentation The Company Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers cash equivalents to be highly liquid investments with original maturities of three months or less. Cash and cash equivalents include deposits in a money market account. The Company deposits its cash in financial institutions and, at times, such balances may be in excess of the Federal Deposit Insurance Corporation insurance limits. Debt Issuance Costs Debt issuance costs incurred in connection with any credit facilities and unsecured notes Indemnification In the normal course of business, the Company enters into contractual agreements that provide general indemnifications against losses, costs, claims and liabilities arising from the performance of individual obligations under such agreements. The Company has had no material claims or payments pursuant to such agreements. The Company’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on management’s experience, the Company expects the risk of loss to be remote. Revenue Recognition Interest income, adjusted for amortization of premiums and accretion of discounts, is recorded on an accrual basis. Dividend income, which represents dividends from equity investments and distributions from Taxable Subsidiaries, is recorded on the ex-dividend date and when the distribution is received, respectively. The Company holds debt investments in its portfolio that contain a payment-in-kind (“PIK”) interest provision. PIK interest, which represents contractually deferred interest added to the investment balance that is generally due at maturity, is recorded on the accrual basis to the extent such amounts are expected to be collected. PIK interest is not accrued if the Company does not expect the issuer to be able to pay all principal and interest when due. For the three and six months ended March 31, Origination/closing, amendment and transaction break-up fees associated with investments in portfolio companies are recognized as income when we become entitled to such fees. Prepayment penalties received by the Company for debt instruments paid back to the Company prior to the maturity date are recorded as income upon repayment of debt. Administrative agent fees received by the Company are capitalized as deferred revenue and recorded as fee income when the services are rendered. For the three and six months ended March 31, Investment transactions are accounted for on a trade date basis. Realized gains or losses on investments are measured by the difference between the net proceeds from the disposition and the amortized cost basis of investment, without regard to unrealized gains or losses previously recognized. There were 22 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 2. Significant Accounting Policies (continued) Revenue Recognition (continued) Management reviews all loans that become 90 days or more past due on principal or interest or when there is reasonable doubt that principal or interest will be collected for possible placement on management’s designation of non-accrual status. Interest receivable is analyzed regularly and may be reserved against when deemed uncollectible. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid and, in management’s judgment, are likely to remain current, although we may make exceptions to this general rule if the loan has sufficient collateral value and is in the process of collection. At March 31, Investment Classification The Company classifies its investments in accordance with the requirements of the 1940 Act. Under the 1940 Act, we would be deemed to “control” a portfolio company if we owned more than 25% of its outstanding voting securities and/or had the power to exercise control over the management or policies of such portfolio company. We refer to such investments in portfolio companies that we “control” as “Control Investments.” Under the 1940 Act, we would be deemed to be an “Affiliated Person” of a portfolio company if we own between 5% and 25% of the portfolio company’s outstanding voting securities or we are under common control with such portfolio company. We refer to such investments in Affiliated Persons as “Affiliated Investments.” Valuation of Investments The Company applies fair value accounting to all of its financial instruments in accordance with the 1940 Act and ASC Topic 820 - Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework used to measure fair value and requires disclosures for fair value measurements. In accordance with ASC 820, the Company has categorized its financial instruments carried at fair value, based on the priority of the valuation technique, into a three-level fair value hierarchy as discussed in Note 4. Fair value is a market-based measure considered from the perspective of the market participant who holds the financial instrument rather than an entity specific measure. Therefore, when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that management believes market participants would use in pricing the financial instrument at the measurement date. Investments for which market quotations are readily available are valued at such market quotations, which are generally obtained from an independent pricing service or multiple broker-dealers or market makers. We weight the use of third-party broker quotations, if any, in determining fair value based on our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer. However, debt investments with remaining maturities within 60 days that are not credit impaired are valued at cost plus accreted discount, or minus amortized premium, which approximates fair value. Investments for which market quotations are not readily available are valued at fair value as determined by the Company’s board of directors based upon input from management and Investments in investment funds are valued at fair value. Fair values are generally determined utilizing the NAV supplied by, or on behalf of, management of each investment fund, which is net of management and incentive fees or allocations charged by the investment fund and is in accordance with the “practical expedient”, as defined by FASB Accounting Standards Update (“ASU”) 2009-12, The methodologies utilized by the Company in estimating the fair value of its investments categorized as Level 3 generally fall into the following two categories: The Company 23 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 2. Significant Accounting Policies (continued) Valuation of Investments (continued) The methodologies and information that the Company utilizes when applying the Market Approach for performing investments include, among other things: The methodologies and information that the Company utilizes when applying the Income Approach for performing investments include: For non-performing investments, we may estimate the liquidation or collateral value of the portfolio company’s assets and liabilities using an expected recovery model (Market Approach - Expected Recovery Analysis or Estimated Liquidation Proceeds). We undertake a multi-step valuation process each quarter when valuing investments for which market quotations are not readily available, as described below: 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 from the values that would have been used had a readily available market value existed for such investments, and the differences could be material. Fair Value of Financial Instruments The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts payable and accrued expenses, approximate fair value due to their short-term nature. The carrying amounts and fair values of our long-term obligations are discussed in Note 5. Recently Adopted Accounting Pronouncements In 24 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 2. Significant Accounting Policies (continued) Recently Adopted Accounting Pronouncements (continued) In May 2020, the SEC adopted rule amendments that impacted the requirement of investment companies, including BDCs, to disclose the financial statements of certain of their portfolio companies or certain acquired funds (the “Final Rules”). The Federal Income Taxes The Company has elected, and intends to qualify annually, to be treated as a RIC under Subchapter M of the Code. In order to continue to qualify as a RIC and be eligible for tax treatment under Subchapter M of the Code, among other things, the Company is required to meet certain source of income and asset diversification requirements and timely distribute to its stockholders at least 90% of the sum of investment company taxable income (“ICTI”) The Company is subject to a nondeductible U.S. federal excise tax of 4% on undistributed income if it does not distribute at least 98% of its ordinary income in any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31 of such calendar The Company’s Taxable Subsidiaries accrue income taxes payable based on the applicable corporate rates on the unrealized gains generated by the investments held by the Taxable Subsidiaries. As of March 31, As of March 31, ICTI generally differs from net investment income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. The Company may be required to recognize ICTI in certain circumstances in which it does not receive cash. For example, if the Company holds debt obligations that are treated under applicable tax rules as having original issue discount, the Company must include in ICTI each year a portion of the original issue discount that accrues over the life of the obligation, regardless of whether cash representing such income is received by the Company in the same taxable year. The Company may also have to include in ICTI other amounts that it has not yet received in cash, such as 1) PIK interest income and 2) interest income from investments that have been classified as non-accrual for financial reporting purposes. Interest income on non-accrual investments is not recognized for financial reporting purposes, but generally is recognized in ICTI. Because any original issue discount or other amounts accrued will be included in the Company’s ICTI for the year of accrual, the Company may be required to make a distribution to its stockholders in order to satisfy the minimum distribution requirements, even though the Company will not have received and may not ever receive any corresponding cash amount. ICTI also excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized. The Company accounts for income taxes in conformity with ASC Topic 740 - Income Taxes (“ASC 740”). ASC 740 provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions deemed to meet a “more-likely-than-not” threshold would be recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Consolidated Statements of Operations. There were no material uncertain income tax positions at March 31, 25 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 2. Significant Accounting Policies (continued) Retroactive Adjustments for Reverse Stock Split and the Authorized Share Reduction The per share amount of the common stock and the authorized shares of common stock in the unaudited financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to the Reverse Stock Split effected on July 24, 2020. See Note 1 for more information regarding the Reverse Stock Split and the Authorized Share Reduction. Segments The Company invests in various industries. The Company separately evaluates the performance of each of its investment relationships. However, because each of these investment relationships has similar business and economic characteristics, they have been aggregated into a single investment segment. All applicable segment disclosures are included in or can be derived from the Company’s financial statements. See Note 3 for further information. Company Investment Risk, Concentration of Credit Risk, and Liquidity Risk The Company has broad discretion in making The value of the Company’s investments in loans may be detrimentally affected to the extent, among other things, that a borrower defaults on its obligations, there is insufficient collateral and/or there are extensive legal and other costs incurred in collecting on a defaulted loan, observable secondary or primary market yields for similar instruments issued by comparable companies increase materially or risk premiums required in the market between smaller companies, such as our borrowers, and those for which market yields are observable increase materially. The Company’s assets may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately. Company performance (including that of certain of its portfolio companies) has been and may continue to be negatively impacted by the COVID-19 pandemic’s effects. The COVID-19 pandemic has adversely impacted economies and capital markets around the world in ways that will likely continue and may change in unforeseen ways for an indeterminate period. The pandemic has also adversely affected various businesses, including some in which we are invested. The COVID-19 pandemic may exacerbate pre-existing business performance, political, social and economic risks affecting certain companies and countries generally. The impacts, as well as the uncertainty over impacts to come, of COVID-19 have adversely affected the performance of the Company (including certain portfolio companies) and may continue to do so in the future. Note 3. Investments The composition of our investments as of March 31, 2021 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands): The composition of our investments as of September 30, 2020 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands): PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) In connection with certain of the Company’s investments, the Company receives warrants that are obtained for the objective of increasing the total investment returns and are not held for hedging purposes. At March 31, For the three and six months ended March 31, The following table shows the portfolio composition by industry grouping at fair value at March 31, The following table shows the portfolio composition by industry grouping at fair value at September 30, The Company invests in portfolio companies principally located in North America. 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. PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) The following table shows the portfolio composition by geographic location at fair value at March 31, The following table shows the portfolio composition by geographic location at fair value at September 30, PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) Transactions With Affiliated/Controlled Companies The Company had investments in portfolio companies designated as Affiliated Investments and Controlled Investments under the 1940 Act. Transactions with Affiliated Investments and Controlled Investments during the six months ended March 31, Income Earned PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) Transactions With Affiliated/Controlled Companies (continued) - - - PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) Transactions With Affiliated/Controlled Companies (continued) PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) Transactions With Affiliated/Controlled Companies (continued) Purchases/(sales) of or advances to/(distributions) from Affiliated Investments and Controlled Investments represent the proceeds from sales and settlements of investments, purchases, originations and participations, investment increases due to PIK interest as well as net amortization of premium/(discount) on investments and are included in the purchases and sales presented on the Consolidated Statements of Cash Flows for the six months ended March 31, 32 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) Loan Participation Sales The Company may sell portions of its investments via participation agreements to a managed account, managed by an affiliate Such investments where the Company has retained proportionate interests are included in the consolidated schedule of investments. All of these investments are classified within Level 3 of the fair value hierarchy, as defined in Note 4. During the three and six months ended March 31, 2021, the Company did not collect interest and principal payments on behalf of the participant. During the three and six months ended March 31, 2020, the Company collected interest and principal payments on behalf of the participant in aggregate amounts of $0.7 million and $1.4 million, respectively. MCC Senior Loan Strategy JV I LLC On March 27, 2015, the Company and GALIC entered into a limited liability company operating agreement to co-manage MCC JV. All portfolio and other material decisions regarding MCC JV On August 4, 2015, MCC JV entered into a senior secured revolving credit facility (the “JV Facility”) led by Credit Suisse AG, Cayman Islands Branch (“CS”) with commitments of $100 million subject to leverage and borrowing base restrictions. On March 30, 2017, the Company amended the JV Facility previously administered by CS and facilitated the assignment of all rights and obligations of CS under the JV Facility to Deutsche Bank AG, New York Branch (“DB”) and increased the total loan commitments to $200 million. On March 29, 2019, the JV Facility reinvestment period was extended from March 30, 2019 to June 28, 2019. On June 28, 2019, the JV Facility reinvestment period was further extended from June 28, 2019 to October 28, 2019. On October 28, 2019, the JV Facility reinvestment period was further extended from October 28, 2019 to March 31, 2020 and the interest rate was modified from bearing an interest rate of LIBOR (with a 0.00% floor) + 2.50% per annum to LIBOR (with a 0.00% floor) + 2.75% per annum. Effective as of March 31, 2020, the maturity date of the JV Facility was extended to March 31, 2023. As of On March 31, 2020, the JV Facility ended its reinvestment period and entered its amortization period, during which time the interest rate On April 20, 2020, the JV Facility was amended to (i) during each 12-month period during the amortization period permit the sale of investments below a price of 97% as long as the sale On October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in MCC JV and all of GALIC’s interest in MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily for principal and interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before transaction expenses) of $41.0 million and $6.6 million for the Company and GALIC, respectively, on the terms and subject to the conditions set forth in the Membership Interest Purchase Agreement, including the representations, warranties, covenants and indemnities contained therein. In connection with the closing of the transaction on October 8, 2020, MCC JV repaid in full all outstanding borrowings under, and terminated, its senior secured revolving credit facility, dated as of August 4, 2015, as amended, administered by Deutsche Bank AG, New York Branch. 33 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) MCC Senior Loan Strategy JV I LLC (continued) Due to the sale transaction on October 8, 2020, Below is a summary of MCC JV’s portfolio, excluding equity investments, as of September 30, 2020, followed by a listing of the individual investments in MCC JV’s portfolio as of MCC JV Loan Portfolio as of September 30, 2020 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, (unaudited) Note 3. Investments (continued) MCC Senior Loan Strategy JV I LLC (continued) PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) MCC Senior Loan Strategy JV I LLC (continued) PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) MCC Senior Loan Strategy JV I LLC (continued) PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) MCC Senior Loan Strategy JV I LLC (continued) PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) MCC Senior Loan Strategy JV I LLC (continued) PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 3. Investments (continued) MCC Senior Loan Strategy JV Below is certain summarized financial Information for MCC JV as of Unconsolidated Significant Subsidiaries The Company evaluated and PHENIXFIN CORPORATION Notes to March 31, 2021 (unaudited) Note 4. Fair Value Measurements The Company follows ASC 820 for measuring the fair value of portfolio investments. Fair value is the price that would be received in the sale of 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 instruments or market and the instruments’ complexity. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Financial investments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs used to measure their value. The valuation hierarchical levels are based upon the transparency of the inputs to the valuation of the investment as of the measurement date. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy, and certain prior period amounts have been reclassified to conform to the current period presentation. The three levels are defined below: In addition to using the above inputs in investment valuations, the Company continues to employ The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of March 31, PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 4. Fair Value Measurements (continued) The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of September 30, 2020 (dollars in thousands): The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended March 31, 2021 (dollars in thousands): The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the six months ended March 31, 2020 (dollars in thousands): Net change in unrealized gain (loss) for the six months ended March 31, PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 4. Fair Value Measurements (continued) Purchases and other adjustments to cost include purchases of new investments at cost, effects of refinancing/restructuring, accretion/amortization of income from discount/premium on debt securities, and PIK. Sales represent net proceeds received from investments sold. Settlements represent principal paydowns received. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the quarter in which the reclassifications occur. During the six months ended March 31, The following table presents the quantitative information about Level 3 fair value measurements of our investments, as of March 31, PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 4. Fair Value Measurements (continued) The following table presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2020 (dollars in The significant unobservable inputs used in the fair value measurement of the The significant unobservable inputs used in the fair value measurement of the Company’s equity/warrants investments are comparable company multiples of revenue or EBITDA for the latest twelve months (“LTM”), next twelve months (“NTM”) or a reasonable period a market participant would consider. Increases in EBITDA multiples in isolation would result in In September 2017, the Company entered into an agreement with Global Accessories Group, LLC (“Global Accessories”), in which the Company exchanged its full position in Lydell Jewelry Design Studio, LLC for a 3.8% membership interest in Global Accessories, which is included in the Consolidated Schedule of Investments. As part of the agreement, the Company is entitled to contingent consideration in the form of cash payments (“Earnout”), as well as up to an additional 5% membership interest (“AMI”), provided Global Accessories achieves certain financial benchmarks PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 5. Borrowings As a BDC, we are generally only allowed to employ leverage to the extent that our asset coverage, as defined in the 1940 Act, equals at least 200% after giving effect to such leverage. The amount of leverage that we employ at any time depends on our assessment of the market and other factors at the time of any proposed borrowing. However, in March 2018, the Small Business Credit Availability Act modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from 200% to 150%, if certain requirements under the 1940 Act are met. Under the 1940 Act, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when a quorum is present, approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval. Alternatively, the 1940 Act allows the majority of our independent directors to approve an increase in our leverage capacity, and such approval would become effective after the one-year anniversary of such approval. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage. As of March 31, As of September 30, The Company’s outstanding debt as of March 31, Unsecured Notes 2021 Notes On December 17, 2015, the Company issued $70.8 million in aggregate principal amount of 6.50% unsecured notes that mature on January 30, 2021 (the “2021 Notes”). On January 14, 2016, the Company closed an additional $3.25 million in aggregate principal amount of the 2021 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. The 2021 Notes On October 21, 2020, the Company caused notices to be issued to the holders of the 2021 Notes regarding the Company’s exercise of its option to redeem, in whole, the issued and outstanding 2021 Notes, pursuant to Section 1104 of the Indenture dated as of February 7, 2012, between the Company and U.S. Bank National Association, as trustee, and Section 101(h) of the Third Supplemental Indenture dated as of December 17, 2015. The Company redeemed $74,012,825 in aggregate principal amount of the issued and outstanding 2021 Notes on November 20, 2020 (the “Redemption Date”). The 2021 Notes 2023 Notes On March 18, 2013, the Company issued $60.0 million in aggregate principal amount of 6.125% unsecured notes that mature on March 30, 2023 (the “2023 Notes,” and together with the 2021 Notes, the PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 5. Borrowings (continued) Unsecured Notes (continued) On December 12, 2016, the Company entered into an “At-The-Market” (“ATM”) debt distribution agreement with FBR Capital Markets & Co., through which the Company could offer for sale, from time to time, up to $40.0 million in aggregate principal amount of the 2023 Notes. The Company sold 1,573,872 of the 2023 Notes at an average price of $25.03 per note, and raised $38.6 million in net proceeds, through the ATM debt distribution agreement. On March 10, 2018, the Company redeemed $13.0 million in aggregate principal amount of the 2023 Notes. On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of the 2023 Notes to the NASDAQ Global Market. The listing and trading of the 2023 Notes on the NYSE ceased at the close of trading on December 31, 2020. Effective January 4, 2021, the 2023 Notes began trading on the NASDAQ Global Market under the trading symbol “PFXNL.” Secured Notes Israeli Notes On January 26, 2018, the Company priced a debt offering in Israel of $121.3 million of Israeli Notes PHENIXFIN CORPORATION Notes to March 31, (unaudited) Note 5. Borrowings (continued) Secured Notes (continued) On June 5, 2018, the Company announced that on June 1, 2018, its board of directors authorized the Company to repurchase and retire up to $20 million of the Company’s outstanding Israeli Notes on the TASE. During the quarter ended December 31, 2018, the Company exchanged $1.0 million United States Dollars to New Israeli Shekels at a rate of 3.73 USD/NIS in order to repurchase the Israeli Notes on the TASE. As the Israeli Notes were trading below par at the time of the repurchase, and the USD/NIS (foreign currency) spot rate was higher than the fixed exchange rate agreed upon in the deed of trust, the Company was able to repurchase and retire 3,812,000 units, which resulted in $1,119,201 aggregate principal amount of the Israeli Notes being retired. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized gain of $0.1 million and was recorded on the Consolidated Statements of Operations as a gain on extinguishment of debt. On December 31, 2019, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by On March 31, 2020, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by On April 14, 2020, the Company repaid the remaining $21.1 million of Israeli Notes outstanding, and as such is no longer subject to any covenants relating thereto. The Israeli Notes were redeemed at 100% of their principal amount, plus the accrued interest thereon, through April 14, 2020. Fair Value of Debt Obligations The fair values of our debt obligations are determined in accordance with ASC 820, which defines fair value in terms of the price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. The fair value of the Notes, which are publicly traded, is based upon closing market quotes as of the measurement date. As of March 31, In accordance with ASU 2015-03, the debt issuance costs related to the Notes are reported on the Consolidated Statements of Assets and Liabilities as a direct deduction from the face amount of the Notes. As of March 31, For the three and six months ended March 31, PHENIXFIN CORPORATION Notes to March 31, (unaudited) Note 6. Agreements Investment Management Agreement We had entered into an investment management agreement with MCC Advisors (the “Investment Management Agreement”) Under the terms of the Investment Management Agreement, MCC Advisors: MCC Advisors’ services under the Investment Management Agreement Pursuant to the Investment Management Agreement, we On December 3, 2015, MCC Advisors recommended and, in consultation with the Board, agreed to reduce fees under the Investment Management Agreement. Beginning January 1, 2016, the base management fee was reduced to 1.50% on gross assets above $1 billion. In addition, MCC Advisors reduced its incentive fee from 20% on pre-incentive fee net investment income over an 8% hurdle, to 17.5% on pre-incentive fee net investment income over a 6% hurdle. Moreover, the revised incentive fee includes a netting mechanism and is subject to a rolling three-year look back from January 1, 2016 forward. Under no circumstances The following discussion of our base management fee and two-part incentive fee reflect the terms of the fee waiver agreement executed by MCC Advisors on February 8, 2016 (the “Fee Waiver Agreement”). The terms of the Fee Waiver Agreement On January 15, 2020, the Company’s board of directors, including all of the independent directors, approved the renewal of the Investment Management Agreement through the later of April 1, 2020 or so long as the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MCC Merger On November 18, 2020, the Board approved the adoption of an internalized management structure effective January 1, 2021. The new management structure replaces the current Investment Management and Administration Agreements with MCC Advisors LLC, which expired on December 31, 2020. To lead the internalized management team, the Board approved the appointment of David Lorber, who had served as an independent director of the Company since April 2019, as interim Chief Executive Officer, and Ellida McMillan as Chief Financial Officer of the Company, each effective January 1, 2021. In connection with his appointment, Mr. Lorber stepped down from the Compensation Committee of the Board, the Nominating and Corporate Governance Committee of the Board, and the Special Committee of the Board. Base Management Fee Through December 31, 2020, for providing investment advisory and management services to us, MCC Advisors For the three and 48 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 6. Agreements (continued) Incentive Fee Through December 31, 2020, the incentive fee Incentive Fee Based on Income The first component of the incentive fee Beginning with the calendar quarter that commenced on January 1, 2016, the incentive fee on net investment income The hurdle amount for the incentive fee on net investment income Determination of Quarterly Incentive Fee Based on Income The incentive fee on net investment income for each quarter The amount of the incentive fee on net investment income that The incentive fee on net investment income that PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 6. Agreements (continued) Incentive Fee (continued) “Cumulative Net Return” means (x) the Ordinary Income in respect of the relevant Trailing Twelve Quarters “Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, and dilution to the Company’s net assets due to capital raising or capital actions, in such period and (ii) aggregate capital gains, whether realized or unrealized and accretion to the Company’s net assets due to capital raising or capital action, in such period. Dilution to the Company’s net assets due to capital raising Incentive Fee Based on Capital Gains The second component of the incentive fee Under GAAP, the Company The incentive fees shown in the Consolidated Statements of Operations PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 6. Agreements (continued) Incentive Fee (continued) For purposes of implementing the fee waiver under the Fee Waiver Agreement, we For the three and six months ended March 31, As of March 31, Administration Agreement On January 19, 2011, the Company entered into an administration agreement with MCC Advisors. Pursuant to the administration agreement, MCC Advisors As of March 31, Expense Support Agreement On June 12, 2020, the Company entered into an expense support agreement (the “Expense Support Agreement”) with MCC Advisors and Medley LLC, pursuant to which MCC Advisors and Medley LLC agreed (jointly and severally) to cap the management fee and all of the Company’s other operating expenses (except interest expenses, certain extraordinary strategic transaction expenses and other expenses approved by the Special Committee (as defined in Note 10)) at $667,000 per month (the “Cap”). Under the Expense Support Agreement, the Cap became effective on June 1, 2020 and expires on September 30, 2020. On September 29, 2020, the board of directors, including all of the independent directors, extended the term of the Expense Support Agreement through the end of quarter ending December 31, 2020. The Expense Support Agreement expired by its terms at the close of business on December 31, 2020, in connection with the adoption of the internalized management structure by the board of directors. Note 7. Related Party Transactions Due to Affiliate Due to affiliate consists of certain general and administrative expenses paid by an affiliate on behalf of the Company. Other Related Party Transactions Opportunities for co-investments may arise when 51 PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 8. Commitments Insurance Reimbursements Related to Professional Fees The Company has Unfunded commitments As of March 31, Note 9. Fee Income Fee income consists of origination/closing fees, amendment fees, prepayment penalty and other miscellaneous fees which are non-recurring in nature, as well as administrative agent fees, which are recurring in nature. The following table PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 10. Directors Fees During calendar year 2021, the Company’s independent directors each receive an annual fee of $100,000. In addition, the lead independent director receives an annual retainer of $30,000; the chair of the Audit Committee receives an annual retainer of $25,000, and each of its other members receives an annual retainer of $12,500; and the chairs of the Nominating and Corporate Governance Committee and of the Compensation Committee each receive an annual retainer of $15,000 and each of the other members of these committees receive annual retainers of $8,000. The Company’s independent directors also receive a fee of $3,000 for each board meeting and $2,500 for each committee meeting that they attend. Prior to calendar year 2021, the Company’s independent directors each received an annual fee of $90,000. They also On January 26, 2018, the board of directors established the special committee of the Board, comprised solely of directors who are not “interested persons” of the Company as such term is defined in Section 2(a)(19) of the 1940 Act (the “Special Committee”), for the purpose of assessing the merits of various proposed strategic transactions. As compensation for serving on the Special Committee, each independent director received a one-time retainer of $25,000 plus reimbursement of out-of-pocket expenses, consistent with the Company’s policies for reimbursement of members of the board of directors. In addition, the chairman of the Special Committee No board Note 11. 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. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. The Company does not have any potentially dilutive common shares as of March 31, The following information sets forth the computation of the weighted average basic and diluted net increase/(decrease) in net assets per share from operations for the three and six months ended March 31, PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 12. Financial Highlights The following is a schedule of financial highlights for the six months ended March 31, The following is a schedule of ratios and supplemental data for the six months ended March 31, PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) PHENIXFIN CORPORATION Notes to Consolidated Financial Statements (continued) March 31, 2021 (unaudited) Note 13. Dividends Dividends and distributions to common stockholders are recorded on the ex-dividend date. The amount to be paid out as a dividend is determined by our board of directors. We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a cash dividend or other distribution, each stockholder that has not “opted out” of our dividend reinvestment plan will have its dividends automatically reinvested in additional shares of our common stock rather than receiving cash dividends. Stockholders who receive distributions in the form of shares of common stock will be subject to the same federal, state and local tax consequences as if they received cash distributions. The Company did not make any distributions during the six months ended March 31, 2021 and 2020. Note 14. Share Transactions On January 11, 2021, the Company announced that its board of directors approved a share repurchase program. The following table The Company’s The Company funded additional share repurchases of 5,550 shares with a total cost of approximately $0.2 million between March 23, 2021 and March 31, Note Management has evaluated subsequent events through the date of issuance of the consolidated financial statements included herein. Other than the items disclosed Under the share repurchase program, the Company The following discussion and analysis should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q. Except as otherwise specified, references to “we,” “us,” “our,” or the “Company,” refer to Forward-Looking Statements Some of the statements in this Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “trend,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “potential,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may,” or similar expressions. The forward looking statements contained in this quarterly report on Form 10-Q 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 as “Risk Factors” in this quarterly report on Form 10-Q. We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Actual results could differ materially from those anticipated in our forward-looking statements, and future results could differ materially from historical performance. Although we undertake no obligation to revise or update any forward-looking statements, 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 COVID-19 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. The global impact of the outbreak has been rapidly evolving and many countries, including the United States, have reacted by instituting quarantines, We are closely monitoring the impact of the outbreak of COVID-19 on all aspects of our business, including how it will impact our portfolio companies, employees, due diligence and underwriting processes, and financial markets. Given the rapid development and fluidity of this situation, We have evaluated subsequent events from March 31, Overview We are We commenced operations and completed our initial public offering on January 20, 2011. The Company’s investment objective is to generate current income and capital As a BDC, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities of private or thinly traded public U.S. companies, cash, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. In addition, we are only allowed to borrow money such that our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if, pursuant to the 1940 Act, certain requirements are met) after such borrowing, with certain limited exceptions. To maintain our RIC tax treatment, we must meet specified source-of-income and asset diversification requirements. In addition, to maintain our RIC tax treatment, we must timely distribute at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, for the taxable year. NYSE Continued Listing Status On April 10, 2020, the Company received written notification, from the NYSE that it was not in compliance with an NYSE continued listing standard in Section 802.01C of the Reverse Stock Split; Authorized Share Reduction At the Company’s 2020 Annual Meeting of Stockholders held on June 30, 2020 (the “Annual Meeting”), stockholders approved a proposal to grant discretionary authority to the Company’s board of directors to amend the Company’s Certificate of Incorporation (the “Certificate of Incorporation”) to effect a reverse stock split of its common stock, of 1-20 (the “Reverse Stock Split”) and with the Reverse Stock Split to be effective at such time and date, if at all, as determined by the board of directors, but not later than 60 days after stockholder approval thereof and, if and when the reverse stock split is effected, reduce the number of authorized shares of common stock by the approved reverse stock split ratio (the “Authorized Share Reduction”). Following the Annual Meeting, on July 7, 2020, the board of directors determined that it was in the best interests of the Company and its stockholders to implement the Reverse Stock Split and the Pursuant to the Revenues We generate revenue in the form of interest income on the debt that we hold and capital gains, if any, on warrants or other equity interests that we may acquire in portfolio companies. We invest our assets primarily in privately held companies with enterprise or asset values between $25 million and $250 million and focus on investment sizes of $10 million to $50 million. We believe that pursuing opportunities of this size offers several benefits including reduced competition, a larger investment opportunity set and the ability to minimize the impact of financial intermediaries. We expect our debt investments to bear interest at either a fixed or floating rate. Interest on debt will be payable generally either monthly or quarterly. In some cases our debt investments may provide for a portion of the interest to be PIK. To the extent interest is PIK, it will be payable through the increase of the principal amount of the obligation by the amount of interest due on the then-outstanding aggregate principal amount of such obligation. The principal amount of the debt and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, fees for providing managerial assistance or investment management services and possibly consulting fees. Any such fees will be generated in connection with our investments and recognized as earned. Expenses In the prior quarter our primary operating expenses Expense Support Agreement On June 12, 2020, the For the three months ended December 31, 2020, the total management fee and Portfolio and Investment Activity As of March 31, During the six months ended March 31, 2021, we received proceeds from sale and settlements of investments of $75.1 million, including principal and dividend proceeds, and realized net losses on investments of $46.5 million. We invested $7.0 million in one new portfolio For the The following table summarizes the amortized cost and the fair value of our average The following table summarizes the amortized cost and the fair value of investments as of March 31, The following table summarizes the amortized cost and the fair value of investments as of September 30, As of March 31, MCC Advisors, The COVID-19 pandemic has impacted our investment ratings, causing downgrades of certain portfolio companies. As the COVID-19 situation continues to evolve, we are maintaining close communications with our portfolio companies to proactively assess and manage potential risks across our investment portfolio. We have also increased oversight and analysis of credits in vulnerable industries in an attempt to improve loan performance and reduce credit risk. The following table shows the distribution of our investments on the 1 to 5 investment performance rating scale at fair value as of March 31, Results of Operations Operating results for the three and six months ended March 31, 2021 and 2020 are as follows (dollars in thousands): Investment Income For the three months ended March 31, For the three months ended March 31, 2020, investment income totaled $5.3 million, of which $5.2 million was attributable to portfolio interest and dividend income, and $0.1 million to fee income. For the six months ended March 31, 2020, investment income totaled $12.8 million, of which $12.4 million was attributable to portfolio interest and dividend income, and $0.4 million to fee income. Operating Expenses Operating expenses for the three and six months ended March 31, For the three months ended March 31, For the three months ended March 31, 2021, the Company did not incur any management or incentive fees, nor was it subject to expense support arrangements due to its transition to an internal management structure. As a result, there were no management or incentive fee waivers or expense support reimbursements for such period. For the three months ended March 31, 2021, operating expenses decreased by $6.7 million or 70.9%, compared to the three months ended March 31, 2020 (net of management and incentive fee waivers and expense support reimbursements). For the six months ended March 31, 2021, operating expenses, net of management and incentive fee waivers and expense support reimbursements decreased by $6.7 million or 48.1%, compared to the six months ended March 31, 2020. Interest and Financing Expenses Interest and financing expenses for the three months ended March 31, Interest and financing expenses for the six months ended March 31, Base Management Fees and Incentive Fees Base management fees for the three months ended March 31, Base management fees for the six months ended March 31, No incentive fees were paid for the Professional Fees and Other General and Administrative Expenses Professional fees and general and administrative expenses for the three months ended March 31, Professional fees and general and administrative expenses for the six months ended March 31, Net Realized Gains/Losses from Investments We measure realized gains or losses by the difference between the net proceeds from the disposition and the amortized cost basis of an investment, without regard to unrealized gains or losses previously recognized. During the three months ended March 31, 2021, we recognized $0.2 million of realized gains on our portfolio investments. The realized gains were primarily due to the sale of one investment. During the six months ended March 31, 2021, we recognized $46.5 million of realized losses on our portfolio investments. The realized losses were primarily due to the sale of one investment. During the three months ended March 31, 2020, we recognized $0.1 million of realized losses on our portfolio investments. The realized losses were primarily due to the sale of one investment. During the six months ended March 31, 2020, we recognized $1.8 million of realized losses on our portfolio investments. The realized losses were primarily due to the sale of one investment. Realized loss on extinguishment of debt In the event that we modify or extinguish our debt prior to maturity, we account for it in accordance with ASC 470-50, Modifications and Extinguishments, in which we measure the difference between the reacquisition price of the debt and the net carrying amount of the debt, which includes any unamortized debt issuance costs. During the three months ended March 31, 2021, the Company did not recognize a net loss on extinguishment of debt. During the six months ended March 31, 2021, the Company recognized a net loss on extinguishment of debt of $0.1 million, which was due to the Company’s $74.0 million repayment of the 2021 Notes on November 20, 2020. During the three months ended March 31, 2020, the Company recognized a net loss on extinguishment of debt of $0.9 million, which was due to the During the six months ended March 31, 2020, the Company recognized a net loss on extinguishment of debt of $1.8 million, which was due to the Net Unrealized Appreciation/Depreciation on Investments Net change in unrealized appreciation or depreciation on investments reflects the net change in the fair value of our investment portfolio. For the three months ended March 31, 2021, we had $3.9 million of net unrealized appreciation on investments. The net unrealized appreciation comprised of $7.2 million of net unrealized depreciation on investments and $11.1 million of net unrealized appreciation that resulted from the reversal of previously recorded unrealized depreciation on investments that were realized, partially sold, or written-off during the year. For the six months ended March 31, 2021, we had $36.0 million of net unrealized appreciation on investments. The net unrealized appreciation comprised of $31.4 million of net unrealized depreciation on investments and $67.4 million of net unrealized appreciation that resulted from the reversal of previously recorded unrealized depreciation on investments that were realized, partially sold, or written-off during the year. For the three months ended March 31, 2020, we had $73.6 million of net unrealized depreciation on investments. For the six months ended March 31, 2020, we had $69.8 million of net unrealized depreciation on investments. The net unrealized depreciation comprised of $71.9 million of net unrealized depreciation on investments offset by $2.1 million of net unrealized appreciation that resulted from the reversal of previously recorded unrealized depreciation on investments that were realized or written-off during the year. Changes in Net Assets from Operations(1) For the three months ended March 31, For the six months ended March 31, Financial Condition, Liquidity and Capital Resources As a RIC, we distribute substantially all of our net income to our stockholders and have an ongoing need to raise additional capital for investment purposes. To fund growth, we have a number of alternatives available to increase capital, including raising equity, increasing debt, and funding from operational cash flow. Our liquidity and capital resources have been generated primarily from the net proceeds of public offerings of common stock, advances from the Revolving Credit Facility and net proceeds from the issuance of notes as well as cash flows from operations. In the future, we may generate cash from future offerings of securities, future borrowings and cash flows from operations, including interest earned from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. Our primary use of funds is investments in our targeted asset classes, cash distributions to our stockholders, and other general corporate purposes. As of March 31, In order to maintain our RIC tax treatment under the Code, we intend to distribute to our stockholders substantially all of our taxable income, but we may also elect to periodically spill over certain excess undistributed taxable income from one tax year into the next tax year. In addition, as a BDC, we generally are required to meet a coverage ratio of total assets to total senior securities, which include borrowings and any preferred stock we may issue in the future, of at least 200% (or 150% if, pursuant to the 1940 Act, certain requirements are met). This requirement limits the amount that we may borrow. Unsecured Notes 2021 Notes On December 17, 2015, the Company issued $70.8 million in aggregate principal amount of 6.50% unsecured notes that mature on January 30, 2021 (the On October 21, 2020, the Company caused notices to be issued to the holders of the 2021 Notes regarding the Company’s exercise of its option to redeem, in whole, the issued and outstanding 2021 Notes, pursuant to Section 1104 of the Indenture dated as of February 7, 2012, between the Company and U.S. Bank National Association, as trustee, and Section 101(h) of the Third Supplemental Indenture dated as of December 17, 2015. The Company redeemed $74,012,825 in aggregate principal amount of the issued and outstanding 2021 Notes on November 20, 2020 (the “Redemption Date”). The 2021 Notes 2023 Notes On March 18, 2013, the Company issued $60.0 million in aggregate principal amount of 2023 Notes. As of March 30, 2016, the 2023 Notes may be redeemed in whole or in part at any time or from time to time at the On December 12, 2016, the Company entered into an “At-The-Market” (“ATM”) debt distribution agreement with FBR Capital Markets & Co., through which the Company could offer for sale, from time to time, up to $40.0 million in aggregate principal amount of the 2023 Notes. The Company sold 1,573,872 of the 2023 Notes at an average price of $25.03 per note, and raised $38.6 million in net proceeds, through the ATM debt distribution agreement. On March 10, 2018, the Company redeemed $13.0 million in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.4 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt. On December 31, 2018, the Company redeemed $12.0 million in aggregate principal amount of the 2023 Notes. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.2 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt. On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of the 2023 Notes to the NASDAQ Global Market. The listing and trading of the 2023 Notes on the NYSE ceased at the close of trading on December 31, 2020. Effective January 4, 2021, the 2023 Notes trade on the NASDAQ Global Market under the trading symbol “PFXNL.” Secured Notes Israeli Notes On January 26, 2018, the Company priced a debt offering in Israel of $121.3 million of Israeli On June 5, 2018, the Company announced that on June 1, 2018, its board of directors authorized the Company to repurchase and retire up to $20 million of the Company’s outstanding Israeli Notes on the TASE. During the quarter ended December 31, 2018, the Company exchanged $1.0 million United States Dollars to New Israeli Shekels at a rate of 3.73 USD/NIS in order to repurchase the Israeli Notes on the TASE. As the Israeli Notes were trading below par at the time of the repurchase, and the USD/NIS (foreign currency) spot rate was higher than the fixed exchange rate agreed upon in the deed of trust, the Company was able to repurchase and retire 3,812,000 units, which resulted in $1,119,201 aggregate principal amount of the Israeli Notes being retired. The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized gain of $0.1 million and was recorded on the Consolidated Statements of Operations as a gain on extinguishment of debt. On December 31, 2019 in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal collections in On March 31, 2020, in addition to the scheduled 12.5% quarterly amortization payment, the Company used proceeds from its principal repayments in assets held by On April 14, 2020, the Company repaid the remaining $21.1 million of Israeli Notes outstanding, and as such is no longer subject to any covenants relating thereto. The Israeli Notes were redeemed at 100% of their principal amount, plus the accrued interest thereon, through April 14, 2020. Contractual Obligations and Off-Balance Sheet Arrangements As of March 31, We We The Investment Management Agreement and administration agreement expired at the close of business on December 31, 2020, in connection with the Company’s adoption of an internalized management structure. The following table shows our payment obligations for repayment of debt and other contractual obligations at March 31, On March 27, 2015, the Company and Great American Life Insurance Company (“GALIC”) entered into a limited liability company operating agreement to co-manage MCC Senior Loan Strategy JV I LLC (“MCC JV”). The Company and GALIC MCC JV commenced operations on July 15, 2015. On August 4, 2015, MCC JV entered into a senior secured revolving credit facility (the “JV Facility”) led by Credit Suisse, AG with commitments of $100 million. On March 30, 2017, the Company amended the JV Facility previously administered by CS and facilitated the assignment of all rights and obligations of CS under the JV Facility to Deutsche Bank AG, New York Branch, (“DB”) and increased the total loan commitments to $200 million. The JV Facility bears interest at a rate of LIBOR (with no minimum + 2.75% per annum. On March 29, 2019, the JV Facility reinvestment period was extended to June 28, 2019 from March 30, 2019. On June 28, 2019, the JV Facility reinvestment period was extended to October 28, 2019. On October 28, 2019, the JV Facility reinvestment period was further extended from October 28, 2019 to March 31, 2020, the maturity date was extended to March 31, 2023 and the interest rate was modified from bearing an interest rate of LIBOR (with no minimum) + 2.50% per annum to LIBOR (with no minimum) + 2.75% per annum. The Company has determined that MCC JV is an investment company under ASC 946, however in accordance with such guidance, the Company will generally not consolidate its investment in a company other than a wholly owned investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company does not consolidate its interest in MCC JV. On October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in the MCC JV and all of GALIC’s interest in the MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to adjustments primarily for principal and interest payments from portfolio companies of MCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before transaction expenses) of $41.0 million and $6.6 million for MCC and GALIC, respectively, on the terms and subject to the conditions set forth in the Membership Interest Purchase Agreement, including the representations, warranties, covenants and indemnities contained therein. In connection with the closing of the transaction on October 8, 2020, MCC JV repaid in full all outstanding borrowings under, and terminated, its senior secured revolving credit facility, dated as of August 4, 2015, as amended, administered by Deutsche Bank AG, New York Branch. Distributions We have elected, and intend to qualify annually, to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code. As a RIC, in any taxable year with respect to which we timely distribute at least 90 percent of the sum of our (i) investment company taxable income (which is generally our net ordinary income plus the excess of realized net short-term capital gains over realized net long-term capital losses) determined without regard to the deduction for dividends paid and (ii) net tax exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions), we (but not our stockholders) generally will not be subject to U.S. federal income tax on investment company taxable income and net capital gains that we distribute to our stockholders. We intend to distribute annually all or substantially all of such income, but we may also elect to periodically spill over certain excess undistributed taxable income from one tax year to the next tax year. To the extent that we retain our net capital gains or any investment company taxable income, we will be subject to U.S. federal income tax. We may choose to retain our net capital gains or any investment company taxable income, and pay the associated federal corporate income tax, including the federal excise tax described below. Amounts not distributed on a timely basis in accordance with a calendar year distribution requirement are subject to a nondeductible 4% U.S. federal excise tax payable by us. To avoid this tax, we must distribute (or be deemed to have distributed) during each calendar year an amount equal to the sum of: While we intend to distribute any income and capital gains in the manner necessary to minimize imposition of the 4% U.S. federal excise tax, sufficient amounts of our taxable income and capital gains may not be distributed to avoid entirely the imposition of the tax. In that event, we will be liable for the tax only on the amount by which we do not meet the foregoing distribution requirement. We intend to pay quarterly dividends to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to pay a specified level of dividends or year-to-year increases in dividends. In addition, the inability to satisfy the To the extent our taxable earnings fall below the total amount of our distributions for a taxable year, a portion of those distributions may be deemed a return of capital to our stockholders for U.S. federal income tax purposes. Stockholders should read any written disclosure accompanying a distribution carefully and should not assume that the source of any distribution is our ordinary income or gains. We have adopted an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a cash dividend or other distribution, each stockholder that has not “opted out” of our dividend reinvestment plan will have their dividends automatically reinvested in additional shares of our common stock rather than receiving cash dividends. Stockholders who receive distributions in the form of shares of common stock will be subject to the same federal, state and local tax consequences as if they received cash distributions. There were no dividend distributions during the six months ended March 31, Related Party Transactions Concurrent with the pricing of our IPO, we entered into a number of business relationships with affiliated or related parties, including the following: On On November 25, 2013, the Company obtained an exemptive order from the SEC that permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is Medley, LLC or an investment adviser controlled by Medley, LLC in a manner consistent with our investment objective, strategies and restrictions, as well as regulatory requirements and other pertinent factors (the “Prior Exemptive Order”). On March 29, 2017, the Company, MCC Advisors and certain other affiliated funds and investment advisers received an exemptive order (the “Exemptive Order”) that supersedes the Prior Exemptive Order and allows affiliated registered investment companies to participate in co-investment transactions with us that would otherwise have been prohibited under Section 17(d) and 57(a)(4) of the 1940 Act and Rule 17d-1 thereunder. On October 4, 2017, the Company, MCC Advisors and certain of our affiliates received an exemptive order that supersedes the Exemptive Order (the “Current Exemptive Order”) and allows, in addition to the entities already covered by the Exemptive Order, Medley LLC and its subsidiary, Medley Capital LLC, to the extent they hold financial assets in a principal capacity, and any direct or indirect, wholly or majority owned subsidiary of Medley LLC that is formed In addition, we have adopted a formal code of ethics that governs the conduct of our Investment Management Agreement We entered into an investment management agreement with MCC Advisors (the “Investment Management Agreement”), which expired December 31, 2020. Mr. Brook Taube, Chairman and Chief Executive Officer through December 31, 2020 and director through January 21, 2021 and Mr. Seth Taube, director through January 21, 2021 are affiliated with MCC Advisors and Medley. Under the terms of the Investment Management Agreement, MCC Advisors: MCC Advisors’ services under the Investment Management Agreement Pursuant to the Investment Management Agreement, we On December 3, 2015, MCC Advisors recommended and, in consultation with the Board, agreed to reduce fees under the Investment Management Agreement. Beginning January 1, 2016, the base management fee was reduced to 1.50% on gross assets above $1 billion. In addition, MCC Advisors reduced its incentive fee from 20% on pre-incentive fee net investment income over an 8% hurdle, to 17.5% on pre-incentive fee net investment income over a 6% hurdle. Moreover, the revised incentive fee includes a netting mechanism and is subject to a rolling three-year look back from January 1, 2016 forward. Under no circumstances 69 The following discussion of our base management fee and two-part incentive fee On January 15, 2020, the Company’s board of directors, including all of the independent directors, approved the renewal of the Investment Management Agreement through the later of April 1, 2020 or so long as the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MCC Merger On November 18, 2020, the Board approved the adoption of an internalized management structure effective January 1, 2021. The new management structure replaces the current Investment Management and Administration Agreements with MCC Advisors LLC, which expired on December 31, 2020. To lead the internalized management team, the Board approved the appointment of David Lorber, who has served as an independent director of the Company since April 2019, as interim Chief Executive Officer, and Ellida McMillan as Chief Financial Officer of the Company, each effective January 1, 2021. In connection with his appointment, Mr. Lorber stepped down from the Compensation Committee of the Board, the Nominating and Corporate Governance Committee of the Board, and the Special Committee of the Board. Base Management Fee Through December 31, 2020, for providing investment advisory and management services to us, MCC Advisors Incentive Fee Through December 31, 2020, the incentive fee Incentive Fee Based on Income The first component of the incentive fee Beginning with the calendar quarter that commenced on January 1, 2016, the incentive fee on net investment income The hurdle amount for the incentive fee on net investment income 70 Determination of Quarterly Incentive Fee Based on Income The incentive fee on net investment income for each quarter The amount of the incentive fee on net investment income that The incentive fee on net investment income that “Cumulative Net Return” means (x) the Ordinary Income in respect of the relevant Trailing Twelve Quarters “Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, and dilution to the Company’s net assets due to capital raising or capital actions, in such period and (ii) aggregate capital gains, whether realized or unrealized and accretion to the Company’s net assets due to capital raising or capital action, in such period. Dilution to the Company’s net assets due to capital raising For the avoidance of doubt, the purpose of the The second component of the incentive fee Under GAAP, the Company Critical Accounting Policies The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following items as critical accounting policies. Valuation of Portfolio Investments We value investments for which market quotations are readily available at their market quotations, which are generally obtained from an independent pricing service or multiple broker-dealers or market makers. We weight the use of third-party broker quotes, if any, in determining fair value based on our understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer. However, a readily available market value is not expected to exist for many of the investments in our portfolio, and we value these portfolio investments at fair value as determined in good faith by our board of directors under our valuation policy and process. We may seek pricing information with respect to certain of our investments from pricing services or brokers or dealers in order to value such investments. Valuation methods may include comparisons of financial ratios of the portfolio companies that issued such private equity securities to peer companies that are public, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flows, the markets in which the portfolio company does business, and other relevant factors. When an external event such as a purchase transaction, public offering or subsequent equity sale occurs, we will consider the pricing indicated by the external event to corroborate the private equity valuation. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the 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. Our board of directors is ultimately and solely responsible for determining the fair value of the investments in our portfolio that are not publicly traded, whose market prices are not readily available on a quarterly basis or any other situation where portfolio investments require a fair value determination. With respect to investments for which market quotations are not readily available, our board of directors will undertake a multi-step valuation process each quarter, as described below: In following these approaches, the types of factors that are taken into account in fair value pricing investments include available current market data, including relevant and applicable market trading and transaction comparables; applicable market yields and multiples; security covenants; call protection provisions; information rights; the nature and realizable value of any collateral; the portfolio company’s ability to make payments; the portfolio company’s earnings and discounted cash flows; the markets in which the portfolio company does business; comparisons of financial ratios of peer companies that are public; comparable merger and acquisition transactions; and the principal market and enterprise values. Determination of fair values involves subjective judgments and estimates made by management. The notes to our financial statements refer to the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on our consolidated financial statements. Revenue Recognition Our revenue recognition policies are as follows: Investments and Related Investment Income Non-accrual Federal Income Taxes The Company has elected, and intends to qualify annually, to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code, commencing with its first taxable year as a corporation, and it intends to operate in a manner so as to maintain its RIC tax treatment. As a RIC, among other things, the Company is required to meet certain source of income and asset diversification requirements. Once qualified as a RIC, the Company must timely distribute to its stockholders at least 90% of the sum of investment company taxable income (“ICTI”) Because federal income tax regulations differ from GAAP, distributions in accordance with tax regulations may differ from net investment income and realized gains recognized for financial reporting purposes. Differences may be permanent or temporary. Permanent differences are reclassified among capital accounts in the consolidated financial statements to reflect their tax character. Temporary differences arise when certain items of income, expense, gain or loss are recognized at some time in the future. Differences in classification may also result from the treatment of short-term gains as ordinary income for tax purposes. Recent Developments Under the share repurchase program, the Company Subsequent to quarter ended March 31, 2021, the global outbreak of the We are subject to financial market risks, including changes in interest rates. Changes in interest rates may affect both our cost of funding and our interest income from portfolio investments and cash and cash equivalents. Our investment income will be affected by changes in various interest rates, including LIBOR, to the extent our debt investments include floating interest rates. In the future, we expect other loans in our portfolio will have floating interest rates. In addition, U.S. and global capital markets and credit markets have experienced a higher level of stress due to the global COVID-19 pandemic, which has resulted in an increase in the level of volatility across such markets. We may hedge against interest rate fluctuations by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act. For the As of March 31, Based on our Consolidated Statements of Assets and Liabilities as of March 31, Evaluation of Disclosure Controls and Procedures Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, Change in Internal Control Over Financial Reporting There From time to time, we are involved in various legal proceedings, lawsuits and claims incidental to the conduct of our business. Our businesses are also subject to extensive regulation, which may result in regulatory proceedings against us. Except as described below, we are not currently party to any material legal proceedings. Medley LLC, By orders dated August 7, 2018 and September 17, 2018, the Court presiding over the Virginia Class Actions consolidated those cases for all purposes. On October 12, 2018, Plaintiffs in Class Action 3 filed a notice of voluntary dismissal of all claims, and on October 29, 2018, Plaintiffs in Class Action 2 filed a notice of voluntary dismissal of all claims. On April 16, 2020, the parties to Class Action 1 reached a settlement reflected in a Settlement Agreement (the “Settlement Agreement”) that has been publicly filed in Class Action 1 (ECF No. 414-1). Among other things, upon satisfaction of the conditions specified in the Settlement Agreement and upon the Effective Date, the Settlement Agreement (capitalized terms not otherwise defined have the meaning set forth in the Settlement Agreement): (1) requires Plaintiffs to seek certification of a nationwide settlement class of all persons in the United States to whom American Web Loan lent money from February 10, 2010 through a future date on which the Court may enter a Preliminary Approval Order as to the Settlement Agreement (which certification Defendants have agreed not to oppose); (2) requires American Web Loan, and only American Web Loan, to pay Monetary Consideration of $65,000,000 (none of Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, On March 31, 2021, the parties to On or about January 28, 2021, a purported class action lawsuit, captioned Kahn v. PhenixFIN Corporation, et al., was filed against the In addition to other information set forth in this report, you should carefully consider the “Risk Factors” discussed in our annual report on Form 10-K for the fiscal year ended September 30, Risks Related to our Business We may not be able to pay you distributions and our distributions may not grow over time. When possible, we intend to pay quarterly distributions to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to pay a specified level of cash distributions or year-to-year increases in cash distributions. Our ability to pay distributions might be adversely affected by, among other things, the impact of one or more of the risk factors described herein. In addition, the inability to satisfy the asset coverage test applicable to us as a BDC could limit our ability to pay distributions. As of March 31, Risks Related to our Operations as a BDC and RIC Regulations governing our operation as a BDC affect our ability to, and the way in which we, raise additional capital. We may only issue senior securities up to the maximum amount permitted by the 1940 Act. The 1940 Act permits us to issue senior securities only in amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% (or 150% if, pursuant to the 1940 Act, certain requirements are met) after such issuance or incurrence. As of March 31, Risks Relating to an Investment in our Securities The indenture under which the 2023 The terms of the indenture under which the 2023 Notes Certain Risks in the Current Environment We are currently operating in a period of capital markets disruptions and economic uncertainty. Such market conditions may materially and adversely affect debt and equity capital markets, which may have a negative impact on our business, financial condition and operations. From time to time, capital markets may experience periods of disruption and instability. For example, between 2008 and 2009, the U.S. and global capital markets were unstable as evidenced by periodic disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. The U.S. capital markets have experienced extreme volatility and disruption following the global outbreak of coronavirus (“COVID-19”) that began in December 2019. Some economists and major investment banks have expressed concern that the continued spread of the COVID-19 globally could lead to a world-wide economic downturn. Even after the COVID-19 pandemic subsides, the U.S. economy, as well as most other major economies, may continue to experience a recession, and we anticipate our businesses would be materially and adversely affected by a prolonged recession in the U.S. and other major markets. 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. The COVID-19 outbreak Equity capital may be difficult to raise during periods of adverse or volatile market conditions because, subject to some limited exceptions, as a BDC, we are generally not able to issue additional shares of our common stock at a price less than NAV without first obtaining approval for such issuance from our shareholders and our independent directors. Volatility and dislocation in the capital markets can also create a challenging environment in which to raise or access debt capital. The current market and future market conditions similar to those experienced from 2008 through 2009 for any substantial length of time could make it difficult to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar terms and any failure to do so could have a material adverse effect on our business. The debt capital that will be available to us in the future, if at all, may be at a higher cost and on less favorable terms and conditions than what we currently experience, including being at a higher cost in a rising interest rate environment. If any of these conditions appear, they may have an adverse effect on our business, financial condition, and results of operations. These events could limit our investment originations, limit our ability to increase returns to equity holders through the effective use of leverage, and negatively impact our operating results. In addition, significant changes or volatility in the capital markets may also have a negative effect on the valuations of our investments. While most of our investments are not publicly traded, applicable accounting standards require us to assume as part of our valuation process that our investments are sold in a principal market to market participants (even if we plan on holding an investment through its maturity). Significant changes in the capital markets may also affect the pace of our investment activity and the potential for liquidity events involving our investments. Thus, the illiquidity of our investments may make it difficult for us to sell our investments to access capital if required, and as a result, we could realize significantly less than the Governmental authorities worldwide have taken increased measures to stabilize the markets and support economic growth. The success of these measures is unknown and they may not be sufficient to address the market dislocations or avert severe and prolonged reductions in economic activity. We also face an increased risk of investor, creditor or portfolio company disputes, litigation and governmental and regulatory scrutiny as a result of the effects of COVID-19 on economic and market conditions. Events outside of our control, including public health crises, could negatively affect our portfolio companies and our results of our operations. Periods of market volatility have occurred and could continue to occur in response to pandemics or other events outside of our control. These types of events have adversely affected and could continue to adversely affect operating results for us and for our portfolio companies. The Company will also be negatively affected if the operations and effectiveness of Company performance (including the We may be subject to risks associated with significant At times, the Company may have a significant portion of its assets invested in securities of companies conducting business within one or more economic sectors, including the construction and building sector. Companies in the same sector may be similarly affected by economic, regulatory, political or market events or conditions, which may make the Company more vulnerable to unfavorable developments in that sector than companies that invest more broadly. Generally, the more broadly the Company invests, the more it spreads risk and potentially reduces the risks of loss and volatility. The Company presently has significant exposure to the The interest rates of some of our loans to our portfolio companies may be priced using a spread over LIBOR, which is scheduled to be phased out. On July 27, 2017, the Financial Conduct Authority (“FCA”) announced that it would phase out LIBOR as a benchmark by the end of 2021. It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2021 and the FCA has indicated that market participants should not rely on LIBOR being available after 2021. Furthermore, on November 30, 2020, Intercontinental Exchange, Inc. (“ICE”) announced that the ICE Benchmark Administration Limited, a wholly-owned subsidiary of ICE and the administrator of LIBOR, will consider extending the LIBOR transition deadline to June 30, 2023. The announcement was supported by the FCA and the U.S. Federal Reserve. Despite the announcement, regulators continue to emphasize the importance of LIBOR transition planning. As an alternative to LIBOR, for example, the U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial The expected discontinuation of LIBOR could have an impact on our business. We may experience operational challenges for the transition away from LIBOR including, but not limited to, amending existing loan agreements with borrowers on investments that There is no guarantee that None. None. None. None. 80 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.Medley Capital Corporation For the three months ended March 31 For the six months ended March 31 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited) INVESTMENT INCOME Interest from investments Non-controlled/non-affiliated investments: Cash $ 2,320,453 $ 7,509,634 $ 5,538,162 $ 15,587,237 Payment-in-kind 128,309 605,640 327,321 1,178,183 Affiliated investments: Cash 190,193 459,966 399,441 1,211,717 Payment-in-kind 706,789 644,575 1,654,262 1,616,365 Controlled investments: Cash 1,297 85,626 84,505 163,458 Payment-in-kind 5,385 760,525 500,767 1,788,857 Total interest income 3,352,426 10,065,966 8,504,458 21,545,817 Dividend income 1,662,500 1,991,527 3,500,000 4,091,527 Interest from cash and cash equivalents 154,290 211,215 372,428 372,529 Fee income (see Note 9) 131,992 318,160 415,532 778,837 Total investment income 5,301,208 12,586,868 12,792,418 26,788,710 EXPENSES Base management fees (see Note 6) 1,641,271 3,084,382 3,649,505 6,269,526 Incentive fees (see Note 6) — — — — Interest and financing expenses 4,432,118 5,898,689 9,576,047 11,907,805 General and administrative 2,083,397 2,880,717 2,600,239 3,484,866 Administrator expenses (see Note 6) 576,362 667,649 1,127,884 1,699,776 Insurance 356,580 116,791 654,578 236,177 Directors fees 296,500 376,625 612,500 668,850 Professional fees, net 130,630 10,156,703 (4,285,445 ) 11,357,280 Expenses before management and incentive fee waivers 9,516,858 23,181,556 13,935,308 35,624,280 Management fee waiver (see Note 6) — — — — Incentive fee waiver (see Note 6) — — — — Total expenses net of management and incentive fee waivers 9,516,858 23,181,556 13,935,308 35,624,280 NET INVESTMENT INCOME/(LOSS) (4,215,650 ) (10,594,688 ) (1,142,890 ) (8,835,570 ) REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from investments Non-controlled/non-affiliated investments (100,115 ) (10,615,469 ) (157,914 ) (15,799,379 ) Affiliated investments — — — — Controlled investments — — (1,686,837 ) (51,538,556 ) Net realized gain/(loss) from investments (100,115 ) (10,615,469 ) (1,844,751 ) (67,337,935 ) Net unrealized appreciation/(depreciation) on investments Non-controlled/non-affiliated investments (19,549,944 ) 19,351,739 (15,802,570 ) 20,163,920 Affiliated investments (15,019,332 ) (3,078,960 ) (5,578,733 ) (5,473,553 ) Controlled investments (38,994,357 ) (19,671,818 ) (48,451,471 ) 26,919,491 Net unrealized appreciation/(depreciation) on investments (73,563,633 ) (3,399,039 ) (69,832,774 ) 41,609,858 Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments (85,664 ) — (85,664 ) — Loss on extinguishment of debt (see Note 5) (895,033 ) — (1,784,183 ) (122,971 ) Net realized and unrealized gain/(loss) on investments (74,644,445 ) (14,014,508 ) (73,547,372 ) (25,851,048 ) NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (78,860,095 ) $ (24,609,196 ) $ (74,690,262 ) $ (34,686,618 ) WEIGHTED AVERAGE - BASIC AND DILUTED EARNINGS PER COMMON SHARE $ (1.45 ) $ (0.45 ) $ (1.37 ) $ (0.64 ) WEIGHTED AVERAGE - BASIC AND DILUTED NET INVESTMENT INCOME PER COMMON SHARE $ (0.08 ) $ (0.19 ) $ (0.02 ) $ (0.16 ) WEIGHTED AVERAGE COMMON STOCK OUTSTANDING - BASIC AND DILUTED (SEE NOTE 11) 54,474,211 54,474,211 54,474,211 54,474,211 DIVIDENDS DECLARED PER COMMON SHARE $ — $ 0.05 $ — $ 0.15 See For the Three Months Ended
March 31 For the Six Months Ended
March 31 2021 2020 2021 2020 Interest Income: Interest from investments Non-controlled, non-affiliated investments: Cash $ 1,534,904 2,320,453 $ 3,206,717 5,538,162 Payment in-kind - 128,309 170,029 327,321 Affiliated investments: Cash 196,328 190,193 548,619 399,441 Payment in-kind - 706,789 - 1,654,262 Controlled investments: Cash (1,190 ) 1,297 - 84,505 Payment in-kind - 5,385 - 500,767 Total interest income 1,730,042 3,352,426 3,925,365 8,504,458 Dividend income 4,408,234 1,662,500 14,671,735 3,500,000 Interest from cash and cash equivalents 506 154,290 1,446 372,428 Fee income (see Note 9) 237,416 131,992 578,880 415,532 Other income 78,204 - 78,204 - Total Investment Income 6,454,402 5,301,208 19,255,630 12,792,418 Expenses: Base management fees (see Note 6) - 1,641,271 1,146,403 3,649,505 Interest and financing expenses 1,260,054 4,432,118 3,277,695 9,576,047 General and administrative expenses 104,440 2,083,397 466,049 2,600,239 Salaries and Benefits 332,317 - 332,317 - Administrator expenses (see Note 6) (44,618 ) 576,362 439,794 1,127,884 Insurance expenses 474,468 356,580 959,480 654,578 Directors fees 220,500 296,500 696,217 612,500 Professional fees, net (see Note 8) 420,220 130,630 (79,077 ) (4,285,445 ) Total expenses net of expense support reimbursement and management and incentive fee waivers 2,767,381 9,516,858 7,238,878 13,935,308 Net Investment Income 3,687,021 (4,215,650 ) 12,016,752 (1,142,890 ) Realized and unrealized gains (losses) on investments Net realized gains (losses): Non-controlled, non-affiliated investments 160,926 (100,115 ) 4,054,648 (157,914 ) Affiliated investments - - (10,452,928 ) - Controlled investments - - (40,147,570 ) (1,686,837 ) Total net realized gains (losses) 160,926 (100,115 ) (46,545,850 ) (1,844,751 ) Net change in unrealized gains (losses): Non-controlled, non-affiliated investments 5,077,737 (19,549,944 ) 1,020,673 (15,802,570 ) Affiliated investments (1,467,862 ) (15,019,332 ) (3,586,184 ) (5,578,733 ) Controlled investments 329,584 (38,994,357 ) 38,566,519 (48,451,471 ) Total net change in unrealized gains (losses) 3,939,459 (73,563,633 ) 36,001,008 (69,832,774 ) Change in provision for deferred taxes on unrealized (appreciation)/ depreciation on investments - (85,664 ) - (85,664 ) Loss on extinguishment of debt (see Note 5) - (895,033 ) (122,355 ) (1,784,183 ) Total realized and unrealized gains (losses) 4,100,385 (74,644,445 ) (10,667,197 ) (73,547,372 ) Net Increase (Decrease) in Net Assets Resulting from Operations $ 7,787,406 $ (78,860,095 ) $ 1,349,555 $ (74,690,262 ) Weighted Average Basic and diluted earnings per common share $ 2.87 $ (28.95 ) $ 0.50 $ (27.42 ) Weighted Average Basic and diluted net investment income (loss) per common share $ 1.36 $ (1.55 ) $ 4.42 $ (0.42 ) Weighted Average Common Shares Outstanding - Basic and Diluted (see Note 11) 2,716,627 2,723,711 (1) 2,720,226 2,723,711 (1) (1) Basic and diluted shares has been adjusted for 2020 to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1. toare an integral part of these consolidated financial statements.Medley Capital Corporation(unaudited) Common Stock Total Distributable Earnings/(Loss) Total Net Assets Shares Par Amount Capital in Excess of Par Value Balance at December 31, 2018 54,474,211 $ 54,474 $ 698,586,770 $ (392,987,360 ) $ 305,653,884 OPERATIONS Net investment income/(loss) — — — (10,594,688 ) (10,594,688 ) Net realized gain/(loss) from investments — — — (10,615,469 ) (10,615,469 ) Net unrealized appreciation/(depreciation) on investments — — — (3,399,039 ) (3,399,039 ) Net loss on extinguishment of debt — — — — — SHAREHOLDER DISTRIBUTIONS Distributions from earnings — — — (2,723,712 ) (2,723,712 ) Total increase/(decrease) in net assets — — — (27,332,908 ) (27,332,908 ) Balance at March 31, 2019 54,474,211 $ 54,474 $ 698,586,770 $ (420,320,268 ) $ 278,320,976 Balance at December 31, 2019 54,474,211 $ 54,474 $ 673,532,717 $ (452,984,828 ) $ 220,602,363 OPERATIONS Net investment income/(loss) — — — (4,215,650 ) (4,215,650 ) Net realized gain/(loss) from investments — — — (100,115 ) (100,115 ) Net unrealized appreciation/(depreciation) on investments — — — (73,563,633 ) (73,563,633 ) Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments — — — (85,664 ) (85,664 ) Net loss on extinguishment of debt — — — (895,033 ) (895,033 ) Total increase/(decrease) in net assets — — — (78,860,095 ) (78,860,095 ) Balance at March 31, 2020 54,474,211 $ 54,474 $ 673,532,717 $ (531,844,923 ) $ 141,742,268 See accompanying notes to consolidated financial statements. Common Stock Total Shares(1) Par Amount(1) Capital in
Excess of
Par Value(1) Distributable
Earnings/
(Loss) Total Net Assets Balance at December 31, 2019 2,723,711 $ 2,724 $ 673,584,467 $ (452,984,828 ) $ 220,602,363 OPERATIONS Net investment income (loss) - - - (4,215,650 ) (4,215,650 ) Net realized gains (losses) on investments - - - (100,115 ) (100,115 ) Net change in unrealized appreciation (depreciation) on investments - - - (73,563,633 ) (73,563,633 ) Change in provision for deferred taxes on unrealized (appreciation) depreciation on investments - - - (85,664 ) (85,664 ) Net loss on extinguishment of debt - - - (895,033 ) (895,033 ) Total Increase (Decrease) in Net Assets - - - (78,860,095 ) (78,860,095 ) Balance at March 31, 2020 2,723,711 $ 2,724 $ 673,584,467 $ (531,844,923 ) $ 141,742,268 Balance at December 31, 2020 2,723,709 $ 2,724 $ 672,381,617 $ (528,202,675 ) $ 144,181,666 OPERATIONS Net investment income (loss) - - - 3,687,021 3,687,021 Net realized gains (losses) on investments - - - 160,926 160,926 Net change in unrealized appreciation (depreciation) on investments - - - 3,939,459 3,939,459 - - - 7,787,406 7,787,406 CAPITAL SHARE TRANSACTIONS Repurchase of common shares (19,773 ) (20 ) (791,927 ) - (791,947 ) (19,773 ) (20 ) (791,927 ) - (791,947 ) Total Increase (Decrease) in Net Assets (19,773 ) (20 ) (791,927 ) 7,787,406 6,995,459 Balance at March 31, 2021 2,703,936 2,704 671,589,690 (520,415,269 ) 151,177,125 (1) Shares of Common Stock, Par Amount, and Capital in Excess of Par Value have been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1. Medley Capital Corporation(unaudited) (continued) Common Stock Total Distributable Earnings/(Loss) Total Net Assets Shares Par Amount Capital in Excess of Par Value Balance at September 30, 2018 54,474,211 $ 54,474 $ 698,586,770 $ (377,462,517 ) $ 321,178,727 OPERATIONS Net investment income/(loss) — — — (8,835,570 ) (8,835,570 ) Net realized gain/(loss) from investments — — — (67,337,935 ) (67,337,935 ) Net unrealized appreciation/(depreciation) on investments — — — 41,609,858 41,609,858 Net loss on extinguishment of debt — — — (122,971 ) (122,971 ) SHAREHOLDER DISTRIBUTIONS Distributions from earnings — — — (8,171,133 ) (8,171,133 ) Total increase/(decrease) in net assets — — — (42,857,751 ) (42,857,751 ) Balance at March 31, 2019 54,474,211 $ 54,474 $ 698,586,770 $ (420,320,268 ) $ 278,320,976 Balance at September 30, 2019 54,474,211 $ 54,474 $ 673,532,717 $ (457,154,661 ) $ 216,432,530 OPERATIONS Net investment income/(loss) — — — (1,142,890 ) (1,142,890 ) Net realized gain/(loss) from investments — — — (1,844,751 ) (1,844,751 ) Net unrealized appreciation/(depreciation) on investments — — — (69,832,774 ) (69,832,774 ) Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments — — — (85,664 ) (85,664 ) Net loss on extinguishment of debt — — — (1,784,183 ) (1,784,183 ) Total increase/(decrease) in net assets — — — (74,690,262 ) (74,690,262 ) Balance at March 31, 2020 54,474,211 $ 54,474 $ 673,532,717 $ (531,844,923 ) $ 141,742,268 See Common Stock Total Shares(1) Par Amount(1) Capital in
Excess of
Par Value(1) Distributable
Earnings/
(Loss) Total Net Assets Balance at September 30, 2019 2,723,711 $ 2,724 $ 673,584,467 $ (457,154,661 ) $ 216,432,530 OPERATIONS Net investment income (loss) - - - (1,142,890 ) (1,142,890 ) Net realized gains (losses) on investments - - - (1,844,751 ) (1,844,751 ) Net change in unrealized appreciation (depreciation) on investments - - - (69,832,774 ) (69,832,774 ) Change in provision for deferred taxes on unrealized (appreciation) depreciation on investments - - - (85,664 ) (85,664 ) Net loss on extinguishment of debt - - - (1,784,183 ) (1,784,183 ) Total Increase (Decrease) in Net Assets - - - (74,690,262 ) (74,690,262 ) Balance at March 31, 2020 2,723,711 $ 2,724 $ 673,584,467 $ (531,844,923 ) $ 141,742,268 Balance at September 30, 2020 2,723,709 $ 2,724 $ 672,381,617 $ (521,764,824 ) $ 150,619,517 OPERATIONS Net investment income (loss) - - - 12,016,752 12,016,752 Net realized gains (losses) on investments - - - (46,545,850 ) (46,545,850 ) Net change in unrealized appreciation (depreciation) on investments - - - 36,001,008 36,001,007 Net loss on extinguishment of debt - - - (122,355 ) (122,354 ) - - - 1,349,555 1,349,555 CAPITAL SHARE TRANSACTIONS Repurchase of common shares (19,773 ) (20 ) (791,927 ) - (791,947 ) (19,773 ) (20 ) (791,927 ) - (791,947 ) Total Increase (Decrease) in Net Assets (19,773 ) (20 ) (791,927 ) 1,349,555 557,608 Balance at March 31, 2021 2,703,936 2,704 671,589,690 (520,415,269 ) 151,177,125 (1) Shares of Common Stock, Par Amount, and Capital in Excess of Par Value have been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1. toare an integral part of these consolidated financial statements.Medley Capital Corporation For the six months ended March 31 2020 2019 (unaudited) (unaudited) Cash flows from operating activities NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (74,690,262 ) $ (34,686,618 ) ADJUSTMENTS TO RECONCILE NET INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS TO NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES: Investment increases due to payment-in-kind interest (1,738,277 ) (5,171,194 ) Net amortization of premium/(discount) on investments (60,113 ) (224,124 ) Amortization of debt issuance costs 2,358,649 1,352,147 Net realized (gain)/loss from investments 1,844,751 67,337,935 Net deferred income taxes 85,664 — Net unrealized (appreciation)/depreciation on investments 69,832,774 (41,609,858 ) Proceeds from sale and settlements of investments 84,358,204 75,033,854 Purchases, originations and participations (13,244,147 ) (52,436,844 ) Loss on extinguishment of debt 1,784,183 122,971 (Increase)/decrease in operating assets: Other assets 2,007,655 285,217 Interest receivable 1,103,450 597,835 Receivable for dispositions and investments sold 406,799 (351,846 ) Fees receivable 63,623 (12,173 ) Increase/(decrease) in operating liabilities: Accounts payable and accrued expenses (9,698,337 ) 8,852,425 Interest and fees payable (2,102,943 ) (271,954 ) Management and incentive fees payable, net (589,904 ) (263,292 ) Administrator expenses payable (285,423 ) (140,897 ) Deferred revenue (65,919 ) (79,411 ) Due to affiliate 151,916 237,146 NET CASH PROVIDED/(USED) BY OPERATING ACTIVITIES 61,522,343 18,571,319 Cash flows from financing activities Paydowns on debt (84,701,839 ) (12,999,337 ) Debt issuance costs paid — (14,361 ) Payments of cash dividends — (8,171,133 ) Offering costs paid — 354,753 NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES (84,701,839 ) (20,830,078 ) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (23,179,496 ) (2,258,759 ) CASH, RESTRICTED CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 84,283,903 75,665,981 CASH, RESTRICTED CASH AND CASH EQUIVALENTS, END OF PERIOD $ 61,104,407 $ 73,407,222 Supplemental Information: Interest paid during the period $ 9,318,341 $ 10,827,613 Supplemental non-cash information: Payment-in-kind interest income $ 2,383,066 $ 4,583,405 Net amortization of premium/(discount) on investments $ 60,113 $ 224,124 Amortization of debt issuance costs $ (2,358,649 ) $ (1,352,147 ) Non-cash purchase of investments $ — $ 47,483 Reconciliation to the Consolidated Statement of Assets and Liabilities March 31, 2020 September 30, 2019 (unaudited) Cash and cash equivalents $ 61,104,407 $ 68,245,213 Restricted cash — 16,038,690 Total cash and cash equivalents and restricted cash $ 61,104,407 $ 84,283,903 See For the Six Months Ended March 31 2021 2020 Cash Flows from Operating Activities: Net increase (decrease) in net assets resulting from operations $ 1,349,555 $ (74,690,262 ) Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities: Investment increases due to payment-in-kind interest (170,029 ) (1,738,277 ) Net amortization of premium (discount) on investments (2,114 ) (60,113 ) Amortization of debt issuance cost 68,025 2,358,649 Net realized (gains)/losses on investments 46,545,850 1,844,751 Net deferred income taxes - 85,664 Net unrealized (gains)/losses on investments (36,001,008 ) 69,832,774 Proceeds from sale and settlements of investments 74,912,948 84,358,204 Purchases, originations and participations (6,786,640 ) (13,244,147 ) Loss on extinguishment of debt 122,355 1,784,183 (Increase)/decrease in operating assets: Other assets 882,835 2,007,655 Interest receivable 324,869 1,103,450 Other receivable (398,551 ) - Receivable for dispositions and investments sold - 406,799 Fees receivable 12,500 63,623 Increase/(decrease) in operating liabilities: Accounts payable and accrued expenses (1,189,946 ) (9,698,337 ) Interest and fees payable (801,805 ) (2,102,943 ) Management and incentive fees payable, net (1,392,022 ) (589,904 ) Administrator expenses payable (62,007 ) (285,423 ) Deferred revenue 20,441 (65,919 ) Due to affiliate (53,083 ) 151,916 Net cash provided by (used in) operating activities 77,382,173 61,522,343 Cash Flows from Financing Activities: Paydowns on debt (74,151,823 ) (84,701,839 ) Debt issuance costs paid 296,438 - Repurchase of common shares (956,205 ) - Net cash provided by (used in) financing activities (74,811,590 ) (84,701,839 ) Net increase/(decrease) in cash and cash equivalents 2,570,583 (23,179,496 ) Cash and cash equivalents, beginning of period 56,522,148 84,283,903 Cash and cash equivalents, end of period $ 59,092,731 $ 61,104,407 Supplemental information: Interest paid during the period $ 4,079,500 $ 9,318,341 toare an integral part of these consolidated financial statements.Medley Capital Corporation2020(unaudited) Industry Type of Investment Maturity High Tech Industries 11/16/2022 $ 5,061,750 $ 5,061,750 $ 4,739,823 3.3 % 11/16/2022 2,444,350 2,444,350 2,288,889 1.6 % 11/16/2022 — — (63,600 ) 0.0 % 7,506,100 7,506,100 6,965,112 American Dental Partners, Inc. Healthcare & Pharmaceuticals 9/25/2023 4,387,500 4,387,500 3,757,016 2.6 % 4,387,500 4,387,500 3,757,016 Autosplice, Inc. High Tech Industries 12/17/2021 12,965,572 12,965,572 12,318,590 8.7 % 12,965,572 12,965,572 12,318,590 Wholesale — 16,487,800 11,767,578 8.3 % — 16,487,800 11,767,578 Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units — 416,250 — 0.0 % — 416,250 — Black Angus Steakhouses, LLC Hotel, Gaming & Leisure 4/24/2020 7,290,179 7,222,523 5,212,478 3.7 % 4/24/2020 — — — 0.0 % 4/24/2020 892,857 884,571 638,393 0.4 % 8,183,036 8,107,094 5,850,871 Capstone Nutrition Development, LLC Healthcare & Pharmaceuticals Equity - 13,833.1916 Common Units — 1,483,319 1,142,156 0.8 % — 1,483,319 1,142,156 CPI International, Inc. Aerospace & Defense 7/28/2025 3,010,025 2,998,924 2,343,004 1.7 % 3,010,025 2,998,924 2,343,004 Crow Precision Components, LLC Aerospace & Defense Equity - 350 Common Units — 700,000 723,131 0.5 % — 700,000 723,131 Healthcare & Pharmaceuticals 12/1/2022 7,500,000 7,500,000 4,959,000 3.5 % 7,500,000 7,500,000 4,959,000 Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(4) % of
Net Assets(5) Non-Controlled/Non-Affiliated Investments: Alpine SG, LLC(8) High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(14) 11/16/2022 $ 4,715,809 $ 4,715,808 $ 4,715,808 3.12 % Senior Secured Incremental First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(14) 11/16/2022 472,087 472,087 472,087 0.31 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(14) (16) 11/16/2022 2,277,293 2,277,293 2,277,293 1.51 % 7,465,189 7,465,188 7,465,188 4.94 % American Dental Partners, Inc. Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(14) 9/25/2023 4,387,500 4,387,500 4,299,750 2.84 % 4,387,500 4,387,500 4,299,750 2.84 % Autosplice, Inc. Automotive Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash & 2.00% PIK, 1.00% LIBOR Floor) (14) 4/30/2022 12,039,457 12,039,457 11,317,089 7.49 % 12,039,457 12,039,457 11,317,089 7.49 % Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units 1 416,250 - 0.00 % 1 416,250 - 0.00 % CM Finance SPV, LLC Energy: Oil & Gas Unsecured Debt(10) 101,463 101,463 - 0.00 % 101,463 101,463 - 0.00 % CPI International, Inc. Aerospace & Defense Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor)(13) 7/28/2025 2,607,062 2,599,397 2,457,156 1.63 % 2,607,062 2,599,397 2,457,156 1.63 % Crow Precision Components, LLC Aerospace & Defense Equity - 350 Common Units 350 700,000 123,000 0.08 % 350 700,000 123,000 0.08 % DataOnline Corp.(8) High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(14) 11/13/2025 4,950,000 4,950,000 4,851,000 3.21 % Revolving Credit Facility (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(14) (16) 11/13/2025 607,143 607,143 592,857 0.39 % 5,557,143 5,557,143 5,443,857 3.60 % Dream Finders Homes, LLC(11) Construction & Building Preferred Equity (8.00% PIK) 4,622,101 4,622,101 4,390,996 2.90 % 4,622,101 4,622,101 4,390,996 2.90 % Footprint Acquisition, LLC Services: Business Preferred Equity (8.75% PIK)(10) 4,049,398 4,049,398 2,794,085 1.85 % Equity - 150 Common Units 150 - - 0.00 % 4,049,548 4,049,398 2,794,085 1.85 % Global Accessories Group, LLC Consumer goods: Non-durable Equity - 3.8% Membership Interest(13) 380 151,337 - 0.00 % 380 151,337 - 0.00 % Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(4) % of
Net Assets(5) Impact Group, LLC Services: Business Senior Secured First Lien Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(14) 6/27/2023 3,185,304 3,185,304 3,153,451 2.09 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(14) 6/27/2023 9,230,102 9,230,102 9,137,801 6.04 % 12,415,406 12,415,406 12,291,252 8.13 % InterFlex Acquisition Company, LLC Containers, Packaging & Glass Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13) 8/18/2022 11,723,406 11,723,406 11,723,406 7.75 % 11,723,406 11,723,406 11,723,406 7.75 % Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.62% of Outstanding Equity 5,000,000 955,680 - 0.00 % 5,000,000 955,680 - 0.00 % Point.360 Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK)(10)(15) 7/8/2020 2,777,366 2,103,712 - 0.00 % 2,777,366 2,103,712 - 0.00 % RateGain Technologies, Inc. Hotel, Gaming & Leisure Unsecured Debt(10)(12) 12/31/2021 646,963 646,963 - 0.00 % Unsecured Debt(10)(12) 6/30/2022 761,905 761,905 - 0.00 % 1,408,868 1,408,868 - 0.00 % Redwood Services Group, LLC(8) Services: Business Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(16) 6/6/2023 175,000 175,000 157,500 0.10 % 175,000 175,000 157,500 0.10 % Sendero Drilling Company, LLC Energy: Oil & Gas Unsecured Debt (8.00% Cash)(10) 8/31/2021 361,250 343,931 - 0.00 % 361,250 343,931 - 0.00 % Seotowncenter, Inc. Services: Business Equity - 3,434,169.6 Common Units 3,434,170 566,475 - 0.00 % 3,434,170 566,475 - 0.00 % SFP Holding, Inc. Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(14) 9/1/2022 4,755,716 4,755,716 4,708,159 3.11 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(14) 9/1/2022 1,843,840 1,843,840 1,825,402 1.21 % Equity - 101,165.93 Common Units in CI (Summit) Investment Holdings LLC 101,166 1,067,547 918,587 0.61 % 6,700,722 7,667,103 7,452,148 4.93 % SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units 700,000 700,000 - 0.00 % 700,000 700,000 - 0.00 % Stancor, Inc. Services: Business Equity - 263,814.43 Class A Units 263,814 263,814 186,680 0.12 % 263,814 263,814 186,680 0.12 % Starfish Holdco, LLC High Tech Industries Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13)(18) 8/18/2025 1,000,000 989,936 1,000,000 0.66 % 1,000,000 989,936 1,000,000 0.66 % Thryv, Inc. (11) Services: Business Senior Secured First Lien Term Loan B (LIBOR + 8.5% Cash, 1.00% LIBOR Floor)(18) 3/1/2026 7,000,000 6,790,969 7,000,000 4.63 % 7,000,000 6,790,969 7,000,000 4.63 % Industry Type of Investment Maturity High Tech Industries 11/13/2025 4,987,500 4,987,500 4,660,320 3.3 % 11/13/2025 535,714 535,714 488,857 0.3 % 5,523,214 5,523,214 5,149,177 Dream Finders Homes, LLC Construction & Building Preferred Equity (8.00% PIK) 4,355,041 4,355,041 3,501,453 2.5 % 4,355,041 4,355,041 3,501,453 Footprint Acquisition, LLC Services: Business Preferred Equity (8.75% PIK) 3,801,326 3,801,326 3,801,326 2.7 % Equity - 150 Common Units — — 1,960,830 1.4 % 3,801,326 3,801,326 5,762,156 Consumer goods: Non-durable Equity - 3.8% Membership Interest — 151,337 42,355 0.0 % — 151,337 42,355 The Imagine Group, LLC Media: Advertising, Printing & Publishing 6/21/2023 3,000,000 2,808,363 375,000 0.3 % 3,000,000 2,808,363 375,000 Impact Group, LLC Services: Business 6/27/2023 3,237,294 3,237,294 2,829,394 2.0 % 6/27/2023 9,380,033 9,380,033 8,198,149 5.8 % 12,617,327 12,617,327 11,027,543 InterFlex Acquisition Company, LLC Containers, Packaging & Glass 8/18/2022 12,884,175 12,884,175 11,948,784 8.4 % 12,884,175 12,884,175 11,948,784 Lighting Science Group Corporation Containers, Packaging & Glass 2/19/2024 — 955,680 — 0.0 % — 955,680 — Manna Pro Products, LLC Consumer goods: Non-durable 12/8/2023 5,371,148 5,371,148 4,907,618 3.5 % 12/8/2023 1,090,714 1,090,714 996,585 0.7 % 6,461,862 6,461,862 5,904,203 Point.360 Services: Business 7/8/2020 2,669,829 2,103,712 178,879 0.1 % 2,669,829 2,103,712 178,879 RateGain Technologies, Inc. Hotel, Gaming & Leisure 7/31/2020 704,106 704,106 704,106 0.5 % 7/31/2021 761,905 761,905 761,905 0.5 % 1,466,011 1,466,011 1,466,011 Services: Business 6/6/2023 1,400,000 1,400,000 1,354,325 1.0 % 1,400,000 1,400,000 1,354,325 Sendero Drilling Company, LLC Energy: Oil & Gas 8/31/2021 637,500 637,500 — 0.0 % 637,500 637,500 — Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(4) % of
Net Assets(5) Velocity Pooling Vehicle, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 11.00%, 1.00% LIBOR Floor) (14) 4/28/2023 1,014,440 951,629 1,014,440 0.67 % Equity - 5,441 Class A Units 5,441 302,464 44,888 0.03 % Warrants - 0.65% of Outstanding Equity 3/30/2028 6,506 361,667 53,609 0.04 % 1,026,387 1,615,760 1,112,937 0.74 % Walker Edison Furniture Company LLC Consumer goods: Durable Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(14) 9/26/2024 3,473,866 3,473,866 3,473,866 2.30 % Equity - 1,500 Common Units 1,500 1,500,000 10,594,200 7.01 % 3,475,366 4,973,866 14,068,066 9.31 % Watermill-QMC Midco, Inc. Automotive Equity - 1.3% Partnership Interest(9) 518,283 518,283 - 0.00 % 518,283 518,283 - 0.00 % Subtotal Non-Controlled/Non-Affiliated Investments $ 98,810,232 $ 95,301,443 $ 93,283,110 61.70 % Affiliated Investments:(6) 1888 Industrial Services, LLC(8) Energy: Oil & Gas Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(10) (14) 9/30/2021 9,946,740 9,473,066 - 0.00 % Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor)(10) (14) 9/30/2021 25,937,520 19,468,870 - 0.00 % Senior Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor)(10) (14) 9/30/2021 1,231,932 1,191,257 1,231,932 0.81 % Revolving Credit Facility (LIBOR +5.00%, 1.00% LIBOR Floor) (14) (16) 9/30/2021 3,554,069 3,554,069 3,554,069 2.36 % Equity - 17,493.63 Class A Units 21,562 - - 0.00 % 40,691,823 33,687,262 4,786,001 3.17 % Black Angus Steakhouses, LLC(8) Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13) 6/30/2022 758,929 758,929 758,929 0.50 % Senior Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor)(10) (13) 6/30/2022 8,412,596 7,767,533 2,061,086 1.37 % Senior Secured First Lien Super Priority DDTL (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) (13) (16) 6/30/2022 1,500,000 1,500,000 1,500,000 0.99 % 10,671,525 10,026,462 4,320,015 2.86 % Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(4) % of
Net Assets(5) Caddo Investors Holdings 1 LLC(11) Forest Products & Paper Equity - 6.15% Membership Interest(19) 2,528,826 2,528,826 3,769,861 2.49 % 2,528,826 2,528,826 3,769,861 2.49 % Dynamic Energy Services International LLC Energy: Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK)(10)(15) 12/31/2021 12,930,235 7,824,975 - 0.00 % Equity - 12,350,000 Class A Units 12,350,000 - - 0.00 % 25,280,235 7,824,975 - 0.00 % JFL-NGS Partners, LLC Construction & Building Equity - 57,300 Class B Units 57,300 57,300 29,961,371 19.82 % 57,300 57,300 29,961,371 19.82 % JFL-WCS Partners, LLC Environmental Industries Preferred Equity - Class A Preferred (6.00% PIK) 1,310,649 1,310,649 1,310,649 0.87 % Equity - 129,588 Class B Units 129,588 129,588 9,036,653 5.99 % 1,440,237 1,440,237 10,347,302 6.86 % Kemmerer Operations, LLC(8) Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK) 6/21/2023 2,051,705 2,051,705 2,051,705 1.36 % Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK) (16) 6/21/2023 244,512 244,512 244,513 0.16 % Equity - 6.7797 Common Units 7 962,717 200,880 0.13 % 2,296,224 3,258,934 2,497,098 1.65 % Path Medical, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor)(10) (13) 10/11/2021 5,905,080 5,905,080 5,143,325 3.40 % Senior Secured First Lien Term Loan B (LIBOR + 13.00% PIK, 1.00% LIBOR Floor)(10) (13) 10/11/2021 7,783,840 6,599,918 1,019,683 0.67 % Warrants - 7.68% of Outstanding Equity 123,867 499,751 - 0.00 % 13,812,787 13,004,749 6,163,008 4.07 % URT Acquisition Holdings Corporation Services: Business 12/4/2024 2,109,589 2,109,589 2,098,484 1.39 % Warrants 28,912 - - 0.00 % 2,138,501 2,109,589 2,098,484 1.39 % US Multifamily, LLC (11) Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (10.00% Cash) 6/17/2021 2,577,418 2,577,418 2,577,417 1.70 % Equity - 33,300 Preferred Units 33,300 3,330,000 1,713,279 1.13 % 2,610,718 5,907,418 4,290,696 2.83 % Subtotal Affiliated Investments $ 101,528,176 $ 79,845,752 $ 68,233,836 45.14 % Industry Type of Investment Maturity Seotowncenter, Inc. Services: Business Equity - 3,434,169.6 Common Units — 566,475 686,834 0.5 % — 566,475 686,834 SFP Holding, Inc. Construction & Building 9/1/2022 4,798,779 4,798,779 4,648,098 3.3 % 9/1/2022 1,861,878 1,861,878 1,803,415 1.3 % — 1,067,547 513,417 0.4 % 6,660,657 7,728,204 6,964,930 Ship Supply Acquisition Corporation Services: Business 7/31/2020 7,410,524 7,216,582 — 0.0 % 7,410,524 7,216,582 — SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units — 700,000 187,211 0.1 % — 700,000 187,211 Stancor, Inc. Services: Business Equity - 263,814.43 Class A Units — 263,815 150,374 0.1 % — 263,815 150,374 Starfish Holdco, LLC High Tech Industries 8/18/2025 2,000,000 1,977,237 1,458,800 1.0 % 2,000,000 1,977,237 1,458,800 Velocity Pooling Vehicle, LLC Automotive 4/28/2023 954,225 890,845 715,669 0.5 % Equity - 5,441 Class A Units — 302,464 — 0.0 % Warrants - 0.65% of Outstanding Equity 3/30/2028 — 361,667 — 0.0 % 954,225 1,554,976 715,669 Walker Edison Furniture Company LLC Consumer goods: Durable 9/26/2024 3,565,889 3,565,889 3,476,029 2.5 % Equity - 1,500 Common Units — 1,500,000 2,489,903 1.8 % 3,565,889 5,065,889 5,965,932 Watermill-QMC Midco, Inc. Automotive — 518,283 — 0.0 % — 518,283 — Subtotal Non-Controlled/Non-Affiliated Investments $ 118,959,813 $ 143,309,568 $ 112,666,094 Industry Type of Investment Maturity Energy: Oil & Gas 9/30/2021 $ 9,639,363 $ 9,473,068 $ — 0.0 % 9/30/2021 24,762,839 19,468,870 — 0.0 % 6/30/2021 1,212,169 1,191,257 303,042 0.2 % 9/18/2020 232,543 232,543 232,543 0.2 % 9/18/2020 838,174 838,174 838,174 0.6 % 9/30/2021 3,441,564 3,441,564 3,441,564 2.4 % Equity - 21,562.16 Class A Units — — — 0.0 % 40,126,652 34,645,476 4,815,323 Media: Broadcasting & Subscription 7/22/2020 10,554,556 8,446,385 1,583,184 1.1 % Preferred Equity Series A 1,600,000 1,600,000 — 0.0 % Preferred Equity Series AA 800,000 800,000 — 0.0 % Preferred Equity Series AAA 971,200 971,200 (100,800 ) (0.1 )% Equity - 16 Common Units — — — 0.0 % 13,925,756 11,817,585 1,482,384 Forest Products & Paper — 2,526,373 2,872,443 2.0 % — 2,526,373 2,872,443 Dynamic Energy Services International LLC Energy: Oil & Gas 12/31/2021 12,026,155 7,824,974 841,831 0.6 % Equity - 12,350,000 Class A Units — — — 0.0 % 12,026,155 7,824,974 841,831 JFL-NGS Partners, LLC Construction & Building Preferred Equity - A-2 Preferred (3.00% PIK) 10,498,737 10,498,737 10,498,737 7.4 % Preferred Equity - A-1 Preferred (3.00% PIK) 1,358,621 1,358,621 1,358,621 1.0 % Equity - 57,300 Class B Units — 57,300 31,195,839 22.0 % 11,857,358 11,914,658 43,053,197 JFL-WCS Partners, LLC Environmental Industries Preferred Equity - Class A Preferred (6.00% PIK) 1,310,649 1,310,649 1,310,649 0.9 % Equity - 129,588 Class B Units — 129,588 2,303,081 1.6 % 1,310,649 1,440,237 3,613,730 Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK) 6/21/2023 1,903,775 1,903,775 1,903,775 1.3 % Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK) 6/21/2023 478,516 478,516 478,516 0.3 % Equity - 6.7797 Common Units — 962,717 962,717 0.7 % 2,382,291 3,345,008 3,345,008 Industry Type of Investment Maturity Path Medical, LLC Healthcare & Pharmaceuticals 10/11/2021 10,106,899 9,898,415 9,376,170 6.6 % 10/11/2021 3,482,185 3,475,040 3,230,423 2.3 % 10/11/2021 147,627 147,627 147,553 0.1 % Warrants - 7.68% of Outstanding Equity 1/9/2027 — 499,751 — 0.0 % 13,736,711 14,020,833 12,754,146 Banking, Finance, Insurance & Real Estate 6/17/2021 5,760,537 5,760,537 5,760,537 4.1 % Equity - 33,300 Preferred Units — 3,330,000 3,737,925 2.6 % 5,760,537 9,090,537 9,498,462 Subtotal Affiliated Investments $ 101,126,109 $ 96,625,681 $ 82,276,524 Multisector Holdings — 78,575,000 41,926,850 29.6 % — 78,575,000 41,926,850 Hotel, Gaming & Leisure 12/31/2024 6,565,875 6,565,875 4,530,078 3.2 % 12/31/2024 2,000,000 1,995,374 2,000,000 1.4 % 12/31/2024 14,206,719 12,305,096 — 0.0 % 12/31/2024 9,377,240 7,570,054 — 0.0 % Equity - 787.4 Class A Units — 9,550,922 — 0.0 % 32,149,834 37,987,321 6,530,078 URT Acquisition Holdings Corporation Services: Business 5/2/2022 20,827,099 20,499,819 12,496,260 8.8 % 7,339,237 6,552,890 — 0.0 % Equity - 397,466 Common Units — 12,936,879 — 0.0 % 28,166,336 39,989,588 12,496,260 Subtotal Control Investments $ 60,316,170 $ 156,551,909 $ 60,953,188 Total Investments, March 31, 2020 $ 280,402,092 $ 396,487,158 $ 255,895,806 180.5 % Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(4) % of
Net Assets(5) Controlled Investments:(7) NVTN LLC(8) Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00%Cash, 1.00% LIBOR Floor)(10) (13) (16) 11/9/2021 6,565,875 6,565,875 4,445,097 2.94 % Senior Secured First Lien Super Priority DDTL (LIBOR + 4.00% Cash, 1.00% LIBOR Floor) (13) (16) 12/31/2024 2,500,000 2,495,374 2,282,500 1.51 % Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor)(10) (13) 11/9/2021 14,963,195 12,305,096 - 0.00 % Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor)(10) (13) 11/9/2021 10,014,223 7,570,054 - 0.00 % Equity - 787.4 Class A Units 9,550,922 9,550,922 - 0.00 % 43,594,215 38,487,321 6,727,597 4.45 % Subtotal Control Investments $ 43,594,215 $ 38,487,321 $ 6,727,597 4.45 % Total Investments, March 31, 2021 $ 243,932,623 $ 213,634,516 $ 168,244,543 111.29 % (1) All of our investments are domiciled in the United States. Certain investments also have international operations. (2) Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments. (3) Net unrealized depreciation for U.S. federal income tax purposes totaled $45,631,338. (4) Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy (see Note 4). (5) Percentage is based on net assets of $151,177,125 as of March 31, 2021. (6) Affiliated Investments are defined by the 1940 Act as investments in companies in which the Company owns between 5% and 25% outstanding voting securities or is under common control with such portfolio company. (7) Control Investments are defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation. (8) The investment has an unfunded commitment as of March 31, 2021 (see Note 8), and fair value includes the value of any unfunded commitments. (9) Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP. (10) The investment was on non-accrual status as of March 31, 2021. (11) The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part. As of March 31, 2021, 8.17% of the Company's portfolio investments were non-qualifying assets. (12) Security is non-income producing. (13) The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of March 31, 2021 was 0.11%. (14) The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate. The 3 month LIBOR as of March 31, 2021 was 0.19%. (15) The interest rate on these loans is subject to 3 month LIBOR plus a base rate. The 3 month LIBOR as of March 31, 2021 was 0.19%. (16) This investment earns 0.50% commitment fee on all unused commitment as of March 31, 2021, and is recorded as a component of interest income on the Consolidated Statements of Operations. (17) In lieu of paying 10.00% Cash, URT Acquisition Holdings Corporation may elect to pay 12.00% PIK. This security has been paying 10.00% Cash since 12/31/20. (18) This investment represents a Level 2 security in the ASC 820 table as of March 31, 2021 (see Note 4). (19) As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment. Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(6) % of
Net
Assets(4) Non-Controlled/Non-Affiliated Investments: Alpine SG, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13) 11/16/2022 4,715,809 4,715,809 4,466,815 3.0 % Senior Secured Incremental First Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(13) 11/16/2022 472,087 472,087 472,087 0.3 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13) 11/16/2022 2,277,293 2,277,293 2,157,052 1.4 % Revolving Credit Facility (LIBOR + 5.75% Cash, 1.00% LIBOR Floor)(13)(15) 11/16/2022 1,000,000 1,000,000 947,200 0.6 % 8,465,189 8,465,189 8,043,154 American Dental Partners, Inc. Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 8.50% Cash, 1.00% LIBOR Floor)(13) 9/25/2023 4,387,500 4,387,500 3,948,750 2.6 % 4,387,500 4,387,500 3,948,750 Autosplice, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor)(13) 12/17/2021 12,780,349 12,780,349 11,898,505 7.9 % 12,780,349 12,780,349 11,898,505 Avantor, Inc.(10) Wholesale Equity - 13,695 Common Units(16) — 9,553,793 12,277,988 8.2 % — 9,553,793 12,277,988 Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units — 416,250 — 0.0 % — 416,250 — CM Finance SPV, LLC Banking, Finance, Insurance & Real Estate Unsecured Debt 6/24/2021 101,463 101,463 101,463 0.1 % 101,463 101,463 101,463 CPI International, Inc. Aerospace & Defense Senior Secured Second Lien Term Loan (LIBOR + 7.25% Cash, 1.00% LIBOR Floor)(12) 7/28/2025 2,607,062 2,598,252 2,219,392 1.5 % 2,607,062 2,598,252 2,219,392 Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(6) % of
Net Assets(4) Crow Precision Components, LLC Aerospace & Defense Equity - 350 Common Units — 700,000 723,131 0.5 % — 700,000 723,131 CT Technologies Intermediate Holdings, Inc.(11) Healthcare & Pharmaceuticals Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(13) 12/1/2022 7,500,000 7,500,000 6,832,500 4.5 % 7,500,000 7,500,000 6,832,500 DataOnline Corp.(7) High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13) 11/13/2025 4,962,500 4,962,500 4,786,331 3.2 % Revolving Credit Facility (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13)(15) 11/13/2025 535,714 535,714 510,357 0.3 % 5,498,214 5,498,214 5,296,688 Dream Finders Homes, LLC Construction & Building Preferred Equity (8.00% PIK) 4,531,472 4,531,472 3,928,786 2.6 % 4,531,472 4,531,472 3,928,786 Footprint Acquisition, LLC Services: Business Preferred Equity (8.75% PIK) 3,969,998 3,969,998 3,969,998 2.6 % Equity - 150 Common Units — — 1,960,830 1.3 % 3,969,998 3,969,998 5,930,828 Global Accessories Group, LLC(11) Consumer goods: Non-durable Equity - 3.8% Membership Interest — 151,337 — 0.0 % — 151,337 — Impact Group, LLC Services: Business Senior Secured First Lien Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(13) 6/27/2023 3,219,964 3,219,964 2,994,565 2.0 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 7.37% Cash, 1.00% LIBOR Floor)(13) 6/27/2023 9,330,056 9,330,056 8,676,952 5.8 % 12,550,020 12,550,020 11,671,517 — InterFlex Acquisition Company, LLC Containers, Packaging & Glass Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12) 8/18/2022 12,098,406 12,098,406 11,987,100 8.0 % 12,098,406 12,098,406 11,987,100 Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(6) % of
Net Assets(4) Lighting Science Group Corporation Containers, Packaging & Glass Warrants - 0.62% of Outstanding Equity(17) 2/19/2024 — 955,680 — 0.0 % — 955,680 — Manna Pro Products, LLC Consumer goods: Non-durable Senior Secured First Lien Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12) 12/8/2023 5,343,674 5,343,674 5,123,515 3.4 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12) 12/8/2023 1,085,219 1,085,219 1,040,508 0.7 % 6,428,893 6,428,893 6,164,023 Point.360 Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.00% PIK)(9) (14)(21) 7/8/2020 2,777,366 2,103,712 186,083 0.1 % 2,777,366 2,103,712 186,083 RateGain Technologies, Inc. Hotel, Gaming & Leisure Unsecured Debt(18) 7/31/2020 704,106 704,106 — 0.0 % Unsecured Debt(18) 7/31/2021 761,905 761,905 — 0.0 % 1,466,011 1,466,011 — Redwood Services Group, LLC(7) Services: Business Revolving Credit Facility (LIBOR + 6.00% Cash, 1.00% LIBOR Floor)(12 )(15) 6/6/2023 700,000 700,000 647,500 0.4 % 700,000 700,000 647,500 �� Sendero Drilling Company, LLC Energy: Oil & Gas Unsecured Debt (8.00% Cash)(9) 8/31/2021 488,750 465,319 — 0.0 % 488,750 465,319 — Seotowncenter, Inc. Services: Business Equity - 3,434,169.6 Common Units — 566,475 686,834 0.5 % — 566,475 686,834 SFP Holding, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13) 9/1/2022 4,776,955 4,776,955 4,733,962 3.1 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13) 9/1/2022 1,852,522 1,852,522 1,835,850 1.2 % Equity - 101,165.93 Common Units in CI (Summit) Investment Holdings LLC — 1,067,546 657,578 0.4 % 6,629,477 7,697,023 7,227,390 Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(6) % of
Net Assets(4) SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units — 700,000 343,000 0.2 % — 700,000 343,000 Stancor, Inc. Services: Business Equity - 263,814.43 Class A Units — 263,814 150,374 0.1 % — 263,814 150,374 Starfish Holdco, LLC High Tech Industries Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12) 8/18/2025 1,000,000 989,935 926,500 0.6 % 1,000,000 989,935 926,500 — URT Acquisition Holdings Corporation Services: Business Unsecured Debt (10.00% PIK) 6/23/2021 2,567,929 2,567,929 2,567,929 1.7 % 2,567,929 2,567,929 2,567,929 Velocity Pooling Vehicle, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 11.00% PIK, 1.00% LIBOR Floor)(13) 4/28/2023 1,014,440 951,628 1,014,440 0.7 % Equity - 5,441 Class A Units — 302,464 12,841 0.0 % Warrants - 0.65% of Outstanding Equity 3/30/2028 — 361,667 15,354 0.0 % 1,014,440 1,615,759 1,042,635 Walker Edison Furniture Company LLC Consumer goods: Durable Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor)(13) 9/26/2024 3,519,878 3,519,878 3,519,878 2.3 % Equity - 1,500 Common Units — 1,500,000 6,000,000 4.0 % 3,519,878 5,019,878 9,519,878 Watermill-QMC Midco, Inc. Automotive Equity - 1.3% Partnership Interest(8) — 518,283 — 0.0 % — 518,283 — Subtotal Non-Controlled/Non-Affiliated Investments $ 101,082,417 $ 117,360,954 $ 114,321,948 Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(6) % of
Net Assets(4) Affiliated Investments:(20) 1888 Industrial Services, LLC(7) Energy: Oil & Gas Senior Secured First Lien Term Loan A (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(9)(13) 9/30/2021 9,946,741 9,473,067 — 0.0 % Senior Secured First Lien Term Loan B (LIBOR + 8.00% PIK, 1.00% LIBOR Floor)(9)(13) 9/30/2021 25,937,520 19,468,870 — 0.0 % Senior Secured First Lien Term Loan C (LIBOR + 5.00%, 1.00% LIBOR Floor)(9)(13) 9/30/2021 1,231,932 1,191,257 1,166,763 0.8 % Revolving Credit Facility (LIBOR + 5.00% PIK, 1.00% LIBOR Floor)(13)(15) 9/30/2021 3,554,069 3,554,069 3,554,069 2.4 % Equity - 17,493.63 Class A Units — — — 0.0 % 40,670,262 33,687,263 4,720,832 Access Media Holdings, LLC Media: Broadcasting & Subscription Senior Secured First Lien Term Loan (10.00% PIK)(9)(21) 7/22/2020 11,105,630 8,446,385 1,110,563 0.7 % Preferred Equity Series A 1,600,000 1,600,000 — 0.0 % Preferred Equity Series AA 800,000 800,000 — 0.0 % Preferred Equity Series AAA 971,200 971,200 — 0.0 % Equity - 16 Common Units — — — 0.0 % 14,476,830 11,817,585 1,110,563 Black Angus Steakhouses, LLC Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor)(12) 12/31/2020 758,929 758,929 758,929 0.5 % Senior Secured First Lien Term Loan (LIBOR + 9.00% PIK, 1.00% LIBOR Floor)(9)(12) 12/31/2020 8,412,596 7,767,532 5,047,557 3.4 % Equity - 17.9% Membership Interest — — — 0.0 % 9,171,525 8,526,461 5,806,486 Caddo Investors Holdings 1 LLC(10) Forest Products & Paper Equity - 6.15% Membership Interest(19) — 2,528,826 2,990,776 2.0 % — 2,528,826 2,990,776 — Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(6) % of
Net Assets(4) Dynamic Energy Services International LLC Energy: Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 13.50% PIK) (9)(14) 12/31/2021 12,930,235 7,824,974 905,116 0.6 % Equity - 12,350,000 Class A Units — — — 0.0 % 12,930,235 7,824,974 905,116 JFL-NGS Partners, LLC Construction & Building Preferred Equity - A-2 Preferred (3.00% PIK) 1,795,034 1,795,034 1,795,034 1.2 % Preferred Equity - A-1 Preferred (3.00% PIK) 232,292 232,292 232,292 0.2 % Equity - 57,300 Class B Units — 57,300 38,780,067 25.7 % 2,027,326 2,084,626 40,807,393 — JFL-WCS Partners, LLC Environmental Industries Preferred Equity - Class A Preferred (6.00% PIK) 1,310,649 1,310,649 1,310,649 0.9 % Equity - 129,588 Class B Units — 129,588 4,535,580 3.0 % 1,310,649 1,440,237 5,846,229 — Kemmerer Operations, LLC(7) Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK) 6/21/2023 2,051,705 2,051,705 2,051,705 1.4 % Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK) 6/21/2023 515,699 515,699 515,699 0.4 % Equity - 6.7797 Common Units — 962,717 962,717 0.6 % 2,567,404 3,530,121 3,530,121 Path Medical, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan A (LIBOR + 9.50% Cash, 1.00% LIBOR Floor)(12) 10/11/2021 5,905,080 5,905,080 5,905,080 3.9 % Senior Secured First Lien Term Loan B (LIBOR + 13.00% PIK, 1.00% LIBOR Floor)(9)(12) 10/11/2021 7,783,840 6,599,918 6,794,514 4.5 % Warrants - 7.68% of Outstanding Equity 1/9/2027 — 499,751 — 0.0 % 13,688,920 13,004,749 12,699,594 US Multifamily, LLC(10) Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (10.00% Cash) 6/17/2021 5,123,913 5,123,913 5,123,913 3.4 % Equity - 33,300 Preferred Units — 3,330,000 1,332,000 0.9 % 5,123,913 8,453,913 6,455,913 Subtotal Affiliated Investments $ 101,967,064 $ 92,898,755 $ 84,873,023 Company(1) Industry Type of Investment Maturity Par
Amount(2) Cost(3) Fair
Value(6) % of
Net Assets(4) Controlled Investments:(5) MCC Senior Loan Strategy JV I LLC(10) Multisector Holdings Equity - 87.5% ownership of MCC Senior Loan Strategy JV I LLC — 79,887,500 41,018,500 27.2 % — 79,887,500 41,018,500 NVTN LLC(7) Hotel, Gaming & Leisure Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(9)(12) 12/31/2024 6,565,875 6,565,875 4,530,078 3.0 % Senior Secured First Lien Super Priority DDTL (LIBOR + 4.00% Cash, 1.00% LIBOR Floor)(9)(12) 12/31/2024 2,000,000 1,995,374 2,000,000 1.3 % Senior Secured First Lien Term Loan B (LIBOR + 9.25% PIK, 1.00% LIBOR Floor)(9)(12) 12/31/2024 14,963,195 12,305,096 — 0.0 % Senior Secured First Lien Term Loan C (LIBOR + 12.00% PIK, 1.00% LIBOR Floor)(9)(12) 12/31/2024 10,014,223 7,570,054 — 0.0 % Equity - 787.4 Class A Units — 9,550,922 — 0.0 % 33,543,293 37,987,321 6,530,078 Subtotal Control Investments $ 33,543,293 $ 117,874,821 $ 47,548,578 Total Investments, September 30, 2020 $ 236,592,774 $ 328,134,530 $ 246,743,549 163.8 % (1) All of our investments are domiciled in the United States. Certain investments also have international operations. (2) Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments. (3) Gross unrealized appreciation, gross unrealized depreciation, and net unrealized depreciation for U.S. federal income tax purposes totaled $37,445,443, $176,359,248,$53,757,923, $134,877,746, and $138,913,805,$81,119,823, respectively. The tax cost basis of investments is $394,809,611$327,863,372 as of March 31,September 30, 2020.(4) Percentage is based on net assets of $141,742,268$150,619,517 as of March 31,September 30, 2020.(5) Control Investments are defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation. (6) Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy (see Note 4). (7) The investment has an unfunded commitment as of March 31,September 30, 2020 (see Note 8),and includes an analysis of the value of any unfunded commitments.(8) Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP. (9)The investment was on non-accrual status as of March 31, 2020.(10)The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part. As of March 31, 2020, 28.0% of the Company's portfolio investments were non-qualifying assets.(11)A portion of this investment was sold via a participation agreement. The amount stated is the portion retained by Medley Capital Corporation (see Note 3).(12)The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of March 31, 2020 was 0.99%.(13)The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate. The 3 month LIBOR as of March 31, 2020 was 1.45%.(14)The interest rate on these loans is subject to 3 month LIBOR plus a base rate. The 3 month LIBOR as of March 31, 2020 was 1.45%.(15)This investment earns 0.50% commitment fee on all unused commitment as of March 31, 2020, and is recorded as a component of interest income on the Consolidated Statements of Operations.(16)This investment represents a Level 1 security in the ASC 820 table as of March 31, 2020 (see Note 4).(17)This investment represents a Level 2 security in the ASC 820 table as of March 31, 2020 (see Note 4).(18)Security is non-income producing.(19)As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment.(20)All or a portion of this investment is held in Medley SLF Funding I LLC (see Note 5).(21)All or a portion of this investment is held in Medley Small Business Fund, LP (see Note 5).(22)The investment was on partial non-accrual status as of March 31, 2020.(23)Affiliated Investments are defined by the 1940 Act as investments in companies in which the Company owns between 5% and 25% outstanding voting securities or is under common control with such portfolio company.See accompanying notes to consolidated financial statements.Medley Capital CorporationConsolidated Schedule of InvestmentsSeptember 30, 2019(25) Industry Type of Investment Maturity High Tech Industries 11/16/2022 $ 5,061,750 $ 5,061,750 $ 5,020,244 2.3 % 11/16/2022 2,444,350 2,444,350 2,424,306 1.1 % 11/16/2022 — — (8,200 ) 0.0 % 7,506,100 7,506,100 7,436,350 American Dental Partners, Inc. Healthcare & Pharmaceuticals 9/25/2023 4,387,500 4,387,500 4,274,741 2.0 % 4,387,500 4,387,500 4,274,741 Autosplice, Inc. High Tech Industries 6/17/2020 13,336,018 13,336,018 13,252,001 6.1 % 13,336,018 13,336,018 13,252,001 Wholesale — 16,487,800 13,849,752 6.4 % — 16,487,800 13,849,752 Barry's Bootcamp Holdings, LLC Services: Consumer 7/14/2022 7,609,499 7,609,499 7,609,499 3.5 % 7/14/2022 1,268,251 1,268,251 1,268,251 0.6 % 7/14/2022 4,400,000 4,400,000 4,400,000 2.0 % 13,277,750 13,277,750 13,277,750 Be Green Packaging, LLC Containers, Packaging & Glass Equity - 417 Common Units — 416,250 — 0.0 % — 416,250 — Hotel, Gaming & Leisure 4/24/2020 7,341,518 7,341,518 7,307,747 3.4 % 4/24/2020 — — (4,107 ) 0.0 % 4/24/2020 892,857 892,857 890,804 0.4 % 8,234,375 8,234,375 8,194,444 Capstone Nutrition Development, LLC Healthcare & Pharmaceuticals Equity - 13,833.1916 Common Units — 1,383,319 1,383,319 0.6 % — 1,383,319 1,383,319 CPI International, Inc. Aerospace & Defense 7/28/2025 3,010,025 2,998,111 2,937,483 1.4 % 3,010,025 2,998,111 2,937,483 Industry Type of Investment Maturity Crow Precision Components, LLC Aerospace & Defense Equity - 350 Common Units — 700,000 666,998 0.3 % — 700,000 666,998 Healthcare & Pharmaceuticals 12/1/2022 7,500,000 7,500,000 6,345,750 2.9 % 7,500,000 7,500,000 6,345,750 High Tech Industries 7/31/2025 15,840,000 15,840,000 15,607,152 7.2 % 7/31/2024 — — (18,900 ) 0.0 % 15,840,000 15,840,000 15,588,252 Dermatologists of Southwestern Ohio, LLC Healthcare & Pharmaceuticals 4/20/2022 1,065,457 1,065,457 1,056,614 0.5 % 4/20/2022 404,248 404,248 400,893 0.2 % 1,469,705 1,469,705 1,457,507 Dream Finders Homes, LLC Construction & Building Senior Secured First Lien Term Loan B (10.00% Cash) 4/1/2020 1,613,455 1,613,455 1,613,455 0.7 % Preferred Equity (8.00% PIK) 4,185,480 4,185,480 3,315,319 1.5 % �� 5,798,935 5,798,935 4,928,774 FKI Security Group, LLC Capital Equipment 3/30/2020 10,906,250 10,906,250 10,680,491 4.9 % 10,906,250 10,906,250 10,680,491 Footprint Acquisition, LLC Services: Business Preferred Equity (8.75% PIK) 7,281,664 7,281,664 7,281,664 3.4 % Equity - 150 Common Units — — 3,347,965 1.5 % 7,281,664 7,281,664 10,629,629 Freedom Powersports, LLC Automotive 11/11/2019 9,450,000 9,450,000 9,450,000 4.4 % 9,450,000 9,450,000 9,450,000 Consumer goods: Non-durable Equity - 3.8% Membership Interest — 151,337 151,339 0.1 % — 151,337 151,339 The Imagine Group, LLC Media: Advertising, Printing & Publishing 6/21/2023 3,000,000 2,968,775 1,715,100 0.8 % 3,000,000 2,968,775 1,715,100 Impact Group, LLC Services: Business 6/27/2023 3,254,623 3,254,623 3,104,911 1.4 % 6/27/2023 9,430,010 9,430,010 8,996,229 4.2 % 12,684,633 12,684,633 12,101,140 Industry Type of Investment Maturity InterFlex Acquisition Company, LLC Containers, Packaging & Glass 8/18/2022 13,259,175 13,259,175 12,637,320 5.8 % 13,259,175 13,259,175 12,637,320 L & S Plumbing Partnership, Ltd. Construction & Building 2/15/2022 5,345,754 5,345,754 5,345,754 2.5 % 5,345,754 5,345,754 5,345,754 Lighting Science Group Corporation Containers, Packaging & Glass 2/19/2024 — 955,680 — 0.0 % — 955,680 — Manna Pro Products, LLC Consumer goods: Non-durable 12/8/2023 5,398,622 5,398,622 5,132,470 2.4 % 12/8/2023 1,096,209 1,096,209 1,042,166 0.5 % 6,494,831 6,494,831 6,174,636 Point.360 Services: Business 7/8/2020 2,563,464 2,103,712 590,366 0.3 % 2,563,464 2,103,712 590,366 Quantum Spatial, Inc. Aerospace & Defense 9/5/2024 5,000,000 5,000,000 5,000,000 2.3 % 5,000,000 5,000,000 5,000,000 RateGain Technologies, Inc. Hotel, Gaming & Leisure 7/31/2020 761,905 761,905 761,905 0.4 % 7/31/2021 761,905 761,905 761,905 0.4 % 1,523,810 1,523,810 1,523,810 Services: Business 6/6/2023 875,000 875,000 860,475 0.4 % 875,000 875,000 860,475 Sendero Drilling Company, LLC Energy: Oil & Gas Unsecured Debt (8.00% Cash) 8/31/2021 850,000 850,000 850,000 0.4 % 850,000 850,000 850,000 Seotowncenter, Inc. Services: Business Equity - 3,434,169.6 Common Units — 566,475 1,236,301 0.6 % — 566,475 1,236,301 SFP Holding, Inc. Construction & Building 9/1/2022 4,820,605 4,820,605 4,775,291 2.2 % 9/1/2022 1,871,234 1,871,234 1,853,644 0.9 % — 985,673 849,545 0.4 % 6,691,839 7,677,512 7,478,480 Ship Supply Acquisition Corporation Services: Business 7/31/2020 7,433,740 7,239,798 — 0.0 % 7,433,740 7,239,798 — SMART Financial Operations, LLC Retail Equity - 700,000 Class A Preferred Units — 700,000 532,000 0.2 % — 700,000 532,000 Industry Type of Investment Maturity Stancor, Inc. Services: Business Equity - 263,814.43 Class A Units — 263,815 274,367 0.1 % — 263,815 274,367 Starfish Holdco, LLC High Tech Industries 8/18/2025 2,000,000 1,975,691 1,977,000 0.9 % 2,000,000 1,975,691 1,977,000 Velocity Pooling Vehicle, LLC Automotive 4/28/2023 894,050 832,281 789,715 0.4 % Equity - 5,441 Class A Units — 302,464 20,893 0.0 % Warrants - 0.65% of Outstanding Equity 3/30/2028 — 361,667 24,983 0.0 % 894,050 1,496,412 835,591 Walker Edison Furniture Company LLC Consumer goods: Durable 9/26/2024 3,611,900 3,611,900 3,611,900 1.7 % Equity - 1,500 Common Units — 1,500,000 2,557,657 1.2 % 3,611,900 5,111,900 6,169,557 Watermill-QMC Midco, Inc. Automotive — 518,283 88,989 0.0 % — 518,283 88,989 Subtotal Non-Controlled/Non-Affiliated Investments $ 180,226,518 $ 204,736,370 $ 189,895,466 1888 Industrial Services, LLC Energy: Oil & Gas 9/30/2021 $ 9,304,145 $ 9,304,145 $ 9,304,145 4.3 % 9/30/2021 23,547,567 19,468,870 5,886,892 2.7 % 6/30/2021 1,170,014 1,170,014 1,170,014 0.5 % 9/18/2020 224,456 224,456 224,456 0.1 % 9/30/2021 4,387,025 4,387,025 4,387,025 2.0 % Equity - 21,562.16 Class A Units — — — 0.0 % 38,633,207 34,554,510 20,972,532 Media: Broadcasting & Subscription 7/22/2020 10,036,355 8,446,385 2,509,089 1.2 % Preferred Equity Series A 1,600,000 1,600,000 — 0.0 % Preferred Equity Series AA 800,000 800,000 — 0.0 % Preferred Equity Series AAA 971,200 971,200 (100,800 ) 0.0 % Equity - 16 Common Units — — — 0.0 % 13,407,555 11,817,585 2,408,289 Forest Products & Paper — 2,526,373 2,830,051 1.3 % — 2,526,373 2,830,051 Industry Type of Investment Maturity Energy: Oil & Gas 12/31/2021 11,124,375 7,824,974 1,264,841 0.6 % Revolving Credit Facility (12.00% Cash) 12/31/2019 545,103 545,103 545,103 0.2 % Equity - 12,350,000 Class A Units — — — 0.0 % 11,669,478 8,370,077 1,809,944 JFL-NGS Partners, LLC Construction & Building Preferred Equity - A-2 Preferred (3.00% PIK) 20,150,684 20,150,684 20,150,684 9.3 % Preferred Equity - A-1 Preferred (3.00% PIK) 2,607,661 2,607,661 2,607,661 1.2 % Equity - 57,300 Class B Units — 57,300 19,096,371 8.8 % 22,758,345 22,815,645 41,854,716 JFL-WCS Partners, LLC Environmental Industries Preferred Equity - Class A Preferred (6.00% PIK) 1,236,269 1,236,269 1,236,269 0.6 % Equity - 129,588 Class B Units — 129,588 2,755,041 1.3 % 1,236,269 1,365,857 3,991,310 Metals & Mining Senior Secured First Lien Term Loan (15.00% PIK) 6/21/2023 1,766,511 1,766,511 1,766,511 0.8 % Senior Secured First Lien Delayed Draw Term Loan (15.00% PIK) 6/21/2023 706,604 706,604 706,604 0.3 % Equity - 6.7797 Common Units — 962,717 962,717 0.4 % 2,473,115 3,435,832 3,435,832 Path Medical, LLC Healthcare & Pharmaceuticals 10/11/2021 9,534,512 9,294,959 8,845,167 4.1 % 10/11/2021 3,284,977 3,284,977 3,047,473 1.4 % 10/11/2021 344,463 344,463 344,291 0.2 % Warrants - 7.68% of Outstanding Equity 1/9/2027 — 499,751 — 0.0 % 13,163,952 13,424,150 12,236,931 Banking, Finance, Insurance & Real Estate 6/17/2021 6,670,000 6,670,000 6,670,000 3.1 % Equity - 33,300 Preferred Units — 3,330,000 3,330,000 1.5 % 6,670,000 10,000,000 10,000,000 Subtotal Affiliated Investments $ 110,011,921 $ 108,310,029 $ 99,539,605 Multisector Holdings — 78,575,000 69,948,970 32.3 % — 78,575,000 69,948,970 NVTN LLC Hotel, Gaming & Leisure 11/9/2020 4,255,990 4,255,990 4,255,990 2.0 % 11/9/2020 13,436,693 12,305,096 7,152,352 3.3 % 11/9/2020 8,747,134 7,570,054 — 0.0 % Equity - 787.4 Class A Units — 9,550,922 — 0.0 % 26,439,817 33,682,062 11,408,342 Industry Type of Investment Maturity TPG Plastics LLC Chemicals, Plastics & Rubber 12/31/2019 352,984 352,984 352,984 0.2 % 278,810 278,810 278,810 0.1 % Equity - 35 Class B Units — 3,317,149 1,644,751 0.8 % 631,794 3,948,943 2,276,545 URT Acquisition Holdings Corporation Services: Business 5/2/2022 18,905,403 18,905,403 18,905,403 8.7 % 6,552,890 6,552,890 4,914,667 2.3 % Equity - 397,466 Common Units — 12,936,879 — 0.0 % 25,458,293 38,395,172 23,820,070 Subtotal Control Investments $ 52,529,904 $ 154,601,177 $ 107,453,927 Total Investments, September 30, 2019 $ 342,768,343 $ 467,647,576 $ 396,888,998 183.4 % (1)All of our investments are domiciled in the United States. Certain investments also have international operations.(2)Par amount includes accumulated payment-in-kind (“PIK”) interest, as applicable, and is net of repayments.(3)Gross unrealized appreciation, gross unrealized depreciation, and net unrealized depreciation for U.S. federal income tax purposes totaled $28,155,804, $96,121,868, and $67,966,064, respectively. The tax cost basis of investments is $464,855,062 as of September 30, 2019.(4)Percentage is based on net assets of $216,432,530 as of September 30, 2019.(5)Control Investments are defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments in companies in which the Company owns more than 25% of the voting securities or maintains greater than 50% of the board representation.(6)Unless otherwise indicated, all securities are valued using significant unobservable inputs, which are categorized as Level 3 assets under the definition of ASC 820 fair value hierarchy (see Note 4).(7)The investment has an unfunded commitment as of September 30, 2019 (see Note 8), and includes an analysis of the value of any unfunded commitments.(8)Represents 1.3% partnership interest in Watermill-QMC Partners, LP and Watermill-EMI Partners, LP.(9) The investment was on non-accrual status as of September 30, 2019.2020.(10) The investment is not a qualifying asset as defined under Section 55(a) of 1940 Act, in a whole, or in part. As of September 30, 2019, 24.3%2020, 25.4% of the Company'sCompany’s portfolio investments were non-qualifying assets.(11) A portion of this investment was sold via a participation agreement. The amount stated is the portion retained by Medley Capital Corporationthe Company (see Note 3).(12) The interest rate on these loans is subject to the greater of a London Interbank Offering Rate (“LIBOR”) floor, or 1 month LIBOR plus a base rate. The 1 month LIBOR as of September 30, 20192020 was 2.04%0.15%.(13) The interest rate on these loans is subject to the greater of a LIBOR floor, or 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 20192020 was 2.10%0.23%.(14) These loans bear interest at an alternate base rate, or in the case of these particular investments the Prime Rate set by the Federal Reserve, plus a given spread. The Prime Rate in effect at September 30, 2019 was 5.00%.(15)The interest rate on these loans is subject to 3 month LIBOR plus a base rate. The 3 month LIBOR as of September 30, 20192020 was 2.10%0.24%.(16)(15)This investment earns 0.50% commitment fee on all unused commitment as of September 30, 2019,2020 and is recorded as a component of interest income on the Consolidated Statements of Operations.(17)(16)This investment represents a Level 1 security in the ASC 820 table as of September 30, 20192020 (see Note 4).(18)(17)This investment represents a Level 2 security in the ASC 820 table as of September 30, 20192020 (see Note 4).(19)(18)Security is non-income producing. (20)This investment is scheduled to repay a percentage of the outstanding principal on a quarterly basis. Upon TPG Plastics, LLC obtaining all environmental and product testing authorizations, licenses and permits from all applicable governmental authorities, the remaining outstanding principal is expected to be repaid in full.(21)(19)As a practical expedient, the Company uses net asset value (“NAV”) to determine the fair value of this investment. (22)All or a portion of this investment is held in Medley SLF Funding I LLC (see Note 5).(23)All or a portion of this investment is held in Medley Small Business Fund, LP (see Note 5).(24)(20)Affiliated Investments are defined by the 1940 Act as investments in companies in which the Company owns between 5% and 25% outstanding voting securities or is under common control with such portfolio company. (25)(21)The investment was past due as of September 30, 2019 presentation has been revised to conform to the current year presentation.2020.2020Corporation (theCorporation) (“PhenixFIN”, the “Company,” “we” and “us”) is a non-diversified closed endclosed-end management investment company incorporated in Delaware that has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). We completed our initial public offering (“IPO”) and commenced operations on January 20, 2011. The Company has elected, and intends to qualify annually, to be treated, for U.S. federal income tax purposes, as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). We areOn November 18, 2020, the board of directors of the Company approved the adoption of an internalized management structure, effective January 1, 2021. Until close of business on December 31, 2020 we were externally managed and advised by MCC Advisors LLC (“MCC Advisors”), which is registered with the Securities and Exchange Commission (the “SEC”) as an investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), pursuant to an investment management agreement. MCC Advisors is a wholly owned subsidiary of Medley LLC, which is controlled by Medley Management Inc. (NYSE: MDLY), a publicly traded asset management firm (“MDLY”), which in turn is controlled by Medley Group LLC, an entity wholly owned by the senior professionals of Medley LLC. We use the term “Medley” to refer collectively to the activities and operations of Medley Capital LLC, Medley LLC, MDLY, Medley Group LLC, MCC Advisors, associated investment funds and their respective affiliates.Medley Capital BDC LLC (the “LLC”), a Delaware limited liability company, was formed on April 23, 2010. Onaffiliates herein. Effective January 18, 2011, the LLC, in accordance with Delaware law, converted into Medley Capital Corporation, a Delaware corporation, and on January 20, 2011,1, 2021 the Company filed an election to be regulated as a BDC under the 1940 Act.On January 20, 2011, the Company consummated its IPO, sold 11,111,112 shares of common stock at $12.00 per share and commenced its operations and investment activities. On February 24, 2011, an additional 450,000 shares of common stock were issued at a price of $12.00 per shareis managed pursuant to the partial exercise of the underwriters’ option to purchase additional shares. Net of underwriting fees and offering costs, the Company received total cash proceeds of approximately $129.6 million.On January 20, 2011, the Company’s shares began trading on the New York Stock Exchange (“NYSE”) under the symbol “MCC”.Prior to the consummation of our IPO, Medley Opportunity Fund LP (“MOF LP”), a Delaware limited partnership, and Medley Opportunity Fund, Ltd. (“MOF LTD”), a Cayman Islands exempted limited liability company, which are managed by an affiliate of MCC Advisors, transferred all of their respective interests in six loan participations in secured loans to middle market companies with a combined fair value, plus payment-in-kind interest and accrued interest thereon, of approximately $84.95 million (the “Loan Assets”) to MOF I BDC LLC (“MOF I BDC”), a Delaware limited liability company, in exchange for membership interests in MOF I BDC. As a result, MOF LTD owned approximately 90% of the outstanding MOF I BDC membership interests and MOF LP owned approximately 10% of the outstanding MOF I BDC membership interests.On January 18, 2011, each of MOF LTD and MOF LP contributed their respective MOF I BDC membership interests to the LLC in exchange for LLC membership interests. As a result, MOF I BDC became a wholly owned subsidiary of the LLC. As a result of the LLC’s conversion noted above, MOF LTD and MOF LP’s LLC membership interests were exchanged for 5,759,356 shares of the Company’s common stock at $14.75 per share. On February 23, 2012, MOF LTD and MOF LP collectively sold 4,406,301 shares of common stock in an underwritten public offering. See Note 7 for further information.LP (“Medley Small Business Fund”).LP. In addition, Medley SBIC GP, LLC changed its name to Medley Small Business Fund GP, LLC. See Note 5 for further information.appreciation by lendingappreciation. The management team seeks to privately-held middle market companies,achieve this objective primarily through directly originated transactions,making loans, private equity or other investments in privately-held companies. The Company may also make debt, equity or other investments in publicly-traded companies. (These investments may also include investments in other BDCs, closed-end funds or REITs.) We may also pursue other strategic opportunities and invest in other assets or operate other businesses to help these companies fund acquisitions, growth or refinancing.achieve our investment objective. The portfolio generally consists of senior secured first lien term loans, and senior secured second lien term loans.loans, senior secured bonds, preferred equity and common equity. Occasionally, we will receive warrants or other equity participation features which we believe will have the potential to increase the total investment returns.Agreements Our loan and Plansother debt investments are primarily rated below investment grade or are unrated. Investments in below investment grade securities are considered predominantly speculative with respect to the issuer’s capacity to pay interest and repay principal when due.MergersThe descriptionStockholders held on June 30, 2020 (the “2020 Annual Meeting”), stockholders approved a proposal to grant discretionary authority to the Company’s board of directors to amend the Company’s Certificate of Incorporation (the “Certificate of Incorporation”) to effect a reverse stock split of its common stock, of 1-20 (the “Reverse Stock Split”) and with the Reverse Stock Split to be effective at such time and date, if at all, as determined by the board of directors, but not later than 60 days after stockholder approval thereof and, if and when the reverse stock split is effected, reduce the number of authorized shares of common stock by the approved reverse stock split ratio (the “Authorized Share Reduction”).Mergers (as defined below)Company and its stockholders to implement the Reverse Stock Split and the Settlement (as defined below) set forth below areAuthorized Share Reduction. Accordingly, on July 13, 2020, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split and the Authorized Share Reduction.March5:00 p.m., Eastern Time, on July 24, 2020 (the “Effective Time”), each twenty (20) shares of common stock issued and outstanding, immediately prior to the Effective Time, automatically and without any action on the part of the respective holders thereof, were combined and converted into one (1) share of common stock. In connection with the Reverse Stock Split, the Certificate of Amendment provided for a reduction in the number of authorized shares of common stock from 100,000,000 to 5,000,000 shares of common stock. No fractional shares were issued as a result of the Reverse Stock Split. Instead, any stockholder who would have been entitled to receive a fractional share as a result of the Reverse Stock Split received cash payments in lieu of such fractional shares (without interest and subject to backup withholding and applicable withholding taxes).Subsequent to such date,Effective January 4, 2021, the Amendedcommon stock trades on the NASDAQ Global Market under the trading symbol “PFX.” Merger Agreement (as defined below)JVthe Amended MDLY Merger Agreement (as defined below) were terminated. See Note 14. Subsequent Events for more information.On August 9, 2018, the Companyan affiliate of Golub Capital LLC (“Golub”) entered into a definitive agreementMembership Interest Purchase Agreement pursuant to mergewhich a fund affiliated with Sierra Income Corporation (“Sierra”). Pursuantand managed by Golub concurrently purchased all of the Company’s interest in the MCC JV and all of GALIC’s interest in the MCC JV for a pre-adjusted gross purchase price of $156.4 million and an adjusted gross purchase price (which constitutes the aggregate consideration for the membership interests) of $145.3 million (giving effect to the Agreementadjustments primarily for principal and Planinterest payments from portfolio companies of Merger, dated asMCC JV from July 1, 2020 through October 7, 2020), resulting in net proceeds (before transaction expenses) of August 9, 2018, by$41.0 million and between$6.6 million for the Company and Sierra (the “MCC Merger Agreement”), the Company would,GALIC, respectively, on the terms and subject to the conditions set forth in the MCC MergerMembership Interest Purchase Agreement, mergeincluding the representations, warranties, covenants and indemnities contained therein. In connection with and into Sierra, with Sierra as the surviving entity (the “Combined Company”) in the merger (the “MCC Merger”). Under the MCC Merger, each share of our common stock issued and outstanding immediately prior to the MCC Merger effective time (other than shares of our common stock held by the Company, Sierra or their respective wholly owned subsidiaries) would be converted into the right to receive 0.8050 sharesclosing of the Sierra’s common stock. Simultaneously, pursuant to the Agreementtransaction on October 8, 2020, MCC JV repaid in full all outstanding borrowings under, and Plan of Merger(the “MDLY Merger Agreement”),terminated, its senior secured revolving credit facility, dated as of August 9, 2018,4, 2015, as amended, administered by and among MDLY, Sierra, and Sierra Management, Inc., a newly formed Delaware corporation and a wholly owned subsidiaryDeutsche Bank AG, New York Branch.Sierra (“Merger Sub”), MDLY would,the COVID-19 pandemic continues to have adverse consequences on the termsU.S. and subject to the conditions set forth in the MDLY Merger Agreement, merge with and into Merger Sub, with Merger Subglobal economies, as the surviving company in the Merger (the “MDLY Merger” together with the MCC Merger, the “Mergers”), and MDLY’s existing asset management business would continue to operatewell as a wholly owned subsidiary of the Combined Company. In the MDLY Merger, each share of MDLY Class A common stock, issued and outstanding immediately prior to the MDLY Merger effective time (other than Dissenting Shares (as defined in the MDLY Merger Agreement) and shares of MDLY Class A common stock held by MDLY, Sierra or their respective wholly owned subsidiaries) would be converted into the right to receive (i) 0.3836 shares of Sierra’s common stock; plus (ii) cash in an amount equal to $3.44 per share. In addition, MDLY’s stockholders would have the right to receive certain dividends and/or other payments.On July 29, 2019,on the Company entered into(including certain portfolio companies) in particular. The ultimate economic fallout from the Amendedpandemic, and Restated Agreementthe long-term impact on economies, markets, industries and Planindividual portfolio companies, remains uncertain. The Company’s performance (including that of Merger, dated ascertain of July 29, 2019 (the “Amended MCC Merger Agreement”), by and betweenits portfolio companies) was negatively impacted during the Company and Sierra, pursuant to which the Company will,pandemic. The longer-term impact of COVID-19 on the terms and subject to the conditions set forth in the Amended MCC Merger Agreement, merge with and into Sierra, with Sierra as the surviving company in the MCC Merger. In the MCC Merger, each share of the Company’s common stock (other than shares of the Company’s common stock held by the Company, Sierra or their respective wholly owned subsidiaries) will be exchanged for the right to receive (i) 0.68 shares of Sierra’s common stock if the attorneys’ fees of plaintiffs’ counsel and litigation expenses paid or incurred by plaintiffs’ counsel or advanced by plaintiffs in connection with the Delaware Action, as described below (such fees and expenses, the “Plaintiff Attorney Fees”), are less than or equal to $10,000,000; (ii) 0.66 shares of Sierra’s common stock if the Plaintiff Attorney Fees are equal to or greater than $15,000,000; (iii) between 0.68 and 0.66 per share of Sierra’s common stock if the Plaintiff Attorney Fees are greater than $10,000,000 but less than $15,000,000, calculated on a descending basis, based on straight line interpolation between $10,000,000 and $15,000,000; or (iv) 0.66 shares of Sierra’s common stock in the event that the Plaintiff Attorney Fees are not fully and finally determined prior to the closing of the MCC Merger (such ratio, the “MCC Merger Exchange Ratio”). Based upon the Plaintiff Attorney Fees approved by the Court of Chancery of the State of Delaware (the “Delaware Court of Chancery”) as set forth in the Order and Final Judgment entered into on December 20, 2019, as described below (the “Delaware Order and Final Judgment”), the MCC Merger Exchange Ratio will be 0.66 shares of Sierra’s common stock. The Company and Sierra are appealing the Delaware Order and Final Judgment with respect to the Delaware Court of Chancery’s ruling on the Plaintiff Attorney Fees.In addition, on July 29, 2019, Sierra and MDLY announced the execution of the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MDLY Merger Agreement”), by and among MDLY, Sierra, and Merger Sub, pursuant to which MDLY will, on the terms and subject to the conditions set forth in the Amended MDLY Merger Agreement, merge with and into Merger Sub, with Merger Sub as the surviving company in the MDLY Merger. In the MDLY Merger, each share of MDLY Class A common stock, issued and outstanding immediately prior to the MDLY Merger effective time, other than shares of MDLY Class A common stock held by MDLY, Sierra or their respective wholly owned subsidiaries (the “Excluded MDLY Shares”)operations and the Dissenting Shares (as defined in the Amended MDLY Merger Agreement), held, immediately prior to the MDLY Merger effective time, by any person other than a Medley LLC unitholder, will be exchanged for (i) 0.2668 shares of Sierra’s common stock; plus (ii) cash in an amount equal to $2.96 per share. In addition, in the MDLY Merger, each share of MDLY Class A common stock issued and outstanding immediately prior to the MDLY Merger effective time, other than the Excluded MDLY Shares and the Dissenting Shares, held, immediately prior to the MDLY Merger effective time, by Medley LLC unitholders will be exchanged for (i) 0.2072 shares of Sierra’s common stock; plus (ii) cash in an amount equal to $2.66 per share.Pursuant to terms of the Amended MCC Merger Agreement, the consummation of the MCC Merger is conditioned upon the satisfaction or waiver of each of the conditions to closing under the Amended MDLY Merger Agreement and the consummation of the MDLY Merger. However, pursuant to the terms of the Amended MDLY Merger Agreement, the consummation of the MDLY Merger is not contingent upon the consummation of the MCC Merger. If both Mergers are successfully consummated, Sierra’s common stock would be listed on the NYSE, with such listing expected to be effective as of the closing date of the Mergers, and Sierra’s common stock will be listed on the Tel Aviv Stock Exchange (“TASE”), with such listing expected to be effective as of the closing date of the MCC Merger. If, however, only the MDLY Merger is consummated, Sierra’s common stock would be listed on the NYSE. If both Mergers are successfully consummated, the investment portfolios of MCC and Sierra would be combined, Merger Sub, as a successor to MDLY, would be a wholly owned subsidiary of the Combined Company, and the Combined Company would be internally managed by MCC Advisors LLC, its wholly controlled adviser subsidiary. If only the MDLY Merger is consummated, the investment portfolios of MCC and Sierra would not be combined; however, the investment management function relating to the operation of Sierra, as the surviving company, would still be internalized (the “Sierra/MDLY Company”) and the Sierra/MDLY Company would be managed by MCC Advisors.The Mergers are subject to approval by the stockholdersperformance of the Company Sierra,(including certain portfolio companies) is difficult to predict, but may continue to be adverse. The longer-term potential impact on such operations and MDLY, regulators, includingperformance could depend to a large extent on future developments and actions taken by authorities and other entities to contain COVID-19 and its economic impact. The impacts, as well as the SEC, court approvaluncertainty over impacts to come, of COVID-19 have adversely affected the Settlement (as described below), other customary closing conditions and third-party consents. There is no assurance that any of the foregoing conditions will be satisfied. The Company and Sierra have the right to terminate the Amended MCC Merger Agreement under certain circumstances, including (subject to certain limitations set forth in the Amended MCC Merger Agreement), among others: (i) by mutual written agreement of each party; (ii) any governmental entity whose consent or approval is a condition to closing set forth in Section 8.1 of the Amended MCC Merger Agreement has denied the granting of any such consent or approval and such denial has become final and nonappealable, or any governmental entity of competent jurisdiction shall have issued a final and nonappealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by the Amended MCC Merger Agreement; (iii) the MCC Merger has not closed on or prior to March 31, 2020; or (iv) either party has failed to obtain stockholder approval or the Amended MDLY Merger Agreement has been terminated.On February 11, 2019, a purported stockholder class action was commenced in the Delaware Court of Chancery by FrontFour Capital Group LLC and FrontFour Master Fund, Ltd. (together, “FrontFour”), captioned as FrontFour Capital Group LLC, et al. v. Brook Taube et al., Case No. 2019-0100 (the “Delaware Action”) against defendants Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, MDLY, Sierra, the Company, MCC Advisors, Medley Group LLC, and Medley LLC. The complaint, as amended on February 12, 2019, alleged that the individuals named as defendants breached their fiduciary duties to the Company’s stockholders in connection with the MCC Merger, and that MDLY, Sierra, MCC Advisors, Medley Group LLC, and Medley LLC aided and abetted those alleged breaches of fiduciary duties. The complaint sought to enjoin the vote of MCC stockholders on the proposed merger and enjoin enforcement of certain provisions of the Agreement and Plan of Merger, dated as of August 9, 2018, by and between MCC and Sierra (the “MCC Merger Agreement”).The Delaware Court of Chancery held a trial on the plaintiffs’ motion for a preliminary injunction and issued a Memorandum Opinion (the “Decision”) on March 11, 2019. The Delaware Court of Chancery denied the plaintiffs’ requests to (i) permanently enjoin the proposed merger and (ii) require the Company to conduct a “shopping process” for the Company on terms proposed by the plaintiffs in their complaint. The Delaware Court of Chanceryheld that the Company’s directors breached their fiduciary duties in entering into the proposed merger, but rejected the plaintiffs’ claim that Sierra aided and abetted those breaches of fiduciary duties. The Delaware Court of Chancery ordered the defendants to issue corrective disclosures consistent with the Decision, and enjoined a vote of the Company’s stockholders on the proposed merger until such disclosures had been made and stockholders had the opportunity to assimilate that information.On March 20, 2019, another purported stockholder class action was commenced by Stephen Altman against Brook Taube, Seth Taube, Jeff Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, Mark Lerdal, and John E. Mack in the Delaware Court of Chancery, captioned Altman v. Taube, Case No. 2019-0219 (the “Altman Action”). The complaint alleged that the defendants breached their fiduciary duties to stockholdersperformance of the Company in connection with the vote of the Company’s stockholders on the proposed mergers. On April 8, 2019, the Delaware Court of Chancery granted a stipulation consolidating the Delaware Action(including certain portfolio companies) and the Altman Action, designating the amended complaintmay continue to do so in the Delaware Action as the operative complaint, and designating the plaintiffs in the Delaware Action and their counsel the lead plaintiffs and lead plaintiffs’ counsel, respectively.On December 20, 2019, the Delaware Court of Chancery entered into the Delaware Order and Final Judgment approving the settlement of the Delaware Action (the “Settlement”). Pursuantthe Settlement, the Company agreed to certain amendments to (i) the MCC Merger Agreement and (ii) the MDLY Merger Agreement, which amendments are reflected in the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement. The Settlement also provides for, if the MCC Merger is consummated, the creation of a settlement fund, consisting of $17 million in cash and $30 million of Sierra’s common stock, with the number of shares of Sierra’s common stock to be calculated using the pro forma net asset value of $6.37 per share as of June 30, 2019, which will be distributed to eligible members of the Settlement Class (as defined in the Settlement). In addition, in connection with the Settlement, on July 29, 2019, the Company entered into a Governance Agreement with FrontFour Capital Group LLC, FrontFour Master Fund, Ltd., FrontFour Capital Corp., FrontFour Opportunity Fund, David A. Lorber, Stephen E. Loukas and Zachary R. George, pursuant to which, among other matters, FrontFour is subject to customary standstill restrictions and required to vote in favor of the revised MCC Merger at a meeting of stockholders to approve the revised MCC Merger Agreement. The Settlement also provides for mutual releases between and among FrontFour and the Settlement Class, on the one hand, and the Medley Parties, on the other hand, of all claims that were or could have been asserted in the Delaware Action through September 26, 2019.The Delaware Court of Chancery also awarded attorney’s fees as follows: (i) an award of $3,000,000 to lead plaintiffs’ counsel and $75,000 to counsel to plaintiff Stephen Altman (the “Therapeutics Fee Award”) and $420,334.97 of plaintiff counsel expenses payable to the lead plaintiff’s counsel, which were paid on December 23, 2019, and (ii) an award that is contingent upon the closing of the proposed merger transactions (the “Contingent Fee Award”), consisting of:a.$100,000 for the agreement to appoint an independent director on the board of directors of the post-merger company; andb. the amount calculated by solving for A in the following formula:Award[A]=(Monetary Fund[M]+Award[A]-Look Through[L])*Percentage[P]Where:Ashall be the amount of the Additional Fee (excluding the $100,000 award for the agreement to appoint an independent director on the board of directors of the post-merger company);Mshall be the sum of (i) the $17 million cash component of the Settlement Fund and (ii) the value of the post-merger company stock component of the Settlement Fund, which shall be calculated as the product of the VPS (as defined below) and 4,709,576.14 (the number of shares of post-merger company’s stock comprising the stock component of the net settlement amount);Lshall be the amount representing the estimated value of the decrease in shares to be received by eligible class members arising by operation of the change in the “Exchange Ratio” under the Amended MCC Merger Agreement, calculated as follows:L = ((ES * 68%) - (ES * 66%)) * VPSWhere:ES shall be the number of eligible shares;VPSshall be the pro forma net asset value per share of the post-merger company’s common stock as of the closing as reported in the public disclosure filed nearest in time and after the closing (the “Closing NAV Disclosure”); andP shall equal 0.26The Contingent Fee Award is contingent upon the closing of the MCC Merger. Payment of the Contingent Fee Award will be made in two stages. First, within five (5) business days of the establishment of the Settlement Fund, the Company or its successor shall (i) pay the plaintiffs’ counsel an estimate of the Contingent Fee Award (the “Additional Fee Estimate”), less twenty (20) percent (the “Additional Fee Estimate Payment”), and (ii) deposit the remaining twenty (20) percent of the Additional Fee Estimate into escrow (the “Escrowed Fee”). For purposes of calculating such estimate, the Company or its successor shall use the formula set above, except that VPS shall equal the pro forma net asset value of the post-merger company’s common stock as reported in the public disclosure filed nearest in time and prior to the closing (the “Closing NAV Estimate”).Second, within five (5) business days of the Closing NAV Disclosure (as defined in the Order and Final Judgment), (i) if the Additional Fee is greater than the Additional Fee Estimate Payment, an amount of the Escrowed Fee shall be released to plaintiffs’ counsel such that the total payments made to plaintiffs’ counsel equal the Additional Fee and the remainder of the Escrowed Fee, if any, shall be released to the Company or its successor, (ii) if the Additional Fee is less than the Additional Fee Estimate Payment, plaintiffs’ counsel shall return to the Company or its successor the difference between the Additional Fee Estimate and the Additional Fee and the Escrowed Fee shall be released to the Company or its successor, or (iii) if the Additional Fee is equal to the Additional Fee Estimate Payment, the Escrowed Fee shall be released to the Company or its successor.On January 17, 2020, the Company and Sierra filed a notice of appeal with the Delaware Supreme Court from those provisions of the Order and Final Judgment with respect to the Contingent Fee Award.followsis an investment company following the accounting and reporting guidance in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946, (“ASC 946”).Financial Services – Investment Companies. The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the consolidated accounts of the Company and its wholly owned subsidiaries PhenixFIN Small Business Fund, LP (f/k/a Medley Small Business Fund, LP) (“PhenixFIN Small Business Fund”) and PhenixFIN SLF Funding I LLC (f/k/a Medley SLF Funding I LLC ("Medley SLF"LLC) (“PhenixFIN SLF”), and its wholly owned Taxable Subsidiaries. All references made to the “Company,” “we,” and “us” herein include Medley CapitalPhenixFIN Corporation and its consolidated subsidiaries, except as stated otherwise. Additionally, 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 Article 10 of Regulation S-X of the Securities Act of 1933. In the opinion of management, the consolidated financial statements reflect all adjustments and reclassifications, which are of a normal recurring nature, that are necessary for the fair presentation of financial results as of and for the periods presented. All intercompany balances and transactions have been eliminated. As of March 31, 2020, we had $61.1 million in cash and cash equivalents. As of September 30, 2019, we had $68.2 million in cash and cash equivalents, and $16.0 million of restricted cash, which was restricted for the purposes of repaying principal and interest on our Series A Israeli Notes (the “Israeli Notes”).Deferred Offering CostsDeferred offering costs consist of fees and expenses incurred in connection with the public offering and sale of the Company’s common stock, including legal, accounting, printing fees and other related expenses, as well as costs incurred in connection with the filing of a shelf registration statement. These amounts are capitalized when incurred and recognized as a reduction of offering proceeds when the offering becomes effective or expensed upon expiration of the registration statement. and SBA-guaranteed debentures (“SBA Debentures”) (see Note 5) are deferred and amortized over the life of the respective credit facility or instrument.2020, 2021, the Company earned approximately $0.8 million$0 and $2.5$0.2 million in PIK interest, respectively. For the three and six months ended March 31, 2019, 2020, the Company earned approximately $2.0$0.8 million and $4.6$2.5 million in PIK interest, respectively.2020,2021, fee income was approximately $0.1$0.2 million and $0.4$0.6 million, respectively (see Note 9). For the three and six months ended March 31, 2019,2020, fee income was approximately $0.3$0.1 million and $0.8$0.4 million, respectively (see Note 9).2020. During the three2021 and six months ended March 31, 2019, $10.8 million and $10.8 million of our realized losses, respectively, were related to certain non-cash restructuring transactions, which is recorded on the Consolidated Statements of Operations as a component of net realized gain/(loss) from investments.2020. The Company reports changes in fair value of investments as a component of the net unrealized appreciation/(depreciation) on investments in the Consolidated Statements of Operations.2020,2021, certain investments in ten portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $28.2$16.7 million, or 11.0% of the fair value of our portfolio. At March 31, 2020, certain investments in two portfolio companies held by the Company were on partial non-accrual status with a combined fair value of approximately $13.3 million, or 5.2%9.9% of the fair value of our portfolio. At September 30, 2019,2020, certain investments in seveneight portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $22.3$21.7 million, or 5.6%8.8% of the fair value of our portfolio.third partythird-party valuation firms. Because these investments are illiquid and because there may not be any directly comparable companies whose financial instruments have observable market values, these loans are valued using a fundamental valuation methodology, consistent with traditional asset pricing standards, that is objective and consistently applied across all loans and through time.The “Market Approach” uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business.The “Income Approach” converts future amounts (for example, cash flows or income and expenses) to a single current (that is, discounted) amount. When the Income Approach is used, the fair value measurement reflects current market expectations about those future amounts.● The “Market Approach” uses prices and other relevant information generated by market transactions involving identical or comparable (that is, similar) assets, liabilities, or a group of assets and liabilities, such as a business. ● The “Income Approach” converts future amounts (for example, cash flows or income and expenses) to a single current (that is, discounted) amount. When the Income Approach is used, the fair value measurement reflects current market expectations about those future amounts. useshas engaged third-party valuation firms (the “Valuation Firms”) to assist theit and its board of directors in the valuation of its portfolio investments. The valuation reports generated by the third-party valuation firmsValuation Firms consider the evaluation of financing and sale transactions with third parties, expected cash flows and market basedmarket-based information, including comparable transactions, performance multiples, and movement in yields of debt instruments, among other factors. The Company uses a market yield analysis under the Income Approach or an enterprise model of valuation under the Market Approach, or a combination thereof. In applying the market yield analysis, the value of the Company’s loans is determined based upon inputs such as the coupon rate, current market yield, interest rate spreads of similar securities, the stated value of the loan, and the length to maturity. In applying the enterprise model, the Company uses a waterfall analysis, which takes into account the specific capital structure of the borrower and the related seniority of the instruments within the borrower’s capital structure into consideration. To estimate the enterprise value of the portfolio company, we weigh some or all of the traditional market valuation methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value.valuations of comparable public companies (“Guideline Comparable Approach”);recent sales of private and public comparable companies (“Guideline Comparable Approach”);recent acquisition prices of the company, debt securities or equity securities (“Recent Arms-Length Transaction”);external valuations of the portfolio company, offers from third parties to buy the company (“Estimated Sales Proceeds Approach”);subsequent sales made by the company of its investments (“Expected Sales Proceeds Approach”); andestimating the value to potential buyers.● valuations of comparable public companies (“Guideline Comparable Approach”); ● recent sales of private and public comparable companies (“Guideline Comparable Approach”); ● recent acquisition prices of the company, debt securities or equity securities (“Recent Arms-Length Transaction”); ● external valuations of the portfolio company, offers from third parties to buy the company (“Estimated Sales Proceeds Approach”); ● subsequent sales made by the company of its investments (“Expected Sales Proceeds Approach”); and ● estimating the value to potential buyers. discounting the forecasted cash flows of the portfolio company or securities (Discounted Cash Flow (“DCF”) Approach); andBlack-Scholes model or simulation models or a combination thereof (Income Approach - Option Model) with respect to the valuation of warrants.● discounting the forecasted cash flows of the portfolio company or securities (Discounted Cash Flow (“DCF”) Approach); and ● Black-Scholes model or simulation models or a combination thereof (Income Approach - Option Model) with respect to the valuation of warrants. our quarterly valuation process begins with each portfolio investment being internally valued by the valuation professionals;preliminary valuation conclusions are then documented and discussed with senior management; andan independent valuation firm engaged by our board of directors reviews approximately one third of these preliminary valuations each quarter on a rotating quarterly basis on non-fiscal year-end quarters, such that each of these investments will be valued by independent valuation firms at least twice per annum when combined with the fiscal year-end review of all the investments by independent valuation firms.In addition, all of our investments are subject to the following valuation process:the audit committee of our board of directors reviews the preliminary valuations of the valuation professionals, senior management and independent valuation firms; andour board of directors discusses valuations and determines the fair value of each investment in our portfolio in good faith based on the input of MCC Advisors, the respective independent valuation firms and the audit committee.● our quarterly valuation process begins with each portfolio investment being initially valued by one or more Valuation Firms; ● preliminary valuation conclusions will then be documented and discussed with senior management; ● the audit committee of the board of directors reviews the preliminary valuations with management and the Valuation Firms; and ● the board of directors discusses the valuations and determines the fair value of each investment in the Company’s portfolio in good faith based on the input of management, the respective Valuation Firms and the audit committee. RecentAugust 2018,March 2020, the FASB issued ASU 2018-13, Fair Value Measurement2020-04, “Reference rate reform (Topic 820) - Disclosure Framework - Changes848)—Facilitation of the effects of reference rate reform on financial reporting.” The amendments in this update provide optional expedients and exceptions for applying U.S. GAAP to certain contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform and became effective upon issuance for all entities. The Company has agreements that have LIBOR as a reference rate with certain portfolio companies and also with certain lenders. Many of these agreements include language for choosing an alternative successor rate if LIBOR reference is no longer considered to be appropriate. Contract modifications are required to be evaluated in determining whether the Disclosure Requirementsmodifications result in the establishment of new contracts or the continuation of existing contracts. The standard is effective as of March 12, 2020 through December 31, 2022 and the Company plans to apply the amendments in this update to account for Fair Value Measurement (“ASU 2018-13”contract modifications due to changes in reference rates. The Company does not believe that it will have a material impact on its consolidated financial statements and disclosures.primary focusFinal Rules adopted a new definition of ASU 2018-13“significant subsidiary” set forth in Rule 1-02(w)(2) of Regulation S-X under the Securities Act. Rules 3-09 and 4-08(g) of Regulation S-X require investment companies to include separate financial statements or summary financial information, respectively, in such investment company’s periodic reports for any portfolio company that meets the definition of “significant subsidiary.” The Final Rules adopt a new definition of “significant subsidiary” applicable only to investment companies that (i) modifies the investment test and the income test, and (ii) eliminates the asset test currently in the definition of “significant subsidiary” in Rule 1-02(w) of Regulation S-X. The new Rule 1-02(w)(2) of Regulation S-X is intended to improve the effectiveness of the disclosure requirements for fair value measurements. The changes affect allmore accurately capture those portfolio companies that are requiredmore likely to include fair value measurement disclosures. In general,materially impact the amendments in ASU 2018-13 arefinancial condition of an investment company. The Final Rules became effective for all entities for fiscal yearsJanuary 1, 2021. The Company evaluated the impact of the Final Rules and interim periods within those fiscal years, beginning after December 15, 2019. After evaluating ASU 2018-13, the Company found nodetermined its impact not to be material changes to its fair value disclosures in the notes to the consolidated financial statements were necessary to complyand began voluntary compliance with the pronouncement. including PIK,, as defined by the Code, including PIK interest, and net tax exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) for each taxable year in order to be eligible for tax treatment under Subchapter M of the Code.year. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.year.year and any income realized, but not distributed, in preceding years and on which it did not pay federal income tax. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. For the calendar years ended 2019 and 2018, accruedThere was no provision for federal excise tax at March 31, 20202021 and March 31, 2019, respectively, the Company distributed at least 98% of its ordinary income and 98.2% of its capital gains, and as such, was not subject to federal excises taxes.2020, the Company recorded a deferred tax liability of $0.1 million on the Consolidated Statements of Assets2021 and Liabilities. As of September 30, 2019,2020, the Company did not record a deferred tax liability on the Consolidated Statements of Assets and Liabilities. The change in provision for deferred taxes is included as a component of net realized and unrealized gain/(loss) on investments in the Consolidated Statements of Operations. For the three and six months ended March 31, 2021 the Company did not record a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments. By comparison, for the three and six months ended March 31, 2020, the Company recorded a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments of $0.1 million. For the three and six months ended March 31, 2019, the Company did not record a change in provisionmillion for deferred taxes on the unrealized (appreciation)/depreciation on investments.20202021 and September 30, 2019,2020, the Company had a net deferred tax asset of $20.9$21.0 million and $20.9$22.8 million, respectively, consisting primarily of net operating losses and net unrealized losses on the investments held within its Taxable Subsidiaries. As of March 31, 20202021 and September 30, 2019,2020, the Company has booked a valuation allowance of $20.9$21.0 million and $20.9$22.8 million, respectively, against its net deferred tax asset.2020.2021. Although we file federal and state tax returns, our major tax jurisdiction is federal. The Company’s federal and state tax returns for the prior three fiscal years remain open, subject to examination by the Internal Revenue Service.Service and applicable state tax authorities.MCC Advisorsinvestments for the Company.investments. Investments will generally consist of debt instruments that may be affected by business, financial market or legal uncertainties. Prices of investments may be volatile, and a variety of factors that are inherently difficult to predict, MCC Advisors may attempt to minimize this risk by maintaining low loan-to-liquidation values with each loan and the collateral underlying the loan. Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 167,149 78.2 % $ 93,291 55.5 % Senior Secured Second Lien Term Loans 7,977 3.7 7,757 4.6 Unsecured Debt 3,964 1.9 2,098 1.2 Equity/Warrants 34,545 16.2 65,099 38.7 Total Investments $ 213,635 100.0 % $ 168,245 100.0 % Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 188,920 47.7 % $ 106,008 41.4 % Senior Secured Second Lien Term Loans 40,172 10.1 25,389 9.9 Unsecured Debt 2,103 0.5 1,466 0.6 MCC Senior Loan Strategy JV I LLC 78,575 19.8 41,927 16.4 Equity/Warrants 86,717 21.9 81,106 31.7 Total $ 396,487 100.0 % $ 255,896 100.0 % The composition of our investments as of September 30, 2019 as a percentage of our total portfolio, at amortized cost and fair value were as follows (dollars in thousands): Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 243,342 52.0 % $ 192,770 48.6 % Senior Secured Second Lien Term Loans 39,089 8.4 36,508 9.2 Unsecured Debt 2,653 0.6 2,653 0.7 MCC Senior Loan Strategy JV I LLC 78,575 16.8 69,949 17.6 Equity/Warrants 103,989 22.2 95,009 23.9 Total $ 467,648 100.0 % $ 396,889 100.0 % Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 178,843 54.5 % $ 106,463 43.2 % Senior Secured Second Lien Term Loans 15,476 4.7 13,927 5.6 Unsecured Debt 4,601 1.4 2,669 1.1 MCC Senior Loan Strategy JV I LLC 79,888 24.4 41,019 16.6 Equity/Warrants 49,327 15.0 82,666 33.5 Total $ 328,135 100.0 % $ 246,744 100.0 % 20202021 and September 30, 2019,2020, the total fair value of warrants was $0$53,609 and $24,983,$15,354, respectively, and were included in investments at fair value on the Consolidated StatementStatements of Assets and Liabilities. During the three months ended March 31, 2021, the Company did not acquire warrants in existing portfolio companies, and during the six months ended March 31, 2021, the Company acquired warrants in 1 existing portfolio company. During the three and six months ended March 31, 2020, the Company had no warrant activity. During the three months ended March 31, 2019, the Company did not acquire any warrant positions. During the six months ended March 31, 2019, the Company acquired additional warrants in one of its existing portfolio investments.2020,2021, there was $24,983$28,186 and $24,983,$38,255, respectively, of unrealized depreciationappreciation related to warrants, which was recorded on the Consolidated Statements of Operations as net unrealized appreciation/(depreciation) on investments. For the three and six months ended March 31, 2019,2020, there was $0.3 million$24,983 and $0.3 million,$24,983, respectively, of unrealized depreciation related to warrants, which was recorded on the Consolidated Statements of Operations as net unrealized appreciation/(depreciation) on investments. The warrants are received in connection with individual investments and are not subject to master netting arrangements.20202021 (dollars in thousands): Fair Value Percentage Construction & Building $ 53,520 20.9 % Multisector Holdings 41,927 16.4 Services: Business 31,656 12.4 High Tech Industries 25,892 10.1 Healthcare & Pharmaceuticals 22,612 8.8 Hotel, Gaming & Leisure 13,847 5.4 Containers, Packaging & Glass 11,949 4.7 Wholesale 11,768 4.6 Banking, Finance, Insurance & Real Estate 9,498 3.7 Consumer goods: Durable 5,966 2.3 Consumer goods: Non-durable 5,947 2.3 Energy: Oil & Gas 5,657 2.2 Environmental Industries 3,614 1.4 Metals & Mining 3,345 1.3 Aerospace & Defense 3,066 1.2 Forest Products & Paper 2,872 1.1 Media: Broadcasting & Subscription 1,482 0.6 Automotive 716 0.3 Media: Advertising, Printing & Publishing 375 0.2 Retail 187 0.1 Total $ 255,896 100.0 % Fair Value Percentage Construction & Building $ 34,353 20.4 % Services: Business 31,980 19.0 Consumer goods: Durable 14,068 8.4 High Tech Industries 13,909 8.3 Automotive 12,430 7.4 Containers, Packaging & Glass 11,723 7.0 Hotel, Gaming & Leisure 11,048 6.6 Healthcare & Pharmaceuticals 10,463 6.2 Environmental Industries 10,347 6.1 Energy: Oil & Gas 4,786 2.8 Banking, Finance, Insurance & Real Estate 4,291 2.6 Forest Products & Paper 3,770 2.2 Aerospace & Defense 2,580 1.5 Metals & Mining 2,497 1.5 Wholesale - 0.0 Total $ 168,245 100.0 % 20192020 (dollars in thousands): Fair Value Percentage Multisector Holdings $ 69,949 17.6 % Construction & Building 59,608 15.0 Services: Business 49,512 12.5 High Tech Industries 38,254 9.6 Healthcare & Pharmaceuticals 25,698 6.5 Energy: Oil & Gas 23,632 6.0 Hotel, Gaming & Leisure 21,127 5.3 Wholesale 13,850 3.5 Services: Consumer 13,278 3.3 Containers, Packaging & Glass 12,637 3.2 Capital Equipment 10,680 2.7 Automotive 10,375 2.6 Banking, Finance, Insurance & Real Estate 10,000 2.5 Aerospace & Defense 8,604 2.2 Consumer goods: Non-durable 6,326 1.6 Consumer goods: Durable 6,170 1.6 Environmental Industries 3,991 1.0 Metals & Mining 3,436 0.9 Forest Products & Paper 2,830 0.7 Media: Broadcasting & Subscription 2,408 0.6 Chemicals, Plastics & Rubber 2,277 0.6 Media: Advertising, Printing & Publishing 1,715 0.4 Retail 532 0.1 Total $ 396,889 100.0 % Fair Value Percentage Construction & Building $ 51,964 21.1 % Multisector Holdings 41,019 16.6 High Tech Industries 26,165 10.6 Healthcare & Pharmaceuticals 23,481 9.5 Services: Business 21,841 8.9 Hotel, Gaming & Leisure 12,337 5.0 Wholesale 12,278 5.0 Containers, Packaging & Glass 11,987 4.8 Consumer goods: Durable 9,520 3.8 Banking, Finance, Insurance & Real Estate 6,557 2.7 Consumer goods: Non-durable 6,164 2.5 Environmental Industries 5,846 2.4 Energy: Oil & Gas 5,626 2.3 Metals & Mining 3,530 1.4 Forest Products & Paper 2,991 1.2 Aerospace & Defense 2,942 1.2 Media: Broadcasting & Subscription 1,110 0.5 Automotive 1,043 0.4 Retail 343 0.1 Total $ 246,744 100.0 % 20202021 (dollars in thousands): Fair Value Percentage Northeast $ 104,886 41.0 % West 52,648 20.5 Southeast 39,881 15.6 Midwest 37,046 14.5 Mid-Atlantic 12,760 5.0 Southwest 8,675 3.4 Total $ 255,896 100.0 % Fair Value Percentage West $ 56,862 33.9 % Northeast 44,996 26.7 Southeast 29,005 17.2 Southwest 21,240 12.6 Midwest 15,955 9.5 Mid-Atlantic 187 0.1 Total $ 168,245 100.0 % 20192020 (dollars in thousands): Fair Value Percentage Northeast $ 143,795 36.2 % West 88,412 22.3 Midwest 76,001 19.2 Southeast 48,089 12.1 Southwest 24,658 6.2 Mid-Atlantic 15,934 4.0 Total $ 396,889 100.0 % Fair Value Percentage Northeast $ 98,555 39.9 % West 55,400 22.5 Southeast 42,321 17.1 Midwest 27,574 11.2 Mid-Atlantic 13,334 5.4 Southwest 9,560 3.9 Total $ 246,744 100.0 % 20202021 and 20192020 were as follows:Name of Investment(3) Type of Investment Fair Value at
September 30,
2020 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized
Gain/(Loss) Fair Value at
March 31,
2021 Affiliated Investments 1888 Industrial Services, LLC Senior Secured First Lien Term Loan A $ - $ - $ - $ - - $ - $ - Senior Secured First Lien Term Loan B - - - - - - - Senior Secured First Lien Term Loan C 1,166,763 - - 65,169 - 1,231,932 56,464 Revolving Credit Facility 3,554,069 - - - - 3,554,069 109,155 Access Media Holdings, LLC Senior Secured First Lien Term Loan 1,110,563 (1,239,335 ) - 7,335,821 (7,207,049 ) - - Preferred Equity Series A - - - 1,600,000 (1,600,000 ) - - Preferred Equity Series AA - - - 800,000 (800,000 ) - - Preferred Equity Series AAA - - - 971,200 (971,200 ) - - Black Angus Steakhouses,LLC Senior Secured First Lien Delayed Draw Term Loan 758,929 - - - - 758,929 38,368 Senior Secured First Lien Term Loan 5,047,557 - - (2,986,471 ) - 2,061,086 - Senior Secured First Lien Super Priority DDTL - 1,500,000 - - - 1,500,000 49,012 Caddo Investors Holdings 1 LLC Equity 2,990,776 - - 779,085 - 3,769,861 - Dynamic Energy Services International LLC Senior Secured First Lien Term Loan 905,116 - - (905,116 ) - - - JFL-NGS Partners, LLC Preferred Equity A-2 1,795,034 (2,110,987 ) - - 315,953 - (16,377 ) Preferred Equity A-1 232,292 - - - (232,292 ) - (2,119 ) Equity 38,780,067 - - (8,818,696 ) - 29,961,371 - JFL-WCS Partners, LLC Preferred Equity Class A 1,310,649 - - - - 1,310,649 (53,623 ) Equity 4,535,580 - - 4,501,073 - 9,036,653 - Kemmerer Operations, LLC Senior Secured First Lien Term Loan 2,051,705 - - - - 2,051,705 (855 ) Senior Secured First Lien Delayed Draw Term Loan 515,699 (271,186 ) - - - 244,513 (215 ) Equity 962,717 - - (761,837 ) - 200,880 - Path Medical, LLC Senior Secured First Lien Term Loan A 5,905,080 - - (761,755 ) - 5,143,325 105,061 Senior Secured First Lien Term Loan B 6,794,514 - - (5,774,831 ) - 1,019,683 3,027 Type of Investment Fair Value at September 30, 2019 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at March 31, 2020 Income Earned Affiliated Investments 1888 Industrial Services, LLC Senior Secured First Lien Term Loan A $ 9,304,145 $ 168,923 $ — $ (9,473,068 ) $ — $ — $ 167,086 Senior Secured First Lien Term Loan B 5,886,892 — — (5,886,892 ) — — — Senior Secured First Lien Term Loan C 1,170,014 21,243 — (888,215 ) — 303,042 21,011 Senior Secured First Lien Term Loan D 224,456 8,087 — — — 232,543 8,084 Senior Secured First Lien Term Loan E — 838,174 — — — 838,174 28,042 Revolving Credit Facility 4,387,025 (945,461 ) — — — 3,441,564 132,413 Equity — — — — — — — Access Media Holdings, LLC Senior Secured First Lien Term Loan 2,509,089 — — (925,905 ) — 1,583,184 — Preferred Equity Series A — — — — — — — Preferred Equity Series AA — — — — — — — Preferred Equity Series AAA (100,800 ) — — — — (100,800 ) — Equity — — — — — — — Caddo Investors Holdings 1 LLC Equity 2,830,051 — — 42,392 — 2,872,443 — Dynamic Energy Services International LLC Senior Secured First Lien Term Loan 1,264,841 — — (423,010 ) — 841,831 — Revolving Credit Facility 545,103 (545,103 ) — — — — 6,692 Equity — — — — — — — JFL-NGS Partners, LLC Preferred Equity A-2 20,150,684 (9,651,947 ) — — — 10,498,737 299,304 Preferred Equity A-1 2,607,661 (1,249,040 ) — — — 1,358,621 38,732 Equity 19,096,371 — — 12,099,468 — 31,195,839 — JFL-WCS Partners, LLC Preferred Equity Class A 1,236,269 74,380 — — — 1,310,649 37,984 Equity 2,755,041 — — (451,960 ) — 2,303,081 — Kemmerer Operations, LLC Senior Secured First Lien Term Loan 1,766,511 137,264 — — — 1,903,775 137,321 Senior Secured First Lien Delayed Draw Term Loan 706,604 (228,088 ) — — — 478,516 43,003 Equity 962,717 — — — — 962,717 — Name of Investment(3) Type of Investment Fair Value at
September 30,
2020 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized
Gain/(Loss) Fair Value at
March 31,
2021 Income
Earned Affiliated Investments URT Acquisition Holdings Corporation Unsecured Debt 2,567,929 (500,000 ) - (11,105 ) 41,660 2,098,484 67,497 US Multifamily, LLC Senior Secured First Lien Term Loan 5,123,913 (2,546,496 ) - - - 2,577,417 193,224 Equity 1,332,000 - - 381,279 - 1,713,279 - Total Affiliated Investments $ 87,440,952 $ (5,168,004 ) $ - $ (3,586,184 ) $ (10,452,928 ) $ 68,233,836 $ 548,619 Name of Investment(3) Type of Investment Fair Value at
September 30,
2020 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized
Gain/(Loss) Fair Value at
March 31,
2021 Income Earned Controlled Investments MCC Senior Loan Strategy JV I LLC(1)(2) Equity 41,018,500 (39,739,930 ) 38,869,000 (40,147,570 ) - - NVTN LLC Senior Secured First Lien Term Loan 4,530,078 - - (84,981 ) - 4,445,097 Super Priority Senior Secured First Lien Term Loan 2,000,000 500,000 - (217,500 ) - 2,282,500 Total Controlled Investments $ 47,548,578 $ (39,239,930 ) $ - $ 38,566,519 $ (40,147,570 ) $ 6,727,597 $ Name of Investment(3) Type of Investment Fair Value at
September 30,
2019 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized
Gain/(Loss) Fair Value at
March 31,
2020 Income Earned Affiliated Investments 1888 Industrial Services, LLC Senior Secured First Lien Term Loan A $ 9,304,145 $ 168,923 $ — $ (9,473,068 ) $ — $ — $ 167,086 Senior Secured First Lien Term Loan B 5,886,892 — — (5,886,892 ) — — — Senior Secured First Lien Term Loan C 1,170,014 21,243 — (888,215 ) — 303,042 21,011 Senior Secured First Lien Term Loan D 224,456 8,087 — — — 232,543 8,084 Senior Secured First Lien Term Loan E — 838,174 — — — 838,174 28,042 Revolving Credit Facility 4,387,025 (945,461 ) — — — 3,441,564 132,413 Equity — — — — — — — Senior Secured First Name of Investment(3) Type of Investment Fair Value at
September 30,
2019 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized
Gain/(Loss) Fair Value at
March 31,
2020 Income Earned Affiliated Investments Access Media Holdings, LLC Lien Term Loan 2,509,089 — — (925,905 ) — 1,583,184 — Preferred Equity Series A — — — — — — — Preferred Equity Series AA — — — — — — — Preferred Equity Series AAA (100,800 ) — — — — (100,800 ) — Equity — — — — — — — Caddo Investors Holdings 1 LLC Equity 2,830,051 — — 42,392 — 2,872,443 — Dynamic Energy Services Senior Secured First International LLC Lien Term Loan 1,264,841 — — (423,010 ) — 841,831 — Revolving Credit Facility 545,103 (545,103 ) — — — — 6,692 Equity — — — — — — — Preferred Equity A- JFL-NGS Partners, LLC 2 20,150,684 (9,651,947 ) — — — 10,498,737 299,304 Preferred Equity A- 1 2,607,661 (1,249,040 ) — — — 1,358,621 38,732 Equity 19,096,371 — — 12,099,468 — 31,195,839 — Preferred Equity JFL-WCS Partners, LLC Class A 1,236,269 74,380 — — — 1,310,649 37,984 Equity 2,755,041 — — (451,960 ) — 2,303,081 — Senior Secured First Kemmerer Operations, LLC Lien Term Loan 1,766,511 137,264 — — — 1,903,775 137,321 Senior Secured First Lien Delayed Draw Term Loan 706,604 (228,088 ) — — — 478,516 43,003 Equity 962,717 — — — — 962,717 — Senior Secured First Path Medical, LLC Lien Term Loan 8,845,167 603,455 — (72,452 ) — 9,376,170 603,235 Senior Secured First Lien Term Loan A 3,047,473 190,063 — (7,113 ) — 3,230,423 189,987 Senior Secured First Lien Term Loan C 344,291 (196,835 ) — 97 — 147,553 14,887 Equity — — — — — — — Senior Secured First Path Medical, LLC Senior Secured First Lien Term Loan 8,845,167 603,455 — (72,452 ) — 9,376,170 603,235 Senior Secured First Lien Term Loan A 3,047,473 190,063 — (7,113 ) — 3,230,423 189,987 Senior Secured First Lien Term Loan C 344,291 (196,835 ) — 97 — 147,553 14,887 Equity — — — — — — — US Multifamily, LLC Senior Secured First Lien Term Loan 6,670,000 (909,463 ) — — — 5,760,537 325,921 Equity 3,330,000 — — 407,925 — 3,737,925 — Total Affiliated Investments $ 99,539,605 $ (11,684,348 ) $ — $ (5,578,733 ) $ — $ 82,276,524 $ 2,053,702 Controlled Investments Equity 69,948,970 — — (28,022,120 ) — 41,926,850 3,500,000 NVTN LLC Senior Secured First Lien Term Loan 4,255,990 2,309,885 — (2,035,797 ) — 4,530,078 62,840 Super Priority Senior Secured First Lien Term Loan — 1,995,374 — 4,626 — 2,000,000 1,983 Senior Secured First Lien Term Loan B 7,152,352 — — (7,152,352 ) — — — Senior Secured First Lien Term Loan C — — — — — — — Equity — — — — — — — TPG Plastics LLC Senior Secured Second Lien Term Loan 352,984 (352,984 ) — — — — 12,806 Unsecured Debt 278,810 (278,810 ) — — — — 6,876 Unsecured Debt 1,644,751 (1,630,312 ) — 1,672,398 (1,686,837 ) — — URT Acquisition Holdings Corporation Senior Secured Second Lien Term Loan 18,905,403 1,594,416 — (8,003,559 ) — 12,496,260 500,767 Preferred Equity 4,914,667 — — (4,914,667 ) — — — Equity — — — — — — — Total Controlled Investments $ 107,453,927 $ 3,637,569 $ — $ (48,451,471 ) $ (1,686,837 ) $ 60,953,188 $ 4,085,272 Type of Investment Fair Value at September 30, 2018 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized Gain/(Loss) Fair Value at March 31, 2019 Income Earned Affiliated Investments 1888 Industrial Services, LLC Senior Secured First Lien Term Loan A $ 8,984,232 $ — $ — $ — $ — $ 8,984,232 $ 344,796 Senior Secured First Lien Term Loan B 19,725,217 734,779 — (7,334,001 ) — 13,125,995 759,184 Revolving Credit Facility 3,593,693 (539,054 ) — — — 3,054,639 112,249 Equity — — — — — — — Access Media Holdings, LLC Senior Secured First Lien Term Loan 5,876,279 — — (510,963 ) — 5,365,316 — Preferred Equity Series A — — — — — — — Preferred Equity Series AA — — — — — — — Preferred Equity Series AAA (172,800 ) 72,000 — — — (100,800 ) — Equity — — — — — — — Brantley Transportation LLC Senior Secured First Lien Term Loan 2,882,800 — — (1,248,260 ) — 1,634,540 — Senior Secured First Lien Delayed Draw Term Loan 503,105 — — — — 503,105 18,817 Equity — — — — — — — Caddo Investors Holdings 1 LLC Equity 2,500,000 20,842 — 194,105 — 2,714,947 (61,927 ) Dynamic Energy Services International LLC Senior Secured First Lien Term Loan — — 7,824,975 (6,636,810 ) — 1,188,165 — Revolving Credit Facility — 585,858 1,322,001 — — 1,907,859 7,542 Equity — — — — — — — JFL-NGS Partners, LLC Preferred Equity A-2 31,468,755 — — — — 31,468,755 470,738 Preferred Equity A-1 4,072,311 — — — — 4,072,311 60,917 Equity 9,825,804 — — 8,367,519 — 18,193,323 — JFL-WCS Partners, LLC Preferred Equity Class A 1,166,292 69,978 — — — 1,236,270 35,641 Equity 215,116 — — 2,539,925 — 2,755,041 — Path Medical, LLC Senior Secured First Lien Term Loan — 856,808 7,821,824 (182,471 ) — 8,496,161 538,508 Senior Secured First Lien Term Loan A — 281,574 2,808,500 (162,846 ) — 2,927,228 171,909 Senior Secured First Lien Term Loan C — 688,926 — — — 688,926 36,208 Equity — — 499,751 (499,751 ) — — — US Multifamily, LLC Senior Secured First Lien Term Loan 6,670,000 — — — — 6,670,000 333,500 Equity 3,330,000 — — — — 3,330,000 — Total Affiliated Investments $ 100,640,804 $ 2,771,711 $ 20,277,051 $ (5,473,553 ) $ — $ 118,216,013 $ 2,828,082 Controlled Investments Capstone Nutrition Senior Secured First Lien Term Loan $ 12,657,663 $ — $ — $ (2,916,918 ) $ — $ 9,740,745 $ — Senior Secured First Lien Delayed Draw Term Loan 5,692,096 — — (1,311,725 ) — 4,380,371 — Senior Secured First Lien Incremental Delayed Draw 2,242,721 1,484,319 — — — 3,727,040 204,361 Equity - Class B and C Units — — — — — — — Equity - Common Units — — — — — — — Equity 78,370,891 — — (2,961,191 ) — 75,409,700 4,025,000 NVTN LLC Senior Secured First Lien Term Loan 4,005,990 250,000 — — — 4,255,990 132,703 Senior Secured First Lien Term Loan B 11,837,367 467,729 — (2,912,368 ) — 9,392,728 356,304 Senior Secured First Lien Term Loan C 7,479,397 90,657 — (7,570,054 ) — — — Equity — — — — — — — OmniVere, LLC Senior Secured First Lien Term Loan — — — 22,880,599 (22,880,599 ) — (2,822 ) Senior Secured First Lien Term Loan 1,374,048 661,225 — 2,963,001 (4,998,274 ) — — Unsecured Debt — — — 22,727,575 (22,727,575 ) — (2,205 ) Equity — — — 872,698 (872,698 ) — — TPG Plastics LLC Senior Secured Second Lien Term Loan 401,346 (28,295 ) — — — 373,051 14,925 Unsecured Debt 360,000 (12,780 ) — — (59,410 ) 287,810 13,667 Unsecured Debt 646,996 (646,996 ) — — — — 2,163 Equity 2,670,154 646,996 — (1,672,398 ) — 1,644,752 — URT Acquisition Holdings Corporation Senior Secured Second Lien Term Loan 15,112,754 2,318,082 — — — 17,430,836 862,128 Preferred Equity 5,850,795 702,095 — — — 6,552,890 371,091 Equity 12,937,518 — — (3,179,728 ) — 9,757,790 — Total Controlled Investments $ 161,639,736 $ 5,933,032 $ — $ 26,919,491 $ (51,538,556 ) $ 142,953,703 $ 5,977,315 Name of Investment(3) Type of Investment Fair Value at
September 30,
2019 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized
Gain/(Loss) Fair Value at
March 31,
2020 Income Earned Affiliated Investments US Multifamily, LLC Lien Term Loan 6,670,000 (909,463 ) — — — 5,760,537 325,921 Equity 3,330,000 — — 407,925 — 3,737,925 — Total Affiliated Investments $ 99,539,605 $ (11,684,348 ) $ — $ (5,578,733 ) — $ 82,276,524 $ 2,053,702 Name of Investment(3) Type of Investment Fair Value at
September 30,
2019 Purchases/(Sales) of or Advances/(Distributions) Transfers In/(Out) of Affiliates Unrealized Gain/(Loss) Realized
Gain/(Loss) Fair Value at
March 31,
2020 Income Earned Controlled Investments MCC Senior Loan Strategy JV I LLC (1)(2) Equity 69,948,970 — — (28,022,120 ) — 41,926,850 3,500,000 Senior Secured First NVTN LLC Lien Term Loan 4,255,990 2,309,885 — (2,035,797 ) — 4,530,078 62,840 Super Priority Senior Secured First Lien Term Loan — 1,995,374 — 4,626 — 2,000,000 1,983 Senior Secured First Lien Term Loan B 7,152,352 — — (7,152,352 ) — — — Senior Secured First Lien Term Loan C — — — — — — — Equity — — — — — — — Senior Secured Second Lien Term TPG Plastics LLC Loan 352,984 (352,984 ) — — — — 12,806 Unsecured Debt 278,810 (278,810 ) — — — — 6,876 Unsecured Debt 1,644,751 (1,630,312 ) — 1,672,398 (1,686,837 ) — — Senior Secured URT Acquisition Holdings Second Lien Term Corporation Loan 18,905,403 1,594,416 — (8,003,559 ) — 12,496,260 500,767 Preferred Equity 4,914,667 — — (4,914,667 ) — — — Equity — — — — — — — Total Controlled Investments $ 107,453,927 $ 3,637,569 $ — $ (48,451,471 ) $ (1,686,837 ) $ 60,953,188 $ 4,085,272 (1) The Company and Great American Life Insurance Company (“GALIC”) areGALIC were the members of MCC Senior Loan Strategy JV, I LLC (“MCC JV”), a joint venture formed as a Delaware limited liability company that iswas not consolidated by either member for financial reporting purposes. The members of MCC JV makemade capital contributions as investments by MCC JV arewere completed, and all portfolio and other material decisions regarding MCC JV must bewere submitted to MCC JV’s board of managers, which iswas comprised of an equal number of members appointed by each of the Company and GALIC. Approval of MCC JV’s board of managers requiresrequired the unanimous approval of a quorum of the board of managers, with a quorum consisting of equal representation of members appointed by each of the Company and GALIC. Because management of MCC JV iswas shared equally between the Company and GALIC, the Company doesdid not have operational control over the MCC JV for purposes of the 1940 Act or otherwise. On October 8, 2020, the Company, GALIC, MCC JV, and an affiliate of Golub entered into a Membership Interest Purchase Agreement pursuant to which a fund affiliated with and managed by Golub concurrently purchased all of the Company’s interest in MCC JV and all of GALIC’s interest in MCC JV.(2) Amount of income earned representsrepresented distributions from MCC JV to the Company and is a component of dividend income, net of provisional taxes in the Consolidated Statements of Operations.(3) The par amount and additional detail are shown in the consolidated scheduleConsolidated Schedule of investments.Investments.20202021 and 2019.2020. Transfers in/(out) of Affiliated Investments and Controlled Investments represent the fair value for the month an investment became or was removed as an Affiliated Investment or a Controlled Investment.Investment, as applicable. Income received from Affiliated Investments and Controlled Investments is included in total investment income on the Consolidated Statements of Operations for the three and six months ended March 31, 20202021 and 2019.2020.andor non-affiliate of the Company. At March 31, 2021, there were no participation agreements outstanding. At September 30, 2020, there were two participation agreements outstanding with an aggregate fair value of $5.0 million. At September 30, 2019, there were two participation agreements outstanding with an aggregate fair value of $6.5$6.8 million. The transfer of the participated portion of the investments met the criteria set forth in ASC 860, transferred investments have been isolated from the Company, and put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership,each participant has the right to pledge or exchange the transferred investments it received, and no condition both constrains the participant from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the Company; andthe Company, its consolidated affiliates or its agents do not maintain effective control over the transferred investments through either: (i) an agreement that entitles and/or obligates the Company to repurchase or redeem the assets before maturity, or (ii) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call.● transferred investments have been isolated from the Company, and put presumptively beyond the reach of the Company and its creditors, even in bankruptcy or other receivership, ● each participant has the right to pledge or exchange the transferred investments it received, and no condition both constrains the participant from taking advantage of its right to pledge or exchange and provides more than a trivial benefit to the Company; and ● the Company, its consolidated affiliates or its agents do not maintain effective control over the transferred investments through either: (i) an agreement that entitles and/or obligates the Company to repurchase or redeem the assets before maturity, or (ii) the ability to unilaterally cause the holder to return specific assets, other than through a cleanup call. During the three and six months ended March 31, 2019, the Company collected interest and principal payments on behalf of the participant in aggregate amounts of $1.0 million and $2.0 million, respectively. Under the terms of the participation agreements, the Company will collect and remit periodic payments to the participant equal to the participant'sparticipant’s proportionate share of any principal and interest payments received by the Company from the underlying investee companies.must bewere submitted to MCC JV’s board of managers, which iswas comprised of four members, two of whom arewere selected by the Company and the other two of whom arewere selected by GALIC. The Company has concluded that it doesdid not operationally control MCC JV. As the Company doesdid not operationally control MCC JV, it doesdid not consolidate the operations of MCC JV within the consolidated financial statements. As a practical expedient, the Company uses NAV to determine the value of its investment in MCC JV; therefore, this investment has been presented as a reconciling item within the fair value hierarchy (see Note 4). Investments held by MCC JV are measured at fair value using the same valuation methodologies as described in Note 2.As of March 31, 2020, MCC JV had total capital commitments of $100.0 million, with the Company providing $87.5 million and GALIC providing $12.5 million. Approximately $89.8 million was funded as of March 31, 2020 relating to these commitments, of which $78.6 million was from the Company. As of March 31, 2020, MCC JV’s board of managers had approved advances of capital of up to $0.3 million of the remaining capital commitments, of which $0.2 million is from the Company.March 31, 2020 and September 30, 2019,2020, there was approximately $179.3$111.3 million outstanding under the JV Facility.iswas increased to LIBOR (with a 0.00% floor) + 3.00% per annum.iswas approved by DB and the balance of all such investments sold is not greater than 30% of the adjusted balance of all loans as of the first date of each 12-month period and (ii) establish a target effective advance rate at various measurement dates during the amortization period. All principal collections willwere to be swept to amortize the amount outstanding under the JV Facility and interest collections willwere to be swept, as applicable, in order to meet the target effective advance rate for the applicable period.At andthe Company no longer held an investment in MCC JV at March 31, 2021. At September 30, 2019,2020, MCC JV had total investments at fair value of $208.2 million and $249.3 million, respectively.$163.1 million. As of March 31, 2020 and September 30, 2019,2020, MCC JV’s portfolio was comprised of senior secured first lien term loans to 60 and 61 borrowers, respectively.of 45 borrowers. As of March 31, 2020 and September 30, 2019,2020, certain investments in one portfolio company held by MCC JV were on non-accrual status.March 31, 2020 and September 30, 2019: March 31, 2020 September 30, 2019 $ 251,868,793 $ 261,170,437 6.30 % 7.17 % Number of borrowers in MCC JV 60 61 $ 10,769,072 $ 10,884,644 $ 43,058,680 $ 43,626,877 September 30,
2020 Senior secured loans(1) $ 182,514,110 Weighted average current interest rate on senior secured loans(2) 6.02 % Number of borrowers in MCC JV 45 Largest loan to a single borrower(1) $ 10,653,501 Total of five largest loans to borrowers(1) $ 39,191,213 (1) At par value. (2) Computed as the (a) annual stated interest rate on accruing senior secured loans, divided by (b) total senior secured loans at par. Company Industry Type of Investment Maturity Par
Amount Cost Fair Value(2) % of Net
Assets(3) 4Over International, LLC Media: Advertising, Printing & Publishing Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1) 6/7/2022 $ 10,653,501 $ 10,653,501 $ 9,995,115 16.8 % 10,653,501 10,653,501 9,995,115 Cardenas Markets LLC Retail Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1) 11/29/2023 5,293,750 5,269,829 5,287,398 8.9 % 5,293,750 5,269,829 5,287,398 CHA Consulting, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 4/10/2025 1,340,389 1,336,046 1,274,308 2.1 % Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 4/10/2025 592,500 592,500 563,290 0.9 % 1,932,889 1,928,546 1,837,598 Covenant Surgical Partners, Inc. Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.00%)(1) 7/1/2026 4,950,187 4,909,373 4,435,496 7.4 % 4,950,187 4,909,373 4,435,496 CT Technologies Intermediate Holdings, Inc. Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1) 12/1/2021 5,086,116 5,005,862 4,875,042 8.2 % 5,086,116 5,005,862 4,875,042 2020Company Industry Type of Investment Maturity Cost 4Over International, LLC Media: Advertising, Printing & Publishing 6/7/2022 10,769,072 10,769,072 9,939,854 20.7 % 10,769,072 10,769,072 9,939,854 Acrisure, LLC Banking, Finance, Insurance & Real Estate 2/15/2027 1,228,961 1,225,110 1,042,650 2.2 % 1,228,961 1,225,110 1,042,650 Callaway Golf Company Consumer Goods: Durable 1/4/2026 2,759,313 2,713,685 2,450,270 5.1 % 2,759,313 2,713,685 2,450,270 Cambrex Corporation Healthcare & Pharmaceuticals 12/4/2026 3,990,000 3,913,763 3,686,361 7.7 % 3,990,000 3,913,763 3,686,361 Cardenas Markets LLC Retail 11/29/2023 5,321,250 5,293,395 4,946,102 10.3 % 5,321,250 5,293,395 4,946,102 CHA Consulting, Inc. Construction & Building 4/10/2025 1,347,244 1,342,396 1,258,191 2.6 % 4/10/2025 595,500 595,500 556,137 1.2 % 1,942,744 1,937,896 1,814,328 Covenant Surgical Partners, Inc. Healthcare & Pharmaceuticals 7/1/2026 4,975,031 4,930,438 3,950,911 8.2 % 4,975,031 4,930,438 3,950,911 CT Technologies Intermediate Holdings, Inc. Healthcare & Pharmaceuticals 12/1/2021 4,110,324 4,061,412 3,192,078 6.7 % 4,110,324 4,061,412 3,192,078 Envision Healthcare Corporation Healthcare & Pharmaceuticals 10/10/2025 1,950,313 1,892,941 1,126,305 2.4 % 1,950,313 1,892,941 1,126,305 GC EOS Buyer, Inc. Automotive 8/1/2025 3,427,687 3,386,073 2,570,765 5.4 % 3,427,687 3,386,073 2,570,765 Company Industry Type of Investment Maturity Par
Amount Cost Fair Value(2) % of Net
Assets(3) Envision Healthcare Corporation Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1) 10/10/2025 1,940,438 1,888,530 1,397,503 2.3 % 1,940,438 1,888,530 1,397,503 GC EOS Buyer, Inc. Automotive Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 8/1/2025 1,420,440 1,404,814 1,304,532 2.2 % 1,420,440 1,404,814 1,304,532 GK Holdings, Inc. Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1) 1/20/2021 2,877,863 2,876,803 2,142,856 3.6 % 2,877,863 2,876,803 2,142,856 Glass Mountain Pipeline Holdings, LLC Energy: Oil & Gas Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 12/23/2024 4,850,625 4,839,587 2,601,390 4.4 % 4,850,625 4,839,587 2,601,390 Golden West Packaging Group LLC Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1) 6/20/2023 4,069,771 4,069,771 3,968,027 6.7 % 4,069,771 4,069,771 3,968,027 High Ridge Brands Co. Consumer Goods: Non-Durable Senior Secured First Lien Term Loan (LIBOR + 7.00%, 1.00% LIBOR Floor)(1)(4) 6/30/2022 1,732,439 1,724,570 593,187 1.0 % 1,732,439 1,724,570 593,187 Highline Aftermarket Acquisitions, LLC Automotive Senior Secured First Lien Term Loan (LIBOR + 3.50%, 1.00% LIBOR Floor)(1) 4/26/2025 4,025,000 4,016,286 3,597,545 6.0 % 4,025,000 4,016,286 3,597,545 Infogroup, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1) 4/3/2023 4,825,000 4,804,770 4,224,770 7.1 % 4,825,000 4,804,770 4,224,770 Intermediate LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1) 7/1/2026 2,722,500 2,708,089 2,513,684 4.2 % 2,722,500 2,708,089 2,513,684 Company Industry Type of Investment Maturity Par
Amount Cost Fair Value(2) % of Net
Assets(3) Isagenix International, LLC Wholesale Senior Secured First Lien Term Loan (LIBOR + 5.75%, 1.00% LIBOR Floor)(1) 6/16/2025 2,626,629 2,616,715 1,337,742 2.2 % 2,626,629 2,616,715 1,337,742 IXS Holdings, Inc. Automotive Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1) 3/5/2027 994,874 985,714 981,543 1.6 % 994,874 985,714 981,543 Keystone Acquisition Corp. Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1) 5/1/2024 6,099,815 6,040,757 5,505,083 9.2 % 6,099,815 6,040,757 5,505,083 KNB Holdings Corporation Consumer Goods: Durable Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1) 4/26/2024 4,743,170 4,694,643 1,992,131 3.3 % 4,743,170 4,694,643 1,992,131 Liason Acquisition, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 12/20/2026 3,466,288 3,458,579 3,372,351 5.7 % 3,466,288 3,458,579 3,372,351 LifeMiles Ltd. Services: Consumer Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1) 8/18/2022 4,229,263 4,220,573 3,880,349 6.5 % 4,229,263 4,220,573 3,880,349 Company Industry Type of Investment Maturity Cost GK Holdings, Inc. Services: Business 1/20/2021 2,893,130 2,890,323 2,406,216 5.0 % 2,893,130 2,890,323 2,406,216 Glass Mountain Pipeline Holdings, LLC Energy: Oil & Gas 12/23/2024 4,875,500 4,863,091 2,888,734 6.0 % 4,875,500 4,863,091 2,888,734 Golden West Packaging Group LLC Forest Products & Paper 6/20/2023 4,092,193 4,092,193 3,793,872 7.9 % 4,092,193 4,092,193 3,793,872 High Ridge Brands Co. Consumer Goods: Non-Durable 6/30/2022 1,732,439 1,722,313 598,211 1.2 % 4/18/2020 86,311 85,849 86,311 0.2 % 4/18/2020 86,311 86,311 86,311 0.2 % 1,905,061 1,894,473 770,833 Highline Aftermarket Acquisitions, LLC Automotive 4/26/2025 4,045,588 4,035,870 3,335,183 7.0 % 4,045,588 4,035,870 3,335,183 The Imagine Group, LLC Media: Advertising, Printing & Publishing 6/21/2022 7,760,000 7,725,206 1,435,600 3.0 % 7,760,000 7,725,206 1,435,600 Infogroup, Inc. High Tech Industries 4/3/2023 4,850,000 4,825,571 3,857,690 8.1 % 4,850,000 4,825,571 3,857,690 Intermediate LLC High Tech Industries 7/1/2026 2,736,250 2,720,504 2,416,930 5.0 % 2,736,250 2,720,504 2,416,930 Isagenix International, LLC Wholesale 6/16/2025 2,711,859 2,700,534 950,235 2.0 % 2,711,859 2,700,534 950,235 IXS Holdings, Inc. Automotive 3/5/2027 3,000,000 2,970,224 2,970,000 6.2 % 3,000,000 2,970,224 2,970,000 Jordan Health Products I, Inc. Healthcare & Pharmaceuticals 5/15/2025 5,155,539 5,098,620 2,909,271 6.1 % 5,155,539 5,098,620 2,909,271 Keystone Acquisition Corp. Healthcare & Pharmaceuticals 5/1/2024 6,131,257 6,063,596 5,552,466 11.6 % 6,131,257 6,063,596 5,552,466 KNB Holdings Corporation Consumer Goods: Durable 4/26/2024 4,807,267 4,751,198 2,635,824 5.5 % 4,807,267 4,751,198 2,635,824 Company Industry Type of Investment Maturity Par
Amount Cost Fair Value(2) % of Net
Assets(3) Manna Pro Products, LLC Consumer Goods: Non-Durable Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1) 12/8/2023 2,998,542 2,998,542 2,875,002 4.8 % Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1) 12/8/2023 608,958 608,958 583,869 1.0 % 3,607,500 3,607,500 3,458,871 Mileage Plus Holdings, LLC Transportation: Consumer Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1) 6/21/2027 4,401,819 4,407,746 4,475,769 7.5 % 4,401,819 4,407,746 4,475,769 NGS US Finco, LLC Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1) 10/1/2025 2,943,223 2,932,700 2,755,445 4.6 % 2,943,223 2,932,700 2,755,445 Northern Star Industries, Inc. Capital Equipment Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 3/28/2025 4,143,750 4,130,394 3,630,754 6.1 % 4,143,750 4,130,394 3,630,754 Offen, Inc. Transportation: Cargo Senior Secured First Lien Term Loan (LIBOR + 5.00%)(1) 6/22/2026 3,626,659 3,596,886 3,494,880 5.9 % 3,626,659 3,596,886 3,494,880 Patriot Rail Company LLC Transportation: Cargo Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1) 10/19/2026 1,741,250 1,711,104 1,730,454 2.9 % 1,741,250 1,711,104 1,730,454 PetroChoice Holdings, Inc. Chemicals, Plastics and Rubber Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1) 8/19/2022 6,279,803 6,270,073 5,418,842 9.1 % 6,279,803 6,270,073 5,418,842 Port Townsend Holdings Company, Inc. Forest Products & Paper Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1) 4/3/2024 2,945,600 2,928,240 2,632,777 4.4 % 2,945,600 2,928,240 2,632,777 PT Network, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor, 2% PIK)(1)(5) 11/30/2023 4,955,627 4,638,237 4,460,064 7.5 % Class C Common Stock 1 — — 4,955,628 4,638,237 4,460,064 Company Industry Type of Investment Maturity Par
Amount Cost Fair Value(2) % of Net
Assets(3) PVHC Holding Corp Containers, Packaging and Glass Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1) 8/5/2024 1,952,427 1,946,107 1,850,511 3.1 % 1,952,427 1,946,107 1,850,511 Quartz Holding Company High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.00%, 1.00% LIBOR Floor)(1) 4/2/2026 3,936,357 3,924,382 3,847,789 6.5 % 3,936,357 3,924,382 3,847,789 RB Media, Inc. Media: Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 8/29/2025 5,651,270 5,620,482 5,605,495 9.4 % 5,651,270 5,620,482 5,605,495 Salient CRGT Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 6.00%, 1.00% LIBOR Floor)(1) 2/28/2022 2,533,036 2,518,601 2,343,058 3.9 % 2,533,036 2,518,601 2,343,058 SFP Holding, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1) 9/1/2022 4,776,954 4,739,017 4,733,961 7.9 % Senior Secured First Lien Term Loan (LIBOR + 6.25%, 1.00% LIBOR Floor)(1) 9/1/2022 1,852,521 1,852,521 1,835,849 3.1 % 6,629,475 6,591,538 6,569,810 Shift4 Payments, LLC Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 11/29/2024 7,304,819 7,283,042 7,255,877 12.2 % 7,304,819 7,283,042 7,255,877 Simplified Logistics, LLC Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1) 2/27/2022 3,447,500 3,447,500 3,358,899 5.6 % 3,447,500 3,447,500 3,358,899 Syniverse Holdings, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.00%, 1.00% LIBOR Floor)(1) 3/9/2023 2,905,253 2,891,007 2,229,200 3.7 % 2,905,253 2,891,007 2,229,200 The Octave Music Group, Inc. Media: Diversified & Production Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1) 5/29/2025 5,896,552 5,844,063 5,071,034 8.5 % 5,896,552 5,844,063 5,071,034 Company Industry Type of Investment Maturity Cost Liaison Acquisition, LLC High Tech Industries 12/20/2026 6,483,750 6,468,169 5,973,479 12.5 % 6,483,750 6,468,169 5,973,479 LifeMiles Ltd. Services: Consumer 8/18/2022 4,533,162 4,521,367 3,615,197 7.5 % 4,533,162 4,521,367 3,615,197 Manna Pro Products, LLC Consumer Goods: Non-Durable 12/8/2023 3,013,958 3,013,958 2,753,854 5.7 % 12/8/2023 612,042 612,042 559,222 1.2 % 3,626,000 3,626,000 3,313,076 MediaOcean Media: Advertising, Printing & Publishing 8/18/2025 1,750,000 1,745,879 1,627,500 3.4 % 1,750,000 1,745,879 1,627,500 NGS US Finco, LLC Capital Equipment 10/1/2025 2,962,500 2,950,847 2,495,906 5.2 % 2,962,500 2,950,847 2,495,906 Northern Star Industries, Inc. Capital Equipment 3/28/2025 4,165,000 4,150,077 3,347,411 7.0 % 4,165,000 4,150,077 3,347,411 Nuvei Technologies Corp. Banking, Finance, Insurance & Real Estate 9/29/2025 3,447,677 3,420,141 3,155,658 6.6 % 9/29/2025 505,053 505,053 462,275 1.0 % 9/29/2025 696,620 696,620 637,617 1.3 % 4,649,350 4,621,814 4,255,550 Offen, Inc. Transportation: Cargo 6/22/2026 3,645,022 3,612,479 3,389,935 7.1 % 3,645,022 3,612,479 3,389,935 Patriot Rail Company LLC Transportation: Cargo 10/19/2026 1,750,000 1,717,193 1,570,975 3.3 % 1,750,000 1,717,193 1,570,975 Peraton Corp. Aerospace and Defense 4/29/2024 3,389,015 3,379,106 3,179,913 6.6 % 3,389,015 3,379,106 3,179,913 PetroChoice Holdings, Inc. Chemicals, Plastics and Rubber 8/19/2022 6,312,851 6,301,740 5,212,521 10.9 % 6,312,851 6,301,740 5,212,521 Phoenix Guarantor Inc. Healthcare & Pharmaceuticals 3/5/2026 3,970,050 3,917,313 3,422,620 7.1 % 3,970,050 3,917,313 3,422,620 Company Industry Type of Investment Maturity Cost Port Townsend Holdings Company, Inc. Forest Products & Paper 4/3/2024 2,960,962 2,941,018 2,641,177 5.5 % 2,960,962 2,941,018 2,641,177 PT Network, LLC Healthcare & Pharmaceuticals 11/30/2023 4,930,040 4,612,650 4,437,036 9.3 % Class C Common Stock 1 — — 4,930,041 4,612,650 4,437,036 PVHC Holding Corp Containers, Packaging and Glass 8/5/2024 1,962,389 1,955,207 1,615,607 3.4 % 1,962,389 1,955,207 1,615,607 Quartz Holding Company High Tech Industries 4/2/2026 6,450,006 6,428,599 5,906,916 12.3 % 6,450,006 6,428,599 5,906,916 RB Media, Inc. Media: Diversified & Production 8/29/2025 3,957,985 3,927,322 3,411,387 7.1 % 3,957,985 3,927,322 3,411,387 Rough Country, LLC Automotive 5/25/2023 3,839,912 3,826,317 3,477,425 7.3 % 3,839,912 3,826,317 3,477,425 Safe Fleet Holdings LLC Automotive 2/3/2025 1,684,453 1,697,405 1,530,982 3.2 % 2/3/2025 1,329,133 1,285,877 1,201,802 2.5 % 3,013,586 2,983,282 2,732,784 Salient CRGT Inc. High Tech Industries 2/28/2022 2,608,036 2,587,903 2,318,805 4.8 % 2,608,036 2,587,903 2,318,805 SCS Holdings I Inc. Wholesale 7/1/2026 2,233,153 2,227,757 1,941,503 4.1 % 2,233,153 2,227,757 1,941,503 SFP Holding, Inc. Construction & Building 9/1/2022 4,798,779 4,750,714 4,648,098 9.7 % 9/1/2022 1,861,878 1,861,878 1,803,415 3.8 % 6,660,657 6,612,592 6,451,513 Shift4 Payments, LLC Banking, Finance, Insurance & Real Estate 11/29/2024 9,775,000 9,742,353 9,199,253 19.2 % 9,775,000 9,742,353 9,199,253 Sierra Enterprises, LLC Beverage & Food 11/11/2024 3,899,099 3,890,735 3,659,695 7.6 % 3,899,099 3,890,735 3,659,695 Company Industry Type of Investment Maturity Cost Simplified Logistics, LLC Services: Business 2/27/2022 3,465,000 3,465,000 3,260,219 6.8 % 3,465,000 3,465,000 3,260,219 Syniverse Holdings, Inc. High Tech Industries 3/9/2023 2,920,152 2,902,888 1,863,641 3.9 % 2,920,152 2,902,888 1,863,641 The Octave Music Group, Inc. Media: Diversified & Production 5/28/2021 6,000,000 5,940,847 5,428,800 11.3 % 6,000,000 5,940,847 5,428,800 ThoughtWorks, Inc. High Tech Industries 10/11/2024 6,641,146 6,621,847 5,749,240 12.0 % 6,641,146 6,621,847 5,749,240 Tortoise Borrower LLC Banking, Finance, Insurance & Real Estate 1/31/2025 2,425,500 2,417,100 2,073,075 4.3 % 2,425,500 2,417,100 2,073,075 United Road Services, Inc. Transportation: Cargo 9/2/2024 3,699,998 3,688,038 2,869,718 6.0 % 3,699,998 3,688,038 2,869,718 Vero Parent, Inc. High Tech Industries 8/16/2024 3,895,700 3,874,200 3,076,045 6.4 % 3,895,700 3,874,200 3,076,045 Wawona Delaware Holdings, LLC Beverage & Food 9/11/2026 4,950,125 4,904,391 4,251,662 8.9 % 4,950,125 4,904,391 4,251,662 Wheels Up Partners LLC Aerospace & Defense 10/15/2021 3,204,578 3,166,354 2,942,443 6.1 % 3,204,578 3,166,354 2,942,443 Wok Holdings Inc. Retail 3/1/2026 6,583,500 6,534,701 4,542,615 9.5 % 6,583,500 6,534,701 4,542,615 Wrench Group LLC Services: Consumer 4/30/2026 2,214,516 2,196,698 2,068,451 4.3 % 4/30/2026 227,513 225,267 215,341 0.4 % 2,442,029 2,421,965 2,283,792 Xebec Global Holdings, LLC High Tech Industries 2/12/2024 8,093,951 8,093,951 7,633,405 15.9 % 8,093,951 8,093,951 7,633,405 Z Medica, LLC Healthcare & Pharmaceuticals 9/29/2022 2,581,250 2,581,250 2,419,148 5.0 % 2,581,250 2,581,250 2,419,148 Total Investments, March 31, 2020 $ 251,868,794 $ 250,115,439 $ 208,233,465 434.5 % Company Industry Type of Investment Maturity Par
Amount Cost Fair Value(2) % of Net
Assets(3) ThoughtWorks, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 3.75%, 1.00% LIBOR Floor)(1) 10/11/2024 2,627,704 2,620,849 2,585,136 4.3 % 2,627,704 2,620,849 2,585,136 Vero Parent, Inc. High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 4.50%, 1.00% LIBOR Floor)(1) 8/16/2024 3,875,924 3,856,982 3,813,522 6.4 % 3,875,924 3,856,982 3,813,522 Wawona Delaware Holdings, LLC Beverage & Food Senior Secured First Lien Term Loan (LIBOR + 4.75%, 1.00% LIBOR Floor)(1) 9/11/2026 945,350 937,295 912,358 1.5 % 945,350 937,295 912,358 Wheels Up Partners LLC Aerospace & Defense Senior Secured First Lien Term Loan (LIBOR + 8.55%, 1.00% LIBOR Floor)(1) 10/15/2021 1,509,917 1,497,761 1,509,917 2.5 % 1,509,917 1,497,761 1,509,917 Wok Holdings Inc. Retail Senior Secured First Lien Term Loan (LIBOR + 6.50%, 1.00% LIBOR Floor)(1) 3/1/2026 6,550,249 6,505,809 4,864,216 8.2 % 6,550,249 6,505,809 4,864,216 Wrench Group LLC Services: Consumer Senior Secured First Lien Term Loan (LIBOR + 4.25%, 1.00% LIBOR Floor)(1) 4/30/2026 2,942,820 2,920,082 2,834,231 4.8 % 2,942,820 2,920,082 2,834,231 Xebec Global Holdings, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.25%, 1.00% LIBOR Floor)(1) 2/12/2024 8,053,168 8,053,168 8,053,168 13.5 % 8,053,168 8,053,168 8,053,168 Z Medica, LLC Healthcare & Pharmaceuticals Senior Secured First Lien Term Loan (LIBOR + 5.50%, 1.00% LIBOR Floor)(1) 9/29/2022 2,566,500 2,566,500 2,528,002 4.3 % 2,566,500 2,566,500 2,528,002 Total Investments, September 30, 2020 $ 182,514,111 $ 181,365,360 $ 163,133,421 273.5 % (1) Represents the annual current interest rate as of March 31,September 30, 2020. All interest rates are payable in cash, unless otherwise noted.(2) Represents the fair value in accordance with ASC 820 as reported by MCC JV. The determination of such fair value is not included in the Company’s board of directors’ valuation process described elsewhere herein. (3) Percentage is based on MCC JV'sJV’s net assets of $47,916,400$59,617,800 as of March 31,September 30, 2020.(4) This investment was on non-accrual status as of March 31,September 30, 2020.(5) Par amount includes accumulated PIK interest and is net of repayments. Loan Portfolio as of September 30, 2019Company Industry Type of Investment Maturity Cost 4Over International, LLC Media: Advertising, Printing & Publishing 6/7/2022 $ 10,884,644 $ 10,884,644 $ 10,635,385 13.3 % 10,884,644 10,884,644 10,635,385 Acrisure, LLC Banking, Finance, Insurance & Real Estate 11/22/2023 724,217 722,980 720,162 0.9 % 724,217 722,980 720,162 AL Midcoast Holdings, LLC Energy: Oil & Gas 8/1/2025 4,330,542 4,297,473 4,246,963 5.3 % 4,330,542 4,297,473 4,246,963 Brightspring Health Services Healthcare & Pharmaceuticals 3/5/2026 3,990,000 3,941,288 3,990,000 5.0 % 3,990,000 3,941,288 3,990,000 Callaway Golf Company Consumer Goods: Durable 1/4/2026 2,774,187 2,724,326 2,801,929 3.5 % 2,774,187 2,724,326 2,801,929 Cardenas Markets LLC Retail 11/29/2023 5,348,750 5,316,921 5,172,776 6.5 % 5,348,750 5,316,921 5,172,776 CHA Consulting, Inc. Construction & Building 4/10/2025 1,354,100 1,348,742 1,324,581 1.7 % 4/10/2025 598,500 598,500 584,908 0.7 % 1,952,600 1,947,242 1,909,489 Covenant Surgical Partners, Inc. Healthcare & Pharmaceuticals 7/1/2026 5,000,000 4,951,590 4,940,000 6.2 % 5,000,000 4,951,590 4,940,000 CT Technologies Intermediate Holdings, Inc. Healthcare & Pharmaceuticals 12/1/2021 4,131,900 4,067,981 3,770,359 4.7 % 4,131,900 4,067,981 3,770,359 Envision Healthcare Corporation Healthcare & Pharmaceuticals 10/10/2025 1,960,188 1,897,299 1,594,220 2.0 % 1,960,188 1,897,299 1,594,220 GC EOS Buyer, Inc. Automotive 8/1/2025 3,445,086 3,399,335 3,400,989 4.3 % 3,445,086 3,399,335 3,400,989 GK Holdings, Inc. Services: Business 1/20/2021 2,908,397 2,903,827 2,641,697 3.3 % 2,908,397 2,903,827 2,641,697 Glass Mountain Pipeline Holdings, LLC Energy: Oil & Gas 12/23/2024 4,900,375 4,886,582 4,618,604 5.8 % 4,900,375 4,886,582 4,618,604 Company Industry Type of Investment Maturity Cost Golden West Packaging Group LLC Forest Products & Paper 6/20/2023 4,188,348 4,188,348 4,163,637 5.2 % 4,188,348 4,188,348 4,163,637 High Ridge Brands Co. Consumer Goods: Non-Durable 6/30/2022 1,818,750 1,805,750 1,421,353 1.8 % 1,818,750 1,805,750 1,421,353 Highline Aftermarket Acquisitions, LLC Automotive 4/26/2025 4,066,176 4,055,443 3,601,412 4.5 % 4,066,176 4,055,443 3,601,412 The Imagine Group, LLC Media: Advertising, Printing & Publishing 6/21/2022 7,800,000 7,757,145 5,187,780 6.5 % 7,800,000 7,757,145 5,187,780 Infogroup, Inc. High Tech Industries 4/3/2023 4,875,000 4,846,330 4,748,738 5.9 % 4,875,000 4,846,330 4,748,738 Intermedia Holdings, Inc. High Tech Industries 7/21/2025 2,977,500 2,952,588 2,973,034 3.7 % 2,977,500 2,952,588 2,973,034 Intermediate LLC High Tech Industries 7/1/2026 2,750,000 2,732,906 2,732,400 3.4 % 2,750,000 2,732,906 2,732,400 Isagenix International, LLC Wholesale 6/16/2025 2,788,268 2,775,502 2,115,738 2.6 % 2,788,268 2,775,502 2,115,738 Jackson Hewitt Tax Service Inc. Services: Consumer 5/31/2023 5,850,000 5,850,000 5,811,390 7.3 % 5,850,000 5,850,000 5,811,390 Jordan Health Products I, Inc. Healthcare & Pharmaceuticals 5/15/2025 5,181,776 5,118,971 4,378,601 5.5 % 5,181,776 5,118,971 4,378,601 Keystone Acquisition Corp. Healthcare & Pharmaceuticals 5/1/2024 6,162,699 6,086,349 5,972,888 7.5 % 6,162,699 6,086,349 5,972,888 KNB Holdings Corporation Consumer Goods: Durable 4/26/2024 4,871,364 4,807,569 3,975,033 5.0 % 4,871,364 4,807,569 3,975,033 LifeMiles Ltd. Services: Consumer 8/18/2022 4,836,393 4,821,161 4,759,978 6.0 % 4,836,393 4,821,161 4,759,978 Company Industry Type of Investment Maturity Cost Manna Pro Products, LLC Consumer Goods: Non-Durable 12/8/2023 3,029,375 3,029,375 2,880,027 3.6 % 12/8/2023 615,125 615,125 584,799 0.7 % 3,644,500 3,644,500 3,464,826 New Media Holdings II LLC Media: Advertising, Printing & Publishing 7/14/2022 2,446,853 2,443,556 2,442,205 3.1 % 2,446,853 2,443,556 2,442,205 NGS US Finco, LLC Capital Equipment 10/1/2025 2,977,500 2,964,722 2,903,360 3.6 % 2,977,500 2,964,722 2,903,360 Northern Star Industries, Inc. Capital Equipment 3/28/2025 4,186,250 4,169,745 3,984,054 5.0 % 4,186,250 4,169,745 3,984,054 Nuvei Technologies Corp. Banking, Finance, Insurance & Real Estate 9/29/2025 3,543,616 3,512,593 3,477,350 4.3 % 9/29/2025 519,107 519,107 509,399 0.6 % 9/29/2025 716,005 716,005 702,616 0.9 % 4,778,728 4,747,705 4,689,365 Offen, Inc. Transportation: Cargo 6/22/2026 3,663,385 3,628,046 3,613,477 4.5 % 3,663,385 3,628,046 3,613,477 Peraton Corp. Aerospace and Defense 4/29/2024 3,406,439 3,395,256 3,384,979 4.2 % 3,406,439 3,395,256 3,384,979 PetroChoice Holdings, Inc. Chemicals, Plastics and Rubber 8/19/2022 6,345,900 6,333,392 6,092,064 7.6 % 6,345,900 6,333,392 6,092,064 Port Townsend Holdings Company, Inc. Forest Products & Paper 4/3/2024 3,041,842 3,018,790 2,992,564 3.7 % 3,041,842 3,018,790 2,992,564 PT Network, LLC Healthcare & Pharmaceuticals 11/30/2023 4,880,028 4,562,638 4,562,338 5.7 % Class C Common Stock 1 — — 4,880,029 4,562,638 4,562,338 PVHC Holding Corp Containers, Packaging and Glass 8/5/2024 1,972,350 1,964,300 1,912,137 2.4 % 1,972,350 1,964,300 1,912,137 Quantum Spatial, Inc. Aerospace & Defense 9/5/2024 5,000,000 5,000,000 5,000,000 6.3 % 5,000,000 5,000,000 5,000,000 Company Industry Type of Investment Maturity Cost Quartz Holding Company High Tech Industries 4/2/2026 6,982,500 6,957,391 6,885,443 8.6 % 6,982,500 6,957,391 6,885,443 RB Media, Inc. Media: Diversified & Production 8/29/2025 3,960,000 3,926,377 3,960,000 5.0 % 3,960,000 3,926,377 3,960,000 Rough Country, LLC Automotive 5/25/2023 4,080,727 4,063,983 4,014,619 5.0 % 4,080,727 4,063,983 4,014,619 Safe Fleet Holdings LLC Automotive 2/3/2025 3,422,875 3,417,582 3,297,255 4.1 % 2/3/2025 1,335,880 1,288,373 1,288,055 1.6 % 4,758,755 4,705,955 4,585,310 Salient CRGT Inc. High Tech Industries 2/28/2022 2,645,536 2,619,767 2,503,471 3.1 % 2,645,536 2,619,767 2,503,471 SCS Holdings I Inc. Wholesale 7/1/2026 2,244,375 2,238,962 2,249,986 2.8 % 2,244,375 2,238,962 2,249,986 SFP Holding, Inc. Construction & Building 9/1/2022 4,820,605 4,762,317 4,775,291 6.0 % 9/1/2022 1,871,234 1,871,234 1,853,644 2.3 % 6,691,839 6,633,551 6,628,935 Shift4 Payments, LLC Banking, Finance, Insurance & Real Estate 11/29/2024 9,825,000 9,788,662 9,825,000 12.3 % 9,825,000 9,788,662 9,825,000 Sierra Enterprises, LLC Beverage & Food 11/11/2024 3,918,993 3,909,644 3,821,018 4.8 % 3,918,993 3,909,644 3,821,018 Simplified Logistics, LLC Services: Business 2/27/2022 3,482,500 3,482,500 3,482,500 4.4 % 3,482,500 3,482,500 3,482,500 SMB Shipping Logistics, LLC Transportation: Cargo 2/5/2024 2,465,807 2,446,381 2,453,478 3.1 % 2,465,807 2,446,381 2,453,478 Syniverse Holdings, Inc. High Tech Industries 3/9/2023 3,935,050 3,907,819 3,695,799 4.6 % 3,935,050 3,907,819 3,695,799 The Octave Music Group, Inc. Media: Diversified & Production 5/28/2021 4,348,644 4,348,644 4,325,596 5.4 % 4,348,644 4,348,644 4,325,596 Company Industry Type of Investment Maturity Cost ThoughtWorks, Inc. High Tech Industries 10/11/2024 6,674,943 6,659,353 6,674,943 8.3 % 6,674,943 6,659,353 6,674,943 Tortoise Borrower LLC Banking, Finance, Insurance & Real Estate 1/31/2025 2,437,875 2,428,557 2,392,287 3.0 % 2,437,875 2,428,557 2,392,287 United Road Services, Inc. Transportation: Cargo 9/2/2024 3,759,999 3,746,467 3,699,087 4.6 % 3,759,999 3,746,467 3,699,087 Vero Parent, Inc. High Tech Industries 8/16/2024 3,915,475 3,891,393 3,886,109 4.9 % 3,915,475 3,891,393 3,886,109 Wawona Delaware Holdings, LLC Beverage & Food 9/11/2026 4,975,000 4,925,465 4,925,250 6.2 % 4,975,000 4,925,465 4,925,250 Wheels Up Partners LLC Aerospace & Defense 10/15/2021 3,633,328 3,575,903 3,569,381 4.5 % 3,633,328 3,575,903 3,569,381 Wok Holdings Inc. Retail 3/1/2026 6,616,750 6,563,551 5,599,756 7.0 % 6,616,750 6,563,551 5,599,756 Wrench Group LLC Services: Consumer 4/30/2026 2,225,672 2,208,221 2,225,672 2.8 % 2,225,672 2,208,221 2,225,672 Xebec Global Holdings, LLC High Tech Industries 2/12/2024 8,134,734 8,134,734 8,114,397 10.1 % 8,134,734 8,134,734 8,114,397 Z Medica, LLC Healthcare & Pharmaceuticals 9/29/2022 2,596,000 2,596,000 2,498,910 3.1 % 2,596,000 2,596,000 2,498,910 Total Investments, September 30, 2019 $ 266,050,466 $ 259,371,480 $ 249,342,871 311.9 % (1)Represents the annual current interest rate as of September 30, 2019. All interest rates are payable in cash, unless otherwise noted.(2)Represents the fair value in accordance with ASC 820 as reported by MCC JV. The determination of such fair value is not included in the Company’s board of directors’ valuation process described elsewhere herein.(3)Percentage is based on MCC JV's net assets of $79,941,680 as of September 30, 2019.(4)This investment was on non-accrual status as of September 30, 2019.(5)Par amount includes accumulated PIK interest and is net of repayments.March 31, 2020 and September 30, 2019,2020, and for the three and six months ended March 31, 2020 and 2019: March 31, 2020 September 30, 2019 (unaudited) Selected Consolidated Statement of Assets and Liabilities Information: Investments in loans at fair value (amortized cost of $250,115,439 and $259,371,480, respectively) $ 208,233,465 $ 249,342,871 Cash 17,260,050 8,007,466 Other assets 983,359 1,466,352 Total assets $ 226,476,874 $ 258,816,689 Line of credit (net of debt issuance costs of $1,780,852 and $1,552,067, respectively) $ 177,499,148 $ 177,694,223 Other liabilities 376,305 472,737 Interest payable 685,021 708,049 Total liabilities 178,560,474 178,875,009 Members' capital 47,916,400 79,941,680 Total liabilities and members' capital $ 226,476,874 $ 258,816,689 For the three months ended March 31 For the six months ended March 31 2020 2019 2020 2019 (unaudited) (unaudited) (unaudited) (unaudited) Selected Consolidated Statement of Operations Information: Total revenues $ 4,396,530 $ 5,143,154 $ 9,183,384 $ 10,120,425 Total expenses (2,587,114 ) (2,748,463 ) (5,321,348 ) (5,431,559 ) Net unrealized appreciation/(depreciation) (27,265,785 ) (806,438 ) (31,853,365 ) (2,724,275 ) Net realized gain/(loss) (4,915 ) 49,381 (33,951 ) (742,113 ) Net income/(loss) $ (25,461,284 ) $ 1,637,634 $ (28,025,280 ) $ 1,222,478 September 30,
2020 Selected Consolidated Statement of Assets and Liabilities Information: Investments in loans at fair value (amortized cost of $181,365,360) $ 163,133,421 Cash 6,055,178 Other assets 1,148,102 Total assets $ 170,336,701 Line of credit (net of debt issuance costs of $1,574,115) $ 109,745,367 Other liabilities 424,095 Interest payable 549,439 Total liabilities 110,718,901 Members’ capital 59,617,800 Total liabilities and members’ capital $ 170,336,701 For the
three months
ended
March 31, For the
six months
ended
March 31, 2020 2020 (unaudited) (unaudited) Selected Consolidated Statement of Operations Information: Total revenues $ 4,396,530 $ 9,183,384 Total expenses (2,587,114) (5,321,348) Net unrealized appreciation/(depreciation) (27,265,785) (31,853,365) Net realized gain/(loss) (4,915) (33,951) Net income/(loss) $ (25,461,284) $ (28,025,280) In accordance with Rules 3-094-08(g)determined that it had no significant subsidiaries as of Regulation S-X, the Company must determine which of its unconsolidated Control Investments, if any, are considered “significant subsidiaries.” In evaluating these investments, there are three tests utilized to determine if any Controlled Investments are considered significant subsidiaries: the investment test, the asset test and the income test. Rule 3-09 of Regulation S-X requires the Company to include separate audited financial statements of any unconsolidated majority-owned subsidiary (Control Investments in which the Company owns greater than 50% of the voting securities) in the Company's annual report on Form 10-K if any of the three tests exceed 20%. Rule 4-08(g) of Regulation S-X requires summarized financial information of Control Investments in the Company's annual report on Form 10-K if any of the three tests exceeds 10%, and summarized financial information in the Company's quarterly report on Form 10-Q if any of the three tests exceeds 20% pursuant to Rule 10-01(b)(1) of Regulation S-X.After performing the income analysis for the six months ended March 31, 2020, excluding MCC JV, the Company had no single Control Investment which would be deemed2021.be a significant subsidiary pursuant to Rule 10-01(b)(1) of Regulation S-X.The Company also determined that the assets of MCC JV represented greater than 20% of its total assets and also generated more than 20% of the Company’s total income primarily due to dividend income. Accordingly, the related summary financial information is presented in the “MCC Senior Loan Strategy JV I LLC” heading above.Level 1 - Valuations based on 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 included in Level 1, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non-active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities.Level 3 - Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include debt and equity investments in private companies or assets valued using the Market or Income Approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence.● Level 1 - Valuations based on 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 included in Level 1, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in non-active markets including actionable bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities. ● Level 3 - Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and are based upon management’s assessment of the assumptions that market participants would use in pricing the assets or liabilities. These investments include debt and equity investments in private companies or assets valued using the Market or Income Approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes which include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level 3 information, assuming no additional corroborating evidence. thea valuation policy approved by the board of directors that is consistent with ASC 820 (see Note 2). Consistent with our valuation policy, we evaluate the source of inputs, including any markets in which our investments are trading, in determining fair value. During the three months ended March 31, 2020, none of our investments transferred in or out of Level 3.20202021 (dollars in thousands): Level 1 Level 2 Level 3 Total Senior Secured First Lien Term Loans $ — $ — $ 106,008 $ 106,008 Senior Secured Second Lien Term Loans — — 25,389 25,389 Unsecured Debt — — 1,466 1,466 Equity/Warrants 11,768 — 66,466 78,234 Total $ 11,768 $ — $ 199,329 $ 211,097 44,799 Total Investments, at fair value $ 255,896 The following table presents the fair value measurements of our investments, by major class according to the fair value hierarchy, as of September 30, 2019 (dollars in thousands): Level 1 Level 2 Level 3 Total Senior Secured First Lien Term Loans $ — $ — $ 192,770 $ 192,770 Senior Secured Second Lien Term Loans — — 36,508 36,508 Unsecured Debt — — 2,653 2,653 Equity/Warrants 13,850 — 78,329 92,179 Total $ 13,850 $ — $ 310,260 $ 324,110 72,779 Total Investments, at fair value $ 396,889 Fair Value Hierarchy as of March 31, 2021 Investments: Level 1 Level 2 Level 3 Total Senior Secured First Lien Term Loans $ - $ 7,000 $ 86,291 $ 93,291 Senior Secured Second Lien Term Loans - 1,000 6,757 7,757 Unsecured Debt - - 2,098 2,098 Equity/Warrants - - 61,329 61,329 Total $ - $ 8,000 $ 156,475 $ 164,475 Investments measured at net asset value(1) 3,770 Total Investments, at fair value $ 168,245 (1) Certain investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets and Liabilities. Level 1 Level 2 Level 3 Total Senior Secured First Lien Term Loans $ — $ — $ 106,463 $ 106,463 Senior Secured Second Lien Term Loans — — 13,927 13,927 Unsecured Debt — — 2,669 2,669 MCC Senior Loan Strategy JV I LLC(1) — — 41,019 41,019 Equity/Warrants 12,278 — 67,397 79,675 Total $ 12,278 $ — $ 231,475 $ 243,753 Investments measured at net asset value(2) 2,991 Total Investments, at fair value $ 246,744 (1) MCC Senior Loan Strategy JV I LLC was sold on October 8, 2020 and as such fair value was measured as a Level 3 investment as of September 30, 2020. Previously fair value had been measured using NAV. (2) Certain investments that are measured at fair value using NAV have not been categorized in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the Consolidated Statements of Assets and Liabilities. Senior Secured First Lien Term Loans Senior Secured Second Lien Term Loans Unsecured Debt MCC Senior Loan Strategy JV I LLC Equities/ Warrants Total Balance as of September 30, 2020 $ 106,463 $ 13,927 $ 2,669 $ 41,019 $ 67,397 $ 231,475 Purchases and other adjustments to cost 168 - - - - 168 Sales 6,589 (7,504 ) (661 ) (39,739 ) (1,941 ) (43,256 ) Net realized gains/(losses) from investments (25,265 ) 4 24 (40,148 ) (3,288 ) (68,673 ) Net unrealized gains/(losses) (1,664 ) 330 66 38,868 (839 ) 36,761 Balance as of March 31, 2021 $ 86,291 $ 6,757 $ 2,098 $ - $ 61,329 $ 156,475 Equities/Warrants Total Balance as of September 30, 2019 $ 192,770 $ 36,508 $ — $ 2,653 $ 78,329 $ 310,260 Purchases and other adjustments to cost 1,387 653 — — 870 2,910 Originations 12,111 944 — — 182 13,237 Sales (186 ) — — — (1,630 ) (1,816 ) Settlements (67,710 ) (513 ) — (549 ) (15,902 ) (84,674 ) Net realized gains/(losses) from investments — — — — (1,687 ) (1,687 ) Net transfers in and/or out of Level 3 — — — — — — Net unrealized gains/(losses) (32,364 ) (12,203 ) — (638 ) 6,304 (38,901 ) Balance as of March 31, 2020 $ 106,008 $ 25,389 $ — $ 1,466 $ 66,466 $ 199,329 The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs Senior Secured First Lien Term Loans Senior Secured Second Lien Term Loans Senior Secured First Lien Notes Unsecured Debt Equities/
Warrants Total Balance as of September 30, 2019 $ 192,770 $ 36,508 $ — $ 2,653 $ 78,329 $ 310,260 Purchases and other adjustments to cost 1,387 653 — — 870 2,910 Originations 12,111 944 — — 182 13,237 Sales (186 ) — — — (1,630 ) (1,816 ) Settlements (67,710 ) (513 ) — (549 ) (15,902 ) (84,674 ) Net realized gains/(losses) from investments — — — — (1,687 ) (1,687 ) Net transfers in and/or out of Level 3 — — — — — — Net unrealized gains/(losses) (32,364 ) (12,203 ) — (638 ) 6,304 (38,901 ) Balance as of March 31, 2020 $ 106,008 $ 25,389 $ — $ 1,466 $ 66,466 $ 199,329 2019 (dollars in thousands): Equities/Warrants Total Balance as of September 30, 2018 $ 395,015 $ 48,890 $ 19,268 $ 3,381 $ 110,455 $ 577,009 Purchases and other adjustments to cost 3,328 821 — (647 ) 2,589 6,091 Originations 50,169 1,500 — — 72 51,741 Sales (32,030 ) (11,828 ) — — — (43,858 ) Settlements (28,752 ) (2,141 ) — (13 ) (1 ) (30,907 ) Net realized gains/(losses) from investments (44,061 ) 114 — (22,787 ) (873 ) (67,607 ) Net transfers in and/or out of Level 3 — — — — — — Net unrealized gains/(losses) 9,151 (1,505 ) — 22,728 14,247 44,621 Balance as of March 31, 2019 $ 352,820 $ 35,851 $ 19,268 $ 2,662 $ 126,489 $ 537,090 Net change in unrealized loss for the six months ended March 31,2021 and 2020 and 2019 included in earnings related to investments still held as of March 31, 20202021 and 2019,2020, was approximately $69.9$37.3 million and $12.5$(69.8) million, respectively.2020,2021, none of our investments transferred in or out of Level 3. During the six months ended March 31, 2019,2020, none of our investments transferred in or out of Level 3.20202021 (dollars in thousands): Fair Value Valuation Technique Unobservable Input Range (Weighted Average) Senior Secured First Lien Term Loans $ 66,322 Income Approach (DCF) Market Yield 8.20% - 15.99% (12.11%) Senior Secured First Lien Term Loans 39,686 Market Approach (Guideline Comparable)/Income Approach (DCF)/ Enterprise Value Analysis
EBITDA Multiple(1)
Capitalization Rate
Discount Rate
Expected Proceeds 0.25x - 0.50x (0.49x)
2.50x - 5.50x (4.68x)
5.25% - 5.25% (5.25%)
9.30% - 17.90% (15.57%)
$11.2M - $11.2M ($11.2M)Senior Secured Second Lien Term Loans 12,518 Income Approach (DCF) Market Yield 14.24% - 28.28% (20.44%) Fair Value Valuation Technique Unobservable Input Range (Weighted Average) Senior Secured Second Lien Term Loan 12,871 Market Approach (Guideline Comparable)/Income Approach (DCF)
Discount Rate 3.50x - 4.50x (4.47x)
15.40% - 15.40% (15.40%)Unsecured Debt 1,466 Market Approach (Guideline Comparable) 4.50x - 4.50x (4.50x) Equity 3,501 Income Approach (DCF) Market Yield 17.00% Equity 62,965 Market Approach (Guideline Comparable)/Income Approach (DCF)/ Enterprise Value Analysis
EBITDA Multiple(1)
Capitalization Rate
Discount Rate
Expected Proceeds 0.50x - 0.50x (0.50x)
2.50x - 8.00x (7.49x)
5.25% - 5.25% (5.25%)
9.30% - 18.30% (13.76%)
$11.2M - $11.2M ($11.2M)Total $ 199,329 The following table has been modified to conform to the current year presentation, and presents the quantitative information about Level 3 fair value measurements of our investments, as of September 30, 2019 (dollars in thousands): Fair Value Valuation Technique Unobservable Input Range (Weighted Average) Senior Secured First Lien Term Loans $ 141,337 Income Approach (DCF) Market yield 6.38% - 16.98% (10.49%) Senior Secured First Lien Term Loans 43,960 Market Approach (Guideline Comparable)/Market Approach (Comparable Transactions)/Income Approach (DCF)/ Enterprise Value Analysis Senior Secured First Lien Term Loans 7,473 Recent Arms-Length Transaction Recent Arms Length Transaction N/A Senior Secured Second Lien Term Loan 17,250 Income Approach (DCF) Market yield 9.78% - 29.76% (14.66%) Senior Secured Second Lien Term Loans 19,258 Market Approach (Guideline Comparable)/Income Approach (DCF) Unsecured Debt 850 Income Approach (DCF) Market yield 7.43% Unsecured Debt 1,803 Market Approach (Guideline Comparable) 4.00x - 7.00x (6.54x) Equity 75,983 Market Approach (Guideline Comparable)/Market Approach (Comparable Transactions)/Income Approach (DCF)/Enterprise Value Analysis Equity 2,346 Recent Arms-Length Transaction Recent Arms Length Transaction N/A Total $ 310,260 Fair Value Valuation Technique Unobservable Input Range
(Weighted Average)Senior Secured First Lien Term Loans $ 4,787 Enterprise Value Analysis LTM Revenue 0.35x - 0.45x (0.40x) Senior Secured First Lien Term Loans 2,577 Enterprise Value Analysis / Market Approach (Guideline Comparable) Expected Proceeds / Capitalization Rate $8.90 - $17.90 ($13.40) Senior Secured First Lien Term Loans 6,534 Income Approach (DCF) Market Yield 7.50% - 8.50% (8.00%) Senior Secured First Lien Term Loans 11,317 Market Approach Market Yield 15.50% - 17.50% (16.50%) Senior Secured First Lien Term Loans 4,320 Market Approach EBITDA Multiple 4.00x - 5.00x (4.50x) Senior Secured First Lien Term Loans 7,465 Market Approach (DCF) Market Yield 6.26% - 6.76% (6.51%) Senior Secured First Lien Term Loans 41,487 Market Approach (Guideline Comparable) Market Yield 6.00% - 17.00% (9.76%) Senior Secured First Lien Term Loans 2,296 Market Approach (Guideline Comparable) EBITDA Multiple 1.75x - 2.75x (2.25x) Senior Secured First Lien Term Loans 1,020 Market Approach (Guideline Comparable) Revenue Multiple 0.70x - 0.80x (0.75x) Senior Secured First Lien Term Loans 1,014 Market Approach (Guideline Comparable) EBITDA Multiple(1) / Revenue Multiple(1) 5.75x - 6.75x (6.25x) Senior Secured First Lien Term Loans 3,474 Recent Arms Length n/a n/a Senior Secured Second Lien Term Loans 4,300 Market Approach (Guideline Comparable)/Income Approach (DCF) EBITDA Multiple 6.50x - 7.50x (7.00x) Senior Secured Second Lien Term Loans 2,457 Income Approach (DCF) Market Yield 9.75% - 10.75% (10.25%) Unsecured Debt 2,098 Market Approach (Guideline Comparable) Market Yield 10.00% - 11.00% (10.50%) Equity/Warrants 1,714 Enterprise Value Analysis / Market Approach (Guideline Comparable) Expected Proceeds / Capitalization Rate $8.90 - $17.90 ($13.40) Equity/Warrants 2,794 Market Approach LTM EBITDA/EV 6.00x - 8.00x (7.00x) Equity/Warrants 123 Market Approach EBITDA Multiple(1) / Revenue Multiple(1) 6.88x - 6.88x (6.88x) Equity/Warrants 51,821 Market Approach (Guideline Comparable) EBITDA Multiple(1) / Revenue Multiple(1) 0.20x - 10.25x (9.25x) Equity/Warrants 4,391 Market Approach (Guideline Comparable) Market Yield 10.75% - 12.25% (11.50%) Equity/Warrants 388 Market Approach (Guideline Comparable) EBITDA Multiple 1.75x - 5.50x (3.33x) Equity/Warrants 98 Market Approach (Guideline Comparable) EV/CFY Multiple 4.94x - 5.80x (5.37x) Total $ 156,475 (1) Represents inputs used when the Company has determined that market participants would use such multiples when measuring the fair value of these investments. Increases or decreasesanythousands): Fair Value Valuation Technique Unobservable Input Range
(Weighted
Average)Senior Secured First Lien Term Loans $ 50,135 Income Approach (DCF) Market yield 7.52% - 15.27% (10.34%) Senior Secured First Lien Term Loans 55,856 Market Approach (Guideline Revenue Multiple(1) 0.25x - 0.25x (0.49x) Comparable)/Income EBITDA Multiple(1) 2.50x - 8.50x (5.73x) Approach (DCF)/ Enterprise Value Capitalization rate 5.50x - 5.50x (5.50x) Analysis Discount rate 17.90% - 17.90% (17.90%) Expected Proceeds $8.25 - $52.00 ($45.65) Senior Secured First Lien Term Loans 472 Recent Arms-Length Transaction Recent Arms Length Transaction N/A Senior Secured Second Lien Term Loan 9,978 Income Approach (DCF) Market yield 12.01% - 14.82% (14.01%) Senior Secured Second Lien Term Loans 3,949 Market Approach (Guideline EBITDA Multiple(1) 8.00x - 8.00x (8.00x) Comparable)/Income Approach Discount Rate 21.00% - 21.00% (21.00%) (DCF) Unsecured Debt - Market Approach (Guideline Comparable) EBITDA Multiple(1) 2.50x - 4.50x (3.50x) Unsecured Debt 2,669 Recent Arms-Length Transaction Recent Arms Length Transaction N/A MCC Senior Loan Strategy JV I LLC 41,019 Recent Arms-Length Transaction Recent Arms Length Transaction N/A Equity 63,468 Market Approach (Guideline Revenue Multiple(1) 0.50x - 0.88x (0.69x) Comparable)/ Income EBITDA Multiple(1) 2.50x - 9.50x (8.25x) Approach (DCF)/Enterprise Value Capitalization rate 5.50% - 5.50% (5.50%) Analysis Discount rate 14.50% - 14.50% (14.50%) Expected Proceeds $8.25 - $52.00 ($38.00) Equity 3,929 Income Approach (DCF) Market Yield 15.40% - 15.40% (15.40%) Total $ 231,475 (1) Represents inputs used when the Company has determined that market participants would use such multiples when measuring the fair value of these investments. aboveCompany’s debt and derivative investments are market yields. Increases in market yields would result in lower fair value measurements.a lower or higher fair value measurement for such assets.over specified time frames.through calendar year ended 2022. The Earnout and AMI were initially recorded with an aggregate fair value of $2.4 million on the transaction date using the Income Approach and were included on the Consolidated Statements of Assets and Liabilities in other assets. The contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved. Any changes in fair value will be recognized in earnings. As of March 31, 2021 and September 30, 2020, the Company deemed the contingent consideration to be uncollectible, and, as such, placed a full reserve against its fair value. As of September 30, 2019, the fair value of the contingent consideration was $1.8 million.2020,2021, the Company’s asset coverage was 181.9%295.6% after giving effect to leverage and therefore the Company’s asset coverage was belowgreater than 200%, the minimum asset coverage requirement applicable presently to the Company under the 1940 Act. As a result, the Company is prohibited from making distributions to stockholders, including the payment of any dividend, and may not employ further leverage until the Company’s asset coverage is at least 200% after giving effect to such leverage.2019,2020, the Company’s asset coverage was 184.2%199.2% after giving effect to leverage and therefore the Company’s asset coverage was below 200%, the minimum asset coverage requirement under the 1940 Act. As a result, the Company was prohibited from making distributions to stockholders, including the payment of any dividend, and could not employ further leverage until the Company’s asset coverage was at least 200% after giving effect to such leverage.20202021 and September 30, 20192020 was as follows (dollars in thousands): March 31, 2020 September 30, 2019 2021 Notes $ 74,013 $ 74,013 $ 73,487 $ 54,769 $ 74,013 $ 74,013 $ 73,172 $ 72,473 2023 Notes 77,847 77,847 77,020 50,600 77,847 77,847 76,881 74,453 Israeli Notes 21,148 21,148 20,666 20,973 105,137 105,137 101,679 104,604 Total $ 173,008 $ 173,008 $ 171,173 $ 126,342 $ 256,997 $ 256,997 $ 251,732 $ 251,530 (1)Modified to conform to the current year presentation. March 31, 2021 September 30, 2020 Aggregate Aggregate Principal Principal Principal Principal Amount Amount Carrying Fair Amount Amount Carrying Fair Available Outstanding Value Value Available Outstanding Value Value 2021 Notes $ - $ - $ - $ - $ 74,013 $ 74,013 $ 73,803 $ 73,095 2023 Notes 77,847 77,847 77,296 70,654 77,847 77,847 77,158 72,460 Total $ 77,847 $ 77,847 $ 77,296 $ 70,654 $ 151,860 $ 151,860 $ 150,961 $ 145,555 may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after January 30, 2019. The 2021 Notes bearbore interest at a rate of 6.50% per year, payable quarterly on January 30, April 30, July 30 and October 30 of each year, beginning January 30, 2016.are listedwere redeemed at 100% of their principal amount ($25 per 2021 Note), plus the accrued and unpaid interest thereon from October 31, 2020, through, but excluding, the Redemption Date. The Company funded the redemption of the 2021 Notes with cash on the NYSE and trade thereon under the trading symbol “MCX”."U.S.“U.S. Notes”). On March 26, 2013, the Company closed an additional $3.5 million in aggregate principal amount of the 2023 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. As of March 30, 2016, the 2023 Notes may be redeemed in whole or in part at any time or from time to time at the Company'sCompany’s option. The 2023 Notes bear interest at a rate of 6.125% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, beginning June 30, 2013. The 2023 Notes are listed on the NYSE and trade thereon under the trading symbol “MCV”.The redemption was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.3 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.and collectively with the U.S. Notes, the "Notes")(as defined below). The Israeli Notes arewere listed on the TASE and denominated in New Israeli Shekels, but linked to the US Dollar at a fixed exchange rate which mitigates any currency exposure to the Company. The Israeli Notes have not been and will not be registered under the Securities Act of 1933, and may not be offered or sold in the United States absent registration under the Securities Act or in transactions exempt from, or not subject to, such registration requirements. In connection with this offering, we have dual listed our common stock on the TASE.On August 12, 2019, the Company and its wholly owned subsidiaries, Medley Small Business Fund, LP (formerly known as Medley SBIC, LP) and Medley SLF, on the one hand, and the Trustee, on the other hand, entered into an amendmentthe deed of trust (the “Deed”) governing the Israeli Notes (the “Amendment” together with the Deed, the “Deed of Trust”). The Amendment amends the Deed by, among other things: (a) modifying Section 2.2 of the Deed to provide for full repayment of the Israeli Notes in eight (8) equal installments, each comprising twelve and one-half percent (12.5%) of the principal amount of the Israeli Notes, beginning on August 12, 2019 (the “Effective Date”) and ending on January 31, 2021, rather than four (4) equal annual installments, each comprising twenty five percent (25%) of the principal amount of the Israeli Notes, that were payable on February 27 of each of the years 2021-2024 (inclusive); (b) changing the interest payment dates for the Israeli Notes from semi-annual to quarterly except for the initial interest payment, which was paid on the Effective Date, and the final interest payment, which will be paid on January 31, 2021; (c) decreasing the annual interest rate on the Israeli Notes by 0.25% per annum on the Effective Date and further decreasing the annual interest rate on the Israeli Notes by 0.50% per annum if the Mergers close, which further decrease will be effective upon the closing of the Mergers; (d) decreasing the minimum Total Net Asset covenant in Section 6.1.1 of the Deed from $275 million to $215 million; (e) modifying the acceleration event in Section 10.1.25 of the Deed to provide that it will occur if the credit rating on the Israeli Notes drops below (i) il/B of Maalot before November 30, 2019, (ii) il/BB- of Maalot during the period between December 1, 2019 and April 1, 2020, and (iii) il/BBB- of Maalot on or after April 1, 2020; (f) waiving the make-whole and market value payment requirements of Section 9.1.7 of the Deed for all early redemption payments on the Israeli Notes within eighteen (18) months following the Effective Date; (g) requiring each of Medley Small Business Fund and Medley SLF to guarantee all of the Company’s obligations under the Deed (including the Amendment) and the Israeli Notes and to grant security interests on all of their assets (the “Collateral”) to secure such guaranties and providing for the termination of the Medley SLF guaranty and release of the security interests in Medley SLF’s assets upon the closing of the Mergers, subject to certain limitations; (h) that the Company use principal collections from the Collateral to make early redemption payments on the Israeli Notes, which payments will be applied in inverse order of the maturity of the required principal installment payments on the Israeli Notes; (i) providing for a waiver by the Trustee and the holders of the Israeli Notes of any right to accelerate the full balance of the amount due to the holders of the Israeli Notes based on any claims, allegations, actions, and/or rights that were raised, and/or resulting or deriving from certain claims or allegations as set forth in Section 19.1 of the Amendment; (j) providing for a waiver by the Trustee and the holders of the Israeli Notes of certain claims, demands, rights, and/or actions against and/or relating to the Company, its subsidiaries and/or affiliates and their respective employees (including their respective directors, officers, members of the Company’s board of directors, employees, stockholders, stakeholders and advisors); and (k) adding other definitions, representations and covenants to the Deed and making related conforming changes to the Deed. Pursuant to the Amendment, no prepayment penalties were due or payable in connection with the payment of principal made by the Company on the Effective Date.The Deed (including the Amendment) includes certain customary covenants, including minimum net assets of $215 million and a maximum debt to total assets ratio of 70%. The date for determining compliance with these financial covenants is the date that the Company publishes its financial statements (i.e., in a quarterly report on Form 10-Q or an annual report on Form 10-K) with the SEC. If the Company does not satisfy these financial covenants for two consecutive quarters, it is an event of default under the Deed. If this event of default is expected to occur, the Company has the right to request the trustee for the Israeli Notes (the “Trustee”) to appoint an emergency committee of the three largest noteholders for the purpose of obtaining a one-quarter extension of time to satisfy the financial covenants. If the Company does not make this request and the breach occurs, or if the emergency committee does not grant the extension, then the Trustee is required to convene a meeting of the noteholders as described below.In addition to not complying with the financial covenants as described above, the events of default include: (i) a change of control of the Company (defined in the Deed as MCC Advisors’ ceasing to provide investment management or advisory services to the Company); (ii) the Company not publishing a tender offer for the purchase of all of the Israeli Notes within 45 days; (iii) the Company not paying any amount due and payable to the holders of the Israeli Notes within seven business days after the payment due date; (iv) certain insolvency and receivership events with respect to the Company or with respect to all or substantially all of its assets, and (v) the Israeli Notes being delisted from the TASE or the TASE’s suspension of trading of the Israeli Notes for more than 60 days.If an event of default occurs under the Deed, there is no automatic acceleration or mandatory redemption of the Israeli Notes. Rather, the Trustee is required to convene a meeting of the noteholders for a vote on whether to accelerate the Israeli Notes. Noteholders holding at least 50% of the principal amount of the Israeli Notes must be present at the meeting for a quorum to exist, and if a quorum exists, then the vote of a majority of the noteholders present at the meeting controls.The foregoing description of the terms of Israeli Notes, the Deed, and the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of each of the Deed and the Amendment incorporated by reference as an exhibit to this quarterly report on Form 10-Q.As described above, the following is a summary of the Collateral to secure the guarantee of all of the Company’s obligations under the Deed (including the Amendment) and the Israeli Notes by Medley Small Business Fund and Medley SLF as of Consolidated Financial Statements (continued)2020.Company Industry Type of Investment Maturity Par Amount Cost Fair Value Medley SLF Funding I LLC Alpine SG, LLC High Tech Industries Senior Secured First Lien Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) 11/16/2022 $ 5,061,750 $ 5,061,750 $ 4,739,823 Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 5.75% Cash, 1.00% LIBOR Floor) 11/16/2022 2,444,350 2,444,350 2,288,889 7,506,100 7,506,100 7,028,712 Starfish Holdco, LLC High Tech Industries Senior Secured Second Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) 8/18/2025 2,000,000 1,977,237 1,458,800 2,000,000 1,977,237 1,458,800 US Multifamily, LLC Banking, Finance, Insurance & Real Estate Senior Secured First Lien Term Loan (10.00% Cash) 6/17/2021 5,760,537 5,760,537 5,760,537 5,760,537 5,760,537 5,760,537 Subtotal Medley SLF Funding I LLC Investments $ 15,266,637 $ 15,243,874 $ 14,248,049 Medley Small Business Fund, LP Black Angus Steakhouses, LLC Hotel, Gaming & Leisure Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) 4/24/2020 7,290,179 7,222,523 5,212,478 7,290,179 7,222,523 5,212,478 Impact Group, LLC Services: Business Senior Secured First Lien Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) 6/27/2023 3,237,294 3,237,294 2,829,394 Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.50% Cash, 1.00% LIBOR Floor) 6/27/2023 9,380,033 9,380,033 8,198,149 12,617,327 12,617,327 11,027,543 InterFlex Acquisition Company, LLC Containers, Packaging & Glass Senior Secured First Lien Term Loan (LIBOR + 9.00% Cash, 1.00% LIBOR Floor) 8/18/2022 8,589,450 8,589,450 7,965,856 8,589,450 8,589,450 7,965,856 RateGain Technologies, Inc. Hotel, Gaming & Leisure Unsecured Debt 7/31/2020 281,632 281,632 281,632 Unsecured Debt 7/31/2021 304,735 304,735 304,735 586,367 586,367 586,367 SFP Holding, Inc. Construction & Building Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) 9/1/2022 4,798,779 4,798,779 4,648,098 Senior Secured First Lien Delayed Draw Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) 9/1/2022 1,861,878 1,861,878 1,803,415 Equity - 73,113.54 Common Units in CI (Summit) Investment Holdings LLC — 736,905 371,051 6,660,657 7,397,562 6,822,564 Ship Supply Acquisition Corporation Services: Business Senior Secured First Lien Term Loan (LIBOR + 8.00% Cash, 1.00% LIBOR Floor) 7/31/2020 7,307,206 7,113,263 — 7,307,206 7,113,263 — Walker Edison Furniture Company LLC Consumer goods: Durable Senior Secured First Lien Term Loan (LIBOR + 6.25% Cash, 1.00% LIBOR Floor) 9/26/2024 3,565,889 3,565,889 3,476,029 3,565,889 3,565,889 3,476,029 Subtotal Medley Small Business Fund, LP Investments $ 46,617,075 $ 47,092,381 $ 35,090,837 Total Medley SLF Funding I LLC and Medley SLF Funding I LLC Investments $ 61,883,712 $ 62,336,255 $ 49,338,886 Execution of the repurchase plan is subject to an open trading window for the Company and continued liquidity at that time and is expected to continue until the full authorized amount is purchased or market conditions change. The repurchase of the Israeli Notes is not expected to result in any material tax consequences to the Company or its note holders.MedleyPhenixFIN SLF and MedleyPhenixFIN Small Business Fund to pre-pay an additional $19.1 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a net loss on extinguishment of debt.MedleyPhenixFIN SLF and MedleyPhenixFIN Small Business Fund to pre-pay an additional $19.8 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.20202021 and September 30, 2019,2020, the Notes would be deemed to be Level 1 in the fair value hierarchy, as defined in Note 4.20202021 and September 30, 2019,2020, debt issuance costs related to the Notes were as follows (dollars in thousands): March 31, 2020 September 30, 2019 Total Israeli Notes Total Total Debt Issuance Costs $ 3,226 $ 3,102 $ 6,287 $ 12,615 $ 3,226 $ 3,102 $ 6,287 $ 12,615 Amortized Debt Issuance Costs 2,700 2,267 5,805 10,772 2,385 2,127 2,829 7,341 Unamortized Debt Issuance Costs $ 526 $ 835 $ 482 $ 1,843 $ 841 $ 975 $ 3,458 $ 5,274 March 31, 2021 September 30, 2020 2023 2021 2023 Notes Total Notes Notes Total Total Debt Issuance Costs $ 3,102 $ 3,102 $ 3,226 $ 3,102 $ 6,328 Amortized Debt Issuance Costs 2,551 2,551 3,016 2,406 5,422 Unamortized Debt Issuance Costs $ 551 $ 551 $ 210 $ 696 $ 906 20202021 and 2019,2020, the components of interest expense, amortized debt issuance costs, weighted average stated interest rate and weighted average outstanding debt balance for the Notes were as follows (dollars in thousands): For the three months ended March 31 For the six months ended March 31 2020 2019 2020 2019 2021 Notes interest 1,203 1,203 2,405 2,405 2023 Notes interest 1,192 1,192 2,384 2,570 2023 Notes premium (1 ) (1 ) (1 ) (1 ) Israeli Notes interest 929 1,644 2,428 3,166 Amortization of debt issuance costs 1,109 561 2,360 1,139 Total $ 4,432 $ 4,599 $ 9,576 $ 9,279 Weighted average stated interest rate 6.4 % 6.0 % 6.4 % 5.9 % Weighted average outstanding balance $ 207,475 $ 272,016 $ 224,716 $ 278,539 For the three months ended March 31 For the six months ended March 31 2021 2020 2021 2020 2021 Notes Interest $ - $ 1,203 $ 668 $ 2,405 2023 Notes Interest 1,192 1,192 2,385 2,384 2023 Notes Premium - (1 ) - (1 ) Israeli Notes Interest - 929 - 2,428 Amortization of debt issuance costs 68 1,109 225 2,360 Total $ 1,260 $ 4,432 $ 3,278 $ 9,576 Weighted average stated interest rate 3.3 % 6.4 % 6.7 % 6.4 % Weighted average outstanding balance $ 77,847 $ 207,475 $ 98,292 $ 224,716 SBA DebenturesOn March 26, 2013, SBIC LP received a SBIC license from the SBA. The SBIC license allowed SBIC LPobtain leverage by issuing SBA Debentures, subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA Debentures were non-recourse, interest only debentures with interest payable semi-annually and had a ten year maturity. The principal amount of SBA Debentures were not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA Debentures were fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, had a superior claim to the SBIC LP’s assets over our stockholders in the event we liquidated the SBIC LP or the SBA exercised its remedies under the SBA Debentures issued by the SBIC LP upon an event of default.On September 1, 2018, the Company repaid $15.0 million in aggregate principal amount of the SBA Debentures. The repayment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.2 million and was recorded on the Consolidated Financial Statements of Operations as a loss on extinguishment of debt.SBIC LP received a letter from the SBA (the “SBA Letter”), dated March 14, 2019, informing SBIC LP of certain alleged regulatory issues constituting a default under the terms of the SBIC LP’s outstanding SBA Debentures. The SBA Letter stated that SBIC LP had until March 29, 2019, fifteen (15) days from the date of the SBA Letter, to provide the SBA with certain additional information regarding the alleged regulatory issues, unless extended by the SBA. SBIC LP’s management submitted an orderly wind-down plan to the SBA to prepay the remaining $135.0 million of outstanding SBA Debentures using available cash at SBIC LP as well as the sale of assets to third parties or affiliates of SBIC LP. On March 28, 2019, SBIC LP agreed and made a repayment of $50.0 million of outstanding SBA Debentures by April 3, 2019 using available cash at SBIC LP and the cure period was extended to April 19, 2019. On April 18, 2019, SBIC LP agreed and made a repayment of $20.0 million of outstanding SBA Debentures on April 23, 2019 and an additional $30.0 million of outstanding SBA Debentures on April 30, 2019 using proceeds from the sale of certain assets and the cure period was extended to May 10, 2019. On May 10, 2019, SBIC LP made the final repayment of the remaining $35.0 million of outstanding SBA Debentures using proceeds from the sale of certain assets. In connection therewith, effective July 1, 2019, SBIC LP surrendered its SBIC license and operates as Medley Small Business Fund.The $135.0 million in aggregate repayments made in connection with the orderly wind-down plan was accounted for as debt extinguishments in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a cumulative realized loss of $1.8 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.The Company believes the wind-down plan of SBIC LP will not have a material impact on the Company’s net investment income per share. In addition, the Company believes the wind-down will not have an adverse impact on the Company’s other operations. The Company has received the necessary consents and waivers under the MCC Merger Agreement to permit the repayment of the outstanding SBA Debentures.As of (continued)2020 and September 30, 2019, Medley Small Business Fund did not have any SBA Debentures outstanding.For the three and six months ended March 31, 2020 and 2019, the components of interest, amortized debt issuance costs, weighted average stated interest rate and weighted average outstanding debt balance for the SBA Debentures were as follows (dollars in thousands): For the three months ended March 31 For the six months ended March 31 2020 2019 2020 2019 SBA Debentures interest $ — $ 1,194 $ — $ 2,415 Amortization of debt issuance costs — 106 — 214 Total $ — $ 1,300 $ — $ 2,629 Weighted average stated interest rate — % 3.6 % — % 3.6 % Weighted average outstanding balance $ — $ 135,000 $ — $ 135,000 ., which expired on December 31, 2020. Mr. Brook Taube, our Chairman and Chief Executive Officer is a managing partnerthrough December 31, 2020 and senior portfolio managerone of MCC Advisors,our directors through January 21, 2021 and Mr. Seth Taube, one of our directors is a managing partner ofthrough January 21, 2021 are both affiliated with MCC Advisors.determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies); andexecutes, closes, monitors and administers the investments we make, including the exercise of any voting or consent rights.● determined the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes; ● identified, evaluated and negotiated the structure of the investments we made (including performing due diligence on our prospective portfolio companies); and ● executed, closed, monitored and administered the investments we made, including the exercise of any voting or consent rights. arewere not exclusive, and it iswas free to furnish similar services to other entities so long as its services to us arewere not impaired.paypaid MCC Advisors a fee for investment advisory and management services consisting of a base management fee and a two-part incentive fee.willwould the new fee structure result in higher fees to MCC Advisors than fees under the prior investment management agreement.arewere effective as of January 1, 2016 and arewere a permanent reduction in the base management fee and incentive fee on net investment income payable to MCC Advisors for the investment advisory and management services it providesprovided under the Investment Management Agreement. The Fee Waiver Agreement doesdid not change the second component of the incentive fee, which iswas the incentive fee on capital gains.Agreement isAgreement”), by and between the Company and Sierra (the “Amended MCC Merger Agreement”) was in effect, but no longer than a year; provided that, if the Amended MCC Merger Agreement iswas terminated by Sierra, then the termination of the Investment Management Agreement would be effective on the 30th day following receipt of Sierra’s notice of termination to the Company. TheOn May 1, 2020, the Company received a notice of termination of the Amended MCC Merger Agreement from Sierra. Under the Amended MCC Merger Agreement, either party was terminatedpermitted, subject to certain conditions, to terminate the Amended MCC Merger Agreement if the merger was not consummated by March 31, 2020. Sierra elected to do so on May 1, 2020. See Note 14. Subsequent Events for more information.Forreceivesreceived a base management fee. The base management fee iswas calculated at an annual rate of 1.75% (0.4375% per quarter) of up to $1.0 billion of the Company’s gross assets and 1.50% (0.375% per quarter) of any amounts over $1.0 billion of the Company’s gross assets and iswas payable quarterly in arrears. The base management fee will bewas calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quartersquarters.will be appropriately pro-rated for any partial quarter.six months ended March 31, 2021, the Company incurred base management fees to MCC Advisors of $0 and $1.1 million, respectively. For the three and six months ended March 31, 2020, the Company incurred base management fees to MCC Advisors of $1.6 million and $3.6 million, respectively.Thehashad two components, as follows:iswas payable quarterly in arrears and iswas based on our pre-incentive fee net investment income earned during the calendar quarter for which the incentive fee iswas being calculated. MCC Advisors iswas entitled to receive the incentive fee on net investment income from us if our Ordinary Income (as defined below) exceedsexceeded a quarterly “hurdle rate” of 1.5%. The hurdle amount iswas calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter.iswas determined and paid quarterly in arrears at the end of each calendar quarter by reference to our aggregate net investment income, as adjusted as described below, from the calendar quarter then ending and the eleven preceding calendar quarters (or if shorter, the number of quarters that have occurred since January 1, 2016). We refer to such period as the “Trailing Twelve Quarters.”iswas determined on a quarterly basis and iswas equal to 1.5% multiplied by the Company’s net asset value at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The hurdle amount iswas calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter. The incentive fee for any partial period willwas to be appropriately pro-rated. Any incentive fee on net investment income willwas to be paid to MCC Advisors on a quarterly basis and willwas to be based on the amount by which (A) aggregate net investment income (“Ordinary Income”) in respect of the relevant Trailing Twelve Quarters exceedsexceeded (B) the hurdle amount for such Trailing Twelve Quarters. The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the “Excess Income Amount.” For the avoidance of doubt, Ordinary Income iswas net of all fees and expenses, including the reduced base management fee but excluding any incentive fee on Pre-Incentive Fee net investment income or on the Company’s capital gains.iswas determined as follows:No incentive fee on net investment income is payable to MCC Advisors for any calendar quarter for which there is no Excess Income Amount;100% of the Ordinary Income, if any, that exceeds the hurdle amount, but is less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by the Company’s net assets at the beginning of each applicable calendar quarter,as adjusted as noted above, comprising the relevant Trailing Twelve Quarters is included in the calculation of the incentive fee on net investment income; and17.5% of the Ordinary Income that exceeds the Catch-up Amount is included in the calculation of the incentive fee on net investment income.● No incentive fee on net investment income was payable to MCC Advisors for any calendar quarter for which there was no Excess Income Amount; ● 100% of the Ordinary Income, if any, that exceeded the hurdle amount, but was less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by the Company’s net assets at the beginning of each applicable calendar quarter, as adjusted as noted above, comprising the relevant Trailing Twelve Quarters was included in the calculation of the incentive fee on net investment income; and ● 17.5% of the Ordinary Income that exceeds the Catch-up Amount was included in the calculation of the incentive fee on net investment income. willwas to be paid to MCC Advisors for a particular quarter willwould equal the excess of the incentive fee so calculated minus the aggregate incentive fees on net investment income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters but not in excess of the Incentive Fee Cap (as described below).iswas paid to MCC Advisors for a particular quarter iswas subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap for any quarter iswas an amount equal to (a) 17.5% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters iswas zero or a negative value, the Company willwould pay no incentive fee on net investment income to MCC Advisors for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter iswas a positive value but iswas less than the incentive fee on net investment income that iswas payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company willwould pay an incentive fee on net investment income to MCC Advisors equal to the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter iswas equal to or greater than the incentive fee on net investment income that iswas payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company willwould pay an incentive fee on net investment income to MCC Advisors, calculated as described above, for such quarter without regard to the Incentive Fee Cap.iswas calculated, in the case of issuances of common stock, as the amount by which the net asset value per share was adjusted over the transaction price per share, multiplied by the number of shares issued. Accretion to the Company’s net assets due to capital raising iswas calculated, in the case of issuances of common stock (including issuances pursuant to our dividend reinvestment plan), as the excess of the transaction price per share over the amount by which the net asset value per share was adjusted, multiplied by the number of shares issued. Accretion to the Company’s net assets due to other capital action iswas calculated, in the case of repurchases by the Company of its own common stock, as the excess of the amount by which the net asset value per share was adjusted over the transaction price per share multiplied by the number of shares repurchased by the Company.iswas determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement as of the termination date) and equalsequaled 20.0% of our cumulative aggregate realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the investment adviser.calculatescalculated the second component of the incentive fee as if the Company had realized all assets at their fair values as of the reporting date. Accordingly, when applicable, the Company accruesaccrued a provisional capital gains incentive fee taking into account any unrealized gains or losses. As the provisional capital gains incentive fee iswas subject to the performance of investments until there iswas a realization event, the amount of the provisional capital gains incentive fee accrued at a reporting date may varyhave varied from the capital gains incentive that iswas ultimately realized and the differences could behave been material.Base Management Fee - Prior to Fee Waiver AgreementPrior to January 1, 2016, the base management fee was calculated at an annual rate of 1.75% of our gross assets (which is defined as all the assets of the Company, including those acquired using borrowings for investment purposes), and was payable quarterly in arrears. The base management fee was based on the average value of our gross assets at the end of the two most recently completed calendar quarters.Incentive Fee - Prior to Fee Waiver AgreementPrior to January 1, 2016, the incentive fee based on net investment income was calculated as 20.0% of the amount, if any, by which our pre-incentive fee net investment income, expressed as a rate of return on the value of our net assets calculated as of the end of the calendar quarter immediately preceding the calendar quarter for which the incentive fee is being calculated, exceeds a 2.0% (which is 8.0% annualized) hurdle rate but also includes a “catch-up” provision. Under this provision, in any calendar quarter, our investment adviser receives no incentive fee until our net investment income equals the hurdle rate of 2.0%, but then receives, as a “catch-up”, 100% of our 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 2.5%. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, our investment adviser will receive 20% of our pre-incentive fee net investment income as if the hurdle rate did not apply. For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income including any other fees (other than fees for providing managerial assistance), such as commitment, origination, structuring, diligence and consulting fees or other fees that we receive from portfolio companies accrued during the calendar quarter, minus our operating expenses for the quarter including the base management fee, expenses payable under the administration agreement, and any interest expense and any dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee. Pre-incentive fee net investment income includes, in the case of investments with adeferred interest feature (such as original issue discount, debt instruments with PIK interest and zero coupon securities), accrued income that we have not yet received in cash.For the avoidance of doubt, the purpose of the new incentive fee calculation under the Fee Waiver Agreement is to permanently reduce aggregate fees payable to MCC Advisors by the Company, effective as of January 1, 2016. In order to ensure that the Company will pay MCC Advisors lesser aggregate fees on a cumulative basis, as calculated beginning January 1, 2016, we will, at the end of each quarter, also calculate the base management fee and incentive fee on net investment income owed by the Company to MCC Advisors based on the formula in place prior to January 1, 2016. If, at any time beginning January 1, 2016, the aggregate fees on a cumulative basis, as calculated based on the formula in place after January 1, 2016, would be greater than the aggregate fees on a cumulative basis, as calculated based on the formula in place prior to January 1, 2016, MCC Advisors shall only be entitled to the lesser of those two amounts.For the three and six months ended March 31, 2020, the Company incurred base management fees to MCC Advisors of $1.6 million and $3.6 million, respectively. For the three and six months ended March 31, 2019, the Company incurred base management fees to MCC Advisors of $3.1 million and $6.3 million, respectively. The Company did not waive management fees under the Fee Waiver Agreement during the three and six months ended March 31, 2020 and 2019.arewere calculated using the fee structure set forth in the Investment Management Agreement, and then adjusted to reflect the terms of the Fee Waiver Agreement. Pursuant to the Investment Management Agreement, pre-incentive fee net investment income iswas compared to a hurdle rate of 2.0% of the net asset value at the beginning of the period and iswas calculated as follows:1) No incentive fee iswas recorded during the quarter in which our pre-incentive fee net investment income doesdid not exceed the hurdle rate;2) 100% of pre-incentive fee net investment income that exceedsexceeded the hurdle rate but iswas less than 2.5% in the quarter; and3) 20.0% of the amount of pre-incentive fee net investment income, if any, that exceedsexceeded 2.5% of the hurdle rate.calculatecalculated the incentive fee based upon the formula that existsexisted under the Investment Management Agreement, and then applyapplied the terms of waiver set forth in the Fee Waiver Agreement, if applicable.20202021 and 2019,2020, the Company did not incur any incentive fees on net investment income because pre-incentive fee net investment income did not exceed the hurdle amount under the formula set forth in the Investment Management Agreement.20202021 and September 30, 2019, $1.6 million2020, $0 and $2.2$1.4 million, respectively, were included in “management and incentive fees payable” in the accompanying Consolidated Statements of Assets and Liabilities.furnishesfurnished us with office facilities and equipment, clerical, bookkeeping, recordkeeping and other administrative services related to the operations of the Company. We reimbursereimbursed MCC Advisors for our allocable portion of overhead and other expenses incurred by it performing its obligations under the administration agreement, including rent and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs. From time to time, our administrator maywas able to pay amounts owed by us to third-party service providers and we willwould subsequently reimburse our administrator for such amounts paid on our behalf. In connection with the adoption by the board of directors of an internalized management structure, on November 19, 2020, the Company entered into a Fund Accounting Servicing Agreement and an Administration Servicing Agreement on customary terms with U.S. Bancorp Fund Services, LLC d/b/a U.S. Bank Global Fund Services (“U.S. Bancorp”). The administration agreement with MCC Advisors terminated by its terms on December 31, 2020. For the three months ended March 31, 2021, we applied $52,000 for administrative expenses due to U.S. Bancorp to an over accrued administrator expense balance. For the six months ended March 31, 2021, we recorded $0.4 million in administrator expenses. For the three and six months ended March 31, 2020, we incurred $0.4$0.6 million and $0.7$1.1 million in administrator expenses, respectively. For the three and six months ended March 31, 2019, we incurred $0.7 million and $1.7 million in administrator expenses, respectively.20202021 and September 30, 2019, $0.62020, $0.1 million and $0.9$0.2 million, respectively, were included in “administrator expenses payable” in the accompanying Consolidated Statements of Assets and Liabilities.Certain affiliates of MCC Advisors, Medley Capital LLC, their respective affiliates and some of their employees purchased in the IPO an aggregate of 833,333 shares of common stock at the IPO price per share of $12.00. The Company received the full proceeds from the sale of these shares, and no underwriting discounts or commissions were paid in respect of these shares. MCC Advisors or an affiliated investment adviser becomes aware of investment opportunities that may be appropriate for the Company, other clients, or affiliated funds. On November 25, 2013, the Company obtained an exemptive order from the SEC that permits us to participate in negotiated co-investment transactions with certain affiliates, each of whose investment adviser is Medley, LLC or an investment adviser controlled by Medley, LLC in a manner consistent with our investment objective, strategies and restrictions, as well as regulatory requirements and other pertinent factors (the “Prior Exemptive Order”). On March 29, 2017, the Company, MCC Advisors and certain other affiliated funds and investment advisers received an exemptive order (the “Exemptive Order”) that supersedes the Prior Exemptive Order and allows affiliated registered investment companies to participate in co-investment transactions with us that would otherwise have been prohibited under Section 17(d) and 57(a)(4) of the 1940 Act and Rule 17d-1 thereunder. On October 4, 2017, the Company, MCC Advisors and certain of our affiliates received an exemptiveIf the Mergers are successfully consummated, Sierra and certain of its affiliates will not be able to rely on the Current Exemptive Order. In this regard, on November 19, 2018, Sierra and certain of its affiliates have submitted an exemptive application to the SEC for an exemptive order that would supersede the Current Exemptive Order (the “Superseding Exemptive Order”) and would permit Sierra to participate in negotiated co-investment transactions with certain affiliates that would otherwise be prohibited by either or both of Sections 17(d) and 57(a)(4) of the 1940 Act. There can be no assurance if and when Sierra will receive the Superseding Exemptive Order. The terms of the Superseding Exemptive Order, if received, would be substantially similar to the Current Exemptive Order. Co-investment under the SupersedingCurrent Exemptive Order is subject to certain conditions therein, including the condition that, in the case of each co-investment transaction, the board of directors determines that it would be in Sierra’sthe Company’s best interest to participate in the transaction. The Current Exemptive Order will remain in effect unless and until the Mergers are completed and the Superseding Exemptive Order is granted by the SEC. However, neither we nor the affiliated funds are obligated to invest or co-invest when investment opportunities are referred to us or them. The Company does not expect to avail itself of the current exemptive order, given the internalization and termination of the Investment Management Agreement.Guaranteesa guaranteereceived insurance proceeds during fiscal year 2021 under its insurance policy relating to issue up to $7.0 million in standby letters of credit through a financial intermediary on behalf of a certain portfolio company. Under this arrangement, if the standby letters of credit were to be issued,legal expenses associated with the dismissed stockholder class action, captioned as FrontFour Capital Group LLC, et al. v Brook Taube et al. During the three and six months ended March 31, 2021, the Company would be required to make payments to third parties ifreceived $0.2 million and $1.1 million, respectively, of insurance proceeds. The reimbursements have been recorded as an offset or reduction in professional fees and expenses on the portfolio company was to default on its related payment obligations. The guarantee will renew annually until cancellation. Consolidated Statements of Operations.20202021 and September 30, 2019, the Company had not issued any standby letters of credit under the commitment on behalf of the portfolio company.Unfunded commitmentsAs of March 31, 2020, and September 30, 2019, we had commitments under loan and financing agreements to fund up to $4.6$5.1 million to seven portfolio companies and $8.9$3.9 million to sevenfive portfolio companies, respectively. These commitments are primarily composed of senior secured term loans and revolvers, and the determination of their fair value is included in the Consolidated Schedule of Investments. The commitments are generally subject to the borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. The terms of the borrowings and financings subject to commitment are comparable to the terms of other loan and equity securities in our portfolio. A summary of the composition of the unfunded commitments as of March 31, 20202021 and September 30, 20192020 is shown in the table below (dollars in thousands): March 31, 2020 September 30, 2019 $ 1,078 $ — Alpine SG, LLC - Revolver 1,000 1,000 Kemmerer Operations, LLC - Delayed Draw Term Loan 908 908 NVTN LLC - Super Priority DDTL 500 — Redwood Services Group, LLC - Revolver 350 875 NVTN LLC - DDTL 220 — 1888 Industrial Services, LLC - Term Loan E 219 — DataOnline Corp. - Revolver 179 1,890 Access Media Holdings, LLC - Series AAA Preferred Equity 101 101 Dynamic Energy Services International LLC - Revolver — 3,255 Black Angus Steakhouses, LLC - Delayed Draw Term Loan — 893 Total $ 4,555 $ 8,922 (1)The revolving credit facility was fully drawn as of September 30, 2019. March 31,
2021 September 30,
2020 Redwood Services Group, LLC - Revolver $ 1,575 $ 1,050 1888 Industrial Services, LLC - Revolver 1,078 1,078 Alpine SG - Revolver 1,000 - Kemmerer Operations, LLC - Delayed Draw Term Loan 908 908 NVTN LLC - DDTL 220 220 Black Angus Steakhouses, LLC - Super Priority DDTL 167 - DataOnline Corp. - Revolver 107 179 NVTN LLC - Super Priority DDTL - 500 Total unfunded commitments $ 5,055 $ 3,935 summarizesummarizes the Company'sCompany’s fee income for the three and six months ended March 31, 20202021 and 20192020 (dollars in thousands): For the three months ended March 31 For the six months ended March 31 2020 2019 2020 2019 Prepayment fee $ — $ 74 $ 139 $ 146 Administrative agent fee 63 85 119 161 Origination fee — 71 87 270 Other fees 56 — 56 — Amendment fee 13 88 15 202 Fee income $ 132 $ 318 $ 416 $ 779 For the three months ended
March 31 For the six months ended
March 31 2021 2020 2021 2020 Administrative agent fee $ 23 $ 63 $ 327 $ 119 Prepayment fee - - - 139 Amendment fee 62 13 89 15 Other fees 152 56 163 56 Origination fee - - - 87 Fee income $ 237 $ 132 $ 579 $ 416 NoteThe Company'sreceivereceived $3,000, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each board meeting, and $2,500, plus reimbursement of reasonable out-of-pocket expenses incurred in connection with attending each Audit Committee, Nominating and Corporate Governance Committee, Transition Committee and Compensation Committee meeting. The chair of the Audit Committee receivesreceived an annual fee of $25,000 and the chair of the Nominating and Corporate Governance Committee and the Compensation Committee receivesreceived an annual fee of $10,000 for their additional services in these capacities. In addition, other members of the Audit Committee receivereceived an annual fee of $12,500, and other members of the Nominating and Corporate Governance Committee and the Compensation Committee receivereceived an annual fee of $6,000.receivesreceived a monthly fee of $15,000 and other members receivereceived a monthly fee of $10,000.Pursuant to the Settlement Term Sheet, on April 15, 2019, the board of directors appointed David A. Lorber and Lowell W. Robinson to the Board to fill the vacancies on the Board created by the resignations of Mark Lerdal and John E. Mack, respectively. In addition, the board of directors added: (i) Messrs. Lorber and Robinson to the The Special Committee with Mr. Lorber servingis no longer active. The Special Committee as Chair ofwell as the Special Committee; (ii) Mr. Lorber to the Nominating and Corporate GovernanceTransition Committee and the Compensation Committee; and Mr. Robinson to the Audit Committee. In addition to the compensation described above,are each of Mr. Lorber and Mr. Robinson received the one-time retainer of $25,000 plus reimbursement of out-of-pocket expenses, consistent with the Company's policies for reimbursement of members of theno longer in operation.of directors.Noservice compensation is paid to directors who are ‘‘interested persons’’“interested persons” of the Company (as such term is defined in the 1940 Act). For the three and six months ended March 31, 2020,2021, we accrued $0.3$0.2 million and $0.6$0.7 million for directors’ fees expense, respectively. For the three and six months ended March 31, 2019,2020, we accrued $0.4$0.3 million and $0.7$0.6 million for directors’ fees expense, respectively.2020.20202021 and 20192020 (dollars in thousands, except share and per share amounts): For the three months ended March 31 For the six months ended March 31 2020 2019 2020 2019 Basic and diluted: Net increase/(decrease) in net assets from operations $ (78,860 ) $ (24,609 ) $ (74,690 ) $ (34,687 ) Weighted average common shares outstanding 54,474,211 54,474,211 54,474,211 54,474,211 Earnings per common share-basic and diluted $ (1.45 ) $ (0.45 ) $ (1.37 ) $ (0.64 ) For the Three Months Ended
March 31 For the Six Months Ended
March 31 2021 2020 2021 2020 Basic and diluted: Net increase (decrease) in net assets resulting from operations $ 7,787 $ (78,860 ) $ 1,350 $ (74,690 ) Weighted average shares of common stock outstanding - basic and diluted 2,716,627 2,723,711 2,720,226 2,723,711 Earnings (loss) per share of common stock - basic and diluted (1) $ 2.87 $ (28.95 ) $ 0.50 $ (27.42 ) (1) Basic and diluted shares has been adjusted for 2020 to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1. 20202021 and 2019: For the six months ended March 31 2020 2019 Net asset value per share at beginning of period $ 3.97 $ 5.90 (0.02 ) (0.16 ) Net realized gains/(losses) on investments (0.03 ) (1.24 ) Net unrealized appreciation/(depreciation) on investments (1.28 ) 0.76 Change in provision for deferred taxes on unrealized appreciation/(depreciation) on investments (0.01 ) — Loss on extinguishment of debt (0.03 ) — Net increase/(decrease) in net assets (1.37 ) (0.64 ) Distributions from net investment income — (0.15 ) Net asset value per share at end of period $ 2.60 $ 5.11 Net assets at end of period $ 141,742,268 $ 278,320,976 Shares outstanding at end of period 54,474,211 54,474,211 Per share market value at end of period $ 0.58 $ 3.11 (77.61 )% (15.83 )% (34.46 )% (9.30 )% 7.96 % 16.50 % For the Six Months Ended
March 31 2021 2020 Per share data (1)(12) Net Asset Value per share at Beginning of Period $ 55.30 $ 79.40 Results of Operations: Net Investment Income/(Loss)(2) 4.42 (0.40 ) Net Realized Gain/(Loss) on Investments (17.11 ) (0.60 ) Net Unrealized Gain/(Loss) on Investments 13.23 (25.60 ) Change in provision for deferred taxes on unrealized appreciation/(depreciation) on investments - (0.20 ) Net loss on extinguishment of debt (0.04 ) (0.60 ) Net Increase (Decrease) in Net Assets Resulting from Operations 0.50 (27.40 ) Capital Share Transactions Repurchase of common stock under stock repurchase program 0.11 - Net Increase (Decrease) Resulting from Capital Share Transactions 0.11 - Net Asset Value per share at End of Period $ 55.91 $ 52.00 Net Assets at End of Period 151,177,125 $ 141,742,268 Shares Outstanding at End of Period 2,703,936 2,723,711 Per share market value at end of period $ 32.92 $ 11.60 Total return based on market value(3) 84.63 % (77.61 %) Total return based on net asset value(4) 0.37 % (34.46 %) Portfolio turnover rate(5) 7.27 % 7.96 % 20202021 and 2019:2020: For the Six Months Ended
March 31 2021 2020 Ratios: Ratio of net investment/(loss) income to average net assets after waivers, discounts and reimbursements(5)(6) 16.08 % (1.11 %) Ratio of total expenses to average net assets after waivers, discounts and reimbursements(5)(6) 9.75 % 13.48 % Ratio of incentive fees to average net assets after waivers(6) 0.00 % 0.00 % Supplemental Data: Ratio of net operating expenses and credit facility related expenses to average net assets(5)(6)(10) 9.75 % 13.48 % Percentage of non-recurring fee income(7) 3.01 % 2.32 % Average debt outstanding(8) 98,292,332 224,716,077 Average debt outstanding per common share 36.13 4.13 Asset coverage ratio per unit(9) 2,956 1,819 Total Debt Outstanding(11) 2021 Notes - 73,487,214 2023 Notes 77,295,658 77,019,735 Israeli Notes - 20,665,773 Average market value per unit: 2021 Notes N/A 23.42 2023 Notes 24.54 21.79 Israeli Notes N/A 231.99 For the six months ended March 31 2020 2019 Ratios: (1.11 )% (5.65 )% 13.48 % 22.77 % — % — % Supplemental Data: 13.48 % 22.77 % 2.32 % 2.31 % $ 224,716,077 $ 413,538,818 Average debt outstanding per common share $ 4.13 $ 7.59 1,819 2,023 2021 Notes $ 73,487,214 $ 72,856,481 2023 Notes $ 77,019,735 $ 76,732,361 Israeli Notes $ 20,665,773 $ 115,556,942 SBA Debentures $ — $ 133,118,654 Average market value per unit: N/A N/A 2021 Notes $ 23.42 $ 25.07 2023 Notes $ 21.79 $ 24.68 Israeli Notes $ 231.99 $ 245.62 (1) Table may not foot due to rounding. (2) Net investment income/(loss) excluding management and incentive fee waivers, discounts and reimbursements based on total weighted average common stock outstanding equals $(0.12)$4.44 and $0.03$(2.47) per share for the sixthree months ended March 31, 20202021 and 2019,2020 respectively.(3) Total return is historical and assumes changes in share price, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period. Calculation is not annualized. (4) Total return is historical and assumes changes in NAV, reinvestments of all dividends and distributions at prices obtained under the Company’s dividend reinvestment plan, and no sales charge for the period. Calculation is not annualized. (5) Ratios are annualized during interim periods. (6) For the six months ended March 31, 2021, prior to the effect of Expense Support Agreement, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is 17.59%, 8.65%, 0.00%, and 10.67%, respectively For the six months ended March 31, 2020, excluding management and incentive fee waivers, discounts and reimbursements, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is (6.50)%, 18.88%, 0.00%, and 18.88%, respectively. For the six months ended March 31, 2019, excluding management and incentive fee waivers, discounts and reimbursements, the ratio of net investment income/(loss), total expenses, incentive fees, and operating expenses and credit facility related expenses to average net assets is (5.65)%, 22.77%, 0.00%, and 22.77%, respectively.(7) Represents the impact of the non-recurring fees as a percentage of total investment income. (8) Based on daily weighted average carrying value of debt outstanding during the period. (9) Asset coverage per unit is the ratio of the carrying value of our total consolidated assets, less all liabilities and indebtedness not represented by senior securities, to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. As of March 31, 2020,2021, the Company’s asset coverage was 181.9%295.6% after giving effect to leverage and therefore the Company’s asset coverage was belowabove 200%, the minimum asset coverage requirement under the 1940 Act. As a result, the Company is prohibited from making distributions to stockholders, including the payment of any dividend, and may not employ further leverage until the Company’s asset coverage is at least 200% after giving effect to such leverage.(10) The SBA Debentures were not registered for public trading.(11)Excludes incentive fees. (12)(11)Total amount of each class of senior securities outstanding at the end of the period excluding debt issuance costs. (12) Per share data has been adjusted for the periods shown to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis, as described in Note 1. summarizessets forth the number of shares of common stock repurchased by the Company at an average price of $30.62 per share under its share repurchase program from February 10, 2021 through March 22, 2021: Month Ended Shares
Repurchased Repurchase
Price Per Share Aggregate
Consideration
for
Repurchased
Shares February 2021 13,082 $30.25 - $30.96 $ 396,961 March 2021 6,691 $30.25 - $32.49 $ 208,553 Total 19,773 $ 605,514 distributions duringnet asset value per share was increased by approximately $0.11 as a result of the six months endedshare repurchases through March 22, 2021.2019.Date Declared Record Date Payment Date Amount Per Share During the six months ended March 31, 2019 11/16/2018 12/5/2018 12/20/2018 $ 0.10 2/10/19 2/22/19 3/12/19 0.05 $ 0.15 14.15. Subsequent Eventsbelow,herein, 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 Consolidated Financial Statements as of and for the six months ended March 31, 2020.On May 1, 2020,2021.receivedrepurchased an aggregate of 18,665 shares of common stock through May 11, 2021 with a noticetotal cost of termination from Sierra of the Amended MCC Merger Agreement. Under the Amended MCC Merger Agreement, either party may, subject to certain conditions, terminate the Amended MCC Merger Agreement if the MCC Merger is not consummated by March 31, 2020. Sierra elected to do so on May 1, 2020. Representatives of Sierra informed the Company that in determining to terminate the Amended MCC Merger Agreement, Sierra considered a number of factors, including, among other factors, changes in the relative valuation of the Company and Sierra, the changed circumstances and the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic, and the uncertainty regarding the parties’ ability to satisfy the conditions to closing the MCC Merger in a timely manner.In addition, on May 1, 2020, MDLY received a notice of termination from Sierra of the Amended MDLY Merger Agreement. Under the Amended MDLY Merger Agreement, either party may, subject to certain conditions, terminate the Amended MDLY Merger Agreement if the MDLY Merger is not consummated by March 31, 2020. Sierra elected to do so on May 1, 2020. Representatives of Sierra informed MDLY that in determining to terminate the Amended MDLY Merger Agreement, Sierra considered a number of factors, including, among other factors, changes in the relative valuation of MDLY and Sierra, the changed circumstances and the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic, and the uncertainty regarding the parties’ ability to satisfy the conditions to closing the MDLY Merger in a timely manner.As a result of the foregoing, in connection with the Delaware Action, no Settlement Fund will be established or paid to the stockholders of the Company and no Contingent Fee Award will be paid to plaintiff’s counsel. The other terms of the Settlement, including the releases provided for in the Delaware Order and Final Judgment, remain in effect.As previously disclosed, on January 15, 2020, the Company’s board of directors, including all of the independent directors, approved the renewal of the Investment Management Agreement through the later of April 1, 2020 or so long as the Amended MCC Merger Agreement is in effect, but no longer than a year; provided that, if the Amended MCC Merger Agreement is terminated by Sierra, then the termination of the Investment Management Agreement would be effective on the 30th day following receipt of Sierra’s notice of termination to the Company. As result of the termination of the Amended MCC Merger Agreement, unless further action is taken by the board of directors, including by a majority of the independent directors, the Investment Management Agreement will be terminated effective as of May 31, 2020.Medley CapitalPhenixFIN Corporation.annualquarterly report on Form 10-Q constitute forward-looking statements, which relate to future events or our performance or financial condition. The forward-looking statements contained in this annualquarterly report on Form 10-Q involve risks and uncertainties, including statements as to:the introduction, withdrawal, success and timing of business initiatives and strategies;changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes in the value of our assets;the relative and absolute investment performance and operations of MCC Advisors;the impact of increased competition;the impact of future acquisitions and divestitures;our business prospects and the prospects of our portfolio companies;the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us or MCC Advisors;our contractual arrangements and relationships with third parties;any future financings by us;the ability of MCC Advisors to attract and retain highly talented professionals;fluctuations in foreign currency exchange rates;the impact of changes to tax legislation and, generally, our tax position;the unfavorable resolution of legal proceedings;uncertainties associated with the impact from the COVID-19 pandemic: including its impact on the global and U.S. capital markets and the global and U.S. economy; the length and duration of the COVID-19 outbreak in the United States as well as worldwide and the magnitude of the economic impact of that outbreak; the effect of the COVID-19 pandemic on our business prospects and the operational and financial performance of our portfolio companies, including our and their ability to achieve their respective objectives; and the effect of the disruptions caused by the COVID-19 pandemic on our ability to continue to effectively manage our business;the impact of the termination of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement on our business, financial results, ability to pay dividends and distributions, if any, to our stockholders, and stock price; andrisks and uncertainties relating to the possibility that the Company may explore strategic alternatives, including, but are not limited to: the timing, benefits and outcome of any exploration of strategic alternatives by the Company; potential disruptions in the Company’s business and stock price as a result of our exploration of any strategic alternatives; the ability to realize anticipated efficiencies, or strategic or financial benefits; potential transaction costs and risks; and the risk that any exploration of strategic alternatives may have an adverse effect on our existing business arrangements or relationships, including our ability to retain or hire key personnel. There is no assurance that any exploration of strategic alternatives will result in a transaction or other strategic change or outcome.● the introduction, withdrawal, success and timing of business initiatives and strategies; ● changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, which could result in changes in the value of our assets; ● the impact of increased competition; ● the impact of future acquisitions and divestitures; ● our business prospects and the prospects of our portfolio companies; ● the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government agencies relating to us; ● our contractual arrangements and relationships with third parties; ● any future financings by us; ● fluctuations in foreign currency exchange rates; ● the impact of changes to tax legislation and, generally, our tax position; ● the unfavorable resolution of legal proceedings; ● uncertainties associated with the impact from the COVID-19 pandemic: including its impact on the global and U.S. capital markets and the global and U.S. economy; the length and duration of the COVID-19 outbreak in the United States as well as worldwide and the magnitude of the economic impact of that outbreak; the effect of the COVID-19 pandemic on our business prospects and the operational and financial performance of our portfolio companies, including our and their ability to achieve their respective objectives; and the effect of the disruptions caused by the COVID-19 pandemic on our ability to continue to effectively manage our business; and ● risks and uncertainties relating to the possibility that the Company may explore strategic alternatives, including, but are not limited to: the timing, benefits and outcome of any exploration of strategic alternatives by the Company; potential disruptions in the Company’s business and stock price as a result of our exploration of any strategic alternatives; the ability to realize anticipated efficiencies, or strategic or financial benefits; potential transaction costs and risks; and the risk that any exploration of strategic alternatives may have an adverse effect on our existing business arrangements or relationships, including our ability to retain or hire key personnel. There is no assurance that any exploration of strategic alternatives will result in a transaction or other strategic change or outcome. imposed restricting travel, and temporarily closing or limiting capacity at many corporate offices, retail stores, restaurants, fitness clubs and manufacturing facilities and factories in affected jurisdictions. Such actions are creating disruption in global supply chains and adversely impacting a number of industries. The outbreak has had and could continue to have a continuedan adverse impact on economic and market conditions and trigger a period of global economic slowdown. Theprecludes any prediction aswe cannot estimate the long-term impact of COVID-19 on our business, future results of operations, financial position or cash flows at this time. Further, the operational and financial performance of the portfolio companies in which we make investments may be significantly impacted by COVID-19, which may in turn impact the valuation of our investments. We believe our portfolio companies have taken immediate actions to effectively and efficiently respond to the ultimate adversechallenges posed by COVID-19 and related orders imposed by state and local governments, including developing liquidity plans supported by internal cash reserves, shareholder support, and, as appropriate, accessing their ability to participate in the government Paycheck Protection Program. The Company’s performance was negatively impacted during the pandemic. The longer-term impact of COVID-19. Nevertheless,COVID-19 on the operations and the performance of the Company (including certain portfolio companies) is difficult to predict, but may also be adverse. The longer-term potential impact on such operations and performance could depend to a large extent on future developments and actions taken by authorities and other entities to contain COVID-19 and its economic impact. The impacts, as well as the uncertainty over impacts to come, of COVID-19 have adversely affected the performance of the Company (including certain portfolio companies) and may continue to do so in the future. Furthermore, the impacts of a potential worsening of global economic conditions and the continued disruptions to and volatility in the financial markets remain unknown. COVID-19 presents material uncertainty and risks with respect to the underlying value of the Company’s portfolio companies, the Company’s business, financial condition, results of operations and cash flows, such as the potential negative impact to financing arrangements, increased costs of operations, changes in law and/or regulation, and uncertainty regarding government and regulatory policy.20202021 through May 11, 2020.the filing date of this quarterly report on Form 10-Q. However, as the discussion in this Item 7.2. Management’s Discussion and Analysis of Financial Condition and Results of Operations relates to the Company’s financial statements for the quarterly period end March 31, 2020,2021, the analysis contained herein may not fully account for impacts relating to the COVID-19 pandemic. In that regard, for example, as of March 31, 2020,2021, the Company valued its portfolio investments in conformity with U.S. GAAP based on the facts and circumstances known by the Company at that time, or reasonably expected to be known at that time. Due to the overall volatility that the COVID-19 pandemic hasmay have caused during the months that followedfollowing our most recent valuation (as of March 31, 2020 valuation,2021), any valuations conducted now or in the future in conformity with U.S. GAAP could result in a lower fair value of our portfolio. The longer-term impact of COVID-19 on the operations and the performance of the Company (including certain portfolio companies) is difficult to predict, but may also be adverse. The longer-term potential impact to our results going forward willon such operations and performance could depend to a large extent on future developments and new information that may emerge regarding the duration and severity of COVID-19 and the actions taken by authorities and other entities to contain COVID-19 and its economic impact. The impacts, as well as the coronavirus or treat its impact, alluncertainty over impacts to come, of which are beyond our control. Accordingly,COVID-19 have adversely affected the performance of the Company cannot predictand may continue to do so in the extent to which its financial condition and results of operations will be affected at this time.an externally-managed,a non-diversified closed-end management investment company that has elected to be regulated as a BDC under the 1940 Act. In addition, we have elected, and intend to qualify annually, to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code.Our investmentUnder our internalized management structure, our activities are managed by MCC Advisorsour senior professionals and are supervised by our board of directors, of which a majority of the members are independent of us.Ourappreciation by lendingappreciation. The management team seeks to privately-held middle market companies,achieve this objective primarily through directly originated transactions,making loans, private equity or other investments in privately-held companies. The Company may also make debt, equity or other investments in publicly-traded companies. (These investments may also include investments in other BDCs, closed-end funds or REITS.) We may also pursue other strategic opportunities and invest in other assets or operate other businesses to help these companies fund acquisitions, growth or refinancing. Ourachieve our investment objective. The portfolio generally consists of senior secured first lien term loans, and senior secured second lien term loans.loans, senior secured bonds, preferred equity and common equity. Occasionally, we will receive warrants or other equity participation features which we believe will have the potential to increase the total investment returns.Agreements and Plan of MergersThe descriptionMergersNYSE Listed Company Manual (“Section 802.01C”) because the average closing price of the Company’s common stock over a period of 30 consecutive trading days was below $1.00 per share. The Company could regain compliance with Section 802.01C at any time during the six-month cure period if, on the last trading day of any calendar month during the cure period, it had (i) a closing share price of at least $1.00 per share and (ii) an average closing price of at least $1.00 per share over the 30 trading-day period ending on the last trading day of that month. As described in detail below, the Company effected the Reverse Stock Split (as defined below), effective as of July 24, 2020, which brought the Company into compliance with Section 802.01C. On December 21, 2020, the Company announced that it completed the application process for and was authorized to transfer the listing of its shares of common stock to the NASDAQ Global Market. The listing and trading of the common stock on the NYSE ceased at the close of trading on December 31, 2020. Effective January 4, 2021, the common stock trades on the NASDAQ Global Market under the trading symbol “PFX.”Settlement (as defined below) set forth below are asAuthorized Share Reduction. Accordingly, on July 13, 2020, the Company filed a Certificate of March 31, 2020. SubsequentAmendment (the “Certificate of Amendment”) to such date, the Amended MCC Merger Agreement (as defined below)Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split and the Amended MDLY Merger Agreement (as defined below) were terminated. See "Recent Developments" for more information.On August 9, 2018, the Company entered into a definitive agreement to merge with Sierra Income Corporation (“Sierra”). Authorized Share Reduction.Agreement and PlanCertificate of Merger, datedAmendment, effective as of August 9, 2018, by and between the Company and Sierra5:00 p.m., Eastern Time, on July 24, 2020 (the “MCC Merger Agreement”“Effective Time”), the Company would, on the terms and subject to the conditions set forth in the MCC Merger Agreement, merge with and into Sierra, with Sierra as the surviving entity (the “Combined Company”) in the merger (the “MCC Merger”). Under the MCC Merger, each sharetwenty (20) shares of our common stock issued and outstanding, immediately prior to the MCC Merger effective time (other thanEffective Time, automatically and without any action on the part of the respective holders thereof, were combined and converted into one (1) share of common stock. In connection with the Reverse Stock Split, the Certificate of Amendment provided for a reduction in the number of authorized shares of our common stock held byfrom 100,000,000 to 5,000,000 shares of common stock. No fractional shares were issued as a result of the Company, Sierra or their respective wholly owned subsidiaries)Reverse Stock Split. Instead, any stockholder who would be converted into the righthave been entitled to receive 0.8050 sharesa fractional share as a result of the Sierra’s common stock. Simultaneously, pursuant to the Agreement and PlanReverse Stock Split received cash payments in lieu of Merger (the “MDLY Merger Agreement”), dated as of August 9, 2018, by and among Medley Management Inc. (“MDLY”), Sierra, and Sierra Management, Inc., a newly formed Delaware corporation and a wholly owned subsidiary of Sierra (“Merger Sub”), MDLY would, on the termssuch fractional shares (without interest and subject to the conditions set forth in the MDLY Merger Agreement, merge withbackup withholding and into Merger Sub, with Merger Sub as the surviving company in the Merger (the “MDLY Merger” together with the MCC Merger, the “Mergers”), and MDLY’s existing asset management business would continue to operate as a wholly owned subsidiary of the Combined Company. In the MDLY Merger, each share of MDLY Class A common stock, issued and outstanding immediately prior to the MDLY Merger effective time (other than Dissenting Shares (as defined in the MDLY Merger Agreement) and shares of MDLY Class A common stock held by MDLY, Sierra or their respective wholly owned subsidiaries) would be converted into the right to receive (i) 0.3836 sharesof Sierra’s common stock; plus (ii) cash in an amount equal to $3.44 per share. In addition, MDLY’s stockholders would have the right to receive certain dividends and/or other payments.On July 29, 2019, the Company entered into the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MCC Merger Agreement”), by and between the Company and Sierra, pursuant to which the Company will, on the terms and subject to the conditions set forth in the Amended MCC Merger Agreement, merge with and into Sierra, with Sierra as the surviving company in the MCC Merger. In the MCC Merger, each share of the Company’s common stock (other than shares of the Company’s common stock held by the Company, Sierra or their respective wholly owned subsidiaries) will be exchanged for the right to receive (i) 0.68 shares of Sierra’s common stock if the attorneys’ fees of plaintiffs’ counsel and litigation expenses paid or incurred by plaintiffs’ counsel or advanced by plaintiffs in connection with the Delaware Action, as described below (such fees and expenses, the “Plaintiff Attorney Fees”), are less than or equal to $10,000,000; (ii) 0.66 shares of Sierra’s common stock if the Plaintiff Attorney Fees are equal to or greater than $15,000,000; (iii) between 0.68 and 0.66 per share of Sierra’s common stock if the Plaintiff Attorney Fees are greater than $10,000,000 but less than $15,000,000, calculated on a descending basis, based on straight line interpolation between $10,000,000 and $15,000,000; or (iv) 0.66 shares of Sierra’s common stock in the event that the Plaintiff Attorney Fees are not fully and finally determined prior to the closing of the MCC Merger (such ratio, the “MCC Merger Exchange Ratio”)applicable withholding taxes). Based upon the Plaintiff Attorney Fees approved by the Court of Chancery of the State of Delaware (the “Delaware Court of Chancery”) as set forth in the Order and Final Judgment entered into on December 20, 2019, as described below (the “Delaware Order and Final Judgment”), the MCC Merger Exchange Ratio will be 0.66 shares of Sierra’s common stock. The Company and Sierra are appealing the Delaware Order and Final Judgment with respect to the Delaware Court of Chancery’s ruling on the Plaintiff Attorney Fees.In addition, on July 29, 2019, Sierra and MDLY announced the execution of the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MDLY Merger Agreement”), by and among MDLY, Sierra, and Merger Sub, pursuant to which MDLY will, on the terms and subject to the conditions set forth in the Amended MDLY Merger Agreement, merge with and into Merger Sub, with Merger Sub as the surviving company in the MDLY Merger. In the MDLY Merger, each share of MDLY Class A common stock, issued and outstanding immediately prior to the MDLY Merger effective time, other than shares of MDLY Class A common stock held by MDLY, Sierra or their respective wholly owned subsidiaries (the “Excluded MDLY Shares”) and the Dissenting Shares (as defined in the Amended MDLY Merger Agreement), held, immediately prior to the MDLY Merger effective time, by any person other than a Medley LLC unitholder, will be exchanged for (i) 0.2668 shares of Sierra’s common stock; plus (ii) cash in an amount equal to $2.96 per share. In addition, in the MDLY Merger, each share of MDLY Class A common stock issued and outstanding immediately prior to the MDLY Merger effective time, other than the Excluded MDLY Shares and the Dissenting Shares, held, immediately prior to the MDLY Merger effective time, by Medley LLC unitholders will be exchanged for (i) 0.2072 shares of Sierra’s common stock; plus (ii) cash in an amount equal to $2.66 per share.Pursuant to terms of the Amended MCC Merger Agreement, the consummation of the MCC Merger is conditioned upon the satisfaction or waiver of each of the conditions to closing under the Amended MDLY Merger Agreement and the consummation of the MDLY Merger. However, pursuant to the terms of the Amended MDLY Merger Agreement, the consummation of the MDLY Merger is not contingent upon the consummation of the MCC Merger. If both Mergers are successfully consummated, Sierra’s common stock would be listed on the NYSE, with such listing expected to be effective as of the closing date of the Mergers, and Sierra’s common stock will be listed on the Tel Aviv Stock Exchange (“TASE”), with such listing expected to be effective as of the closing date of the MCC Merger. If, however, only the MDLY Merger is consummated, Sierra’s common stock would be listed on the NYSE. If both Mergers are successfully consummated, the investment portfolios of MCC and Sierra would be combined, Merger Sub, as a successor to MDLY, would be a wholly owned subsidiary of the Combined Company, and the Combined Company would be internally managed by MCC Advisors LLC, its wholly controlled adviser subsidiary. If only the MDLY Merger is consummated, the investment portfolios of MCC and Sierra would not be combined; however, the investment management function relating to the operation of Sierra, as the surviving company, would still be internalized (the “Sierra/MDLY Company”) and the Sierra/MDLY Company would be managed by MCC Advisors.The Mergers are subject to approval by the stockholders of the Company, Sierra, and MDLY, regulators, including the SEC, court approval of the Settlement (as described below), other customary closing conditions and third-party consents. There is no assurance that any of the foregoing conditions will be satisfied. The Company and Sierra have the right to terminate the Amended MCC Merger Agreement under certain circumstances, including (subject to certain limitations set forth in the Amended MCC Merger Agreement), among others: (i) by mutual written agreement of each party; (ii) any governmental entity whose consent or approval is a condition to closing set forth in Section 8.1 of the Amended MCC Merger Agreement has denied the granting of any such consent or approval and such denial has become final and nonappealable, or any governmental entity of competent jurisdiction shall have issued a final and nonappealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by the Amended MCC Merger Agreement; (iii) the MCC Merger has not closed on or prior to March 31, 2020; or (iv) either party has failed to obtain stockholder approval or the Amended MDLY Merger Agreement has been terminated.On February 11, 2019, a purported stockholder class action was commenced in the Delaware Court of Chancery by FrontFour Capital Group LLC and FrontFour Master Fund, Ltd. (together, “FrontFour”), captioned as FrontFour Capital Group LLC, et al. v. Brook Taube et al., Case No. 2019-0100 (the “Delaware Action”) against defendants Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, MDLY, Sierra, the Company, MCC Advisors, Medley Group LLC, and Medley LLC. The complaint, as amended on February 12, 2019, alleged that the individuals named as defendants breached their fiduciary duties to the Company’s stockholders in connection with the MCC Merger, and that MDLY, Sierra, MCC Advisors, Medley Group LLC, and Medley LLC aided and abetted those alleged breaches of fiduciary duties. The complaint sought to enjoin the vote of MCC stockholders on the proposed merger and enjoin enforcement of certain provisions of the Agreement and Plan of Merger, dated as of August 9, 2018, by and between MCC and Sierra (the “MCC Merger Agreement”).The Delaware Court of Chancery held a trial on the plaintiffs’ motion for a preliminary injunction and issued a Memorandum Opinion (the “Decision”) on March 11, 2019. The Delaware Court of Chancery denied the plaintiffs’ requests to (i) permanently enjoin the proposed merger and (ii) require the Company to conduct a “shopping process” for the Company on terms proposed by the plaintiffs in their complaint. The Delaware Court of Chancery held that the Company’s directors breached their fiduciary duties in entering into the proposed merger, but rejected the plaintiffs’ claim that Sierra aided and abetted those breaches of fiduciary duties. The Delaware Court of Chancery ordered the defendants to issue corrective disclosures consistent with the Decision, and enjoined a vote of the Company’s stockholders on the proposed merger until such disclosures had been made and stockholders had the opportunity to assimilate that information.On March 20, 2019, another purported stockholder class action was commenced by Stephen Altman against Brook Taube, Seth Taube, Jeff Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, Mark Lerdal, and John E. Mack in the Delaware Court of Chancery, captioned Altman v. Taube, Case No. 2019-0219 (the “Altman Action”). The complaint alleged that the defendants breached their fiduciary duties to stockholders of the Company in connection with the vote of the Company’s stockholders on the proposed mergers. On April 8, 2019, the Delaware Court of Chancery granted a stipulation consolidating the Delaware Action and the Altman Action, designating the amended complaint in the Delaware Action as the operative complaint, and designating the plaintiffs in the Delaware Action and their counsel the lead plaintiffs and lead plaintiffs’ counsel, respectively.On December 20, 2019, the Delaware Court of Chancery entered into the Delaware Order and Final Judgment approving the settlement of the Delaware Action (the “Settlement”). Pursuant to the Settlement, the Company agreed to certain amendments to (i) the MCC Merger Agreement and (ii) the MDLY Merger Agreement, which amendments are reflected in the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement. The Settlement also provides for, if the MCC Merger is consummated, the creation of a settlement fund, consisting of $17 million in cash and $30 million of Sierra’s common stock, with the number of shares of Sierra’s common stock to be calculated using the pro forma net asset value of $6.37 per share as of June 30, 2019, which will be distributed to eligible members of the Settlement Class (as defined in the Settlement). In addition, in connection with the Settlement, on July 29, 2019, the Company entered into a Governance Agreement with FrontFour Capital Group LLC, FrontFour Master Fund, Ltd., FrontFour Capital Corp., FrontFour Opportunity Fund, David A. Lorber, Stephen E. Loukas and Zachary R. George, pursuant to which, among other matters, FrontFour is subject to customary standstill restrictions and required to vote in favor of the revised MCC Merger at a meeting of stockholders to approve the revised MCC Merger Agreement. The Settlement also provides for mutual releases between and among FrontFour and the Settlement Class, on the one hand, and the Medley Parties, on the other hand, of all claims that were or could have been asserted in the Delaware Action through September 26, 2019.The Delaware Court of Chancery also awarded attorney’s fees as follows: (i) an award of $3,000,000 to lead plaintiffs’ counsel and $75,000 to counsel to plaintiff Stephen Altman (the “Therapeutics Fee Award”) and $420,334.97 of plaintiff counsel expenses payable to the lead plaintiff’s counsel, which were paid on December 23, 2019, and (ii) an award that is contingent upon the closing of the proposed merger transactions (the “Contingent Fee Award”), consisting of:a.$100,000 for the agreement to appoint an independent director on the board of directors of the post-merger company; andb. the amount calculated by solving for A in the following formula:Award[A]=(Monetary Fund[M]+Award[A]-Look Through[L])*Percentage[P]Where:Ashall be the amount of the Additional Fee (excluding the $100,000 award for the agreement to appoint an independent director on the board of directors of the post-merger company);Mshall be the sum of (i) the $17 million cash component of the Settlement Fund and (ii) the value of the post-merger company stock component of the Settlement Fund, which shall be calculated as the product of the VPS (as defined below) and 4,709,576.14 (the number of shares of post-merger company’s stock comprising the stock component of the net settlement amount);Lshall be the amount representing the estimated value of the decrease in shares to be received by eligible class members arising by operation of the change in the “Exchange Ratio” under the Amended MCC Merger Agreement, calculated as follows:L = ((ES * 68%) - (ES * 66%)) * VPSWhere:ES shall be the number of eligible shares;VPSshall be the pro forma net asset value per share of the post-merger company’s common stock as of the closing as reported in the public disclosure filed nearest in time and after the closing (the “Closing NAV Disclosure”); andP shall equal 0.26The Contingent Fee Award is contingent upon the closing of the MCC Merger. Payment of the Contingent Fee Award will be made in two stages. First, within five (5) business days of the establishment of the Settlement Fund, the Company or its successor shall (i) pay the plaintiffs’ counsel an estimate of the Contingent Fee Award (the “Additional Fee Estimate”), less twenty (20) percent (the “Additional Fee Estimate Payment”), and (ii) deposit the remaining twenty (20) percent of the Additional Fee Estimate into escrow (the “Escrowed Fee”). For purposes of calculating such estimate, the Company or its successor shall use the formula set above, except that VPS shall equal the pro forma net asset value of the post-merger company’s common stock as reported in the public disclosure filed nearest in time and prior to the closing (the “Closing NAV Estimate”).Second, within five (5) business days of the Closing NAV Disclosure (as defined in the Order and Final Judgment), (i) if the Additional Fee is greater than the Additional Fee Estimate Payment, an amount of the Escrowed Fee shall be released to plaintiffs’ counsel such that the total payments made to plaintiffs’ counsel equal the Additional Fee and the remainder of the Escrowed Fee, if any, shall be released to the Company or its successor, (ii) if the Additional Fee is less than the Additional Fee Estimate Payment, plaintiffs’ counsel shall return to the Company or its successor the difference betweenthe Additional Fee Estimate and the Additional Fee and the Escrowed Fee shall be released to the Company or its successor, or (iii) if the Additional Fee is equal to the Additional Fee Estimate Payment, the Escrowed Fee shall be released to the Company or its successor.On January 17, 2020, the Company and Sierra filed a notice of appeal with the Delaware Supreme Court from those provisions of the Order and Final Judgment with respect to the Contingent Fee Award.Ourinclude the payment ofincluded management and incentive fees pursuant to the investment management agreement we havehad with MCC Advisors and overhead expenses, including our allocable portion of our administrator’s overhead under the administration agreement.agreement, which were paid during the quarter ended March 31, 2021. Our management and incentive fees compensatecompensated MCC Advisors for its work in identifying, evaluating, negotiating, closing and monitoring our investments. WeOn November 18, 2020, the board of directors adopted an internally managed structure, effective January 1, 2021, under which we bear all other costs and expenses of our operations and transactions, including those relating to:● our organization and continued corporate existence; ● calculating our NAV (including the cost and expenses of any independent valuation firms); ● salaries, compensation and benefits for our employees and any consultants, including investment professionals; ● interest payable on debt, if any, incurred to finance our investments; ● the costs of all offerings of common stock and other securities, if any; ● distributions on our shares; ● administration fees payable under our administration agreement with U.S. Bancorp; ● amounts payable to third parties relating to, or associated with, making investments; ● transfer agent and custodial fees; ● registration fees and listing fees; our organization and continued corporate existence;calculating our NAV (including● U.S. federal, state and local taxes; ● independent director fees and expenses; ● costs of preparing and filing reports or other documents with the SEC or other regulators; ● the costs of any reports, proxy statements or other notices to our stockholders, including printing costs; ● our fidelity bond; ● directors and officers/errors and omissions liability insurance, and any other insurance premiums; ● indemnification payments; ● direct costs and expenses of administration, including audit and legal costs; and ● all other expenses reasonably incurred by us in connection with administering our business, such as rent for our office space. cost and expenses of any independent valuation firms);expenses incurred byCompany entered into an expense support agreement (the “Expense Support Agreement”) with MCC Advisors payableand Medley LLC, pursuant to third parties, including agents, consultants or other advisers, in monitoring our financialwhich MCC Advisors and legal affairsMedley LLC agreed (jointly and in monitoring our investments and performing due diligence on our prospective portfolio companies;interest payable on debt, if any, incurredseverally) to finance our investments; costs of all offerings of common stock and other securities, if any;the base management fee and any incentive fee;distributions on our shares;administration fees payable under our administration agreement;allocated costs incurred by MCC Advisors in providing managerial assistance to those portfolio companies that request it;amounts payable to third parties relating to, or associated with, making investments;transfer agentCompany’s other operating expenses (except interest expenses, certain extraordinary strategic transaction expenses, and custodial fees;registration fees and listing fees;U.S. federal, state and local taxes;independent director fees and expenses;costs of preparing and filing reports or other documents with the SEC or other regulators;the costs of any reports, proxy statements or other notices to our stockholders, including printing costs;our fidelity bond;directors and officers/errors and omissions liability insurance, and any other insurance premiums;indemnification payments;direct costs and expenses of administration, including audit and legal costs; andall other expenses reasonably incurredapproved by us or MCC Advisorsthe Special Committee of the Board (as described in Note 10)), at $667,000 per month (the “Cap”). Under the Expense Support Agreement, the Cap became effective on June 1, 2020 and was to expire on September 30, 2020. On September 29, 2020, the board of directors, including all of the independent directors, extended the term of the Expense Support Agreement through the end of quarter ending December 31, 2020. The Expense Support Agreement expired by its terms at the close of business on December 31, 2020, in connection with administering our business, such as the allocable portion of overhead under our administration agreement, including rent and other allocable portionsadoption of the costinternalized management structure by the board of our Chief Financial Officerdirectors.Chief Compliance Officerthe other operating expenses subject to the Cap (as described above) were $2.5 million, which resulted in $0.3 million of expense support incurred during the quarter ended December 31, 2020 and their respective staffs (including travel expenses).20202021 and September 30, 2019,2020, our portfolio had a fair market value of approximately $255.9approximately $168.2 million and $396.9$246.7 million, respectively. The following table summarizes ourand investment activity duringcompany. three and six months ended March 31, 2020, we received proceeds from sale and 2019 (dollars in thousands): For the three months ended March 31 For the six months ended March 31 2020 2019 2020 2019 Investments made in new portfolio companies $ — $ — $ 5,000 $ 648 Investments made in existing portfolio companies 6,572 13,268 8,237 51,741 Aggregate amount in exits and repayments (20,363 ) (30,968 ) (85,363 ) (74,765 ) Net investment activity $ (13,791 ) $ (17,700 ) $ (72,126 ) $ (22,376 ) Portfolio Companies, at beginning of period 46 62 51 67 Number of new portfolio companies — — 1 2 Number of exited portfolio companies (2 ) (2 ) (8 ) (9 ) Portfolio companies, at end of period 44 60 44 60 Number of investments in existing portfolio companies 11 13 16 19 portfolioportfolio company, including until its sale on October 8, 2020, the equity investment in the MCC Senior Loan Strategy JV I LLC (“MCC JV”), andwhich had been our largest portfolio company, as well as excluding the equity investment in the MCC JV, as of March 31, 20202021 and September 30, 20192020 (dollars in thousands): March 31, 2020 September 30, 2019 Amortized Cost Fair Value Amortized Cost Fair Value Average portfolio company $ 9,011 $ 5,816 $ 9,170 $ 7,782 Largest portfolio company 39,990 43,053 38,395 41,855 March 31, 2021 September 30, 2020 Amortized Cost Fair Value Amortized Cost Fair Value Average portfolio company $ 3,391 $ 3,739 $ 7,813 $ 5,875 Largest portfolio company 19,469 29,961 37,987 40,807 20202021 (dollars in thousands): Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 188,920 47.7 % $ 106,008 41.4 % Senior Secured Second Lien Term Loans 40,172 10.1 25,389 9.9 Unsecured Debt 2,103 0.5 1,466 0.6 MCC Senior Loan Strategy JV I LLC 78,575 19.8 41,927 16.4 Equity/Warrants 86,717 21.9 81,106 31.7 Total $ 396,487 100.0 % $ 255,896 100.0 % Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 167,149 78.2 % $ 93,291 55.5 % Senior Secured Second Lien Term Loans 7,977 3.7 7,757 4.6 Unsecured Debt 3,964 1.9 2,098 1.2 Equity/Warrants 34,545 16.2 65,099 38.7 Total Investments $ 213,635 100.0 % $ 168,245 100.0 % 20192020 (dollars in thousands): Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 243,342 52.0 % $ 192,770 48.6 % Senior Secured Second Lien Term Loans 39,089 8.4 36,508 9.2 Unsecured Debt 2,653 0.6 2,653 0.7 MCC Senior Loan Strategy JV I LLC 78,575 16.8 69,949 17.6 Equity/Warrants 103,989 22.2 95,009 23.9 Total $ 467,648 100.0 % $ 396,889 100.0 % Amortized Cost Percentage Fair Value Percentage Senior Secured First Lien Term Loans $ 178,843 54.5 % $ 106,463 43.2 % Senior Secured Second Lien Term Loans 15,476 4.7 13,927 5.6 Unsecured Debt 4,601 1.4 2,669 1.1 MCC Senior Loan Strategy JV I LLC 79,888 24.4 41,019 16.6 Equity/Warrants 49,327 15.0 82,666 33.5 Total $ 328,135 100.0 % $ 246,744 100.0 % 2020,2021, our income-bearing investment portfolio which represented 64.7%59.6% of our total portfolio had a weighted average yield based upon cost of our portfolio investments of approximately 8.7%, and 82.7% of our income-bearing investment portfoliowhich 85.0% bore interest based on floating rates, such as the London Interbank Offering Rate (“LIBOR”), while 17.3% of our income-bearing investment portfolio15.0% bore interest at fixed rates. As of March 31, 2020,2021, the weighted average yield based upon cost of our total portfolio was approximately 2.9%8.9%. The weighted average yield of our total portfolio does not represent the total return to our stockholders.regularly assesseswhile serving as our investment adviser, rated the risk profile of each of our investments and rates each of them based on the following categories, which we referwas referred to as MCC Advisors’ investment credit rating:RatingDefinition 1RatingDefinition 1 Investments that are performing above expectations. 22 Investments that are performing within expectations, with risks that are neutral or favorable compared to risks at the time of origination. All new loans are rated ‘2’. 33 Investments that are performing below expectations and that require closer monitoring, but where no loss of interest, dividend or principal is expected. Companies rated ‘3’ may be out of compliance with financial covenants, however, loan payments are generally not past due. 44 Investments that are performing below expectations and for which risk has increased materially since origination. Some loss of interest or dividend is expected but no loss of principal. In addition to the borrower being generally out of compliance with debt covenants, loan payments may be past due (but generally not more than 180 days past due). 55 Investments that are performing substantially below expectations and whose risks have increased substantially since origination. Most or all of the debt covenants are out of compliance and payments are substantially delinquent. Some loss of principal is expected. 20202021 and September 30, 20192020 (dollars in thousands): March 31, 2020 September 30, 2019 Investment Performance Rating Fair Value Percentage Fair Value Percentage 1 $ 65,248 25.5 % $ 105,231 26.5 % 2 107,692 42.1 146,053 36.8 3 56,898 22.2 123,253 31.1 4 4,530 1.8 4,915 1.2 5 21,528 8.4 17,437 4.4 Total $ 255,896 100.0 % $ 396,889 100.0 % March 31, 2021 September 30, 2020 Fair Value Percentage Fair Value Percentage 1 $ 40,556 24.2 % $ 54,256 22.0 % 2 76,283 45.3 % 130,742 53.0 % 3 21,480 12.8 % 40,645 16.5 % 4 18,757 11.1 % 11,325 4.6 % 5 11,169 6.6 % 9,776 3.9 % Total $ 168,245 100.0 % $ 246,744 100.0 % For the three months ended March 31 For the six months ended March 31 2021 2020 2021 2020 Total investment income $ 6,455 $ 5,301 $ 19,255 $ 12,792 Less: Net expenses 2,767 9,517 7,239 13,935 Net investment income/(loss) 3,688 (4,216 ) 12,016 (1,143 ) Net realized gains (losses) on investments 161 (100 ) (46,545 ) (1,844 ) Net change in unrealized gains (losses) on investments 3,938 (73,563 ) 36,001 (69,833 ) Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments - (86 ) - (86 ) Loss on extinguishment of debt - (895 ) (122 ) (1,784 ) Net increase (decrease) in net assets resulting from operations $ 7,787 $ (78,860 ) $ 1,350 $ (74,690 ) 20202021, investment income totaled $6.4 million, of which $6.1 million was attributable to portfolio interest and 2019 are as follows (dollars in thousands): For the three months ended March 31 For the six months ended March 31 2020 2019 2020 2019 Total investment income/(loss) $ 5,301 $ 12,587 $ 12,792 $ 26,789 Total expenses, net 9,517 23,182 13,935 35,625 Net investment income before excise taxes (4,216 ) (10,595 ) (1,143 ) (8,836 ) Excise tax expense — — — — Net investment income (4,216 ) (10,595 ) (1,143 ) (8,836 ) Net realized gains/(losses) from investments (100 ) (10,615 ) (1,844 ) (67,338 ) Net unrealized appreciation/(depreciation) on investments (73,563 ) (3,399 ) (69,833 ) 41,610 Change in provision for deferred taxes on unrealized (appreciation)/depreciation on investments (86 ) — (86 ) — Loss on extinguishment of debt (895 ) — (1,784 ) (123 ) Net increase/(decrease) in net assets resulting from operations $ (78,860 ) $ (24,609 ) $ (74,690 ) $ (34,687 ) Investment IncomeFor the three months ended March 31, 2019, investment income totaled $12.6 million, of which $12.3 million was attributable to portfolio interest and dividend income, and $0.3 million to fee income. For the six months ended March 31, 2019, investment income totaled $26.8 million, of which $26.0 million was attributable to portfolio interest and dividend income, and $0.8 million to fee income.20202021 and 20192020 are as follows (dollars in thousands): For the three months ended March 31 For the six months ended March 31 2020 2019 2020 2019 Base management fees $ 1,641 $ 3,084 $ 3,650 $ 6,270 Incentive fees — — — — Interest and financing expenses 4,432 5,899 9,576 11,908 General and administrative 2,083 2,881 2,600 3,485 Administrator expenses 576 668 1,128 1,700 Insurance 357 117 655 236 Directors fees 297 376 612 669 Professional fees, net 131 10,157 (4,286 ) 11,357 Expenses before management and incentive fee waivers 9,517 23,182 13,935 35,625 Management fee waiver — — — — Incentive fee waiver — — — — Expenses, net of management and incentive fee waivers $ 9,517 $ 23,182 $ 13,935 $ 35,625 For the three months ended
March 31 For the six months ended
March 31 2021 2020 2021 2020 Base management fees $ - $ 1,641 $ 1,146 $ 3,650 Interest and financing expenses 1,260 4,432 3,278 9,576 General and administrative 105 2,083 467 2,600 Salary and Benefits 332 - 332 - Administrator expenses (45 ) 576 440 1,128 Insurance 474 357 959 655 Directors fees 221 297 696 612 Professional fees, net 420 131 (79 ) (4,286 ) Expenses before waivers and reimbursements 2,767 9,517 7,239 13,935 2020,2021, total operating expenses before management and incentive fee waivers and expense support reimbursements decreased by $13.7$5.1 million, or 58.9%64.9%, compared to the three months ended March 31, 2019.2020. For the six months ended March 31, 2020,2021, total operating expenses before management and incentive fee waivers and expense support reimbursements decreased by $21.7$4.2 million, or 60.9%40.8%, compared to the six months ended March 31, 2019.20202021 decreased by $1.5$3.2 million, or 24.9%71.6%, compared to the three months ended March 31, 2019.2020. The decrease in interest and financing expenses was primarily due to the Company’s $74.0 million repayment of $64.2the 2021 Notes on November 20, 2020 and the full repayment of $120.2 million Series A Israeli Notes offered in Israel (the “Israeli Notes”) between August 12, 2019 and December 31, 2019 and the voluntary repayment of $135.0 million SBA-guaranteed debentures (the “SBA Debentures”), which the Company repaid between March 28, 2019 and May 10, 2019.20202021 decreased by $2.3$6.3 million, or 19.6%65.8%, compared to the six months ended March 31, 2019.2020. The decrease in interest and financing expenses was primarily due to the redemption of $12.0Company’s $74.0 million of 6.125% unsecured notes that mature on March 30, 2023 (the “2023 Notes”), the repayment of $64.2the 2021 Notes on November 20, 2020 and the full repayment of $120.2 million of theSeries A Israeli Notes offered in Israel (the “Israeli Notes”) between August 12, 2019 and December 31, 2019 and the voluntary repayment of $135.0 million of the SBA Debentures, which the Company repaid between March 28, 2019 and May 10, 2019.20202021 decreased by $1.4$1.6 million, or 46.8%100%, compared to the three months ended March 31, 2019 due to2020 as, effective January 1, 2021, the decline in our gross assets during the period.20202021 decreased by $2.6$2.5 million, or 41.8%68.6%, compared to the six months ended March 31, 2019 due to2020 as, effective January 1, 2021, the decline in our gross assets duringCompany no longer incurs management fees under its current internalized structure.period.20202021 decreased by $10.8$1.4 million, or 75.7%61.3%, compared to the three months ended March 31, 20192020 primarily due to a decrease in the insurance proceeds received related toin 2020 which offset legal expenses relating to the Delaware Action, as well as a decrease in legal expenses, administrative expenses, directorsdirectors’ fees and valuation expenses, partially offset by an increase in insurance expenses.2020 decreased2021 increased by $16.7$2.4 million, or 95.9%142.7%, compared to the six months ended March 31, 20192020 primarily due to a decrease in the insurance proceeds received related toin 2020 which offset legal expenses relating to the Delaware Action, and the Therapeutic Fee Award of approximately $3.5 million as well as a decrease in legal expenses, administrative expenses, directorsdirectors’ fees and valuation expenses, partially offset by an increase in insurance expenses.During the three months ended March 31, 2019, we recognized $10.6 million of realized losses on our portfolio investments. The realized losses were primarily due to the non-cash restructuring of one of our investments. During the six months ended March 31, 2019, we recognized $67.3 million ofrealized losses on our portfolio investments. The realized losses were primarily due to the non-cash restructuring of one of our investments as well as the write off of certain investments in two of our portfolio companies.company’s $34.1Company’s $34.9 million repayment of the Israeli Notes on March 31, 2020.company’sCompany’s $34.1 million repayment of the Israeli Notes on December 31, 2019 and $34.9 million repayment of the Israeli Notes on March 31, 2020.During the three months ended March 31, 2019, the Company did not recognize a loss on extinguishment of debt.During the six months ended March 31, 2019, the Company recognized a net loss on extinguishment of debt of $0.1 million, which was comprised of a $0.2 million loss on extinguishment of debt from the $13.0 million partial redemption of the 2023 Notes, offset by a $0.1 million gain on extinguishment of debt from the repurchase and retirement of $1.1 million of the Israeli Notes.2019, the Company had $3.4 million of net unrealized depreciation on investments. The net unrealized depreciation comprised of $12.3 million of net unrealized depreciation on investments offset by $8.9 million of net unrealized appreciation that resulted from the reversal of previously recorded unrealized depreciation on investments that were realized or written-off during the year.For the six months ended March 31, 2019, the Company had $41.6 million of net unrealized appreciation on investments. The net unrealized appreciation comprised of $19.6 million of net unrealized depreciation on investments offset by $61.2 million of net unrealized appreciation that resulted from the reversal of previously recorded unrealized depreciation on investments that were realized or written-off during the year.Provision for Deferred Taxes on Unrealized Depreciation on InvestmentsCertain consolidated subsidiaries of ours are subject to U.S. federal and state income taxes. These taxable subsidiaries are not consolidated with the Company for income tax purposes, but are consolidated for GAAP purposes, and may generate income tax liabilities or assets from temporary differences in the recognition of items for financial reporting and income tax purposes at the subsidiaries.For the three and six months ended March 31, 2020 and 2019, the Company recorded a change in provision for deferred taxes on the unrealized (appreciation)/depreciation on investments of $85,664, respectively.Changes in Net Assets from OperationsFor the three months ended March 31, 2020,2021, we recorded a net decreaseincrease in net assets resulting from operations of $78.9$7.8 million compared to a net decrease in net assets resulting from operations of $24.6$78.9 million for the three months ended March 31, 20192020. This increase takes into account increased net income and net capital appreciation for the period, each as a result of the factors discusseddescribed above. Based on 54,474,2112,716,627 and 2,723,711 weighted average common shares outstanding for the three months ended March 31, 2021 and 2020, and 2019,respectively, our per share net decreaseincrease in net assets resulting from operations was $1.45$2.87 for the three months ended March 31, 20202021 and a decrease of $0.45$28.95 for the three months ended March 31, 2019.2020,2021, we recorded a net decreaseincrease in net assets resulting from operations of $74.7$1.3 million compared to a net decrease in net assets resulting from operations of $34.7$74.7 million for the six months ended March 31, 20192020. This increase takes into account increased net income and net capital appreciation for the period, each as a result of the factors discussed above.described. Based on 54,474,2112,720,226 and 2,723,711 weighted average common shares outstanding for the six months ended March 31, 2021 and 2020, and 2019,respectively, our per share net decreaseincrease in net assets resulting from operations was $1.37$0.50 for the six months ended March 31, 20202021 and a decrease of $0.64$27.42 for the six months ended March 31, 2019.(1) Per share data has been adjusted for 2020 to reflect the one-for-twenty reverse stock split effected on July 24, 2020 on a retroactive basis. 2020,2021, we had $61.1$59.1 million in cash and cash equivalents."2021 Notes" and together with the 2023 Notes, the "U.S. Notes"“2021 Notes”). On January 14, 2016, the Company closed an additional $3.25 million in aggregate principal amount of the 2021 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. The 2021 Notes may be redeemed in whole or in part at any time or from time to time at the Company’s option on or after January 30, 2019. The 2021 Notes bearbore interest at a rate of 6.50% per year, payable quarterly on January 30, April 30, July 30 and October 30 of each year, beginning January 30, 2016.are listedwere redeemed at 100% of their principal amount ($25 per 2021 Note), plus the accrued and unpaid interest thereon from October 31, 2020, through, but excluding, the Redemption Date. The Company funded the redemption of the 2021 Notes with cash on the NYSE and trade thereon under the trading symbol ‘‘MCX’’.Company'sCompany’s option. On March 26, 2013, the Company closed an additional $3.5 million in aggregate principal amount of 2023 Notes, pursuant to the partial exercise of the underwriters’ option to purchase additional notes. The 2023 Notes bear interest at a rate of 6.125% per year, payable quarterly on March 30, June 30, September 30 and December 30 of each year, beginning June 30, 2013. The 2023 Notes are listed on the NYSE and trade thereon under the trading symbol “MCV”.Notes and collectively with the U.S. Notes, the "Notes").Notes. The Israeli Notes arewere listed on the TASE and denominated in New Israeli Shekels, but linked to the US Dollar at a fixed exchange rate which mitigates any currency exposure to the Company. The Israeli Notes have not been and will not be registered under the Securities Act of 1933, and may not be offered or sold in the United States absent registration under the Securities Act or in transactions exempt from, or not subject to, such registration requirements. In connection with this offering, we have dual listed our common stock on the TASE.On August 12, 2019, the Company and its wholly owned subsidiaries, Medley Small Business Fund, LP (formerly known as Medley SBIC, LP) and Medley SLF, on the one hand, and the Trustee, on the other hand, entered into an amendment to the deed of trust (the “Deed”) governing the Israeli Notes (the “Amendment” together with the Deed, the "Deed of Trust"). The Amendment amends the Deed by, among other things: (a) modifying Section 2.2 of the Deed to provide for full repayment of the Israeli Notes in eight (8) equal installments, each comprising twelve and one-half percent (12.5%) of the principal amount of the Israeli Notes, beginning on August 12, 2019 (the “Effective Date”) and ending on January 31, 2021, rather than four (4) equal annual installments, each comprising twenty five percent (25%) of the principal amount of the Israeli Notes, that were payable on February 27 of each of the years 2021-2024 (inclusive); (b) changing the interest payment dates for the Israeli Notes from semi-annual to quarterly except for the initial interest payment, which was paid on the Effective Date, and the final interest payment, which will be paid on January 31, 2021; (c) decreasing the annual interest rate on the Israeli Notes by 0.25% per annum on the Effective Date and further decreasing the annual interest rate on the Israeli Notes by 0.50% per annum if the Mergers close, which further decrease will be effective upon the closing of the Mergers; (d) decreasing the minimum Total Net Asset covenant in Section 6.1.1 of the Deed from $275 million to $215 million; (e) modifying the acceleration event in Section 10.1.25 of the Deed to provide that it will occur if the credit rating on the Israeli Notes drops below (i) il/B of Maalot before November 30, 2019, (ii) il/BB- of Maalot during the period between December 1, 2019 and April 1, 2020, and (iii) il/BBB- of Maalot on or after April 1, 2020; (f) waiving the make-whole and market value payment requirements of Section 9.1.7 of the Deed for all early redemption payments on the Israeli Notes within eighteen (18) months following the Effective Date; (g) requiring each of Medley Small Business Fund and Medley SLF to guarantee all of the Company’s obligations under the Deed (including the Amendment) and the Israeli Notes and to grant security interests on all of their assets (the “Collateral”) to secure such guaranties and providing for the termination of the Medley SLF guaranty and release of the security interests in Medley SLF’s assets upon the closing of the Mergers, subject to certain limitations; (h) that the Company use principal collections from the Collateral to make early redemption payments on the Israeli Notes, which payments will be applied in inverse order of the maturity of the required principal installment payments on the Israeli Notes; (i) providing for a waiver by theTrustee and the holders of the Israeli Notes of any right to accelerate the full balance of the amount due to the holders of the Israeli Notes based on any claims, allegations, actions, and/or rights that were raised, and/or resulting or deriving from certain claims or allegations as set forth in Section 19.1 of the Amendment; (j) providing for a waiver by the Trustee and the holders of the Israeli Notes of certain claims, demands, rights, and/or actions against and/or relating to the Company, its subsidiaries and/or affiliates and their respective employees (including their respective directors, officers, members of the Company’s board of directors, employees, stockholders, stakeholders and advisors); and (k) adding other definitions, representations and covenants to the Deed and making related conforming changes to the Deed. Pursuant to the Amendment, no prepayment penalties were due or payable in connection with the payment of principal made by the Company on the Effective Date.The Deed (including the Amendment) includes certain customary covenants, including minimum net assets of $215 million and a maximum debt to total assets ratio of 70%. The date for determining compliance with these financial covenants is the date that the Company publishes its financial statements (i.e., in a quarterly report on Form 10-Q or an annual report on Form 10-K) with the SEC. If the Company does not satisfy these financial covenants for two consecutive quarters, it is an event of default under the Deed. If this event of default is expected to occur, the Company has the right to request the trustee for the Israeli Notes (the “Trustee”) to appoint an emergency committee of the three largest noteholders for the purpose of obtaining a one-quarter extension of time to satisfy the financial covenants. If the Company does not make this request and the breach occurs, or if the emergency committee does not grant the extension, then the Trustee is required to convene a meeting of the noteholders as described below.In addition to not complying with the financial covenants as described above, the events of default include: (i) a change of control of the Company (defined in the Deed as MCC Advisors’ ceasing to provide investment management or advisory services to the Company); (ii) the Company not publishing a tender offer for the purchase of all of the Israeli Notes within 45 days; (iii) the Company not paying any amount due and payable to the holders of the Israeli Notes within seven business days after the payment due date; (iv) certain insolvency and receivership events with respect to the Company or with respect to all or substantially all of its assets, and (v) the Israeli Notes being delisted from the TASE or the TASE’s suspension of trading of the Israeli Notes for more than 60 days.If an event of default occurs under the Deed, there is no automatic acceleration or mandatory redemption of the Israeli Notes. Rather, the Trustee is required to convene a meeting of the noteholders for a vote on whether to accelerate the Israeli Notes. Noteholders holding at least 50% of the principal amount of the Israeli Notes must be present at the meeting for a quorum to exist, and if a quorum exists, then the vote of a majority of the noteholders present at the meeting controls.The foregoing description of the terms of Israeli Notes, the Deed, and the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of each of the Deed and the Amendment incorporated by reference as an exhibit to this quarterly report on Form 10-Q. Execution of the repurchase plan is subject to an open trading window for the Company and continued liquidity at that time and is expected to continue until the full authorized amount is purchased or market conditions change. The repurchase of the Israeli Notes is not expected to result in any material tax consequences to the Company or the holders of the Israeli Notes.MedleyPhenixFIN SLF and MedleyPhenixFIN Small Business Fund to pre-pay an additional $19.1 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a net loss on extinguishment of debt.MedleyPhenixFIN SLF and MedleyPhenixFIN Small Business Fund to pre-pay an additional $19.8 million of the Israeli Notes. The pre-payment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.9 million and was recorded on the Consolidated Statements of Operations as a net loss on extinguishment of debt.SBA DebenturesOn March 26, 2013, SBIC LP received a SBIC license from the SBA. The SBIC license allowed SBIC LP to obtain leverage by issuing SBA-guaranteed debentures (“SBA Debentures”), subject to the issuance of a capital commitment by the SBA and other customary procedures. SBA Debentures were non-recourse, interest only debentures with interest payable semi-annually and had a ten year maturity. The principal amount of SBA Debentures were not required to be paid prior to maturity but may be prepaid at any time without penalty. The interest rate of SBA Debentures were fixed on a semi-annual basis at a market-driven spread over U.S. Treasury Notes with 10-year maturities. The SBA, as a creditor, had a superior claim to the SBIC LP’s assets over our stockholders in the event we liquidated the SBIC LP or the SBA exercised its remedies under the SBA Debentures issued by the SBIC LP upon an event of default.On September 1, 2018, the Company repaid $15.0 million in aggregate principal amount of the SBA Debentures. The repayment was accounted for as a debt extinguishment in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a realized loss of $0.2 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.SBIC LP received a letter from the SBA (the “SBA Letter”), dated March 14, 2019, informing SBIC LP of certain alleged regulatory issues constituting a default under the terms of the SBIC LP’s outstanding SBA Debentures. The SBA Letter stated that SBIC LP had until March 29, 2019, fifteen (15) days from the date of the SBA Letter, to provide the SBA with certain additional information regarding the alleged regulatory issues, unless extended by the SBA. SBIC LP’s management submitted an orderly wind-down plan to the SBA to prepay the remaining $135.0 million of outstanding SBA Debentures using available cash at SBIC LP as well as the sale of assets to third parties or affiliates of SBIC LP. On March 28, 2019, SBIC LP agreed and made a repayment of $50.0 million of outstanding SBA Debentures by April 3, 2019 using available cash at SBIC LP and the cure period was extended to April 19, 2019. On April 18, 2019, SBIC LP agreed and made a repayment of $20.0 million of outstanding SBA Debentures on April 23, 2019 and an additional $30.0 million of outstanding SBA Debentures on April 30, 2019 using proceeds from the sale of certain assets and the cure period was extended to May 10, 2019. On May 10, 2019, SBIC LP made the final repayment of the remaining $35.0 million of outstanding SBA Debentures using proceeds from the sale of certain assets. In connection therewith, effective July 1, 2019, SBIC LP surrendered its SBIC license and operates as Medley Small Business Fund.The $135.0 million in aggregate repayments made in connection with the orderly wind-down plan was accounted for as debt extinguishments in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a cumulative realized loss of $1.8 million and was recorded on the Consolidated Statements of Operations as a loss on extinguishment of debt.The Company believes the wind-down plan of SBIC LP will not have a material impact on the Company’s net investment income per share. In addition, the Company believes the wind-down will not have an adverse impact on the Company’s other operations. The Company has received the necessary consents and waivers under the MCC Merger Agreement to permit the repayment of the outstanding SBA Debentures.The Company has a guarantee to issue up to $7.0 million in standby letters of credit through a financial intermediary on behalf of a certain portfolio company. Under this arrangement, if the standby letters of credit were to be issued, the Company would be required to make payments to third parties if the portfolio company was to default on its related payment obligations. The guarantee will renew annually until cancellation. 20202021 and September 30, 2019, the Company had not issued any standby letters of credit under the commitment on behalf of the portfolio company.As of March 31, 2020, and September 30, 2019, we had commitments under loan and financing agreements to fund up to $4.6$5.1 million to seven portfolio companies and $8.9$5.0 million to sevensix portfolio companies, respectively. These commitments are primarily composed of senior secured term loans and revolvers, and the determination of their fair value is included in the Consolidated Schedule of Investments. The commitments are generally subject to the borrowers meeting certain criteria such as compliance with covenants and certain operational metrics. The terms of the borrowings and financings subject to commitment are comparable to the terms of other loan and equity securities in our portfolio. A summary of the composition of the unfunded commitments as of March 31, 20202021 and September 30, 20192020 is shown in the table below (dollars in thousands): March 31, 2020 September 30, 2019 $ 1,078 $ — Alpine SG, LLC - Revolver 1,000 1,000 Kemmerer Operations, LLC - Delayed Draw Term Loan 908 908 NVTN LLC - Super Priority DDTL 500 — Redwood Services Group, LLC - Revolver 350 875 NVTN LLC - DDTL 220 — 1888 Industrial Services, LLC - Term Loan E 219 — DataOnline Corp. - Revolver 179 1,890 Access Media Holdings, LLC - Series AAA Preferred Equity 101 101 Dynamic Energy Services International LLC - Revolver — 3,255 Black Angus Steakhouses, LLC - Delayed Draw Term Loan — 893 Total $ 4,555 $ 8,922 (1)The revolving credit facility was fully drawn as of September 30, 2019. March 31, 2021 September 30, 2020 Redwood Services Group, LLC - Revolver $ 1,575 $ 1,050 1888 Industrial Services, LLC - Revolver 1,078 1,078 Alpine SG - Revolver 1,000 - Kemmerer Operations, LLC - Delayed Draw Term Loan 908 908 NVTN LLC - DDTL 220 220 Black Angus Steakhouses, LLC - Super Priority DDTL 167 - DataOnline Corp. - Revolver 107 179 NVTN LLC - Super Priority DDTL - 500 Total unfunded commitments $ 5,055 $ 3,935 have certain contracts under which we have material future commitments. We have entered into an investment management agreement with MCC Advisors (the “Investment Management Agreement”) in accordance with the 1940 Act. The Investment Management Agreement became effective upon the pricing of our initial public offering. Under the Investment Management Agreement, MCC Advisors has agreed to provide us with investment advisory and management services. For these services, we have agreed to pay a base management fee equal to a percentage of our gross assets and an incentive fee based on our performance. have also entered into an administration agreement with MCC Advisors as our administrator. The administration agreement became effective upon the pricing of our initial public offering. Under the administration agreement, MCC Advisors has agreed to furnish us with office facilities and equipment, provide us clerical, bookkeeping and record keeping services at such facilities and provide us with other administrative services necessary to conduct our day-to-day operations. MCC Advisors will also provideprovided on our behalf significant managerial assistance to those portfolio companies to which we are required to provide such assistance.20202021 (dollars in thousands): Payment Due by Period Total Less than 1 year 1 - 3 years 3 - 5 years 2021 Notes $ 74,013 $ 74,013 $ — $ — $ — 2023 Notes 77,847 — 77,847 — — Israeli Notes 21,148 21,148 — — — Total contractual obligations $ 173,008 $ 95,161 $ 77,847 $ — $ — If any of the contractual obligations discussed above are terminated, our costs under any new agreements that we enter into may increase. In addition, we would likely incur significant time and expense in locating alternative parties to provide the services we expect to receive under the Investment Management Agreement and our administration agreement. Any new investment management agreement would also be subject to approval by our stockholders. Payments Due by Period Total Less than 1 year 1-3 years 3-5 years More than 5 years 2023 Notes $ 77,846,800 $ - $ 77, 846,800 $ - $ - Total contractual obligations $ 77, 846,800 $ - $ 77, 846,800 $ - $ - havehad committed to provide $100 million of equity to MCC JV, with the Company providing $87.5 million and GALIC providing $12.5 million. Approximately $89.8 million was funded as of March 31, 2020 relating to these commitments, of which $78.6 million was from the Company. As of March 31, 2020, MCC JV’s board of managers had approved advances of capital of up to $0.3 million of the remaining capital commitments, of which $0.2 million is from the Company. As of March 31, 2020, MCC JV has drawn approximately $179.3 million on the JV Facility.As of March 31, 2020, MCC JV had total investments at fair value of $208.2 million. As of March 31, 2020, MCC JV’s portfolio was comprised of senior secured first lien term loans to 60 different borrowers. As of March 31, 2020, certain investments in one portfolio company were on non-accrual status.1) at least 98.0% of our ordinary income (not taking into account any capital gains or losses) for the calendar year; 2) at least 98.2% of the amount by which our capital gains exceed our capital losses (adjusted for certain ordinary losses) for a one-year period ending on October 31st of the calendar year; and 3) income realized, but not distributed, in preceding years and on which we did not pay federal income tax. 2020:We entered into the Investment Management Agreement with MCC Advisors. Mr. Brook Taube, our Chairman and Chief Executive Officer, is a managing partner and senior portfolio manager of MCC Advisors, and Mr. Seth Taube, one of our directors, is a managing partner of MCC Advisors.MCC Advisors provides us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our administration agreement. We reimburse MCC Advisors for the allocable portion (subject to the review and approval of our board of directors) of overhead and other expenses incurred by it in performing its obligations under the administration agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs.We have entered into a license agreement with Medley Capital LLC, pursuant to which Medley Capital LLC has granted us a non-exclusive, royalty-free license to use the name “Medley.”Certain affiliates of MCC Advisors, Medley Capital LLC, their respective affiliates and some of their employees purchased in the IPO an aggregate of 833,333 shares of common stock at the IPO price per share of $12.00. We received the full proceeds from the sale of these shares, and no underwriting discounts or commissions were paid in respect of these shares.The description of the Mergers and the Settlement set forth below are as of March 31, 2020. Subsequent to such date, the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement were terminated. See “Recent Developments” for more information.● We entered into the Investment Management Agreement with MCC Advisors, which expired December 31, 2020. Mr. Brook Taube, Chairman and Chief Executive Officer through December 31, 2020 and director through January 21, 2021 and Mr. Seth Taube, director through January 21, 2021, are both affiliated with MCC Advisors and Medley. ● Through December 31, 2020, MCC Advisors provided us with the office facilities and administrative services necessary to conduct day-to-day operations pursuant to our administration agreement. We reimbursed MCC Advisors for the allocable portion (subject to the review and approval of our board of directors) of overhead and other expenses incurred by it in performing its obligations under the administration agreement, including rent, the fees and expenses associated with performing compliance functions, and our allocable portion of the cost of our Chief Financial Officer and Chief Compliance Officer and their respective staffs. August 9, 2018,June 12, 2020, the Company entered into the Expense Support Agreement with MCC Merger AgreementAdvisors and Medley LLC, pursuant to which MCC Advisors and Medley LLC agreed (jointly and severally) to cap the Company would, on the termsmanagement fee and subject to the conditions set forth in the MCC Merger Agreement, merge with and into Sierra, with Sierra as the surviving company in the MCC Merger Agreement. Under the MCC Merger, each share of our common stock issued and outstanding immediately prior to the MCC Merger effective time (other than shares of our common stock held by the Company, Sierra or their respective wholly owned subsidiaries) would be converted into the right to receive 0.8050 shares of the Sierra’s common stock. In addition, pursuant to the MDLY Merger Agreement, MDLY would, on the terms and subject to the conditions set forth in the MDLY Merger Agreement, merge with and into Merger Sub, with Merger Sub as the surviving company in the MDLY Merger Agreement. In the MDLY Merger, each share of MDLY Class A common stock, issued and outstanding immediately prior to the MDLY Merger effective time (other than Dissenting Shares (as defined in the MDLY Merger Agreement) and shares of MDLY Class A common stock held by MDLY, Sierra or their respective wholly owned subsidiaries) would be converted into the right to receive (i) 0.3836 shares of Sierra’s common stock; plus (ii) cash in an amount equal to $3.44 per share. In addition, MDLY’s stockholders would have the right to receive certain dividends and/or other payments.On July 29, 2019, the Company entered into the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MCC Merger Agreement”), by and between the Company and Sierra, pursuant to which the Company will, on the terms and subject to the conditions set forth in the Amended MCC Merger Agreement, merge with and into Sierra, with Sierra as the surviving company in the MCC Merger. In the MCC Merger, each shareall of the Company’s common stock (other than sharesother operating expenses (except interest expenses, certain extraordinary strategic transaction and expenses, and other expenses approved by the Special Committee) at $667,000 per month (the “Cap”). Under the Expense Support Agreement, the Cap became effective on June 1, 2020 and was to expire on September 30, 2020. On September 29, 2020, the board of directors, including all of the Company’s common stock heldindependent directors, extended the term of the Expense Support Agreement through the end of quarter ending December 31, 2020. The Expense Support Agreement expired by its terms at the Company, Sierra or their respective wholly owned subsidiaries) will be exchanged for the right to receive (i) 0.68 sharesclose of Sierra’s common stock if the attorneys’ fees of plaintiffs’ counsel and litigation expenses paid or incurred by plaintiffs’ counsel or advanced by plaintiffsbusiness on December 31, 2020, in connection with the Delaware Action, as described below (such fees and expenses, the “Plaintiff Attorney Fees”), are less than or equal to $10,000,000; (ii) 0.66 shares of Sierra’s common stock if the Plaintiff Attorney Fees are equal to or greater than $15,000,000; (iii) between 0.68 and 0.66 per share of Sierra’s common stock if the Plaintiff Attorney Fees are greater than $10,000,000 but less than $15,000,000, calculated on a descending basis, based on straight line interpolation between $10,000,000 and $15,000,000; or (iv) 0.66 shares of Sierra’s common stock in the event that the Plaintiff Attorney Fees are not fully and finally determined prior to the closingadoption of the MCC Merger (such ratio, the “MCC Merger Exchange Ratio”). Based upon the Plaintiff Attorney Fees approvedinternalized management structure by the Delaware Courtboard of Chancery as set forth in the Delaware Order and Final Judgment, as described below, the MCC Merger Exchange Ratio will be 0.66 shares of Sierra’s common stock. The Company and Sierra are appealing the Delaware Order and Final Judgment with respect to the Delaware Court of Chancery’s ruling on the Plaintiff Attorney Fees.In addition, on July 29, 2019, Sierra and MDLY announced the execution of the Amended and Restated Agreement and Plan of Merger, dated as of July 29, 2019 (the “Amended MDLY Merger Agreement”), by and among MDLY, Sierra, and Merger Sub, pursuant to which MDLY will, on the terms and subject to the conditions set forth in the Amended MDLY Merger Agreement, merge with and into Merger Sub, with Merger Sub as the surviving companyin the MDLY Merger. In the MDLY Merger, each share of MDLY Class A common stock, issued and outstanding immediately prior to the MDLY Merger effective time, other than shares of MDLY Class A common stock held by MDLY, Sierra or their respective wholly owned subsidiaries (the “Excluded MDLY Shares”) and the Dissenting Shares (as defined in the Amended MDLY Merger Agreement), held, immediately prior to the MDLY Merger effective time, by any person other than a Medley LLC unitholder, will be exchanged for (i) 0.2668 shares of Sierra’s common stock; plus (ii) cash in an amount equal to $2.96 per share. In addition, in the MDLY Merger, each share of MDLY Class A common stock issued and outstanding immediately prior to the MDLY Merger effective time, other than the Excluded MDLY Shares and the Dissenting Shares, held, immediately prior to the MDLY Merger effective time, by Medley LLC unitholders will be exchanged for (i) 0.2072 shares of Sierra’s common stock; plus (ii) cash in an amount equal to $2.66 per share.Pursuant to terms of the Amended MCC Merger Agreement, the consummation of the MCC Merger is conditioned upon the satisfaction or waiver of each of the conditions to closing under the Amended MDLY Merger Agreement and the consummation of the MDLY Merger. However, pursuant to the terms of the Amended MDLY Merger Agreement, the consummation of the MDLY Merger is not contingent upon the consummation of the MCC Merger. If both Mergers are successfully consummated, Sierra’s common stock would be listed on the NYSE, with such listing expected to be effective as of the closing date of the Mergers, and Sierra’s common stock will be listed on the Tel Aviv Stock Exchange (“TASE”), with such listing expected to be effective as of the closing date of the MCC Merger. If, however, only the MDLY Merger is consummated, Sierra’s common stock would be listed on the NYSE. If both Mergers are successfully consummated, the investment portfolios of MCC and Sierra would be combined, Merger Sub, as a successor to MDLY, would be a wholly owned subsidiary of the Combined Company, and the Combined Company would be internally managed by MCC Advisors LLC, its wholly controlled adviser subsidiary. If only the MDLY Merger is consummated, the investment portfolios of MCC and Sierra would not be combined; however, the investment management function relating to the operation of Sierra, as the surviving company, would still be internalized (the “Sierra/MDLY Company”) and the Sierra/MDLY Company would be managed by MCC Advisors.The Mergers are subject to approval by the stockholders of the Company, Sierra, and MDLY, regulators, including the SEC, court approval of the Settlement (as described below), other customary closing conditions and third-party consents. There is no assurance that any of the foregoing conditions will be satisfied. The Company and Sierra have the right to terminate the Amended MCC Merger Agreement under certain circumstances, including (subject to certain limitations set forth in the Amended MCC Merger Agreement), among others: (i) by mutual written agreement of each party; (ii) any governmental entity whose consent or approval is a condition to closing set forth in Section 8.1 of the Amended MCC Merger Agreement has denied the granting of any such consent or approval and such denial has become final and nonappealable, or any governmental entity of competent jurisdiction shall have issued a final and nonappealable order, injunction or decree permanently enjoining or otherwise prohibiting or making illegal the consummation of the transactions contemplated by the Amended MCC Merger Agreement; (iii) the MCC Merger has not closed on or prior to March 31, 2020; or (iv) either party has failed to obtain stockholder approval or the Amended MDLY Merger Agreement has been terminated.On February 11, 2019, a purported stockholder class action was commenced in the Delaware Court of Chancery by FrontFour Capital Group LLC and FrontFour Master Fund, Ltd. (together, “FrontFour”), captioned as FrontFour Capital Group LLC, et al. v. Brook Taube et al., Case No. 2019-0100 (the “Delaware Action”) against defendants Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, MDLY, Sierra, the Company, MCC Advisors, Medley Group LLC, and Medley LLC. The complaint, as amended on February 12, 2019, alleged that the individuals named as defendants breached their fiduciary duties to the Company’s stockholders in connection with the MCC Merger, and that MDLY, Sierra, MCC Advisors, Medley Group LLC, and Medley LLC aided and abetted those alleged breaches of fiduciary duties. The complaint sought to enjoin the vote of MCC stockholders on the proposed merger and enjoin enforcement of certain provisions of the Agreement and Plan of Merger, dated as of August 9, 2018, by and between MCC and Sierra (the “MCC Merger Agreement”).The Delaware Court of Chancery held a trial on the plaintiffs’ motion for a preliminary injunction and issued a Memorandum Opinion (the “Decision”) on March 11, 2019. The Delaware Court of Chancery denied the plaintiffs’ requests to (i) permanently enjoin the proposed merger and (ii) require the Company to conduct a “shopping process” for the Company on terms proposed by the plaintiffs in their complaint. The Delaware Court of Chancery held that the Company’s directors breached their fiduciary duties in entering into the proposed merger, but rejected the plaintiffs’ claim that Sierra aided and abetted those breaches of fiduciary duties. The Delaware Court of Chancery ordered the defendants to issue corrective disclosures consistent with the Decision, and enjoined a vote of the Company’s stockholders on the proposed merger until such disclosures had been made and stockholders had the opportunity to assimilate that information.On March 20, 2019, another purported stockholder class action was commenced by Stephen Altman against Brook Taube, Seth Taube, Jeff Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, Mark Lerdal, and John E. Mack in the Delaware Court of Chancery, captioned Altman v. Taube, Case No. 2019-0219 (the “Altman Action”). The complaint alleged that the defendants breached their fiduciary duties to stockholders of the Company in connection with the vote of the Company’s stockholders on the proposed mergers. On April 8, 2019, the Delaware Court of Chancery granted a stipulation consolidating the Delaware Action and the Altman Action, designating the amended complaint in the Delaware Action as the operative complaint, and designating the plaintiffs in the Delaware Action and their counsel the lead plaintiffs and lead plaintiffs’ counsel, respectively.On December 20, 2019, the Delaware Court of Chancery entered the Delaware Opinion approving the settlement of the Delaware Action (the “Settlement”). Pursuant to the Settlement, the Company agreed to certain amendments to (i) the MCC Merger Agreement and (ii) the MDLY Merger Agreement, which amendments are reflected in the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement. The Settlement also provides for, if the MCC Merger is consummated, the creation of a settlement fund, consisting of $17 million in cash and $30 million of Sierra’s common stock, with the number of shares of Sierra’s common stock to be calculated using the pro forma net asset value of $6.37 per share as of June 30, 2019, which will be distributed to eligible members of the Settlement Class (as defined in the Settlement). In addition, in connection with the Settlement, on July 29, 2019, the Company entered into a Governance Agreement with FrontFour Capital Group LLC, FrontFour Master Fund, Ltd., FrontFour Capital Corp., FrontFour Opportunity Fund, David A. Lorber, Stephen E. Loukas and Zachary R. George, pursuant to which, among other matters, FrontFour is subject to customary standstill restrictions and required to vote in favor of the revised MCC Merger at a meeting of stockholders to approve the revised MCC Merger Agreement. The Settlement also provides for mutual releases between and among FrontFour and the Settlement Class, on the one hand, and the Medley Parties, on the other hand, of all claims that were or could have been asserted in the Delaware Action through September 26, 2019.The Delaware Court of Chancery also awarded attorney’s fees as follows: (i) an award of $3,000,000 to lead plaintiffs’ counsel and $75,000 to counsel to plaintiff Stephen Altman (the “Therapeutics Fee Award”) and $420,334.97 of plaintiff counsel expenses payable to the lead plaintiff’s counsel, whichwere paid on December 23, 2019, and (ii) an award that is contingent upon the closing of the proposed merger transactions (the “Contingent Fee Award”), consisting of:a.$100,000 for the agreement to appoint an independent director on the board of directors of the post-merger company; andb. the amount calculated by solving for A in the following formula:Award[A]=(Monetary Fund[M]+Award[A]-Look Through[L])*Percentage[P]Where:Ashall be the amount of the Additional Fee (excluding the $100,000 award for the agreement to appoint an independent director on the board of directors of the post-merger company);Mshall be the sum of (i) the $17 million cash component of the Settlement Fund and (ii) the value of the post-merger company stock component of the Settlement Fund, which shall be calculated as the product of the VPS (as defined below) and 4,709,576.14 (the number of shares of post-merger company’s stock comprising the stock component of the net settlement amount);Lshall be the amount representing the estimated value of the decrease in shares to be received by eligible class members arising by operation of the change in the “Exchange Ratio” under the Amended MCC Merger Agreement, calculated as follows:L = ((ES * 68%) - (ES * 66%)) * VPSWhere:ES shall be the number of eligible shares;VPSshall be the pro forma net asset value per share of the post-merger company’s common stock as of the closing as reported in the public disclosure filed nearest in time and after the closing (the “Closing NAV Disclosure”); andP shall equal 0.26The Contingent Fee Award is contingent upon the closing of the MCC Merger. Payment of the Contingent Fee Award will be made in two stages. First, within five (5) business days of the establishment of the Settlement Fund, the Company or its successor shall (i) pay the plaintiffs’ counsel an estimate of the Contingent Fee Award (the “Additional Fee Estimate”), less twenty (20) percent (the “Additional Fee Estimate Payment”), and (ii) deposit the remaining twenty (20) percent of the Additional Fee Estimate into escrow (the “Escrowed Fee”). For purposes of calculating such estimate, the Company or its successor shall use the formula set above, except that VPS shall equal the pro forma net asset value of the post-merger company’s common stock as reported in the public disclosure filed nearest in time and prior to the closing (the “Closing NAV Estimate”).Second, within five (5) business days of the Closing NAV Disclosure (as defined in the Order and Final Judgment), (i) if the Additional Fee is greater than the Additional Fee Estimate Payment, an amount of the Escrowed Fee shall be released to plaintiffs’ counsel such that the total payments made to plaintiffs’ counsel equal the Additional Fee and the remainder of the Escrowed Fee, if any, shall be released to the Company or its successor, (ii) if the Additional Fee is less than the Additional Fee Estimate Payment, plaintiffs’ counsel shall return to the Company or its successor the difference between the Additional Fee Estimate and the Additional Fee and the Escrowed Fee shall be released to the Company or its successor, or (iii) if the Additional Fee is equal to the Additional Fee Estimate Payment, the Escrowed Fee shall be released to the Company or its successor.On January 17, 2020, the Company and Sierra filed a notice of appeal with the Delaware Supreme Court from those provisions of the Order and Final Judgment with respect to the Contingent Fee Award.MCC Advisors and its affiliates may in the future manage other accounts that have investment mandates that are similar, in whole and in part, with ours. MCC Advisors and its affiliates may determine that an investment is appropriate for us and for one or more of those other accounts. In such event, depending on the availability of such investment and other appropriate factors, and pursuant to MCC Advisors’ allocation policy, MCC Advisors or its affiliates may determine that we should invest side-by-side with one or more other accounts. We will not make any investments if they are not permitted by applicable law and interpretive positions of the SEC and its staff, the exemptive order granted by the SEC, or if they are inconsistent with MCC Advisors’ allocation procedures. Further, any investments made by related parties will be made in accordance with MCC Advisors’ related party transaction procedures.and MCC Advisors’ officers, directors, employees and employees.certain other individuals. Our officers and directors also remain subject to the duties imposed by both the 1940 Act and the Delaware General Corporation Law.determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes;identifies, evaluates and negotiates the structure of the investments we make (including performing due diligence on our prospective portfolio companies); andexecutes, closes, monitors and administers the investments we make, including the exercise of any voting or consent rights.● determined the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes; ● identified, evaluated and negotiated the structure of the investments we made (including performing due diligence on our prospective portfolio companies); and ● executed, closed, monitored and administered the investments we made, including the exercise of any voting or consent rights. arewere not exclusive, and it iswas free to furnish similar services to other entities so long as its services to us arewere not impaired.paypaid MCC Advisors a fee for investment advisory and management services consisting of a base management fee and a two-part incentive fee.willwould the new fee structure result in higher fees to MCC Advisors than fees under the prior investment management agreement.reflectsreflect the terms of the fee waiver agreement executed by MCC Advisors on February 8, 2016 (the “Fee Waiver Agreement”). The terms of the Fee Waiver Agreement arewere effective as of January 1, 2016, and arewere a permanent reduction in the base management fee and incentive fee on net investment income payable to MCC Advisors for the investment advisory and management services it providesprovided under the Investment Management Agreement. The Fee Waiver Agreement doesdid not change the second component of the incentive fee, which iswas the incentive fee on capital gains.Agreement isAgreement”), by and between the Company and Sierra (the “Amended MCC Merger Agreement”) was in effect, but no longer than a year; provided that, if the Amended MCC Merger Agreement is terminated by Sierra, then the termination of the Investment Management Agreement would be effective on the 30th day following receipt of Sierra’s notice of termination to the Company. TheOn May 1, 2020, the Company received a notice of termination of the Amended MCC Merger Agreement from Sierra. Under the Amended MCC Merger Agreement, either party was terminatedpermitted, subject to certain conditions, to terminate the Amended MCC Merger Agreement if the merger was not consummated by March 31, 2020. Sierra elected to do so on May 1, 2020. See “Recent Developments” for more information.Forreceivesreceived a base management fee. The base management fee iswas calculated at an annual rate of 1.75% (0.4375% per quarter) of up to $1.0 billion of the Company’s gross assets and 1.50% (0.375% per quarter) of any amounts over $1.0 billion of the Company’s gross assets and iswas payable quarterly in arrears. The base management fee willwas to be calculated based on the average value of the Company’s gross assets at the end of the two most recently completed calendar quarters and willwas to be appropriately pro-rated for any partial quarter.Thehashad two components, as follows:iswas payable quarterly in arrears and iswas based on our pre-incentive fee net investment income earned during the calendar quarter for which the incentive fee iswas being calculated. MCC Advisors iswas entitled to receive the incentive fee on net investment income from us if our Ordinary Income (as defined below) exceedsexceeded a quarterly “hurdle rate” of 1.5%. The hurdle amount iswas calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter.iswas determined and paid quarterly in arrears at the end of each calendar quarter by reference to our aggregate net investment income, as adjusted as described below, from the calendar quarter then ending and the eleven preceding calendar quarters (or if shorter, the number of quarters that have occurred since January 1, 2016). We refer to such period as the “Trailing Twelve Quarters.”iswas determined on a quarterly basis and iswas equal to 1.5% multiplied by the Company’s net asset value at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The hurdle amount iswas calculated after making appropriate adjustments to the Company’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by the Company of its common stock (including issuances pursuant to our dividend reinvestment plan), any repurchase by the Company of its own common stock, and any dividends paid by the Company, each as may have occurred during the relevant quarter. The incentive fee for any partial period willwas to be appropriately prorated.pro-rated. Any incentive fee on net investment income willwas to be paid to MCC Advisors on a quarterly basis and willwas to be based on the amount by which (A) aggregate net investment income (“Ordinary Income”) in respect of the relevant Trailing Twelve Quarters exceedsexceeded (B) the hurdle amount for such Trailing Twelve Quarters. The amount of the excess of (A) over (B) described in this paragraph for such Trailing Twelve Quarters is referred to as the “Excess Income Amount.” For the avoidance of doubt, Ordinary Income iswas net of all fees and expenses, including the reduced base management fee but excluding any incentive fee on Pre-Incentive Fee net investment income or on the Company’s capital gains.iswas determined as follows:No incentive fee on net investment income is payable to MCC Advisors for any calendar quarter for which there is no Excess Income Amount;100% of the Ordinary Income, if any, that exceeds the hurdle amount, but is less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by the Company’s net assets at the beginning of each applicable calendar quarter, as adjusted as noted above, comprising the relevant Trailing Twelve Quarters is included in the calculation of the incentive fee on net investment income; and17.5% of the Ordinary Income that exceeds the Catch-up Amount is included in the calculation of the incentive fee on net investment income.● No incentive fee on net investment income was payable to MCC Advisors for any calendar quarter for which there was no Excess Income Amount; ● 100% of the Ordinary Income, if any, that exceeded the hurdle amount, but was less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by the Company’s net assets at the beginning of each applicable calendar quarter, as adjusted as noted above, comprising the relevant Trailing Twelve Quarters was included in the calculation of the incentive fee on net investment income; and ● 17.5% of the Ordinary Income that exceeds the Catch-up Amount was included in the calculation of the incentive fee on net investment income. willwas to be paid to MCC Advisors for a particular quarter willwould equal the excess of the incentive fee so calculated minus the aggregate incentive fees on net investment income that were paid in respect of the first eleven calendar quarters (or the portion thereof) included in the relevant Trailing Twelve Quarters but not in excess of the Incentive Fee Cap (as described below).iswas paid to MCC Advisors for a particular quarter iswas subject to a cap (the “Incentive Fee Cap”). The Incentive Fee Cap for any quarter iswas an amount equal to (a) 17.5% of the Cumulative Net Return (as defined below) during the relevant Trailing Twelve Quarters iswas zero or a negative value, the Company willwould pay no incentive fee on net investment income to MCC Advisors for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter iswas a positive value but is less than the incentive fee on net investment income that iswas payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company willwould pay an incentive fee on net investment income to MCC Advisors equal to the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap for such quarter iswas equal to or greater than the incentive fee on net investment income that iswas payable to MCC Advisors for such quarter (before giving effect to the Incentive Fee Cap) calculated as described above, the Company willwould pay an incentive fee on net investment income to MCC Advisors, calculated as described above, for such quarter without regard to the Incentive Fee Cap.iswas calculated, in the case of issuances of common stock, as the amount by which the net asset value per share was adjusted over the transaction price per share, multiplied by the number of shares issued. Accretion to the Company’s net assets due to capital raising iswas calculated, in the case of issuances of common stock (including issuances pursuant to our dividend reinvestment plan), as the excess of the transaction price per share over the amount by which the net asset value per share was adjusted, multiplied by the number of shares issued. Accretion to the Company’s net assets due to other capital action iswas calculated, in the case of repurchases by the Company of its own common stock, as the excess of the amount by which the net asset value per share was adjusted over the transaction price per share multiplied by the number of shares repurchased by the Company.new incentive fee calculation under the Fee Waiver Agreement iswas to permanently reduce aggregate fees payable to MCC Advisors by the Company, effective as of January 1, 2016. In order to ensure that the Company willwould pay MCC Advisors lesser aggregate fees on a cumulative basis, as calculated beginning January 1, 2016, we will,had, at the end of each quarter, also calculatecalculated the base management fee and incentive fee on net investment income owed by the Company to MCC Advisors based on the formula in place prior to January 1, 2016. If, at any time beginning January 1, 2016, the aggregate fees on a cumulative basis, as calculated based on the formula in place after January 1, 2016, would bewere greater than the aggregate fees on a cumulative basis, as calculated based on the formula in place prior to January 1, 2016, MCC Advisors shallwere only be entitled to the lesser of those two amounts.iswas determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Management Agreement as of the termination date) and equalsequaled 20.0% of our cumulative aggregate realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to the investment adviser.calculatescalculated the second component of the incentive fee as if the Company had realized all assets at their fair values as of the reporting date. Accordingly, when applicable, the Company accruesaccrued a provisional capital gains incentive fee taking into account any unrealized gains or losses. As the provisional capital gains incentive fee iswas subject to the performance of investments until there iswas a realization event, the amount of the provisional capital gains incentive fee accrued at a reporting date may varyhave varied from the capital gains incentive that iswas ultimately realized and the differences could behave been material.Our quarterly valuation process begins with each investment being initially valued by the valuation professionals responsible for monitoring the portfolio investment.Preliminary valuation conclusions are then documented and discussed with senior management.Independent third-party valuation firms are also employed for all of our investments for which there is not a readily available market value. At least twice annually, including at year end, the valuation for each portfolio investment is reviewed by an independent valuation firm.The audit committee of our board of directors reviews the preliminary valuations of the valuation professionals, senior management and independent valuation firms.Our audit committee reviews and the board of directors approves the valuations and determines the fair value of each investment in our portfolio in good faith based on the input of MCC Advisors, the respective independent valuation firms and the audit committee.● our quarterly valuation process begins with each portfolio investment being initially valued by one or more Valuation Firms; ● preliminary valuation conclusions will then be documented and discussed with senior management; ● the audit committee of the board of directors reviews the preliminary valuations with management and the Valuation Firms; and ● the board of directors discusses the valuations and determines the fair value of each investment in the Company’s portfolio in good faith based on the input of management, the respective Valuation Firms and the audit committee. 2020,2021, certain investments in ten portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $28.2$16.7 million, or 11.0% of the fair value of our portfolio. At March 31, 2020, certain investments in two portfolio companies held by the Company were on partial non-accrual status with a combined fair value of approximately $13.3 million, or 5.2%9.9% of the fair value of our portfolio. At September 30, 2019,2020, certain investments in seveneight portfolio companies held by the Company were on non-accrual status with a combined fair value of approximately $22.3$21.7 million, or 5.6%8.8% of the fair value of our portfolio. including PIK,, as defined by the Code, including PIK interest, and net tax exempttax-exempt interest income (which is the excess of our gross tax exempt interest income over certain disallowed deductions) for each taxable year in order to be eligible for tax treatment under Subchapter M of the Code. The Company will be subject to a nondeductible U.S. federal excise tax of 4% on undistributed income if it does not distribute at least 98% of its net ordinary income for any calendar year and 98.2% of its capital gain net income for each one-year period ending on October 31 of such calendar year and any income realized, but not distributed, in preceding years and on which we did not pay federal income tax. Depending on the level of ICTI earned in a tax year, the Company may choose to carry forward ICTI in excess of current year dividend distributions into the next tax year and pay a 4% excise tax on such income, as required. To the extent that the Company determines that its estimated current year annual taxable income will be in excess of estimated current year dividend distributions for excise tax purposes, the Company accrues excise tax, if any, on estimated excess taxable income as taxable income is earned. Any such carryover ICTI must be distributed before the end of that next tax year through a dividend declared prior to filing the final tax return related to the year which generated such ICTI.On May 1, 2020,receivedrepurchased an aggregate of 18,665 shares of common stock through May 11, 2021 with a noticetotal cost of termination from Sierraapproximately $0.6 million.Amended MCC Merger Agreement. UnderCOVID-19 pandemic can continue to have adverse consequences on the Amended MCC Merger Agreement, either party may, subject to certain conditions, terminate the Amended MCC Merger Agreement if the MCC Merger is not consummated by March 31, 2020. Sierra elected to do so on May 1, 2020. Representatives of Sierra informed the Company that in determining to terminate the Amended MCC Merger Agreement, Sierra considered a number of factors, including, among other factors, changes in the relative valuation of the CompanyU.S. and Sierra, the changed circumstances and the unpredictableglobal economies. The ultimate economic conditions resultingfallout from the global health crisis caused by the coronavirus (COVID-19) pandemic, and the uncertaintylong-term impact on economies, markets, industries and individual portfolio companies, remains uncertain. The Company cannot predict the extent to which its financial condition and results of operations will be affected at this time. The potential impact to our results will depend to a large extent on future developments and new information that may emerge regarding the parties’ abilityduration and severity of COVID-19. The Company continues to satisfy the conditions to closing the MCC Merger in a timely manner.In addition, on May 1, 2020, MDLY received a notice of termination from Sierra of the Amended MDLY Merger Agreement. Under the Amended MDLY Merger Agreement, either party may, subject to certain conditions, terminate the Amended MDLY Merger Agreement if the MDLY Merger is not consummated by March 31, 2020. Sierra elected to do so on May 1, 2020. Representatives of Sierra informed MDLY that in determining to terminate the Amended MDLY Merger Agreement, Sierra considered a number of factors, including, among other factors, changes in the relative valuation of MDLYobserve and Sierra, the changed circumstances and the unpredictable economic conditions resulting from the global health crisis caused by the coronavirus (COVID-19) pandemic, and the uncertainty regarding the parties’ ability to satisfy the conditions to closing the MDLY Merger in a timely manner.As a result of the foregoing, in connection with the Delaware Action, no Settlement Fund will be established or paidrespond to the stockholders of the Companyevolving COVID-19 environment and no Contingent Fee Award will be paid to plaintiff’s counsel. The other terms of the Settlement, including the releases provided for in the Delaware Order and Final Judgment, remain in effect.As previously disclosed, on January 15, 2020, the Company’s board of directors, including all of the independent directors, approved the renewal of the Investment Management Agreement through the later of April 1, 2020 or so long as the Amended MCC Merger Agreement is in effect, but no longer than a year; provided that, if the Amended MCC Merger Agreement is terminated by Sierra, then the termination of the Investment Management Agreement would be effective on the 30th day following receipt of Sierra’s notice of termination to the Company. As result of the termination of the Amended MCC Merger Agreement, unless further action is taken by the board of directors, including by a majority of the independent directors, the Investment Management Agreement will be terminated effective as of May 31, 2020.threesix months ended March 31, 2020,2021, we did not engage in hedging activities.2020, 82.7%2021, 59.1% of our income-bearing investment portfolio bore interest based on floating rates. The composition of our floating rate debt investments by cash interest rate LIBOR floor as of March 31, 20202021 was as follows (dollars in thousands): March 31, 2020 LIBOR Floor Fair Value Under 1% $ — — % 1% to under 2% 81,837 100.0 2% to under 3% — — Total $ 81,837 100.0 % March 31, 2021 LIBOR Floor Fair Value % of
Floating
Rate
Portfolio Under 1% $ - - % 1% to under 2% 96,174 99.9 2% to under 3% - - No Floor 129 0.1 Total $ 96,303 100.0 % 2020,2021, the following table (dollars in thousands) shows the approximate increase/(decrease) in components of net assets resulting from operations of hypothetical LIBOR base rate changes in interest rates, assuming no changes in our investment and capital structure.Basis point increase/(decrease) Interest Expense 300 $ 2,700 $ — $ 2,700 200 1,800 — 1,800 100 900 — 900 (100) (400 ) — (400 ) (200) (400 ) — (400 ) (300) (400 ) — (400 ) Change in Interest Rates Interest Income(1) Interest Expense Net Increase/ (Decrease) Up 300 basis points $ 7,300 $ (2,300 ) $ 5,000 Up 200 basis points 4,900 (1,600 ) 3,300 Up 100 basis points 2,400 (800 ) 1,600 Down 100 basis points (2,400 ) 800 (1,600 ) Down 200 basis points (4,900 ) 1,600 (3,300 ) Down 300 basis points (7,300 ) 2,300 (5,000 ) (1) Assumes no defaults or prepayments by portfolio companies over the next twelve months. 2020.2021. The term “disclosure controls and procedures” is defined under Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as amended. Based on the evaluation of our disclosure controls and procedures as of March 31, 2020,2021, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective.has not been any changewere no changes in our internal controls over financial reporting (as defined in Rule 13a-15 (f)13a-15(f) under the Exchange Act) that occurred during the periodquarter covered by this report that hashave materially affected, or isare reasonably likely to materially affect, our internal controls over financial reporting.On January 25, 2019, two purported class actions were commenced in the Supreme Court of the State of New York, County of New York, by alleged stockholders of Medley Capital Corporation, captioned, respectively, Helene Lax v. Brook Taube, et al., Index No. 650503/2019, and Richard Dicristino, et al. v. Brook Taube, et al., Index No. 650510/2019 (together with the Lax Action, the “New York Actions”). Named as defendants in each complaint are Brook Taube, Seth Taube, Jeffrey Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, John E. Mack, Mark Lerdal, Richard T. Allorto, Jr., Medley Capital Corporation, Medley Management Inc., Sierra Income Corporation, and Sierra Management, Inc. The complaints in each of the New York Actions alleged that the individuals named as defendants breached their fiduciary duties in connection with the proposed merger of MCC with and into Sierra, and that the other defendants aided and abetted those alleged breaches of fiduciary duties. Compensatory damages in unspecified amounts were sought. On December 20, 2019, the Delaware court entered an Order and Final Judgment approving the settlement of the Delaware Action (defined below). The plaintiffs in the New York Actions acknowledged that the settlement of the Delaware Action rendered the New York Actions moot; however, the attorneys for the plaintiffs in the New York Actions sought an order awarding them fees and recovery of expenses on account of their purported contributions to the settlement of the Delaware Action.Following a period of negotiations, the Company reached an agreement with the respective plaintiffs to resolve the New York Actions. While the Company believed that the allegations in the New York Actions were without merit, to avoid the nuisance, potential expense, burden and delay due to continued litigation, the Company agreed to pay $50,000 in attorneys’ fees and expenses to plaintiffs’ counsel in connection with the mooted claims asserted. This amount will be covered by the Company’s insurance carrier. On May 11, 2020, the court formally approved the parties’ settlement agreement and dismissed the New York Actions.On February 11, 2019, a purported stockholder class action was commenced in the Court of Chancery of the State of Delaware (“Delaware Court of Chancery”) by FrontFour Capital Group LLC and FrontFour Master Fund, Ltd. (together, “FrontFour”), captioned as FrontFour Capital Group LLC, et al. v. Brook Taube et al., Case No. 2019-0100 (the “Delaware Action”) against defendants Brook Taube, Seth Taube, Jeff Tonkel, Mark Lerdal, Karin Hirtler-Garvey, John E. Mack, Arthur S. Ainsberg, MDLY, Sierra, the Company, MCC Advisors, Medley Group LLC, and Medley LLC. The complaint, as amended on February 12, 2019, alleged that the individuals named as defendants breached their fiduciary duties to the Company’s stockholders in connection with the MCC Merger, and that MDLY, Sierra, MCC Advisors, Medley Group LLC, and aided and abetted those alleged breaches of fiduciary duties. The complaint sought to enjoin the vote of MCC stockholders on the proposed merger and enjoin enforcement of certain provisions of the Agreement and Plan of Merger, dated as of August 9, 2018, by and between MCC and Sierra (the “MCC Merger Agreement”).The Delaware Court of Chancery held a trial on the plaintiffs’ motion for a preliminary injunction and issued a Memorandum Opinion (the “Decision”) on March 11, 2019. The Delaware Court of Chancery denied the plaintiffs’ requests to (i) permanently enjoin the proposed merger and (ii) require the Company, to conduct a “shopping process” for the Company on terms proposed by the plaintiffs in their complaint. The Delaware Court of Chancery held that the Company’s directors breached their fiduciary duties in entering into the proposed merger, but rejected the plaintiffs’ claim that Sierra aided and abetted those breaches of fiduciary duties. The Delaware Court of Chancery ordered the defendants to issue corrective disclosures consistent with the Decision, and enjoined a vote of the Company’s stockholders on the proposed merger until such disclosures had been made and stockholders had the opportunity to assimilate that information.On March 20, 2019, another purported stockholder class action was commenced by Stephen Altman against Brook Taube, Seth Taube, Jeff Tonkel, Arthur S. Ainsberg, Karin Hirtler-Garvey, Mark Lerdal, and John E. Mack in the Delaware Court of Chancery, captioned Altman v. Taube, Case No. 2019-0219 (the “Altman Action”). The complaint in the Altman Action alleged that the defendants breached their fiduciary duties to stockholders of the Company in connection with the vote of the Company’s stockholders on the proposed mergers. On April 8, 2019, the Delaware Court of Chancery granted a stipulation consolidating the Delaware Action and the Altman Action, designating the amended complaint in the Delaware Action as the operative complaint, and designating the plaintiffs in the Delaware Action and their counsel the lead plaintiffs and lead plaintiffs’ counsel, respectively.On December 20, 2019, the Delaware Court of Chancery entered an Order and Final Judgment approving the settlement of the Delaware Action (the “Settlement”). Pursuant to the Settlement, the Company agreed to certain amendments to (i) the MCC Merger Agreement and (ii) the MDLY Merger Agreement, which amendments are reflected in the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement. The Settlement also provides for, if the MCC Merger had been consummated, the creation of a settlement fund (the “Settlement Fund”), consisting of $17 million in cash and $30 million of Sierra’s common stock, with the number of shares of Sierra’s common stock to be calculated using the pro forma net asset value of $6.37 per share as of June 30, 2019, which would have been distributed to eligible members of the Settlement Class (as defined in the Settlement). In addition, in connection with the Settlement, on July 29, 2019, the Company entered into a Governance Agreement with FrontFour Capital Group LLC, FrontFour Master Fund, Ltd., FrontFour Capital Corp., FrontFour Opportunity Fund, David A. Lorber, Stephen E. Loukas and Zachary R. George, pursuant to which, among other matters, FrontFour is subject to customary standstill restrictions and required to vote in favor of the amended MCC Merger at a meeting of stockholders to approve the Amended MCC Merger Agreement. The Settlement also provides for mutual releases between and among FrontFour and the Settlement Class, on the one hand, and the Medley Parties, on the other hand, of all claims that were or could have been asserted in the Delaware Action through September 26, 2019.The Delaware Court of Chancery also awarded attorney’s fees as follows: (i) an award of $3,000,000 to lead plaintiffs’ counsel and $75,000 to counsel to plaintiff Stephen Altman (the “Therapeutics Fee Award”) and $420,334.97 of plaintiff counsel expenses payable to the lead plaintiff’s counsel, which were paid on December 23, 2019, and (ii) an award that was contingent upon the closing of the proposed merger transactions (the “Contingent Fee Award”).On May 1, 2020, Sierra terminated the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement. Accordingly, no Settlement Fund will be established or paid to the stockholders of the Company and no Contingent Fee Award will be paid to plaintiff’s counsel. The other terms of the Settlement, including the releases provided for in the Delaware Order and Final Judgment, remain in effect.On January 17, 2020, the Company and Sierra filed a notice of appeal with the Delaware Supreme Court from those provisions of the Order and Final Judgment with respect to the Contingent Fee Award. In light of the termination of the Amended MCC Merger Agreement, the appeal is expected to be dismissed.The Company was named as a defendant in a lawsuit on May 29, 2015, by Moshe Barkat and Modern VideoFilm Holdings, LLC (“MVF Holdings”) against the Company, MOF II, MCC Advisors LLC, Deloitte Transactions and Business Analytics LLP A/K/A Deloitte ERG (“Deloitte”), Scott Avila (“Avila”), Charles Sweet, and Modern VideoFilm, Inc. (“MVF”). The lawsuit is pending in the California Superior Court, Los Angeles County, Central District, as Case No. BC 583437. The lawsuit was filed after the Company, as agent for the lender group, exercised remedies following a series of defaults by MVF and MVF Holdings on a secured loan with an outstanding balance at the time in excess of $65 million. The lawsuit sought damages in excess of $100 million. Deloitte and Avila have settled the claims against them in exchange for payment of $1.5 million. On June 6, 2016, the court granted the Medley defendants’ demurrers on several counts and dismissed Mr. Barkat’s claims with prejudice except with respect to his claim for intentional interference with contract. On March 18, 2018, the court granted the Medley defendants’ motion for summary adjudication with respect to Mr. Barkat’s sole remaining claim against the Medley Defendants for intentional interference. Now that the trial court has ruled in favor of the Medley defendants on all counts, the only remaining claims in the Barkat litigation are the Company and MOF II’s affirmative counterclaims against Mr. Barkat and MVF Holdings, which the Company and MOF II are diligently prosecuting.On August 29, 2016, MVF Holdings filed another lawsuit in the California Superior Court, Los Angeles County, Central District, as Case No. BC 631888 (the “Derivative Action”), naming MCC Advisors LLC and certain of Medley’s employees as defendants, among others. The plaintiff in the Derivative Action, asserts claims against the defendants for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unfair competition, breach of the implied covenant of good faith and fair dealing, interference with prospective economic advantage, fraud, and declaratory relief. MCC Advisors LLC and the other defendants believe the causes of action asserted in the Derivative Action are without merit and all defendants intend to continue to assert a vigorous defense. In light of the COVID-19 pandemic, the trial that was set for May 19, 2020 has been continued with no new date set.Medley LLC, Medley Capital Corporation, Medley Opportunity Fund II LP, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube were named as defendants, along with other various parties, in a putative class action lawsuit captioned as Royce Solomon, Jodi Belleci, Michael Littlejohn, and Giulianna Lomaglio v. American Web Loan, Inc., AWL, Inc., Mark Curry, MacFarlane Group, Inc., Sol Partners, Medley Opportunity Fund, II, LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, Seth Taube, DHI Computing Service, Inc., Middlemarch Partners, and John Does 1-100, filed on December 15, 2017, amended on March 9, 2018, and amended a second time on February 15, 2019, in the United States District Court for the Eastern District of Virginia, Newport News Division, as Case No. 4:17-cv-145 (hereinafter, “Class Action 1”). Medley Opportunity Fund II LP and Medley Capital Corporationthe Company were also named as defendants, along with various other parties, in a putative class action lawsuit captioned George Hengle and Lula Williams v. Mark Curry, American Web Loan, Inc., AWL, Inc., Red Stone, Inc., Medley Opportunity Fund II LP, and Medley Capital Corporation, filed February 13, 2018, in the United States District Court, Eastern District of Virginia, Richmond Division, as Case No. 3:18-cv-100 (“Class Action 2”). Medley Opportunity Fund II LP and Medley Capital Corporationthe Company were also named as defendants, along with various other parties, in a putative class action lawsuit captioned John Glatt, Sonji Grandy, Heather Ball, Dashawn Hunter, and Michael Corona v. Mark Curry, American Web Loan, Inc., AWL, Inc., Red Stone, Inc., Medley Opportunity Fund II LP, and Medley Capital Corporation, filed August 9, 2018 in the United States District Court, Eastern District of Virginia, Newport News Division, as Case No. 4:18-cv-101 (“Class Action 3”) (together with Class Action 1 and Class Action 2, the “Virginia Class Actions”). Medley Opportunity Fund II LP was also named as a defendant, along with various other parties, in a putative class action lawsuit captioned Christina Williams and Michael Stermel v. Red Stone, Inc. (as successor in interest to MacFarlane Group, Inc.), Medley Opportunity Fund II LP, Mark Curry, Brian McGowan, Vincent Ney, and John Doe entities and individuals, filed June 29, 2018 and amended July 26, 2018, in the United States District Court for the Eastern District of Pennsylvania, as Case No. 2:18-cv-2747 (the “Pennsylvania Class Action”) (together. The Company and Medley Opportunity Fund II, LP were also named as defendants, along with various other parties, in a putative class action lawsuit captioned Charles McDaniel v. American Web Loan, Inc., AWL, Inc., Mark Curry, Medley Capital Corporation, Medley Opportunity Fund II, LP, and Red Stone, Inc., filed on August 7, 2020 and amended on October 22, 2020 in the First Judicial Circuit of Ohio County, West Virginia, Case No. 20-C-169, which case was then removed to the United States District Court for the Northern District of West Virginia on December 15, 2020 (the “West Virginia Class Action” and together with the Virginia Class Actions and the Pennsylvania Class Action, the “Class Action Complaints”). The plaintiffs in the Class Action Complaints filed their putative class actions alleging claims under the Racketeer Influenced and Corrupt Organizations Act, and various other claims arising out of the alleged payday lending activities of American Web Loan. The claims against Medley Opportunity Fund II LP, Medley LLC, Medley Capital Corporation,the Company, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube (in Class Action 1, as amended); Medley Opportunity Fund II LP and Medley Capital Corporation (in Class Action 2 and Class Action 3); and Medley Opportunity Fund II LP (in the Pennsylvania Class Action); and Medley Opportunity Fund II LP and the Company (in the West Virginia Class Action), allege that those defendants in each respective action exercised control over, or improperly derived income from, and/or obtained an improper interest in, American Web Loan’s payday lending activities as a result of a loan to American Web Loan. The loan was made by Medley Opportunity Fund II LP in 2011. American Web Loan repaid the loan from Medley Opportunity Fund II LP in full in February of 2015, more than 1 year and 10 months prior to any of the loans allegedly made by American Web Loan to the alleged class plaintiff representatives in Class Action 1. In Class Action 2, the alleged class plaintiff representatives had not alleged when they received any loans from American Web Loan. In Class Action 3, the alleged class plaintiff representatives claim to have received loans from American Web Loan at various times from February 2015 through April 2018. In the Pennsylvania Class Action, the alleged class plaintiff representatives claim to have received loans from American Web Loan in 2017. The Settlement Agreement is subject various conditions before it will become effective on the Effective Date, including payment of the Monetary Consideration, Final Approval by the Court of the Settlement following Notice to the Settlement Class and a Final Approval Hearing; entry of Judgment dismissing Class Action 1 with prejudice; and expiration of the time during which Plaintiffs and American Web Loan may exercise specified termination rights. On April 16, 2020, PlaintiffsObjectors filed a revised settlement agreement publicly in Class Action 1 moved(ECF No. 483-1) (the “Revised Settlement Agreement”). As relevant to Medley LLC, the Company, Medley Opportunity Fund II LP, Medley Management, Inc., Medley Group, LLC, Brook Taube, and Seth Taube, the terms of the Revised Settlement Agreement do not differ from the terms of the original Settlement Agreement. On April 7, 2021, the Court presiding over Class Action 1 held a hearing on Plaintiffs’ motion for apreliminary approval of the Revised Settlement Agreement, and entered an order granting preliminary approval of the revised settlement (the “Preliminary Approval Order”). Pursuant to the Preliminary Approval Order, objections to the revised settlement agreement are due by June 9, 2021, and tothe Court has set a Final Approval hearing date;Hearing for July 9, 2021.motion remains pending.2019,2020, filed with the SEC on December 16, 2019,11, 2020, which could materially affect our business, financial condition and/or operating results. Other than the items disclosed below, there have been no material changes during the six months ended March 31, 20202021 to the risk factors discussed in “Item 1A. Risk Factors” of our annual report on Form 10-K. Additional risks or uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition and/or operating results.2020,2021, the Company’s asset coverage was 181.7%295.6% after giving effect to leverage and therefore the Company’s asset coverage is belowabove 200%, the minimum asset coverage requirement under the 1940 Act. As a result, the Company is prohibited from making distributions to stockholders. All distributions will be paid at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our RIC tax treatment, compliance with applicable BDC regulations, and such other factors as our board of directors may deem relevant from time to time. We cannot assure you that we will pay distributions to our stockholders in the future.2020,2021, the Company’s asset coverage was 181.7%295.6% after giving effect to leverage and therefore the Company’s asset coverage is belowabove 200%, the minimum asset coverage requirement under the 1940 Act. As a result, the Company is prohibited from making distributions to stockholders, including the payment of any dividend, and may not employ further leverage until the Company’s asset coverage is at least 200% after giving effect to such leverage. Notes and the 2021 Notes are issued place restrictions on our and/or our subsidiaries’ activities. and the 2021 Notes (collectively, “U.S. Notes”) were issued place restrictions on our and/or our subsidiaries’ ability to, among other things:U.S.2023 Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the U.S.2023 Notes to the extent of the values of the assets securing such debt, (3) indebtedness of ours that is guaranteedU.S.2023 Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the U.S.2023 Notes with respect to the assets of our subsidiaries, in each case other than an incurrence of indebtedness or other obligation that would cause a violation of Section 18(a)(1)(A) of the 1940 Act, as modified by Section 61(a)(1) of the 1940 Act, or any successor provisions. These provisions generally prohibit us from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowings. As of March 31, 2020,2021, the Company’s asset coverage was 181.7%295.6% after giving effect to leverage and therefore the Company is prohibited from making additional borrowings, including through the issuance of additional debt or the sale of additional debt securities; orpay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities ranking junior in right of payment to the U.S. Notes, in each case other than dividends, purchases, redemptions or payments that would cause a violation of Section 18(a)(1)(B) of the 1940 Act, as modified by Section 61(a)(1) of the 1940 Act, or any successor provisions.leverage. These provisions generally prohibit us from declaring any cash dividend or distribution upon any class of our capital stock or purchasing any such capital stock if our asset coverage, as defined in the 1940 Act, is below 200% at the time of the declaration of the dividend or distribution or the purchase and after deducting the amount of such dividend, distribution or purchase. As of March 31, 2020, the Company’s asset coverage was 181.7% after giving effect to leverage and therefore the Company is prohibited from declaring any cash dividend or distribution upon any class of our capital stock, or purchasing any such capital stock.is having,continues to have, and any future outbreaks could have, an adverse impact on the ability of lenders to originate loans, the volume and type of loans originated, the ability of borrowers to make payments and the volume and type of amendments and waivers granted to borrowers and remedial actions taken in the event of a borrower default, each of which could negatively impact the amount and quality of loans available for investment by the Company and returns to the Company, among other things. With respect to the U.S. credit markets (in particular for middle market loans), the COVID-19 outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things: (i) increased draws by borrowers on revolving lines of credit and other financing instruments; (ii) 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; (iii) greater volatility in pricing and spreads and difficulty in valuing loans during periods of increased volatility; and (iv) 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. These and future market disruptions and/or illiquidity could have an adverse effect on our business, financial condition, results of operations and cash flows. Unfavorable economic conditions also could 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 could 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. We may have to access, if available, alternative markets for debt and equity capital, and a severe disruption in the global financial markets, deterioration in credit and financing conditions or uncertainty regarding U.S. government spending and deficit levels or other global economic conditions could have a material adverse effect on our business, financial condition and results of operations.For example, between 2008 The Company’s performance (including that of certain of its portfolio companies) was negatively impacted during the pandemic. The longer-term impact of COVID-19 on the operations and 2009, the U.S.performance of the Company is difficult to predict, but may also be adverse. The longer-term potential impact on such operations and global capital markets were unstableperformance could depend to a large extent on future developments and actions taken by authorities and other entities to contain COVID-19 and its economic impact. The impacts, as evidenced by periodic disruptions in liquiditywell as the uncertainty over impacts to come, of COVID-19 have adversely affected the performance of the Company and may continue to do so in the debt capital markets, significant write-offs in the financial services sector, the re-pricing of credit risk in the broadly syndicated credit market and the failure of major financial institutions. Despite actions of the U.S. federal government and foreign governments, these events contributed to worsening general economic conditions that materially and adversely impacted the broader financial and credit markets and reduced the availability of debt and equity capital for the market as a whole and financial services firms in particular. The recent outbreak ofIn December 2019, COVID-19 surfaced in manyChina and has since spread and continues to spread to other countries, including the United States,States. COVID-19 spread quickly and has been identified as a global pandemic by the World Health Organization The COVID-19 pandemic continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. COVID-19 spread quickly and has been identified as a global pandemic by the World Health Organization. In response, beginning in March 2020, in affected jurisdictions including the United States, unprecedented actions were and continue to be taken by governmental authorities have imposedand businesses, including quarantines, “stay at home” orders, travel restrictions on traveland bans, and the temporary closure and limited operations of many businesses (including corporate offices, retail stores, restaurants, fitness clubs, and manufacturing facilities and factories, in affected jurisdictions, including, beginning in March 2020,and other businesses). The actions to contain the COVID-19 pandemic varied by country and by state in the United States. While state and local governments across the United States have taken steps to re-open their economies by lifting “stay at home” orders and re-opening businesses, a number of states and local governments have needed to pause or slow the re-opening or impose new shut-down orders as the number of cases of COVID-19 has continued to rise. COVID-19 and the resulting economic dislocations have had and continue to have adverse consequences for the business operations and financial performance of some of our portfolio companies, which may, in turn impact the valuation of our investments and have adversely affected, and threaten to continue to adversely affect, our operations. Local, state and federal and numerous non-U.S. governmental authorities have imposed travel restrictions and bans, business closures or limited business operations and other quarantine measures on service providersbusinesses and other individuals that remain in effect on the date of this Quarterly Report on Form 10-Q. COVID-19 has caused the effective cessation of all business activity deemed non-essential by such governmental authorities. We cannot predict the full impact of COVID-19, including the duration of the closures and restrictions described above. As a result, we are unable to predict the duration of these business and supply-chain disruptions, the extent to which COVID-19 will negatively affect our portfolio companies’ operating results or the impact that such disruptions may have on our results of operations and financial condition. With respect to loans to portfolio companies, the Company will be impacted if, among other things, (i) amendments and waivers are granted (or are required to be granted) to borrowers permitting deferral of loan payments or allowing for PIK interest payments, (ii) borrowers default on their loans, are unable to refinance their loans at maturity, or go out of business, or (iii) the value of loans held by the Company decreases as a result of such events and the uncertainty they cause. Portfolio companies may also be more likely to seek to draw on unfunded commitments we have made, and the risk of being unable to fund such commitments is heightened during such periods. Depending on the duration and extent of the disruption to the business operations of our portfolio companies, we expect some portfolio companies, particularly those in vulnerable industries, such as travel, to experience financial distress and possibly to default on their financial obligations to us and/or their other capital providers. In addition, if such portfolio companies are subjected to prolonged and severe financial distress, we expect some of them to substantially curtail their operations, defer capital expenditures and lay off workers. These developments would be likely to permanently impair their businesses and result in a reduction in the value of our investments in them. MCC Advisors or our portfolio companies (or any of the key personnel or service providers of the foregoing) are compromised or if necessary or beneficial systems and processes are disrupted as a result of stay-at-home orders or other related interruptions to business operations.Risks Relating toTerminationperformance of the MergersThe terminationcertain of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement could negatively impact us.The termination of the Amended MCC Merger Agreement and the Amended MDLY Merger Agreement may result in various consequences, including:our business may haveits portfolio companies) has been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Mergers, without realizing any of the anticipated benefits of completing the Mergers;the market price of our common stock may decline to the extent that the market price prior to termination reflects a market assumption that the Mergers would be completed;we may not be able to find a party willing to pay an equivalent or more attractive price than the price Sierra had agreed to pay in the MCC Merger.the Company may experience negative publicity and negative reactions from the financial markets and from its investors, creditors and employees;the Company may experience negative publicity and negative reactions from the financial markets and from its investors, creditors and employees;the Company has incurred and may continue to incurbe negatively impacted by the COVID-19 pandemic’s effects. The COVID-19 pandemic has adversely impacted economies and capital markets around the world in ways that will likely continue and may change in unforeseen ways for an indeterminate period. The pandemic has also adversely affected various businesses, including some in which we are invested. The COVID-19 pandemic may exacerbate pre-existing business performance, political, social and economic risks affecting certain companies and countries generally. The impacts, as well as the uncertainty over impacts to come, of COVID-19 have adversely affected the performance of the Company (including certain portfolio companies) and may continue to do so in the future.costs relatinginvestments in one or more economic sectors, including the construction and building sector.Mergers,construction and building sector (its investments in such sector comprise 15.0% of gross assets as of March 31, 2021), which subjects the Company to the particular risks of such sector to a greater degree than others not similarly concentrated. These risks include that the construction and building sector is cyclical and is affected by a number of factors, including the general condition of the economy, market demand and changes in interest rates. Construction activity is affected by the ability to finance projects, which may be reduced due to a widespread outbreak of contagious disease, including an epidemic or pandemic such as legal, accounting,the current COVID-19 pandemic. Residential, commercial and industrial construction could decline if companies and consumers are unable to finance construction projects or if the economy precipitously declines or stalls, which could result in delays or cancellations of capital projects. A downturn in the residential, commercial or industrial construction industries and general economic conditions may have an adverse effect on the portfolio companies in which the Company invests.advisor, printing,institutions, is considering replacing U.S.-dollar LIBOR with the Secured Overnight Financing Rate ("SOFR"), a new index calculated by short-term repurchase agreements, backed by Treasury securities. Abandonment of or modifications to LIBOR could have adverse impacts on newly issued financial instruments and other professional services fees,our existing financial instruments which reference LIBOR. While some instruments may contemplate a scenario where LIBOR is no longer available by providing for an alternative rate setting methodology, not all instruments may have such provisions and there is significant uncertainty regarding the effectiveness of any such alternative methodologies. Abandonment of or modifications to LIBOR could lead to significant short-term and long-term uncertainty and market instability. If LIBOR ceases to exist, we and our portfolio companies may need to amend or restructure our existing LIBOR-based debt instruments and any related hedging arrangements that extend beyond 2021, which may relatebe difficult, costly and time consuming. In addition, from time to activitiestime we invest in floating rate loans and investment securities whose interest rates are indexed to LIBOR. Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR, or any changes announced with respect to such reforms, may result in a sudden or prolonged increase or decrease in the reported LIBOR rates and the value of LIBOR-based loans and securities, including those of other issuers we or our funds currently own or may in the future own. It remains uncertain how such changes would be implemented and the effects such changes would have on us, issuers of instruments in which we invest and financial markets generally.we wouldmay have not have undertaken other thanbeen modified with fallback language and adding effective fallback language to new agreements in connection with the Mergers; andthe Company has committed, andevent that LIBOR is discontinued before maturity. There may be requiredadditional risks to further commit, timeour current processes and resourcesinformation systems that will need to defending legal proceedings commenced against us relatedbe identified and evaluated by us. Due to the Mergers.Weuncertainty of the replacement for LIBOR, the potential effect of any such event on our cost of capital and net investment income cannot assure our stockholdersyet be determined. In addition, the cessation of LIBOR could:● Adversely impact the pricing, liquidity, value of, return on and trading for a broad array of financial products, including any LIBOR-linked securities, loans and derivatives that are included in our assets and liabilities; ● Require changes to documentation that governs or references LIBOR or LIBOR-based products, including, for example, pursuant to renegotiations of existing documentation to modify the terms of outstanding investments; ● Result in inquiries or other actions from regulators in respect of our preparation and readiness for the replacement of LIBOR with one or more alternative reference rates; ● Result in disputes, litigation or other actions with portfolio companies, or other counterparties, regarding the interpretation and enforceability of provisions in our LIBOR-based investments, such as fallback language or other related provisions, including, in the case of fallbacks to the alternative reference rates, any economic, legal, operational or other impact resulting from the fundamental differences between LIBOR and the various alternative reference rates; ● Require the transition and/or development of appropriate systems and analytics to effectively transition our risk management processes from LIBOR-based products to those based on one or more alternative reference rates, which may prove challenging given the limited history of the proposed alternative reference rates; and ● Cause us to incur additional costs in relation to any of the above factors. the risks described abovea transition from LIBOR to an alternative will not negatively impactresult in financial market disruptions, significant increases in benchmark rates, or borrowing costs to borrowers, any of which could have an adverse effect on our business, result of operations, financial results,condition, and ability to pay dividends and distributions, if any, to our stockholders, and could negatively impact our stock prices.None.3.1 3.2 3.3 Form of Bylaws (Incorporated by reference to Exhibit 99.B.3 to the Registrant’s Pre-effective Amendment No. 3 to the Registration Statement on Form N-2 (File No. 333-166491), filed on November 23, 2010). 3.33.43.5 Amendment No. 2 to Bylaws (Incorporated by reference to the Current Report on Form 8-K filed December 28, 2020). 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 10.10 10.11 10.12 10.13 10.14 10.15 10.16 10.17 10.18 10.19 10.20 10.21 10.22 10.23 10.24 10.25 10.26 10.27 10.28 10.29 10.30 10.31 10.32 10.33 10.34 10.35 10.36 10.37 10.3810.39 10.4010.38 * Filed herewith. Dated: May 12, 2021 Dated:May 11, 2020PhenixFIN Corporation
(f/k/a Medley Capital CorporationCorporation) By /s/ Brook TaubeDavid Lorber Brook TaubeDavid Lorber Chief Executive Officer (Principal Executive Officer) By /s/ Richard T. Allorto, Jr.Ellida McMillan Richard T. Allorto, Jr.Ellida McMillan Chief Financial Officer (Principal Accounting and Financial Officer) 33