~~PART I — FINANCIAL INFORMATION~~

~~Item 1. Condensed Consolidated Financial Statements~~

~~HMS~~

MSC Income Fund, Inc.

~~Condensed~~

Consolidated Balance Sheets

(dollars in thousands, except ~~share~~shares and per share amounts)


	March 31,		December 31,
	2021		2020
	(unaudited)
ASSETS
Investments at fair value:
Control investments (cost: $18,163 and $18,152 as of March 31, 2021 and December 31, 2020, respectively)	$	33,776	$	33,831
Affiliate investments (cost: $156,007 and $143,740 as of March 31, 2021 and December 31, 2020, respectively)		170,959		157,690
Non‑Control/Non‑Affiliate investments (cost: $685,503 and $678,764 as of March 31, 2021 and December 31, 2020, respectively)		644,997		634,001
Total investments (cost: $859,673 and $840,656 as of March 31, 2021 and December 31, 2020, respectively)		849,732		825,522
Cash and cash equivalents		28,604		8,586
Restricted cash		—		40,480
Dividends and interest receivable		10,659		8,303
Deferred financing costs (net of accumulated amortization of $4,740 and $4,443 as of March 31, 2021 and December 31, 2020, respectively)		3,975		2,691
Prepaids and other assets		1,520		2,439
Receivable for investments sold		1,789		—
Total assets	$	896,279	$	888,021
LIABILITIES
Credit facilities payable	$	284,688	$	301,816
Accounts payable and other liabilities		2,854		2,093
Interest payable		1,771		286
Dividend payable		7,961		—
Base management and incentive fees payable		3,903		4,202
Payable for investment purchases		10,782		—
Total liabilities		311,959		308,397
Commitments and contingencies (Note I)
NET ASSETS
Common stock, $0.001 par value per share (150,000,000 shares authorized; 79,608,304 and 79,608,304 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively)		80		80
Additional paid‑in capital		682,028		682,028
Total undistributed (overdistributed) earnings		(97,788)		(102,484)
Total net assets		584,320		579,624
Total liabilities and net assets	$	896,279	$	888,021
NET ASSET VALUE PER SHARE	$	7.34	$	7.28

March 31, 2020 December 31, 2019
(Unaudited)
ASSETS
Portfolio investments at fair value:
Non-Control/Non-Affiliate investments (amortized cost: $835,553 and $878,632 as of March 31, 2020 and December 31, 2019, respectively) $ 705,726
$ 838,643
Affiliate investments (amortized cost: $147,574 and $144,006 as of March 31, 2020 and December 31, 2019, respectively) 154,472
154,158
Control investments (amortized cost: $18,285 and $17,417 as of March 31, 2020 and December 31, 2019, respectively) 34,665
34,796
Total portfolio investments (amortized cost: $1,001,412 and $1,040,055 as of March 31, 2020 and December 31, 2019, respectively) 894,863
1,027,597

Cash and cash equivalents 16,252
21,846
Interest receivable 8,650
8,749
Prepaid and other assets 3,948
4,403
Deferred financing costs (net of accumulated amortization of $3,339 and $2,990 as of March 31, 2020 and December 31, 2019, respectively) 3,627
3,516
Total assets $ 927,340
$ 1,066,111

LIABILITIES

Accounts payable and other liabilities $ 3,139
$ 1,684
Stockholder distributions payable 4,669
4,669
Base management and incentive fees payable 4,994
5,388
Due to affiliates 48
44
Directors’ fees payable 26
21
Payable for securities purchased 1,900
—
Credit facilities payable 403,000
445,000
Total liabilities 417,776
456,806

Commitments and Contingencies (Note 12)

NET ASSETS

Common stock, $.001 par value; 150,000,000 shares authorized, 78,423,129 and 78,463,377 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively 78
78
Additional paid-in capital 675,358
675,554
Accumulated loss (165,872 ) (66,327 )
Total net assets 509,564
609,305

Total liabilities and net assets $ 927,340
$ 1,066,111

Net asset value per share $ 6.50
$ 7.77

~~See~~

The accompanying notes ~~to the condensed~~are an integral part of these consolidated financial ~~statements.~~

statements

Table of Contents

~~HMS~~

MSC Income Fund, Inc.

~~Condensed~~

Consolidated Statements of Operations

(dollars in thousands, except ~~share~~shares and per share amounts)

(unaudited)


	Three Months Ended
	March 31,
	2021		2020
INVESTMENT INCOME:
Interest, fee and dividend income:
Control investments	$	600	$	591
Affiliate investments		3,650		3,540
Non‑Control/Non‑Affiliate investments		16,022		19,869
Total investment income		20,272		24,000
EXPENSES:
Interest		3,164		5,229
Base management fees		3,903		4,994
Internal administrative service expenses		1,055		784
Offering costs		—		88
Professional fees		558		710
Insurance		114		103
Board of director fees		108		102
Other general and administrative		483		240
Total expenses before fee and expense waivers		9,385		12,250
Waiver of internal administrative services expenses		(1,055)		(784)
Total expenses, net of fee and expense waivers		8,330		11,466
NET INVESTMENT INCOME		11,942		12,534
NET REALIZED GAIN (LOSS):
Affiliate investments		—		(3,044)
Non‑Control/Non‑Affiliate investments		(1,991)		(321)
Realized loss on extinguishment of debt		(2,091)		—
Total net realized loss		(4,082)		(3,365)
NET UNREALIZED APPRECIATION (DEPRECIATION):
Control investments		(66)		(998)
Affiliate investments		1,003		(3,254)
Non‑Control/Non‑Affiliate investments		4,256		(90,657)
Total net change in unrealized appreciation (depreciation)		5,193		(94,909)
INCOME TAXES:
Federal and state income, excise and other taxes		396		76
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	12,657	$	(85,816)
NET INVESTMENT INCOME PER SHARE—BASIC AND DILUTED	$	0.15	$	0.16
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE—BASIC AND DILUTED	$	0.16	$	(1.09)
WEIGHTED AVERAGE SHARES OUTSTANDING—BASIC AND DILUTED		79,608,304		78,607,063

~~(Unaudited)~~

Three Months Ended
March 31, 2020 March 31, 2019
INVESTMENT INCOME:

From non-control/non-affiliate investments:
Interest income $ 19,048
$ 23,499
Fee income 540
307
Dividend income 281
327
From affiliate investments:
Interest income 2,557
2,602
Fee income 15
37
Dividend income 968
396
From control investments:
Interest income 180
123
Fee income 20
17
Dividend income 391
1,853
Total investment income 24,000
29,161
EXPENSES:

Interest expense 5,229
7,107
Base management and incentive fees 4,994
7,125
Internal administrative services expenses 784
758
Offering costs 88
95
Professional fees 547
316
Insurance 103
48
Other general and administrative 505
516
Expenses before fee and expense waivers 12,250
15,965
Waiver of incentive fees —
—
Waiver of internal administrative services expenses (784 ) (758 )
Total expenses, net of fee and expense waivers 11,466
15,207
Net investment income before taxes 12,534
13,954
Income tax expense, including excise tax 76
58
NET INVESTMENT INCOME 12,458
13,896
NET REALIZED LOSS ON INVESTMENTS

Non-Control/Non-Affiliate investments (321 ) (1,631 )
Affiliate investments (3,044 ) (5,508 )
Control investments —
—
Total net realized loss on investments (3,365 ) (7,139 )
NET REALIZED INCOME 9,093
6,757
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS

Non-Control/Non-Affiliate investments (90,657 ) 4,331
Affiliate investments (3,254 ) 3,626
Control investments (998 ) 4,106
Total net change in unrealized appreciation (depreciation) on investments (94,909 ) 12,063
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (85,816 ) $ 18,820
PER SHARE INFORMATION - BASIC AND DILUTED
NET INVESTMENT INCOME PER SHARE $ 0.16
$ 0.18
NET REALIZED INCOME PER SHARE $ 0.12
$ 0.09
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE (EARNINGS PER SHARE) $ (1.09 ) $ 0.24
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED 78,607,063
78,819,746

~~See~~

The accompanying notes ~~to the condensed~~are an integral part of these consolidated financial ~~statements.~~

statements

Table of Contents

~~HMS~~

MSC Income Fund, Inc.

~~Condensed~~

Consolidated Statements of Changes in Net Assets

(dollars in thousands, except ~~share and per share amounts)~~shares)

(unaudited)


						Total
	Common Stock			Additional		Undistributed
	Number of	Par		Paid‑In		(Overdistributed)		Total Net
	Shares	Value		Capital		Earnings		Asset Value
Balances at December 31, 2019	78,463,377	$	78	$	675,554	$	(66,327)	$	609,305
Dividend reinvestment	751,240		1		5,898		—		5,899
Common stock repurchased	(791,488)		(1)		(6,094)		—		(6,095)
Net decrease resulting from operations	—		—		—		(85,816)		(85,816)
Dividends to stockholders	—		—		—		(13,729)		(13,729)
Balances at March 31, 2020	78,423,129	$	78	$	675,358	$	(165,872)	$	509,564

Balances at December 31, 2020	79,608,304	$	80	$	682,028	$	(102,484)	$	579,624
Net increase resulting from operations	—		—		—		12,657		12,657
Dividends to stockholders	—		—		—		(7,961)		(7,961)
Balances at March 31, 2021	79,608,304	$	80	$	682,028	$	(97,788)	$	584,320

~~(Unaudited)~~

Three Months Ended
March 31, 2020 March 31, 2019
Change in Net Assets from Operations:
Net investment income $ 12,458
$ 13,896
Net realized gain (loss) on investments (3,365 ) (7,139 )
Net change in unrealized appreciation (depreciation) on investments (94,909 ) 12,063
Net increase (decrease) in net assets resulting from operations (85,816 ) 18,820

Change in Net Assets from Stockholders’ Distributions:
Net decrease in net assets resulting from stockholders’ distributions (13,730 ) (13,606 )

Change in Net Assets from Capital Share Transactions:
Reinvestment of stockholder distributions 5,899
6,366
Repurchase of common stock (6,094 ) (6,553 )
Net decrease in net assets resulting from capital share transactions (195 ) (187 )

Total Increase (Decrease) in Net Assets (99,741 ) 5,027
Net Assets at beginning of the period 609,305
625,366
Net Assets at end of the period $ 509,564
$ 630,393

NAV per share at end of the period $ 6.50
$ 8.03
Distributions declared per share $ 0.17
$ 0.17

Common shares outstanding, beginning of the period 78,463,377
78,584,824
Issuance of common shares pursuant to distribution reinvestment plan 751,240
782,543
Repurchase of common shares (791,488 ) (820,171 )
Common shares outstanding, end of the period 78,423,129
78,547,196

~~See~~

The accompanying notes ~~to the condensed~~are an integral part of these consolidated financial ~~statements.~~statements

Table of Contents

~~HMS~~

MSC Income Fund, Inc.

~~Condensed~~

Consolidated Statements of Cash Flows

(dollars in thousands)

(unaudited)


	Three Months Ended
	March 31,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets resulting from operations	$	12,657	$	(85,816)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash generated from operating activities:
Investments in portfolio companies		(79,381)		(46,895)
Proceeds from sales and repayments of debt investments in portfolio companies		60,744		86,496
Net change in unrealized (appreciation) depreciation		(5,193)		94,909
Net realized loss on the sale of portfolio investments		1,991		3,365
Realized loss on extinguishment of debt		2,091		—
Amortization of deferred financing costs		311		351
Amortization of deferred offering costs		—		88
Accretion of unearned income		(959)		(2,021)
Payment-in-kind interest		(1,412)		(828)
Changes in other assets and liabilities:
Dividends and interest receivable		(2,356)		99
Receivable for investments sold		(1,789)		—
Prepaid and other assets		919		875
Payable for investments purchased		10,782		—
Base management and incentive fees payable		(299)		(394)
Interest payable		1,485		—
Accounts payable and other liabilities		620		652
Net cash provided by (used in) operating activities		211		50,881
CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of common stock		—		(6,094)
Payment of offering costs		—		(88)
Dividends paid		—		(7,831)
Repayments on Credit Facilities payable		(311,816)		(117,000)
Proceeds from Credit Facilities payable		294,688		75,000
Payment of deferred financing costs		(3,545)		(462)
Net cash provided by (used in) financing activities		(20,673)		(56,475)
Net increase (decrease) in cash, cash equivalents and restricted cash		(20,462)		(5,594)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT THE BEGINNING OF THE PERIOD		49,066		21,846
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT THE END OF THE PERIOD	$	28,604	$	16,252

Supplemental cash flow disclosures:
Cash paid for interest	$	1,369	$	4,493
Cash paid for taxes	$	396	$	685
Non-cash financing activities:
Dividends declared and unpaid	$	7,961	$	4,669
Shares issued pursuant to the dividend reinvestment plan	$	—	$	751

The accompanying notes are an integral part of these consolidated financial statements

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments

March 31, 2021

(dollars in thousands)

(unaudited)

~~(Unaudited)~~


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Control Investments (5)

Copper Trail Fund Investments	(12) (13)	July 17, 2017	Investment Partnership
				LP Interests (CTMH, LP)	38.8%					$	835	$	710	(31)

GRT Rubber Technologies LLC ("GRT")		December 19, 2014	Manufacturer of Engineered Rubber Products
				Secured Debt		7.12% (L+7.00%)	12/31/2023	$	8,262		8,247		8,262
				Member Units	5,879						6,435		22,120	(8)
											14,682		30,382

Harris Preston Fund Investments	(12) (13)	October 1, 2017	Investment Partnership
				LP Interests (2717 MH, L.P.)	49.3%						2,646		2,684	(31)


Subtotal Control Investments (5.8% of net assets at fair value)										$	18,163	$	33,776

Affiliate Investments (6)

AFG Capital Group, LLC		November 7, 2014	Provider of Rent-to-Own Financing Solutions and Services
				Secured Debt		10.00%	5/25/2022		101		101		101
				Preferred Member Units	186						300		1,580
											401		1,681

Analytical Systems Keco, LLC		August 16, 2019	Manufacturer of Liquid and Gas Analyzers
				Secured Debt		12.00% (L+10.00%, Floor 2.00%)	8/16/2024		1,289		1,219		1,219	(9)
				Preferred Member Units	3,200						800		680
				Warrants	420		8/16/2029				79		-	(27)
											2,098		1,899

Brewer Crane Holdings, LLC		January 9, 2018	Provider of Crane Rental and Operating Services
				Secured Debt		11.00% (L+10.00%, Floor 1.00%)	1/9/2023		2,108		2,090		2,090	(9)
				Preferred Member Units	2,950						1,070		1,370	(8)
											3,160		3,460

Centre Technologies Holdings, LLC		January 4, 2019	Provider of IT Hardware Services and Software Solutions
				Secured Debt		12.00% (L+10.00%, Floor 2.00%)	1/4/2024		2,869		2,833		2,833	(9)
				Preferred Member Units	12,696						1,460		1,540
											4,293		4,373

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)

Three Months Ended
March 31, 2020 Three Months Ended
March 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES

Net increase (decrease) in net assets resulting from operations $ (85,816 ) $ 18,820
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash generated from operating activities:
Principal repayments received and proceeds from sales of investments in portfolio companies 86,496
39,036
Investments in portfolio companies (46,895 ) (34,152 )
Net change in unrealized (appreciation) depreciation on portfolio investments 94,909
(12,063 )
Net realized loss on sale of portfolio investments 3,365
7,139
Amortization of deferred financing costs 351
337
Amortization of deferred offering costs 88
95
Accretion of unearned income (2,021 ) (1,562 )
Net payment-in-kind interest accrual (828 ) (1,169 )
Changes in other assets and liabilities:
Interest receivable 99
1,036
Prepaid and other assets 875
518
Base management and incentive fees payable (394 ) 1,271
Due to affiliates 4
48
Directors’ fees payable 5
5
Accounts payable and other liabilities 643
88
Net cash generated from operating activities 50,881
19,447

CASH FLOWS FROM FINANCING ACTIVITIES

Redemption of common stock (6,094 ) (6,553 )
Payment of offering costs (88 ) (95 )
Payment of stockholder distributions (7,831 ) (7,243 )
Repayments on credit facilities payable (117,000 ) (31,000 )
Proceeds from credit facilities payable 75,000
22,000
Payment of deferred financing costs (462 ) —
Net cash used in financing activities (56,475 ) (22,891 )

Net decrease in cash and cash equivalents (5,594 ) (3,444 )

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 21,846
21,757

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 16,252
$ 18,313


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Chamberlin Holding LLC		February 26, 2018	Roofing and Waterproofing Specialty Contractor
				Secured Debt		9.00% (L+8.00%, Floor 1.00%)	2/26/2023		3,803		3,751		3,803	(9)
				Member Units	4,347						2,860		7,070	(8)
				Member Units	1,047,146						330		332	(8) (30)
											6,941		11,205

Charlotte Russe, Inc	(11)	May 28, 2013	Fast-Fashion Retailer to Young Women
				Common Stock	19,041						2,470		-

Charps, LLC		February 3, 2017	Pipeline Maintenance and Construction
				Preferred Member Units	1,600						100		2,830	(8)

Clad-Rex Steel, LLC		December 20, 2016	Specialty Manufacturer of Vinyl-Clad Metal
				Secured Debt		10.50% (L+9.50%, Floor 1.00%)	1/15/2024		2,720		2,710		2,710	(9)
				Member Units	717						1,820		2,152	(8)
				Secured Debt		10.00%	12/20/2036		276		273		273	(30)
				Member Units	800						53		132	(30)
											4,856		5,267

Cody Pools, Inc.		March 6, 2020	Designer of Residential and Commercial Pools
				Secured Debt		12.25% (L+10.50%, Floor 1.75%)	3/6/2025		3,504		3,442		3,504	(9)
				Preferred Member Units	587						2,079		4,720
											5,521		8,224

Colonial Electric Company LLC		March 31, 2021	Provider of Electrical Contracting Services
				Secured Debt		12.00%	3/31/2026		6,300		6,143		6,143
				Preferred Member Units	17,280						1,920		1,920
											8,063		8,063

Copper Trail Fund Investments	(12) (13)	July 17, 2017	Investment Partnership
				LP Interests (Copper Trail Energy Fund I, LP)	12.4%						2,161		1,843	(8) (31)
											-		-
Datacom, LLC		May 30, 2014	Technology and Telecommunications Provider
				Secured Debt		5.00%	12/31/2025		997		901		901
				Preferred Member Units	9,000						290		290
											1,191		1,191

~~See notes to the condensed consolidated financial statements.~~

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)

HMS Income Fund, Inc.
Condensed Consolidated Schedule of Investments
As of March 31, 2020
(dollars in thousands)
Portfolio Company (1) (3) Business Description Type of Investment (2) (3) Index Rate (22) Principal (7) Cost (7) Fair Value (26)

Control Investments (6)
CTMH, LP (9) (15) Investment Partnership LP Interests (CTMH, LP) (Fully diluted 38.8%) — $ —
$ 872
$ 872
GRT Rubber Technologies, LLC (10) (13) Manufacturer of Engineered Rubber Products LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.58%, Secured Debt (Maturity - December 31, 2023) (8) 1 month LIBOR 8,262
8,243
8,262
Member Units (2,896 units) (16) — —
6,435
22,375
14,678
30,637
Harris Preston Fund Investments (9) (15) Investment Partnership LP Interests (2717 MH, LP) (Fully diluted 49.3%) — —
2,735
3,156

Subtotal Control Investments (6) (4% of total investments at fair value) $ 18,285
$ 34,665
Affiliate Investments (4)
AFG Capital Group, LLC (10) (13) Provider of Rent-to-Own Financing Solutions and Services 10.00% Secured Debt (Maturity - May 25, 2022) (14) None $ 188
$ 188
$ 188
Member Units (46 units) — —
300
1,265
488
1,453
Analytical Systems Keco, LLC (10) (13) Manufacturer of Liquid and Gas Analyzers LIBOR Plus 10.00% (Floor 2.00%), Current Coupon 12.00%, Secured Debt (Maturity - August 16, 2024) (8) 1 month LIBOR 1,374
1,245
1,251
Preferred Member Units (800 units) — —
800
1,015
Warrants (105 Equivalent Shares; Expiration - August 16, 2029; Strike Price - $0.01 per Share) — —
79
135
2,124
2,401
Brewer Crane Holdings, LLC (10) (13) Provider of Crane Rental and Operating Services LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.58%, Secured Debt (Maturity - January 9, 2023) (8) 1 month LIBOR 2,232
2,204
2,204
Preferred Member Units (737 units) (16) — —
1,070
1,070
3,274
3,274
Centre Technologies Holdings, LLC (10) (13) Provider of IT Hardware Services and Software Solutions LIBOR Plus 10.00% (Floor 2.00%), Current Coupon 12.00%, Secured Debt (Maturity - January 4, 2024) (8) 1 month LIBOR 3,022
2,967
2,972
Preferred Member Units (3,174 units) — —
1,460
1,460
4,427
4,432
Chamberlin Holding, LLC (10) (13) Roofing and Waterproofing Specialty Subcontractor LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.63%, Secured Debt (Maturity - February 23, 2023) (8) 1 month LIBOR 4,443
4,358
4,443
Member Units (1,087 units) (16) — —
2,860
6,037
Member Units (Chamberlin Langfield Real Estate, LLC) (1 unit) (16) — —
262
230
7,480
10,710
Charlotte Russe, Inc. Fast-Fashion Retailer to Young Women Common Stock (14,973 shares) — —
2,470
—
Charps, LLC (10) (13) Pipeline Maintenance and Construction 15.00% Secured Debt (Maturity - June 5, 2022) (14) None 500
500
500
Preferred Member Units (400 units) (16) — —
100
1,890
600
2,390
Clad-Rex Steel, LLC (10) (13) Specialty Manufacturer of Vinyl-Clad Metal LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 11.08%, Secured Debt (Maturity - December 20, 2021) (8) 1 month LIBOR 2,720
2,697
2,720
Member Units (179 units) (16) — —
1,820
2,153
10.00% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity - December 19, 2036) None 283
280
280
Member Units (Clad-Rex Steel RE Investor, LLC) (200 units) — —
53
115
4,850
5,268

Cody Pools Holdings, LLC (10) (13) Designer of Residential and Commercial Pools LIBOR Plus 10.50% (Floor 1.75%), Current Coupon 12.50%, Secured Debt (Maturity - March 6, 2025) (8) 1 Month LIBOR $ 4,000
$ 3,917
$ 3,921
Preferred Member Units (147 units) — —
2,079
2,079
5,996
6,000
Copper Trail Energy Fund I, LP (9) (15) Investment Partnership LP Interests (Copper Trail Energy Fund I, LP) (Fully diluted 12.4%) — —
1,233
1,459
Digital Products Holdings LLC (10) (13) Designer and Distributor of Consumer Electronics LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.63%, Secured Debt (Maturity - March 31, 2023) (8) 1 month LIBOR 4,822
4,755
4,451
Preferred Member Units (863 units) (16) — —
2,375
594
7,130
5,045
Direct Marketing Solutions, Inc. (10) (13) Provider of Omni-Channel Direct Marketing Services LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.63%, Secured Debt (Maturity - February 13, 2023) (8) 1 month LIBOR 3,870
3,797
3,870
Preferred Stock (2,100 shares) — —
2,100
5,015
5,897
8,885
Freeport Financial Funds (9) (15) Investment Partnership LP Interests (Freeport First Lien Loan Fund III, LP) (Fully diluted 6.00%) (16) — —
10,945
9,631
Gamber-Johnson Holdings, LLC (10) (13) Manufacturer of Ruggedized Computer Mounting Systems LIBOR Plus 6.50% (Floor 2.00%), Current Coupon 8.50%, Secured Debt (Maturity - June 24, 2021) (8) 1 month LIBOR 4,560
4,515
4,560
Member Units (2,155 units) (16) — —
3,711
13,311
8,226
17,871
Guerdon Modular Holdings, Inc. (10) (13) Multi-Family and Commercial Modular Construction Company Common Stock (53,008 shares) — —
746
—
Class B Preferred Stock (101,250 shares) — —
285
—
1,031
—
Gulf Publishing Holdings, LLC (10) (13) Energy Industry Focused Media and Publishing 12.50% Secured Debt (Maturity - April 29, 2021) None 3,133
3,116
3,090
LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 11.08%, Secured Debt (Maturity - September 30, 2020) (8) 1 month LIBOR 60
60
60
Member Units (920 units) — —
920
—
4,096
3,150
Harris Preston Fund Investments (9) (15) Investment Partnership LP Interests (HPEP 3, LP) (Fully diluted 8.20%) — —
2,819
2,819
Hawk Ridge Systems, LLC (9) (10) (13) Value-Added Reseller of Engineering Design and Manufacturing Solutions 11.00% Secured Debt (Maturity - December 2, 2021) None 3,350
3,322
3,350
LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.58%, Secured Debt (Maturity - December 2, 2021) (8) 1 month LIBOR 150
149
149
Preferred Member Units (56 units) — —
713
1,830
Preferred Member Units (HRS Services, ULC) (56 units) — —
38
98
4,222
5,427
J&J Services, Inc. (10) (13) Provider of Dumpster and Portable Toilet Rental Services 11.50% Secured Debt (Maturity - October 31, 2024) None 4,400
4,319
4,319
Preferred Stock (704 shares) — —
1,790
1,790
6,109
6,109
Kickhaefer Manufacturing Company, LLC (10) (13) Precision Metal Parts Manufacturing 11.50% Secured Debt (Maturity - October 31, 2023) None 6,340
6,192
6,192
9.00% Secured Debt (Maturity October 31, 2048) None 993
983
983
Member Units (145 units) — —
3,060
2,861
Member Units (KMC RE Investor, LLC) (200 units) (16) — —
248
290
10,483
10,326

Market Force Information, Inc. (10) (13) Provider of Customer Experience Management Services 12.00% PIK Secured Debt (Maturity - July 28, 2022) — $ 5,881
$ 5,825
$ 4,424
8.00% PIK Secured Debt (Maturity - July 28, 2022) — 697
697
580
Member Units (170,000 units) — —
4,160
—
10,682
5,004
M.H. Corbin Holding LLC (10) (13) Manufacturer and Distributor of Traffic Safety Products 13.00% Secured Debt (Maturity - March 31, 2022) None 2,202
2,183
2,185
Preferred Member Units (16,500 units) — —
1,100
1,092
Common Units (1,000 units) — —
1,500
—
4,783
3,277
Mystic Logistics Holdings, LLC (10) (13) Logistics and Distribution Services Provider for Large Volume Mailers 12.00% Secured Debt (Maturity - January 17, 2022) None 1,744
1,738
1,736
Common Stock (1,468 shares) — —
680
2,547
2,418
4,283
NexRev, LLC (10) (13) Provider of Energy Efficiency Products & Services 11.00% PIK Secured Debt (Maturity - February 28, 2023) None 4,342
4,280
3,889
Preferred Member Units (21,600,000 units) (16) — —
1,720
—
6,000
3,889
NuStep, LLC (10) (13) Designer, Manufacturer and Distributor of Fitness Equipment 12.00% Secured Debt (Maturity - January 31, 2022) None 4,910
4,868
4,868
Preferred Member Units (102 units) — —
2,550
2,550
7,418
7,418
SI East, LLC (10) (13) Rigid Industrial Packaging Manufacturing 9.50% Secured Debt (Maturity - August 31, 2023) None 10,988
10,858
10,988
Preferred Member Units (52 units) (16) — —
2,000
2,884
12,858
13,872
Tedder Acquisition, LLC (10) (13) Manufacturer of Firearm Holsters and Accessories 12.00% Secured Debt (Maturity - August 31, 2023) None 4,099
4,008
4,071
12.00% Secured Debt (Maturity - August 31, 2020) None 160
158
158
Preferred Member Units (110 units) — —
2,034
2,034
6,200
6,263
Trantech Radiator Topco, LLC (10) (13) Transformer Cooling Products and Services 12.00% Secured Debt (Maturity - May 31, 2024) None 2,220
2,151
2,161
Common Stock (154 shares) (16) — —
1,164
1,655
3,315
3,816

Subtotal Affiliate Investments (4) (17% of total investments at fair value) $ 147,574
$ 154,472

Non-Control/Non-Affiliate Investments (5)
AAC Holdings Inc. (8) Substance Abuse Treatment Service Provider LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 16.75%, Secured Debt (Maturity - June 30, 2023) (18) 3 month LIBOR $ 14,448
$ 14,078
$ 6,321
PRIME Plus 10.00% (Floor 1.00%), Current Coupon 13.25%, Secured Debt (Maturity - April 17, 2020) PRIME 3,121
2,967
2,887
17,045
9,208
Adams Publishing Group, LLC (8) (11) Local Newspaper Operator LIBOR Plus 7.50% (Floor 1.75%), Current Coupon 9.29%, Secured Debt (Maturity - July 3, 2023) 3 month LIBOR 6,105
6,020
5,751
LIBOR Plus 7.50% (Floor 1.75%), Current Coupon 9.25%, Secured Debt (Maturity - July 3, 2023) 3 month LIBOR 196
183
184
PRIME Plus 4.00% (Floor 1.75%), Current Coupon 7.25%, Secured Debt (Maturity - July 3, 2023) PRIME 5,000
4,935
4,500
11,138
10,435
ADS Tactical, Inc. (8) (11) Value-Added Logistics and Supply Chain Solutions Provider to the Defense Industry LIBOR Plus 6.25% (Floor 0.75%), Current Coupon 7.24%, Secured Debt (Maturity - July 26, 2023) 1 month LIBOR $ 15,784
$ 15,796
$ 15,106
Aethon United BR, LP (8) (11) Oil & Gas Exploration & Production LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 7.76%, Secured Debt (Maturity - September 8, 2023) (14) 3 month LIBOR 7,000
6,922
6,244
American Nuts, LLC (8) (11) Roaster, Mixer and Packager of Bulk Nuts and Seeds LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 11.41%, Secured Debt (Maturity - April 10, 2023) 3 month LIBOR 12,213
11,939
11,615
American Teleconferencing Services, Ltd. (8) Provider of Audio Conferencing and Video Collaboration Solutions LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.24%, Secured Debt (Maturity - June 8, 2023) 3 month LIBOR 14,144
13,730
7,991
American Trailer Rental Group LLC (10) Provider of Short Term Trailer and Container Rental Member Units (Milton Meisler Holdings, LLC) (12,139 units) — —
2,149
3,236
APTIM Corp Engineering, Construction and Procurement 7.75% Secured Debt (Maturity - June 15, 2025) None 6,952
6,279
2,364
Arcus Hunting, LLC (8) (11) Manufacturer of Bowhunting and Archery Products and Accessories LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.91%, Secured Debt (Maturity - March 31, 2021) 1 month LIBOR 6,839
6,798
6,839
ASC Ortho Management Company, LLC (11) Provider of Orthopedic Services LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.41%, Secured Debt (Maturity - August 31, 2023) (8) 3 month LIBOR 5,264
5,193
4,770
13.25% PIK Secured Debt (Maturity - December 1, 2023) (14) None 1,854
1,815
1,737
7,008
6,507
ATX Networks Corp. (8) (9) Provider of Radio Frequency Management Equipment LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.45% / 1.00% PIK, Current Coupon Plus PIK 8.45%, Secured Debt (Maturity - June 11, 2021) 3 month LIBOR 13,673
13,573
11,349
BarFly Ventures, LLC (11) Casual Restaurant Group 12.00% Secured Debt (Maturity - August 31, 2020) (18) None 3,395
3,378
343
9.00% PIK Secured Debt (Maturity - March 23, 2021) (18) None 37
37
37
Warrants (.410 equivalent units, Expiration - August 31, 2025) — —
158
—
Options (.99 equivalent units) — —
202
—
3,775
380
BBB Tank Services, LLC (10) (13) Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.58%, Secured Debt (Maturity - April 8, 2021) (8) 1 month LIBOR 1,200
1,198
1,168
Preferred Stock (28,280 units) — —
33
34
Member Units (200,000 units) — —
200
53
1,431
1,255
Berry Aviation, Inc. (11) Airline Charter Service Operator 10.50% Current / 1.50% PIK, Secured Debt (Maturity - January 6, 2024) (14) None 4,565
4,514
4,497
Preferred Member Units (Berry Acquisition, LLC) (1,548,387 units, 8.00% cumulative) — — 1,548
622
Preferred Member Units (Berry Acquisition, LLC) (122,416 units, 16.00% cumulative) — — 122
130
6,184
5,249
BigName Commerce, LLC (8) (11) Provider of Envelopes and Complimentary Stationery Products LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.16%, Secured Debt (Maturity - May 11, 2022) 1 month LIBOR 2,201
2,188
2,096
Binswanger Enterprises, LLC (11) Glass Repair and Installation Service Provider LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.95%, Secured Debt (Maturity - March 9, 2022) (8) 3 month LIBOR 13,538
13,279
13,105
Member Units (1,050,000 units) — —
1,050
730
14,329
13,835
Bluestem Brands, Inc. (8) Multi-Channel Retailer of General Merchandise PRIME Plus 6.50%, Current Coupon 11.29%, Secured Debt (Maturity - November 6, 2020) (18) PRIME 11,391
11,339
6,777

Boccella Precast Products, LLC (10) (13) Manufacturer of Precast Hollow Core Concrete LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.91%, Secured Debt (Maturity - June 30, 2022) (8) 3 month LIBOR $ 3,220
$ 3,177
$ 3,220
Member Units (540,000 units) — —
564
1,415
3,741
4,635
Brightwood Capital Fund Investments (9) (15) Investment Partnership LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 1.60%) — —
3,735
2,602
LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.80%) — —
9,037
8,082
12,772
10,684
Buca C, LLC (10) (13) Casual Restaurant Group LIBOR Plus 9.25% (Floor 1.00%), Current Coupon 10.61%, Secured Debt (Maturity - June 30, 2020) (8) 1 month LIBOR 12,670
12,654
11,327
Preferred Member Units (4 units, 6.00% cumulative) — —
3,040
511
15,694
11,838
Cadence Aerospace, LLC (8) (11) Aerospace Manufacturing LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.28%, Secured Debt (Maturity - November 14, 2023) 3 month LIBOR 19,224
19,094
17,916
CAI Software, LLC (10) (13) Provider of Specialized Enterprise Resource Planning Software 11.00% Secured Debt (Maturity - December 7, 2023) None 2,286
2,298
2,286
Member Units (16,742 units) — —
188
1,318
2,486
3,604
Cenveo Corporation Provider of Digital Marketing Agency Services PRIME Plus 9.50%, Current Coupon 10.51%, Secured Debt (Maturity - June 7, 2023) (8) PRIME 4,449
4,194
4,338
Common Stock (138,889 shares) — —
4,163
2,083
8,357
6,421
Chisholm Energy Holdings, LLC (8) (11) Oil & Gas Exploration & Production LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 7.94%, Secured Debt (Maturity - May 15, 2026) (14) 3 month LIBOR 3,571
3,480
3,093
Clarius BIGS, LLC (11) Prints & Advertising Film Financing 15.00% PIK Secured Debt (Maturity - January 5, 2015) (18) None 2,099
1,841
34
20.00% PIK Secured Debt (Maturity - January 5, 2015) (18) None 763
670
12
2,511
46
Classic H&G Holdings, LLC (10) (13) Provider of Engineered Packaging Solutions 12.00% Secured Debt (Maturity - March 12, 2025) None 6,500
6,302
6,307
Preferred Member Units (38.52 units) — —
1,440
1,440
7,742
7,747
Clickbooth.com, LLC (8) (11) Provider of Digital Advertising Performance Marketing Solutions LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.41%, Secured Debt (Maturity - January 31, 2025) 3 month LIBOR 8,000
7,861
7,784
LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity - January 31, 2025) 3 month LIBOR 457
457
445
8,318
8,229
Construction Supply Investments, LLC (11) Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors Member units (42,207 units) — —
5,637
6,872
Corel Corporation (8) (9) (12) Publisher of Desktop and Cloud-Based Software LIBOR plus 5.00%, (Floor 0.00%), Current Coupon 6.61%, Secured Debt (Maturity - July 2, 2026) 3 month LIBOR 2,000
1,895
1,775
CTVSH, PLLC (8) (11) (13) Emergency Care and Specialty Service Animal Hospital LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.58%, Secured Debt (Maturity - August 3, 2022) 1 month LIBOR 2,387
2,361
2,311
Datacom, LLC (10) (13) Technology and Telecommunications Provider 10.50% PIK Secured Debt (Maturity - May 31, 2021) (18) None 1,376
1,369
1,116
8.00% Secured Debt (Maturity - May 31, 2021) (18) None 200
200
179
Class A Preferred Member Units (1,530 units) — —
144
—
Class B Preferred Member Units (717 units) — —
670
—
2,383
1,295
Digital River, Inc. (8) Provider of Outsourced e-Commerce Solutions and Services LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity - February 12, 2023) 3 month LIBOR $ 8,377
$ 8,227
$ 8,084
DTE Enterprises, LLC (11) Industrial Powertrain Repair and Services LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 9.00%, Secured Debt (Maturity - April 13, 2023) (8) 3 month LIBOR 10,992
10,843
10,684
Class AA Preferred Member Units (non-voting) — —
859
881
Class A Preferred Member Units (776,316 units) — —
776
1,210
12,478
12,775
Dynamic Communities, LLC (8) (11) Developer of Business Events and Online Community Groups LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity - July 17, 2023) 3 month LIBOR 5,390
5,312
5,045
Epic Y-Grade Services, LP (8) NGL Transportation & Storage LIBOR Plus 6.00% (Floor 0.00%), Current Coupon 7.62%, Secured Debt (Maturity - June 13, 2024) 3 month LIBOR 6,875
6,776
5,129
Evergreen Skills Lux S.á r.l.
(d/b/a Skillsoft) (8) (9)
Technology-Based Performance Support Solutions LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 10.03%, Secured Debt (Maturity - April 28, 2022) (14) (18) 3 month LIBOR 10,901
10,669
1,970
Flavors Holdings, Inc. (8) Global Provider of Flavoring and Sweetening Products and Solutions LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.20%, Secured Debt (Maturity - June 30, 2020) 3 month LIBOR 10,719
10,687
10,138
GoWireless Holdings, Inc. (8) Provider of Wireless Telecommunications Carrier Services LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.50%, Secured Debt (Maturity - December 22, 2024) 3 month LIBOR 14,704
14,601
11,935
GS Operating, LLC (8) (11) Distributor of Industrial and Specialty Parts LIBOR Plus 6.50% (Floor 1.50%), Current Coupon 8.00%, Secured Debt (Maturity - February 24, 2025) 1 month LIBOR 12,600
12,253
11,126
HDC/HW Intermediate Holdings, LLC (8) (11) Managed Services and Hosting Provider LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.96%, Secured Debt (Maturity - December 21, 2023) 3 month LIBOR 1,958
1,927
1,829
Hoover Group, Inc. (8) (9) (11) Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 8.70%, Secured Debt (Maturity - January 28, 2021) 3 month LIBOR 22,007
21,578
20,356
Hunter Defense Technologies, Inc. (8) (11) Provider of Military and Commercial Shelters and Systems LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.45%, Secured Debt (Maturity - March 29, 2023) 3 month LIBOR 15,731
15,499
15,038
HW Temps LLC (10) (13) Temporary Staffing Solutions 12.00% Secured Debt (Maturity - March 29, 2023) None 2,515
2,473
2,201
Hydrofarm Holdings, LLC (8) (11) Wholesaler of Horticultural Products LIBOR Plus 8.50%, Current Coupon 9.49%, Secured Debt (Maturity - May 12, 2022) 1 month LIBOR 6,908
6,829
5,603
Hyperion Materials & Technologies, Inc. (8) (9) Manufacturer of Cutting and Machine Tools & Specialty Polishing Compounds LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.50%, Secured Debt (Maturity - August 28, 2026) 1 month LIBOR 7,481
7,341
6,209
iEnergizer Limited (8) (9) (11) Provider of Business Outsourcing Solutions LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - April 17, 2024) 1 month LIBOR 12,200
12,097
11,431
Implus Footcare, LLC (8) (11) Provider of Footwear and Related Accessories LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity - April 30, 2024) 3 month LIBOR 16,939
16,622
14,924
Independent Pet Partners Intermediate Holdings, LLC (11) Omnichannel Retailer of Specialty Pet Products LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.90%, Secured Debt (Maturity - November 19, 2023) (8) 3 month LIBOR 14,922
14,545
13,848
Member Units (1,191,667 units) — —
1,192
543
15,737
14,391
Industrial Services Acquisitions, LLC (11) Industrial Cleaning Services 6.00% Current / 7.00% PIK, Current Coupon 13.00%, Unsecured Debt (Maturity - December 17, 2022) (17) None 12,229
12,205
12,229
Member Units (Industrial Services Investments, LLC) (336 units; 10.00% cumulative) — —
202
202
Preferred Member Units (Industrial Services Investments, LLC) (187 units, 20.00% cumulative) — —
124
124
Member Units (Industrial Services Investments, LLC) (2,100 units) — —
2,100
1,004
14,631
13,559
Interface Security Systems, L.L.C. (8) (11) Commercial Security and Alarm Services LIBOR Plus 7.00% (Floor 1.75%), Current Coupon 8.75%, Secured Debt (Maturity - August 7, 2023) 3 month LIBOR $ 7,500
$ 7,371
$ 6,780
Intermedia Holdings, Inc. (8) Unified Communications as a Service LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 6.99%, Secured Debt (Maturity - July 19, 2025) 1 month LIBOR 3,507
3,479
3,209
Invincible Boat Company, LLC (8) (11) Manufacturer of Sport Fishing Boats LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity - August 28, 2025) 3 month LIBOR 9,813
9,717
8,793
Isagenix International, LLC (8) Direct Marketer of Health and Wellness Products LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.02%, Secured Debt (Maturity - June 14, 2025) 3 month LIBOR 5,860
5,813
2,183
Jackmont Hospitality, Inc. (8) (11) Franchisee of Casual Dining Restaurants LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.35%, Secured Debt (Maturity - May 26, 2021) 1 month LIBOR 8,119
8,112
6,544
Joerns Healthcare, LLC Manufacturer and Distributor of Health Care Equipment & Supplies LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 8.79%, Secured Debt (Maturity - August 21, 2024) (8) 3 month LIBOR 3,335
3,281
3,012
Common Stock (472,579 shares) — —
3,678
2,931
6,959
5,943
Kemp Technologies Inc. (8) (11) Provider of Application Delivery Controllers LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.17%, Secured Debt (Maturity - March 29, 2024) 3 month LIBOR 7,444
7,314
6,885
Knight Energy Services LLC (11) Oil and Gas Equipment and Services 8.50% PIK Secured Debt (Maturity - February 9, 2024) None 845
845
845
Class A-2 Shares (25,692 units) — —
1,843
160
2,688
1,005
Kore Wireless Group, Inc. Mission Critical Software Platform LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.57%, Secured Debt (Maturity - December 20, 2024) (8) 3 month LIBOR 6,046
6,022
5,592
Larchmont Resources, LLC Oil & Gas Exploration & Production LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.00%, Secured Debt (Maturity - August 7, 2020) (8) 3 month LIBOR 3,614
3,671
3,289
Member units (Larchmont Intermediate Holdco, LLC) (4,806 units) — —
601
841
4,272
4,130
Laredo Energy VI, LP (8) (11) Oil & Gas Exploration & Production LIBOR Plus 9.63% (Floor 2.00%), Current Coupon 10.75% / 12.50% PIK, Current Coupon Plus PIK 23.25% Secured Debt (Maturity - November 19, 2021) 3 month LIBOR 11,402
11,330
8,779
Lightbox Holdings, L.P. (8) Provider of Commercial Real Estate Software LIBOR Plus 5.00% (Floor 0.00%), Current Coupon 5.80%, Secured Debt (Maturity - May 9, 2026) 1 month LIBOR 4,962
4,894
4,888
LL Management, Inc. (8) (11) Medical Transportation Service Provider LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 7.56%, Secured Debt (Maturity - September 25, 2023) 3 month LIBOR 13,685
13,564
12,590
Logix Acquisition Company, LLC (8) (11) Competitive Local Exchange Carrier LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.74%, Secured Debt (Maturity - December 22, 2024) (23) 1 month LIBOR 12,722
12,651
10,495
LSF9 Atlantis Holdings, LLC (8) Provider of Wireless Telecommunications Carrier Services LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - May 1, 2023) 1 month LIBOR 13,038
12,976
10,764
Lulu’s Fashion Lounge, LLC (8) (11) Fast Fashion E-Commerce Retailer LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.07%, Secured Debt (Maturity - August 28, 2022) 3 month LIBOR 5,668
5,545
4,846
Lynx FBO Operating LLC (11) Fixed Based Operator in the General Aviation Industry LIBOR Plus 5.75%, (Floor 1.00%), Current Coupon 7.66%, Secured Debt (Maturity - September 30, 2024) (8) 3 month LIBOR 14,681
14,395
13,022
Member Units (3,704 units) — —
500
445
14,895
13,467
Mac Lean-Fogg Company (11) Manufacturer and Supplier for Auto and Power Markets LIBOR Plus 5.00% (Floor 0.00%), Current Coupon 5.99%, Secured Debt (Maturity - December 22, 2025) (8) 1 month LIBOR 7,117
7,067
6,262
Preferred Stock (650 shares, 4.50% cash / 9.25% PIK, cumulative) — —
778
751
7,845
7,013
Mariner CLO 7, Ltd. (9) (15) Structured Finance Subordinated Structured Notes (estimated yield of 8.3% due April 30, 2032) — $ 25,935
$ 22,477
$ 12,449
Mills Fleet Farm Group, LLC (8) (11) Omnichannel Retailer of Work, Farm and Lifestyle Merchandise LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.84% / 0.75% PIK, Current Coupon Plus PIK 8.59%, Secured Debt (Maturity - October 24, 2024) 3 month LIBOR 14,874
14,557
12,658
NinjaTrader, LLC (8) (11) Operator of Futures Trading Platform LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 7.90%, Secured Debt (Maturity - December 18, 2024) 1 month LIBOR 9,675
9,497
8,688
NNE Partners, LLC (8) (11) Oil & Gas Exploration & Production LIBOR Plus 8.00%, (Floor 0.00%) Current Coupon 9.58%, Secured Debt (Maturity - March 2, 2022) 3 month LIBOR 20,417
20,332
17,599
North American Lifting Holdings, Inc. (8) Crane Service Provider LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 5.95%, Secured Debt (Maturity - November 27, 2020) 3 month LIBOR 6,162
6,002
4,622
Novetta Solutions, LLC (8) Provider of Advanced Analytics Solutions for Defense Agencies LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.00%, Secured Debt (Maturity - October 17, 2022) 1 month LIBOR 14,784
14,555
13,255
NTM Acquisition Corp. (8) Provider of B2B Travel Information Content LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity - June 7, 2022) 3 month LIBOR 4,505
4,481
4,482
Pasha Group (8) Diversified Logistics and Transportation Provided LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 8.76%, Secured Debt (Maturity - January 26, 2023) 2 month LIBOR 8,496
8,314
7,222
Permian Holdco 2, Inc. Storage Tank Manufacturer 14.00% PIK Unsecured Debt (Maturity - October 15, 2021) (17) None 1,179
1,179
892
18.00% PIK Unsecured Debt (Maturity - June 30, 2022) (17) None 830
830
830
Series A Preferred Shares (Permian Holdco 1, Inc.) (386,255 shares) — —
1,997
—
Common Shares (Permian Holdco 1, Inc.) (386,255 shares) — —
—
—
4,006
1,722
PricewaterhouseCoopers Public Sector LLP (8) Provider of Consulting Services to Governments LIBOR Plus 8.00% (Floor 0.00%), Current Coupon 8.99%, Secured Debt (Maturity - May 1, 2026) (14) 1 month LIBOR 14,100
14,059
12,197
Rise Broadband (8) (11) Fixed Wireless Broadband Provider LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.64%, Secured Debt (Maturity - May 2, 2023) 3 month LIBOR 14,738
14,637
13,839
RM Bidder, LLC (11) Scripted and Unscripted TV and Digital Programming Provider Common Stock (1,854 shares) — —
31
10
Series A Warrants (124,915 equivalent units, Expiration - October 20, 2025) — —
284
—
Series B Warrants (93,686 equivalent units, Expiration - October 20, 2025) — —
—
—
315
10
Salient Partners, LP (8) (11) Provider of Asset Management Services LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - June 9, 2021) 1 month LIBOR 6,450
6,526
5,702
Slick Software Holdings LLC (10) (13) Text Messaging Marketing Platform 14.00% Secured Debt (Maturity - September 13, 2023) — 1,590
1,346
1,346
Member units (17,500 units) — —
175
270
Warrants (4,521 equivalent units, Expiration - September 13, 2028) — —
45
73
1,566
1,689
TEAM Public Choices, LLC (8) (11) Home-Based Care Employment Service Provider LIBOR Plus 6.00%, (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - September 20, 2024) 1 month LIBOR 9,601
9,510
8,631
TE Holdings, LLC Oil & Gas Exploration & Production Common Units (72,785 units) — —
728
—
TGP Holdings III LLC (8) Outdoor Cooking & Accessories LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.28%, Secured Debt (Maturity - September 25, 2025) (14) 3 month LIBOR 5,000
5,000
3,675

TOMS Shoes, LLC (8) Global Designer, Distributor, and Retailer of Casual Footwear LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 6.77%, Secured Debt (Maturity - September 30, 2025) 3 month LIBOR $ 571
$ 571
$ 571
LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.27%, Secured Debt (Maturity - December 31, 2025) (14) 3 month LIBOR 1,662
1,662
1,428
Member Units (16,321 units) — —
220
220
2,453
2,219
USA DeBusk LLC (8) (11) Provider of Industrial Cleaning Services LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 6.75%, Secured Debt (Maturity - October 22, 2024) 1 month LIBOR 16,758
16,450
14,730
U.S. Telepacific Corp. (8) Provider of Communications and Managed Services LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.07%, Secured Debt (Maturity - May 2, 2023) 3 month LIBOR 12,500
12,314
9,750
Vida Capital, Inc. (8) Alternative Asset Manager LIBOR Plus 6.00% (Floor 0.00%), Current Coupon 7.78%, Secured Debt (Maturity - October 1, 2026) 3 month LIBOR 7,434
7,330
6,877
VIP Cinema Holdings, Inc. (8) Supplier of Luxury Seating to the Cinema Industry PRIME Plus 8.00% (Floor 1.00%), Current Coupon 9.91%, Secured Debt (Maturity - March 1, 2023) (18) PRIME 8,750
8,724
—
LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.00%, Secured Debt (Maturity - May 1, 2020) 1 month LIBOR 1,439
1,210
1,210
9,934
1,210
Vistar Media, Inc. (11) Operator of Digital Out-of-Home Advertising Platform LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.50%, Secured Debt (Maturity - April 3, 2023) (8) 3 month LIBOR 4,670
4,519
4,520
Warrants (69,675 equivalent units, Expiration - April 3, 2029) — —
—
1,850
Preferred Stock (70,207 shares) — —
767
1,830
5,286
8,200
Volusion, LLC (10) (13) Provider of Online Software-as-a-Service eCommerce Solutions 11.50% Secured Debt (Maturity - January 24, 2020) (19) None 8,672
8,636
8,247
8.00% Unsecured Debt (Maturity - November 16, 2023) (17) None 175
175
124
Preferred Member Units (2,090,001 units) — —
6,000
5,550
Warrants (784,866.80 equivalent units, Expiration - January 26, 2025) — —
1,104
—
15,915
13,921
Wireless Vision Holdings, LLC (8) (11) Provider of Wireless Telecommunications Carrier Services LIBOR Plus 9.86% (Floor 1.00%), Current Coupon 11.46% / 1.00% PIK, Current Coupon Plus PIK 12.46%, Secured Debt (Maturity - September 29, 2022) (23) 1 month LIBOR 7,036
6,920
6,016
LIBOR Plus 9.91% (Floor 1.00%), Current Coupon 11.52% / 1.00% PIK, Current Coupon Plus PIK 12.52%, Secured Debt (Maturity - September 29, 2022) (23) 1 month LIBOR 6,116
5,949
5,229
12,869
11,245
YS Garments, LLC (8) Designer and Provider of Branded Activewear LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.00%, Secured Debt (Maturity - August 9, 2024) 1 month LIBOR 7,219
7,162
6,533
Subtotal Non-Control/Non-Affiliate Investments (5) (79% of total portfolio investments at fair value) $ 835,553
$ 705,726
Total Portfolio Investments $ 1,001,412
$ 894,863
Short Term Investments (20)
Fidelity Institutional Money Market Funds (21) — Prime Money Market Portfolio, Class III Shares — —
$ 7,999
$ 7,999
US Bank Money Market Account (21) — — — —
5,229
5,229
Total Short Term Investments $ 13,228
$ 13,228


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Digital Products Holdings LLC		April 1, 2018	Designer and Distributor of Consumer Electronics
				Secured Debt		11.00% (L+10.00%, Floor 1.00%)	4/1/2023		4,461		4,416		4,416	(9)
				Preferred Member Units	3,857						2,375		2,459	(8)
											6,791		6,875

Direct Marketing Solutions, Inc.		February 13, 2018	Provider of Omni-Channel Direct Marketing Services
				Secured Debt		12.00% (L+11.00%, Floor 1.00%)	2/13/2023		3,772		3,723		3,723	(9)
				Preferred Stock	8,400						2,100		4,460
											5,823		8,183

Freeport Financial Funds	(12) (13)	July 31, 2015	Investment Partnership
				LP Interests (Freeport First Lien Loan Fund III LP)	6.0%						9,387		8,923	(8) (31)

Gamber-Johnson Holdings, LLC ("GJH")		June 24, 2016	Manufacturer of Ruggedized Computer Mounting Systems
				Secured Debt		9.00% (L+7.00%, Floor 2.00%)	6/24/2021		5,160		5,148		5,160	(9)
				Member Units	9,042						4,423		13,810	(8)
											9,571		18,970

GFG Group, LLC.		March 31, 2021	Grower and Distributor of a Variety of Plants and Products to Other Wholesalers, Retailers and Garden Centers
				Secured Debt		12.00%	3/31/2026		3,936		3,818		3,818
				Preferred Member Units	226						1,225		1,225
											5,043		5,043

Gulf Publishing Holdings, LLC		April 29, 2016	Energy Industry Focused Media and Publishing
				Secured Debt		10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%)	9/30/2020		64		64		64	(9) (17) (19)
				Secured Debt		12.50% (6.25% Cash, 6.25% PIK)	4/29/2021		3,320		3,319		3,048	(19)
				Member Units	3,681						920		-
											4,303		3,112

Harris Preston Fund Investments	(12) (13)	August 9, 2017	Investment Partnership
				LP Interests (HPEP 3, L.P.)	8.2%						3,445		3,632	(31)

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)

~~(1) All investments are Middle Market (as defined~~


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Hawk Ridge Systems, LLC	(13)	December 2, 2016	Value-Added Reseller of Engineering Design and Manufacturing Solutions
				Secured Debt		10.00%	12/2/2023		3,350		3,339		3,350
				Preferred Member Units	226						713		2,330	(8)
				Preferred Member Units	226						38		120	(30)
											4,090		5,800

J&J Services, Inc.		October 31, 2019	Provider of Dumpster and Portable Toilet Rental Services
				Secured Debt		11.50%	10/31/2024		3,200		3,152		3,200
				Preferred Stock	2,814						1,771		3,170
											4,923		6,370

Kickhaefer Manufacturing Company, LLC		October 31, 2018	Precision Metal Parts Manufacturing
				Secured Debt		11.50%	10/31/2023		5,604		5,508		5,508
				Member Units	581						3,060		3,060
				Secured Debt		9.00%	10/31/2048		986		976		976
				Member Units	800						248		290	(8) (30)
											9,792		9,834

Market Force Information, LLC		July 28, 2017	Provider of Customer Experience Management Services
				Secured Debt		12.00% PIK	7/28/2023		6,520		6,463		3,317	(14) (19)
				Member Units	743,921						4,160		-
											10,623		3,317

MH Corbin Holding LLC		August 31, 2015	Manufacturer and Distributor of Traffic Safety Products
				Secured Debt		13.00% (10.00% Cash, 3.00% PIK)	3/31/2022		2,123		2,113		2,052	(19)
				Preferred Member Units	66,000						1,100		300
				Preferred Member Units	4,000						1,500		-
											4,713		2,352

Mystic Logistics Holdings, LLC		August 18, 2014	Logistics and Distribution Services Provider for Large Volume Mailers
				Secured Debt		12.00%	1/17/2022		1,683		1,682		1,682
				Common Stock	587278.0%						680		1,820	(8)
											2,362		3,502

NexRev LLC		February 28, 2018	Provider of Energy Efficiency Products & Services
				Secured Debt		11.00%	2/28/2023		4,220		4,181		4,173
				Preferred Member Units	86,400,000						1,720		820	(8)
											5,901		4,993

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in ~~the notes~~thousands)

(unaudited)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
NuStep, LLC		January 31, 2017	Designer, Manufacturer and Distributor of Fitness Equipment
				Secured Debt		12.00%	1/31/2022		4,310		4,293		4,293
				Preferred Member Units	406						2,550		2,850
											6,843		7,143

Project BarFly, LLC	(10)	August 31, 2015	Casual Restaurant Group
				Member Units	12						528		528

SI East, LLC		August 31, 2018	Rigid Industrial Packaging Manufacturing
				Secured Debt		9.50%	8/31/2023		9,738		9,654		9,738
				Preferred Member Units	157						2,000		3,390	(8)
											11,654		13,128

Tedder Industries, LLC		August 31, 2018	Manufacturer of Firearm Holsters and Accessories
				Secured Debt		12.00%	8/31/2023		3,700		3,636		3,638
				Preferred Member Units	479						2,034		2,034
											5,670		5,672

Trantech Radiator Topco, LLC		May 31, 2019	Transformer Cooling Products and Services
				Secured Debt		12.00%	5/31/2024		2,180		2,126		2,126
				Common Stock	615						1,164		1,420	(8)
											3,290		3,546

Subtotal Affiliate Investments (29.3% of net assets at fair value)										$	156,007	$	170,959

Non-Control/Non-Affiliate Investments (7)

AAC Holdings, Inc.	(11)	June 30, 2017	Substance Abuse Treatment Service Provider
				Secured Debt		18.00% (10.00% Cash, 8.00% PIK)	6/25/2025		3,422		3,085		3,404	(19)
				Common Stock	593,928						3,148		1,930
				Warrants	554,353		12/11/2025				-		643	(27)
											6,233		5,977

Adams Publishing Group, LLC	(10)	November 19, 2015	Local Newspaper Operator
				Secured Debt		8.75% (L+7.00%, Floor 1.75%)	7/3/2023		5,644		5,537		5,599	(9)

ADS Tactical, Inc.	(11)	March 7, 2017	Value-Added Logistics and Supply Chain Provider to the Defense Industry
				Secured Debt		6.75% (L+5.75%, Floor 1.00%)	3/19/2026		19,231		18,847		19,135	(9)

American Nuts, LLC	(10)	April 10, 2018	Roaster, Mixer and Packager of Bulk Nuts and Seeds
				Secured Debt		9.00% (L+8.00%, Floor 1.00%)	4/10/2023		12,100		11,910		12,100	(9)

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
American Teleconferencing Services, Ltd.	(11)	May 19, 2016	Provider of Audio Conferencing and Video Collaboration Solutions
				Secured Debt		7.50% (L+6.50%, Floor 1.00%)	6/8/2023		14,118		13,826		7,500	(9)

American Trailer Rental Group LLC		June 7, 2017	Provider of Short-term Trailer and Container Rental
				Member Units	73,493						2,149		4,470	(30)

Arcus Hunting LLC	(10)	January 6, 2015	Manufacturer of Bowhunting and Archery Products and Accessories
				Secured Debt		11.00% (L+10.00%, Floor 1.00%)	3/31/2022		5,504		5,464		5,504	(9)

ASC Ortho Management Company, LLC	(10)	August 31, 2018	Provider of Orthopedic Services
				Secured Debt		8.50% (L+7.50%, Floor 1.00%)	8/31/2023		5,177		5,127		5,125	(9)
				Secured Debt		13.25% PIK	12/1/2023		2,118		2,085		2,118	(19)
											7,212		7,243

ATX Networks Corp.	(11) (13) (21)	June 30, 2015	Provider of Radio Frequency Management Equipment
				Secured Debt		8.75% (7.25% Cash, 1.50% PIK) (1.50% PIK + L+6.25%, Floor 1.00%)	12/31/2023		13,346		13,258		12,212	(9) (19)

BBB Tank Services, LLC		April 8, 2016	Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market
				Unsecured Debt		12.00% (L+11.00%, Floor 1.00%)	4/8/2021		1,200		1,200		1,186	(9)
				Preferred Stock (non-voting)		15.00% PIK					39		39	(8) (19)
				Member Units	800,000						200		70
											1,439		1,295

Berry Aviation, Inc.	(10)	July 6, 2018	Charter Airline Services
				Secured Debt		12.00% (10.50% Cash, 1.5% PIK)	1/6/2024		4,635		4,595		4,635	(19)
				Preferred Member Units	122,416	16.00% PIK					151		151	(8) (19) (30)
				Preferred Member Units	1,548,387	8.00% PIK					1,548		1,438	(19) (30)
											6,294		6,224

BLST Operating Company, LLC.	(11)	December 19, 2013	Multi-Channel Retailer of General Merchandise
				Secured Debt		10.00% (L+8.50%, Floor 1.50%)	8/28/2025		6,304		6,304		5,800	(9)
				Common Stock	653,184						-		315
											6,304		6,115

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
BigName Commerce, LLC	(10)	May 11, 2017	Provider of Envelopes and Complimentary Stationery Products
				Secured Debt		8.25% (L+7.25%, Floor 1.00%)	5/11/2022		1,985		1,979		1,985	(9)

Binswanger Enterprises, LLC	(10)	March 10, 2017	Glass Repair and Installation Service Provider
				Secured Debt		9.50% (L+8.50%, Floor 1.00%)	3/9/2022		12,765		12,641		12,765	(9)
				Member Units	1,050,000						1,050		730
											13,691		13,495

Boccella Precast Products LLC		June 30, 2017	Manufacturer of Precast Hollow Core Concrete
				Member Units	2,160,000						564		1,438	(8)

Brightwood Capital Fund Investments	(12) (13)	July 21, 2014	Investment Partnership
				LP Interests (Brightwood Capital Fund III, LP)	1.6%						3,095		2,067	(8) (31)
				LP Interests (Brightwood Capital Fund IV, LP)	0.6%						9,037		9,000	(8) (31)
											12,132		11,067

Buca C, LLC		June 30, 2015	Casual Restaurant Group
				Secured Debt		10.25% (2.56% Cash, 7.69% PIK) (L+9.25%, Floor 1.00%)	6/30/2020		12,670		12,670		9,255	(9) (17) (19)
				Preferred Member Units	6	6.00% PIK					3,040		-	(19)
											15,710		9,255

Cadence Aerospace LLC	(10)	November 14, 2017	Aerostructure Manufacturing
				Secured Debt		9.50% (4.25% Cash, 5.25% PIK) (5.25% PIK + L+3.25%, Floor 1.00%)	11/14/2023		19,952		19,814		18,317	(9) (19)

CAI Software LLC		October 10, 2014	Provider of Specialized Enterprise Resource Planning Software
				Secured Debt		12.50%	12/7/2023		1,939		1,952		1,939
				Member Units	77,960						188		1,600
											2,140		3,539

Cenveo Corporation	(11)	September 4, 2015	Provider of Digital Marketing Agency Services
				Secured Debt		10.50% (L+9.50%, Floor 1.00%)	6/7/2023		4,117		3,946		4,077	(9)
				Common Stock	177,130						4,163		1,852
											8,109		5,929

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Chisholm Energy Holdings, LLC	(10)	May 15, 2019	Oil & Gas Exploration & Production
				Secured Debt		7.75% (L+6.25%, Floor 1.50%)	5/15/2026		2,857		2,811		2,573	(9)

Clarius BIGS, LLC	(10)	September 23, 2014	Prints & Advertising Film Financing
				Secured Debt		15.00% PIK	1/5/2015		2,849		2,498		31	(14) (17) (19)

Classic H&G Holdings, LLC		March 12, 2020	Provider of Engineered Packaging Solutions
				Secured Debt		12.00%	3/12/2025		6,200		6,040		6,200
				Preferred Member Units	154						1,440		2,800	(8)
											7,480		9,000

Clickbooth.com, LLC	(10)	December 5, 2017	Provider of Digital Advertising Performance Marketing Solutions
				Secured Debt		9.50% (L+8.50%, Floor 1.00%)	1/31/2025		7,800		7,688		7,800	(9)

Copper Trail Fund Investments	(12) (13)	July 17, 2017	Investment Partnership
				LP Interests (CTEF I, LP)	375						-		67

Corel Corporation	(11) (13) (21)	July 13, 2020	Publisher of Desktop and Cloud-based Software
				Secured Debt		5.19% (L+5.00%)	7/2/2026		1,950		1,857		1,944

Digital River, Inc.	(11)	February 24, 2015	Provider of Outsourced e-Commerce Solutions and Services
				Secured Debt		8.00% (L+7.00%, Floor 1.00%)	2/12/2023		8,377		8,291		8,335	(9)

DTE Enterprises, LLC	(10)	April 13, 2018	Industrial Powertrain Repair and Services
				Secured Debt		10.00% (L+8.50%, Floor 1.50%)	4/13/2023		9,333		9,244		8,937	(9)
				Class AA Preferred Member Units (non-voting)		10.00% PIK					974		974	(8) (19)
				Class A Preferred Member Units	776,316						776		800
											10,994		10,711

Dynamic Communities, LLC	(10)	July 17, 2018	Developer of Business Events and Online Community Groups
				Secured Debt		12.50% (6.25% Cash, 6.25% PIK) (L+11.50%, Floor 1.00%)	7/17/2023		5,530		5,475		5,222	(9) (19)

EPIC Y-Grade Services, LP	(11)	June 22, 2018	NGL Transportation & Storage
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	6/30/2027		6,944		6,857		6,041	(9)

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Flip Electronics LLC	(10)	January 4, 2021	Distributor of Hard-to-Find and Obsolete Electronic Components
				Secured Debt		9.17% (L+8.09%, Floor 1.00%)	1/5/2026		6,000		5,875		5,875	(33)

GoWireless Holdings, Inc.	(11)	December 31, 2017	Provider of Wireless Telecommunications Carrier Services
				Secured Debt		7.50% (L+6.50%, Floor 1.00%)	12/22/2024		13,876		13,797		13,859	(9)

Gexpro Services	(10)	February 24, 2020	Distributor of Industrial and Specialty Parts
				Secured Debt		8.00% (L+6.50%, Floor 1.50%)	2/24/2025		12,474		12,187		12,390	(9)

HDC/HW Intermediate Holdings	(10)	December 21, 2018	Managed Services and Hosting Provider
				Secured Debt		8.50% (L+7.50%, Floor 1.00%)	12/21/2023		1,947		1,923		1,885	(9)

Hunter Defense Technologies, Inc.	(10)	March 29, 2018	Provider of Military and Commercial Shelters and Systems
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	3/29/2023		16,563		16,414		16,563	(9)

HW Temps LLC		July 2, 2015	Temporary Staffing Solutions
				Secured Debt		8.00%	3/29/2023		2,420		2,393		2,221

Hyperion Materials & Technologies, Inc.	(11) (13)	September 12, 2019	Manufacturer of Cutting and Machine Tools & Specialty Polishing Compounds
				Secured Debt		6.50% (L+5.50%, Floor 1.00%)	8/28/2026		7,406		7,285		7,388	(9)

Implus Footcare, LLC	(10)	June 1, 2017	Provider of Footwear and Related Accessories
				Secured Debt		8.75% (L+7.75%, Floor 1.00%)	4/30/2024		17,221		17,172		15,796	(9)

Independent Pet Partners Intermediate Holdings, LLC	(10)	November 20, 2018	Omnichannel Retailer of Specialty Pet Products
				Secured Debt		6.00% PIK	11/20/2023		9,960		9,092		9,092	(19)
				Preferred Stock (non-voting)							2,470		2,470
				Preferred Stock (non-voting)							-		-
				Member Units	1,558,333						1,192		-
											12,754		11,562

Industrial Services Acquisition, LLC	(10)	June 17, 2016	Industrial Cleaning Services
				Unsecured Debt		13.00% (6.00% Cash, 7.00% PIK)	12/17/2022		13,123		13,104		13,123	(19)
				Preferred Member Units	144	10.00% PIK					265		343	(8) (19) (30)
				Preferred Member Units	80	20.00% PIK					171		199	(8) (19) (30)
				Member Units	900						2,100		1,610	(30)
											15,640		15,275

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Interface Security Systems, L.L.C	(10)	August 7, 2019	Commercial Security & Alarm Services
				Secured Debt		9.75% (8.75% Cash, 1.00% PIK) (1.00% PIK + L+7.00%, Floor 1.75%)	8/7/2023		7,278		7,188		7,278	(9) (19)

Intermedia Holdings, Inc.	(11)	August 3, 2018	Unified Communications as a Service
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	7/19/2025		7,374		7,351		7,391	(9)

Invincible Boat Company, LLC.	(10)	August 28, 2019	Manufacturer of Sport Fishing Boats
				Secured Debt		8.00% (L+6.50%, Floor 1.50%)	8/28/2025		8,661		8,585		8,661	(9)

Isagenix International, LLC	(11)	June 21, 2018	Direct Marketer of Health & Wellness Products
				Secured Debt		6.75% (L+5.75%, Floor 1.00%)	6/14/2025		5,469		5,432		4,127	(9)

Jackmont Hospitality, Inc.	(10)	May 26, 2015	Franchisee of Casual Dining Restaurants
				Secured Debt		7.75% (L+6.75%, Floor 1.00%)	5/26/2021		7,855		7,854		6,274	(9)

Joerns Healthcare, LLC	(11)	April 3, 2013	Manufacturer and Distributor of Health Care Equipment & Supplies
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	8/21/2024		3,336		3,296		3,226	(9)
				Common Stock	472,579						3,678		1,861
											6,974		5,087

Kemp Technologies Inc.	(10)	June 27, 2019	Provider of Application Delivery Controllers
				Secured Debt		7.50% (L+6.50%, Floor 1.00%)	3/29/2024		7,369		7,269		7,369	(9)

Knight Energy Services LLC	(11)	November 14, 2018	Oil and Gas Equipment & Services
				Secured Debt		8.50% PIK	2/9/2024		902		902		683	(17) (19)
				Common Stock	25,692						1,843		-
											2,745		683

Kore Wireless Group Inc.	(11)	December 31, 2018	Mission Critical Software Platform
				Secured Debt		5.70% (L+5.50%)	12/20/2024		5,984		5,965		5,977

Larchmont Resources, LLC	(11)	August 13, 2013	Oil & Gas Exploration & Production
				Secured Debt		9.00% (L+8.00%, Floor 1.00%)	8/9/2021		3,715		3,754		1,690	(9)
				Member Units	2,828						601		192	(30)
											4,355		1,882

Laredo Energy VI, LP	(10)	January 15, 2019	Oil & Gas Exploration & Production
				Member Units	1,155,952						11,560		10,118

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Lightbox Holdings, L.P.	(11)	May 23, 2019	Provider of Commercial Real Estate Software
				Secured Debt		5.20% (L+5.00%)	5/9/2026		4,913		4,854		4,863

LL Management, Inc.	(10)	May 2, 2019	Medical Transportation Service Provider
				Secured Debt		8.25% (L+7.25%, Floor 1.00%)	9/25/2023		14,441		14,335		14,441	(9)

Logix Acquisition Company, LLC	(10)	June 24, 2016	Competitive Local Exchange Carrier
				Secured Debt		6.75% (L+5.75%, Floor 1.00%)	12/22/2024		12,586		12,530		12,146	(9)


Lulu's Fashion Lounge, LLC	(10)	August 31, 2017	Fast Fashion E-Commerce Retailer
				Secured Debt		10.50% (8.00% Cash, 2.50% PIK) (2.50% PIK + L+7.00%, Floor 1.00%)	8/28/2022		5,530		5,459		4,728	(9) (19)

Lynx FBO Operating LLC	(10)	September 30, 2019	Fixed Based Operator in the General Aviation Industry
				Secured Debt		7.25% (L+5.75%, Floor 1.50%)	9/30/2024		13,589		13,361		13,589	(9)
				Member Units	4,872						500		594
											13,861		14,183

Mac Lean-Fogg Company	(10)	April 22, 2019	Manufacturer and Supplier for Auto and Power Markets
				Secured Debt		5.63% (L+5.00%, Floor 0.625%)	12/22/2025		7,357		7,316		7,357	(9)
				Preferred Stock		13.75% (4.50% Cash, 9.25% PIK)			782		782		782	(8) (19)
											8,098		8,139

Mako Steel, LP	(10)	March 15, 2021	Self-Storage Design & Construction
				Secured Debt		8.00% (L+7.25%, Floor 0.75%)	3/15/2026		18,863		18,437		18,437

MB2 Dental Solutions, LLC	(11)	January 28, 2021	Dental Partnership Organization
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	1/29/2027		8,322		8,144		8,144

Mills Fleet Farm Group, LLC	(10)	October 24, 2018	Omnichannel Retailer of Work, Farm and Lifestyle Merchandise
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	10/24/2024		15,094		14,831		14,854	(9)

NinjaTrader, LLC	(10)	December 18, 2019	Operator of Futures Trading Platform
				Secured Debt		8.25% (L+6.75%, Floor 1.50%)	12/18/2024		16,875		16,541		16,829	(9)

NNE Partners, LLC	(10)	March 2, 2017	Oil & Gas Exploration & Production
				Secured Debt		9.44% (4.94% Cash, 4.50% PIK) (4.50% PIK + L+4.75%)	12/31/2023		20,881		20,834		18,981	(19)

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Novetta Solutions, LLC	(11)	June 21, 2017	Provider of Advanced Analytics Solutions for Defense Agencies
				Secured Debt		6.00% (L+5.00%, Floor 1.00%)	10/17/2022		14,630		14,488		14,602	(9)
				Secured Debt		9.50% (L+8.50%, Floor 1.00%)	10/16/2023		1,069		1,069		1,070
											15,557		15,672


NTM Acquisition Corp.	(11)	July 12, 2016	Provider of B2B Travel Information Content
				Secured Debt		8.25% (7.25% Cash, 1.00% PIK) (1.00%PIK + L+6.25%, Floor 1.00%)	6/7/2024		4,321		4,309		4,213	(9) (19)

Research Now Group, Inc. and Survey Sampling International, LLC	(11)	December 31, 2017	Provider of Outsourced Online Surveying
				Secured Debt		6.50% (L+5.50%, Floor 1.00%)	12/20/2024		10,000		10,000		9,947	(9)

RM Bidder, LLC	(10)	November 12, 2015	Scripted and Unscripted TV and Digital Programming Provider
				Warrants	187,161		10/20/2025				284		-	(26)
				Member Units	2,779						31		23
											315		23

Salient Partners L.P.	(11)	June 25, 2015	Provider of Asset Management Services
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	8/31/2021		6,251		6,269		3,374	(9)

Signal Peak CLO 7, Ltd. (Mariner)	(12) (13)	May 8, 2019	Structured Finance
				Subordinated Structured Notes		12.00%	4/30/2032		25,935		21,481		17,735	(16)
											-		-
Slick Innovations, LLC		September 13, 2018	Text Message Marketing Platform
				Secured Debt		12.00%	9/13/2023		1,390		1,220		1,390
				Common Stock	70,000						175		380
				Warrants	18,084		9/13/2028				45		100	(27)
											1,440		1,870

TGP Holdings III LLC	(11)	September 30, 2017	Outdoor Cooking & Accessories
				Secured Debt		9.50% (L+8.50%, Floor 1.00%)	9/25/2025		5,000		5,000		4,966	(9)

Time Manufacturing Acquisition LLC	(11)	February 24, 2021	Manufacturer and Distributor of Utility Equipment
				Secured Debt		6.00% (L+5.00%, Floor 1.00%)	2/3/2023		1,498		1,494		1,504

The Pasha Group	(11)	February 2, 2018	Diversified Logistics and Transportation Provided
				Secured Debt		9.00% (L+8.00%, Floor 1.00%)	1/26/2023		7,361		7,140		7,306	(9)

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
U.S. TelePacific Corp.	(11)	September 14, 2016	Provider of Communications and Managed Services
				Secured Debt		6.50% (L+5.50%, Floor 1.00%)	5/2/2023		12,500		12,346		11,608	(9)

USA DeBusk LLC	(10)	October 22, 2019	Provider of Industrial Cleaning Services
				Secured Debt		6.75% (L+5.75%, Floor 1.00%)	10/22/2024		16,590		16,346		16,417	(9)

Vida Capital, Inc	(11)	October 10, 2019	Alternative Asset Manager
				Secured Debt		6.11% (L+6.00%)	10/1/2026		7,134		7,048		6,885

Vistar Media, Inc.	(10)	February 17, 2017	Operator of Digital Out-of-Home Advertising Platform
				Secured Debt		13.00% (9.50% Cash, 3.50% PIK) (3.50% PIK + L+7.50%, Floor 2.00%)	4/3/2023		4,697		4,610		4,697	(9) (19)
				Preferred Stock	70,207						767		910
				Warrants	69,675		4/3/2029				-		920	(25)
											5,377		6,527

Volusion, LLC		January 26, 2015	Provider of Online Software-as-a-Service eCommerce Solutions
				Secured Debt		11.50%	1/26/2020		8,672		8,654		8,246	(17)
				Unsecured Convertible Debt		8.00%	11/16/2023		175		175		125
				Preferred Member Units	4,876,670						6,000		2,570
				Warrants	1,831,355		1/26/2025				1,104		-	(27)
											15,933		10,941

White Cap Parent, LLC	(10)	December 29, 2016	Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors											(8)
				Member Units							3,335		6,050

YS Garments, LLC	(11)	August 22, 2018	Designer and Provider of Branded Activewear
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	8/9/2024		6,952		6,908		6,430	(9)


Subtotal Non-Control/Non-Affiliate Investments (110.4% of net assets at fair value)										$	685,503	$	644,997

Total Portfolio Investments, March 31, 2021 (145.4% of net assets at fair value)										$	859,673	$	849,732

Short Term Investments (34)

Fidelity Institutional Money Market Funds (35)				Prime Money Market Portfolio						$	19,892	$	19,892

USBank Money Market Account (35)											6,001		6,001

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)


Portfolio Company (1) (20)	Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)	Cost (4)		Fair Value (18)

Total Short Term Investments								$	25,893	$	25,893


(1)		All investments are Lower Middle Market portfolio investments, unless otherwise noted. See C.2 for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered as security for the Company’s Credit Facilities.
(2)		Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.
(3)		See Note C.2 and Schedule 12-14 for a summary of geographic location of portfolio companies.
(4)		Principal is net of repayments. Cost is net of repayments and accumulated unearned income.
(5)		Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act"), as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.
(6)		Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments.
(7)		Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.
(8)		Income producing through dividends or distributions.
(9)		Index based floating interest rate is subject to contractual minimum interest rate. A majority of the variable rate loans in the Company’s investment portfolio bear interest at a rate that may be determined by reference tto either the London Interbank Offered Rate (“LIBOR”) or or an alternate Base Rate (commonly based on the Federal Funds Rate or the Prime Rate), which typically resets semi-annually, quarterly, or monthly at the borrower’s option. The borrower may also elect to have multiple interest reset periods for each loan. For each such loan, the Company has provided the weighted average annual stated interest rate in effect at March 31, 2021. As noted in this schedule, 76% of the loans (based on the par amount) contain LIBOR floors which range between 0.63% and 2.00%, with a weighted-average LIBOR floor of approximately 1.10%.
(10)		Private Loan portfolio investment. See Note C.2 for a description of Private Loan portfolio investments.
(11)		Middle Market portfolio investment. See Note C.2 for a description of Middle Market portfolio investments.
(12)		Other Portfolio investment. See Note C.2 for a description of Other Portfolio investments.
(13)		Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.
(14)		Non-accrual and non-income producing investment.
(15)		All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”
(16)		Our CLO equity position is entitled to recurring distributions which are generally equal to the remaining cash flow of payments made by underlying assets less contractual payments to debt holders and CLO expenses. The effective yield is estimated based upon the current projection of the amount and timing of these recurring distributions in addition to the estimated amount of terminal principal payment. We monitor the anticipated cash flows from our CLO equity position and adjust our effective yield periodically as needed on a prospective basis. The estimated yield and investment cost may ultimately not be realized.
(17)		Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.
(18)		Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See Note C.1 for further discussion.
(19)		PIK interest income and cumulative dividend income represent income not paid currently in cash.
(20)		All portfolio company headquarters are based in the United States, unless otherwise noted.
(21)		Portfolio company headquarters are located outside of the United States.

Table of Contents

MSC Income Fund, Inc.

Consolidated Schedule of Investments (Continued)

March 31, 2021

(dollars in thousands)

(unaudited)

(22)		Not used
(23)		Not used
(24)		Investment date represents the date of initial investment in the portfolio company.
(25)		Warrants are presented in equivalent shares with a strike price of $10.92 per share.
(26)		Warrants are presented in equivalent units with a strike price of $14.28 per unit.
(27)		Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.
(28)		Not used
(29)		Not used
(30)		Shares/Units represent ownership in an underlying Real Estate or HoldCo entity.
(31)		Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.
(32)		Not used
(33)		The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche will receive priority as to the "last out" tranche with respect to payments of principal, interest, and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.50% (Floor 1.00%) per the credit agreement and the Consolidated Schedule of Investments above reflects such higher rate.
(34)		Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less. These short term investments are included as Cash and cash equivalents.
(35)		Effective yield as of March 31, 2021 was approximately 0.05% at USBank Money Market Account and 0.01% at Fidelity Institutional Money Market Funds.

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Control Investments (5)

Copper Trail Fund Investments	(12) (13)	July 17, 2017	Investment Partnership
				LP Interests (CTMH, LP)	38.8%					$	872	$	747	(31)

GRT Rubber Technologies LLC ("GRT")		December 19, 2014	Manufacturer of Engineered Rubber Products
				Secured Debt		7.15% (L+7.00%)	12/31/2023	$	8,262		8,246		8,262
				Member Units	2,896						6,435		22,120	(8)
											14,681		30,382

Harris Preston Fund Investments	(12) (13)	October 1, 2017	Investment Partnership
				LP Interests (2717 MH, L.P.)	49.3%						2,599		2,702	(31)

Subtotal Control Investments (5.8% of net assets at fair value)										$	18,152	$	33,831


Affiliate Investments (6)
AFG Capital Group, LLC		November 7, 2014	Provider of Rent-to-Own Financing Solutions and Services
				Secured Debt		10.00%	5/25/2022		123		123		123
				Preferred Member Units	46						300		1,450
											423		1,573

Analytical Systems Keco, LLC		August 16, 2019	Manufacturer of Liquid and Gas Analyzers
				Secured Debt		12.00% (L+10.00%, Floor 2.00%)	8/16/2024		1,289		1,180		1,180	(9)
				Preferred Member Units	800						800		800
				Warrants	105		8/16/2029				79		-	(27)
											2,059		1,980

Brewer Crane Holdings, LLC		January 9, 2018	Provider of Crane Rental and Operating Services
				Secured Debt		11.00% (L+10.00%, Floor 1.00%)	1/9/2023		2,139		2,119		2,119	(9)
				Preferred Member Units	737						1,070		1,460	(8)
											3,189		3,579

Centre Technologies Holdings, LLC		January 4, 2019	Provider of IT Hardware Services and Software Solutions
				Secured Debt		12.00% (L+10.00%, Floor 2.00%)	1/4/2024		2,907		2,868		2,868	(9)
				Preferred Member Units	3,174						1,460		1,540
											4,328		4,408

Chamberlin Holding LLC		February 26, 2018	Roofing and Waterproofing Specialty Contractor
				Secured Debt		9.00% (L+8.00%, Floor 1.00%)	2/26/2023		3,803		3,745		3,803	(9)
				Member Units	1,087						2,860		7,020	(8)
				Member Units	1						330		318	(8) (30)
											6,935		11,141

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Charlotte Russe, Inc	(11)	May 28, 2013	Fast-Fashion Retailer to Young Women
				Common Stock	14,973						2,470		-


Charps, LLC		February 3, 2017	Pipeline Maintenance and Construction
				Secured Debt		15.00%	6/5/2022		167		167		167
				Preferred Member Units	400						100		2,630	(8)
											267		2,797

Clad-Rex Steel, LLC		December 20, 2016	Specialty Manufacturer of Vinyl-Clad Metal
				Secured Debt		10.50% (L+9.50%, Floor 1.00%)	12/20/2021		2,720		2,706		2,706	(9)
				Member Units	179						1,820		2,153	(8)
				Secured Debt		10.00%	12/20/2036		278		275		275	(30)
				Member Units	200						53		132	(30)
											4,854		5,266


Cody Pools, Inc.		March 6, 2020	Designer of Residential and Commercial Pools
				Secured Debt		12.25% (L+10.50%, Floor 1.75%)	3/6/2025		3,554		3,488		3,554	(9)
				Preferred Member Units	147						2,079		3,740
											5,567		7,294

Copper Trail Fund Investments	(12) (13)	July 17, 2017	Investment Partnership
				LP Interests (Copper Trail Energy Fund I, LP)	12.4%						2,161		1,782	(8) (31)

Digital Products Holdings LLC		April 1, 2018	Designer and Distributor of Consumer Electronics
				Secured Debt		11.00% (L+10.00%, Floor 1.00%)	4/1/2023		4,543		4,493		4,493	(9)
				Preferred Member Units	964						2,375		2,459	(8)
											6,868		6,952

Direct Marketing Solutions, Inc.		February 13, 2018	Provider of Omni-Channel Direct Marketing Services
				Secured Debt		12.00% (L+11.00%, Floor 1.00%)	2/13/2023		3,772		3,717		3,717	(9)
				Preferred Stock	2,100						2,100		4,840
											5,817		8,557	-

Freeport Financial Funds	(12) (13)	July 31, 2015	Investment Partnership
				LP Interests (Freeport First Lien Loan Fund III LP)	6.0%						10,785		10,321	(8) (31)

Gamber-Johnson Holdings, LLC ("GJH")		June 24, 2016	Manufacturer of Ruggedized Computer Mounting Systems
				Secured Debt		9.00% (L+7.00%, Floor 2.00%)	6/24/2021		4,960		4,935		4,960	(9)
				Member Units	9,042						3,711		13,120	(8)

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
											8,646		18,080


Gulf Publishing Holdings, LLC		April 29, 2016	Energy Industry Focused Media and Publishing
				Secured Debt		10.50% (5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%)	9/30/2020		63		63		63	(9) (17) (19)
				Secured Debt		12.50% (6.25% Cash, 6.25% PIK)	4/29/2021		3,269		3,264		2,988	(19)
				Member Units	920						920		-
											4,247		3,051

Harris Preston Fund Investments	(12) (13)	August 9, 2017	Investment Partnership
				LP Interests (HPEP 3, L.P.)	8.2%						3,071		3,258	(31)

Hawk Ridge Systems, LLC	(13)	December 2, 2016	Value-Added Reseller of Engineering Design and Manufacturing Solutions
				Secured Debt		11.00%	12/2/2023		3,350		3,335		3,350
				Preferred Member Units	56						713		2,008	(8)
				Preferred Member Units	56						38		105	(30)
											4,086		5,463

J&J Services, Inc.		October 31, 2019	Provider of Dumpster and Portable Toilet Rental Services
				Secured Debt		11.50%	10/31/2024		3,200		3,150		3,200
				Preferred Stock	695						1,771		3,170
											4,921		6,370

Kickhaefer Manufacturing Company, LLC		October 31, 2018	Precision Metal Parts Manufacturing
				Secured Debt		11.50%	10/31/2023		5,604		5,500		5,500
				Member Units	145						3,060		3,060
				Secured Debt		9.00%	10/31/2048		988		978		978
				Member Units	200						248		290	(8) (30)
											9,786		9,828

Market Force Information, LLC		July 28, 2017	Provider of Customer Experience Management Services
				Secured Debt		12.00% PIK	7/28/2023		6,520		6,463		3,391	(14) (19)
				Member Units	185,980						4,160		-
											10,623		3,391

MH Corbin Holding LLC		August 31, 2015	Manufacturer and Distributor of Traffic Safety Products
				Secured Debt		13.00% (10.00% Cash, 3.00% PIK)	3/31/2022		2,143		2,131		2,070	(19)
				Preferred Member Units	16,500						1,100		590
				Preferred Member Units	1,000						1,500		-
											4,731		2,660

Mystic Logistics Holdings, LLC		August 18, 2014	Logistics and Distribution Services Provider for Large Volume Mailers
				Secured Debt		12.00%	1/17/2022		1,683		1,682		1,682
				Common Stock	1,468						680		2,248	(8)

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
											2,362		3,930

NexRev LLC		February 28, 2018	Provider of Energy Efficiency Products & Services
				Secured Debt		11.00%	2/28/2023		4,274		4,231		4,177
				Preferred Member Units	21,600,000						1,720		370	(8)
											5,951		4,547

NuStep, LLC		January 31, 2017	Designer, Manufacturer and Distributor of Fitness Equipment
				Secured Debt		12.00%	1/31/2022		4,310		4,288		4,288
				Preferred Member Units	102						2,550		2,700
											6,838		6,988
														��
Project BarFly, LLC	(10)	August 31, 2015	Casual Restaurant Group
				Member Units	12						528		528

SI East, LLC		August 31, 2018	Rigid Industrial Packaging Manufacturing
				Secured Debt		9.50%	8/31/2023		10,988		10,884		10,986
				Preferred Member Units	52						2,000		3,260	(8)
											12,884		14,246

Tedder Industries, LLC		August 31, 2018	Manufacturer of Firearm Holsters and Accessories	Secured Debt		12.00%	8/31/2023		4,100		4,023		4,025
				Preferred Member Units	120						2,034		2,034
											6,057		6,059

Trantech Radiator Topco, LLC		May 31, 2019	Transformer Cooling Products and Services
				Secured Debt		12.00%	5/31/2024		2,180		2,122		2,131
				Common Stock	154						1,164		1,510	(8)
											3,286		3,641



Subtotal Affiliate Investments (27.2% of net assets at fair value)										$	143,740	$	157,690

Non-Control/Non-Affiliate Investments (7)
					��
AAC Holdings, Inc.	(11)	June 30, 2017	Substance Abuse Treatment Service Provider
				Secured Debt		18.00% (10.00% Cash, 8.00% PIK)	6/25/2025		3,354		2,998		2,998	(19)
				Common Stock	593,927						3,148		3,148
				Warrants	197,717		12/11/2025				-		1,048	(27)
											6,146		7,194

Adams Publishing Group, LLC	(10)	November 19, 2015	Local Newspaper Operator
				Secured Debt		8.75% (L+7.00%, Floor 1.75%)	7/3/2023		5,863		5,742		5,813	(9)

ADS Tactical, Inc.	(10)	March 7, 2017	Value-Added Logistics and Supply Chain Provider to the Defense Industry
				Secured Debt		7.00% (L+6.25%, Floor 0.75%)	7/26/2023		15,659		15,700		15,659	(9)

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Aethon United BR LP	(10)	September 8, 2017	Oil & Gas Exploration & Production
				Secured Debt		7.75% (L+6.75%, Floor 1.00%)	9/8/2023		7,000		6,938		6,852	(9)

American Nuts, LLC	(10)	April 10, 2018	Roaster, Mixer and Packager of Bulk Nuts and Seeds
				Secured Debt		9.00% (L+8.00%, Floor 1.00%)	4/10/2023		12,128		11,916		12,109	(9)
American Teleconferencing Services, Ltd.	(11)	May 19, 2016	Provider of Audio Conferencing and Video Collaboration Solutions
				Secured Debt		7.50% (L+6.50%, Floor 1.00%)	6/8/2023		14,125		13,803		6,568	(9)

American Trailer Rental Group LLC		June 7, 2017	Provider of Short-term Trailer and Container Rental
				Member Units	18,373						2,149		4,000	(30)

APTIM Corp.	(11)	August 17, 2018	Engineering, Construction & Procurement
				Secured Debt		7.75%	6/15/2025		6,952		6,356		5,434

Arcus Hunting LLC	(10)	January 6, 2015	Manufacturer of Bowhunting and Archery Products and Accessories
				Secured Debt		11.00% (L+10.00%, Floor 1.00%)	3/31/2021		5,504		5,455		5,504	(9)

ASC Ortho Management Company, LLC	(10)	August 31, 2018	Provider of Orthopedic Services
				Secured Debt		8.50% (L+7.50%, Floor 1.00%)	8/31/2023		5,206		5,151		5,149	(9)
				Secured Debt		13.25% PIK	12/1/2023		2,047		2,011		2,047	(19)
											7,162		7,196

ATX Networks Corp.	(11) (13) (21)	June 30, 2015	Provider of Radio Frequency Management Equipment
				Secured Debt		8.75% (7.25% Cash, 1.50% PIK) (1.50% PIK + L+6.25%, Floor 1.00%)	12/31/2023		13,435		13,338		12,293	(9) (19)


BBB Tank Services, LLC		April 8, 2016	Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market
				Unsecured Debt		12.00% (L+11.00%, Floor 1.00%)	4/8/2021		1,200		1,200		1,177	(9)
				Preferred Stock (non-voting)		15.00% PIK					38		38	(8) (19)
				Member Units	200,000						200		70
											1,438		1,285

Berry Aviation, Inc.	(10)	July 6, 2018	Charter Airline Services
				Secured Debt		12.00% (10.50% Cash, 1.5% PIK)	1/6/2024		4,618		4,575		4,618	(19)
				Preferred Member Units	122,416	16.00% PIK					143		143	(8) (19) (30)
				Preferred Member Units	1,548,387	8.00% PIK					1,548		904	(19) (30)
											6,266		5,665

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
BigName Commerce, LLC	(10)	May 11, 2017	Provider of Envelopes and Complimentary Stationery Products
				Secured Debt		8.25% (L+7.25%, Floor 1.00%)	5/11/2022		2,037		2,030		2,004	(9)

Binswanger Enterprises, LLC	(10)	March 10, 2017	Glass Repair and Installation Service Provider
				Secured Debt		9.50% (L+8.50%, Floor 1.00%)	3/9/2022		12,958		12,801		12,958	(9)
				Member Units	1,050,000						1,050		670
											13,851		13,628

BLST Operating Company, LLC.	(11)	December 19, 2013	Multi-Channel Retailer of General Merchandise
				Secured Debt		10.00% (L+8.50%, Floor 1.50%)	8/28/2025		6,304		6,304		6,304	(9)
				Common Stock	700						-		-
											6,304		6,304

Boccella Precast Products LLC		June 30, 2017	Manufacturer of Precast Hollow Core Concrete
				Member Units	564,000						564		1,510	(8)

Brightwood Capital Fund Investments	(12) (13)	July 21, 2014	Investment Partnership
				LP Interests (Brightwood Capital Fund III, LP)	1.2%						3,695		2,867	(8) (31)
				LP Interests (Brightwood Capital Fund IV, LP)	0.5%						10,037		9,490	(8) (31)
											13,732		12,357

Buca C, LLC		June 30, 2015	Casual Restaurant Group
				Secured Debt		10.25% (L+9.25%, Floor 1.00%)	6/30/2020		12,670		12,670		9,504	(9) (17)
				Preferred Member Units	4	6.00% PIK					3,040		-	(8) (19)
											15,710		9,504

Cadence Aerospace LLC	(10)	November 14, 2017	Aerostructure Manufacturing
				Secured Debt		9.50% (4.25% Cash, 5.25% PIK) (5.25% PIK + L+3.25%, Floor 1.00%)	11/14/2023		19,687		19,538		18,732	(9) (19)

CAI Software LLC		October 10, 2014	Provider of Specialized Enterprise Resource Planning Software
				Secured Debt		12.50%	12/7/2023		2,086		2,101		2,086
				Member Units	16,742						188		1,510	(8)
											2,289		3,596

Cenveo Corporation	(11)	September 4, 2015	Provider of Digital Marketing Agency Services
				Secured Debt		10.50% (L+9.50%, Floor 1.00%)	6/7/2023		4,117		3,929		3,849	(9)
				Common Stock	138,889						4,163		2,049
											8,092		5,898

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Chisholm Energy Holdings, LLC	(10)	May 15, 2019	Oil & Gas Exploration & Production
				Secured Debt		7.75% (L+6.25%, Floor 1.50%)	5/15/2026		3,571		3,512		3,274	(9)

Clarius BIGS, LLC
	(10)	September 23, 2014	Prints & Advertising Film Financing
				Secured Debt		15.00% PIK	1/5/2015		2,849		2,498		31	(14) (17) (19)

Classic H&G Holdings, LLC		March 12, 2020	Provider of Engineered Packaging Solutions
				Secured Debt		12.00%	3/12/2025		6,200		6,033		6,200
				Preferred Member Units	39						1,440		2,380	(8)
											7,473		8,580

Clickbooth.com, LLC	(10)	December 5, 2017	Provider of Digital Advertising Performance Marketing Solutions
				Secured Debt		9.50% (L+8.50%, Floor 1.00%)	1/31/2025		7,850		7,731		7,850	(9)

Copper Trail Fund Investments	(12) (13)	July 17, 2017
			Investment Partnership	LP Interests (CTEF I, LP)	375						-		67

Corel Corporation	(11) (13) (21)	July 13, 2020	Publisher of Desktop and Cloud-based Software
				Secured Debt		5.23% (L+5.00%)	7/2/2026		1,962		1,866		1,934

Datacom, LLC		May 30, 2014	Technology and Telecommunications Provider
				Secured Debt		8.00%	5/31/2021		200		200		179	(14)
				Secured Debt		10.50% PIK	5/31/2021		1,376		1,369		1,159	(14) (19)
				Class A Preferred Member Units	-						144		-
				Class B Preferred Member Units	717						670		-
											2,383		1,338

Digital River, Inc.	(11)	February 24, 2015	Provider of Outsourced e-Commerce Solutions and Services
				Secured Debt		8.00% (L+7.00%, Floor 1.00%)	2/12/2023		8,377		8,344		8,335	(9)

DTE Enterprises, LLC	(10)	April 13, 2018	Industrial Powertrain Repair and Services
				Secured Debt		10.00% (L+8.50%, Floor 1.50%)	4/13/2023		9,324		9,225		9,011	(9)
				Class AA Preferred Member Units (non-voting)		10.00% PIK					951		951	(8) (19)
				Class A Preferred Member Units	776,316						776		880
											10,952		10,842

Dynamic Communities, LLC	(10)	July 17, 2018	Developer of Business Events and Online Community Groups
				Secured Debt		12.50% (6.25% Cash, 6.25% PIK) (L+11.50%, Floor 1.00%)	7/17/2023		5,425		5,364		5,020	(9) (19)

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)

EPIC Y-Grade Services, LP	(11)	June 22, 2018	NGL Transportation & Storage
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	6/30/2027		6,944		6,855		5,798	(9)

GoWireless Holdings, Inc.	(11)	December 31, 2017	Provider of Wireless Telecommunications Carrier Services
				Secured Debt		7.50% (L+6.50%, Floor 1.00%)	12/22/2024		14,083		13,998		13,970	(9)

Gexpro Services	(10)	February 24, 2020	Distributor of Industrial and Specialty Parts
				Secured Debt		8.00% (L+6.50%, Floor 1.50%)	2/24/2025		12,506		12,202		12,408	(9)

HDC/HW Intermediate Holdings	(10)	December 21, 2018	Managed Services and Hosting Provider
				Secured Debt		8.50% (L+7.50%, Floor 1.00%)	12/21/2023		1,951		1,926		1,883	(9)

Hunter Defense Technologies, Inc.	(10)	March 29, 2018	Provider of Military and Commercial Shelters and Systems
				Secured Debt		8.00% (L+7.00%, Floor 1.00%)	3/29/2023		16,583		16,416		16,583	(9)

HW Temps LLC		July 2, 2015	Temporary Staffing Solutions
				Secured Debt		12.00%	3/29/2023		2,450		2,420		2,248

Hyperion Materials & Technologies, Inc.	(11) (13)	September 12, 2019	Manufacturer of Cutting and Machine Tools & Specialty Polishing Compounds
				Secured Debt		6.50% (L+5.50%, Floor 1.00%)	8/28/2026		7,425		7,299		6,938	(9)

Implus Footcare, LLC	(10)	June 1, 2017	Provider of Footwear and Related Accessories
				Secured Debt		8.75% (L+7.75%, Floor 1.00%)	4/30/2024		17,264		17,113		15,694	(9)

Independent Pet Partners Intermediate Holdings, LLC	(10)	November 20, 2018	Omnichannel Retailer of Specialty Pet Products
				Secured Debt		6.00% PIK	11/20/2023		9,944		8,992		8,992	(19)
				Preferred Stock (non-voting)							2,470		2,470
				Preferred Stock (non-voting)							-		-
				Member Units	1,191,667						1,192		-
											12,654		11,462

Industrial Services Acquisition, LLC	(10)	June 17, 2016	Industrial Cleaning Services
				Unsecured Debt		13.00% (6.00% Cash, 7.00% PIK)	12/17/2022		12,892		12,871		12,892	(19)
				Preferred Member Units	336	10.00% PIK					202		202	(8) (19) (30)
				Preferred Member Units	187	20.00% PIK					124		124	(8) (19) (30)
				Member Units	2,100						2,100		1,237	(30)
											15,297		14,455

Interface Security Systems, L.L.C	(10)	August 7, 2019	Commercial Security & Alarm Services
				Secured Debt		11.75% (8.75% Cash, 3.00% PIK) (3.00% PIK + L+7.00%, Floor 1.75%)	8/7/2023		7,266		7,168		7,266	(9) (19)

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Intermedia Holdings, Inc.	(11)	August 3, 2018	Unified Communications as a Service
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	7/19/2025		3,480		3,456		3,478	(9)

Invincible Boat Company, LLC.	(10)	August 28, 2019	Manufacturer of Sport Fishing Boats
				Secured Debt		8.00% (L+6.50%, Floor 1.50%)	8/28/2025		8,876		8,797		8,876	(9)

Isagenix International, LLC	(11)	June 21, 2018	Direct Marketer of Health & Wellness Products
				Secured Debt		6.75% (L+5.75%, Floor 1.00%)	6/14/2025		5,572		5,533		3,130	(9)

Jackmont Hospitality, Inc.	(10)	May 26, 2015	Franchisee of Casual Dining Restaurants
				Secured Debt		7.75% (L+6.75%, Floor 1.00%)	5/26/2021		7,908		7,906		6,315	(9)

Joerns Healthcare, LLC	(11)	April 3, 2013	Manufacturer and Distributor of Health Care Equipment & Supplies
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	8/21/2024		3,336		3,294		3,336	(9)
				Common Stock	392,514						3,678		2,322
											6,972		5,658

Kemp Technologies Inc.	(10)	June 27, 2019	Provider of Application Delivery Controllers
				Secured Debt		7.50% (L+6.50%, Floor 1.00%)	3/29/2024		7,388		7,280		7,388	(9)

Knight Energy Services LLC	(11)	November 14, 2018	Oil and Gas Equipment & Services
				Secured Debt		8.50% PIK	2/9/2024		828		882		745	(17) (19)
				Common Stock	25,692						1,843		-	-
											2,725		745	-

Kore Wireless Group Inc.	(11)	December 31, 2018	Mission Critical Software Platform
				Secured Debt		5.75% (L+5.50%)	12/20/2024		6,000		5,979		5,917

Larchmont Resources, LLC	(11)	August 13, 2013	Oil & Gas Exploration & Production
				Secured Debt		11.00% PIK (L+10.00% PIK, Floor 1.00%)	8/9/2021		3,715		3,780		1,672	(9) (19)
				Member Units	4,806						601		192	(30)
											4,381		1,864

Laredo Energy VI, LP	(10)	January 15, 2019	Oil & Gas Exploration & Production
				Member Units	1,155,952						11,560		10,238

Lightbox Holdings, L.P.	(11)	May 23, 2019	Provider of Commercial Real Estate Software
				Secured Debt		5.15% (L+5.00%)	5/9/2026		4,925		4,864		4,777

LL Management, Inc.	(10)	May 2, 2019	Medical Transportation Service Provider
				Secured Debt		8.25% (L+7.25%, Floor 1.00%)	9/25/2023		13,581		13,485		13,581	(9)

Logix Acquisition Company, LLC	(10)	June 24, 2016	Competitive Local Exchange Carrier
				Secured Debt		6.75% (L+5.75%, Floor 1.00%)	12/22/2024		12,620		12,560		11,673	(9)

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
LSF9 Atlantis Holdings, LLC	(11)	May 17, 2017	Provider of Wireless Telecommunications Carrier Services
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	5/1/2023		12,600		12,555		12,561	(9)

Lulu's Fashion Lounge, LLC	(10)	August 31, 2017	Fast Fashion E-Commerce Retailer
				Secured Debt		10.50% (8.00% Cash, 2.50% PIK) (2.50% PIK + L+7.00%, Floor 1.00%)	8/28/2022		5,622		5,539		4,807	(9) (19)

Lynx FBO Operating LLC	(10)	September 30, 2019	Fixed Based Operator in the General Aviation Industry
				Secured Debt		7.25% (L+5.75%, Floor 1.50%)	9/30/2024		13,613		13,370		13,521	(9)
				Member Units	3,704						500		594
											13,870		14,115

Mac Lean-Fogg Company	(10)	April 22, 2019	Manufacturer and Supplier for Auto and Power Markets
				Secured Debt		5.63% (L+5.00%, Floor 0.625%)	12/22/2025		7,375		7,332		7,375	(9)
				Preferred Stock		13.75% (4.50% Cash, 9.25% PIK)			1		793		780	(8) (19)
											8,125		8,155

Mills Fleet Farm Group, LLC	(10)	October 24, 2018	Omnichannel Retailer of Work, Farm and Lifestyle Merchandise
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	10/24/2024		13,875		13,599		13,623	(9)

NinjaTrader, LLC	(10)	December 18, 2019	Operator of Futures Trading Platform
				Secured Debt		8.25% (L+6.75%, Floor 1.50%)	12/18/2024		16,875		16,520		16,828	(9)

NNE Partners, LLC	(10)	March 2, 2017	Oil & Gas Exploration & Production
				Secured Debt		9.48% (4.75% Cash, 4.50% PIK) (4.50% PIK + L+4.75%)	12/31/2023		20,649		20,590		18,331	(19)

Novetta Solutions, LLC	(11)	June 21, 2017	Provider of Advanced Analytics Solutions for Defense Agencies
				Secured Debt		6.00% (L+5.00%, Floor 1.00%)	10/17/2022		14,668		14,504		14,638	(9)

NTM Acquisition Corp.	(11)	July 12, 2016	Provider of B2B Travel Information Content
				Secured Debt		8.25% (7.25% Cash, 1.00% PIK) (1.00% PIK + L+6.25%, Floor 1.00%)	6/7/2024		4,347		4,332		3,912	(9) (19)

PricewaterhouseCoopers Public Sector LLP	(11)	May 24, 2018	Provider of Consulting Services to Governments
				Secured Debt		8.15% (L+8.00%)	5/1/2026		14,100		14,063		14,100

RM Bidder, LLC	(10)	November 12, 2015	Scripted and Unscripted TV and Digital Programming Provider
				Warrants	218,601		10/20/2025				284		-	(26)
				Member Units	1,854						31		17
											315		17

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
Salient Partners L.P.	(11)	June 25, 2015	Provider of Asset Management Services
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	8/31/2021		6,450		6,505		4,542	(9)

Signal Peak CLO 7, Ltd. (Mariner)	(12) (13)	May 8, 2019	Structured Finance
				Subordinated Structured Notes		8.30%	4/30/2032		25,935		21,705		19,300	-

Slick Innovations, LLC		September 13, 2018	Text Message Marketing Platform
				Secured Debt		13.00%	9/13/2023		1,430		1,241		1,430
				Common Stock	17,500						175		330
				Warrants	4,521		9/13/2028				45		90	(27)
											1,461		1,850
														-
TGP Holdings III LLC	(11)	September 30, 2017	Outdoor Cooking & Accessories
				Secured Debt		9.50% (L+8.50%, Floor 1.00%)	9/25/2025		5,000		5,000		4,825	(9)

The Pasha Group	(11)	February 2, 2018	Diversified Logistics and Transportation Provided
				Secured Debt		9.00% (L+8.00%, Floor 1.00%)	1/26/2023		7,031		6,916		6,451	(9)

USA DeBusk LLC	(10)	October 22, 2019	Provider of Industrial Cleaning Services
				Secured Debt		6.75% (L+5.75%, Floor 1.00%)	10/22/2024		16,632		16,373		16,394	(9)

U.S. TelePacific Corp.	(11)	September 14, 2016	Provider of Communications and Managed Services
				Secured Debt		6.50% (L+5.50%, Floor 1.00%)	5/2/2023		12,500		12,329		11,328	(9)

Vida Capital, Inc	(11)	October 10, 2019	Alternative Asset Manager
				Secured Debt		6.15% (L+6.00%)	10/1/2026		7,238		7,145		7,002

Vistar Media, Inc.	(10)	February 17, 2017	Operator of Digital Out-of-Home Advertising Platform
				Secured Debt		12.00% (8.50% Cash, 3.50% PIK) (3.50% PIK + L+7.50%, Floor 1.00%)	4/3/2023		4,656		4,550		4,656	(9) (19)
				Preferred Stock	70,207						767		910
				Warrants	69,675		4/3/2029				-		920	(25)
											5,317		6,486

Volusion, LLC		January 26, 2015	Provider of Online Software-as-a-Service eCommerce Solutions
				Secured Debt		11.50%	1/26/2020		8,672		8,646		8,247	(17)
				Unsecured Convertible Debt		8.00%	11/16/2023		175		175		124
				Preferred Member Units	2,090,001						6,000		2,570
				Warrants	784,867		1/26/2025				1,104		-	(27)
											15,925		10,941

White Cap Parent, LLC	(10)	December 29, 2016	Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors
				Member Units							5,637		8,617

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)


Portfolio Company (1) (20)		Investment Date (24)	Business Description	Type of Investment (2) (3) (15)	Shares/Units	Rate	Maturity Date	Principal (4)		Cost (4)		Fair Value (18)
YS Garments, LLC	(11)	August 22, 2018	Designer and Provider of Branded Activewear
				Secured Debt		7.00% (L+6.00%, Floor 1.00%)	8/9/2024		6,998		6,951		6,457	(9)

Subtotal Non-Control/Non-Affiliate Investments (109.4% of net assets at fair value)										$	678,764	$	634,001

Total Portfolio Investments, December 31, 2020 (142.4% of net assets at fair value)										$	840,656	$	825,522


Short Term Investments (33)

Fidelity Institutional Money Market Funds (34)				Prime Money Market Portfolio						$	3,989	$	3,989

US Bank Money Market Account (34)											40,217		40,217

Total Short Term Investments										$	44,206	$	44,206


(1)	All investments are Lower Middle Market portfolio investments, unless otherwise noted. See C.2 for a description of Lower Middle Market portfolio investments. All of the Company’s investments, unless otherwise noted, are encumbered either as security for the Company’s Credit Facility.
(2)	Debt investments are income producing, unless otherwise noted. Equity and warrants are non-income producing, unless otherwise noted.
(3)	See C.2 and Schedule 12-14 for a summary of geographic location of portfolio companies.
(4)	Principal is net of repayments. Cost is net of repayments and accumulated unearned income.
(5)	Control investments are defined by the Investment Company Act of 1940, as amended ("1940 Act"), as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained.
(6)	Affiliate investments are defined by the 1940 Act as investments in which between 5% and 25% (inclusive) of the voting securities are owned and the investments are not classified as Control investments.
(7)	Non-Control/Non-Affiliate investments are defined by the 1940 Act as investments that are neither Control investments nor Affiliate investments.
(8)	Income producing through dividends or distributions.
(9)	Index based floating interest rate is subject to contractual minimum interest rate, or floors.
(10)	Private Loan portfolio investment. See C.2 for a description of Private Loan portfolio investments.
(11)	Middle Market portfolio investment. See C.2 for a description of Middle Market portfolio investments.
(12)	Other Portfolio investment. See C.2 for a description of Other Portfolio investments.
(13)	Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets.
(14)	Non-accrual and non-income producing investment.
(15)	All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities.”
(16)	Not used
(17)	Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.
(18)	Investment fair value was determined using significant unobservable inputs, unless otherwise noted. See C.1 for further discussion.
(19)	PIK interest income and cumulative dividend income represent income not paid currently in cash.
(20)	All portfolio company headquarters are based in the United States, unless otherwise noted.

Table of Contents

MSC Income Fund

Consolidated Schedule of Investments (Continued)

December 31, 2020

(dollars in thousands)

(21)	Portfolio company headquarters are located outside of the United States.
(22)	Not used
(23)	Not used
(24)	Investment date represents the date of initial investment in the portfolio company.
(25)	Warrants are presented in equivalent shares with a strike price of $10.92 per share.
(26)	Warrants are presented in equivalent units with a strike price of $14.28 per unit.
(27)	Warrants are presented in equivalent shares/units with a strike price of $0.01 per share/unit.
(28)	Not used
(29)	Not used
(30)	Shares/Units represent ownership in an underlying Real Estate or HoldCo entity.
(31)	Investment is not unitized. Presentation is made in percent of fully diluted ownership unless otherwise indicated.
(32)	Not used
(33)	Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less. These short term investments are included as Cash and cash equivalents.
(34)	Effective yield as of December 31, 2020 was approximately .05% at US Bank Money Market Account and .01% at Fidelity Institutional Money Market Funds.

Table of Contents

MSC Income Fund, Inc.

Notes to ~~the financial statements) portfolio investments, unless otherwise noted. All of the assets of~~Consolidated Financial Statements

(Unaudited)

NOTE A—ORGANIZATION AND BASIS OF PRESENTATION

1. Organization

MSC Income Fund, Inc. (formerly known as HMS Income Fund, Inc. ~~(together with its consolidated subsidiaries, the “Company”~~through October 30, 2020) (“MSC Income Fund”) ~~are encumbered as security for the Company’s credit agreements. See Note 5 —~~ ~~Borrowings.~~

~~(2) Debt investments are income producing, unless otherwise noted. Equity investments~~ and, ~~warrants are non-income producing, unless otherwise noted.~~

~~(3) See Note 3 —~~ ~~Fair Value Hierarchy for Investments~~ ~~for summary geographic location of portfolio companies.~~

(4) Affiliate investments are generally defined by the Investment Company Act of 1940, as amended (the “1940 Act”), as investments in which between 5% and 25% of the voting securities are owned, or an investment in an investment company’s investment adviser, and the investments are not classified as Control investments. Fair value as of December 31, 2019 and March 31, 2020 along with transactions during the three months ended March 31, 2020 in these affiliated investments were as follows (in thousands):

Three Months Ended March 31, 2020 Three Months Ended March 31, 2020
Portfolio Company Fair Value at December 31, 2019
Gross Additions (Cost)^*

Gross Reductions (Cost)^**

Net Unrealized Gain (Loss) ^***
Fair Value at March 31, 2020 Net Realized Gain (Loss) Interest Income Fee Income Dividend Income

Affiliate Investments
AFG Capital Group, LLC
Term loan $ 209
$ —
$ (21 ) $ —
$ 188
$ —
$ 5
$ —
$ —
Member units 1,295
—
—
(30 ) 1,265
—
—
—
—
Analytical Systems Keco, LLC
Term loan 1,266
2
(17 ) —
1,251
—
44
—
—
Preferred member units 800
—
—
215
1,015
—
—
—
—
Warrants 79
—
—
56
135
—
—
—
—
Brewer Crane Holdings, LLC
Term loan 2,233
2
(31 ) —
2,204
—
68
—
—
Preferred member units 1,070
—
—
—
1,070
—
—
—
5
Centre Technologies Holdings, LLC
Term loan 3,008
3
(39 ) —
2,972
—
94
—
—
Preferred member units 1,460
—
—
—
1,460
—
—
7
—
Chamberlin HoldCo, LLC
Term loan 4,443
5
—
(5 ) 4,443
—
139
—
—
Member units 6,009
—
—
28
6,037
—
—
—
46
Member units 363
—
—
(133 ) 230
—
—
—
4
Charlotte Russe, Inc.
Common stock —
—
—
—
—
—
—
—
—
Charps, LLC
Term loan 500
—
—
—
500
—
19
—
—
Preferred member units 1,730
—
—
160
1,890
—
—
—
6
Clad-Rex Steel, LLC
Term loan 2,696
3
—
21
2,720
—
77
—
—
Member units 2,408
—
—
(255 ) 2,153
—
—
—
18
Term loan (Clad-Rex Steel RE Investor, LLC) 282
—
(2 ) —
280
—
7
—
—
Member units (Clad-Rex Steel RE Investor, LLC) 115
—
—
—
115
—
—
—
—
Cody Pools Holdings, LLC
Term loan —
4,001
(84 ) 4
3,921
—
37
—
—
Preferred member units —
2,079
—
—
2,079
—
—
—
—
Copper Trail Energy Fund I, LP
LP interests 1,643
—
(155 ) (29 ) 1,459

—
—
8
—
Digital Products Holdings LLC
Term loan 4,611
5
(83 ) (82 ) 4,451
—
149
—
—
Preferred member units 1,294
—
—
(700 ) 594
—
—
—
13
Direct Marketing Solutions, Inc.
Term loan 3,929
6
(59 ) (6 ) 3,870
—
132
—
—
Preferred stock 5,051
—
—
(36 ) 5,015
—
—
—
—
Freeport Financial Funds
LP interests 9,696
989
—
(1,054 ) 9,631
—
—
—
255
Gamber-Johnson Holdings, LLC
Term loan 4,755
6
(195 ) (6 ) 4,560
—
105
—
—
Member units 13,352
—
—
(41 ) 13,311
—
—
—
514
Guerdon Modular Holdings, Inc.
Term loan —
30
(3,147 ) 3,117
—
(2,792 ) 30
—
—
Term loan —
1
(253 ) 252
—
(252 ) —
—
—
Gulf Publishing Holdings, LLC
Term loan 3,124
4
—
(38 ) 3,090
—
103
—
—
Revolving line of credit 70
—
(10 ) —
60
—
2
—
—
Member units 605
—
—
(605 ) —
—
—
—
—
Harris Preston Fund Investments
LP interests (HPEP 3, LP) 2,474
345
—
—
2,819
—
—
—
—
Hawk Ridge Systems, LLC
Term loan 3,350
4
—
(4 ) 3,350
—
100
—
—
Revolving line of credit 148
1
—
—
149
—
—
—
—
Preferred member units 1,975
—
—
(145 ) 1,830
—
—
—
—
Preferred member units (HRS Services, ULC) 105
—
—
(7 ) 98
—
—
—
—
J&J Services, Inc.
Term Loan $ 4,315
$ 4
$ —
$ —
$ 4,319
$ —
$ 132
$ —
$ —
Preferred stock 1,790
—
—
—
1,790
—
—
—
—
Kickhaefer Manufacturer Company, LLC
Term loan 6,146
151
(100 ) (5 ) 6,192
—
191
—
—
Term loan 977
8
(2 ) —
983
—
32
—
—
Member units 290
—
—
—
290
—
—
—
—
Member units (KMC RE Investor, LLC) 3,060
—
—
(199 ) 2,861
—
—
—
5
Market Force Information, Inc.
Term loan 5,625
94
—
(1,295 ) 4,424
—
182
—
—
Revolving line of credit 674
—
—
(94 ) 580
—
15
—
—
Member units 1,319
—
—
(1,319 ) —
—
—
—
—
M.H. Corbin Holding LLC
Term loan 2,213
12
(20 ) (20 ) 2,185
—
75
—
—
Preferred member units 1,192
—
—
(100 ) 1,092
—
—
—
—
Common units 5
—
—
(5 ) —
—
—
—
—
Mystic Logistics Holdings, LLC
Term loan 1,561
251
(75 ) (1 ) 1,736
—
55
—
—
Common stock 2,103
—
—
444
2,547
—
—
—
—
NexRev, LLC
Term loan 4,331
5
(55 ) (392 ) 3,889
—
125
—
—
Preferred member units 1,577
—
—
(1,577 ) —
—
—
—
(24 )
NuStep, LLC
Term loan 4,901
7
(40 ) —
4,868
—
156
—
—
Preferred member units 2,550
—
—
—
2,550
—
—
—
—
SI East, LLC
Term loan 10,988
8
—
(8 ) 10,988
—
274
—
—
Preferred member units 2,734
—
—
150
2,884
—
—
—
119
Tedder Acquisition, LLC
Term loan 4,066
5
—
—
4,071
—
130
—
—
Revolving line of credit 158
—
—
—
158
—
5
—
—
Preferred member units 2,034
—
—
—
2,034
—
—
—
—
Trantech Radiator Topco, LLC
Term loan 2,237
5
(80 ) (1 ) 2,161
—
74
—
—
Common stock 1,164
—
—
491
1,655
—
—
—
7
Total Affiliate Investments $ 154,158
$ 8,036
$ (4,468 ) $ (3,254 ) $ 154,472
$ (3,044 ) $ 2,557
$ 15
$ 968

* Gross additions include increases in the cost basis of investments resulting from new portfolio investments, payment-in-kind (“PIK”) interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

** Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more new securities and the movement of an existing portfolio company out of this category into a different category.

~~***~~ ~~Net unrealized gain (loss) does not include unrealized appreciation (depreciation) on unfunded commitments.~~

~~(5) Non-Control/Non-Affiliate investments are generally investments that are neither Control investments nor Affiliate investments.~~

(6) Control investments are generally defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. Fair value as of December 31, 2019 and March 31, 2020 along with transactions during the three months ended March 31, 2020 in these Control investments were as follows (in thousands):

* Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

~~(7) Principal is net of repayments. Cost represents amortized cost which is net of repayments and adjusted for the amortization of premiums and/or accretion of discounts, as applicable.~~

~~(8) Index based floating interest rate is subject to contractual minimum interest rates, or floors.~~

(9) The investment is not a qualifying asset in an eligible portfolio company under Section 55(a) of the 1940 Act. A business development company (“BDC”) may not acquire any asset other than qualifying assets in eligible portfolio companies unless, at the time the acquisition is made, qualifying assets represent at least 70% of the BDC’s total assets. As of March 31, 2020, approximately 10.7% of the Company’s total assets were considered non-qualifying.

~~(10) Investment is classified as a LMM (as defined in the notes to the financial statements) portfolio investment.~~

~~(11) Investment is classified as a Private Loan (as defined in the notes to the financial statements) portfolio investment.~~

~~(12) Investment or portion of investment is under contract to purchase and met trade date accounting criteria as of March 31, 2020. Settlement occurred or is scheduled to occur after March 31, 2020.~~

~~(13) Investment serviced by Main Street Capital Corporation (“Main Street”) pursuant to servicing arrangements with the Company.~~

~~(14) Second lien secured debt investment.~~

~~(15) Investment is classified as an Other Portfolio (as defined in the notes to the financial statements) investment.~~

~~(16) Income producing through dividends or distributions.~~

~~(17) Unsecured debt investment.~~

~~(18) Investment is on non-accrual status as of March 31, 2020.~~

~~(19) Maturity date is under on-going renegotiations with the portfolio company and other lenders, if applicable.~~

~~(20) Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.~~

~~(21) Effective yield as of March 31, 2020 was approximately 0.01% at US Bank Money Market Account and 2.11% at Fidelity Institutional Money Market Funds.~~

(22) The 1, 2, 3, and 6-month London Interbank Offered Rate (“LIBOR”) were 0.99%, 1.26%, 1.45% and 1.18%, respectively, as of March 31, 2020. The actual LIBOR for each loan listed may not be the applicable LIBOR as of March 31, 2020, as the loan may have been priced or repriced based on a LIBOR prior to March 31, 2020. The prime rate was 3.25% as of March 31, 2020.

(23) The Company has entered into an intercreditor agreement that entitles the Company to the "last out" tranche of the first lien secured loans, whereby the "first out" tranche receives priority over the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder. Therefore, the Company receives a higher interest rate than the contractual stated interest rate of LIBOR plus 7.50% (Floor 1.00%) per the credit agreement and the Condensed Consolidated Schedule of Investments above reflects such higher rate.

~~(24) [Reserved]~~

(25) The Company has entered into an intercreditor agreement that entitles the Company to the "first out" tranche of the first lien secured loans, whereby the "first out" tranche receives priority over the "last out" tranche with respect to payments of principal, interest and any other amounts due thereunder. Therefore, the Company receives a lower interest rate than the contractual stated interest rate of LIBOR plus 6.64% (Floor 1.00%) per the credit agreement and the Condensed Consolidated Schedule of Investments above reflects such lower rate.

~~(26) The fair value of the investment was determined using significant unobservable inputs. See Note 3 —~~ ~~Fair Value Hierarchy for Investments~~.

~~See notes to the condensed consolidated financial statements.~~

HMS Income Fund, Inc.
Condensed Consolidated Schedule of Investments
As of December 31, 2019
(dollars in thousands)
Portfolio Company (1) (3) Business Description Type of Investment (2) (3) Index Rate (22) Principal (7) Cost (7) Fair Value (26)

Control Investments (6)
CTMH, LP (9) (15) Investment Partnership LP Interests (CTMH, LP) (Fully diluted 38.80%) — $ —
$ 872
$ 872
GRT Rubber Technologies, LLC (10) (13) Manufacturer of Engineered Rubber Products LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.71%, Secured Debt (Maturity - December 31, 2023) (8) 1 month LIBOR 7,396
7,375
7,396
Member Units (2,896 units) (16) — —
6,435
23,372
13,810
30,768
Harris Preston Fund Investments (9) (15) Investment Partnership LP Interests (2717 MH, LP) (Fully diluted 49.30%) — —
2,735
3,156

Subtotal Control Investments (6) (3% of total investments at fair value) $ 17,417
$ 34,796
Affiliate Investments (4)
AFG Capital Group, LLC (10) (13) Provider of Rent-to-Own Financing Solutions and Services 10.00% Secured Debt (Maturity - May 25, 2022) (14) None $ 209
$ 209
$ 209
Member Units (46 units) (16) — —
300
1,295
509
1,504
Analytical Systems Keco, LLC (10) (13) Manufacturer of Liquid and Gas Analyzers LIBOR Plus 10.00% (Floor 2.00%), Current Coupon 12.13%, Secured Debt (Maturity - August 16, 2024) (8) 1 month LIBOR 1,391
1,260
1,266
Preferred Member Units (800 units) — —
800
800
Warrants (105 equivalent shares; Expiration - August 16, 2029) — —
79
79
2,139
2,145
Brewer Crane Holdings, LLC (10) (13) Provider of Crane Rental and Operating Services LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.71%, Secured Debt (Maturity - January 9, 2023) (8) 1 month LIBOR 2,263
2,233
2,233
Preferred Member Units (737 units) (16) — —
1,070
1,070
3,303
3,303
Centre Technologies Holdings, LLC (10) (13) Provider of IT Hardware Services and Software Solutions LIBOR Plus 9.00% (Floor 2.00%), Current Coupon 10.75%, Secured Debt (Maturity - January 4, 2024) (8) 1 month LIBOR 3,060
3,003
3,008
Preferred Member Units (3,174 units) — —
1,460
1,460
4,463
4,468
Chamberlin Holding, LLC (10) (13) Roofing and Waterproofing Specialty Subcontractor LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 12.00%, Secured Debt (Maturity - February 23, 2023) (8) 1 month LIBOR 4,443
4,353
4,443
Member Units (1,087 units) (16) — —
2,860
6,009
Member Units (Langfield RE, LLC) (1 unit) — —
262
363
7,475
10,815
Charlotte Russe, Inc. Fast-Fashion Retailer to Young Women Common Stock (14,973 shares) None —
2,470
—
Charps, LLC (10) (13) Pipeline Maintenance and Construction 15.00% Secured Debt (Maturity - June 5, 2022) (14) None 500
500
500
Preferred Member Units (400 units) (16) — —
100
1,730
600
2,230
Clad-Rex Steel, LLC (10) (13) Specialty Manufacturer of Vinyl-Clad Metal LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.71%, Secured Debt (Maturity - December 20, 2021) (8) 1 month LIBOR 2,720
2,694
2,696
Member Units (179 units) (16) — —
1,820
2,408
10.00% Secured Debt (Clad-Rex Steel RE Investor, LLC) (Maturity - December 19, 2036) None 284
282
282
Member Units (Clad-Rex Steel RE Investor, LLC) (200 units) — —
53
115
4,849
5,501
Copper Trail Fund Investments (9) (15) Investment Partnership LP Interests (Copper Trail Energy Fund I, LP) (Fully Diluted 12.40%) (16) — —
1,389
1,643
Digital Products Holdings LLC (10) (13) Designer and Distributor of Consumer Electronics LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 11.75%, Secured Debt (Maturity - March 31, 2023) (8) 1 month LIBOR $ 4,905
$ 4,832
$ 4,611
Preferred Member Units (863 units) (16) — —
2,375
1,294
7,207
5,905
Direct Marketing Solutions, Inc. (10) (13) Provider of Omni-Channel Direct Marketing Services LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.75%, Secured Debt (Maturity - February 13, 2023) (8) 1 month LIBOR 3,929
3,851
3,929
Preferred Stock (2,100 shares) — —
2,100
5,051
5,951
8,980
Freeport Financial Funds (9) (15) Investment Partnership LP Interests (Freeport First Lien Loan Fund III, LP) (Fully diluted 6.00%) (16) — —
9,956
9,696
Gamber-Johnson Holdings, LLC (10) (13) Manufacturer of Ruggedized Computer Mounting Systems LIBOR Plus 7.50% (Floor 2.00%), Current Coupon 8.50%, Secured Debt (Maturity - June 24, 2021) (8) 1 month LIBOR 4,755
4,704
4,755
Member Units (2,155 units) (16) — —
3,711
13,352
8,415
18,107
Guerdon Modular Holdings, Inc. (10) (13) Multi-Family and Commercial Modular Construction Company 16.00% Secured Debt (Maturity - October 1, 2019) (18) None 3,147
3,116
—
LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.60%, Secured Debt (Maturity - October 1, 2019) (8) (18) 3 month LIBOR 253
252
—
Common Stock (53,008 shares) — —
746
—
Class B Preferred Stock (101,250 shares) — —
285
—
4,399
—
Gulf Publishing Holdings, LLC (10) (13) Energy Industry Focused Media and Publishing 12.50% Secured Debt (Maturity - April 29, 2021) None 3,134
3,112
3,124
LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 11.21%, Secured Debt (Maturity - September 30, 2020) (8) 1 month LIBOR 70
70
70
Member Units (920 units) — —
920
605
4,102
3,799
Harris Preston Fund Investments (9) (15) Investment Partnership LP Interests (HPEP 3, LP) (Fully diluted 8.20%) — —
2,474
2,474
Hawk Ridge Systems, LLC (9) (10) (13) Value-Added Reseller of Engineering Design and Manufacturing Solutions 11.00% Secured Debt (Maturity - December 2, 2021) None 3,350
3,318
3,350
LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.71%, Secured Debt (Maturity - December 2, 2021) (8) 1 month LIBOR 150
148
148
Preferred Member Units (56 units) (16) — —
713
1,975
Preferred Member Units (HRS Services, ULC) (56 units) — —
38
105
4,217
5,578
J & J Services, Inc. (10) (13) Provider of Dumpster Rental and Related Services 11.50% Secured Debt (Maturity - October 31, 2024) None 4,400
4,315
4,315
Preferred Member Units (704 units) — —
1,790
1,790
6,105
6,105
Kickhaefer Manufacturing Company, LLC (10) (13) Precision Metal Parts Manufacturing 11.50% Secured Debt (Maturity - October 31, 2023) None 6,300
6,141
6,146
9.00% Secured Debt (Maturity - October 31, 2048) None 995
977
977
Preferred Member Units (145 units) — —
3,060
3,060
Member Units (KMC RE Investor, LLC) (200 units) (16) — —
248
290
10,426
10,473

Market Force Information, Inc. (10) (13) Provider of Customer Experience Management Services 6.00% Current / 6.00% PIK Secured Debt (Maturity - July 28, 2022) 3 month LIBOR $ 5,792
$ 5,732
$ 5,625
8.00% Secured Debt (Maturity - July 28, 2022) None 697
697
674
Member Units (170,000 units) — —
4,160
1,319
10,589
7,618
M.H. Corbin Holding LLC (10) (13) Manufacturer and Distributor of Traffic Safety Products 5.00% Current / 5.00% PIK Secured Debt (Maturity - March 31, 2022) None 2,213
2,191
2,213
Preferred Member Units (16,500 units) — —
1,100
1,192
Common Units (1,000 units) — —
1,500
5
4,791
3,410
Mystic Logistics Holdings, LLC (10) (13) Logistics and Distribution Services Provider for Large Volume Mailers 12.00% Secured Debt (Maturity - August 15, 2019) (19) None 1,563
1,561
1,561
Common Stock (1,468 shares) (16) — —
680
2,103
2,241
3,664
NexRev, LLC (10) (13) Provider of Energy Efficiency Products & Services 11.00% Secured Debt (Maturity - February 28, 2023) None 4,397
4,331
4,331
Preferred Member Units (21,600,000 units) (16) — —
1,720
1,577
6,051
5,908
NuStep, LLC (10) (13) Designer, Manufacturer and Distributor of Fitness Equipment 12.00% Secured Debt (Maturity - January 31, 2022) None 4,949
4,901
4,901
Preferred Member Units (102 units) — —
2,550
2,550
7,451
7,451
SI East, LLC (10) (13) Rigid Industrial Packaging Manufacturing 9.50% Secured Debt (Maturity - August 31, 2023) None 10,988
10,849
10,988
Preferred Member Units (52 units) (16) — —
2,000
2,734
12,849
13,722
Tedder Acquisition, LLC (10) (13) Manufacturer of Firearm Holsters and Accessories 12.00% Secured Debt (Maturity - August 31, 2023) None 4,100
4,003
4,066
12.00% Secured Debt (Maturity - August 31, 2020) None 160
158
158
Preferred Member Units (110 units) — —
2,034
2,034
6,195
6,258
Trantech Radiator Topco, LLC (10) (13) Transformer Cooling Products and Services 12.00% Secured Debt (Maturity - May 31, 2024) None 2,300
2,226
2,237
Common Stock (154 shares) (16) — —
1,164
1,164
3,390
3,401

Subtotal Affiliate Investments (4) (15% of total investments at fair value) $ 144,006
$ 154,158

Non-Control/Non-Affiliate Investments (5)
AAC Holdings Inc. (8) Substance Abuse Treatment Service Provider LIBOR Plus 11.75% (Floor 1.00%), Current Coupon 16.75%, Secured Debt (Maturity - June 30, 2023) (18) 3 month LIBOR $ 14,449
$ 14,078
$ 9,392
LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 13.03%, Secured Debt (Maturity - April 15, 2020) 3 month LIBOR 2,227
2,069
2,172
16,147
11,564
Adams Publishing Group, LLC (8) (11) Local Newspaper Operator LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.44%, Secured Debt (Maturity - July 3, 2023) 3 month LIBOR 6,158
6,064
6,158
LIBOR Plus 7.50% (Floor 1.50%), Current Coupon 9.45%, Secured Debt (Maturity - July 3, 2023) 3 month LIBOR 197
184
197
PRIME Plus 4.00% (Floor 1.50%), Current Coupon 8.75%, Secured Debt (Maturity - July 3, 2023) PRIME 5,000
4,930
5,000
11,178
11,355
ADS Tactical, Inc. (8) (11) Value-Added Logistics and Supply Chain Solutions Provider to the Defense Industry LIBOR Plus 6.25% (Floor 0.75%), Current Coupon 8.10%, Secured Debt (Maturity - July 26, 2023) 2 month LIBOR $ 15,827
$ 15,817
$ 15,827
Aethon United BR, LP (8) (11) Oil & Gas Exploration & Production LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.46%, Secured Debt (Maturity - September 8, 2023) (14) 1 month LIBOR 7,000
6,918
6,846
Allen Media, LLC (8) Operator of Cable Television Networks LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.44%, Secured Debt (Maturity - August 30, 2023) 3 month LIBOR 16,270
15,895
15,863
American Nuts, LLC (8) (11) Roaster, Mixer and Packager of Bulk Nuts and Seeds LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 11.60%, Secured Debt (Maturity - April 10, 2023) 3 month LIBOR 12,241
11,950
12,241
American Teleconferencing Services, Ltd. (8) Provider of Audio Conferencing and Video Collaboration Solutions LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.32%, Secured Debt (Maturity - June 8, 2023) 3 month LIBOR 14,150
13,715
8,511
American Trailer Rental Group LLC (10) (13) Provider of Short Term Trailer and Container Rental LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.34%, Secured Debt (Maturity - June 7, 2022) (8) 1 month LIBOR 6,772
6,659
6,772
Member Units (Milton Meisler Holdings, LLC) (12,139 units) — —
1,214
2,135
7,873
8,907
APTIM Corp Engineering, Construction and Procurement 7.75% Secured Debt (Maturity - June 15, 2025) None 6,952
6,255
4,171
Arcus Hunting, LLC (8) (11) Manufacturer of Bowhunting and Archery Products and Accessories LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 9.10%, Secured Debt (Maturity - January 13, 2020) 1 month LIBOR 6,928
6,932
6,928
ASC Ortho Management Company, LLC (11) Provider of Orthopedic Services LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.60%, Secured Debt (Maturity - August 31, 2023) (8) 3 month LIBOR 4,543
4,466
4,502
13.25% PIK Secured Debt (Maturity - December 1, 2023) (14) None 1,793
1,754
1,793
6,220
6,295
ATI Investment Sub, Inc. (8) Manufacturer of Solar Tracking Systems LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.06%, Secured Debt (Maturity - June 22, 2021) 1 month LIBOR 2,885
2,842
2,853
ATX Networks Corp. (8) (9) Provider of Radio Frequency Management Equipment LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.94%, Current Coupon plus PIK 8.94%, Secured Debt (Maturity - June 11, 2021) 3 month LIBOR 13,638
13,520
12,786
BarFly Ventures, LLC (11) Casual Restaurant Group 12.00% Secured Debt (Maturity - August 31, 2020) None 3,395
3,378
2,580
Warrants (.410 equivalent units, Expiration - August 31, 2025) — —
158
—
Options (.99 equivalent units) — —
202
—
3,738
2,580
BBB Tank Services, LLC (10) (13) Maintenance, Repair and Construction Services to the Above-Ground Storage Tank Market LIBOR Plus 11.00% (Floor 1.00%), Current Coupon 12.71%, Secured Debt (Maturity - April 8, 2021) (8) 1 month LIBOR 1,200
1,197
1,177
Preferred Stock (non-voting) (28,280 units) (16) — —
33
33
Member Units (200,000 units) — —
200
73
1,430
1,283
Berry Aviation, Inc. (11) Charter Airline Services 10.50% Current / 1.50% PIK, Secured Debt (Maturity - January 6, 2024) (14) None 4,548
4,494
4,548
Preferred Member Units (Berry Acquisition, LLC) (1,548,387 units, 8.00% cumulative) (16) — — 1,548
776
Preferred Member Units (Berry Acquisition, LLC) (122,416 units, 16.00% cumulative) (16) — — 122
125
6,164
5,449
BigName Commerce, LLC (8) (11) Provider of Envelopes and Complimentary Stationery Products LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.35%, Secured Debt (Maturity - May 11, 2022) 3 month LIBOR 2,232
2,218
2,232
Binswanger Enterprises, LLC (11) Glass Repair and Installation Service Provider LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.41%, Secured Debt (Maturity - March 9, 2022) (8) 3 month LIBOR $ 13,635
$ 13,345
$ 13,635
Member Units (1,050,000 units) — —
1,050
950
14,395
14,585
Bluestem Brands, Inc. (8) Multi-Channel Retailer of General Merchandise LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.30%, Secured Debt (Maturity - November 6, 2020) 3 month LIBOR 11,391
11,339
8,550
Boccella Precast Products, LLC (10) (13) Manufacturer of Precast Hollow Core Concrete LIBOR Plus 10.00% (Floor 1.00%), Current Coupon 14.10%, Secured Debt (Maturity - June 30, 2022) (8) 3 month LIBOR 3,311
3,262
3,311
Member Units (540,000 units) (16) — —
564
1,567
3,826
4,878
Brightwood Capital Fund Investments (9) (15) Investment Partnership LP Interests (Brightwood Capital Fund III, LP) (Fully diluted 1.60%) (16) — —
3,815
3,018
LP Interests (Brightwood Capital Fund IV, LP) (Fully diluted 0.80%) (16) — —
9,037
9,009
12,852
12,027
Buca C, LLC (10) (13) Casual Restaurant Group LIBOR Plus 9.25% (Floor 1.00%), Current Coupon 10.94%, Secured Debt (Maturity - June 30, 2020) (8) 1 month LIBOR 12,669
12,639
12,530
Preferred Member Units (4 units, 6.00% cumulative) (16) — —
3,040
3,135
15,679
15,665
Cadence Aerospace, LLC (8) (11) Aerospace Manufacturing LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.43%, Secured Debt (Maturity - November 14, 2023) 3 month LIBOR 19,272
19,135
19,273
CAI Software, LLC (10) (13) Provider of Specialized Enterprise Resource Planning Software 11.00% Secured Debt (Maturity - December 7, 2023) None 2,290
2,299
2,290
Member Units (16,742 units) (16) — —
188
1,303
2,487
3,593
Cenveo Corporation Provider of Digital Marketing Agency Services LIBOR Plus 9.50% (Floor 1.00%), Current Coupon 11.21%, Secured Debt (Maturity - June 7, 2023) (8) 3 month LIBOR 4,449
4,177
4,449
Common Stock (138,889 shares) — — 4,163
2,292
8,340
6,741
Chisholm Energy Holdings, LLC (8) (11) Oil and Gas Exploration and Production LIBOR Plus 6.25% (Floor 1.50%), Current Coupon 8.16%, Secured Debt (Maturity - May 15, 2026) (14) 3 month LIBOR 3,571
3,477
3,489
Clarius BIGS, LLC (11) Prints & Advertising Film Financing 15.00% PIK Secured Debt (Maturity - January 5, 2015) (18) None 2,100
1,842
29
20.00% PIK Secured Debt (Maturity - January 5, 2015) (18) None 763
670
11
2,512
40
Clickbooth.com, LLC (8) (11) Provider of Digital Advertising Performance Marketing Solutions LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.59%, Secured Debt (Maturity - December 5, 2022) 3 month LIBOR 2,663
2,625
2,663
Construction Supply Investments, LLC (11) Distribution Platform of Specialty Construction Materials to Professional Concrete and Masonry Contractors Member units (42,207 units) — —
4,866
7,669
CTVSH, PLLC (8) (11) (13) Emergency Care and Specialty Service Animal Hospital LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.91%, Secured Debt (Maturity - August 3, 2022) 1 month LIBOR 2,525
2,494
2,525
Datacom, LLC (10) (13) Technology and Telecommunications Provider 5.25% Current / 5.25% PIK, Current Coupon 10.50% Secured Debt (Maturity - May 31, 2021) (18) None 1,376
1,315
1,116
8.00% Secured Debt (Maturity - May 31, 2021) (18) None 200
200
179
Class A Preferred Member Units (1,530 units) — —
144
—
Class B Preferred Member Units (717 units) — —
670
—
2,329
1,295
Digital River, Inc. (8) Provider of Outsourced e-Commerce Solutions and Services LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.90%, Secured Debt (Maturity - February 12, 2021) 3 month LIBOR $ 9,759
$ 9,725
$ 9,734
DTE Enterprises, LLC (11) Industrial Powertrain Repair and Services LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.24%, Secured Debt (Maturity - April 13, 2023) (8) 1 month LIBOR 10,992
10,831
10,992
Class AA Preferred Member Units (non-voting) (16) — —
838
859
Class A Preferred Member Units (776,316 units) (16) — —
776
1,490
12,445
13,341
Dynamic Communities, LLC (8) (11) Developer of Business Events and Online Community Groups LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.71%, Secured Debt (Maturity - July 17, 2023) 3 month LIBOR 5,425
5,341
5,425
Epic Y-Grade Services, LP (8) NGL Transportation & Storage LIBOR Plus 6.00% (Floor 0.00%), Current Coupon 8.04%, Secured Debt (Maturity - June 13, 2024) 3 month LIBOR 10,275
10,115
10,050
Evergreen Skills Lux S.á r.l.
(d/b/a Skillsoft) (8) (9)
Technology-Based Performance Support Solutions LIBOR Plus 8.25% (Floor 1.00%), Current Coupon 10.45%, Secured Debt (Maturity - April 28, 2022) (14) 6 month LIBOR 10,901
10,669
3,060
Felix Investments Holdings II, LLC (8) (11) Oil and Gas Exploration and Production LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.40%, Secured Debt (Maturity - August 9, 2022) 1 month LIBOR 5,000
4,937
5,000
Flavors Holdings, Inc. (8) Global Provider of Flavoring and Sweetening Products and Solutions LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.69%, Secured Debt (Maturity - April 3, 2020) 3 month LIBOR 10,719
10,667
10,076
GoWireless Holdings, Inc. (8) Provider of Wireless Telecommunications Carrier Services LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.30%, Secured Debt (Maturity - December 22, 2024) 3 month LIBOR 14,910
14,803
14,377
HDC/HW Intermediate Holdings, LLC (8) (11) Managed Services and Hosting Provider LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.45%, Secured Debt (Maturity - December 21, 2023) 3 month LIBOR 1,961
1,928
1,958
Hoover Group, Inc. (8) (9) (11) Provider of Storage Tanks and Related Products to the Energy and Petrochemical Markets LIBOR Plus 7.25% (Floor 1.00%), Current Coupon 9.16%, Secured Debt (Maturity - January 28, 2021) 3 month LIBOR 22,045
21,529
20,391
Hunter Defense Technologies, Inc. (8) (11) Provider of Military and Commercial Shelters and Systems LIBOR Plus 7.00% (Floor 1.00%), Current Coupon 8.94%, Secured Debt (Maturity - March 29, 2023) 3 month LIBOR 15,944
15,676
15,944
HW Temps, LLC (10) (13) Temporary Staffing Solutions 8.00% Secured Debt (Maturity - March 29, 2023) None 2,545
2,498
2,230
Hydrofarm Holdings, LLC (8) (11) Wholesaler of Horticultural Products LIBOR Plus 10.00%, Current Coupon 3.54% / 8.26% PIK, Current Coupon Plus PIK 11.80%, Secured Debt (Maturity - May 12, 2022) 1 month LIBOR 7,658
7,573
6,410
Hyperion Materials & Technologies, Inc. (8) Manufacturer of Cutting and Machine Tools and Specialty Polishing Compounds LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.30%, Secured Debt (Maturity - August 28, 2026) 1 month LIBOR 7,500
7,355
7,425
iEnergizer Limited (8) (9) (11) Provider of Business Outsourcing Solutions LIBOR Plus 6.00% (Floor 1.25%), Current Coupon 7.79%, Secured Debt (Maturity - April 17, 2024) 1 month LIBOR 12,963
12,848
12,963
Implus Footcare, LLC (8) (11) Provider of Footwear and Related Accessories LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.19%, Secured Debt (Maturity - April 30, 2024) 3 month LIBOR 16,977
16,644
16,655
Independent Pet Partners Intermediate Holdings, LLC (11) Omnichannel Retailer of Specialty Pet Products LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.89%, Secured Debt (Maturity - November 19, 2023) (8) 3 month LIBOR 14,376
14,120
14,376
Member Units (1,191,667 units) — —
1,192
964
15,312
15,340

Industrial Services Acquisitions, LLC (11) Industrial Cleaning Services 6.00% Current / 7.00% PIK, Current Coupon 13.00%, Unsecured Debt (Maturity - December 17, 2022) (17) None $ 12,014
$ 11,990
$ 12,014
Member Units (Industrial Services Investments, LLC) (336 units; 10.00% cumulative) — —
202
202
Preferred Member Units (Industrial Services Investments, LLC) (187 units; 20.00% cumulative) — —
124
124
Member Units (Industrial Services Investments, LLC) (2,100 units) — —
2,100
1,191
14,416
13,531
Interface Security Systems, L.L.C. (8) (11) Commercial Security and Alarm Services LIBOR Plus 7.00% (Floor 1.75%), Current Coupon 8.80%, Secured Debt (Maturity - August 7, 2023) 1 month LIBOR 7,500
7,363
7,363
Intermedia Holdings, Inc. (8) Unified Communications as a Service LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.80%, Secured Debt (Maturity - July 19, 2025) 1 month LIBOR 3,516
3,487
3,525
Invincible Boat Company, LLC (8) (11) Manufacturer of Sport Fishing Boats LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.45%, Secured Debt (Maturity - August 28, 2025) 3 month LIBOR 9,873
9,773
9,773
Isagenix International, LLC (8) Direct Marketer of Health and Wellness Products LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.70%, Secured Debt (Maturity - June 14, 2025) 3 month LIBOR 5,943
5,893
4,273
JAB Wireless, Inc. (8) (11) Fixed Wireless Broadband Provider LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.74%, Secured Debt (Maturity - May 2, 2023) 3 month LIBOR 14,775
14,668
14,775
Jackmont Hospitality, Inc. (8) (11) Franchisee of Casual Dining Restaurants LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.45%, Secured Debt (Maturity - May 26, 2021) 1 month LIBOR 8,119
8,111
8,119
Joerns Healthcare, LLC (8) Manufacturer and Distributor of Health Care Equipment & Supplies LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.91%, Secured Debt (Maturity - August 21, 2024) 3 month LIBOR 3,335
3,276
3,276
Common Stock (472,579 shares) — —
3,678
3,678
6,954
6,954
Kemp Technologies, Inc. (8) (11) Provider of Application Delivery Controllers LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.17%, Secured Debt (Maturity - March 29, 2024) 1 month LIBOR 7,463
7,326
7,463
Knight Energy Services LLC (11) Oil and Gas Equipment & Services 8.50% PIK Secured Debt (Maturity - February 9, 2024) None 828
828
828
Class A-2 Shares (25,692 units) — —
1,843
1,843
2,671
2,671
Kore Wireless Group, Inc. (8) Mission Critical Software Platform LIBOR Plus 5.50% (Floor 1.00%) PIK, 7.44%, Secured Debt (Maturity - December 20, 2024) 3 month LIBOR 6,061
6,036
6,023
Larchmont Resources, LLC (9) Oil & Gas Exploration & Production LIBOR Plus 7.00% (Floor 1.00%) PIK, 8.89% PIK, Secured Debt (Maturity - August 7, 2020) (8) 3 month LIBOR 3,614
3,638
3,352
Member units (Larchmont Intermediate Holdco, LLC) (4,806 units) — —
601
1,201
4,239
4,553
Laredo Energy VI, LP (8) (11) Oil & Gas Exploration & Production LIBOR Plus 9.63% (Floor 2.00%), Current Coupon 5.38% / 6.26% PIK, Current Coupon PIK 11.64%, Secured Debt (Maturity - November 19, 2021) 3 month LIBOR 11,228
11,093
10,554
Lightbox Holdings, L.P. (8) Provider of Commercial Real Estate Software LIBOR Plus 5.00% (Floor 0.00%), Current Coupon 6.74%, Secured Debt (Maturity - May 9, 2026) 1 month LIBOR 4,975
4,904
4,913
LL Management, Inc. (8) (11) Medical Transportation Service Provider LIBOR Plus 6.50% (Floor 1.00%), Current Coupon 8.56%, Secured Debt (Maturity - September 25, 2023) 3 month LIBOR 13,719
13,590
13,719
Logix Acquisition Company, LLC (8) (11) Competitive Local Exchange Carrier LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.55%, Secured Debt (Maturity - December 22, 2024) (23) 1 month LIBOR 12,756
12,682
12,628
LSF9 Atlantis Holdings, LLC (8) Provider of Wireless Telecommunications Carrier Services LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.74%, Secured Debt (Maturity - May 1, 2023) 1 month LIBOR 13,124
13,059
12,157
Lulu’s Fashion Lounge, LLC (8) (11) Fast Fashion E-Commerce Retailer LIBOR Plus 9.00% (Floor 1.00%), Current Coupon 10.80%, Secured Debt (Maturity - August 28, 2022) 1 month LIBOR $ 5,668
$ 5,533
$ 5,554
Lynx FBO Operating LLC (11) Fixed Based Operator in the General Aviation Industry LIBOR Plus 5.75% (Floor 1.00%), Current Coupon 7.86%, Secured Debt (Maturity - September 30, 2024) (8) 3 month LIBOR 13,750
13,451
13,487
Member Units (3,704 units) — —
500
500
13,951
13,987
Mac Lean-Fogg Company (11) Manufacturer and Supplier for Auto and Power Markets LIBOR Plus 5.00% (Floor 0.00%), Current Coupon 6.80%, Secured Debt (Maturity - December 22, 2028) (8) 1 month LIBOR 7,135
7,083
7,135
Preferred Stock (650 shares; 4.50% Cash / 9.25% PIK, cumulative) (16) — —
771
771
7,854
7,906
Mariner CLO 7, Ltd. (9) (15) Structured Finance Subordinated Structured Notes (estimated yield of 8.30% due April 30, 2032) — 25,935
22,810
19,028
Mills Fleet Farm Group LLC (8) (11) Omnichannel Retailer of Work, Farm and Lifestyle Merchandise LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.29% / 0.75% PIK, Current Coupon Plus PIK 9.04%, Secured Debt (Maturity - October 24, 2024) 3 month LIBOR 14,883
14,556
14,184
NinjaTrader, LLC (8) (11) Operator of Futures Trading Platform LIBOR Plus 6.00% (Floor 1.50%), Current Coupon 9.04%, Secured Debt (Maturity - December 18, 2024) 1 month LIBOR 9,675
9,490
9,490
NNE Partners, LLC (8) (11) Oil & Gas Exploration & Production LIBOR Plus 8.00%, (Floor 0.00%), Current Coupon 9.91%, Secured Debt (Maturity - March 2, 2022) 3 month LIBOR 20,417
20,320
20,172
North American Lifting Holdings, Inc. (8) Crane Service Provider LIBOR Plus 4.50% (Floor 1.00%), Current Coupon 6.44%, Secured Debt (Maturity - November 27, 2020) 3 month LIBOR 6,179
5,959
5,228
Novetta Solutions, LLC (8) Provider of Advanced Analytics Solutions for Defense Agencies LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.80%, Secured Debt (Maturity - October 17, 2022) 1 month LIBOR 14,823
14,573
14,604
NTM Acquisition Corp. (8) Provider of B2B Travel Information Content LIBOR Plus 6.25% (Floor 1.00%), Current Coupon 8.05%, Secured Debt (Maturity - June 7, 2022) 1 month LIBOR 4,518
4,490
4,518
Pasha Group (8) Diversified Logistics and Transportation Provided LIBOR Plus 7.50% (Floor 1.00%), Current Coupon 9.35%, Secured Debt (Maturity - January 26, 2023) 2 month LIBOR 8,984
8,781
9,074
Permian Holdco 2, Inc. Storage Tank Manufacturer 14.00% PIK Unsecured Debt (Maturity - October 15, 2021) (17) None 1,138
1,138
851
18.00% PIK Unsecured Debt (Maturity - June 30, 2022) (17) None 794
794
794
Series A Preferred Shares (Permian Holdco 1, Inc.) (386,255 shares) — —
1,997
250
Common Shares (Permian Holdco 1, Inc.) (386,255 shares) — —
—
—
3,929
1,895
PricewaterhouseCoopers Public Sector LLP (8) Provider of Consulting Services to Governments LIBOR Plus 8.00% (Floor 0.00%), Current Coupon 9.80%, Secured Debt (Maturity - May 1, 2026) (14) 1 month LIBOR 14,100
14,057
13,889
RM Bidder, LLC (11) Scripted and Unscripted TV and Digital Programming Provider Common Stock (1,854 shares) — —
31
12
Series A Warrants (124,915 equivalent units, Expiration - October 20, 2025) — —
284
—
Series B Warrants (93,686 equivalent units, Expiration - October 20, 2025) — —
—
—
315
12
Salient Partners, LP (8) (11) Provider of Asset Management Services LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.80%, Secured Debt (Maturity - June 9, 2021) 1 month LIBOR 6,450
6,511
6,450

Slick Software Holdings LLC (10) (13) Text Messaging Marketing Platform 14.00% Secured Debt (Maturity - September 13, 2023) None $ 1,590
$ 1,336
$ 1,336
Member units (17,500 units) (16) — —
175
270
Warrants (4,521 equivalent units, Expiration - September 13, 2028) — —
45
73
1,556
1,679
Smart Modular Technologies, Inc. (8) (9) (11) Provider of Specialty Memory Solutions LIBOR Plus 6.25%, (Floor 1.00%), Current Coupon 8.16%, Secured Debt (Maturity - August 9, 2022) 3 month LIBOR 18,484
18,340
18,669
TEAM Public Choices, LLC (8) (11) Home-Based Care Employment Service Provider LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.80%, Secured Debt (Maturity - September 20, 2024) 1 month LIBOR 9,626
9,530
9,529
TE Holdings, LLC Oil & Gas Exploration & Production Common Units (72,785 units) — —
728
—
TGP Holdings III LLC (8) Outdoor Cooking & Accessories LIBOR Plus 8.50% (Floor 1.00%), Current Coupon 10.30%, Secured Debt (Maturity - September 25, 2025) (14) 1 month LIBOR 5,000
5,000
4,675
TMC Merger Sub Corp (8) Refractory & Maintenance Services Provider LIBOR Plus 6.75% (Floor 1.00%), Current Coupon 8.56%, Secured Debt (Maturity - October 31, 2022) (25) 1 month LIBOR 16,835
16,691
16,689
TOMS Shoes, LLC Global Designer, Distributor, and Retailer of Casual Footwear LIBOR Plus 5.50% (Floor 1.00%), Current Coupon 7.46%, Secured Debt (Maturity - October 30, 2020) 3 month LIBOR 571
571
571
LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.96%, Secured Debt (Maturity - December 31, 2025) (8) (14) 3 month LIBOR 1,637
1,637
1,637
Member Units (13,866 units) — —
220
220
2,428
2,428
USA DeBusk LLC (8) (11) Provider of Industrial Cleaning Services LIBOR Plus 5.75%, (Floor 1.00%), Current Coupon 7.54%, Secured Debt (Maturity - October 22, 2024) 1 month LIBOR 20,000
19,615
19,615
U.S. Telepacific Corp. (8) Provider of Communications and Managed Services LIBOR Plus 5.00% (Floor 1.00%), Current Coupon 6.94%, Secured Debt (Maturity - May 2, 2023) 3 month LIBOR 12,500
12,297
12,032
Vida Capital, Inc. (8) Alternative Asset Manager LIBOR Plus 6.00% (Floor 0.00%), Current Coupon 7.93%, Secured Debt (Maturity - October 1, 2026) 3 month LIBOR 7,500
7,391
7,425
VIP Cinema Holdings, Inc. (8) Supplier of Luxury Seating to the Cinema Industry LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 9.91%, Secured Debt (Maturity - March 1, 2023) (18) 3 month LIBOR 8,750
8,724
4,611
Vistar Media, Inc. (11) Operator of Digital Out-of-Home Advertising Platform LIBOR Plus 8.00% (Floor 1.00%), Current Coupon 10.00%, Secured Debt (Maturity - April 3, 2023) (8) 3 month LIBOR 4,963
4,790
4,963
Warrants (69,675 equivalent units, Expiration - April 3, 2029) — —
—
1,630
Preferred Stock (70,207 shares) — —
767
1,610
5,557
8,203
Volusion, LLC (10) (13) Provider of Online Software-as-a-Service eCommerce Solutions 11.50% Secured Debt (Maturity - January 24, 2020) None 8,672
8,611
8,290
8.00% Unsecured Convertible Debt (Maturity - November 16, 2023) None 175
175
124
Preferred Member Units (2,090,001 units) — —
6,000
6,000
Warrants (784,866.80 equivalent units, Expiration - January 26, 2025) — —
1,104
64
15,890
14,478
Wireless Vision Holdings, LLC (8) (11) Provider of Wireless Telecommunications Carrier Services LIBOR Plus 9.65% (Floor 1.00%), Current Coupon 11.66% / 1.00% PIK, Current Coupon Plus PIK 12.66%, Secured Debt (Maturity - September 29, 2022) (23) 1 month LIBOR 7,148
7,023
7,148
LIBOR Plus 9.91% (Floor 1.00%), Current Coupon 11.61% / 1.00% PIK, Current Coupon Plus PIK 12.61%, Secured Debt (Maturity - September 29, 2022) (23) 1 month LIBOR 6,213
6,029
6,213
13,052
13,361
YS Garments, LLC (8) Designer and Provider of Branded Activewear LIBOR Plus 6.00% (Floor 1.00%), Current Coupon 7.62%, Secured Debt (Maturity - August 9, 2024) 1 month LIBOR $ 7,266
$ 7,206
$ 7,201
Subtotal Non-Control/Non-Affiliate Investments (5) (82% of total portfolio investments at fair value) $ 878,632
$ 838,643

Total Portfolio Investments $ 1,040,055
$ 1,027,597

Short Term Investments (20)
Fidelity Institutional Money Market Funds (21) — Prime Money Market Portfolio, Class III Shares — —
$ 3,482
$ 3,482
US Bank Money Market Account (21) — — — —
15,973
15,973

Total Short Term Investments $ 19,455
$ 19,455

~~(1) All investments are Middle Market portfolio investments, unless otherwise noted. All of the assets of the Company are encumbered as security for the Company’s credit agreements. See Note 5 —~~ ~~Borrowings.~~

~~(2) Debt investments are income producing, unless otherwise noted. Equity investments and warrants are non-income producing, unless otherwise noted.~~

~~(3) See Note 3 —~~ ~~Fair Value Hierarchy for Investments~~ ~~for summary geographic location of portfolio companies.~~

(4) Affiliate investments are defined by the 1940 Act, as investments in which between 5% and 25% of the voting securities are owned, or an investment in an investment company’s investment adviser, and the investments are not classified as Control investments. Fair value as of December 31, 2018 and December 31, 2019 along with transactions during the year ended December 31, 2019 in these affiliated investments were as follows (in thousands):

Twelve Months Ended December 31, 2019 Twelve Months Ended December 31, 2019
Affiliate Investments Fair Value at December 31, 2018
Gross Additions (Cost)^*

Gross Reductions (Cost)^**

Net Unrealized Gain (Loss)^***
Fair Value at December 31, 2019 Net Realized Gain (Loss) Interest Income Fee Income Dividend Income

AFG Capital Group, LLC
Term loan $ —
$ 260
$ (51 ) $ —
$ 209
$ —
$ 16
$ —
$ —
Member units 995
1
—
299
1,295
—
—
—
(10 )
Warrants 237
195
(260 ) (172 ) —
195
—
—
—
Analytical Systems Keco, LLC
Term loan —
1,403
(143 ) 6
1,266
—
69
—
—
Preferred member units —
800
—
—
800
—
—
—
—
Warrants —
79
—
—
79
—
—
—
—
Brewer Crane Holdings, LLC
Term loan 2,347
10
(124 ) —
2,233
—
297
—
—
Preferred member units 1,070
—
—
—
1,070
—
—
—
30
Centre Technologies Holdings, LLC
Term loan —
3,069
(67 ) 6
3,008
—
362
30
—
Preferred member units —
1,460
—
—
1,460
—
—
—
—
Chamberlin Holding, LLC
Term loan 4,933
28
(608 ) 90
4,443
—
633
75
—
Member units 4,735
—
—
1,274
6,009
—
—
—
276
Member units (Langfield RE, LLC) 183
79
—
101
363
—
—
—
90
Charlotte Russe, Inc.
Common stock 3,090
—
(6,236 ) 3,146
—
(5,430 ) (84 ) —
—
Charps, LLC
Term loan 2,975
452
(3,374 ) (53 ) —
—
236
—
—
Term loan —
500
—
—
500
—
4
2
—
Preferred member units 568
—
—
1,162
1,730
—
—
—
134
Clad-Rex Steel, LLC
Term loan 3,020
14
(300 ) (38 ) 2,696
—
348
—
—
Member units 2,653
—
—
(245 ) 2,408
—
1
—
67
Term loan (Clad-Rex Steel RE Investor, LLC) 288
—
(5 ) (1 ) 282
—
29
—
—
Member units (Clad-Rex Steel RE Investor, LLC) 88
—
—
27
115
—
—
—
—
Copper Trail Energy Fund I, LP
LP Interests —
4,029
(1,916 ) (470 ) 1,643
—
—
17
(250 )

Digital Products Holdings, LLC
Term loan $ 6,320
$ 42
$ (1,530 ) $ (221 ) $ 4,611
$ —
$ 756
$ —
$ —
Preferred member units 2,116
259
—
(1,081 ) 1,294
—
—
—
37
Direct Marketing Solutions, Inc.
Term loan 4,404
29
(574 ) 70
3,929
—
612
—
—
Preferred stock 3,725
—
—
1,326
5,051
—
—
—
—
Freeport Financial Funds
LP interests 10,980
798
(1,998 ) (84 ) 9,696
—
—
—
1,033
Gamber-Johnson Holdings, LLC
Term loan 5,371
23
(616 ) (23 ) 4,755
—
503
—
—
Member units 11,365
—
—
1,987
13,352
—
—
—
930
Guerdon Modular Holdings, Inc.
Term loan 3,001
11
(19 ) (2,993 ) —
—
(252 ) —
—
Term loan —
252
—
(252 ) —
—
2
3
—
Common stock —
—
—
—
—
—
—
—
—
Class B preferred stock —
—
—
—
—
—
—
—
—
Gulf Publishing Holdings, LLC
Term loan 3,131
14
(33 ) 12
3,124
—
412
—
—
Revolving line of credit —
80
(10 ) —
70
—
6
—
—
Member units 1,030
1
—
(426 ) 605
—
—
—
—
Harris Preston Fund Investments
LP interests (HPEP 3, LP) 1,733
741
—
—
2,474
—
—
—
—
LP interests (2717 HM, LP) 1,133
1,195
(2,328 ) —
—
—
—
—
—
Hawk Ridge Systems, LLC
Term loan 3,575
17
(225 ) (17 ) 3,350
—
379
—
—
Revolving line of credit —
151
(3 ) —
148
—
1
—
—
Preferred member units 1,815
—
—
160
1,975
—
—
—
94
Preferred member units (HRS Services, ULC) 95
—
—
10
105
—
—
—
—
HW Temps, LLC
Term loan 2,484
391
(2,875 ) —
—
—
—
—
—
Preferred member units 986
—
(986 ) —
—
—
—
—
—
J & J Services, Inc.
Term loan —
4,403
(88 ) —
4,315
—
90
—
—
Preferred member units —
1,790
—
—
1,790
—
—
—
—
Kickhaefer Manufacturer Company, LLC
Term loan 6,795
51
(700 ) —
6,146
—
846
—
—
Term loan 259
3
(266 ) 4
—
—
5
—
—
Term loan 991
—
(14 ) —
977
—
90
—
—
Preferred member units 3,060
—
—
—
3,060
—
—
—
27
Member units (KMC RE Investor, LLC) 248
—
—
42
290
—
—
—
—
Market Force Information, Inc.
Term loan 5,617
115
(1 ) (106 ) 5,625
—
787
—
—
Revolving line of credit 50
696
(50 ) (22 ) 674
—
33
—
—
Member units 3,275
485
—
(2,441 ) 1,319
—
—
—
—
M.H. Corbin Holding, LLC
Term loan 2,934
272
(1,115 ) 122
2,213
10
291
—
—
Preferred member units 250
—
—
(245 ) 5
—
—
—
—
Common units —
1,100
—
92
1,192
—
—
—
—
Mystic Logistics Holdings, LLC
Term loan 1,877
10
(320 ) (6 ) 1,561
—
222
—
—
Common stock 52
1
—
2,050
2,103
—
—
—
67
NexRev, LLC
Term loan 4,322
218
(161 ) (48 ) 4,331
—
506
—
—
Preferred member units 1,972
—
—
(395 ) 1,577
—
—
—
49
NuStep, LLC
Term loan 5,073
28
(200 ) —
4,901
—
655
—
—
Preferred member units 2,550
—
—
—
2,550
—
—
—
—
SI East, LLC
Term loan 11,582
41
(762 ) 127
10,988
—
1,227
—
—
Preferred member units 2,000
—
—
734
2,734
—
—
—
153
SoftTouch Medical Holdings, LLC
Term loan —
—
—
—
—
(41 ) —
—
—

Tedder Acquisition, LLC
Term loan $ 3,983
$ 20
$ (1 ) $ 64
$ 4,066
$ —
$ 518
$ —
$ —
Revolving line of credit 118
300
(260 ) —
158
—
16
1
—
Preferred member units 1,869
165
—
—
2,034
—
—
—
—
Trantech Radiator Topco, LLC
Term loan —
2,616
(378 ) (1 ) 2,237
—
195
—
—
Common stock —
1,164
—
—
1,164
—
—
—
17
Total Affiliate Investments $ 149,323
$ 29,861
$ (28,597 ) $ 3,571
$ 154,158
$ (5,266 ) $ 9,811
$ 128
$ 2,744

~~***~~ ~~Net unrealized gain (loss) does not included unrealized appreciation (depreciation) on unfunded commitments.~~

~~(5) Non-Control/Non-Affiliate investments are generally investments that are neither Control investments nor Affiliate investments.~~

(6) Control investments are defined by the 1940 Act as investments in which more than 25% of the voting securities are owned or where the ability to nominate greater than 50% of the board representation is maintained. Fair value as of December 31, 2018 and December 31, 2019 along with transactions during the year ended December 31, 2019 in these Control investments were as follows (in thousands):

Twelve Months Ended December 31, 2019 Twelve Months Ended December 31, 2019
Control Investments Fair Value at December 31, 2018
Gross Additions (Cost)^**

Gross Reductions (Cost)^***
Net Unrealized Gain (Loss) Fair Value at December 31, 2019 Net Realized Gain (Loss) Interest Income Fee Income Dividend Income

Copper Trail Energy Fund I, LP
LP interests $ 4,468
$ 23
$ (4,491 ) $ —
$ —
$ —
$ —
$ —
$ —
CTMH, LP
LP interests 872
—
—
—
872
—
—
—
—
GRT Rubber Technologies, LLC
Term loan 4,797
2,603
—
(4 ) 7,396
—
596
—
—
Member units 19,239
—
—
4,133
23,372
—
—
71
5,439
Harris Preston Fund Investments
LP Interests (2717 HM, LP) —
3,328
(497 ) 325
3,156
—
—
—
—
HMS-ORIX SLF LLC^*

Membership interests 26,351
—
(30,001 ) 3,650
—
(633 ) —
—
546
Total Control Investments $ 55,727
$ 5,954
$ (34,989 ) $ 8,104
$ 34,796
$ (633 ) $ 596
$ 71
$ 5,985

* Together with Orix, the Company previously co-invested through HMS-ORIX SLF LLC (“HMS-ORIX”), which was organized as a Delaware limited liability company. Pursuant to the terms of the limited liability company agreement and through representation on the HMS-ORIX Board of Managers, the Company and Orix each had 50% voting control of HMS-ORIX and together agreed on all portfolio and investment decisions as well as all other significant actions for HMS-ORIX. Although the Company owned more than 25% of the voting securities of HMS-ORIX, the Company did not have sole control over significant actions of HMS-ORIX for purposes of the 1940 Act or otherwise. HMS-ORIX was fully liquidated on September 26, 2019.

** Gross additions include increases in the cost basis of investments resulting from new portfolio investments, PIK interest, the amortization of unearned income, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.

*** Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more new securities and the movement of an existing portfolio company out of this category into a different category.

~~(7) Principal is net of repayments. Cost represents amortized cost which is net of repayments and adjusted for the amortization of premiums and/or accretion of discounts, as applicable.~~

~~(8) Index based floating interest rate is subject to contractual minimum interest rates, or floors.~~

(9) The investment is not a qualifying asset under the 1940 Act. A BDC may not acquire any asset other than qualifying assets unless, at the time the acquisition is made, qualifying assets represent at least 70% of the BDC’s total assets. As of December 31, 2019, approximately 12.2% of the Company’s investments were considered non-qualifying.

~~(10) Investment is classified as a Lower Middle Market investment.~~

~~(11) Investment is classified as a Private Loan portfolio investment.~~

(12) Investment or portion of investment is under contract to purchase and met trade date accounting criteria as of December 31, 2019. Settlement occurred or is scheduled to occur after December 31, 2019. See Note 2 — ~~Basis of Presentation and Summary of Significant Accounting Policies~~ ~~for Summary of Security Transactions.~~

~~(13) Investment serviced by Main Street pursuant to servicing arrangements with the Company.~~

~~(14) Second lien secured debt investment.~~

~~(15) Investment is classified as an Other Portfolio investment.~~

~~(16) Income producing through dividends or distributions.~~

~~(17) Unsecured debt investment.~~

~~(18) Investment is on non-accrual status as of December 31, 2019.~~

~~(19) Maturity date is under on-going negotiations with the portfolio company and other lenders, if applicable.~~

~~(20) Short term investments represent an investment in a fund that invests in highly liquid investments with average original maturity dates of three months or less.~~

~~(21) Effective yield as of December 31, 2019 was approximately 0.15% at US Bank Money Market Account and 1.24% at Fidelity Institutional Money Market Funds.~~

(22) The 1, 2, 3 and 6 month LIBOR rates were 1.76%, 1.83%, 1.91% and 1.91%, respectively, as of December 31, 2019. The actual LIBOR rate for each loan listed may not be the applicable LIBOR rate as of December 31, 2019, as the loan may have been priced or repriced based on a LIBOR rate prior to or subsequent to December 31, 2019. The prime rate was 4.75% as of December 31, 2019.

~~(24) [Reserved]~~

~~(26) The fair value of the investment was determined using significant unobservable inputs. See Note 3 —~~ ~~Fair Value Hierarchy for Investments~~.

~~See notes to the condensed consolidated financial statements.~~

~~HMS Income Fund, Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~Note 1 — Principal Business and Organization~~

~~HMS Income Fund, Inc.~~ (collectively with its consolidated subsidiaries, the “Company”) was formed as a Maryland corporation on November 28, 2011 under the General Corporation Law of the State of Maryland. The Company is an externally managed, non-diversified closed-end management investment company that has elected to be treated as a business development company, or BDC, under the Investment Company Act of 1940, ~~Act. The Company~~as amended (the “1940 Act”). MSC Income Fund has elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

As a result, MSC Income Fund generally will not pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that it distributes to its stockholders.

The Company’s primary investment objective is to generate current income through debt and equity investments. A secondary objective of the Company is to generate current dividend income and long-term capital appreciation through direct equity investments and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities. The Company’s portfolio strategy is to invest primarily in illiquid debt and equity securities issued by lower middle market (“LMM”) companies, which generally have annual revenues between $10 million and $150 million, and debt securities issued by middle market (“Middle Market”) companies that are generally larger in size than the LMM ~~companies, with annual revenues typically between $10 million and $3 billion.~~companies. The Company’s LMM and Middle Market portfolio investments generally range in size from $1 million to $15 million. The Company categorizes some of its investments in LMM companies and Middle Market companies as private loan (“Private Loan”) portfolio investments. Private Loan investments, often referred to in the debt markets as “club deals,” are investments, generally in debt instruments, that the Company originates on a collaborative basis with other investment funds. Private Loan investments are typically similar in size, structure, terms and conditions to investments the Company holds in its LMM portfolio and Middle Market portfolio. The Company’s portfolio also includes other portfolio (“Other Portfolio”) investments primarily consisting of investments managed by third parties, which differ from the typical profiles for the Company’s other types of investments.

The Company previously registered for sale up to 150,000,000 shares of common stock pursuant to a registration statement on Form N-2 (File No. 333-178548) which was initially declared effective by the Securities and Exchange Commission (the “SEC”) on June 4, 2012 (the “Initial Offering”). The Initial Offering terminated on December 1, 2015. The Company raised approximately $601.2 million under the Initial Offering, including proceeds from the distribution reinvestment plan of approximately $22.0 million. The Company also registered for sale up to $1,500,000,000 worth of shares of common stock (the “Offering”) pursuant to a new registration statement on Form N-2 (File No. 333-204659), as amended and declared effective by the SEC on May 1, 2017. With the approval of the Company’s board of directors, the Company closed the Offering to new investors effective September 30, 2017. Through March 31, 2020, the Company raised approximately $242.2 million in the Offering, including proceeds from the distribution reinvestment plan of approximately $110.5 million.

MSC Income Fund has six wholly owned subsidiaries. HMS Funding I LLC (“HMS Funding”) ~~and~~, MSIF Funding LLC (“MSIF Funding”), MSC Equity Holding, LLC (“MSC Equity Holding”) (formerly known as HMS Equity Holding, LLC) and MSC California Holdings GP LLC (“MSC California Holdings GP”) (formerly known as HMS ~~Equity Holding”)~~California Holdings, GP LLC) are ~~both wholly owned subsidiaries of the Company that were~~each organized as Delaware limited liability ~~companies.~~companies, MSC Equity Holding II, Inc. (“MSC Equity Holding II”) (formerly known as HMS Equity Holding II, Inc. ~~(“HMS Equity Holding II”~~) is ~~a wholly owned subsidiary of the Company that was~~ organized as a Delaware ~~corporation.~~corporation and MSC California Holdings LP (“MSC California Holdings”) (formerly known as HMS California Holdings ~~LP (“HMS California Holdings”)~~LP) is ~~a wholly owned subsidiary of the Company that was~~ organized as a Delaware limited partnership. ~~HMS California Holdings GP LLC (“HMS California Holdings GP”~~MSC Equity Holding and MSC Equity Holding II, (the “Taxable Subsidiaries”) ~~is a wholly owned subsidiary of the Company that was organized as a Delaware limited liability company.~~, which have elected to be taxable entities, primarily hold equity investments in portfolio companies which are “pass through” entities for tax purposes. HMS Funding was created ~~for~~in connection with the Deutsche Bank Credit Facility ~~(as defined below in Note 5 —~~ ~~Borrowings) in order~~ to function as a “Structured Subsidiary,” which is permitted to incur debt outside of the TIAA Credit Facility ~~(as defined below in Note 5 —~~ ~~Borrowings~~) since it is not a guarantor under the TIAA Credit Facility. ~~Two~~MSIF Funding was created on December 1, 2020 in connection with the JPM SPV Facility to function as a “Structured Subsidiary,” which is permitted to incur debt outside of the ~~Company’s wholly owned subsidiaries, HMS Equity Holding~~TIAA Credit Facility since it is not a guarantor under the TIAA Credit Facility. The Deutsche Bank Credit Facility, the TIAA Credit Facility, the JPM SPV Facility and ~~HMS Equity Holding II, have elected~~the Main Street Capital Term Loan (each defined below in “Note E- Debt”) are collectively referred to ~~be taxable entities~~herein as our “Credit Facilities”.

Unless otherwise noted or the context otherwise indicates, the terms “we,” “us,” “our,” and ~~primarily hold equity investments in certain portfolio companies which are “pass through” entities for tax purposes.~~the “Company” refer to MSC Income Fund and its consolidated subsidiaries.

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~~The~~

Prior to October 30, 2020, the business of the Company iswas managed by HMS Adviser LP ~~(the “Adviser”~~(“HMS Adviser”), a Texas limited partnership and affiliate of Hines Interests Limited Partnership (“Hines”), under an Investment Advisory and Administrative Services Agreement dated May 31, 2012 (as amended, the ~~“Investment~~“Original Investment Advisory Agreement”). ~~The~~Prior to October 30, 2020, the Company and ~~the~~HMS Adviser ~~have~~ retained MSC Adviser I, LLC ~~(the “Sub-Adviser”~~(“MSC Adviser”), a wholly owned subsidiary of Main Street Capital Corporation (“Main Street”), a New York Stock Exchange listed BDC, as the Company’s investment sub-adviser, pursuant to an Investment Sub-Advisory Agreement (the “Sub-Advisory Agreement”), to identify, evaluate, negotiate and structure prospective investments, make investment and portfolio management recommendations for approval by ~~the~~HMS Adviser, monitor the Company’s investment portfolio and provide certain ongoing administrative services to ~~the~~HMS Adviser. ~~The~~HMS Adviser and ~~the Sub-Adviser~~MSC Adviser are collectively referred to as the “Advisers,” and each is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. Upon the execution of the Sub-Advisory Agreement, Main Street became an affiliate of the Company. The ~~Company’s board of directors most recently reapproved the Investment Advisory Agreement and Sub-Advisory Agreement on May 23, 2019. The~~ Company engaged Hines Securities, Inc. (the “Dealer Manager”), an affiliate of ~~the~~HMS Adviser, to serve as the Dealer Manager for previously offered and sold shares of its common stock on a continuous basis pursuant to registration statements on Form N-2 that were filed with and declared effective by the SEC.

HMS Adviser entered into an asset purchase agreement, dated June 26, 2020 (the “Purchase Agreement”), with MSC Adviser, Main Street (solely for the purposes set forth in the Purchase Agreement) and Hines (solely for the purposes set forth in the Purchase Agreement). The Purchase Agreement contemplated that, subject to approval by the Company’s ~~offerings, if any.~~

~~Note 2~~Board of Directors and the Company’s stockholders, the Company would enter into the Investment Advisory and Administrative Services Agreement with MSC Income Fund as sole investment adviser (the “Investment Advisory Agreement”) and that the Original Investment Advisory Agreement and the Sub-Advisory Agreement would terminate concurrently therewith.

On June 29, 2020, the Company’s Board of Directors, including all of its independent directors, unanimously approved and recommended to the stockholders of the Company for approval the Investment Advisory Agreement. On October 28, 2020, the Company’s stockholders approved the Investment Advisory Agreement to take effect upon the closing of the transactions contemplated by the Purchase Agreement (collectively, the “Transaction”). Upon the closing of the Transaction on October 30, 2020, the Company entered into the Investment Advisory Agreement with MSC Adviser and MSC Adviser became the sole investment adviser to the Company. See “Note J — Related Party Transactions” for additional information regarding the Investment Advisory Agreement.

2. Basis of Presentation

The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The Company is an investment company following accounting and ~~Summary~~reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946, Financial Services—Investment Companies (“ASC 946”). For each of ~~Significant Accounting Policies~~

~~Basis~~the periods presented herein, the Company’s consolidated financial statements include the accounts of ~~Presentation~~MSC Income Fund and ~~Consolidation~~

its consolidated subsidiaries. The Investment Portfolio, as used herein, refers to all of the Company’s investments in Private Loan portfolio companies, LMM portfolio companies, Middle Market portfolio companies and Other Portfolio investments (see “Note C.2” for additional discussion of the Company’s Investment Portfolio). The Company’s results of operations and cash flows for the three months ended March 31, 2021 and 2020, and financial position as of March 31, 2021 and December 31, 2020, are presented on a consolidated basis. The effects of all intercompany transactions between MSC Income Fund and its consolidated subsidiaries have been eliminated in consolidation.

The accompanying ~~condensed~~unaudited consolidated financial statements of the Company ~~have been~~are presented in conformity with U.S. GAAP for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP are omitted. In the ~~instructions~~opinion of management, the unaudited consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results to ~~Form 10-Q~~be expected for the full year. Also, the unaudited financial statements and ~~accounting principles generally accepted~~notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020. Financial statements prepared on a U.S. GAAP basis require management to make estimates and assumptions that affect the amounts and disclosures

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reported in the ~~United States of America (“GAAP”)~~financial statements and ~~include~~accompanying notes. Such estimates and assumptions could change in the ~~accounts of~~future as more information becomes known, which could impact the amounts reported and disclosed herein.

Certain prior period information has been reclassified to conform to the current period presentation. The reclassification has no effect on the Company’s ~~wholly owned~~ consolidated ~~subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.~~ financial position or the consolidated results of operations as previously reported.

Principles of Consolidation

Under ~~Topic~~ASC 946,~~Financial Services- Investment Companies, of the Accounting Standards Codification, as amended (the “ASC 946”), of the Financial Accounting Standards Board (the “FASB”),~~ the Company is precluded from consolidating ~~portfolio company~~other entities in which it has equity investments, including those in which ~~the Company~~it has a controlling interest, unless the ~~portfolio company~~other entity is ~~a wholly-owned~~another investment company. An exception to this general principle in ASC 946 occurs if the Company ~~owns~~holds a ~~controlled~~controlling interest in an operating company ~~whose purpose is to provide~~that provides all or substantially all of its services directly to the Company ~~such~~or to its portfolio companies. The Company has determined that none of its portfolio investments qualify for this exception as ~~an investment adviser or transfer agent. None~~ of March 31, 2021. Accordingly, as noted above, the Company’s ~~investments qualifies~~consolidated financial statements include the financial position and operating results for ~~this exception.~~its wholly-owned subsidiaries, including the Taxable Subsidiaries. Therefore, the Company’s ~~portfolio company investments, including those in which the Company has a controlling interest, are~~Investment Portfolio is carried on the ~~Condensed Consolidated Balance Sheet~~consolidated balance sheet at fair value, as discussed ~~below,~~further in Note B.1., with ~~changes~~any adjustments to fair value recognized as “Net ~~Change in~~ Unrealized Appreciation (Depreciation) ~~on Investments”~~” on the ~~Condensed Consolidated Statements~~consolidated statements of ~~Operations~~operations until the investment is realized, usually upon exit, resulting in any gain or loss ~~on exit~~ being recognized as a ~~realized gain~~“Net Realized Gain (Loss).”

Portfolio Investment Classification

The Company classifies its Investment Portfolio in accordance with the requirements of the 1940 Act. Under the 1940 Act, (a) “Control Investments” are defined as investments in which the Company owns more than 25% of the voting securities or ~~loss. However,~~has rights to maintain greater than 50% of the board representation, (b) “Affiliate Investments” are defined as investments in which the Company owns between 5% and 25% (inclusive) of the voting securities and does not have rights to maintain greater than 50% of the board representation, and (c) “Non-Control/Non-Affiliate Investments” are defined as investments that are neither Control Investments nor Affiliate Investments. For purposes of determining the classification of its Investment Portfolio, the Company has excluded consideration of any voting securities or board appointment rights held by Main Street and other funds advised by Main Street.

NOTE B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Valuation of the Investment Portfolio

The Company accounts for its Investment Portfolio at fair value. As a result, the Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. ASC 820 requires the Company to assume that the portfolio investment is to be sold in the ~~event~~principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. Pursuant to its internal valuation process and the requirements under the 1940 Act, the Company performs valuation procedures on each of its portfolio investments quarterly.

The Company’s portfolio strategy calls for it to invest primarily in illiquid debt and equity securities issued by privately held, LMM companies and more liquid debt securities issued by Middle Market companies that are generally larger in size than the LMM companies. The Company categorizes some of its investments in LMM companies and Middle Market companies as Private Loan portfolio investments, which are primarily debt securities in privately held companies that have been originated through strategic relationships with other investment funds on a collaborative basis, and are often referred to in the debt markets as “club deals.” Private Loan investments are typically similar in size, structure, terms and conditions to investments the Company holds in its LMM portfolio and Middle Market portfolio. The Company’s portfolio also includes Other Portfolio investments which primarily consist of investments that are not consistent with the typical profiles for its LMM portfolio investments, Middle Market portfolio investments or Private

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Loan portfolio investments, including investments which may be managed by third parties. The Company’s portfolio investments may be subject to restrictions on resale.

Private Loan investments may include investments which have no established trading market or have established markets that are not active. LMM investments and Other Portfolio investments (excluding the Company’s investment in Signal Peak CLO 7, Ltd. (the “Signal CLO”)) generally have no established trading market while Middle Market investments and the Signal CLO generally have established markets that are not active. The Company determines in good faith the fair value of its Investment Portfolio pursuant to a valuation policy in accordance with ASC 820 and a valuation process approved by its Board of Directors and in accordance with the 1940 Act. The Company’s valuation policies and processes are intended to provide a consistent basis for determining the fair value of the Company’s Investment Portfolio.

For LMM portfolio investments, the Company generally reviews external events, including private mergers, sales and acquisitions involving comparable companies, and includes these events in the valuation process by using an enterprise value waterfall methodology (“Waterfall”) for its LMM equity investments and an income approach using a yield-to-maturity model (“Yield-to-Maturity”) for its LMM debt investments. For Middle Market portfolio investments, the Company primarily uses quoted prices in the valuation process. The Company determines the appropriateness of the use of third-party broker quotes, if any, ~~controlled subsidiary exceeds~~in determining fair value based on its understanding of the ~~tests~~level of ~~significance~~actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. For Middle Market and Private Loan portfolio investments in debt securities for which it has determined that third-party quotes or other independent pricing are not available or appropriate, the Company generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value the investment in a current hypothetical sale using the Yield-to-Maturity valuation method. For its Other Portfolio equity investments, the Company generally calculates the fair value of the investment primarily based on the net asset value (“NAV”) of the fund and adjusts the fair value for other factors deemed relevant that would affect the fair value of the investment. All of the valuation approaches for the Company’s portfolio investments estimate the value of the investment as if the Company were to sell, or exit, the investment as of the measurement date.

These valuation approaches consider the value associated with the Company’s ability to control the capital structure of the portfolio company, as well as the timing of a potential exit. For valuation purposes, “control” portfolio investments are composed of debt and equity securities in companies for which the Company has a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors. For valuation purposes, “non-control” portfolio investments are generally composed of debt and equity securities in companies for which the Company does not have a controlling interest in the equity ownership of the portfolio company or the ability to nominate a majority of the portfolio company’s board of directors.

Under the Waterfall valuation method, the Company estimates the enterprise value of a portfolio company using a combination of market and income approaches or other appropriate valuation methods, such as considering recent transactions in the equity securities of the portfolio company or third-party valuations of the portfolio company, and then performs a waterfall calculation by allocating the enterprise value over the portfolio company’s securities in order of their preference relative to one another. The enterprise value is the fair value at which an enterprise could be sold in a transaction between two willing parties, other than through a forced or liquidation sale. Typically, privately held companies are bought and sold based on multiples of earnings before interest, taxes, depreciation and amortization (“EBITDA”), cash flows, net income, revenues, or in limited cases, book value. There is no single methodology for estimating enterprise value. For any one portfolio company, enterprise value is generally described as a range of values from which a single estimate of enterprise value is derived. In estimating the enterprise value of a portfolio company, the Company analyzes various factors including the portfolio company’s historical and projected financial results. Due to SEC deadlines for the Company’s quarterly and annual financial reporting, the operating results of a portfolio company used in the current period valuation are generally the results from the period ended three months prior to such valuation date and may include unaudited, projected, budgeted or pro forma financial information and may require adjustments for non-recurring items or to normalize the operating results that may require significant judgment from the Company’s management. In addition, projecting future financial results requires significant judgment regarding future growth assumptions. In evaluating the operating results, the Company also analyzes the impact of exposure to litigation, loss of customers or other contingencies. After determining the appropriate enterprise value, the Company allocates the

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enterprise value to investments in order of the legal priority of the various components of the portfolio company’s capital structure. In applying the Waterfall valuation method, the Company assumes the loans are paid off at the principal amount in a change in control transaction and are not assumed by the buyer, which the Company believes is consistent with its past transaction history and standard industry practices.

Under the Yield-to-Maturity valuation method, the Company also uses the income approach to determine the fair value of debt securities based on projections of the discounted future free cash flows that the debt security will likely generate, including analyzing the discounted cash flows of interest and principal amounts for the debt security, as set forth in ~~Rules 3-09 or 4-08(g)~~the associated loan agreements, as well as the financial position and credit risk of ~~Regulation S-X,~~the portfolio company. The Company’s estimate of the expected repayment date of its debt securities is generally the maturity date of the instrument, as the Company generally intends to hold its loans and debt securities to maturity. The Yield-to-Maturity analysis also considers changes in leverage levels, credit quality, portfolio company performance and other factors. The Company will ~~include required financial information~~generally use the value determined by the Yield-to-Maturity analysis as the fair value for ~~such subsidiary~~that security; however, because of the Company’s general intent to hold its loans to maturity, the fair value will not exceed the principal amount of the debt security valued using the Yield-to-Maturity valuation method. A change in the ~~notes~~assumptions that the Company uses to estimate the fair value of its debt securities using the Yield-to-Maturity valuation method could have a material impact on the determination of fair value. If there is deterioration in credit quality or if a debt security is in workout status, the Company may consider other factors in determining the fair value of the debt security, including the value attributable to the debt security from the enterprise value of the portfolio company or the proceeds that would most likely be received in a liquidation analysis.

Under the NAV valuation method, for an investment in an investment fund that does not have a readily determinable fair value, the Company measures the fair value of the investment predominately based on the NAV of the investment fund as of the measurement date and adjusts the investment’s fair value for factors known to the Company that would affect that fund’s NAV, including, but not limited to, fair values for individual investments held by the fund if the Company holds the same investment or for a publicly traded investment. In addition, in determining the fair value of the investment, the Company considers whether adjustments to the NAV are necessary in certain circumstances, based on the analysis of any restrictions on redemption of the Company’s investment as of the measurement date, recent actual sales or redemptions of interests in the investment fund, and expected future cash flows available to equity holders, including the rate of return on those cash flows compared to an ~~attachment~~implied market return on equity required by market participants, or other uncertainties surrounding the Company’s ability to realize the full NAV of its interests in the investment fund.

For valuation purposes, all of the Company’s Private Loan portfolio investments are non-control investments. For Private Loan portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, the Company generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Private Loan debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Private Loan equity investments in a current hypothetical sale using the Waterfall valuation method.

In addition to its ~~condensed consolidated~~internal valuation process, in arriving at estimates of fair value for its investments in its Private Loan portfolio companies, the Company, among other things, consults with a nationally recognized independent financial ~~statements.~~advisory services firm. The nationally recognized independent financial advisory services firm analyzes and provides observations and recommendations and an assurance certification regarding the Company’s determinations of the fair value of its Private Loan portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to the Company’s investments in each Private Loan portfolio company at least once every calendar year, and for the Company’s investments in new Private Loan portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, the Company may determine that it is not cost-effective, and as a result is not in its stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more Private Loan portfolio companies. Such instances include, but are not limited to, situations where the fair value of the Company’s investment in a Private Loan portfolio company is determined to be insignificant relative to the total Investment Portfolio. The Company consulted with and received an assurance certification from its independent financial advisory services firm in arriving at its determination of fair value on its investments in a total of seven Private Loan portfolio companies for the three months ended March 31, 2021, representing approximately 21% of the total Private Loan portfolio at fair value as of March 31, 2021, and on a total of nine Private Loan portfolio companies for the three months ended March 31, 2020,

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representing approximately 20% of the total Private Loan portfolio at fair value as of March 31, 2020. Excluding its investments in Private Loan portfolio companies that, as of March 31, 2021 and 2020, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment and its investments in Private Loan portfolio companies that were not reviewed because the investment is valued based upon third-party quotes or other independent pricing, the percentage of the Private Loan portfolio reviewed and certified by its independent financial advisory services firm for the three months ended March 31, 2021 and 2020 was 23% and 25% of the total Private Loan portfolio at fair value as of March 31, 2021 and 2020, respectively.

In addition to its internal valuation process, in arriving at estimates of fair value for its investments in its LMM portfolio companies, the Company, among other things, consults with a nationally recognized independent financial advisory services firm. The ~~unaudited condensed~~nationally recognized independent financial advisory services firm analyzes and provides observations, recommendations and an assurance certification regarding the Company’s determinations of the fair value of its LMM portfolio company investments. The nationally recognized independent financial advisory services firm is generally consulted relative to the Company’s investments in each LMM portfolio company at least once every calendar year, and for the Company’s investments in new LMM portfolio companies, at least once in the twelve-month period subsequent to the initial investment. In certain instances, the Company may determine that it is not cost-effective, and as a result is not in its stockholders’ best interest, to consult with the nationally recognized independent financial advisory services firm on its investments in one or more LMM portfolio companies. Such instances include, but are not limited to, situations where the fair value of the Company’s investment in a LMM portfolio company is determined to be insignificant relative to the total Investment Portfolio. The Company consulted with and received an assurance certification from its independent financial advisory services firm in arriving at the Company’s determination of fair value on its investments in a total of nine LMM portfolio companies for the three months ended March 31, 2021, representing approximately 28% of the total LMM portfolio at fair value as of March 31, 2021, and on a total of nine LMM portfolio companies for the three months ended March 31, 2020, representing approximately 31% of the total LMM portfolio at fair value as of March 31, 2020. Excluding its investments in LMM portfolio companies that, as of March 31, 2021 and 2020, as applicable, had not been in the Investment Portfolio for at least twelve months subsequent to the initial investment or whose primary purpose is to own real estate for which a third-party appraisal is obtained on at least an annual basis, the percentage of the LMM portfolio reviewed and certified by its independent financial advisory services firm for the three months ended March 31, 2021 and 2020 was 30% and 35% of the total LMM portfolio at fair value as of March 31, 2021 and 2020, respectively.

For valuation purposes, all of the Company’s Middle Market portfolio investments are non-control investments. To the extent sufficient observable inputs are available to determine fair value, the Company uses observable inputs to determine the fair value of these investments through obtaining third-party quotes or other independent pricing. For Middle Market portfolio investments for which it has determined that third-party quotes or other independent pricing are not available or appropriate, the Company generally estimates the fair value based on the assumptions that it believes hypothetical market participants would use to value such Middle Market debt investments in a current hypothetical sale using the Yield-to-Maturity valuation method and such Middle Market equity investments in a current hypothetical sale using the Waterfall valuation method. Because the vast majority of the Middle Market portfolio investments are typically valued using third-party quotes or other independent pricing services (including 92% and 88% of the Middle Market portfolio investments as of March 31, 2021 and December 31, 2020, respectively), the Company generally does not consult with any financial advisory services firms in connection with determining the fair value of its Middle Market investments.

For valuation purposes, all of the Company’s Other Portfolio investments are non-control investments. The Company’s Other Portfolio investments comprised 5.5% and 6.1% of the Company’s Investment Portfolio at fair value as of March 31, 2021 and December 31, 2020, respectively. Similar to the LMM investment portfolio, market quotations for Other Portfolio equity investments, except for the Signal CLO, are generally not readily available. For its Other Portfolio equity investments, except for the Signal CLO, the Company generally determines the fair value of these investments using the NAV valuation method. For the Signal CLO, the Company determines the appropriateness of the use of the third-party broker quote in determining fair value based on its understanding of the level of actual transactions used by the broker to develop the quote and whether the quote was an indicative price or binding offer, the depth and consistency of broker quotes and the correlation of changes in broker quotes with underlying performance of the portfolio company and other market indices. The Company often cannot observe the inputs considered by the third party in determining their quotes.

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

MSC Adviser, the Company’s investment adviser, uses an internally developed portfolio investment rating system in connection with its investment oversight, portfolio management and analysis and investment valuation procedures for the Company’s LMM portfolio companies. This system takes into account both quantitative and qualitative factors of the LMM portfolio company and the investments held therein.

The Board of Directors of the Company has the final responsibility for overseeing, reviewing and approving, in good faith, the Company’s determination of the fair value for its Investment Portfolio, as well as its valuation procedures, consistent with 1940 Act requirements. The Company believes its Investment Portfolio as of March 31, 2021 and December 31, 2020 approximates fair value as of those dates based on the markets in which the Company operates and other conditions in existence on those reporting dates.

2. Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results may differ from these estimates under different conditions or assumptions. Additionally, as explained in Note B.1., the consolidated financial statements ~~reflect all normal recurring adjustments, which are,~~include investments in the ~~opinion~~Investment Portfolio whose values have been estimated by the Company with the oversight, review and approval by the Company’s Board of ~~management, necessary~~Directors in the absence of readily ascertainable market values. Because of the inherent uncertainty of the Investment Portfolio valuations, those estimated values may differ materially from the values that would have been determined had a ready market for the ~~fair presentation~~securities existed.

The COVID-19 pandemic, and the related effect on the U.S. and global economies, has impacted, and threatens to continue to impact, the businesses and operating results of certain of the Company’s ~~results~~portfolio companies, as well as market interest rate spreads. As a result of these and other current effects of the COVID-19 pandemic, as well as the uncertainty regarding the extent and duration of its impact, the valuation of the Company’s Investment Portfolio has been experiencing increased volatility since the beginning of the COVID-19 pandemic.

3. Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and highly liquid investments with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are carried at cost, which approximates fair value.

At March 31, 2021, cash balances totaling $2.7 million exceeded Federal Deposit Insurance Corporation insurance protection levels, subjecting the Company to risk related to the uninsured balance. All of the Company’s cash deposits are held at large established high credit quality financial institutions and management believes that the risk of loss associated with any uninsured balances is remote. At March 31, 2021, the Company had investments in short-term money market accounts totaling $25.9 million classified as cash equivalents.

Amounts included in restricted cash at December 31, 2020 represented balances in the cash accounts held at HMS Funding, which had been set aside pursuant to an amendment to the Deutsche Bank Credit Facility effective April 24, 2020 (see Note E — Debt) (i) as a reserve for ~~the interim periods presented. The results of operations for interim periods are not indicative of results~~draws on unfunded commitments related to investments held by HMS Funding or (ii) to be ~~expected for~~applied against outstanding advances on the ~~full year.~~facility. On February 3, 2021, the Deutsche Bank Credit Facility was fully repaid through the use of restricted cash and proceeds from borrowings under the JPM SPV Facility and accordingly, the Company has no other restrictions on cash (or restricted cash requirement) upon the extinguishment of the Deutsche Bank Credit Facility.

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Amounts as of December 31, 2019 included in the unaudited condensed consolidated financial statements have been derived from the Company’s audited consolidated financial statements as of that date. All intercompany accounts

4. Interest, Dividend and transactions have been eliminated in consolidation. Certain financial information that is normally included in annual financial statements, including certain financial statement footnotes, prepared in accordance with GAAP, is not required for interim reporting purposes and has been condensed or omitted herein. Fee Income

The current period’s results of operations are not necessarily indicative of results that ultimately may be achieved for the year. Therefore, these financial statements should be read in conjunction with the Company’s financial statements and notes related thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 19, 2020.

~~Interest, Fee and Dividend Income~~

~~Interest~~Company records interest and dividend income ~~are recorded~~ on the accrual basis to the extent amounts are expected to be collected. ~~Prepayment penalties received by the Company are recorded as income upon receipt.~~ Dividend income is recorded ~~when~~as dividends are declared by the portfolio company or at the point an obligation exists for the portfolio company to make a distribution. ~~Accrued~~In accordance with the Company’s valuation policies, the Company evaluates accrued interest and dividend income ~~are evaluated quarterly~~periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if the Company otherwise does not expect the debtor to be able to service all of its debt or other obligations, itthe Company will generally ~~be placed~~place the loan or debt security on non-accrual status and ~~the Company will~~ cease recognizing interest income on that loan or debt security until the borrower has demonstrated the ability and intent to pay contractual amounts due. If ~~there is reasonable doubt that the Company will receive any previously accrued interest, then the interest income will be written off. Additionally, if~~ a debt security has deferred interest payment terms and the Company becomes aware of a deterioration in credit quality, the Company will evaluate the collectability of the deferred interest payment. If it is determined that the deferred interest is unlikely to be collected, the Company will place the security on non-accrual status and cease recognizing interest income on that debt security until the borrower has demonstrated the ability and intent to pay the contractual amounts due. Payments received on non-accrual investments may be recognized as incomeloan or ~~applied to principal depending upon the collectability of the remaining principal and interest. If a~~ debt security’s status significantly improves ~~with respect to~~regarding the debtor’s ability to service the debt or other obligations, or if a loan or debt security is ~~fully impaired,~~ sold or written off, the Company removes it ~~will be removed~~ from non-accrual status.

As of March 31, 2021, the Company’s total Investment Portfolio had two investments on non-accrual status, which comprised approximately 0.4% of its fair value and 1.0% of its cost. As of December 31, 2020, the Company’s total Investment Portfolio had three investments on non-accrual status, which comprised approximately 0.6% of its fair value and 1.3% of its cost.

Interest income from investments in the “equity” class of security of collateralized loan obligation (“CLO”) funds (typically subordinated notes) is recorded based upon an estimation of an effective yield to expected maturity utilizing ~~assumed~~estimated projected cash flows in accordance with ASC 325-40, Beneficial Interests in Securitized Financial Assets. The Company monitors the expected cash inflows from its investment in a CLO, including the expected residual payments, and the effective yield is determined and updated periodically.

~~As of March 31, 2020, the~~

The Company ~~had 10~~holds certain debt ~~investments in seven portfolio companies that were on non-accrual status, including eight debt investments in six portfolio companies that were more than 90 days past due. The debt investments on non-~~

~~accrual status comprised approximately 1.9% of the Company’s total investment portfolio at fair value~~ and 5.2% of the total investment portfolio at cost. Each of these portfolio companies experienced a significant decline in credit quality raising doubt regarding the Company’s ability to collect the principal and interest contractually due. Given the credit deterioration of these portfolio companies, the Company ceased accruing interest income on the non-accrual debt investments and wrote off any previously accrued interest deemed uncollectible.

As of December 31, 2019, the Company had eight debt investments in five portfolio companies which were on non-accrual status, including seven debt investments in four portfolio companies that were more than 90 days past due. The debt investments on non-accrual status comprised approximately 1.5% of the Company’s total investment portfolio at fair value and 2.9% of the total investment portfolio at cost. Each of these portfolio companies experienced a significant decline in credit quality after the Company acquired its investments, raising doubt regarding the Company’s ability to collect the principal and interest contractually due. Given the credit deterioration, the Company ceased accruing interest income on the non-accrual debt investments and wrote off any previously accrued interest deemed uncollectible.

~~From time to time, the Company may hold debt~~preferred equity instruments in its ~~investment portfolio~~Investment Portfolio that contain a payment-in-kind (“PIK”) interest ~~provision. If these borrowers elect to pay or are obligated to pay~~and cumulative dividend provisions. The PIK interest, ~~under the optional PIK provision and, if deemed collectible in management’s judgment, then the interest would be~~ computed at the contractual rate specified in ~~the investment’s credit~~each debt agreement, ~~recorded as interest income and~~is periodically added to the principal balance of the ~~investment.~~debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or sold. To maintain RIC tax treatment (as discussed in Note B.8. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though the Company may not have collected the PIK interest and cumulative dividends in cash. For the three months ended March 31, 2021 and 2020, approximately 6.7% and 3.5%, respectively, of the Company’s total investment income was attributable to PIK interest income and cumulative dividend income not paid currently in cash. The Company stops accruing PIK interest and cumulative dividends and writes off any accrued and uncollected interest and dividends in arrears when it determines that such PIK interest ~~in arrears~~ is no longer collectible.

As of March 31, 2020 and December 31, 2019, the Company held 32 and 26 investments, respectively, which contained a PIK provision. As of March 31, 2020, five of the 32 investments with PIK provisions were on non-accrual status. No PIK interest was recorded on these non-accrual investments during the three months ended March 31, 2020. As of December 31, 2019, five of the 26 investments with PIK provisions were on non-accrual status. No PIK interest was recorded on these investments during the year ended December 31, 2019. For the three months ended March 31, 2020 and 2019, the Company capitalized approximately $828,000 and $1.2 million, respectively, of PIK interest income.

The Company may periodically provide services, including structuring and advisory services, to its portfolio companies or other third parties. ~~The income from such services is non-recurring.~~ For services that are separately identifiable and evidence exists to substantiate fair value, fee income is recognized as earned, which is generally when the investment or other applicable transaction closes. For the three months ended March 31, 2020 and 2019, the Company recognized approximately $575,000 and $361,000, respectively, of non-recurring fee income received from its portfolio companies or other third parties, which accounted for approximately 2.4% and 1.2%, respectively, of the Company’s total investment income during such period. Fees received in connection with debt financing transactions for services that do not meet these criteria are treated as debt origination fees and are deferred and accreted into ~~interest~~ income over the life of the financing.

A presentation of total investment income the Company received from its Investment Portfolio in each of the periods presented is as follows:


	Three Months Ended
	March 31,
	2021		2020

	(dollars in thousands)
Interest, fee and dividend income:
Interest income	$	16,080	$	21,785
Dividend income		3,952		1,640
Fee income		240		575
Total interest, fee and dividend income	$	20,272	$	24,000

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~~Recent Accounting Pronouncements~~

5. Deferred Financing Costs

Deferred financing costs represent fees and other direct costs incurred in connection with arranging the Company’s borrowings. These costs were incurred in connection with the Company’s Credit Facilities (see Note E — Debt) and have been capitalized. The deferred financing costs are being amortized to interest expense using the straight-line method over the life of the related credit facility, which the Company believes is materially consistent with the effective interest method.

6. Equity Offering Costs

In ~~August 2018,~~accordance with the ~~FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820),” which is intended to improve fair value~~

~~disclosure requirements by removing disclosures~~Original Investment Advisory Agreement and the Sub-Advisory Agreement, the Company had historically reimbursed HMS Adviser for any offering costs that are not cost-beneficial, clarifying disclosures’ specific requirements, and adding relevant disclosure requirements. The amendments take effect for all organizations for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this standard did not have a material impactwere paid on the Company’s ~~condensed~~behalf, which consist of, among other costs, actual legal, accounting, bona fide out-of-pocket itemized and detailed due diligence costs, printing, filing fees, transfer agent costs, postage, escrow fees, data processing fees, advertising and sales literature and other offering costs. In connection with the Transaction, HMS Adviser has agreed to permanently waive its right to receive reimbursement for any and all accrued and unpaid or unreimbursed expenses under the Original Investment Advisory Agreement, except for certain organizational and offering expenses described further in “Note J - Related Party Transactions.

Deferred offering costs were fully amortized to expense upon the closing of the our prior public continuous offering of common stock to new investors. Any future offering costs will be currently expensed as incurred by the Company or as it becomes obligated to reimburse MSC Adviser for such costs.

7. Unearned Income—Debt Origination Fees and Original Issue Discount and Discounts / Premiums to Par Value

The Company capitalizes debt origination fees received in connection with financings and reflects such fees as unearned income netted against the applicable debt investments. The unearned income from the fees is accreted into income based on the effective interest method over the life of the financing.

In connection with its portfolio debt investments, the Company sometimes receives nominal cost warrants or warrants with an exercise price below the fair value of the underlying equity (together, “nominal cost equity”) that are valued as part of the negotiation process with the particular portfolio company. When the Company receives nominal cost equity, it allocates its cost basis in its investment between its debt security and its nominal cost equity at the time of origination based on amounts negotiated with the particular portfolio company. The allocated amounts are based upon the fair value of the nominal cost equity, which is then used to determine the allocation of cost to the debt security. Any discount recorded on a debt investment resulting from this allocation is reflected as unearned income, which is netted against the applicable debt investment, and accreted into interest income based on the effective interest method over the life of the debt investment. The actual collection of this interest is deferred until the time of debt principal repayment.

The Company may purchase debt securities at a discount or at a premium to the par value of the debt security. In the case of a purchase at a discount, the Company records the investment at the par value of the debt security net of the discount, and the discount is accreted into interest income based on the effective interest method over the life of the debt investment. In the case of a purchase at a premium, the Company records the investment at the par value of the debt security plus the premium, and the premium is amortized as a reduction to interest income based on the effective interest method over the life of the debt investment.

To maintain RIC tax treatment (as discussed in Note B.8. below), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though the Company may not have collected the interest income. For the three months ended March 31, 2021 and 2020, approximately 4.8% and 8.4%, respectively, of the Company’s total investment income was attributable to interest income from the accretion of discounts associated with debt investments, net of any premium reduction.

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8. Income Taxes

The Taxable Subsidiaries primarily hold certain portfolio investments for the Company. The Taxable Subsidiaries permit the Company to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with the Company for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in the Company’s consolidated financial statements as portfolio investments and are recorded at fair value. The Taxable Subsidiaries are not consolidated with the Company for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related ~~disclosures.~~tax assets and liabilities, of the Taxable Subsidiaries are reflected in the Company’s consolidated financial statements.

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

Taxable income generally differs from net income for financial reporting purposes due to temporary and permanent differences in the recognition of income and expenses. Taxable income generally excludes net unrealized appreciation or depreciation, as investment gains or losses are not included in taxable income until they are realized. Our stockholder’s equity includes an adjustment to classification as a result of permanent book-to-tax differences, which include differences in the book and tax treatment of income and expenses.

9. Net Realized Gains or Losses and Net Unrealized Appreciation or Depreciation

Realized gains or losses are measured by the difference between the net proceeds from the sale or redemption of an investment or a financial instrument and the cost basis of the investment or financial instrument, without regard to unrealized appreciation or depreciation previously recognized, and includes investments written-off during the period net of recoveries and realized gains or losses from in-kind redemptions. Net unrealized appreciation or depreciation reflects the net change in the fair value of the Investment Portfolio and financial instruments and the reclassification of any prior period unrealized appreciation or depreciation on exited investments and financial instruments to realized gains or losses.

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10. Fair Value of Financial Instruments

Fair value estimates are made at discrete points in time based on relevant information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. The Company believes that the carrying amounts of its financial instruments, consisting of cash and cash equivalents, receivables, payables and other liabilities approximate the fair values of such items due to the short-term nature of these instruments.

11. Earnings per Share

Net increase (decrease) in net assets resulting from operations per share and net investment income per share, are calculated based upon the weighted average number of shares of common stock outstanding during the reporting period.

12. Recently Issued or Adopted Accounting Standards

In March 2020, the FASB issued ASU 2020-04, “Reference rate reform (Topic 848) - —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. ~~Such contract~~Contract modifications are required to be evaluated in determining whether the modifications result in the establishment of new contracts or the continuation of existing contracts. The Company adopted this amendment in March 2020 and plans to apply the amendments in this update to account for contract modifications due to changes in reference ~~rates, if applicable.~~rates. The Company ~~does not believe~~continues to evaluate the impact that itthe amendments in this update will have ~~a material impact~~ on its ~~condensed~~ consolidated financial statements and ~~disclosures.~~

disclosures when applied.

In May 2020, the SEC published Release No. 33-10786 (the “May 2020 Release”), Amendments to Financial Disclosures about Acquired and Disposed Businesses, announcing its adoption of rules amending Rule 1-02(w)(2) under Regulation S-X used in the determination of a significant subsidiary specific to investment companies, including BDCs. In part, the rules adopted pursuant to the May 2020 Release eliminated the use of the asset test, and amended the income and investment tests for determining whether an unconsolidated subsidiary requires additional disclosure in the footnotes of the financial statements. The Company adopted the rules pursuant to the May 2020 Release during the quarter ended December 31, 2020. The impact of the adoption of these rules on the Company’s consolidated financial statements was not material.

In December 2020, the SEC published Release No. IC-34084 (the “December 2020 Release”) Use of Derivatives by Registered Investment Companies and Business Development Companies, announcing its adoption of Rule 18f-4 and amendment of Rule 6c-11 under the 1940 Act to provide an updated, comprehensive approach to the regulation of registered investment companies’, including BDCs’, use of derivatives and address investor protection concerns. In part, the rules adopted pursuant to the December 2020 Release require that funds using derivatives generally will have to adopt a derivatives risk management program that a derivatives risk manager administers and that the fund’s board of directors oversees, and comply with an outer limit on fund leverage. Funds that use derivatives only in a limited manner will not be subject to these requirements, but they will have to adopt and implement policies and procedures reasonably designed to manage the fund’s derivatives risks. Funds also will be subject to reporting and recordkeeping requirements regarding their derivatives use. The Company adopted the rules pursuant to the December 2020 Release during the quarter ended March 31, 2021. As the Company is a limited user of derivatives, the impact of the adoption of these rules on the consolidated financial statements was not material.

From time to time, new accounting pronouncements are issued by the FASB or other ~~standards setting~~standard-setting bodies that are adopted by the Company as of the specified effective date. The Company believes that the impact of recently issued standards and any that are not yet effective will not have a material impact on its consolidated financial statements upon adoption.

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~~Note 3 — Fair Value Hierarchy for Investments~~

~~Fair Value Hierarchy~~

NOTE C—FAIR VALUE HIERARCHY FOR INVESTMENTS AND DEBENTURES—PORTFOLIO COMPOSITION

ASC ~~Topic~~ 820 ~~Fair Value Measurement and Disclosures~~ ~~(“ASC 820”),~~defines fair value, establishes a ~~hierarchal disclosure~~ framework ~~which prioritizes and ranks~~for measuring fair value, establishes a fair value hierarchy based on the ~~level of market price observability~~quality of inputs used ~~in measuring~~to measure fair value, and enhances disclosure requirements for fair value measurements. The Company accounts for its investments at fair value. ~~Market price observability is affected by a number of factors, including~~

1. Fair Value Hierarchy

In accordance with ASC 820, the type of investment and the characteristics specific to the investment. Investments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

~~Based~~Company has categorized its investments based on the ~~observability~~priority of the inputs ~~used in~~to the valuation ~~techniques, the Company is required to provide disclosures on fair value measurements according to the~~technique into a three-level fair value hierarchy. The fair value hierarchy ~~ranks~~gives the ~~observability of the inputs used~~highest priority to ~~determine fair values. Investments carried at fair value are classified and disclosed in one of the following three categories:~~

~~Level 1—Valuations based on~~ quoted prices in active markets for identical investments (Level 1) and the lowest priority to unobservable inputs (Level 3).

Investments recorded on the Company’s balance sheet are categorized based on the inputs to the valuation techniques as follows:

Level 1—Investments whose values are based on unadjusted quoted prices for identical assets ~~or liabilities~~in an active market that the Company has the ability to ~~access.~~

access (examples include investments in active exchange-traded equity securities and investments in most U.S. government and agency securities).

Level 2—~~Valuations~~Investments whose values are based on ~~inputs other than~~ quoted prices in markets that are not active ~~markets, which~~or model inputs that are observable either directly or indirectly ~~observable~~ for ~~essentially~~substantially the full term of the investment. Level 2 inputs include ~~quoted prices for similar assets in active markets, quoted prices for identical or similar assets in non-active markets (for example, thinly traded public companies), pricing~~the following:

●

Quoted prices for similar assets in active markets (for example, investments in restricted stock);

●

Quoted prices for identical or similar assets in non-active markets (for example, investments in thinly traded public companies);

●

Pricing models whose inputs are observable for substantially the full term of the investment (for example, market interest rate indices); and

●

Pricing models whose inputs are derived principally from, or corroborated by, observable market data through correlation or other means for substantially the full term of the investment.

Level 3—Investments whose ~~inputs~~values are observable for substantially the full term of the investment, and pricing models whose inputs are derived principally from or corroborated by, observable market data through correlation or other means for substantially the full term of the investment.

~~Level 3—Valuations~~ based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value ~~measurement. Such information may be~~measurement (for example, investments in illiquid securities issued by privately held companies). These inputs reflect management’s own assumptions about the ~~result of consensus~~assumptions a market participant would use in pricing ~~information or broker quotes for which sufficient observable inputs were not available.~~

the investment.

As required by ASC 820, when the inputs used to measure fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is based on the lowest level input that is significant to the fair value measurement in its entirety. For example, a Level 3 fair value measurement may include inputs that are observable (Levels 1 and 2) and unobservable (Level 3). Therefore, ~~gains~~unrealized appreciation and ~~losses for~~depreciation related to such investments categorized within the Level 3 ~~table~~tables below may include changes in fair value that are attributable to both observable inputs (Levels 1 and 2) and unobservable inputs (Level 3). ~~The Company conducts reviews of fair value hierarchy classifications on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain investments.~~

As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company’s investment portfolio was comprised of debt securities, equity investments and Other Portfolio investments. The fair value determination for these investments primarily consisted of unobservable (Level 3) inputs.

~~As of March 31, 2020 and December 31, 2019, all of the Company’s LMM portfolio investments consisted of illiquid securities issued by private companies. The fair value determination for the LMM~~Private Loan portfolio investments primarily consisted of ~~unobservable inputs. As a result, all of the Company’s LMM portfolio investments were categorized as Level 3 as of March 31, 2020 and December 31, 2019.~~

~~As of March 31, 2020 and December 31, 2019, the Company’s Middle Market portfolio investments consisted primarily of Middle Market~~ investments in interest-bearing secured ~~and unsecured debt investments and independently rated~~ debt investments. The fair value determination for these investments consisted of a combination of (1) observable inputs in non-active markets for which sufficient observable inputs were available to determine the fair value of these investments, (2) observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and (3) unobservable inputs. As a result, all of the Company’s Middle Market portfolio investments were categorized as Level 3 as of March 31, 2020 and December 31, 2019.

~~As of March 31, 2020 and December 31, 2019, the Company’s Private Loan portfolio investments consisted primarily of debt investments. The fair value determination for Private Loan~~ investments consisted of a combination of observable inputs in non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all of the Company’s Private Loan portfolio investments were categorized as Level 3 as of March 31, ~~2020~~2021 and December 31, ~~2019.~~2020.

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As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, all of the Company’s ~~Other Portfolio~~LMM portfolio investments consisted ~~primarily~~ of illiquid securities issued by ~~private companies.~~privately held companies and the fair value determination for these investments primarily consisted of unobservable inputs. As a result, all of the Company’s LMM portfolio investments were categorized as Level 3 as of March 31, 2021 and December 31, 2020.

As of March 31, 2021 and December 31, 2020, the Company’s Middle Market portfolio investments consisted primarily of investments in secured and unsecured debt investments and independently rated debt investments. The ~~Company relies primarily on information provided by managers of private investment funds in valuing~~fair value determination for these investments and ~~considers whether it is appropriate,~~the Signal CLO consisted of a combination of observable inputs in ~~light~~non-active markets for which sufficient observable inputs were not available to determine the fair value of these investments and unobservable inputs. As a result, all ~~relevant circumstances, to value~~of the ~~Other Portfolio~~Company’s in Middle Market portfolio investments ~~at the net asset value (“NAV”) reported by the private investment fund at the time of valuation or to adjust the value to reflect a premium or discount. Additionally,~~were categorized as Level 3 as of March 31, 2021 and December 31, 2020.

As of March 31, 2021 and December 31, 2020, the Company’s Other Portfolio investments ~~included an investment in subordinated notes~~(other than the Signal CLO) consisted of ~~a CLO, which are carried at a fair value determined~~illiquid securities issued by ~~taking into account information received from a third-party, independent valuation firm. The~~privately held companies and the fair value determination for ~~the Company’s Other Portfolio~~these investments primarily consisted of unobservable inputs. As a result, all of the Company’s Other Portfolio investments were categorized as Level 3 as of March 31, ~~2020~~2021 and December 31, ~~2019.~~

2020.

The fair value determination of ~~the~~each portfolio investment categorized as Level 3 ~~securities~~ required one or more of the following unobservable inputs:

~~Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers;~~

●

Financial information obtained from each portfolio company, including unaudited statements of operations and balance sheets for the most recent period available as compared to budgeted numbers;

●

Current and projected financial condition of the portfolio company;

●

Current and projected ability of the portfolio company to service its debt obligations;

●

Type and amount of collateral, if any, underlying the investment;

●

Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio and net debt/EBITDA ratio) applicable to the investment;

●

Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio);

●

Pending debt or capital restructuring of the portfolio company;

●

Projected operating results of the portfolio company;

●

Current information regarding any offers to purchase the investment;

●

Current ability of the portfolio company to raise any additional financing as needed;

●

Changes in the economic environment which may have a material impact on the operating results of the portfolio company;

●

Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company;

●

Qualitative assessment of key management;

●

Contractual rights, obligations or restrictions associated with the investment; and

●

Other factors deemed relevant.

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The use of significant unobservable inputs creates uncertainty in the measurement of fair value as of the ~~portfolio company;~~

~~Current and projected ability of the portfolio company to service its debt obligations;~~

~~Type and amount of collateral, if any, underlying the investment;~~

Current financial ratios (e.g., fixed charge coverage ratio, interest coverage ratio, and net debt/earnings before interest, tax, depreciation and amortization (“EBITDA”) ratio) applicable to the investment;

~~Current liquidity of the investment and related financial ratios (e.g., current ratio and quick ratio);~~

~~Pending debt or capital restructuring of the portfolio company;~~

~~Projected operating results of the portfolio company;~~

~~Current information regarding any offers to purchase the investment;~~

~~Current ability of the portfolio company to raise any additional financing as needed;~~

~~Changes in the economic environment which may have a material impact on the operating results of the portfolio company;~~

Internal occurrences that may have an impact (both positive and negative) on the operating performance of the portfolio company, including but not limited to impacts from COVID-19 pandemic and oil price volatility;

~~Qualitative assessment of key management;~~

~~Contractual rights, obligations or restrictions associated with the investment;~~

~~Third party pricing for securities with limited observability of inputs determining the pricing; and~~

~~Other factors deemed relevant.~~

~~The following table presents fair value measurements of the Company’s investments, by type of investment, as of March 31, 2020 according to the fair value hierarchy (dollars in thousands):~~

Fair Value Measurements
Level 1 Level 2 Level 3 Total
First lien secured debt investments $ —
$ —
$ 688,475
$ 688,475
Second lien secured debt investments —
—
35,529
35,529
Unsecured debt investments —
—
14,075
14,075
Equity investments ⁽¹⁾
—
—
156,784
156,784
Total $ —
$ —
$ 894,863
$ 894,863

~~(1) Includes the Company’s investments in CLO subordinated notes. (See Note 4 —~~ ~~Investment in HMS-ORIX SLF LLC~~)

~~The following table presents fair value measurements of the Company’s investments, by type of investment, as of December 31, 2019 according to the fair value hierarchy (dollars in thousands):~~

Fair Value Measurements
Level 1 Level 2 Level 3 Total
First lien secured debt investments $ —
$ —
$ 800,361
$ 800,361
Second lien secured debt investments —
—
40,646
40,646
Unsecured debt investments —
—
13,783
13,783
Equity investments ⁽¹⁾
—
—
172,807
172,807
Total $ —
$ —
$ 1,027,597
$ 1,027,597

~~(1) Includes the Company’s investment in CLO subordinated notes. (See Note 4 —~~ ~~Investment in HMS-ORIX SLF LLC)~~

The following table presents fair value measurements of the Company’s investments, by investment classification, segregated by the level within the fair value hierarchy as of March 31, 2020 (dollars in thousands):

Fair Value Measurements
Level 1 Level 2 Level 3 Total
LMM portfolio investments $ —
$ —
$ 222,621
$ 222,621
Private Loan investments —
—
431,349
431,349
Middle Market investments —
—
199,823
199,823
Other Portfolio investments ⁽¹⁾
—
—
41,070
41,070
Total $ —
$ —
$ 894,863
$ 894,863

~~(1) Includes the Company’s investments in CLO subordinated notes. (See Note 4 —~~ ~~Investment in HMS-ORIX SLF LLC~~)

Fair Value Measurements
Level 1 Level 2 Level 3 Total
LMM portfolio investments $ —
$ —
$ 225,121
$ 225,121
Private Loan investments —
—
481,152
481,152
Middle Market investments —
—
272,428
272,428
Other Portfolio investments ⁽¹⁾
—
—
48,896
48,896
Total $ —
$ —
$ 1,027,597
$ 1,027,597

~~(1) Includes the Company’s investment in CLO subordinated notes. (See Note 4 —~~ ~~Investment in HMS-ORIX SLF LLC)~~

reporting date. The significant unobservable inputs used in the fair value measurement of the Company’s LMM ~~Middle Market and Private Loan debt investments are (i) risk adjusted discount rates used in the yield-to-maturity valuation technique (described in Note 2 —~~ ~~Basis of Presentation and Summary of Significant Accounting Policies — Valuation of Portfolio Investments~~ in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the SEC on March 19, 2020) and (ii) the percentage of expected principal recovery. Increases (decreases) in any of these discount rates in isolation could result in a significantly lower (higher) fair value measurement. Increases (decreases) in any of these expected principal recovery percentages in isolation could result in a significantly higher (lower) fair value measurement. The significant unobservable inputs used in the fair value measurement of the Company’s LMM equity securities and Private Loan equity securities, which are generally valued through an average of the discounted cash flow technique and the market comparable/enterprise value technique (unless one of these approaches is determined to not ~~applicable)~~be appropriate), are (i) EBITDA multiples and (ii) the ~~weighted average~~weighted-average cost of capital (“WACC”). ~~Increases~~Significant increases (decreases) in EBITDA multiple inputs in isolation ~~could~~would result in a significantly higher (lower) fair value measurement. ~~Conversely,~~On the contrary, significant increases (decreases) in WACC inputs in isolation ~~could~~would result in a significantly lower (higher) fair value measurement. The significant unobservable inputs used in the fair value measurement of the Company’s LMM, Middle Market and Private Loan securities are (i) risk adjusted discount rates used in the Yield-to-Maturity valuation technique (see “Note B.1.—Valuation of the Investment Portfolio”) and (ii) the percentage of expected principal recovery. Significant increases (decreases) in any of these discount rates in isolation would result in a significantly lower (higher) fair value measurement. Significant increases (decreases) in any of these expected principal recovery percentages in isolation would result in a significantly higher (lower) fair value measurement. However, due to the nature of certain investments, fair value measurements may be based on other criteria, such as third-party appraisals of collateral and fair values as determined by independent third parties, which are not presented in the ~~table~~tables below.

The following ~~table, which is not intended to be all inclusive, presents~~tables provide a summary of the significant unobservable inputs ofused to fair value the Company’s Level 3 portfolio investments as of March 31, ~~2020 (dollars in thousands):~~2021 and December 31, 2020:


	Fair Value as of
	March 31,
Type of	2021			Significant		Weighted
Investment	(in thousands)		Valuation Technique	Unobservable Inputs	Range	Average(3)		Median(3)
Equity investments	$	185,855	Discounted cash flow	WACC	11.4% - 19.9%	14.1	%	15.2	%
			Market comparable / Enterprise Value	EBITDA multiple(1)	4.9x - 8.5x(2)	6.9x		6.4x
Debt investments	$	464,730	Discounted cash flow	Risk adjusted discount factor	6.6% - 15.0%(2)	10.4	%	10.0	%
				Expected principal recovery percentage	1.1% - 100.0%	99.6	%	100.0	%
Debt investments	$	199,147	Market approach	Third‑party quote	45.5 - 100.4	94.5		99.1
Total Level 3 investments	$	849,732

(1)	EBITDA may include pro forma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)	Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 11.9x and the range for risk adjusted discount factor is 5.1% - 31.7%.

(3)	Does not include investments for which the valuation technique does not include the use of the applicable fair value input.


	Fair Value as of
	December 31,
Type of	2020			Significant		Weighted
Investment	(in thousands)		Valuation Technique	Unobservable Inputs	Range(3)	Average(3)		Median(3)
Equity investments	$	187,099	Discounted cash flow	WACC	11.3%-19.9%	14.1	%	15.3	%
			Market comparable / Enterprise Value	EBITDA multiple(1)	5.2x-8.5x(2)	6.9x		6.4x
Debt investments	$	456,576	Discounted cash flow	Risk adjusted discount factor	7.4%-14.2%(2)	10.3	%	10.2	%
				Expected principal recovery percentage	1.1%-100.0%	99.3	%	100.0	%
Debt investments	$	181,847	Market approach	Third‑party quote	45.0 - 100.0	92.0	%	93.4
Total Level 3 investments	$	825,522

(1)	EBITDA may include pro forma adjustments and/or other addbacks based on specific circumstances related to each investment.

(2)	Range excludes outliers that are greater than one standard deviation from the mean. Including these outliers, the range for EBITDA multiple is 4.0x - 11.9x and the range for risk adjusted discount factor is 5.4% - 25.0%.

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(3)	Does not include investments for which the valuation technique does not include the use of the applicable fair value input.

Fair Value
Valuation
Technique
Significant Unobservable Inputs Range
Weighted
Average ⁽²⁾
LMM equity investments $ 92,275
Discounted Cash Flows WACC 11.7% - 19.2% 14.2%
Market Approach/Enterprise Value
EBITDA Multiples ⁽¹⁾
4.0x - 12.0x 7.0x
LMM debt investments 130,346
Discounted Cash Flows Expected Principal Recovery 87.0% - 100.0% 99.3%
Risk Adjusted Discount Factor 8.0% - 22.5% 13.9%
Private Loan debt investments 378,288
Discounted Cash Flows Expected Principal Recovery 1.6% - 100.0% 99.7%
Risk Adjusted Discount Factor 8.1% - 29.3% 11.8%
35,697
Market Approach Third Party Quotes 82.5% - 92.5% 88.6%
Private Loan equity investments 17,364
Market Approach/Enterprise Value
EBITDA Multiples ⁽¹⁾
4.9x - 11.9x 8.0x
Discounted Cash Flows WACC 11.2% - 15.0% 12.6%
Middle Market debt investments 7,943
Discounted Cash Flows Expected Principal Recovery 0.0% - 100.0% 100.0%
Risk Adjusted Discount Factor 9.0% - 40.5% 17.6%
185,805
Market Approach Third Party Quotes 18.1% - 99.5% 81.3%
Middle Market equity investments 6,075
Market Approach Third Party Quotes $0.0 - $140.0 $75.5
Discounted Cash Flows WACC 12.5% - 18.0% 12.5%
Market Approach/Enterprise Value
EBITDA Multiples⁽¹⁾
3.9x - 7.7x 7.7x
Other Portfolio investments ⁽³⁾
28,621
Market Approach
NAV ⁽¹⁾
71.1% - 118.3% 92.9%
12,449
Discounted Cash Flows Constant Default Rate 1.0% 1.0%
Constant Prepayment Rate 20.0% 20.0%
Reinvestment Spread 3.3% 3.3%
Reinvestment Price 99.5% 99.5%
Recovery Rate 70.0% 70.0%
Yield to Maturity 22.0% 22.0%
$ 894,863

~~(1) May include pro forma adjustments and/or other add-backs based on specific circumstances related to each investment.~~

~~(2) Weighted average excludes investments for which the significant unobservable input was not utilized in the fair value determination.~~

~~(3) Includes the Company’s investment in CLO subordinated notes. (See Note 4 —~~ ~~Investment in HMS-ORIX SLF LLC~~)

The following ~~table, which is not intended to be all inclusive, presents the significant unobservable inputs of the Company’s Level 3 investments as of December 31, 2019 (dollars in thousands):~~

Fair Value
Valuation
Technique
Significant Unobservable Inputs Range
Weighted
Average ⁽²⁾
LMM equity investments $ 95,554
Discounted Cash Flows WACC 11.0% - 18.3% 13.6%
Market Approach/Enterprise Value
EBITDA Multiples⁽¹⁾
4.5x - 12.0x 6.9x
LMM debt investments 129,567
Discounted Cash Flows Expected Principal Recovery 100.0% - 100.0% 100.0%

Risk Adjusted Discount Factor 8.0% - 19.0% 12.1%
Private Loan debt investments 403,194
Discounted Cash Flows Expected Principal Recovery 1.4% - 100.0% 99.9%
Risk Adjusted Discount Factor 4.6% - 21.7% 7.9%
57,242
Market Approach Third Party Quotes 92.5% - 101.0% 97.2%
Private Loan equity investments 20,716
Market Approach/Enterprise Value
EBITDA Multiples⁽¹⁾
4.9x - 9.5x 7.8x
Discounted Cash Flows WACC 10.7% - 14.6% 12.1%
Middle Market debt investments 250,194
Market Approach Third Party Quotes 28.1% - 101.0% 92.0%
14,593
Discounted Cash Flows Expected Principal Recovery 52.7% - 100.0% 76.1%
Risk Adjusted Discount Factor 8.6% - 38.0% 19.9%
Middle Market equity investments 7,641
Market Approach Third Party Quotes $0.00 - $200.0 $104.9
Discounted Cash Flows WACC 17.5% - 18.0% 17.5%
Market Approach/Enterprise Value
EBITDA Multiples⁽¹⁾
3.9x - 5.5x 5.5x
Other Portfolio investments⁽³⁾
29,868
Market Approach
NAV ⁽¹⁾
80.7% - 118.3% 99.9%
19,028
Discounted Cash Flows Constant Default Rate 1.0% 1.0%
Constant Prepayment Rate 20.0% 20.0%
Reinvestment Spread 3.4% 3.4%
Reinvestment Price 99.5% 99.5%
Recovery Rate 70.0% 70.0%
Yield to Maturity 12.0% 12.0%
$ 1,027,597

~~(1) May include pro forma adjustments and/or other add-backs based on specific circumstances related to each investment.~~

~~(2) Weighted average excludes investments for which the significant unobservable input was not utilized in the fair value determination.~~

~~(3) Includes the Company’s investment in CLO subordinated notes. (See Note 4 —~~ ~~Investment in HMS-ORIX SLF LLC)~~

~~The following table provides~~tables provide a summary of changes in fair value of the Company’s Level 3 portfolio investments for the ~~three months~~three-month periods ended March 31, 2021 and 2020 ~~(dollars~~(amounts in thousands):


									Net
	Fair Value		Transfers						Changes		Net				Fair Value
	as of		Into						from		Unrealized				as of
Type of	December 31,		Level 3		Redemptions/		New		Unrealized		Appreciation				March 31,
Investment	2020		Hierarchy		Repayments		Investments		to Realized		(Depreciation)		Other(1)		2021
Debt	$	638,423	$	—	$	($ 63,307)	$	$ 83,329	$	$ 2,125	$	$ 3,597	$	(290)	$	663,877
Equity(2)		185,041		—		($ 6,385)		$ 4,421		$ 814		$ 12		290		184,192
Equity Warrant		2,058		—		—		—		—		($ 395)		—		1,663
	$	825,522	$	—	$	(69,692)	$	87,750	$	2,939	$	3,214	$	—	$	849,732

(1)	Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.

(2)	Includes the Company’s investment in CLO subordinated notes. (See Note D — Investment in Signal Peak CLO 7, Ltd.)


									Net
	Fair Value		Transfers						Changes		Net				Fair Value
	as of		Into						from		Unrealized				as of
Type of	December 31,		Level 3		Redemptions/		New		Unrealized		Appreciation				March 31,
Investment	2019		Hierarchy		Repayments		Investments		to Realized		(Depreciation)		Other(1)		2020
Debt	$	848,265	$	—	$	(90,042)	$	43,357	$	2,021	$	(72,050)	$	—	$	731,551
Equity(2)		177,993		—		(246)		6,265		—		(22,250)		—		161,762
Equity Warrant		1,339		—		—		—		—		212		—		1,551
	$	1,027,597	$	—	$	(90,288)	$	49,622	$	2,021	$	(94,088)	$	—	$	894,864

(1)	Includes the impact of non-cash conversions. These transactions represent non-cash investing activities. See additional cash flow information at the consolidated statements of cash flows.

(2)	Includes the Company’s investment in CLO subordinated notes. (See Note D — Investment in Signal Peak CLO 7, Ltd.)

At March 31, 2021 and December 31, 2020, the Company's investments were categorized as follows in the fair value hierarchy for ASC 820 purposes:


			Fair Value Measurements
			(in thousands)
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
At March 31, 2021	Fair Value		(Level 1)		(Level 2)		(Level 3)
LMM portfolio investments	$	230,445	$	—	$	—	$	230,445
Middle Market portfolio investments		203,810		—		—		203,810
Private Loan portfolio investments		368,816		—		—		368,816
Other Portfolio investments(1)		46,661		—		—		46,661
Total investments	$	849,732	$	—	$	—	$	849,732

Type of Investment December 31, 2019 Fair Value
PIK
Interest
Accrual

New Investments⁽¹⁾
Sales/ Repayments
Net Change in Unrealized
Appreciation
(Depreciation) ⁽²⁾
Net Realized Gain (Loss) March 31, 2020 Fair Value
LMM Equity $ 95,554
$ —
$ 4,454
$ —
$ (7,733 ) $ —
$ 92,275
LMM Debt 129,567
98
11,835
(7,915 ) (35 ) (3,204 ) 130,346
Private Loan Equity 20,716
38
770
(10 ) (4,150 ) —
17,364
Private Loan Debt 460,436
555
27,617
(36,609 ) (37,924 ) (90 ) 413,985
Middle Market Debt 264,787
137
5,140
(42,147 ) (34,098 ) (71 ) 193,748
Middle Market Equity 7,641
—
—
—
(1,566 ) —
6,075
Other Portfolio ⁽³⁾
48,896
—
1,001
(236 ) (8,591 ) —
41,070
Total $ 1,027,597
$ 828
$ 50,817
$ (86,917 ) $ (94,097 ) $ (3,365 ) $ 894,863

(1) ~~Column includes changes to investments due to the net accretion of discounts/premiums and amortization of fees.~~

~~(2) Column does not include unrealized appreciation (depreciation) on unfunded commitments of approximately $(812,000).~~

~~(3)~~Includes the ~~Company’s investments~~Company's investment in CLO subordinated notes. (See Note 4D — Investment in ~~HMS-ORIX SLF LLC~~Signal Peak CLO 7, Ltd.)

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			Fair Value Measurements
			(in thousands)
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
			Identical Assets		Observable Inputs		Inputs
At December 31, 2020	Fair Value		(Level 1)		(Level 2)		(Level 3)
LMM portfolio investments	$	217,036	$	—	$	—	$	217,036
Middle Market portfolio investments		191,304		—		—		191,304
Private Loan portfolio investments		366,649		—		—		366,649
Other Portfolio investments(1)		50,533		—		—		50,533
Total investments	$	825,522	$	—	$	—	$	825,522

(1) Includes the Company's investment in CLO subordinated notes. (See Note D — Investment in Signal Peak CLO 7, Ltd.)

2. Investment Portfolio Composition

The ~~following table provides~~Company’s Private Loan portfolio investments are primarily debt securities in privately held companies that have been originated through strategic relationships with other investment funds on a ~~summary of changes~~collaborative basis, and are often referred to in ~~fair value~~the debt markets as “club deals.” Private Loan investments are typically similar in size, structure, terms and conditions to investments the Company holds in its LMM portfolio and Middle Market portfolio. The Company’s Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

The Company’s ~~Level 3~~LMM portfolio investments ~~for~~primarily consist of secured debt, equity warrants and direct equity investments in privately held, LMM companies based in the ~~three months ended March 31, 2019 (dollars~~United States. The Company’s LMM portfolio companies generally have annual revenues between $10 million and $150 million, and its LMM investments generally range in ~~thousands):~~

Type of Investment December 31, 2018 Fair Value
PIK
Interest
Accrual

New Investments⁽¹⁾
Sales/ Repayments
Net Change in Unrealized
Appreciation
(Depreciation) ⁽²⁾
Net Realized Gain (Loss) March 31, 2019 Fair Value
LMM Equity $ 79,641
$ —
$ 2,560
$ (938 ) $ 1,851
$ (47 ) $ 83,067
LMM Debt 130,633
169
6,158
(2,637 ) (221 ) 10
134,112
Private Loan Equity 16,905
—
19
(1,340 ) 907
591
17,082
Private Loan Debt 392,034
928
23,299
(6,080 ) 10,716
(2,263 ) 418,634
Middle Market Debt 428,569
72
3,059
(26,870 ) (2,866 ) (5,430 ) 396,534
Middle Market Equity 5,702
—
—
—
(1,661 ) —
4,041
Other Portfolio⁽³⁾
53,084
—
2,456
(1,860 ) 2,978
—
56,658
Total $ 1,106,568
$ 1,169
$ 37,551
$ (39,725 ) $ 11,704
$ (7,139 ) $ 1,110,128

~~(1) Column includes changes~~size from $5 million to $50 million. The LMM debt investments ~~due to~~are typically secured by either a first or second priority lien on the ~~net accretion~~assets of ~~discounts/premiums~~the portfolio company, can include either fixed or floating rate terms and ~~amortization~~generally have a term of ~~fees.~~

~~(2) Column does not include unrealized appreciation (depreciation) on unfunded commitments~~between five and seven years from the original investment date. In most LMM portfolio investments, the Company receives nominally priced equity warrants and/or makes direct equity investments in connection with a debt investment.

The Company’s Middle Market portfolio investments primarily consist of ~~approximately $359,000.~~

~~(3) Includes~~direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the ~~Company’s investment~~United States that are generally larger in ~~HMS-ORIX. (See Note 4 —~~ ~~Investment in HMS-ORIX SLF LLC)~~

~~The total net change in unrealized appreciation (depreciation) for~~size than the ~~three months ended March 31, 2020 and 2019~~companies included in the ~~Condensed Consolidated Statements~~Company’s LMM portfolio. The Company’s Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and its Middle Market investments generally range in size from $3 million to $20 million. The Company’s Middle Market portfolio debt investments are generally secured by either a first or second priority lien on the assets of ~~Operations~~the portfolio company and typically have a term of between three and seven years from the original investment date.

The Company’s Other Portfolio investments primarily consist of investments that are not consistent with the typical profiles for its LMM, Middle Market or Private Loan portfolio investments, including investments which may be managed by third parties. In the Other Portfolio, the Company may incur indirect fees and expenses in connection with investments managed by third parties, such as investments in other investment companies or private funds. For Other Portfolio investments, the Company generally receives distributions related to ~~Level 3~~the assets ~~still~~ held asby the portfolio company. Those assets are typically expected to be liquidated over a five to ten-year period.

Investment income, consisting of ~~March 31, 2020~~interest, dividends and ~~2019 was approximately $(97.8) million and $11.4 million, respectively.~~fees, can fluctuate dramatically due to various factors, including the level of new investment activity, repayments of debt investments or sales of equity interests. Investment

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income in any given year could also be highly concentrated among several portfolio companies. For the three months ended March 31, 2021 and 2020, ~~and 2019, there were no transfers between Level 2 and Level 3~~the Company did not record investment income from any single portfolio ~~investments.~~

~~Portfolio Investment Composition~~

company in excess of 10% of total investment income.

The ~~composition~~following tables provide a summary of the Company’s investments ~~as of March 31, 2020, at cost and fair value, was as follows (dollars~~ in ~~thousands):~~

Investments at Cost Cost Percentage of Total Portfolio Investments at Fair Value
Fair Value
Percentage of
Total Portfolio
First lien secured debt investments $ 786,367
78.5 % $ 688,475
76.9 %
Second lien secured debt investments 48,809
4.9
35,529
4.0
Unsecured debt investments 14,389
1.4
14,075
1.6
Equity investments ⁽¹⁾
150,177
15.0
154,726
17.3
Equity warrants 1,670
0.2
2,058
0.2
Total $ 1,001,412
100.0 % $ 894,863
100.0 %

~~(1)Includes~~ the ~~Company’s investment in CLO subordinated notes. (See Note 4 —~~ ~~Investment in HMS-ORIX SLF LLC~~)

~~The composition of the Company’s investments as of December 31, 2019, at cost and fair value, was as follows (dollars in thousands):~~

Investments at Cost Cost Percentage of Total Portfolio Investments at Fair Value
Fair Value
Percentage of
Total Portfolio
First lien secured debt investments $ 831,414
79.9 % $ 800,361
77.9 %
Second lien secured debt investments 48,715
4.7
40,646
4.0
Unsecured debt investments 14,097
1.4
13,783
1.3
Equity investments ⁽¹⁾
144,159
13.8
170,961
16.6
Equity warrants 1,670
0.2
1,846
0.2
Total $ 1,040,055
100.0 % $ 1,027,597
100.0 %

~~(1) Includes the Company’s investment in HMS-ORIX. (See Note 4 —~~ ~~Investment in HMS-ORIX SLF LLC)~~

The composition of the Company’s investments by geographic region as of March 31, 2020, at cost and fair value, was as follows (dollars in thousands) (since the Other Portfolio investments do not represent a single geographic region, this information excludes Other Portfolio investments):

Investments at Cost Cost Percentage of Total Portfolio Investments at Fair Value
Fair Value
Percentage of
Total Portfolio
Northeast $ 141,120
14.9 % $ 129,954
15.2 %
Southeast 223,840
23.6
202,739
23.7
West 128,245
13.5
109,160
12.8
Southwest 215,633
22.8
190,182
22.3
Midwest 213,051
22.5
198,978
23.3
Non-United States 25,670
2.7
22,780
2.7
Total $ 947,559
100.0 % $ 853,793
100.0 %

The composition of the Company’s investments by geographic region as of December 31, 2019, at cost and fair value, was as follows (dollars in thousands) (since the Other Portfolio investments do not represent a single geographic region, this information excludes Other Portfolio investments):

Investments at Cost Cost Percentage of Total Portfolio Investments at Fair Value
Fair Value
Percentage of
Total Portfolio
Northeast $ 130,531

13.2 %
$ 127,098

13.0 %
Southeast 215,254

21.8

218,819

22.4
West 183,955

18.6

174,871

17.9
Southwest 207,284

21.0

202,918

20.7
Midwest 223,575

22.7

229,246

23.4
Non-United States 26,368

2.7

25,749

2.6
Total $ 986,967

100.0 %
$ 978,701

100.0 %

The composition of the Company’s total investments by industry as of March 31, 2020 and December 31, 2019, at cost and fair value, was as follows (since the Other Portfolio investments do not represent a single industry, this information excludes Other Portfolio investments):

Cost Fair Value
March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019
Commercial Services and Supplies 6.8 % 8.5 % 6.5 % 8.2 %
Machinery 6.2
5.9
8.4
7.7
Oil, Gas, and Consumable Fuels 5.8
6.3
5.4
6.3
Aerospace and Defense 5.2
5.0
5.4
5.1
Communications Equipment 5.2
5.0
4.3
4.4
Health Care Providers and Services 4.9
4.7
4.3
4.2
Diversified Telecommunication Services 4.6
4.4
4.2
4.3
IT Services 4.6
4.5
4.7
4.5
Internet Software and Services 4.5
3.9
4.7
3.8
Leisure Equipment and Products 4.2
4.0
3.6
3.6
Specialty Retail 3.5
3.3
3.2
3.0
Distributors 3.3
2.5
3.3
2.4
Construction and Engineering 3.1
3.3
3.6
3.4
Diversified Consumer Services 3.1
2.4
2.2
1.6
Energy Equipment and Services 3.0
2.8
2.7
2.6
Trading Companies and Distributors 3.0
1.6
3.1
1.6
Hotels, Restaurants, and Leisure 2.9
2.8
2.2
2.7
Media 2.6
4.2
3.2
4.5
Transportation Infrastructure 2.5
2.3
2.4
2.3
Professional Services 1.9
1.8
1.4
1.5
Diversified Financial Services 1.8
1.7
1.8
1.7
Internet and Catalog Retail 1.8
1.7
1.4
1.4
Food Products 1.7
1.7
1.4
1.5
Wireless Telecommunication Services 1.5
1.5
1.6
1.5
Containers and Packaging 1.3
1.3
1.6
1.4
Household Durables 1.3
1.2
1.0
1.1
Food & Staples Retailing 1.2
1.2
1.4
1.2
Software 1.1
0.8
1.4
1.1
Construction Materials 1.0
0.9
1.4
1.3
Textiles, Apparel & Luxury Goods 1.0
1.0
1.0
1.0
Computers and Peripherals 0.9
2.7
2.1
3.8
Other (1) 4.5
5.1
5.1
5.3
Total 100.0 % 100.0 % 100.0 % 100.0 %

~~(1) Includes various industries with each industry individually less than 1.0% of the total combined~~ LMM, Middle Market and Private Loan portfolios as of March 31, 2021 and December 31, 2020 (this information excludes the Other Portfolio investments which are discussed further below):


	As of March 31, 2021
	LMM (a)			Middle Market			Private Loan

	(dollars in millions)
Number of portfolio companies		36			29			40
Fair value	$	230.4		$	203.8		$	368.8
Cost	$	201.9		$	226.3		$	379.4
Debt investments as a % of portfolio (at cost)		66.2	%		93.8	%		92.0	%
Equity investments as a % of portfolio (at cost)		33.8	%		6.2	%		8.0	%
% of debt investments at cost secured by first priority lien		99.8	%		97.1	%		93.5	%
Weighted-average annual effective yield(b)		11.1	%		7.9	%		9.3	%
Average EBITDA(c)	$	6.7		$	79.1		$	38.0

(a)	At March 31, 2021, the Company had equity ownership in approximately 97% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 9%.

(b)

The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of March 31, 2021, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in shares of the Company’s common stock will realize on its investment because it does not reflect the Company’s expenses or any sales load paid by an investor.

(c)

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


	As of December 31, 2020
	LMM (a)			Middle Market			Private Loan

	(dollars in millions)
Number of portfolio companies		34			28			40
Fair value	$	217.0		$	191.3		$	366.6
Cost	$	191.2		$	216.4		$	378.2
Debt investments as a % of portfolio (at cost)		66.0	%		93.5	%		91.4	%
Equity investments as a % of portfolio (at cost)		34.0	%		6.5	%		8.6	%
% of debt investments at cost secured by first priority lien		99.7	%		90.6	%		91.3	%
Weighted-average annual effective yield (b)		11.1	%		8.2	%		9.2	%
Average EBITDA (c)	$	6.2		$	78.5		$	54.1

(a)	At December 31, 2020, the Company had equity ownership in approximately 97% of its LMM portfolio companies, and the average fully diluted equity ownership in those portfolio companies was approximately 10%.

(b)

The weighted-average annual effective yields were computed using the effective interest rates for all debt investments at cost as of December 31, 2020, including amortization of deferred debt origination fees and accretion of original issue discount but excluding fees payable upon repayment of the debt instruments and any debt investments on non-accrual status. The weighted-average annual effective yield is higher than what an investor in

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shares of the Company’s common stock will realize on its investment because it does not reflect the Company’s expenses or any sales load paid by an investor.

(c)

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

As of March 31, 2021, the Company had Other Portfolio investments in five companies, collectively totaling approximately $46.7 million in fair value and approximately $52.1 million in cost basis and which comprised approximately 5.5% of the Company’s Investment Portfolio at fair value. As of December 31, 2020, the Company had Other Portfolio investments in five companies, collectively totaling approximately $50.5 million in fair value and approximately $54.9 million in cost basis and which comprised approximately 6.1% of the Company’s Investment Portfolio at fair value.

The following tables summarize the composition of the Company’s total combined LMM portfolio ~~investments.~~investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value by type of investment as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of March 31, 2021 and December 31, 2020 (this information excludes the Other Portfolio investments).


Cost:	March 31, 2021		December 31, 2020
First lien debt	82.5	%	79.5	%
Equity	13.7	%	13.9	%
Second lien debt	1.9	%	4.6	%
Equity warrants	0.2	%	0.2	%
Other	1.7	%	1.8	%
	100.0	%	100.0	%


Fair Value:	March 31, 2021		December 31, 2020
First lien debt	79.1	%	76.0	%
Equity	17.1	%	17.3	%
Second lien debt	1.9	%	4.6	%
Equity warrants	0.2	%	0.3	%
Other	1.7	%	1.8	%
	100.0	%	100.0	%

The following tables summarize the composition of the Company’s total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments by geographic region of the United States and other countries at cost and fair value as a percentage of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments, as of March 31, 2021 and December 31, 2020 (this information excludes the Other Portfolio investments). The geographic composition is determined by the location of the corporate headquarters of the portfolio company.



Cost:	March 31, 2021		December 31, 2020
Southwest	23.2	%	24.9	%
Northeast	17.6	%	18.9	%
West	19.7	%	17.5	%
Midwest	20.6	%	18.2	%
Southeast	17.0	%	18.8	%
Canada	1.9	%	1.7	%
Other Non-United States	—	%	—	%
	100.0	%	100.0	%

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Fair Value:	March 31, 2021		December 31, 2020
Aerospace & Defense	8.7	%	8.5	%
Machinery	8.5	%	8.5	%
Commercial Services & Supplies	7.1	%	7.9	%
Internet Software & Services	5.9	%	4.8	%
Construction & Engineering	5.1	%	4.1	%
Oil, Gas & Consumable Fuels	5.1	%	6.1	%
Communications Equipment	4.6	%	4.6	%
Health Care Providers & Services	4.5	%	3.6	%
Specialty Retail	3.9	%	4.1	%
Leisure Equipment & Products	3.4	%	3.5	%
Diversified Telecommunication Services	3.4	%	5.2	%
Diversified Financial Services	3.2	%	3.3	%
Distributors	3.1	%	3.1	%
Building Products	3.0	%	0.7	%
Transportation Infrastructure	2.7	%	2.7	%
IT Services	2.6	%	4.0	%
Media	2.5	%	2.7	%
Computers & Peripherals	2.4	%	2.3	%
Hotels, Restaurants & Leisure	2.0	%	2.1	%
Software	1.6	%	1.7	%
Containers & Packaging	1.6	%	1.8	%
Trading Companies & Distributors	1.5	%	1.6	%
Food & Staples Retailing	1.5	%	1.6	%
Internet & Catalog Retail	1.4	%	1.4	%
Professional Services	1.2	%	1.2	%
Electrical Equipment	1.2	%	0.5	%
Air Freight & Logistics	1.2	%	1.2	%
Electronic Equipment, Instruments & Components	1.1	%	1.2	%
Diversified Consumer Services	1.0	%	0.9	%
Construction Materials	0.9	%	1.3	%
Other (1)	4.1	%	3.8	%
	100.0	%	100.0	%


Fair Value:	March 31, 2021		December 31, 2020
Southwest	24.5	%	25.7	%
West	17.8	%	19.2	%
Northeast	18.5	%	16.3	%
Midwest	18.7	%	20.1	%
Southeast	18.7	%	17.1	%
Canada	1.8	%	1.6	%
Other Non-United States	—	%	—	%
	100.0	%	100.0	%

The Company’s LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments are in companies conducting business in a variety of industries. The following tables summarize the composition of the Company’s total combined LMM portfolio investments, Middle Market portfolio investments and

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Private Loan portfolio investments by industry at cost and fair value as of March 31, 2021 and December 31, 2020 (this information excludes the Other Portfolio investments).


Cost:	March 31, 2021		December 31, 2020
Aerospace & Defense	8.7	%	8.4	%
Commercial Services & Supplies	7.1	%	8.1	%
Machinery	6.5	%	6.5	%
Internet Software & Services	6.5	%	5.4	%
Oil, Gas & Consumable Fuels	5.9	%	7.0	%
Communications Equipment	5.5	%	5.7	%
Health Care Providers & Services	4.4	%	3.4	%
Specialty Retail	4.3	%	4.5	%
Construction & Engineering	4.3	%	3.4	%
Diversified Telecommunication Services	3.5	%	5.4	%
Leisure Equipment & Products	3.3	%	3.5	%
Distributors	3.1	%	3.1	%
Hotels, Restaurants & Leisure	3.0	%	3.1	%
Diversified Financial Services	3.0	%	3.1	%
Building Products	2.9	%	0.6	%
IT Services	2.6	%	4.0	%
Transportation Infrastructure	2.6	%	2.6	%
Media	2.4	%	2.5	%
Professional Services	2.1	%	2.2	%
Trading Companies & Distributors	1.5	%	1.6	%
Electronic Equipment, Instruments & Components	1.5	%	1.5	%
Food & Staples Retailing	1.5	%	1.5	%
Internet & Catalog Retail	1.5	%	1.5	%
Containers & Packaging	1.4	%	1.6	%
Software	1.2	%	1.2	%
Computers & Peripherals	1.2	%	1.1	%
Air Freight & Logistics	1.1	%	1.1	%
Electrical Equipment	1.1	%	0.4	%
Other (1)	6.3	%	6.0	%
	100.0	%	100.0	%

(1)	Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

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Fair Value:	March 31, 2021		December 31, 2020
Aerospace & Defense	8.7	%	8.5	%
Machinery	8.5	%	8.5	%
Commercial Services & Supplies	7.1	%	7.9	%
Internet Software & Services	5.9	%	4.8	%
Construction & Engineering	5.1	%	4.1	%
Oil, Gas & Consumable Fuels	5.1	%	6.1	%
Communications Equipment	4.6	%	4.6	%
Health Care Providers & Services	4.5	%	3.6	%
Specialty Retail	3.9	%	4.1	%
Leisure Equipment & Products	3.4	%	3.5	%
Diversified Telecommunication Services	3.4	%	5.2	%
Diversified Financial Services	3.2	%	3.3	%
Distributors	3.1	%	3.1	%
Building Products	3.0	%	0.7	%
Transportation Infrastructure	2.7	%	2.7	%
IT Services	2.6	%	4.0	%
Media	2.5	%	2.7	%
Computers & Peripherals	2.4	%	2.3	%
Hotels, Restaurants & Leisure	2.0	%	2.1	%
Software	1.6	%	1.7	%
Containers & Packaging	1.6	%	1.8	%
Trading Companies & Distributors	1.5	%	1.6	%
Food & Staples Retailing	1.5	%	1.6	%
Internet & Catalog Retail	1.4	%	1.4	%
Professional Services	1.2	%	1.2	%
Electrical Equipment	1.2	%	0.5	%
Air Freight & Logistics	1.2	%	1.2	%
Electronic Equipment, Instruments & Components	1.1	%	1.2	%
Diversified Consumer Services	1.0	%	0.9	%
Construction Materials	0.9	%	1.3	%
Other (1)	4.1	%	3.8	%
	100.0	%	100.0	%

(1)	Includes various industries with each industry individually less than 1.0% of the total combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at each date.

At March 31, 2021 and December 31, 2020, the Company had no portfolio investment that was greater than 10% of the Investment Portfolio at fair value.

3. Unconsolidated Significant Subsidiaries

In evaluating its unconsolidated controlled portfolio companies in accordance with the Regulation S-X, there are two tests that the Company must utilize to determine if any of the Company’s Control Investments (as defined in Note ~~4 —~~A, including those unconsolidated portfolio companies defined as Control Investments in which the Company does not own greater than 50% of the voting securities or maintain greater than 50% of the board representation) are considered significant subsidiaries: the investment test and the income test. The investment test is generally measured by dividing the Company’s investment in the Control Investment by the value of the Company’s total investments. The income test is generally measured by dividing the absolute value of the combined sum of total investment income, net realized gain (loss) and net unrealized appreciation (depreciation) from the relevant Control Investment for the period being tested by the absolute value of the Company’s change in net assets resulting from operations for the same period. Regulation S-X requires the Company to include (1) separate audited financial statements of an unconsolidated majority-owned subsidiary (Control Investments in which the Company owns greater than 50% of the voting securities) in an annual report and (2) summarized financial information of a Control Investment in ~~HMS-ORIX SLF LLC~~a quarterly report, respectively, if certain thresholds of the investment or income tests are exceeded and the unconsolidated portfolio company qualifies as a significant subsidiary.

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As of March 31, 2021 and December 31, 2020, the Company had no single investment that qualified as a significant subsidiary under either the investment or income tests.

Note D – Investment in Signal Peak CLO 7, LTD.

On April 4, 2017, the Company and ORIX Funds Corp. (“Orix”) entered into a limited liability company agreement to co-manage HMS-ORIX SLF LLC (“HMS-ORIX”), which invested primarily in broadly-syndicated loans. Pursuant to the terms of the limited liability agreement and through representation on the HMS-ORIX Board of Managers, the Company and Orix each had 50% voting control of HMS-ORIX and together were required to agree on all portfolio and investment decisions as well as all other significant actions for HMS-ORIX. The Company did not have sole control of significant actions of HMS-ORIX and, accordingly, did not consolidate the operations of HMS-ORIX within the consolidated financial statements. The Company and Orix funded an aggregate of $50.0 million of equity to HMS-ORIX, with the Company providing $30.0 million (60% of the equity) and Orix providing $20.0 million (40% of the equity).

On May 8, 2019, HMS-ORIX Holdings I LLC, a wholly owned subsidiary of HMS-ORIX, which held all of the investments in broadly-syndicated loans held by HMS-ORIX, was merged (the “HMS-ORIX Holdings Merger”) into Mariner CLO 7, Ltd., an exempted company incorporated under the laws of the Cayman Islands (“Mariner CLO”). In connection with the HMS-ORIX Holdings Merger, HMS-ORIX made certain distributions to its members. The Company used the cash proceeds it received from the HMS-ORIX Holdings Merger to purchase an aggregate principal amount of approximately $25.9 million of the “Subordinated Notes” (the equity tranche of the CLO’s securities) due in 2032 issued by Mariner CLO in connection with an offering of $405.9 million aggregate principal amount of ~~notes~~

~~(the “CLO Offering”).~~notes. After distribution to its members of residual cash remaining after the HMS-ORIX Holdings Merger, HMS-ORIX was fully liquidated on September 26, 2019.

~~For~~ On October 8, 2020, Mariner CLO changed its name to Signal Peak CLO 7, Ltd. (“Signal Peak CLO”).

During the three months ended March 31, ~~2019,~~2021 and 2020, respectively, the Company recognized approximately ~~$546,000~~$0.6 million and $0.5 million of ~~dividend~~interest income in respect of its investment in ~~HMS-ORIX.~~Signal Peak CLO.

NOTE E—DEBT

Summary of debt as of March 31, 2021 is as follows:


		Outstanding Balance		Unamortized Debt Issuance Costs		Recorded Value		Estimated Fair Value (1)

	(dollars in thousands)
TIAA Credit Facility		$	34,000	$	(432)	$	33,568	$	33,568
JPM SPV Facility			210,688		(3,157)		207,531		207,531
Main Street Term Loan			40,000		(386)		39,614		39,614
Total Debt		$	284,688	$	(3,975)	$	280,713	$	280,713

(1)	Estimated fair value for outstanding debt if the Company had adopted the fair value option under ASC 825.

Summary of debt as of December 31, 2020 is as follows:


		Outstanding Balance		Unamortized Debt Issuance Costs		Recorded Value		Estimated Fair Value (1)

	(dollars in thousands)
TIAA Credit Facility		$	44,000	$	(491)	$	43,509	$	43,509

~~The following table shows~~

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Deutsche Bank Credit Facility			257,816			(2,200)			255,616			255,616
Total Debt		$	301,816		$	(2,691)		$	299,125		$	299,125

(1)	Estimated fair value for outstanding debt if the Company had adopted the fair value option under ASC 825.

Summarized interest expense on the ~~summarized financial information for HMS-ORIX~~Company’s debt for the three months ended March 31, ~~2019 (dollars in thousands):~~2021 and 2020 is as follows:


	Three Months Ended March 31,
	2021		2020

	(dollars in thousands)
TIAA Credit Facility	$	388	$	1,141
Deutsche Bank Credit Facility		1,046		4,088
JPM SPV Facility		1,367		-
Main Street Term Loan		364		-
Total Interest Expense	$	3,165	$	5,229

HMS-ORIX SLF LLC
Statement of Operations
(dollars in thousands)
Three Months Ended March 31, 2019
Investment income
Interest income $ 2,548
Dividend income —
Fee income —
Other income —
Total investment income 2,548
Expenses
Interest expense 1,247
Other expenses —
General and administrative expenses 11
Total expenses 1,258
Net investment income 1,290
Net realized loss from investments (1 )
Net realized income 1,289
Net change in unrealized appreciation on investments 4,639
Net increase in net assets resulting from operations $ 5,928

~~Note 5 — Borrowings~~

A BDC is permitted, under specified conditions, to issue “senior securities,” including borrowing money from banks or other financial institutions, only in amounts such that its asset coverage, as that term is defined in the 1940 Act, immediately after each such issuance is at least equal to the percentage set forth in Section 61 of the 1940 Act that is applicable to the BDC at such time. Prior to the enactment of the Small Business

1. TIAA Credit Availability Act (the “SBCAA”) in March 2018, the asset coverage requirement applicable to BDCs was 200%. The SBCAA permits a BDC to be subject to an asset coverage requirement of 150% so long as it meets certain disclosure requirements and obtains certain approvals and, in the case of an unlisted BDC, makes an offer to repurchase the shares of its stockholders as of the date of the requisite approval. The reduced asset coverage requirement permits a BDC to have a ratio of total consolidated assets to outstanding indebtedness of 2:1 as compared to a maximum of 1:1 under the 200% asset coverage requirements. Effectiveness of the reduced asset coverage requirements to a BDC requires approval by either (1) a “required majority” (as defined in Section 57(o) of the 1940 Act) of such BDC’s board of directors with effectiveness one year after the date of such approval or (2) a majority of the votes cast at a special or annual meeting of such BDC’s stockholders at which a quorum is present, which is effective the day after such stockholder approval. The Company has not requested or obtained any such approval and, as a result, remains subject to the 200% asset coverage requirement.

Facility

On March 6, 2017, the Company entered into an amended and restated senior secured revolving credit agreement (as amended, the “TIAA Credit Facility”) with TIAA, FSB ~~(formerly known as EverBank Commercial Finance, Inc. prior to June 18, 2018)~~ (“TIAA Bank”), as administrative agent, and with TIAA Bank and other financial institutions as lenders. The TIAA Credit Facility ~~as amended most recently on March 5, 2020,~~ features aggregate revolver commitments of $130.0 million, with an accordion provision allowing increases in aggregate commitments, not to exceed $150.0 million, with lender consent. The ~~revolver commitments terminate~~revolving period under the TIAA Credit Facility expires on March 6, 2022, and all outstanding advances are payable on March 6, 2023, with two one-year extension options available for both such dates, subject to lender consent. Borrowings under the TIAA Credit Facility bear interest, subject to the Company’s election, on a per annum basis at a rate equal to (i) LIBOR plus 2.60% or (ii) the base rate plus 1.60%. The base rate is defined as the higher of (a) the prime rate, (b) the Federal Funds Rate (as defined in the credit agreement) plus 0.5% or (c) LIBOR plus 1.0%. ~~As of March 31, 2020, the one-month LIBOR was 0.99%~~. Additionally, the Company pays an annual unused commitment fee of 0.30% on the unused revolver commitments if more than 50% of the revolver commitments are being used

and an annual unused commitment fee of 0.625% on the unused revolver commitments if less than 50% of the revolver commitments are being used.

The TIAA Credit Facility permits the creation of certain “Structured Subsidiaries,” which are not guarantors under the TIAA Credit Facility and which are permitted to incur debt outside of the TIAA Credit Facility. Borrowings under the TIAA Credit Facility are secured by all of the Company’s assets, other than the assets of Structured Subsidiaries, as well as all of the assets, and a pledge of equity ownership interests, of any future subsidiaries of the Company (other than Structured Subsidiaries). The TIAA Credit Facility contains affirmative and negative covenants usual and customary for credit facilities of this nature, including: (i) maintaining a minimum interest coverage ratio of at least 2.00 to 1.00; (ii) maintaining an asset coverage ratio of at least 2.10 to 1.00; and (iii) maintaining a minimum consolidated tangible net worth, excluding Structured Subsidiaries, of at least the greater of (a) the aggregate amount of the revolver commitments or (b) $50.0 million. Further, the TIAA Credit Facility contains limitations on incurrence of other indebtedness (other than by the Structured Subsidiaries), limitations on industry concentration, and an anti-hoarding provision to protect the collateral under the TIAA Credit Facility. Additionally, the Company must provide information to TIAA Bank on a regular basis, preserve its corporate existence, comply with applicable laws, including the 1940 Act, pay obligations when they become due, and invest the proceeds of the sales of common stock in accordance with its investment objectives and strategies (as set forth in the TIAA Credit Facility). Further, the credit agreement contains usual and customary default provisions including: (i) a default in the payment of interest and principal; (ii) insolvency or bankruptcy of the Company; (iii) a material adverse change in the Company’s business; or (iv) breach of any covenant, representation or warranty in the loan agreement or other credit documents and failure to cure such breach within defined periods. Additionally, the TIAA Credit Facility requires the Company to obtain written approval from the administrative agent prior to entering into any material amendment, waiver or other modification of any provision of the Investment Advisory Agreement.

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As of March 31, 2021, the interest rate on the TIAA Credit Facility was 2.72%. The average cost of borrowings on the TIAA Credit Facility, excluding amortization of deferred financing costs, was approximately 2.74% and 4.43% per annum for the three months ended March 31, 2021 and 2020 respectively. As of March 31, 2021, the Company was not aware of any instances of noncompliance with covenants related to the TIAA Credit Facility.

2. JPM SPV Facility

On February 3, 2021, MSIF Funding, the Company’s wholly-owned subsidiary that primarily holds originated loan investments, entered into a senior secured revolving credit facility (as amended from time to time, the “JPM SPV Facility”) by and among JPMorgan Chase Bank, National Association (“JPM”), as administrative agent, and U.S. Bank, N.A., as collateral agent and collateral administrator and the Company as portfolio manager. The revolving period under the JPM SPV Facility expires on February 3, 2024 and the JPM SPV Facility is scheduled to mature on February 3, 2025. Advances under the JPM SPV Facility bear interest at a per annum rate equal to the three-month LIBOR in effect, plus the applicable margin of 2.90% per annum. MSIF Funding will also pay a commitment fee of 0.75% per annum on the average daily unused amount of the financing commitments until the third anniversary of the JPM SPV Facility. The initial commitment amount of the JPM SPV Facility is $300 million. The JPM SPV Facility has an accordion feature, subject to the satisfaction of various conditions, which could bring total commitments and borrowing availability under the JPM SPV Facility to up to $450 million.

Initial proceeds from borrowings under the JPM SPV Facility were used to purchase certain investments and participating interest from HMS Funding. HMS Funding, in turn, used the proceeds from these transactions and restricted cash to fully repay its existing indebtedness under the Deutsche Bank Credit Facility (as defined below). Concurrently, the Company and HMS Funding extinguished the Deutsche Bank Credit Facility and transferred certain portfolio investments previously held by HMS Funding to MSIF Funding. The Deutsche Bank Credit Facility had been in an amortization period, requiring that all principal and interest payments received on investments held by HMS Funding be paid to lenders to retire the outstanding balance under the Deutsche Bank Credit Facility, since April 2020.

As of March 31, 2021, the interest rate on the JPM SPV Facility, excluding amortization of deferred financing costs, was 3.10%. As of March 31, 2021, the Company was not aware of any instances of noncompliance with covenants related to the JPM SPV Facility.

3. Deutsche Bank Credit Facility

On May 18, 2015, HMS Funding entered into an amended and restated credit agreement (as amended, the “Deutsche Bank Credit Facility”) among HMS Funding, as borrower, the Company, as ~~equityholder~~equity holder and as servicer, Deutsche Bank AG, New York Branch (“Deutsche Bank”), as administrative agent, the financial institutions party thereto as lenders (together with Deutsche Bank, the “HMS Funding Lenders”), and U.S. Bank National Association, as collateral agent and collateral custodian. As of March 31, 2020, the Deutsche Bank Credit Facility provided for a revolving period until November 20, 2020, unless otherwise extended with the consent of the HMS Funding Lenders, with aggregate revolver commitments of $450.0 million and an accordion provision allowing increases in aggregate commitments, not to exceed $550.0 million, with lender consent. Under the Deutsche Bank Credit Facility, during the revolving period, (i) outstanding advances bore interest on a per annum basis at a rate equal to the sum of one-month LIBOR plus the applicable margin of 2.35%, (ii) HMS Funding incurred a utilization fee equal to 2.35% of the undrawn amount of the required utilization, which is 75% of the aggregate revolver commitments, (iii) HMS Funding incurred an undrawn fee equal to 0.40% per annum of the difference between the aggregate revolver commitments and the outstanding advances under the facility, provided that the undrawn fee relating to any utilization shortfall will not be payable to the extent that the utilization fee relating to such utilization shortfall is incurred, and (iv) HMS Funding incurred an administrative agent fee of 0.25% per annum of the aggregate revolver commitments. As of March 31, 2020, the one-month LIBOR was 0.99%. The amortization period begins the day after the last day of the revolving period and ends on November 20, 2022, the maturity date. On April 24, 2020, the Deutsche Bank Credit Facility was amended to, among other things, terminate the revolver commitments effective on April 24, 2020 and begin the amortization ~~period. During~~period, through November 20, 2022, the ~~amortization period, (i) no further advances or reinvestment~~maturity date. For the three months ended March 31, 2021 and 2020, the average cost of ~~principal collections are permitted, and all monthly interest and principal proceeds from the Company’s investments securing~~borrowings on the Deutsche Bank Credit Facility, ~~(net~~excluding amortization of ~~certain fees~~deferred financing costs, was approximately 2.93% and ~~expenses) will be applied against~~3.99% per annum, respectively.

On February 3, 2021, the total amount outstanding ~~advances~~ on the facility ~~(ii) outstanding advances bear interest on a per annum basis at a rate equal to the sum of one-month LIBOR plus the applicable margin of (a) 2.85% if the effective advance rate (as defined in~~under the Deutsche Bank Credit ~~Facility) is greater than 50.0% or (b) 2.60% if~~Facility was fully repaid. As a result, the ~~effective advance rate is less than 50.0% and (iii) HMS Funding incurs an administrative agent fee~~Company recorded a loss on the extinguishment of ~~(a) 0.97% per annum if~~debt in the ~~effective advance rate is greater than 50.0% or (b) 0.83% per annum if~~amount of $2.1 million, which represented the ~~effective advance rate is less than 50.0%. HMS Funding incurs no undrawn~~write-off of the unamortized deferred financing fees ~~or utilization fees during~~related to the ~~amortization period.~~Deutsche Bank Credit Facility.

4. Main Street Term Loan

On January 27, 2021, the Company entered into a term loan agreement (the “Main Street Term Loan”) with Main Street. As of March 31, ~~2020,~~2021, the Main Street Term Loan was fully drawn at $40.0 million, bearing interest at a fixed rate of 5.00% per annum and maturing on January 27, 2026. The Company paid a 1.0% upfront fee to Main Street on the closing date. Borrowings under the Main Street Term Loan are expressly subordinated and junior in right of payment to all secured indebtedness of the Company and may be prepaid any time after January 27, 2023. As of March 31, 2021, the Company was not aware of any instances of noncompliance with covenants related to the ~~Deutsche Bank Credit Facility.~~Main Street Term Loan.

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As of March 31, 2020, the Company had borrowings of $90.0 million outstanding on the TIAA Credit Facility and had borrowings of $313.0 million outstanding on the Deutsche Bank Credit Facility, both of which the Company estimated approximated fair value.

NOTE F—FINANCIAL HIGHLIGHTS


	Three Months Ended March 31,
Per Share Data:	2021		2020
NAV at the beginning of the period	$	7.28	$	7.77
Net investment income(1)		0.15		0.16
Net realized loss(1)(2)		(0.05)		(0.04)
Net unrealized appreciation (depreciation)		0.07		(1.21)
Net increase (decrease) in net assets resulting from operations(1)		0.17		(1.09)
Dividends paid (1)(3)		(0.10)		(0.17)
Other(4)		(0.01)		(0.01)
NAV at the end of the period	$	7.34	$	6.50
Shares of common stock outstanding at end of period		79,608,304		78,423,129
Weighted average shares of common stock outstanding		79,608,304		78,607,063

~~A summary of the Company’s significant contractual payment obligations for the repayment of outstanding borrowings at March 31, 2020 is as follows:~~

Payments Due By Period (dollars in thousands)
Total Less than 1 year 1-3 years 3-5 years After 5 years
TIAA Credit Facility ⁽¹⁾
$ 90,000
$ —
$ 90,000
$ —
$ —
Deutsche Bank Credit Facility ⁽²⁾
313,000
—
313,000
—
—
Total Credit Facilities $ 403,000
$ —
$ 403,000
$ —
$ —


~~(1)~~	At March 31, 2020, the Company had $40.0 million of undrawn revolver commitments under the TIAA Credit Facility; however, the Company’s borrowing ability is limited by borrowing base restrictions and asset coverage restrictions imposed by the 1940 Act, as discussed above.


~~(2)~~	At March 31, 2020, HMS Funding had $137.0 million of undrawn revolver commitments under the Deutsche Bank Credit Facility; however, HMS Funding’s borrowing ability was limited by borrowing base restrictions and asset coverage restrictions imposed by the 1940 Act, as discussed above.

~~Note 6 – Financial Highlights~~

~~The following is a schedule of financial highlights of the Company for the three months ended March 31, 2020 and 2019.~~

Per Share Data: Three Months Ended
March 31, 2020 Three Months Ended
March 31, 2019
NAV at beginning of period $ 7.77
$ 7.96
Results from Operations
Net investment income ^{(1) (2)}
0.16
0.18
Net realized loss on investments ^{(1) (2)}
(0.04 ) (0.09 )
Net change in unrealized appreciation (depreciation) on investments^{(1) (2)}
(1.21 ) 0.15
Net increase (decrease) in net assets resulting from operations (1.09 ) 0.24
Stockholder distributions^{(1) (3)}

Distributions from net investment income ^{(1) (2)}
(0.16 ) (0.17 )
Distributions in excess of net investment income ^{(1) (2)}
(0.01 ) —
Net decrease in net assets resulting from stockholder distributions (0.17 ) (0.17 )
Other ⁽⁴⁾
(0.01 ) —
NAV at end of the period $ 6.50
$ 8.03
Shares of common stock outstanding at end of period 78,423,129
78,547,196
Weighted average shares of common stock outstanding 78,607,063
78,819,746


(1)	Based on ~~weighted average~~weighted-average number of ~~shares of~~ common ~~stock~~shares outstanding for the period.


(2)	~~Changes in~~Net realized gains or losses, net ~~investment income and net realized and~~ unrealized appreciation ~~(depreciation) on investments~~or depreciation, and income taxes can ~~change~~fluctuate significantly from period to period.


(3)	~~The stockholder distributions~~Dividends paid represent the stockholder distributions declared ~~for~~during the period.


(4)	Includes the impact of the different share amounts as a result of calculating per share data based on the weighted-average basic shares outstanding during the period and certain per share data based on the ~~weighted average basic~~ shares outstanding as of a period end or transaction date.

~~outstanding during the period and certain per share data based on the shares outstanding as of a period end or transaction date.~~


	Three Months Ended March 31,
		2021			2020

	(dollars in thousands)

NAV at end of period	$	584,320		$	509,564
Average NAV	$	581,972		$	559,435
Average outstanding debt	$	249,947		$	424,000
Ratios to average net assets:
Ratio of operating expenses to average NAV(1)(2)		1.44	%		2.06	%
Ratio of operating expenses excluding interest expense to NAV(1)(2)		0.89	%		1.13	%
Ratio of net investment income to average NAV(2)		2.05	%		2.23	%
Portfolio turnover ratio(2)		7.25	%		9.04	%
Total return based on change in NAV(2)(3)		2.20	%		(14.16)	%

Three Months Ended
March 31, 2020 Three Months Ended
March 31, 2019
(dollars in thousands)
Net assets at end of period $ 509,564
$ 630,393
Average net assets $ 559,435
$ 627,880
Average Credit Facilities borrowings $ 424,000
$ 504,500

Ratios to average net assets:
Ratio of total expenses to average net assets⁽¹⁾
2.06 % 2.43 %
Ratio of net investment income to average net assets ⁽¹⁾
2.23 % 2.21 %
Portfolio turnover ratio 9.04 % 3.58 %
Total return⁽²⁾
(14.16 )% 3.02 %

(1)

~~Ratio~~Total expenses are the sum of operating expenses and net income tax provision/benefit. Net income tax provision/benefit includes the accrual of net deferred tax provision/benefit relating to the net unrealized appreciation/depreciation on portfolio investments held in Taxable Subsidiaries and due to the change in the loss carryforwards, which are non-cash in nature and may vary significantly from period to period. The Company is required to include net deferred tax provision/benefit in calculating its total expenses ~~to average~~even though these net assets is calculated net of waiver of reimbursement of internal administrative services expenses. For the three months ended March 31, 2020 and 2019, the Advisers waived reimbursement of internal administrative services expenses of approximately $784,000 and $758,000, respectively. Excluding interest expense, the ratio of total expenses to average net assets for the three months ended March 31, 2020 and 2019 was 1.13% and 1.30%, respectively. See Note 10 — ~~Related Party Transactions and Arrangements~~ ~~for further discussion of fee waivers provided by the Advisers.~~

deferred taxes are not currently payable/receivable.

(2)	Not annualized.

~~(2)~~(3)

Total return is ~~calculated as the~~based on change in ~~NAV per share~~net asset value was calculated using the sum of ending net asset value plus dividends to stockholders and ~~stockholder distributions declared per share over~~other non-operating changes during the ~~reporting~~ period, as divided by the ~~NAV per share at~~beginning net asset value. Non-operating changes include any items that affect net asset value other than the ~~beginning~~net increase in net assets resulting from operations, such as the effects of stock offerings, shares issued under the ~~period. The total return does not reflect the sales load from the sale of the Company’s common stock.~~dividend reinvestment plan and other miscellaneous items.

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~~Note 7 – Stockholder Distributions~~

NOTE G—DIVIDENDS, DISTRIBUTIONS AND TAXABLE INCOME

The ~~following table reflects the cash distributions per share that~~Company’s dividends, if any, will be determined by its Board of Directors on a quarterly basis. During 2021, the Company declared ~~on its common stock~~dividends of $8.0 million, or $0.10 per share, during the three months ended March 31, 2021, compared to dividends declared during the three months ended March 31, 2020, ~~and 2019 (dollars in thousands except~~totaling approximately $13.7 million, or $0.17 per ~~share amounts).~~

Distributions
Per Share Amount
2020
Three months ended March 31, 2020 $ 0.17
$ 13,730
2019
Three months ended March 31, 2019 $ 0.17
$ 13,606

On March 5, 2020, with the authorization of the Company’s board of directors, the Company declared distributions to its stockholders for the period of April 2020 through June 2020. These distributions have been, or will be, calculated based on

stockholders of record each day from April 1, 2020 through June 30, 2020 in an amount equal to $0.00191781 per share, per day. Distributions are paid on the first business day following the completion of each month to which they relate.

The Company has adopted an “opt in” distribution reinvestment plan for its stockholders. As a result, if the Company makes a distribution, its stockholders will receive distributions in cash unless they specifically “opt in” to the distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of the Company’s common stock.

~~The following table reflects the sources of the cash distributions that the Company declared and, in some instances, paid on its common stock during the three months ended March 31, 2020 and 2019.~~

Three Months Ended
March 31, 2020 Three Months Ended
March 31, 2019
(dollars in thousands)
Source of Distribution
Distribution
Amount
Percentage
Distribution
Amount
Percentage
Net realized income from operations (before waiver of incentive fees) $ 9,093
66.2 % $ 6,757
49.7 %
Distributions in excess of net realized income from operations ⁽¹⁾
4,637
33.8
6,849
50.3
Total $ 13,730
100.0 % $ 13,606
100.0 %


~~(1)~~	~~Includes adjustments made to GAAP-basis net investment income to arrive at taxable income available for distributions. See Note 8 —~~ ~~Taxable Income~~ ~~for the sources of the Company’s cash distributions on a tax basis.~~

The Company may fund its cash distributions from all sources of funds legally available, including stock offering proceeds, if any, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to it on account of preferred and common equity investments in portfolio companies, and fee waivers from its Advisers. The Company has not established limits on the amount of funds that the Company may use from legally available sources to make distributions. The Company expects that for the foreseeable future, a portion of the distributions may be paid from sources other than net realized income from operations, which may include stock offering proceeds, if any, borrowings, and fee waivers from the Advisers. See Note 10 — ~~Related Party Transactions and Arrangements — Advisory Agreements and Conditional Fee Waiver and Expense Reimbursement Waivers.~~

The Company’s distributions may exceed its earnings and, as a result, a portion of the distributions it makes may represent a return of capital for U.S. federal income tax purposes. The timing and amount of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of the Company’s board of directors.

Under certain applicable provisions of the Code and the Treasury regulations, distributions payable in cash or in shares of stock at the election of the stockholders are treated as taxable dividends. The Internal Revenue Service has published guidance indicating that this rule will apply even where the total amount of cash that may be distributed is limited to no more than 10% of the total distribution, for distributions declared on or before December 31, 2020, and after that, to no more than 20% of the total distribution. Under this guidance if too many stockholders elect to receive their distributions in cash, the cash available for distribution must be allocated among the stockholders electing to receive cash (with the balance of the distribution paid in stock). If the Company decides to make any distributions consistent with this guidance that are payable in part in its stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, shares of the Company’s stock, or a combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of the Company’s current and accumulated earnings and profits for U.S. federal income tax purposes. As a result, a U.S. stockholder may be required to pay tax with respect to such dividends in excess of any cash received. If a U.S. stockholder sells the stock it receives in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the dividend, depending on the value of the Company’s stock at the time of the sale. Furthermore, with respect to non-U.S. stockholders, the Company may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock.

~~Note 8 – Taxable Income~~

share.

The Company has elected to be treated for U.S. federal income tax purposes as a RIC. The Company’s taxable income includes the taxable income generated by the Company and certain of its subsidiaries which are treated as disregarded entities for tax purposes. As a RIC, the Company generally will not ~~incur~~pay corporate-level U.S. federal income taxes on any net ordinary taxable income or capital gains that the Company ~~timely~~ distributes ~~each taxable year as dividends~~ to its stockholders. ~~To qualify as a RIC in any taxable year, the~~The Company must ~~among other things, satisfy certain source-of-income and asset diversification requirements. In addition, the Company must~~generally distribute ~~an amount in each taxable year generally~~ at least ~~equal to~~ 90% of its ~~investment~~“investment company taxable income” (which is generally its net ordinary taxable income ~~determined without regard to any deduction for dividends paid,~~and realized net short-term capital gains in ~~order~~excess of realized net long-term capital losses) and 90% of its tax-exempt income to maintain its ~~ability to be subject to taxation as a RIC.~~RIC status (pass-through tax treatment for amounts distributed). As a part of maintaining ~~its~~ RIC status, undistributed taxable income (subject to a 4% ~~nondeductible,~~non-deductible U.S. federal excise tax) pertaining to a given ~~taxable~~fiscal year may be distributed up to 12 months subsequent to the end of that ~~taxable~~fiscal year, provided such ~~distributions~~dividends are declared on or prior to the later of ~~eight-and-one-half months after~~(i) filing of the U.S. federal income tax return for the applicable fiscal year or (ii) the fifteenth day of the ninth month following the close of the ~~taxable~~ year in which such taxable income was ~~generated or the extended due date for the timely filing~~generated.

The determination of the tax return related to the tax year in which such taxable income was generated and paid to the shareholders in the 12-month period following the close of such taxable year and not later than the date of the first dividend payment of the same type of dividendattributes for The Company’s distributions is made ~~after such declaration. For the taxable year ended December 31, 2018, the Company distributed $20.5 million, or $0.260865 per share, of~~annually, based upon its taxable income ~~in 2019, prior~~for the full year and distributions paid for the full year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. Ordinary dividend distributions from a RIC do not qualify for the 20% maximum tax rate (plus a 3.8% Medicare surtax, if applicable) on dividend income from domestic corporations and qualified foreign corporations, except to ~~filing of its U.S. federal income tax return for its 2018 taxable year. As a result,~~ the ~~Company was subject to a 4% nondeductible, U.S. federal excise tax liability of approximately $765,000. For~~extent that the ~~taxable year ended December 31, 2019,~~RIC received the ~~Company distributed $17.1 million, or $0.217936 per share, of its taxable~~ income in ~~2020, prior to filing~~the form of ~~its U.S. federal~~qualifying dividends from domestic corporations and qualified foreign corporations. The tax attributes for distributions will generally include both ordinary income ~~tax~~and qualified dividends, but may also include either one or both of capital gains and return ~~for its 2019 taxable year. As a result, the Company was subject to a 4% nondeductible, U.S. federal excise tax liability~~ of ~~approximately $635,000.~~

~~The Company accounts for income taxes in conformity with ASC Topic 740 -~~ ~~Income Taxes~~, which provides guidelines for how uncertain tax positions should be recognized, measured, presented and disclosed in financial statements. ASC Topic 740 requires the evaluation of tax positions taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the Company’s financial statements is the largest benefit or expense that has a greater than

50% likelihood of being realized upon its ultimate settlement with the relevant tax authority. Positions not deemed to meet the more-likely-than-not threshold would be recorded as a tax benefit or expense in the current year. It is the Company’s policy to recognize accrued interest and penalties related to uncertain tax benefits, if any, in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof. Management has analyzed the Company’s tax positions and has concluded that there were no material uncertain income tax positions through March 31, 2020. The Company identifies its major tax jurisdiction as the United States, and the Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months. Tax returns for the 2016 through 2018 taxable years remain subject to examination by U.S. federal and most state tax authorities.

Two of the Company’s wholly owned subsidiaries, HMS Equity Holding and HMS Equity Holding II, have elected to be taxable entities for U.S. tax purposes. HMS Equity Holding and HMS Equity Holding II primarily hold equity investments in portfolio companies which are treated as “pass through” entities for U.S. tax purposes. HMS Equity Holding and HMS Equity Holding II are consolidated for financial reporting purposes, and the portfolio investments held by each entity are included in the condensed consolidated financial statements as portfolio investments recorded at fair value. HMS Equity Holding and HMS Equity Holding II are not consolidated with the Company for U.S. federal income tax purposes and may generate income tax expense, or benefit, and the related tax assets and liabilities, as a result of its ownership of certain portfolio investments. This income tax expense, or benefit, if any, and the related tax assets and liabilities, are reflected in the Company’s condensed consolidated financial statements.

capital.

Listed below is a reconciliation of “Net increase (decrease) in net assets resulting from operations” to taxable income and to total distributions declared to common stockholders for the three months ended March 31, ~~2020~~2021 and ~~2019 (dollars in thousands).~~2020.


	Three Months Ended March 31,
		2021		2020

	(estimated, dollars in thousands)


Net increase (decrease) in net assets resulting from operations	$	12,657	$	(85,816)
Net change in unrealized (appreciation) depreciation		(5,193)		94,909
Income tax provision		396		76
Pre-tax book (income) loss not consolidated for tax purposes		(2,485)		2,176
Book income (loss) and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates		936		509
Estimated taxable income		6,311		11,854
Taxable income earned in prior year and carried forward for distribution in current year		29,173		17,198
Taxable income earned prior to period end and carried forward for distribution next period		(35,484)		(19,991)
Dividend accrued as of period end and paid-in the following period		7,961		4,669
Taxable income earned to be carried forward		(27,523)		(15,322)
Total distributions accrued or paid to common stockholders	$	7,961	$	13,730

Three Months Ended March 31, 2020 Three Months Ended March 31, 2019

Net increase (decrease) in net assets resulting from operations $ (85,816 ) $ 18,820
Net change in unrealized (appreciation) depreciation 94,909
(12,063 )
Income tax provision 76
58
Pre-tax book loss not consolidated for tax purposes 2,176
5,255
Book income and tax income differences, including debt origination, structuring fees, dividends, realized gains and changes in estimates 509
224
Estimated taxable income⁽¹⁾
11,854
12,294

Taxable income earned in prior year and carried forward for distribution in current year 17,198
20,574

Taxable income earned prior to period end and carried forward for distribution next period (19,991 ) (23,935 )
Dividend accrued as of period end and paid-in the following period 4,669
4,673
Taxable income earned to be carried forward $ (15,322 ) $ (19,262 )

Total distributions accrued or paid to common stockholders $ 13,730
$ 13,606

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(1)	The Company’s taxable income for each period is an estimate and will not be finally determined until the Company files its tax return for each year. Therefore, the final taxable income, and the taxable income earned in each period and carried forward for distribution in the following period, may be different than this estimate.

The Taxable Subsidiaries primarily hold certain portfolio investments for MSC Income Fund. The Taxable Subsidiaries permit MSC Income Fund to hold equity investments in portfolio companies which are “pass-through” entities for tax purposes and to continue to comply with the “source-of-income” requirements contained in the RIC tax provisions of the Code. The Taxable Subsidiaries are consolidated with MSC Income Fund for U.S. GAAP financial reporting purposes, and the portfolio investments held by the Taxable Subsidiaries are included in the Company’s consolidated financial statements as portfolio investments and recorded at fair value. The Taxable Subsidiaries are not consolidated with the Company for income tax purposes and may generate income tax expense, or benefit, and tax assets and liabilities, as a result of their ownership of certain portfolio investments. The taxable income, or loss, of the Taxable Subsidiaries may differ from their book income, or loss, due to temporary book and tax timing differences and permanent differences. The Taxable Subsidiaries are each taxed at their normal corporate tax rates based on their taxable income. The income tax expense, or benefit, if any, and the related tax assets and liabilities, of the Taxable Subsidiaries are reflected in The Company’s consolidated financial statements.

The income tax expense (benefit) for the Company is generally composed of (i) deferred tax expense (benefit), which is primarily the result of the net activity relating to the portfolio investments held in the Taxable Subsidiaries, including changes in loss carryforwards, changes in net unrealized appreciation or depreciation and other temporary book tax differences, and (ii) current tax expense, which is primarily the result of current U.S. federal income and state taxes and excise taxes on the Company’s estimated undistributed taxable income. The income tax expense, or benefit, and the related tax ~~assets~~asset and liabilities generated by ~~HMS Equity Holding and HMS Equity Holding II,~~the Taxable Subsidiaries, if any, are reflected in The Company’s consolidated statement of operations. The Company’s provision for income taxes was comprised of the ~~Company’s Condensed Consolidated Financial Statements. For~~following for the three months ended March 31, 2021 and 2020 and 2019, the Company recognized a net income tax (benefit) provision of $76,000 and $58,000, respectively, related to deferred taxes (benefit) of $7.7 million and $1.1 million, respectively, and other taxes (benefit) of $76,000 and $58,000, respectively, offset by a valuation allowance of $(7.7) million and $(1.1) million, respectively. For the three months ended March 31, 2020 and 2019, the other taxes (benefit) included $76,000 and $58,000, respectively, related to accruals for state and other taxes.(amounts in thousands):


	Three Months Ended March 31,
	2021		2020
Current tax expense (benefit):
Federal	$	—	$	—
State		87		76
Excise		309		—
Total current tax expense (benefit)		396		76
Deferred tax expense (benefit):
Federal		—		—
State		—		—
Total deferred tax expense (benefit)		—		—

Total income tax provision (benefit)	$	396	$	76

As of March 31, 2020, the cost basis of the Company’s portfolio investments for tax purposes was $1.0 billion, with such investments having an estimated net unrealized depreciation of $106.5 million, composed of gross unrealized appreciation of $49.1 million and gross unrealized depreciation of $155.6 million. As of December 31, 2019, the cost basis of investments for tax purposes was $1.0 billion, with such investments having an estimated net unrealized depreciation of $12.5 million, composed of gross unrealized appreciation of $55.3 million and gross unrealized depreciation of $68.5 million.

The net deferred tax ~~assets~~liability at ~~both~~ March 31, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~$0,~~$0. Deferred tax asset and liability balances primarily related to net unrealized appreciation or depreciation, loss carryforwards, ~~timing~~and other temporary book-tax differences ~~in net unrealized depreciation of portfolio investments, and basis differences of~~relating to portfolio investments held by ~~HMS Equity Holding and HMS Equity Holding II offset by a~~the Taxable Subsidiaries. The Company recorded valuation ~~allowance. Based on HMS Equity Holding’s and HMS Equity Holding II’s short operating history, management believes it is~~allowance to reduce the carrying value of deferred tax assets to the amount that more likely than not ~~that there will be inadequate profits in HMS Equity Holding and HMS Equity Holding II against which the deferred tax assets~~ can be ~~offset. Accordingly, the Company recorded a full valuation allowance against such deferred tax assets.~~

~~The following table sets forth the significant components of net deferred tax assets and liabilities as of~~realized. At March 31, ~~2020 and December 31, 2019 (amounts in thousands):~~

March 31, 2020 December 31, 2019
Deferred tax assets:
Net operating loss carryforwards $ 2,406
$ 2,420
Foreign tax credit carryforwards 10
10
Capital loss carryforwards 15,482
14,750
Net basis differences in portfolio investments 67

Net unrealized depreciation of portfolio investments 5,668
67
    Total deferred tax assets 23,633
17,247
Deferred tax liabilities:
Net basis differences in portfolio investments (3,414 ) (3,217 )
Net unrealized appreciation of portfolio investments (14 ) (1,576 )
Other —
—
    Total deferred tax liabilities (3,428 ) (4,793 )
Valuation allowance (20,205 ) (12,454 )
    Total net deferred tax assets (liabilities) $ —
$ —

~~For~~2021, for U.S. federal income tax purposes, the Taxable Subsidiaries had net operating loss carryforwards ~~generated~~from prior ~~to December 31, 2017~~years which, if unused, will expire in various taxable years from 2034 through 2037. Any net operating losses generated in 2018 and future periods are not subject to expiration and will ~~have an indefinite carryforward.~~carryforward indefinitely until utilized. The net capital loss carryforwards of the Company will expire in taxable years ~~2020~~2021 through 2025. The timing and manner in which ~~HMS Equity Holding and HMS Equity Holding II~~the Company will utilize any ~~net~~ loss carryforwards in such taxable years, or in total, may be limited in the future under the provisions of the Code. Additionally, the Taxable Subsidiaries have interest expense limitation carryforwards which have an indefinite carryforward period.

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~~Federal legislation intended~~

NOTE H—SHARE REPURCHASE PROGRAM

Prior to ~~ameliorate~~March 31, 2020, the ~~economic~~Company historically conducted quarterly tender offers pursuant to its share repurchase program. On March 31, 2020, the Company’s Board of Directors unanimously approved a temporary suspension of the Company’s share repurchase program commencing with the second quarter of 2020. The Board of Directors determined that it was in the best interest of the Company to suspend the share repurchase program in order to preserve financial flexibility and liquidity given the potential prolonged impact of COVID-19. From April 2020 through March 2021, the Share Repurchase Plan remained suspended due to the impacts of the COVID-19 ~~pandemic,~~pandemic. On March 8, 2021, the ~~Coronavirus Aid, Relief and Economic Security Act, or~~Company announced that its Board of Directors approved the ~~CARES Act, has been enacted that makes technical corrections to, or modifies on a temporary basis, certain~~reinstatement of the ~~provisions~~share repurchase program following the payment of the ~~Tax Cut and Jobs Act~~dividend declared by the Board of ~~2017.~~Directors for payment on April 1, 2021.

Under the terms of the reinstated plan, the Company will offer to purchase shares at the estimated NAV per share, as determined within 48 hours prior to the repurchase date. The amount of shares of the Company’s common stock to be repurchased during any calendar quarter may be equal to the lesser of (i) the number of shares of common stock the Company could repurchase with the proceeds it received from the issuance of common stock under the Company’s dividend reinvestment plan or (ii) 2.5% of the weighted average number of shares of common stock outstanding in the prior four calendar quarters. Upon resuming making offers to repurchase shares pursuant to the share repurchase program, the Company is ~~currently assessing the impact, if any,~~initially limiting repurchase offers to the ~~condensed consolidated financial statements and disclosures~~number of shares of common stock it can repurchase with 90% of the ~~Company~~cash retained as a result of issuances of common stock under the ~~CARES Act.~~

~~For~~Company’s dividend reinvestment plan.

At the ~~years ending December 31, 2019, 2018 and 2017, respectively, the tax characteristics of distributions paid to shareholders were as follows (amounts in thousands):~~

Year Ended December 31,
Tax Characteristics of Distributions 2019 2018 2017

Ordinary income $ 53,297
96.65 % $ 50,274
90.56 % $ 52,473
96.43 %
Capital gain distributions 1,848
3.35
5,238
9.44
1,941
3.57
Total distributions $ 55,145
100.00 % $ 55,512
100.00 % $ 54,414
100.00 %

~~The determination of the tax attributes~~discretion of the Company’s ~~distributions is made annually at~~Board of Directors, the Company may also use cash on hand, cash available from borrowings and cash from the sale of investments as of the end of the applicable period to repurchase shares. The Company’s ~~taxable year based~~Board of Directors may amend, suspend or terminate the share repurchase program upon ~~the Company’s taxable income for the full taxable year and distributions paid for the full taxable year. Therefore, a determination made on an interim basis may not be representative~~30 days’ notice. Since inception of ~~the actual tax attributes of distributions for a full year. If~~its share repurchase program, the Company ~~had determined~~funded the ~~tax attributes~~repurchase of $103.0 million in shares. For the three months ended March 31, 2021 the Company did not repurchase any shares of its distributions taxable year-to-date as of March 31, 2020, 100% would be from its current and accumulated earnings and profits. However, there can be no certainty to stockholders that this determination is representative of what the actual tax attributes of the Company’s anticipated fiscal and taxable years ending December 31, 2020 distributions to stockholders will be. The actual tax characteristics of distributions to stockholders will be reported to the Internal Revenue Service and stockholders subject to information reporting shortly after the close of each calendar year on Form 1099-DIV.

Dividends from net investment income and distributions from net realized capital gains are determined in accordance with U.S. federal tax regulations, which may differ from amounts determined in accordance with GAAP and those differences could be material. These book-to-tax differences are either temporary or permanent in nature. Reclassifications due to permanent book-to-tax differences, such as the non-deductible excise tax, have no impact on net assets.

~~Note 9 – Supplemental Cash Flow Disclosures~~

~~Listed below are the supplemental cash flow disclosures for~~common stock. For the three months ended March 31, 2020 the Company funded $6.1 million for shares of its common stock tendered for repurchase under the plan approved by the Board of Directors.

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NOTE I—COMMITMENTS AND CONTINGENCIES

At March 31, 2021, the Company had the following outstanding commitments (in thousands):


Investments with equity capital commitments that have not yet funded:	Amount

Brightwood Capital Fund III, LP	$	1,000
Freeport First Lien Loan Fund III LP		3,113
HPEP 3, L.P.		1,555

Total equity commitments	$	5,668

Investments with commitments to fund revolving loans that have not been fully drawn or term loans with additional commitments not yet funded:

Adams Publishing Group, LLC	$	5,000
NinjaTrader, LLC		3,078
Mako Steel LP		2,637
MB2 Dental Solutions, LLC		2,569
SI East, LLC		2,500
Lynx FBO Operating LLC		1,875
Hunter Defense Technologies, Inc.		1,770
Arcus Hunting, LLC		1,446
Invincible Boat Company, LLC		1,080
Classic H&G AcquireCo, LLC		1,000
DTE Enterprises, LLC		750
GRT Rubber Technologies LLC		660
Eastern Wholesale Fence LLC		565
Hawk Ridge Systems, LLC		500
Clickbooth.Com, LLC		457
Chamberlin Holdco, LLC		400
Cody Pools Holdings, LLC		400
Direct Marketing Solutions, Inc.		400
Trantech Radiator Topco LLC		400
Gamber-Johnson, LLC		300
Tedder Acquisition, LLC		300
Dynamic Communities, LLC		250
American Nuts, LLC		247
Mystic Logistics Holdings, LLC		200
Klein Hersh, LLC		179

Total loan commitments	$	28,963

Total commitments	$	34,631

The Company will fund its unfunded commitments from the same sources it uses to fund its investment commitments that are funded at the time they are made (which are typically through existing cash and ~~2019 (dollars in thousands):~~

Supplemental Disclosure of Cash Flow Information Three Months Ended March 31, 2020 Three Months Ended March 31, 2019
Cash paid for interest $ 4,493
$ 6,675
Cash paid for income taxes 685
924

Supplemental Disclosure of Non-Cash Flow Information

Stockholder distributions declared and unpaid 4,669
4,673
Stockholder distributions reinvested 5,899
6,366
Unpaid deferred financing costs —
7

~~Note 10 — Related Party Transactions~~cash equivalents and ~~Arrangements~~

borrowings under the Credit Facilities). The Company follows a process to manage its liquidity and ensure that it has available capital to fund its unfunded commitments as necessary. The Company had no unrealized depreciation on the outstanding unfunded commitments as of March 31, 2021.

NOTE J - RELATED PARTY TRANSACTIONS

1. Advisory Agreements and Conditional Fee and Expense Reimbursement Waivers

Prior to October 30, 2020, the business of the Company was managed by HMS Adviser (an affiliate of Hines), pursuant to Original Investment Advisory Agreement. On October 30, 2020, the Company entered into the Investment Advisory Agreement with MSC Adviser, which includes similar terms to those contained in Original Investment

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Advisory Agreement with HMS Adviser. The agreements state that the respective adviser will oversee the management of the Company’s activities and is responsible for making investment decisions with respect to, and providing day-to-day management and administration of, the Company’s investment portfolio. Prior to October 30, 2020, the Company and HMS Adviser had engaged MSC Adviser pursuant to a sub-advisory agreement to identify, evaluate, negotiate and structure the ~~Advisers entered into conditional income~~Company’s prospective investments, make investment and portfolio management recommendations for approval by HMS Adviser, monitor the Company’s investment portfolio and provide certain ongoing administrative services to HMS Adviser in exchange for which HMS Adviser agreed to pay MSC Adviser 50.0% of the base management fee and incentive fees described below as compensation for its services.

Pursuant to the Original Investment Advisory Agreement, the Company paid HMS Adviser a base management fee and incentive fees as compensation for the services described above. The base management fee was calculated at an annual rate of 2.0% of the Company’s average gross assets. The term “gross assets” means total assets of the Company as disclosed on the Company’s balance sheet. “Average gross assets” are calculated based on the Company’s gross assets at the end of the two most recently completed calendar quarters. The base management fee was payable quarterly in arrears. Under the Investment Advisory Agreement, the Company pays a 1.75% base management fee to MSC Adviser on substantially the same terms as the Original Investment Advisory Agreement. The base management fee is expensed as incurred.

The incentive fee ~~waiver agreements (the “2016-2018 Conditional Income Incentive Fee Waiver Agreements”), most recently on March 4, 2019, pursuant~~under the Original Investment Advisory Agreement and under the Investment Advisory Agreement is the same. The incentive fees consist of two parts. The first part, referred to ~~which, for a period from January 1, 2016 through December 31, 2018,~~as the ~~Advisers would waive payments in respect of the “subordinated~~subordinated incentive fee on income,” is calculated and payable quarterly in arrears based on pre-incentive fee net investment income for the immediately preceding quarter. The subordinated incentive fee on income is equal to 20.0% of the Company’s pre-incentive fee net investment income for the immediately preceding quarter, expressed as a quarterly rate of return on adjusted capital at the beginning of the most recently completed calendar quarter, exceeding 1.875% (or 7.5% annualized), subject to a “catch up” feature (as described below).

For this purpose, pre-incentive fee net investment income means interest income, dividend income and any other income (including any other fees such ~~term~~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 management fee, expenses payable under any proposed administration agreement and any interest expense and dividends paid on any issued and outstanding preferred stock, but excluding the incentive fee). Pre-incentive fee net investment income includes, in the case of investments with a deferred interest feature (such as original issue discount debt instruments and PIK interest and zero coupon securities), accrued income that we have not yet received in cash. Pre-incentive fee net investment income does not include any realized capital gains, realized capital losses or unrealized capital appreciation or depreciation. For purposes of this fee, adjusted capital means cumulative gross proceeds generated from sales of the Company’s common stock (including proceeds from the Company’s dividend reinvestment plan) reduced for non-liquidating distributions, other than distributions of profits, paid to the Company’s stockholders and amounts paid for share repurchases pursuant to the Company’s share repurchase program. The subordinated incentive fee on income is ~~defined~~expensed in the quarter in which it is incurred.

The calculation of the subordinated incentive fee on income for each quarter is as follows:

No subordinated incentive fee on income shall be payable to MSC Adviser in any calendar quarter in which the Company’s pre-incentive fee net investment income does not exceed the hurdle rate of 1.875% (or 7.5% annualized) on adjusted capital;

100% of the Company’s pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than or equal to 2.34375% in any calendar quarter (9.375% annualized) shall be payable to MSC Adviser. This portion of the subordinated incentive fee on income is referred to as the “catch up” and is intended to provide MSC Adviser with an incentive fee of 20.0% on all of the Company’s pre-incentive fee net investment income as if the hurdle rate did not apply when the pre-incentive fee net investment income exceeds 2.34375% (9.375% annualized) in any calendar quarter; and

For any quarter in which the Company’s pre-incentive fee net investment income exceeds 2.34375% (9.375% annualized), the subordinated incentive fee on income shall equal 20.0% of the amount of the

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Company’s pre-incentive fee net investment income, as the hurdle rate and catch-up will have been achieved.

The second part of the incentive fee, referred to as the incentive fee on capital gains, is an incentive fee on realized capital gains earned from the portfolio of the Company and is determined and payable in arrears as of the end of each calendar year (or upon termination of the Investment Advisory Agreement, upon the occurrence of any event that, in the Advisers’ sole discretion, causes such waiver to be deemed necessary. The 2016-2018 Conditional Income Incentive Fee Waiver Agreements may require the Company to repay base management fees or incentive fees previously waived by the Advisers under certain circumstances and to the extent eligible for repayment.

~~Previously waived fees are potentially subject to repayment by the Company, if at all, within a period not to exceed three years from the date of each respective~~Agreement). This fee ~~waiver. Thus, in any quarter where a surplus exists and the conditions described below are satisfied, the surplus will be available, subject to approval~~equals 20.0% of the Company’s ~~board of directors, to reimburse waived fees. Reimbursement of previously waived fees will only be permitted if~~incentive fee capital gains, which equals the operating expense ratio is equal to or less than the operating expense ratio at the time the corresponding fees were waived and if the annualized rate of regular cash distributions to stockholders is equal to or greater than the annualized rateCompany’s realized capital gains on a cumulative basis from inception, calculated as of the ~~regular cash distributions at~~end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gain incentive fees. At the end of each reporting period, the Company estimates the incentive fee on capital gains and accrues the fee based on a hypothetical liquidation of its portfolio. Therefore, the accrual includes both net realized gains and net unrealized gains (the net unrealized difference between the fair value and the par value of its portfolio), if any. The incentive fee accrued pertaining to the unrealized gain is neither earned nor payable to MSC Adviser until such time ~~the corresponding fees were waived.~~

it is realized.

For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company incurred base management fees of approximately $3.9 million and $5.0 million, ~~and $5.7 million, respectively, and subordinated incentive fees on income of $0.0 million and $1.4 million,~~ respectively. ~~For each of the three months ended March 31, 2020 and 2019, the Company did not incur any capital gains incentive fees.~~

For the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the Company did not ~~record an accrual for~~incur subordinated incentive fees on income or any ~~previously waived~~capital gains incentive fees. ~~Any future reimbursement of previously waived fees~~

Pursuant to the Advisers will not be accrued until the reimbursement of the waived fees becomes probable and estimable, which will be upon approval of the Company’s board of directors. To date, none of the previously waived fees has been approved by the Company’s board of directors for reimbursement.

The table below presents the fees waived by the Advisers and the timing of potential reimbursement of waived fees (dollars in thousands). Previously waived fees will only be reimbursed with the approval of the Company’s board of directors and if the “Operating Expense Ratio” (as described in footnote 3 to the table below) is equal to or less than the Company’s operating expense ratio at the time the corresponding fees were waived and if the annualized rate of the Company’s regular cash distributions to stockholders is equal to or greater than the annualized rate of the Company’s regular cash distributions at the time the corresponding fees were waived.

Management Fee⁽¹⁾

Subordinated Incentive Fee⁽¹⁾

Quarter Ended Waivers
Repaid to Adviser⁽²⁾
Waivers
Repaid to Adviser⁽²⁾

Operating
Expense
Ratio ⁽³⁾
Annualized Distribution Rate ⁽⁴⁾
Eligible to be Repaid Through ⁽⁵⁾
6/30/2017 $ —
$ —
$ 246
$ —
1.67% $0.70 6/30/2020
9/30/2017 $ —
$ —
$ —
$ —
1.91% $0.70 9/30/2020
12/31/2017 $ —
$ —
$ —
$ —
1.82% $0.70 12/31/2020
3/31/2018 $ —
$ —
$ —
$ —
1.80% $0.70 3/31/2021
6/30/2018 $ —
$ —
$ —
$ —
1.96% $0.70 6/30/2021
9/30/2018 $ —
$ —
$ 2,535
$ —
2.01% $0.70 9/30/2021
12/31/2018 $ —
$ —
$ 798
$ —
2.32% $0.70 12/31/2021


~~(1)~~	~~Fees waived pursuant to the 2016-2018 Conditional Income Incentive Fee Waiver Agreements.~~

~~(2)~~

Subject to the approval of the Company’s board of directors, in future periods previously waived fees may be paid to the Advisers, if the Company’s cumulative net increase in net assets resulting from operations exceeds the amount of cumulative distributions paid to stockholders. The previously waived fees are potentially subject to repayment by the Company, if at all, within a period not to exceed three years from the date of each respective fee waiver. To date, none of the previously waived fees have been approved for reimbursement by the Company’s board of directors.


~~(3)~~	The “Operating Expense Ratio” is calculated on a quarterly basis as a percentage of average net assets and includes all expenses borne by the Company, except for base management and incentive fees and administrative expenses waived by the Advisers and organizational and offering expenses.


~~(4)~~	~~“Annualized Distribution Rate” equals $0.00191781 per share, per day based on the distributions declared by the Company’s board of directors.~~


~~(5)~~	Prior to March 31, 2017, the Advisers waived total management fees of $2.8 million, total subordinated incentive fees of $3.9 million and total capital gain incentive fees of $8,000. Due to the passage of time, such waived fees are not eligible for repayment under the applicable fee waiver agreements.

~~Pursuant to the~~Original Investment Advisory Agreement and Sub-Advisory Agreement, the Company is required to pay or reimburse the Advisers for administrative services expenses, which include all costs and expenses related to the Company’s day-to-day administration and management not related to advisory services, whether such administrative services to the extent performed by the Advisers or their affiliates, were performed by a third party service provider or affiliates of the Advisers (“Internal Administrative Services”). The Advisers do not earn any profit under their provision of administrative services to the Company. For the three months ended March 31, ~~2020~~2021, and ~~2019,~~2020, the Company incurred, and the Advisers waived the reimbursements of, Internal Administrative Services expenses of approximately ~~$784,000~~$1.1 million, and ~~$758,000,~~$0.8 million, respectively. The Company and the Advisers entered into an expense support and conditional reimbursement agreement, as amended from time to time, which ~~extends~~extended the period for waiver of reimbursement of Internal Administrative Services expenses accrued pursuant to the Original Investment Advisory Agreement and the Sub-Advisory Agreement through ~~June~~October 29, 2020. MSC Adviser also agreed to waive reimbursement of Internal Administrative Expenses from October 30, ~~2020.~~2020 through March 31, 2021. Since inception, the Advisers waived the reimbursement of total Internal Administrative Services expenses of ~~$16.9~~$20.8 million. Waived Internal Administrative Services expenses are permanently waived and are not subject to future reimbursement.

The table below outlines fees incurred and expense reimbursements payable to the Adviser, the Sub-Adviser and their respective affiliates for the three months ended March 31, 2020 and 2019 and amounts unpaid as of March 31, 2020 and December 31, 2019 (dollars in thousands).

Incurred Unpaid as of
Three Months Ended March 31, March 31, 2020 December 31, 2019
Type and Recipient 2020 2019
Offering Costs - the Adviser, Sub-Adviser $ 88
$ 95
$ —
$ —
Other ⁽²⁾ - the Adviser
157
204
48
44
Selling Commissions - Dealer Manager —
—
—
—
Dealer Manager Fee - Dealer Manager —
—
—
—
Due to Affiliates
$ 48
$ 44

Base Management Fees- the Adviser, Sub-Adviser
4,994
5,726
$ 4,994
$ 5,388
Incentive Fees on Income - the Adviser, Sub-Adviser⁽¹⁾
—
1,399
—
—
Base Management and Incentive Fees Payable $ 4,994
$ 5,388


~~(1)~~	~~Net of amounts waived by the Advisers.~~


~~(2)~~	~~Includes amounts the Adviser paid on behalf of the Company such as general and administrative services expenses.~~

2. Offering Costs

In accordance with the Original Investment Advisory Agreement and the Sub-Advisory Agreement, the Company ~~reimburses~~reimbursed the Advisers for any offering costs that are paid on the Company’s behalf, which ~~consist~~consisted of, among other costs, actual legal, accounting, bona fide out-of-pocket itemized and detailed due diligence costs, printing, filing fees, transfer agent costs, postage, escrow fees, advertising and sales literature and other costs incurred in connection with an offering of the Company including the Company’s ~~distribution~~dividend reinvestment plan. Pursuant to the terms of the Investment Advisory Agreement and the Sub-Advisory Agreement, the Company expects to reimburse the Advisers for such costs incurred on the Company’s behalf on a monthly basis, up to a maximum aggregate amount of 1.5% of the gross stock offering proceeds. The Advisers ~~are~~were responsible for the payment of offering costs to the extent they ~~exceed~~exceeded 1.5% of the aggregate gross stock offering proceeds.

Pursuant to the Transaction, HMS Adviser agreed to permanently waive reimbursement of organizational and offering expenses except for $676,603 which remained payable to HMS Adviser. No outstanding amount was payable to MSC Adviser. As of March 31, ~~2020,~~2021, $676,603 of the Company’s reimbursement obligation for organizational and offering expenses remained outstanding.

As of March 31, 2021, the Company has reimbursed ~~the~~HMS Advisers approximately ~~$12.6~~$12.8 million since inception for offering costs.

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3. Main Street Term Loan

On January 27, 2021, the Company entered into the Main Street Term Loan with Main Street. As of March 31, ~~2020,~~2021, the ~~Advisers carried~~Main Street Term Loan was fully drawn at $40.0 million, bearing interest at a ~~balance~~fixed rate of ~~approximately $668,000 for offering costs incurred~~5.00% per annum and maturing on January 27, 2026. The Company paid a 1.0% upfront fee to Main Street on the ~~Company’s behalf, net~~closing date. Borrowings under the Main Street Term Loan are expressly subordinated and junior in right of ~~reimbursement payments from the Company.~~

~~Note 11 – Share Repurchase Plan~~

~~Since inception~~payment to all secured indebtedness of the ~~share repurchase program in 2015,~~Company and may be prepaid any time after January 27, 2023. See Note E – Debt for further discussion.

NOTE K—SUBSEQUENT EVENTS

On April 10, 2021, the Company ~~has funded~~filed a tender offer statement on Schedule TO (the “Offer”) with the ~~repurchase of $103.0 million in shares of common stock. For the three months ended March 31, 2020 and 2019,~~SEC, to commence an offer by the Company ~~funded $6.1 million and $6.6 million, respectively, for~~to purchase a number of shares ~~of common stock tendered for repurchase under the plan approved by the board of directors.~~

For the Quarter Ended Repurchase Date Shares Repurchased Percentage of Shares Tendered that were Repurchased
Repurchase Price
per Share
Aggregate Consideration for Repurchased Shares
March 31, 2020 February 21, 2020 791,488.12 26.5% $ 7.70
$ 6,094,455

~~On March 31, 2020, the Company’s board of directors unanimously approved a temporary suspension~~ of the Company’s common stock equal 90% of the amount of the DRIP proceeds resulting from shares issued in lieu of cash distributions from the April 1, 2021 dividend payment, approximately $2,846,049. The Offer will expire on May 17, 2021 and shares validly tendered and not withdrawn will be purchased at a price equal to the Company’s net asset value per share ~~repurchase program commencing with~~as of May 31, 2021.

On May 11, 2021, the ~~second quarter~~Company’s Board of ~~2020. The board~~Directors declared a quarterly cash dividend of ~~directors determined that~~$0.125 per share payable August 2, 2021 to stockholders as of June 30, 2021.

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Schedule 12-14

MSC Income Fund, Inc.

Consolidated Schedule of Investments In and Advances to Affiliates

March 31, 2021

(dollars in thousands)

(unaudited)


							Amount of
							Interest,
							Fees or
			Amount of		Amount of		Dividends		December 31,						March 31,
			Realized		Unrealized		Credited to		2020		Gross		Gross		2021
Company	Investment(1)(10)(11)	Geography	Gain/(Loss)		Gain/(Loss)		Income(2)		Fair Value		Additions(3)		Reductions(4)		Fair Value

GRT Rubber Technologies LLC	(L+7.00%) Secured Debt	(8)		-		(1)		152		8,262		3,465		-		8,262
	Member Units	(8)		-		-		448		22,120		-		3,465		22,120
Harris Preston Fund Investments	LP Interests (2717 MH, L.P.)	(8)		-		(65)		-		2,702		47		65		2,684
Copper Trail Energy Fund I, LP - CTMH	LP Interests (CTMH, LP)	(9)		-		-		-		727		-		37		710
Other Amounts related to investments transferred to or from other 1940 Act classification during the period				-		-		-		-		-		-		-
Total Control Investments			$	-	$	(66)	$	600	$	33,811	$	3,512	$	3,567	$	33,776
Affiliate Investments
AFG Capital Group, LLC	Preferred Member Units	(8)	$	-	$	130	$	-	$	1,450	$	130	$	-	$	1,580
	10.00% Secured Debt	(8)		-		-		3		123		-		22		101
ASK (Analytical Systems Keco Holdings, LLC)	Preferred Member Units	(8)		-		(120)		-		800		-		120		680
	(L+10.00%, Floor 2.00%) Secured Debt	(8)		-		-		79		1,180		39		-		1,219
	Warrants	(8)		-		-		-		-		-		-		-
	Member Units	(5)		-		-		-		528		-		-		528
Brewer Crane Holdings, LLC	Preferred Member Units	(9)		-		(90)		8		1,460		-		90		1,370
	(L+10.00%, Floor 1.00%) Secured Debt	(9)		-		-		63		2,119		2		31		2,090
Centre Technologies Holdings, LLC	(L+10.00%, Floor 2.00%) Secured Debt	(8)		-		-		92		2,868		3		38		2,833
	Preferred Member Units	(8)		-		-		-		1,540		-		-		1,540
Chamberlin Holding LLC	(L+8.00%, Floor 1.00%) Secured Debt	(8)		-		(6)		102		3,803		6		6		3,803
	Member Units	(8)		-		50		290		7,020		50		-		7,070
	Member Units	(8)		-		15		4		317		15		-		332
Charps, LLC	Preferred Member Units	(5)		-		200		261		2,630		200		-		2,830
	0.15 Secured Debt	(5)		-		-		9		167		-		167		-
Clad-Rex Steel, LLC	(L+9.50%, Floor 1.00%) Secured Debt	(5)		-		-		76		2,706		4		-		2,710
	Member Units	(5)		-		(1)		68		2,153		-		1		2,152
	Member Units	(5)		-		-		-		132		-		-		132
	10.00% Secured Debt	(5)		-		-		7		275		-		2		273
Cody Pools, Inc.	(L+10.50%, Floor 1.75%) Secured Debt	(8)		-		(4)		119		3,554		4		54		3,504
	Preferred Member Units	(8)		-		980		-		3,740		980		-		4,720
Colonial Electric Company LLC	12.00% Secured Debt	(6)		-		-		-		-		6,143		-		6,143
	Preferred Member Units	(6)		-		-		-		-		1,920		-		1,920
Copper Trail Energy Fund I, LP	LP Interests (Copper Trail Energy Fund I, LP)	(9)		-		61		98		1,782		61		-		1,843
Datacom, LLC	8.00% Secured Debt	(8)		-		-		-		-		-		-		-
	Preferred Member Units	(8)		-		-		-		-		290		-		290
	10.50% PIK Secured Debt	(8)		-		-		-		-		-		-		-
	Preferred Member Units	(8)		-		-		-		-		-		-		-
	Preferred Member Units	(8)		-		-		-		-		-		-		-
	5.00% Secured Debt	(8)		-		-		4		-		904		3		901
Digital Products Holdings LLC	(L+10.00%, Floor 1.00%) Secured Debt	(5)		-		-		133		4,493		6		83		4,416
	Preferred Member Units	(5)		-		-		13		2,459		-		-		2,459
Direct Marketing Solutions, Inc.	Preferred Stock	(9)		-		(380)		-		4,840		-		380		4,460
	(L+11.00%, Floor 1.00%) Secured Debt	(9)		-		-		122		3,717		10		4		3,723
Freeport Financial Funds	LP Interests (Freeport First Lien Loan Fund III LP)	(5)		-		-		274		10,321		1,398		-		8,923
Gamber-Johnson Holdings, LLC	(L+7.00%, Floor 2.00%) Secured Debt	(5)		-		(12)		127		4,960		798		598		5,160
	Member Units	(5)		-		(22)		119		13,120		712		22		13,810
GFG Group, LLC.	Preferred Member Units	(5)		-		-		-		-		1,225		-		1,225
	12.00% Secured Debt	(5)		-		-		-		-		3,818		-		3,818
Gulf Publishing Holdings, LLC	(5.25% Cash, 5.25% PIK) (L+9.50%, Floor 1.00%) Secured Debt	(8)		-		-		2		63		1		-		64
	(6.25% Cash, 6.25% PIK) Secured Debt	(8)		-		5		125		2,988		60		-		3,048
Hawk Ridge Systems, LLC	10.00% Secured Debt	(9)		-		-		7		-		-		-		-
	10.00% Secured Debt	(9)		-		(4)		98		3,350		4		4		3,350
	Preferred Member Units	(9)		-		321		77		2,008		322		-		2,330
	Preferred Member Units	(9)		-		15		-		105		15		-		120
HPEP 3, L.P.	LP Interests (HPEP 3, L.P.)	(8)		-		-		-		3,258		374		-		3,632
J&J Services, Inc.	11.50% Secured Debt	(7)		-		(2)		102		3,200		2		2		3,200
	Preferred Stock	(7)		-		-		-		3,170		-		-		3,170

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Kickhaefer Manufacturing Company, LLC	Member Units	(5)		-		-		4		3,060		-		-		3,060
	11.50% Secured Debt	(5)		-		-		178		5,500		5,375		5,367		5,508
	9.00% Secured Debt	(5)		-		-		21		978		-		2		976
	Member Units	(5)		-		-		-		290		-		-		290
	PIK Secured Debt	(9)		-		(74)		-		3,391		-		74		3,317
MH Corbin Holding LLC	(10.00% Cash, 3.00% PIK) Secured Debt	(5)		-		-		74		2,070		2		20		2,052
	Preferred Member Units	(5)		-		(290)		-		590		-		290		300
Mystic Logistics Holdings, LLC	12.00% Secured Debt	(6)		-		-		52		1,682		248		248		1,682
	Common Stock	(6)		-		(428)		51		2,248		-		428		1,820
NexRev LLC	Preferred Member Units	(8)		-		450		5		370		450		-		820
	11.00% Secured Debt	(8)		-		46		125		4,177		248		252		4,173
NuStep, LLC	Preferred Member Units	(5)		-		150		-		2,700		150		-		2,850
	12.00% Secured Debt	(5)		-		-		153		4,288		5		-		4,293
SI East, LLC (Stavig)	9.50% Secured Debt	(7)		-		(19)		288		10,987		20		1,269		9,738
Tedder Industries, LLC	12.00% Secured Debt	(9)		-		-		138		4,025		13		400		3,638
	Preferred Member Units	(9)		-		-		-		2,034		-		-		2,034
	12.00% Secured Debt	(9)		-		-		1		-		-		-		-
Trantech Radiator Topco, LLC	Common Stock	(7)		-		(90)		7		1,510		-		90		1,420
	12.00% Secured Debt	(7)		-		(8)		71		2,131		3		8		2,126
	Preferred Member Units	(7)		-		130		-		3,260		130		-		3,390
Other Amounts related to investments transferred to or from other 1940 Act classification during the period				-		-		-		-		-		-		-
Total Affiliate investments			$	-	$	1,003	$	3,650	$	157,690	$	26,140	$	10,075	$	170,959

(1)	The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.

(2)

Represents the total amount of interest, fees and dividends credited to income for the portion of the period for which an investment was included in Control or Affiliate categories, respectively. For investments transferred between Control and Affiliate categories during the period, any income or investment balances related to the time period it was in the category other than the one shown at period end is included in “Amounts related to investments transferred to or from other 1940 Act classifications during the period.”

(3)

Gross additions include increases in the cost basis of investments resulting from new portfolio investments, follow-on investments and accrued PIK interest, and the exchange of one or more existing securities for one or more new securities. Gross additions also include net increases in unrealized appreciation or net decreases in net unrealized depreciation as well as the movement of an existing portfolio company into this category and out of a different category.

(4)

Gross reductions include decreases in the cost basis of investments resulting from principal repayments or sales and the exchange of one or more existing securities for one or more new securities. Gross reductions also include net increases in net unrealized depreciation or net decreases in unrealized appreciation as well as the movement of an existing portfolio company out of this category and into a different category.

(5)	Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for affiliate investments located in this region was $67,766. This represented 11.6% of net assets as of March 31, 2021.

(6)	Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for affiliate investments located in this region was $11,565. This represented 2.0% of net assets as of March 31, 2021.

(7)	Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for affiliate investments located in this region was $23,043. This represented 3.9% of net assets as of March 31, 2021.

(8)

Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for control investments located in this region was $33,066. This represented 5.7% of net assets as of March 31, 2021. The fair value as of March 31, 2021 for affiliate investments located in this region was $40,310. This represented 6.9% of net assets as of March 31, 2021.

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(9)

Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of March 31, 2021 for control investments located in this region was $710. This represented 0.1% of net assets as of March 31, 2021. The fair value as of March 31, 2021 for affiliate investments located in this region was $28,274. This represented 4.8% of net assets as of March 31, 2021.

(10)	All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.

(11)

This schedule should be read in conjunction with the consolidated schedule of investments and notes to the consolidated financial statements. Supplemental information can be located within the schedule of investments including end of period interest rate, preferred dividend rate, maturity date, investments not paid currently in cash and investments whose value was determined using significant unobservable inputs.

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Schedule 12-14

MSC Income Fund, Inc.

Consolidated Schedule of Investments in and Advances to Affiliates

March 31, 2020

(dollars in thousands)

(unaudited)


							Amount of
							Interest,
							Fees or						��
			Amount of		Amount of		Dividends		December 31,							March 31,
			Realized		Unrealized		Credited to		2019		Gross			Gross		2020
Company	Investment(1)(10)(11)	Geography	Gain/(Loss)		Gain/(Loss)		Income(2)		Fair Value		Additions(3)			Reductions(4)		Fair Value

GRT Rubber Technologies LLC	LIBOR Plus 7.00%	(8)	$	-	$	(2)	$	180	$	7,396	$	868		$	2	$	8,262
	Member Units	(8)		-		(996)		331	-	23,372	-	-		-	997	-	22,375
Copper Trail Fund Investments	LP Interests (CTMH, LP)	(9)		-		-		80	-	872	-	-		-	-	-	872
Harris Preston Fund Investments	LP Interests (2717 MH, L.P.)	(8)		-		-		-	-	3,156	-	-		-	-	-	3,156
Other						-
Amounts related to investments transferred to or from other 1940 Act classification during the period				-		-		-		-		-			-		-
Total Control investments			$	-	$	(998)	$	591	$	34,796	$	868		$	999	$	34,665
Affiliate Investments
AFG Capital Group, LLC	10.00% Secured Debt	(8)	$	-	$	-	$	5	$	209	$	-		$	21	$	188
	Preferred Member Units	(8)		-		(30)		-	-	1,295	-	-		-	30	-	1,265
Analytical Systems Keco, LLC	LIBOR Plus 10.00% (Floor 2.00%)	(8)		-		-		44	-	1,266	-	2		-	17	-	1,251
	Preferred Member Units	(8)		-		215		-	-	800	-	215		-	-	-	1,015
	Warrants	(8)		-		56		-	-	79	-	56		-	-	-	135
Brewer Crane Holdings, LLC	LIBOR Plus 10.00% (Floor 1.00%)	(9)		-		-		68	-	2,233	-	2		-	31	-	2,204
	Preferred Member Units	(9)		-		-		5	-	1,070	-	-		-	-	-	1,070
Centre Technologies Holdings, LLC	LIBOR Plus 10.00% (Floor 2.00%)	(8)		-		-		94	-	3,008	-	3		-	39	-	2,972
	Preferred Member Units	(8)		-		-		7	-	1,460	-	-		-	-	-	1,460
Chamberlin Holding LLC	LIBOR Plus 10.00% (Floor 1.00%)	(8)		-		(5)		139	-	4,443	-	5		-	5	-	4,443
	Member Units	(8)		-		28		46	-	6,009	-	28		-	-	-	6,037
	Member Units	(8)		-		(133)		4	-	363	-	-		-	133	-	230
Charps, LLC	15.00% Secured Debt	(5)		-		-		19	-	500	-	-		-	-	-	500
	Preferred Member Units	(5)		-		160		6	-	1,730	-	160		-	-	-	1,890
Clad-Rex Steel, LLC	LIBOR Plus 9.50% (Floor 1.00%)	(5)		-		21		77	-	2,696	-	24		-	-	-	2,720
	Member Units	(5)		-		(255)		18	-	2,408	-	-		-	255	-	2,153
	10% Secured Debt	(5)		-		-		7	-	282	-	-		-	2	-	280
	Member Units	(5)		-		-		-	-	115	-	-		-	-	-	115
Cody Pools, Inc.	LIBOR Plus 10.50% (Floor 1.75%)	(8)		-		4		37	-	-	-	4,005		-	84	-	3,921
	Preferred Member Units	(8)		-		-		-	-	-	-	2,079		-	-	-	2,079
Copper Trail Fund Investments	LP Interests (Copper Trail Energy Fund I, LP)	(9)		-		(29)		8	-	1,643	-	-		-	184	-	1,459
Direct Marketing Solutions, Inc.	LIBOR Plus 11.00% (Floor 1.00%)	(9)		-		(6)		132	-	3,929	-	6		-	65	-	3,870
	Preferred Stock	(9)		-		(36)		-	-	5,051	-	-		-	36	-	5,015
Digital Products Holdings LLC	LIBOR Plus 10.00% (Floor 1.00%)	(5)		-		(82)		149	-	4,611	-	5		-	165	-	4,451
	Preferred Member Units	(5)		-		(700)		13	-	1,294	-	-		-	700	-	594
	LP Interests (Freeport First Lien Loan Fund III LP)	(5)		-		(1,054)		255	-	9,696	-	989		-	1,054	-	9,631
Gamber-Johnson Holdings, LLC	LIBOR Plus 6.50% (Floor 2.00%)	(5)		-		(6)		105	-	4,755	-	6		-	201	-	4,560
	Member Units	(5)		-		(41)		514	-	13,352	-	-		-	41	-	13,311
Guerdon Modular Holdings, Inc.	16.00% Secured Debt	(9)		(2,792)		3,117		30	-	-	-	3,147		-	3,147	-	-
	LIBOR Plus 8.50% (Floor 1.00%)	(9)		(252)		252		-	-	-	-	253		-	253	-	-
	Preferred Stock	(9)		-		-		-	-	-	-	-		-	-	-	-
	Common Stock	(9)		-		-		-	-	-	-	-		-	-	-	-
Gulf Publishing Holdings, LLC	LIBOR Plus 9.50% (Floor 1.00%)	(8)		-		-		2	-	70	-	-		-	10	-	60
	12.50% Secured Debt	(8)		-		(38)		103	-	3,124	-	4		-	38	-	3,090
	Member Units	(8)		-		(605)		-	-	605	-	-		-	605	-	-
Harris Preston Fund Investments	LP Interests (HPEP 3, L.P.)	(8)		-		-		-	-	2,474	-	345		-	-	-	2,819
Hawk Ridge Systems, LLC	LIBOR Plus 6.00% (Floor 1.00%)	(9)		-		-		-	-	148	-	1		-	-	-	149
	11.00% Secured Debt	(9)		-		(4)		100	-	3,350	-	4		-	4	-	3,350
	Preferred Member Units	(9)		-		(145)		-	-	1,975	-	-		-	145	-	1,830
	Preferred Member Units	(9)		-		(7)		-	-	105	-	-		-	7	-	98
J&J Services, Inc.	11.50% Secured Debt	(7)		-		-		132	-	4,315	-	4		-	-	-	4,319

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	Preferred Stock	(7)		-		-		-	-	1,790	-	-	-	-	-	1,790
Kickhaefer Manufacturing Company, LLC	11.50% Secured Debt	(5)		-		(5)		191	-	6,146	-	151	-	105	-	6,192
	Member Units	(5)		-		-		32	-	290	-	-	-	-	-	290
	9.00% Secured Debt	(5)		-		-		-	-	977	-	8	-	2	-	983
	Member Units	(5)		-		(199)		5	-	3,060	-	-	-	199	-	2,861
Market Force Information, LLC	8% PIK Secured Debt	(9)		-		(94)		15	-	674	-	-	-	94	-	580
	12.00% PIK Secured Debt	(9)		-		(1,295)		182	-	5,625	-	94	-	1,295	-	4,424
	Member Units	(9)		-		(1,319)		-	-	1,319	-	-	-	1,319	-	-
MH Corbin Holding LLC	13.00% Secured Debt	(5)		-		(20)		75	-	2,213	-	12	-	40	-	2,185
	Preferred Member Units	(5)		-		(100)		-	-	1,192	-	-	-	100	-	1,092
	Preferred Member Units	(5)		-		(5)		-	-	5	-	-	-	5	-	-
Mystic Logistics Holdings, LLC	12.00% Secured Debt	(6)		-		(2)		55	-	1,561	-	251	-	76	-	1,736
	Common Stock	(6)		-		444		-	-	2,103	-	444	-	-	-	2,547
NexRev LLC	11.00% PIK Secured Debt	(8)		-		(392)		125	-	4,331	-	5	-	447	-	3,889
	Preferred Member Units	(8)		-		(1,577)		(24)	-	1,577	-	-	-	1,577	-	-
NuStep, LLC	12.00% Secured Debt	(5)		-		-		156	-	4,901	-	7	-	40	-	4,868
	Preferred Member Units	(5)		-		-		-	-	2,550	-	-	-	-	-	2,550
SI East, LLC	9.50% Current, Secured Debt	(7)		-		(8)		274	-	10,988	-	8	-	8	-	10,988
	Preferred Member Units	(7)		-		150		119	-	2,734	-	150	-	-	-	2,884
Tedder Industries, LLC	12.00% Secured Debt	(9)		-		-		130	-	4,066	-	5	-	-	-	4,071
	12.00% Secured Debt	(9)		-		-		5	-	158	-	-	-	-	-	158
	Preferred Member Units	(9)		-		-		-	-	2,034	-	-	-	-	-	2,034
Trantech Radiator Topco, LLC	12% Secured Debt	(7)		-		(1)		74	-	2,237	-	5	-	81	-	2,161
	Common Stock	(7)		-		491		7	-	1,164	-	491	-	-	-	1,655
Other						-
Amounts related to investments transferred to or from other 1940 Act classification during the period				-		-		-		-		-		-		-
Total Affiliate investments			$	(3,044)	$	(3,254)	$	3,540	$	154,158	$	12,974	$	12,660	$	154,472

(1)	The principal amount, the ownership detail for equity investments and if the investment is income producing is included in the consolidated schedule of investments.

(2)

(3)

(4)

(5)	Portfolio company located in the Midwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for affiliate investments located in this region was $61,226. This represented 12.0% of net assets as of March 31, 2020.

(6)	Portfolio company located in the Northeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for affiliate investments located in this region was $4,283. This represented 0.8% of net assets as of March 31, 2020.

(7)	Portfolio company located in the Southeast region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for affiliate investments located in this region was $23,797. This represented 4.7% of net assets as of March 31, 2020.

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(8)

Portfolio company located in the Southwest region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for control investments located in this region was $33,793. This represented 6.6% of net assets as of March 31, 2020. The fair value as of March 31, 2020 for affiliate investments located in this region was $34,854. This represented 6.8% of net assets as of March 31, 2020.

(9)

Portfolio company located in the West region as determined by location of the corporate headquarters. The fair value as of March 31, 2020 for control investments located in this region was $872. This represented 0.2% of net assets as of March 31, 2020. The fair value as of March 31, 2020 for affiliate investments located in this region was $30,312. This represented 5.9% of net assets as of March 31, 2020.

(10)	All of the Company’s portfolio investments are generally subject to restrictions on resale as “restricted securities,” unless otherwise noted.

(11)

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

This Quarterly Report on Form 10-Q contains forward-looking statements regarding the plans and objectives of management for future operations and which relate to future events or our future performance or financial condition. Any such forward-looking statements may involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and we cannot assure you that the projections included in these forward-looking statements will come to pass. Our actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors, including, without limitation: changes in laws and regulations and adverse changes in the ~~best interest of~~economy generally or in the ~~Company~~industries in which our portfolio companies operate, including with respect to ~~suspend~~changes from the ~~share repurchase program in order to preserve financial flexibility and liquidity given the potential prolonged~~ impact of the ~~coronavirus (“COVID-19”). Share repurchases for future quarters will be reevaluated by the board of directors based on circumstances and expectations at the time of consideration.~~

~~Note 12 – Commitments and Contingencies~~

As of March 31, 2020, the Company had a total of approximately $39.0 million in outstanding commitments comprising (i) 32 commitments to fund revolving loans that had not been fully drawn or term loans that had not been funded and (ii) five capital commitments that had not been fully called. The Company recognized unrealized depreciation of approximately $818,000 on the outstanding unfunded loan commitments and no unrealized appreciation or depreciation on the outstanding unfunded capital commitments during the three months ended March 31, 2020. As of December 31, 2019, the Company had a total of approximately $46.3 million in outstanding commitments comprising (i) 36 commitments to fund revolving loans that had not been fully drawn or term loans that had not been funded and (ii) five capital commitments that had not been fully called. The Company recognized unrealized appreciation of $323,000 on the outstanding unfunded loan commitments and no unrealized appreciation or depreciation on the outstanding unfunded capital commitments during the year ended December 31, 2019.

Commitments and Contingencies
(dollars in thousands)
March 31, 2020 December 31, 2019

Direct Marketing Solutions, Inc. $ 400

$ 400
DTE Enterprises, LLC 750
750
Dynamic Communities, LLC 250
250
Gamber-Johnson Holdings, LLC 300
300
GRT Rubber Technologies, Inc. 660
1,526
Guerdon Modular Holdings, Inc. —
148
Hawk Ridge Systems, LLC 350
350
Hunter Defense Technologies, Inc. 3,540

3,540
HW Temps LLC 200
200
Independent Pet Partners Intermediate Holdings, LLC 6,126

9,357
Invincible Boat Company, LLC 648

648
J & J Services, Inc. 3,000

3,000
Kickhaefer Manufacturing Company, LLC 360

500
LL Management, Inc. 1,182

1,182
Lynx FBO Operating LLC 875

1,875
Mac Lean-Fogg Company 313

313
Market Force Information, Inc. 3

3
Mystic Logistics Holdings, LLC 200
200
NexRev, LLC 800

800
NinjaTrader, LLC 200

200
NuStep, LLC 300

300
SI East , LLC 2,500
2,500
TEAM Public Choices, LLC 351

351
Tedder Acquisition, LLC 140

140
Trantech Radiator Topco, LLC 400

400
Unfunded Capital Commitments
Brightwood Capital Fund III, LP 1,260
1,260
Brightwood Capital Fund IV, LP 1,000
1,000
Copper Trail Energy Fund I LP 3,416
3,416
Freeport Financial Funds 1,945
1,945
Harris Preston Fund Investments 2,526

2,526
Total $ 39,041
$ 46,266

~~Note 13 – Subsequent Events~~

~~On April 24, 2020, HMS Funding entered into an amendment to the Deutsche Bank Credit Facility. As of April 24, 2020, the revolving period of the Deutsche Bank Credit Facility terminated,~~COVID-19 pandemic, and the ~~amortization period began. During~~resulting impacts on our and our portfolio companies’ business and operations, liquidity and access to capital; and such ~~amortization period, no further advances or reinvestment~~other factors referenced in Item 1A entitled “Risk Factors” below in Part 2 of ~~principal collections are permitted,~~this Quarterly Report on Form 10-Q, if any, and ~~all monthly interest and principal proceeds from the Company's investments securing the Deutsche Bank Credit Facility (net~~discussed in Item 1A entitled “Risk Factors” in Part I of ~~certain fees and expenses) will be applied against the outstanding advances on the facility. See Note 5 —~~ ~~Borrowings~~ ~~for further discussion regarding the amended Deutsche Bank Credit Facility.~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.~~
The following discussion is based on the condensed consolidated financial statements as of March 31, 2020 (unaudited) and December 31, 2019 and for the three months ended March 31, 2020 and 2019. Amounts as of December 31, 2019 included in the unaudited condensed consolidated financial statements have been derived from the Company’s audited consolidated financial statements as of that date. This information should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and the notes thereto, as well as the audited consolidated financial statements, notes and management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2019. Capitalized terms used in this Item 2 have~~2020, filed with the ~~same meaning as in the accompanying condensed consolidated financial statements in Item 1 unless otherwise defined in this Report.~~

~~We refer to HMS Income Fund, Inc., collectively with its consolidated subsidiaries, as the “Company,”~~Securities and ~~the use of “we,” “our,” “us” or similar pronouns in this Report refers to HMS Income Fund, Inc.~~

~~Forward-Looking Statements~~
Some of the statements in this Report constitute forward-looking statements because they relate to future events or our future performance or financial condition. The forward-looking statements contained in this Report may include statements as to:
~~our future operating results;~~
~~our business prospects and the prospects of our current and prospective portfolio companies;~~
~~the impact of the investments that we expect to make;~~
~~the ability of our portfolio companies to achieve their objectives, including as a result of the COVID-19 pandemic and recent drop in oil and gas prices;~~
~~our expected financings and investments;~~
~~the adequacy of our cash resources and working capital;~~
~~the timing of cash flows, if any, from the operations of our portfolio companies;~~
changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets that could result in changes to the value of our assets, including changes from the impact of the current COVID-19 pandemic;
~~the impact of increased competition;~~
~~our ability to continue to effectively manage our business due to the disruptions caused by the current COVID-19 pandemic;~~
~~our contractual arrangements and relationships with third parties;~~
~~the dependence of our future success~~Exchange Commission (“SEC”) on ~~the general economy, including general economic trends, and its impact on the industries in which we invest;~~
~~the relative and absolute performance of our investment adviser, HMS Adviser LP (the “Adviser”), a Texas limited partnership, including in identifying suitable investments for us;~~
~~our ability to make distributions to our stockholders;~~
~~the effects of applicable legislation and regulations and changes thereto; and~~
~~the impact of future acquisitions and divestitures.~~

In addition, words such as “anticipate,” “believe,” “expect” and “intend” indicate a forward-looking statement, although not all forward-looking statements include these words. The forward-looking statements contained in this Report involve risks and uncertainties.

~~Our actual results could differ materially from those implied or expressed in the forward-looking statements for any reason, including the factors set forth in “Part II — Item 1A. Risk Factors”~~March 30, 2021 and elsewhere in this Quarterly Report ~~and set forth in our annual report~~ on Form ~~10-K for the year ended December 31, 2019. Other factors that could cause actual results to differ materially include:~~
~~changes in the economy;~~
~~risks associated with possible disruption in~~10-Q and our ~~operations or the economy generally; and~~
~~future changes in laws or regulations and conditions in our operating areas.~~

other SEC filings.

We have based the forward-looking statements included in this Quarterly Report on Form 10-Q on information available to us on the date of this ~~Report. Except as required by the federal securities laws,~~Quarterly Report on Form 10-Q, and we assume no obligation to ~~revise or~~ update any such forward-looking statements, ~~whether as a result of new information, future events or otherwise.~~

~~You~~unless we are required to do so by applicable law. However, you are advised to ~~consult~~refer to any additional disclosures that we may make directly to you or through reports that we in the future may file with the ~~Securities and Exchange Commission (the “SEC”),~~SEC, including ~~annual reports on Form 10-K, quarterly reports on Form 10-Q~~subsequent periodic and current ~~reports on Form 8-K.~~ reports.

COVID-19 UPDATE

The ~~forward-looking statements and projections contained in this Report are~~

excluded from the safe harbor protection provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

COVID-19 ~~Developments~~

~~The rapid spread of COVID-19,~~pandemic, and the related effect on the U.S. and ~~world economy,~~global economies, has had, ~~adverse consequences on the business operations of some of our portfolio companies and has adversely affected,~~ and threatens to continue to ~~adversely affect, our operations and the operations of our Advisers (including those relating to us). Our Advisers~~ have, ~~been monitoring the COVID-19 pandemic and its impact on~~adverse consequences for our business and operating results, and the ~~business~~businesses and operating results of our portfolio companies. During the quarter ended March 31, 2021, MSC Adviser continued to work collectively with its personnel and portfolio companies to navigate the significant challenges created by the COVID-19 pandemic. MSC Adviser remains focused on ensuring the safety of its personnel and the employees of our portfolio companies, ~~and have been focused on proactively engaging~~while also managing our ongoing business activities. In this regard, MSC Adviser remains heavily engaged with our portfolio ~~companies~~companies. As discussed in ~~order~~our public SEC filings, our investment income, principally our interest and dividend income, was negatively impacted by the economic effects of the COVID-19 pandemic in 2020. However, we maintain access to ~~collaborate~~multiple sources of liquidity, including cash and unused capacity under our Credit Facilities. In February 2021 we entered into a $300 million senior secured revolving credit facility with JPM to replace the Deutsche Bank Credit Facility to improve our liquidity. As of March 31, 2021, we were in compliance with all debt covenants applicable to us and do not anticipate any issues with our ability to comply with all covenants in the future. Refer to “— Financial Condition, Liquidity and Capital Resources” below for further discussion as of March 31, 2021.

Neither our management, ~~teams~~MSC Adviser nor our Board of Directors is able to ~~assess and evaluate the steps each portfolio company can take in response to the impacts of COVID-19.~~

~~We cannot~~ predict the full impact of the COVID-19 pandemic, including its duration ~~in the United States and worldwide~~ and the magnitude of its economic and societal impact. As such, while we will continue to monitor the ~~economic impact of the outbreak,~~evolving situation and guidance from U.S. authorities, including ~~with respect to the travel restrictions, business closures and other quarantine measures imposed on service providers and other individuals by various local,~~federal, state and ~~federal governmental~~local public health authorities, ~~as well as non-U.S. governmental authorities. As such,~~we are unable to predict with any certainty the extent to which ~~COVID-19 and/or other health pandemics may continue to~~the outbreak will negatively affect our portfolio companies’ operating results and financial condition or the duration of any potential business or supply-chain disruption for us, our Advisers and/or our portfolio companies, is uncertain. Depending on the duration and extent of the disruption to the operations of our portfolio companies, we expectimpact that ~~certain portfolio companies, particularly those in at-risk industries~~ such as retail, travel, hospitality and leisure, and oil, gas, and consumable fuels, among others, will experience financial distress and possibly default on their financial obligations to us and their other capital providers. We also expect that some of our portfolio companiesdisruptions may significantly curtail business operations, furlough or lay off employees and terminate service providers, and defer capital expenditures if subjected to prolonged and severe financial distress, which would likely impair their business on a permanent basis. These developments would likely result in a decrease in the value of our investment in any such portfolio company.

~~The COVID-19 pandemic and the related disruption and financial distress experienced by our portfolio companies~~ have ~~already had adverse material effects~~ on our results of operations, which are described in further detail below, and we expect that such adverse effects will continue for the duration of the pandemic and potentially for some time thereafter. The effects of the COVID-19 pandemic have already caused a steep decline in leveraged loan market values, which affects the value of many of the loans we hold. In connection with the adverse effects of the COVID-19 pandemic, we may need to restructure our investments in some of our portfolio companies, which could result in reduced interest payments, an increase the amount of PIK interest we receive, or result in permanent impairments on our investments. The effects of the COVID-19 pandemic discussed above increase the risk that more of our portfolio investments may be placed on non-accrual status in the future. Any decreases in our net investment income would increase the portion of our cash flows dedicated to servicing our existing borrowings under the Credit Facilities and distribution payments to stockholders. If these amounts become unsustainable, we may be required to reduce the amount of our distributions to stockholders and/or convert a portion from cash to stock distributions.

As of March 31, 2020, we are permitted under the 1940 Act, as a BDC, to borrow amounts such that our asset coverage, as defined in the 1940 Act, equals at least 200% after such borrowing. While we are in compliance with our asset coverage requirements under the 1940 Act as of March 31, 2020, the TIAA Credit Facility contains affirmative and negative covenants usual and customary for leveraged financings, including maintaining a minimum interest coverage ratio, maintaining a minimum asset coverage ratio, and maintaining a minimum consolidated tangible net worth. Similarly, the Deutsche Bank Credit Facility contains affirmative and negative covenants usual and customary for leveraged financings, including maintaining a positive tangible net worth and limitations on industry concentration. The Credit Facilities contain usual and customary default provisions, including default in payment of interest and principal or a breach of any covenant in the loan agreement or other credit documents and failure to cure such breach within defined periods. If we or HMS Funding fail to satisfy the respective covenants in each of the TIAA Credit Facility and the Deutsche Bank Credit Facility or are unable to cure any event of default or obtain a waiver from the applicable lender, it could result in foreclosure by the lenders under the applicable Credit Facility, which would accelerate our or HMS Funding’s respective repayment obligations under the facilities and thereby have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to our stockholders. See “Item 1A — “Risk Factors — Risks Relating to Debt Financing — In addition to regulatory limitations on our ability to raise capital, the Credit Facilities contain various covenants, which, if not complied with, could accelerate our repayment obligations under the Credit Facilities, thereby materially and adversely affecting our liquidity, financial condition, results of operations and ability to pay distributions” included in our most recent Annual Report on Form 10-K and the other risk factors contained therein and in our subsequent filings with the SEC, including this Quarterly Report on Form 10-Q. Neither we nor HMS Funding were in default under either of the Credit Facilities as of March 31, 2020.

We are also subject to financial risks, including changes in market interest rates. As of March 31, 2020, approximately $737.5 million (amortized cost) of our debt portfolio investments bore interest at variable rates, which generally are LIBOR-based (or based on an equivalent applicable currency rate), and many of which are subject to certain floors. In addition, each of the Credit Facilities have floating rate interest provisions. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in our operating expenses, including with respect to our subordinated incentive fee on income, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR. See “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for an analysis of the impact of hypothetical base rate changes in interest rates.

In response to COVID-19, our Sub-Adviser has focused its portfolio investment team’s efforts on proactively engaging with our portfolio companies. More specifically, its efforts are focused on collaborating with the management teams of the Company’s LMM portfolio companies to assess and evaluate the steps each portfolio company can take in response to the impacts of COVID-19, including offering insights and assistance to these companies as they navigate this environment and analyze the numerous government programs which are now available.We will continue to monitor the rapidly evolving situation relating to the COVID-19 pandemic and guidance from U.S. and international authorities, including federal, state and local public health authorities and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our plan of operation. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impacts of COVID-19 on our financial condition, results of operations or cash flows in the future. However, we do expect that it will have a material adverse impact on our future net investment income, the fair value of our portfolio investments, and the results of operations and financial condition in the future.

Table of ~~our portfolio companies.~~Contents

OVERVIEW

We are a specialty finance company sponsored by Hines Interests Limited Partnership (“Hines”) that makes debt and equity investments in middle market (“Middle Market”) companies, which we define as companies with annual revenues generally between $10 million and $3 billion and in lower middle market (“LMM”) companies, which we define as companies with annual revenues generally between $10 million and $150 million. We are an externally managed, non-diversified closed-end management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). We are, therefore, required to comply with certain regulatory requirements. We have elected to be treated for U.S. federal income tax purposes as a regulated investment company (“RIC”), under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”).

Our primary investment objective is to generate current income through debt and equity investments. A secondary objective is to generate long-term capital appreciation through such equity and equity-related investments, including warrants, convertible securities and other rights to acquire equity securities. Our ~~portfolio~~ strategy is to invest primarily in illiquid debt and equity securities issued by lower middle market (“LMM”) companies, which generally have annual revenues between $10 million and $150 million, and middle market (“Middle Market”) companies that are generally larger in size than the LMM companies and have annual revenues typically between $150 million and $1.5 billion. Our LMM and Middle Market ~~companies~~portfolio investments generally range in private placements and negotiated transactions, which are traded in private over-the-counter markets for institutional investors. We will also invest in, and a significant portion of our assets are invested in, customized direct secured and unsecured loanssize from $1 million to and equity securities of LMM companies, referred to as LMM securities. Typically, our investments in LMM companies require us to co-invest with Main Street Capital Corporation, a New York Stock Exchange listed BDC (“Main Street”), and/or its affiliates as a result of our sub-advisory relationship described below.$15 million. We categorize some of our investments in LMM companies and Middle Market companies as private loan (“Private Loan”) portfolio investments. Private Loan investments, often referred to in the debt markets as “club deals,” are investments, generally in debt instruments, that we originate on a collaborative basis with other investment funds. Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our investment portfolio also includes other portfolio (“Other Portfolio”) investments primarily consisting of investments managed by third parties, which may differ from the typical profiles for our other types of investments.

We previously registered for sale up to 150,000,000 shares of common stock pursuant to a registration statement on Form N-2 (File No. 333-178548) which was initially declared effective by the SEC on June 4, 2012 (the “Initial Offering”). The Initial Offering terminated on December 1, 2015. We raised approximately $601.2 million in the Initial Offering, including proceeds from the dividend reinvestment plan of approximately $22.0 million. We also registered for sale up to $1,500,000,000 worth of shares of common stock (the “Offering”) pursuant to a new registration statement on Form N-2 (File No. 333-204659), as amended. With the approval of In our board of directors, we closed the Offering to new investors effective September 30, 2017. Through March 31, 2020, we raised approximately $242.2 million in the Offering, including proceeds from the distribution reinvestment plan of approximately $110.5 million.

Our business is managed by the Adviser, an affiliate of Hines, under an Investment Advisory and Administrative Services Agreement dated May 31, 2012 (as amended the “Investment Advisory Agreement”). We and the Adviser have retained MSC Adviser I, LLC (the “Sub-Adviser”), a wholly owned subsidiary of Main Street, as our investment sub-adviser pursuant to an Investment Sub-Advisory Agreement (the “Sub-Advisory Agreement”) to identify, evaluate, negotiate and structure prospective investments, make investment and portfolio management recommendations for approval by the Adviser, monitor our investment portfolio and provide certain ongoing administrative services to the Adviser. The Adviser and the Sub-Adviser are collectively referred to as the “Advisers,” and each is registered under the Investment Advisers Act of 1940, as amended. Upon the execution of the Sub-Advisory Agreement, Main Street became our affiliate. Our board of directors most recently reapproved the Investment Advisory Agreement and the Sub-Advisory Agreement on May 23, 2019. We have engaged Hines Securities, Inc. (the “Dealer Manager”), an affiliate of the Adviser, to serve as the Dealer Manager for our offerings, if any.

As a BDC, we are subject to certain regulatory restrictions in making our investments, including limitations on our ability to co-invest with certain affiliates, including Main Street. However, we received exemptive relief from the SEC, that permits us, subject to certain conditions, to co-invest with Main Street and/or its affiliates in certain transactions originated by Main Street and/or our Advisers. The exemptive relief permits us, and certain of our directly or indirectly wholly owned subsidiaries on one hand, and Main Street, and or/certain of its affiliates on the other hand, to co-invest in the same investment opportunities where such investment may otherwise be prohibited under Section 57(a)(4) of the 1940 Act. In addition,Other Portfolio, we may ~~continue to co-invest with Main Street and/or its affiliates in syndicated deals~~incur indirect fees and ~~secondary loan market purchases in accordance with applicable regulatory guidance or interpretations where price is the only negotiated point.~~

As of March 31, 2020, we had investments in 36 Middle Market debt investments, 53 Private Loan debt investments, 41 LMM debt investments, 45 LMM equity investments, eight Middle Market equity investments, 20 Private Loan equity investments and eight Other Portfolio investments with an aggregate fair value of approximately $894.9 million, a cost basis of approximately $1,001.4 million and a weighted average effective annual yield of approximately 8.3%. The weighted average annual yield was calculated using the effective interest rates for all investments at March 31, 2020, including accretion of original issue discount and amortization of premium to par value, the amortization of fees receivedexpenses in connection with ~~transactions, and assumes zero yield for~~ investments ~~on non-accrual status. Approximately 80.6% and 4.2% of our total portfolio~~managed by third parties, such as investments ~~(at fair value, excluding our Other Portfolio investments) were secured by first priority liens and second priority liens, respectively, on portfolio company assets with the remainder~~ in ~~unsecured debt investments and equity investments.~~

other investment companies or private funds.

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

~~Investment Income~~

~~We have generated,~~

Our LMM investments include customized direct secured and ~~plan~~unsecured loans to ~~continue~~and equity securities of LMM companies. Companies that issue customized LMM securities to ~~generate, investment income primarily~~us are privately held at the time we invest in them. Our investments in LMM companies are co-investments with Main Street and/or its affiliates and, as a result, we obtained an exemptive order from the ~~form~~SEC, as discussed below, to permit us to do so. While the structure of ~~interest on the~~our investments in customized LMM securities is likely to vary, we may invest in senior secured debt, ~~securities that we hold, dividends~~senior unsecured debt, subordinated secured debt, subordinated unsecured debt, mezzanine debt, convertible debt, convertible preferred equity, preferred equity, common equity, warrants and other ~~distributions with respect to any equity interests that we hold~~instruments, many of which generate current yields. We will make other investments as allowed by the 1940 Act and capital gains, if any, on our investments. In addition, we may generate revenue in the form of commitment, origination, structuring or diligence fees, monitoring fees, and possibly consulting fees and performance-based fees. All such fees will be generated in connectionconsistent with our ~~investments and recognized~~continued qualification as ~~earned or as additional yield over the life~~a RIC. For a discussion of the ~~debt investment. To date~~risks inherent in our ~~investment income has been interest income on debt~~portfolio investments, accretion of original issue discounts, dividend income, amortization of premiums and fees received from transactions, net realized gain (loss) on investments and net change in unrealized appreciation (depreciation) on investments.

~~Expenses~~

~~On both a short-term and long-term basis, our primary use of funds will be investments in portfolio companies and cash distributions~~see “Item 1A. Risk Factors — Risks Relating to our ~~stockholders. Our primary operating expenses will be debt service payments, general~~Business and administrative expenses, and payment of advisory fees under the Investment Advisory Agreement. The investment advisory fees paid to our Adviser (and the fees paid by our Adviser to our Sub-Adviser pursuant to the Sub-Advisory Agreement) will compensate our Advisers for their work in identifying, evaluating, negotiating, executing, monitoring and servicing our investments.

~~We bear all other expenses of our operations and transactions, including fees and expenses relating to:~~



●		~~corporate and organizational expenses relating to offerings of our common stock, subject to certain limitations;~~
●		~~the cost of calculating our net asset value (“NAV”), including the cost of any third-party valuation services;~~
●		~~the cost of effecting sales and repurchases of shares of our common stock and other securities;~~
●		fees payable to third parties relating to, or associated with, monitoring our financial and legal affairs, making investments, and valuing investments, including fees and expenses associated with performing due diligence reviews of prospective investments;
●		~~interest payable on debt, if any, including any hedging costs;~~
●		~~investment advisory fees;~~
●		~~transfer agent and custodial fees;~~
●		~~fees and expenses associated with marketing efforts;~~
●		~~federal and state registration fees;~~
●		~~federal, state and local taxes;~~
●		~~independent directors’ fees and expenses, including travel expenses;~~
●		~~costs of director and stockholder meetings, proxy statements, stockholders’ reports and notices;~~
●		~~cost of fidelity bond, directors and officers/errors and omissions liability insurance and other insurance premiums;~~
●		~~direct costs such as printing of stockholder reports and advertising or sales materials, mailing, long distance telephone, and staff;~~
●		fees and expenses associated with independent audits and outside legal costs, including compliance with the Sarbanes-Oxley Act of 2002, the 1940 Act, and other applicable federal and state securities laws and regulations;
●		~~costs associated with our reporting and compliance obligations under the 1940 Act and other applicable federal and state securities laws and regulations;~~
●		~~brokerage commissions for our investments;~~
●		~~all other expenses incurred by our Advisers in performing their obligations, subject to the limitations included in the Investment Advisory Agreement and Sub-Advisory Agreement; and~~
●		all other expenses incurred by us or any administrator in connection with administering our business, including payments under any administration agreement that will be based upon our allocable portion of overhead and other expenses incurred by any administrator in performing its obligations under any proposed administration agreement, including rent and our allocable portion of the costs of compensation and related expenses of our Chief Compliance Officer and Chief Financial Officer and their respective staffs.

~~During periods of asset growth, we expect our general and administrative expenses to be relatively stable or decline as a percentage of total assets and increase during periods of asset declines.~~

~~Base Management Fee, Incentive Fee Waiver Agreements and Administrative Services Expense Reimbursement Waiver Agreements~~

From time to time, our Advisers may waive certain fees and expense reimbursements accrued under the Investment Advisory Agreement and the Sub-Advisory Agreement, as applicable. Under certain circumstances, we may reimburse such waived fees within three years from the date of each respective fee reimbursement waiver. See Note 10 — ~~Related Party Transactions and Arrangements — Advisory Agreements and Conditional Fee and Expense Reimbursement Waivers~~ ~~to our condensed consolidated financial statements included elsewhere in this Report for additional information on our fee and expense reimbursement waivers.~~

~~CRITICAL ACCOUNTING POLICIES~~

Each of our critical accounting policies involves the use of estimates that require management to make assumptions that are subjective in nature. Management relies on its experience, collects historical and current market data, and analyzes these assumptions in order to arrive at what it believes to be reasonable estimates. In addition, application of these accounting policies involves the exercise of judgments regarding assumptions as to future uncertainties. Actual results could materially differ from these estimates. A disclosure of our critical accounting policies is includedStructure” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019~~2020.

Our investments may include other equity investments, such as warrants, options to buy a minority interest in ~~Management’s Discussion~~a portfolio company, or contractual payment rights or rights to receive a proportional interest in the operating cash flow or net income of such company. When determined by MSC Adviser to be in our best interest, we, in conjunction with other investment funds managed by or affiliated with MSC Adviser, may acquire a controlling interest in a portfolio company. Any warrants we receive with our debt securities may require only a nominal cost to exercise, and ~~Analysis of Financial Condition and Results of Operations. There have been no changes~~thus, as a portfolio company appreciates in value, we may achieve additional investment return from this equity interest. We intend to structure such warrants to include provisions protecting our ~~critical accounting policies during 2020, except~~rights as a minority-interest or, if applicable, controlling-interest holder, as well as puts, or rights to sell such securities back to the ~~extent described below.~~company upon the occurrence of specified events. In addition, we may obtain demand or “piggyback” registration rights in connection with these equity interests.

We plan to hold many of our investments to maturity or repayment but may sell our investments earlier if a liquidity event takes place, such as the sale or recapitalization of a portfolio company, or if we determine the sale to be in our best interest.

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~~Basis of Presentation~~

As a BDC, we are subject to certain regulatory restrictions in making our investments, including limitations on our ability to co-invest with certain affiliates. In April 2014, we received an exemptive order from the SEC permitting co-investments by us and ~~Consolidation~~

~~Our condensed consolidated financial statements~~Main Street in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. During December 2020, we received an amended exemptive order from the SEC permitting co-investments by us, Main Street and other funds advised by MSC Adviser in certain negotiated transactions where co-investing would otherwise be prohibited under the 1940 Act. We have ~~been prepared~~made co-investments with Main Street and in the future intend to make co-investments with Main Street and other funds advised by MSC Adviser, in accordance with the ~~instructions~~conditions of the order. The order requires, among other things, that we and MSC Adviser consider whether each such investment opportunity is appropriate for us and Main Street and other funds advised by MSC Adviser, as applicable, and if it is appropriate, to ~~Form 10-Q~~propose an allocation of the investment opportunity between such parties. Because MSC Adviser is not managing our investment activities as its sole activity, this may provide MSC Adviser an incentive to allocate opportunities to other funds instead of us. However, MSC Adviser has policies and ~~accounting principles generally accepted~~procedures in place to manage this conflict, including oversight by the independent members of our Board of Directors and the independent members of the Board of Directors of Main Street. Additional information regarding the operation of the co-investment program is set forth in the ~~United States~~order granting exemptive relief, which may be reviewed on the SEC’s Website at www.sec.gov.

In addition to the co-investment program described in this Form 10-Q and in the SEC’s order for co-investment exemptive relief, we may continue to co-invest in syndicated deals and secondary loan market transactions where only price is negotiated by MSC Adviser and its affiliates.

See “Note C.2 – Investment Portfolio Composition” in the notes to consolidated financial statements for a summary of ~~America~~the Company’s investments in the LMM, Middle Market and Private Loan portfolios as of March 31, 2021 and December 31, 2020.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and 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. Critical accounting policies are those that require management to make subjective or complex judgments about the effect of matters that are inherently uncertain and may change in subsequent periods. Changes that may be required in the underlying assumptions or estimates in these areas could have a material impact on our current and future financial condition and results of operations.

Management has discussed the development and selection of each critical accounting policy and estimate with the Audit Committee of the Board of Directors. Our critical accounting policies and estimates include the ~~accounts~~Investment Portfolio Valuation and Revenue Recognition policies described below. Our significant accounting policies are described in greater detail in Note B to the consolidated financial statements included in “Item 1.– Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

Investment Portfolio Valuation

The most significant determination inherent in the preparation of our ~~wholly owned~~ consolidated ~~subsidiaries: HMS Funding I LLC~~financial statements is the valuation of our Investment Portfolio and the related amounts of unrealized appreciation and depreciation. We consider this determination to be a critical accounting estimate, given the significant judgments and subjective measurements required. As of March 31, 2021 and December 31, 2020, our Investment Portfolio valued at fair value represented approximately 95% and 93% of our total assets, respectively. We are required to report our investments at fair value. We follow the provisions of FASB ASC 820, Fair Value Measurements and Disclosures (“HMS Funding”), HMS Equity Holding, LLC (“HMS Equity Holding”), HMS Equity Holding II, Inc. (“HMS Equity Holding II”), HMS California Holdings LP (“HMS California Holdings”) and HMS California Holdings GP LLC (“HMS California Holdings GP”ASC 820”). ~~All intercompany accounts~~ASC 820 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and ~~transactions~~enhances disclosure requirements for fair value measurements. ASC 820 requires us to assume that the portfolio investment is to be sold in the principal market to independent market participants, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal market that are independent, knowledgeable and willing and able to transact. See “Note B.1.—Valuation of the Investment Portfolio” in

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the notes to consolidated financial statements for a detailed discussion of our investment portfolio valuation process and procedures.

Due to the inherent uncertainty in the valuation process, our determination of fair value for our Investment Portfolio may differ materially from the values that would have been ~~eliminated~~determined had a ready market for the securities existed. In addition, changes in ~~consolidation. Under Topic 946,~~ ~~Financial Services - Investment Companies~~ the market environment, portfolio company performance and other events that may occur over the lives of the ~~Accounting Standards Codification,~~investments may cause the gains or losses ultimately realized on these investments to be materially different than the valuations currently assigned. We determine the fair value of each individual investment and record changes in fair value as ~~amended (the “ASC”),~~unrealized appreciation or depreciation.

Our Board of Directors has the final responsibility for overseeing, reviewing and approving, in good faith, our determination of the ~~Financial Accounting Standards Board (“FASB”), we are precluded from consolidating portfolio company investments, including~~fair value for our Investment Portfolio and our valuation procedures, consistent with 1940 Act requirements. We believe our Investment Portfolio as of March 31, 2021 and December 31, 2020 approximates fair value as of those dates based on the markets in which we ~~have~~operate and other conditions in existence on those reporting dates.

The SEC recently adopted new Rule 2a-5 under the 1940 Act, which establishes requirements for determining fair value in good faith for purposes of the 1940 Act. The rule permits boards to designate the determination of fair value to a ~~controlling~~fund’s executive officers or investment adviser, subject to the active oversight of the board. We will comply with the new rule’s valuation requirements on or before the SEC’s required compliance date in 2022.

Revenue Recognition

Interest and Dividend Income

We record interest ~~unless~~and dividend income on the accrual basis to the extent amounts are expected to be collected. Dividend income is recorded as dividends are declared by the portfolio company isor at the point an obligation exists for the portfolio company to make a ~~wholly owned investment company. An exception to this general principle occurs~~distribution. In accordance with our valuation policies, we evaluate accrued interest and dividend income periodically for collectability. When a loan or debt security becomes 90 days or more past due, and if we ~~own a controlled operating company whose purpose is~~otherwise do not expect the debtor to ~~provide services~~be able to ~~us such as an investment adviser~~service all of its debt or ~~transfer agent. None of our investments qualify for this exception. Therefore, our portfolio company investments, including those in which~~other obligations, we ~~have a controlling~~will generally place the loan or debt security on non-accrual status and cease recognizing interest ~~are carried~~income on the Consolidated Balance Sheet at fair value with changes to fair value recognized as “Net Change in Unrealized Appreciation (Depreciation) on Investments” on the Consolidated Statements of Operationsthat loan or debt security until the ~~investment~~borrower has demonstrated the ability and intent to pay contractual amounts due. If a loan or debt security’s status significantly improves regarding the debtor’s ability to service the debt or other obligations, or if a loan or debt security is ~~realized, usually upon exit, resulting~~sold or written off, we remove it from non-accrual status.

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

We hold certain debt and preferred equity instruments in our Investment Portfolio that contain PIK interest and cumulative dividend provisions. The PIK interest, computed at the contractual rate specified in each debt agreement, is periodically added to the principal balance of the debt and is recorded as interest income. Thus, the actual collection of this interest may be deferred until the time of debt principal repayment. Cumulative dividends are recorded as dividend income, and any ~~gain~~dividends in arrears are added to the balance of the preferred equity investment. The actual collection of these dividends in arrears may be deferred until such time as the preferred equity is redeemed or ~~loss on exit being recognized as a realized gain or loss. However,~~sold. To maintain RIC tax treatment (as discussed in ~~the event that any controlled subsidiary exceeds the tests~~“Income Taxes” within “Note B. Summary of ~~significance set forth in Rules 3-09 or 4-08(g) of Regulation S-X, we will include required financial information for such subsidiary~~Significant Accounting Policies” in the notes ~~or as an attachment~~ to ~~our condensed~~the consolidated financial ~~statements.~~

statements), these non-cash sources of income may need to be paid out to stockholders in the form of distributions, even though we may not have collected the PIK interest and cumulative dividends in cash. We stop accruing PIK interest and cumulative dividends and write off any accrued and uncollected interest and dividends in arrears when we determine that such PIK interest and dividends in arrears are no longer collectible. For the three months ended March 31, 2021 and 2020, (i) approximately 6.7% and 3.5%, respectively, of our total investment income was attributable to PIK interest income and cumulative dividend income not paid currently in cash.

INVESTMENT PORTFOLIO ~~INVESTMENT~~ COMPOSITION

Our ~~Middle Market~~LMM portfolio investments primarily consist of secured debt, equity warrants and direct ~~or secondary purchases~~equity investments in privately held, LMM companies based in the United States. Our LMM portfolio companies generally

Table of ~~interest-bearing debt securities in companies that are~~Contents

have annual revenues between $10 million and $150 million, and our LMM investments generally ~~larger~~range in size ~~than the~~from $1 million to $15 million. The LMM ~~companies included in our LMM portfolio. While our Middle Market~~ debt investments are ~~generally~~typically secured by either a first ~~priority lien, 9.6% of the fair value of our Middle Market portfolio, as of March 31, 2020, is secured by~~or second priority ~~liens.~~

~~As of March 31, 2020, our LMM portfolio primarily consists of debt investments secured by a first priority~~ lien ~~(58.2% of the total fair value of the LMM portfolio)~~ on the assets of the portfolio ~~companies~~company, can include either fixed or floating rate terms and ~~equity investments (41.4%~~generally have a term of ~~the total fair value of the LMM portfolio) in privately held LMM companies. The LMM debt investments generally mature~~ between five and seven years from the original investment date. ~~The~~In most LMM portfolio investments, we receive nominally priced equity warrants and/or make direct equity investments ~~represent an equity position~~in connection with a debt investment.

Our Middle Market portfolio investments primarily consist of direct investments in or secondary purchases of interest-bearing debt securities in privately held companies based in the ~~right~~United States that are generally larger in size than the companies included in our LMM portfolio. Our Middle Market portfolio companies generally have annual revenues between $150 million and $1.5 billion, and our Middle Market investments generally range in size from $1 million to ~~acquire an equity position through warrants.~~

~~As of March 31, 2020, our Private Loan~~$15 million. Our Middle Market portfolio ~~primarily consists of~~ debt investments are generally secured by either a first ~~and~~or second priority ~~liens (89.5% and 3.6% of the total fair value of the Private Loan portfolio, respectively)~~lien on the assets of the portfolio ~~companies, unsecured debt investments (2.9% of the total fair value of the Private Loan portfolio)~~company and ~~equity investments (4.0% of the total fair value of the Private Loan portfolio) in Private Loan companies. The Private Loan debt investments~~ typically have ~~stated terms~~a term of between three and seven years from the original investment date. ~~The~~

Our Private Loan ~~equity~~portfolio investments ~~represent an equity position~~are primarily debt securities in privately held companies which have been originated through strategic relationships with other investment funds on a collaborative basis and are often referred to in the debt markets as “club deals.” Private Loan investments are typically similar in size, structure, terms and conditions to investments we hold in our LMM portfolio and Middle Market portfolio. Our Private Loan portfolio debt investments are generally secured by either a first or second priority lien on the ~~right to acquire an equity position through warrants.~~

assets of the portfolio company and typically have a term of between three and seven years from the original investment date.

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

~~During the three months ended March 31, 2020,~~funds. For Other Portfolio investments, we funded investment purchases of approximately $46.9 million and had one investment under contract to purchase as of March 31, 2020 for an aggregate purchase price of approximately $1.9 million, which settled or was scheduled to settle after March 31, 2020. We also received proceeds from sales and repayments of existing portfolio investments of approximately $86.5 million, including $32.2 million in sales. We had no investments under contract to sell as of March 31, 2020. The combined result of these transactions decreased our portfolio, on a cost basis, by approximately $38.6 million, or 3.7%, and increased the number of portfolio investments by one, or 0.5%, comparedgenerally receive distributions related to the portfolio as of December 31, 2019. As of March 31, 2020, the largest investment in an individual portfolio company represented approximately 3.4% of our portfolio’s fair value, with remaining investments in any individual portfolio company ranging from 0.0% to 2.3%. The average investment in our portfolio is approximately $4.2 million or 0.5% of our total portfolio as of March 31, 2020. Our portfolio extends across individual portfolio investments, geographic regions, and industries. Further, our total portfolio’s investment composition (excluding our Other Portfolio investments) at fair value comprises 80.6% first lien debt securities and 4.2% second lien debt securities, with the remainder in unsecured debt investments and equity investments. First lien debt securities have priority over subordinated debt owedassets held by the ~~issuer with respect~~portfolio company. Those assets are typically expected to ~~the collateral pledged as security for the loan. Due~~be liquidated over a five to ~~the relative priority of payment of first lien investments, these generally have lower yields than lower priority, less secured investments.~~

During the three months ended March 31, 2019, we made investment purchases of approximately $34.2 million and had one investment under contract to purchase as of March 31, 2019 for an aggregate purchase price of approximately $1.8 million, which settled after March 31, 2019. We also received proceeds from sales and repayments of existing portfolio investments of approximately $39.0 million including $24.9 million in sales and had one investment under contract to sell as of March 31, 2019 for approximately $809,000, which represented the contract sales price.

Based upon our investment rating system, which is described further below, the weighted average rating of our LMM investment portfolio was approximately 2.3 and 2.4 as of March 31, 2020 and December 31, 2019, respectively. See “Portfolio Asset Quality” below for a description of the system used to rate our investments. Lastly, the overall weighted average effective yield on our investment portfolio was 8.3% and 8.7% as of March 31, 2020 and December 31, 2019, respectively.

~~Summaries of~~ten-year period.

The following tables summarize the composition of our total ~~investment~~combined LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments at cost and fair value ~~are shown in the following tables (this information excludes Other Portfolio investments):~~

March 31, 2020 December 31, 2019
Cost: LMM Private Loan Middle Market Total LMM Private Loan Middle Market Total
First Lien Secured Debt 66.7 % 90.1 % 82.7 % 83.0 % 68.0 % 90.4 % 84.8 % 84.3 %
Second Lien Secured Debt 0.3
3.5
11.5
5.2
0.4
3.5
10.1
4.9
Unsecured Debt 0.1
2.6
0.7
1.5
0.1
2.5
0.6
1.4
Equity
32.3
3.7
5.1
10.1
30.9
3.5
4.5
9.2
Equity warrants 0.6
0.1
—
0.2
0.6
0.1
—
0.2
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

March 31, 2020 December 31, 2019
Fair Value: LMM Private Loan Middle Market Total LMM Private Loan Middle Market Total
First Lien Secured Debt 58.2 % 89.5 % 86.5 % 80.6 % 57.2 % 89.7 % 88.1 % 81.8 %
Second Lien Secured Debt 0.3
3.6
9.6
4.2
0.3
3.5
8.5
4.1
Unsecured Debt 0.1
2.9
0.9
1.7
0.1
2.5
0.6
1.4
Equity 41.3
3.6
3.0
13.3
42.3
4
2.8
12.5
Equity warrants 0.1
0.4
—
0.2
0.1
0.3
—
0.2
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

~~For the tables showing our total~~by type of investment ~~portfolio composition by geographic region and by industry, see Note 3 —~~ ~~Fair Value Hierarchy for Investments — Portfolio Investment Composition~~ ~~to our condensed consolidated financial statements included elsewhere in this Report.~~

~~Investment in HMS-ORIX~~

~~We previously co-invested in broadly-syndicated loans with Orix through our investment in HMS-ORIX, which was organized~~ as a Delaware limited liability company. On November 20, 2018, HMS-ORIX closed on a $170.0 million credit facility with Citibank, N.A. (the “Refinanced HMS-ORIX Credit Facility”). The proceeds from the Refinanced HMS-ORIX Credit Facility were used to pay off the outstanding balance on the Initial HMS-ORIX Credit Facility, which was subsequently terminated. On May 8, 2019, HMS-ORIX Holdings I LLC, a wholly owned subsidiary of HMS-ORIX, which held allpercentage of the total combined LMM portfolio investments, in broadly-syndicated loans held by HMS-ORIX, was merged (the “HMS-ORIX Holdings Merger”) into Mariner CLO 7, Ltd., an exempted company incorporated under the laws of the Cayman Islands (“Mariner CLO”). Proceeds from the HMS-ORIX Holdings Merger were used to pay off the Refinanced HMS-ORIX Credit Facility. HMS-ORIX was fully liquidated on September 26, 2019.

~~For the three months ended March 31, 2019, we recognized approximately $546,000 of dividend income in respect of our investment in HMS-ORIX.~~

~~The following table shows the summarized financial information for HMS-ORIX for the three months ended March 31, 2019 (dollars in thousands):~~

~~PORTFOLIO ASSET QUALITY~~

~~As of March 31, 2020, we owned a broad~~Middle Market portfolio ~~of 211~~ investments ~~in 123 companies representing a wide range of industries. We believe that this broad~~and Private Loan portfolio ~~adds to the structural protection of the portfolio, revenue sources, income, cash flows and dividends. The portfolio included the following:~~

▪

~~36 debt~~ investments in 32 Middle Market portfolio companies with an aggregate fair value of approximately $193.7 million and a cost basis of approximately $259.9 million. The Middle Market debt investments had a weighted average annual effective yield of approximately 7.7%, which is calculated assuming the investments on non-accrual status have a zero yield, and 89.2% of the Middle Market debt investments were secured by first priority liens. Further, 97.9% of the Middle Market debt investments contain variable interest rates, though a majority of the investments with variable rates are subject to contractual minimum base interest rates between 100 and 150 basis points.

▪

53 debt investments in 46 Private Loan portfolio companies with an aggregate fair value of approximately $414.0 million and a cost basis of approximately $455.3 million. The Private Loan debt investments had a weighted average annual effective yield of approximately 9.5%, which is calculated assuming the investments on non-accrual status have a zero yield, and 93.3% of the Private Loan debt investments were secured by first priority liens. Further, 95.2% of the Private Loan debt investments contain variable interest rates, though a majority of the investments with variable interest rates are subject to contractual minimum base interest rates between 100 and 150 basis points.

▪

41 debt investments in 33 LMM portfolio companies with an aggregate fair value of approximately $130.3 million and a cost basis of approximately $134.4 million. The LMM debt investments had a weighted average annual effective yield of approximately 11.6%, and 99.4% of the debt investments were secured by first priority liens. Also, 58.1% of the LMM debt investments are fixed rate investments with fixed interest rates between 8.0% and 15.0%. Also, 27 LMM debt investments, representing approximately 41.9% of the LMM debt investments have variable interest rates subject to a contractual minimum base interest rate of 100 basis points.


▪	74 equity investments and seven equity warrant investments in 34 LMM portfolio companies, 12 Private Loan portfolio companies, seven Middle Market portfolio companies and six Other Portfolio companies with an aggregate fair value of approximately $156.8 million and a cost basis of approximately $151.8 million.

~~Overall,~~ as of March 31, 2021 and December 31, 2020 ~~our investment portfolio had a weighted average effective yield on our investments of approximately 8.3%, and 76.9% of our total portfolio’s investments (including our~~(this information excludes the Other Portfolio investments) ~~were secured by first priority liens.~~.

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Cost:	March 31, 2021		December 31, 2020
First lien debt	82.5	%	79.5	%
Equity	13.7	%	13.9	%
Second lien debt	1.9	%	4.6	%
Equity warrants	0.2	%	0.2	%
Other	1.7	%	1.8	%
	100.0	%	100.0	%


Fair Value:	March 31, 2021		December 31, 2020
First lien debt	79.1	%	76.0	%
Equity	17.1	%	17.3	%
Second lien debt	1.9	%	4.6	%
Equity warrants	0.2	%	0.3	%
Other	1.7	%	1.8	%
	100.0	%	100.0	%

Our LMM portfolio investments, Middle Market portfolio investments and Private Loan portfolio investments carry a number of ~~March~~risks including: (1) investing in companies which may have limited operating histories and financial resources; (2) holding investments that generally are not publicly traded and which may be subject to legal and other restrictions on resale; and (3) other risks common to investing in below investment-grade debt and equity investments in our Investment Portfolio. Please see “Item 1A. Risk Factors—Risks Related to Our Investments” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 ~~we had 10 investments in seven portfolio companies that were on non-accrual status, which comprised approximately 1.9% of our total investment portfolio at fair value and 5.2%~~for a more complete discussion of the ~~total investment portfolio at cost. As of December 31, 2019, we had eight investments~~risks involved with investing in five portfolio companies that were on non-accrual status, which comprised approximately 1.5% of the total investment portfolio at fair value and 2.9% of the total investment portfolio at cost. For those investments in which S&P credit ratings are available, which represents approximately 19.8% of the portfolio as of March 31, 2020, the portfolio had a weighted average effective credit rating of B.

our Investment Portfolio.

PORTFOLIO ASSET QUALITY

We utilize aan internally developed investment rating system ~~developed by our Sub-Adviser~~ to rate the performance of each LMM portfolio company and to monitor our expected level of returns on each of our LMM investments in relation to our expectations for the portfolio ~~companies.~~company. The investment rating system takes into consideration various factors, including each investment’s expected level of returns, the collectability of our debt investments and the ability to receive a return of the invested capital in our equity investments, comparisons to competitors and other industry participants, ~~and~~ the portfolio company’s future ~~outlook.~~

~~Investment Rating 1 represents a LMM~~outlook and other factors that are deemed to be significant to the portfolio ~~company that is performing in a manner which significantly exceeds expectations.~~

~~Investment Rating 2 represents a LMM portfolio company that, in general, is performing above expectations.~~

~~Investment Rating 3 represents a LMM portfolio company that is generally performing in accordance with expectations. All new LMM portfolio investments receive an initial Investment Rating 3.~~

~~Investment Rating 4 represents a LMM portfolio company that is underperforming expectations, requiring increased monitoring and scrutiny by us.~~

Investment Rating 5 represents a LMM portfolio company that is significantly underperforming, requiring heightened levels of monitoring and scrutiny by us and involves the recognition of significant unrealized depreciation on such investment.

~~The following table shows the distribution of our LMM portfolio investments on the 1 to 5 investment rating system of our Sub-Adviser at fair value as~~company.

As of March 31, ~~2020~~2021, our total Investment Portfolio had two investments on non-accrual status, which comprised approximately 0.4% of its fair value and 1.0% of its cost. As of December 31, ~~2019 (dollars in thousands):~~

March 31, 2020 December 31, 2019
Investment Rating Investments at Fair Value Percentage of Total LMM Portfolio Investments at Fair Value Percentage of Total LMM Portfolio
1 $ 99,484
44.7 % $ 86,453
38.4 %
2 8,504
3.8
28,130
12.5
3 57,495
25.8
48,597
21.6
4 57,138
25.7
61,941
27.5
5 —
—
—
—
Total $ 222,621
100.0 % $ 225,121
100.0 %

~~Based upon this investment rating system, the weighted average rating~~2020, our total Investment Portfolio had three investments on non-accrual status, which comprised approximately 0.6% of its fair value and 1.3% of its cost.

The operating results of our ~~LMM~~ portfolio ~~at fair value was approximately 2.3~~companies are impacted by changes in the broader fundamentals of the United States economy. In periods during which the United States economy contracts, as it did due to the impact of COVID-19, it is likely that the financial results of small to mid-sized companies, like those in which we invest, could experience deterioration or limited growth from current levels, which could ultimately lead to difficulty in meeting their debt service requirements, to an increase in defaults on our debt investments or in realized losses on our investments and ~~2.4 as~~to difficulty in maintaining historical dividend payment rates and unrealized appreciation on our equity investments. Consequently, we can provide no assurance that the performance of ~~March 31, 2020~~ ~~and~~ ~~December 31, 2019, respectively.~~certain portfolio companies will not be negatively impacted by future economic cycles or other conditions, which could also have a negative impact on our future results.

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DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS

~~RESULTS COMPARISONS FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND MARCH 31, 2019~~

~~Total Investment Income, Expenses, Net Assets~~

~~For~~

Comparison of the three months ended March 31, ~~2020~~2021 and 2019, our total investment income was approximately $24.0 million and $29.2 million, respectively, consisting predominately of interest income and dividend income. The decrease in total investment income was primarily driven by a decrease in interest income of approximately $4.4 million and a decrease in dividend income of approximately $0.9 million. The decrease in interest income was primarily due to (i) a decrease in the weighted average annual effective yield on investments in our portfolio from 9.6% as of March 31, ~~2019 to 8.3% as of March 31,~~ 2020 ~~(ii) interest income write-offs due to an increase in non-accrual investments in our portfolio, and (iii) a decrease in the aggregate par value of the debt investments in our portfolio.~~


	Three Months Ended
	March 31,				Net Change
	2021		2020		Amount		%

	(dollars in thousands)

Total investment income	$	20,272	$	24,000	$	(3,728)	(16)	%
Total expenses (net of fee and expense waivers)		8,330		11,466		(3,136)	(27)	%
Net investment income		11,942		12,534		(592)	(5)	%
Net realized loss from investments		(4,082)		(3,365)		(717)	NM
Net unrealized appreciation (depreciation) from investments		5,193		(94,909)		100,102	NM
Income tax benefit (provision)		(396)		(76)		(320)	NM
Net increase (decrease) in net assets resulting from operations	$	12,657	$	(85,816)	$	98,473	NM

For the three months ended March 31, 2020 and 2019, we recognized $575,000 and $361,000, respectively, of non-recurring fee income received from our portfolio companies or other third parties, which accounted for approximately 2.4% and 1.2%, respectively, of our total

NM	Not Meaningful

Total Investment Income

Total investment income during such periods. Such fee income is transaction based and typically consists of prepayment fees, structuring fees, amendment and consent fees and other non-recurring fees. As such, future fee income is generally dependent on new direct origination investments and the occurrence of prepayments and other events at existing portfolio companies resulting in such fees.

For the three months ended March 31, 2020 and 2019, expenses, net of internal administrative services expense waivers, were approximately $11.5 million and $15.3 million, respectively. The decrease in expenses is primarily due to a decrease in the subordinated incentive fee on income of $1.4 million and a decrease in interest expense of approximately $1.9 million. Due to a decline in net investment income, which is the metric on which the subordinated incentive fee on income is calculated, the Advisers did not earn a subordinated incentive fee on income for the three months ended March 31, ~~2020, while~~2021 was $20.3 million, a 16% decrease from the ~~Advisers earned~~$24.0 million of total investment income for the corresponding period of 2020. The following table provides a ~~subordinated incentive~~summary of the changes in the comparable period activity.


	Three Months Ended
	March 31,				Net Change
	2021		2020		Amount		%

	(dollars in thousands)
Interest income	$	16,080	$	21,785	$	(5,705)	(26)	%	(a)
Dividend income		3,952		1,640		2,312	141	%	(b)
Fee income		240		575		(335)	(58)	%
Total investment income	$	20,272	$	24,000	$	(3,728)	(16)	%

(a)	The decrease in interest income was primarily due to lower floating interest rates on investment portfolio debt investments based upon the decline in the LIBOR and the reduction in our total portfolio debt investments.

(b)	The increase in dividend income from equity investments is primarily a result of improved operating results, financial condition and liquidity positions of certain of our portfolio companies.

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Expenses

Total expenses, net of fee and expense waivers, for the three months ended March 31, 2021 were $8.3 million, an 27% decrease from the $11.5 million in the corresponding period of 2020. The following table provides a summary of the changes in the comparable period activity.


	Three Months Ended
	March 31,				Net Change
	2021		2020		Amount		%

		(dollars in thousands)
Interest expense	$	3,164	$	5,229	$	(2,065)	(39)	%	(a)
Base management and incentive fees		3,903		4,994		(1,091)	(22)	%	(b)
Internal administrative services fees		1,055		784		271	35	%
Offering costs		-		88		(88)	(100)	%
Professional fees		558		710		(152)	(21)	%
Insurance		114		103		11	11	%
Board of director fees		108		102		6	6	%
Other general and administrative		483		240		243	101	%
Total expenses before fee and expense waivers		9,385		12,250		(2,865)	(23)	%
Waiver of internal administrative services expenses		(1,055)		(784)		(271)	35	%
Total expenses	$	8,330	$	11,466	$	(3,136)	(27)	%

(a)	The decrease in interest expense was primarily due to lower floating interest rates on our revolving lines of credit based upon the decline in LIBOR and lower amounts outstanding under our Credit Facilities.

(b)	The decrease in the base management fees relates to a decrease in the base management fee from 2.00% to 1.75% as the result Main Street becoming the sole investment manager to the Company and lower average gross assets subject to base management fees.

Net Investment Income

Net investment income for the three months ended March 31, 2021 decreased 5% to $11.9 million, or $0.15 per share, compared to net investment income of ~~$1.4~~$12.5 million, or $0.16 per share, for the corresponding period of 2020. The decrease in net investment income was principally attributable to the decrease in total investment income partially offset by the decrease in total expenses, both as discussed above.

Net Realized Gain (Loss) from Investments

The following table provides a summary of the primary components of the total net realized loss on investments of $2.0 million (excludes realized loss on extinguishment of debt of $2.1 million) for the three months ended March 31, 2021:


	Three Months Ended March 31, 2021
	Full Exits			Restructures			Total
	Net Gain/(Loss)		# of Investments	Net Gain/(Loss)		# of Investments	Net Gain/(Loss)		# of Investments

	(dollars in thousands)
LMM Portfolio	$	—	—	$	(1,193)	1	$	(1,193)	1
Middle Market Portfolio		(798)	1		—	—		(798)	1
Total Net Realized Gain/(Loss)	$	(798)	1	$	(1,193)	1	$	(1,991)	2

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Net Unrealized Appreciation (Depreciation)

The following table provides a summary of the total net unrealized appreciation of $5.2 million for the three months ended March 31, ~~2019. Interest expense was lower~~2021:


	Three Months Ended March 31, 2021
			Middle		Private
	LMM(a)		Market (b)		Loan (c)		Other		Total

	(dollars in millions)
Accounting reversals of net unrealized (appreciation) depreciation recognized in prior periods due to net realized (gains/income) losses recognized during the current period	$	1.0	$	0.9	$	0.1	$	—	$	2.0
Net unrealized appreciation (depreciation) relating to portfolio investments		1.7		1.7		0.8		(1.0)		3.2
Total net appreciation depreciation relating to portfolio investments	$	2.7	$	2.6	$	0.9	$	(1.0)	$	5.2

(a)	LMM includes unrealized appreciation on 16 LMM portfolio investments and unrealized depreciation on 16 LMM portfolio investments.

(b)	Middle Market includes unrealized appreciation on 19 Middle Market portfolio investments and unrealized depreciation on 8 Middle Market portfolio investments.

(c)	Private Loan includes unrealized appreciation on 17 Private Loan portfolio investments and unrealized depreciation on 19 Private Loan portfolio investments.

Income Tax Benefit (Provision)

The income tax provision for the three months ended March 31, ~~2020 due~~2021 of $0.4 million consisted of a current tax provision of $0.4 million, related to ~~(i)~~ a $0.3 million provision for excise tax on our estimated undistributed taxable income and $0.1 million provision for current U.S. federal and state income taxes.

Net Increase (Decrease) in Net Assets Resulting from Operations

The net increase in net assets resulting from operations for the three months ended March 31, 2021 was $12.7 million, or $0.16 per share, compared with a net decrease in ~~the annualized interest rate on our borrowings, from approximately 5.1% as~~net assets of ~~March 31, 2019 to approximately 3.5% as of March 31, 2020 and (ii) lower average Credit Facilities borrowings~~$85.8 million, or $1.09 per share, during the three months ended March 31, ~~2020 as compared to the three months ended March 31, 2019.~~

~~For the three months ended March 31, 2020, the net decrease in net assets resulting from operations (gross~~2020. The tables above provide a summary of stockholder distributions declared) was approximately $85.8 million. The decrease was attributable to (i) a net change in unrealized depreciation on investments of approximately $94.9 million and (ii) net realized loss on investments of approximately $3.4 million, offset by net investment income of approximately $12.5 million.

~~For the three months ended March 31, 2019,~~ the net increase in net assets resulting from operations ~~(gross of stockholder distributions declared) was approximately $18.8 million. The increase was attributable to (i) net investment income of approximately $13.9 million~~for the three months ended March 31, 2021.

Liquidity and ~~(ii) a net change~~Capital Resources

This “Liquidity and Capital Resources” section should be read in ~~unrealized appreciation on investments of approximately $12.1 million, offset by net realized loss on investments of approximately $7.1 million.~~

~~FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES~~

~~Overview~~

conjunction with the “COVID-19 Update” section above.

Cash and Cash Equivalents

As of March 31, ~~2020,~~2021, we had ~~approximately $16.3~~$28.6 million in cash and cash equivalents, which we held in various custodial ~~accounts. In addition, as~~accounts and our NAV totaled approximately $584.3 million, equating to approximately $7.34 per share. As of ~~March~~December 31, 2020, we had ~~$177.0~~approximately $49.1 million in undrawn commitments under the Credit Facilities, in the aggregate, subject to borrowing base restrictions and asset coverage limitations under the 1940 Act. To seek to enhance our returns, we intend to continue to employ leverage as market conditions permit and at the discretion of our Adviser, subject to asset coverage restrictions under the 1940 Act. See ~~“Financial Condition, Liquidity and Capital Resources — Financing Arrangements.~~”

~~As of March 31, 2020, we had 32~~ ~~senior secured loan investments andfive equity investments with aggregate unfunded commitments of $39.0 million. We believe that we maintain sufficient~~ cash and cash equivalents, ~~on hand and available borrowings to fund such unfunded commitments should the need arise.~~

We currently generate cash primarily from interest, dividends and fees earned on our investments, principal repayments and proceeds from the sales of our investments and the net proceeds of the issuance of shares under our distribution reinvestment plan.

~~Prior to investing~~which we held in securities of portfolio companies, we invest the net proceeds from the issuance of shares of common stock under our distribution reinvestment plan and from sales and pay-downs of existing investments primarily in cash, cash equivalents, U.S. government securities, repurchase agreements and high-quality debt instruments maturing in one year or less from the time of investment, consistent with our BDC electionvarious custodial accounts and our ~~election~~NAV totaled approximately $579.6 million equating to ~~be taxed as a RIC.~~

~~Liquidity and Capital Resources~~

approximately $7.28 per share.

Cash Flows

For the three months ended March 31, ~~2020,~~2021, we experienced a net decrease in cash and cash equivalents of ~~approximately $5.6 million. During that period, approximately $50.9~~$20.5 million, which is the net result of $0.2 million of cash ~~was generated from~~provided by our operating activities ~~which principally consisted~~and $20.7 million of ~~principal~~cash used in our financing activities.

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The $0.2 million of cash provided by our operating activities resulted primarily from (i) cash proceeds totaling $60.7 million from the sales and repayments ~~from~~of debt investments and sales of and return on capital of equity investments, ~~in portfolio companies~~(ii) cash flows we generated from the operating profits earned totaling $9.5 million, which is our net investment income, excluding the non-cash effects of ~~$86.5~~the accretion of unearned income, payment-in-kind interest income, cumulative dividends and the amortization of expenses for deferred financing costs and (iii) cash proceeds of $9.4 million ~~and net realized income (net decrease in net assets resulting from operations less~~related to the ~~net~~ change in ~~unrealized depreciation) of $9.1 million,~~other assets and liabilities, partially offset by the purchase of new portfolio investments of ~~$46.9~~$79.4 million. ~~During the three months ended March 31, 2020, approximately $56.5~~

The $20.7 million ~~was~~ used in financing activities ~~which~~ principally consisted of a net ~~$42.0~~$17.1 million decrease in borrowings outstanding under ~~the~~our Credit Facilities ~~$6.1 million used for the redemption of our common stock~~ and ~~$7.8~~$3.6 million in ~~cash distributions paid~~debt issuance costs.

Share Repurchase Program

On March 31, 2020, the Company’s Board of Directors unanimously approved a temporary suspension of the Company’s share repurchase program commencing with the second quarter of 2020. The Board of Directors determined that it was the best interest of the Company to ~~stockholders.~~

suspend the share repurchase program in order to preserve the financial flexibility and liquidity given the prolonged impact of COVID-19.

On March 2, 2021, the Company’s Board of Directors approved the reinstatement of the Company’s share repurchase program commencing in April 2021. For the ~~three months ended~~purposes of the first repurchase beginning in April 2021, the Company has determined that the aggregate repurchase will equal 90% of the amount of the dividend reinvestment plan proceeds resulting from the April 1, 2021 dividend payment.

Capital Resources

As of March 31, ~~2019,~~2021, we ~~experienced a net decrease~~had $28.6 million in cash and cash equivalents ~~of approximately $3.4 million. During that period, approximately $19.4~~and $185.3 million of ~~cash was generated from~~unused capacity under our operating activities, which principally consisted of the principal repayments from and sales of investments in portfolio companies of $39.0 million and a net increase in net assets resulting from operations of approximately $18.8 million, offset by purchase of new portfolio investments of $34.2 million. During the three months ended March 31, 2019, approximately $22.9 million was used in financing activities, which

~~principally consisted of a net $9.0 million decrease in borrowings under the~~ Credit Facilities, ~~$6.6 million in cash used for the redemption of our common stock and $7.2 million in cash distributions paid to stockholders.~~

~~Continuous Public Offering~~

With the approval of our board of directors, we closed the Offering to new investors effective September 30, 2017. During the three months ended March 31, 2020, we raised proceeds of $5.9 million from our distribution reinvestment plan.

~~During the three months ended March 31, 2019, we raised proceeds of $6.4 million from our distribution reinvestment plan.~~

~~Distributions~~

The following table reflects the cash distributions per share that we have declared on our common stock during the three months ended March 31, 2020 and 2019 (dollars in thousands except per share amounts).

Distributions
Per Share Amount
2020
Three months ended March 31, 2020 $ 0.17
$ 13,730
2019
Three months ended March 31, 2019 $ 0.17
$ 13,606

On March 5, 2020, with the authorization of our board of directors, we declared distributions to our stockholders for the period of April 2020 through June 2020. These distributions have been, or will be, calculated based on stockholders of record each day from April 1, 2020 through June 30, 2020 in an amount equal to $0.00191781 per share, per day. Distributions are paid on the first business day following the completion of each month to which they relate.

~~For the years ending December 31, 2019, 2018 and 2017, respectively, the tax characteristics of distributions paid to stockholders were as follow (amounts in thousands):~~

Year Ended December 31,
Tax Characteristics of Distributions 2019 2018 2017

Ordinary income $ 53,297
96.65 % $ 50,274
90.56 % $ 52,473
96.43 %
Capital gain distributions 1,848
3.35
5,238
9.44
1,941
3.57
Total $ 55,145
100.00 % $ 55,512
100.00 % $ 54,414
100.00 %

The determination of the tax attributes of our distributions is made annually at the end of our taxable year, based upon our taxable income for the full taxable year and distributions paid for the full taxable year. Therefore, a determination made on an interim basis may not be representative of the actual tax attributes of distributions for a full year. If we had determined the tax attributes of our distributions taxable year-to-date as of March 31, 2020, 100% would be from our current and accumulated earnings and profits. However, there can be no certainty to stockholders that this determination is representative of what the actual tax attributes of our fiscal and taxable years ending December 31, 2020 distributions to stockholders will be. The actual tax characteristics of distributions to stockholders will be reported to the Internal Revenue Service and stockholders subject to information reporting after the close of each calendar year on Form 1099-DIV.

We have adopted an “opt in” distribution reinvestment plan for our stockholders. As a result, if we make a distribution, our stockholders will receive distributions in cash unless they specifically “opt in” to the distribution reinvestment plan so as to have their cash distributions reinvested in additional shares of our common stock.

We may fund our cash distributions from any sources of funds legally available, including stock offering proceeds, if any, borrowings, net investment income from operations, capital gains proceeds from the sale of assets, non-capital gains proceeds from the sale of assets, dividends or other distributions paid to us on account of preferred and common equity investments in portfolio companies and fee waivers from our Advisers. We have not established limits on the amount of funds that we may use from legally available sources to make distributions. Our distributions may exceed our earnings. As a result, a portion of the distributions we make may represent a return of capital for U.S. federal income tax purposes.

~~The timing, amount and nature (cash or stock distributions) of any future distributions to stockholders are subject to applicable legal restrictions and the sole discretion of our board of directors.~~

In order to satisfy the Code’s requirements applicable to entities subject to tax as RICs, we are required to distribute substantially all of our taxable income to our stockholders on an annual basis. However, we may elect to spill over certain excess undistributed

taxable income from one taxable year into the next taxable year, which may require us to incur a 4% nondeductible U.S. federal excise tax on such excess undistributed taxable income. In order to avoid the imposition of the 4% nondeductible excise tax, we need to distribute, in respect of each calendar year dividends for U.S. federal income tax purposes of an amount at least equal to the sum of (1) 98.0% of our net ordinary income (taking into account certain deferrals and elections) for the calendar year, (2) 98.2% of our capital gain in excess of capital loss, or capital gain net income, adjusted for certain ordinary losses, generally for the one-year period ending on October 31 of such calendar year (or, if we so elect, for the calendar year) and (3) any net ordinary income and capital gain net income for the preceding calendar years that was not distributed during such calendar years and on which we ~~incurred no U.S. federal income tax.~~

~~Financing Arrangements~~

~~We anticipate that we will continue~~maintain to ~~fund~~support our investment ~~activities through existing cash, capital raised from our stock offerings, if any, proceeds from our dividend reinvestment plan~~ and borrowings on the Credit Facilities. However, with the approval of our board of directors, we closed the Offering to new investors effective September 30, 2017. Due to the impacts of the COVID-19 pandemic, our primary uses of funds in the short-term are expected to be to fund draws on unfunded commitments on existing investments in portfolio companies, operating ~~expenses and cash distributions to holders of our common stock.~~

activities. As of March 31, ~~2020,~~2021, our net asset value totaled $584.3 million, or $7.34 per share.

As of March 31, 2021, we had ~~$90.0~~$34.0 million outstanding and ~~$40.0~~$96.0 million of undrawn commitments under our TIAA Credit Facility, and ~~$313.0~~ $210.7 million outstanding and ~~$137.0~~$89.3 million of undrawn commitments under the ~~Deutsche Bank Credit~~JPM SPV Facility, both of which we ~~estimated~~estimate approximated fair value. Effective April 24, 2020, HMS Funding amended the Deutsche Bank Credit Facility to, among other things, terminate the facility’s revolver commitments and begin the amortization period of the facility. During such amortization period, no further advances or reinvestment of principal proceeds are permitted and all interest and principal proceeds received from the investments securing the facility (net of certain fees and expenses) will be applied against theAt March 31, 2021, we had $40 million outstanding ~~advances~~ on ~~the facility.~~our Main Street Term Loan. Availability under ~~each of~~ the TIAA Credit ~~Facilities~~Facility is subject to certain borrowing base limitations and the asset coverage ~~restrictions~~restrictions. Availability under the ~~1940 Act.~~JPM SPV Facility is subject to certain borrowing base limitations. For further information on our Credit Facilities, including key terms and financial covenants, refer to ~~Note 6~~“Note E — ~~Borrowings~~Debt” to the ~~consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 as well as Note 5 —~~ ~~Borrowings~~ ~~to the condensed~~ consolidated financial statements included elsewhere in this ~~Report.~~

AsQuarterly Report on Form 10-Q.

We anticipate that we will continue to fund our investment activities through existing cash and cash equivalents, cash flows generated through our ongoing operating activities and utilization of available borrowings under our Credit Facilities. Our primary uses of funds will be investments in portfolio companies, operating expenses, cash distributions to holders of our common stock and share repurchases under our share repurchase program.

We periodically invest excess cash balances into marketable securities and idle funds investments. The primary investment objective of marketable securities and idle funds investments is to generate incremental cash returns on excess cash balances prior to utilizing those funds for investment in our LMM, Middle Market and Private Loan portfolio investments. Marketable securities and idle funds investments generally consist of debt investments, independently rated debt investments, certificates of deposit with financial institutions, diversified bond funds and publicly traded debt and equity investments.

In order to satisfy the Code requirements applicable to a RIC, we intend to distribute to our stockholders, after consideration and application of our ability under the Code to carry forward certain excess undistributed taxable income from one tax year into the next tax year, substantially all of our taxable income. In addition, as a BDC, we generally are ~~permitted, under specified conditions,~~required to ~~issue “senior securities,” including borrowing money from banks or other financial institutions, only in amounts such that our asset~~meet a coverage as that term is defined in the 1940 Act, immediately after each such issuance is at least equal to the percentage set forth in Section 61 of the 1940 Act that is applicable to us at such time. Prior to the enactment of the SBCAA in March 2018, the asset coverage requirement applicable to BDCs was 200%. The SBCAA permits a BDC to be subject to an asset coverage requirement of 150% so long as it meets certain disclosure requirements and obtains certain approvals and, in the case of an unlisted BDC, makes an offer to repurchase the shares of its stockholders as of the date of the requisite approval. The reduced asset coverage requirement permits a BDC to have a ratio of total ~~consolidated~~ assets to outstanding indebtedness of 2:1 as compared to a maximum of 1:1 under the 200% asset coverage requirement. Effectiveness of the reduced asset coverage requirements to a BDC requires approval by either (1) a “required majority” (as defined in Section 57(o) of the 1940 Act) of such BDC’s board of directors with effectiveness one year after the date of such approval or (2) a majority of the votes cast at a special or annual meeting of such BDC’s stockholders attotal senior securities, which ~~a quorum is present, which is effective the day after such stockholder approval. We have not requested or obtained either such approval. As of March 31, 2020~~include borrowings and ~~December 31, 2019, our asset coverage ratio under BDC regulations was 226% and 237%, respectively.~~

~~Although~~any preferred stock we may issue in the ~~past~~future, of at least 200% (or 150% if certain requirements are met). This requirement limits the amount that we may borrow.

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Although we have been able to secure access to ~~potential~~ additional liquidity, including through ~~proceeds from the Offering and also by entering into the~~our Credit Facilities, there is no assurance that ~~equity~~debt or ~~debt~~equity capital will be available to us in the future on favorable terms, or at all.

Recently Issued or Adopted Accounting Standards

See “Note B.12 – Recently Issued or Adopted Accounting Standards” to the consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of recently issued or adopted accounting standards.

From time to time, new accounting pronouncements are issued by the FASB or other standard-setting bodies that are adopted by us as of the specified effective date. We believe that the impact of recently issued standards and any that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

Inflation

Inflation has not had a significant effect on our results of operations in any of the reporting periods presented herein. However, our portfolio companies have experienced, and may in the future experience, the impacts of inflation on their operating results, including periodic escalations in their costs for labor, raw materials, third-party services and required energy consumption.

Off-Balance Sheet Arrangements

We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. These instruments include commitments to extend credit and fund equity capital and involve, to varying degrees, elements of liquidity and credit risk in excess of the amount recognized in the balance sheet. At March 31, 2021, we had a total of $35.2 million in outstanding commitments comprised of (i) twenty-six investments with commitments to fund revolving loans that had not been fully drawn or term loans with additional commitments not yet funded and (ii) three investments with equity capital commitments that had not been fully called.

Contractual Obligations

As of March 31, 2021, we had $284.7 million in borrowings outstanding under our Credit Facilities. The TIAA Credit Facility will mature on March 6, 2022. JPM SPV Facility will mature on February 3, 2025. The Main Street Term Loan will mature on January 27, 2026. The Deutsche Bank Credit Facility, which was scheduled to mature on November 20, 2022, was fully repaid on February 3, 2021. See further discussion of the terms of our Credit Facilities in Note E —Debt” to the consolidated financials statements included elsewhere in this Quarterly Report on Form 10-Q.


	2021		2022		2023		2024		2025		Thereafter		Total

	(dollars in thousands)
TIAA Credit Facility	$	—	$	—	$	34,000	$	-	$	—	$	—	$	34,000
JPM SPV Facility		—		—		—		210,688		—		—		210,688
Main Street Term Loan		—		—		—		-		—		40,000		40,000
Interest Due on Main Street Term Loan		1,883		2,028		2,028		2,033		2,028		150		10,150
Total	$	1,883	$	2,028	$	36,028	$	212,721	$	2,028	$	40,150	$	294,838

Related Party Transactions ~~and Agreements~~

We have entered into agreements with ~~our~~HMS Adviser, ~~our Sub-Adviser~~MSC Adviser and ~~our~~the Dealer Manager, whereby we pay certain fees and reimbursements to these entities. These included payments to ~~our~~the Dealer Manager for selling commissions and the Dealer Manager fee and include payments to ~~our~~HMS Adviser and MSC Adviser for reimbursement of offering costs. In addition, we make payments for certain services that include the identification, execution, and management of our investments and also the management of our day-to-day operations provided to us by ~~our~~MSC Adviser, ~~and Sub-Adviser,~~ pursuant to various agreements that we have entered into. See Note 10J — Related Party Transactions and Arrangementsto the financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding related party transactions.

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~~Contractual Obligations~~

Recent Developments

On April 10, 2021, we filed a tender offer statement on Schedule TO (the “Offer”) with the SEC, to commence an offer by us to purchase a number of March 31, 2020, we had $403.0 million in borrowings outstanding under the Credit Facilities. Our TIAA Credit Facility will mature March 6, 2023, with two one-year extension options, subject to lender approval, and the Deutsche Bank Credit Facility will mature on November 20, 2022. See Note 5 — ~~Borrowings~~ ~~to the financial statements included elsewhere in this Report for a description~~shares of our common stock equal 90% of the ~~Credit Facilities.~~

~~A summary of our significant contractual payment obligations for the repayment of outstanding borrowings at March 31, 2020 is as follows:~~


~~(1)~~	At March 31, 2020, we had $40.0 million of undrawn revolver commitments under our TIAA Credit Facility; however, our borrowing ability is limited by borrowing base restrictions and asset coverage restrictions imposed by the 1940 Act, as discussed above.


~~(2)~~	At March 31, 2020, HMS Funding had $137.0 million of undrawn revolver commitments under the Deutsche Bank Credit Facility; however, our borrowing ability was limited by borrowing base restrictions and asset coverage restrictions imposed by the 1940 Act, as discussed above.

~~Off-Balance Sheet Arrangements~~

As of March 31, 2020, we had a total of approximately $39.0 million in outstanding commitments comprised of (i) 32 commitments to fund revolving loans that had not been fully drawn or term loans that had not been funded and (ii) five capital commitments that had not been fully called. We recognized unrealized depreciation of approximately $818,000 on our outstanding unfunded loan commitments and no unrealized appreciation or depreciation on our outstanding unfunded capital commitments during the three months ended March 31, 2020. We reasonably believe that we maintain sufficient assets and available borrowings to adequately cover and allow us to satisfy our outstanding unfunded commitments should the need arise. As of December 31, 2019, we had a total of approximately $46.3 million in outstanding commitments comprised of (i) 36 commitments to fund revolving loans that had not been fully drawn or term loans that had not been funded and (ii) five capital commitments that had not been fully called. We recognized unrealized appreciation of approximately $323,000 on our outstanding unfunded loan commitments and no unrealized appreciation or depreciation on our outstanding unfunded capital commitments during the year ended December 31, 2019.

Commitments and Contingencies
(dollars in thousands)
March 31, 2020 December 31, 2019

Unfunded Loan Commitments
Adams Publishing Group, LLC $ —
$ 762
American Nuts, LLC 247
247
American Trailer Rental Group, LLC —
400
Analytical Systems Keco, LLC 200
200
Arcus Hunting, LLC 1,470
1,398
ASC Ortho Management Company, LLC —
750
Boccella Precast Products, LLC 500
500
Centre Technologies Holdings, LLC 600
600
Chamberlin Holding, LLC 400
400
Chisholm Energy Holdings, LLC 1,429
1,429
CTVSH, PLLC 200
200
Direct Marketing Solutions, Inc. 400
400
DTE Enterprises, LLC 750
750
Dynamic Communities, LLC 250
250
Gamber-Johnson Holdings, LLC 300
300
GRT Rubber Technologies, Inc. 660
1,526
Guerdon Modular Holdings, Inc. —
148
Hawk Ridge Systems, LLC 350
350
Hunter Defense Technologies, Inc. 3,540
3,540

Commitments and Contingencies
(dollars in thousands)
March 31, 2020 December 31, 2019

HW Temps LLC $ 200
$ 200
Independent Pet Partners Intermediate Holdings, LLC 6,126
9,357
Invincible Boat Company, LLC 648
648
J & J Services, Inc. 3,000
3,000
Kickhaefer Manufacturing Company, LLC 360
500
LL Management, Inc. 1,182
1,182
Lynx FBO Operating LLC 875
1,875
Mac Lean-Fogg Company 313
313
Market Force Information, Inc. 3
3
Mystic Logistics Holdings, LLC 200
200
NexRev, LLC 800
800
NinjaTrader, LLC 200
200
NuStep, LLC 300
300
SI East , LLC 2,500
2,500
TEAM Public Choices, LLC 351
351
Tedder Acquisition, LLC 140
140
Trantech Radiator Topco, LLC 400
400
Unfunded Capital Commitments
Brightwood Capital Fund III, LP 1,260
1,260
Brightwood Capital Fund IV, LP 1,000
1,000
Copper Trail Energy Fund I LP 3,416
3,416
Freeport Financial Funds 1,945
1,945
Harris Preston Fund Investments 2,526
2,526
Total $ 39,041
$ 46,266

~~Recent Developments and Subsequent Events~~

~~On April 24, 2020, HMS Funding entered into an amendment to the Deutsche Bank Credit Facility. As of April 24, 2020, the revolving period~~amount of the ~~Deutsche Bank Credit Facility terminated,~~DRIP proceeds resulting from shares issued in lieu of cash distributions from the April 1, 2021 dividend payment, approximately $2,846,049. The Offer will expire on May 17, 2021 and ~~the amortization period began. During such amortization period, no further advances or reinvestment of principal collections are permitted,~~shares validly tendered and ~~all monthly interest and principal proceeds from our investments securing the Deutsche Bank Credit Facility (net of certain fees and expenses)~~not withdrawn will be ~~applied against the outstanding advances on the facility.~~

purchased at a price equal to our net asset value per share as of May 31, 2021.

On May 11, 2021, our Board of Directors declared a quarterly cash dividend of $0.125 per share payable August 2, 2021 to stockholders as of June 30, 2021.

Item 3. ~~Quantitative and Qualitative Disclosures about Market Risk.~~

Quantitative and Qualitative Disclosures about Market Risk

We are subject to financial market risks, ~~in particular~~including changes in interest rates, and ~~market risk.~~

~~Interest Rate Risk~~

~~Changes~~changes in interest rates may affect both our interest expense on the debt outstanding under our Credit Facilities and our interest income from portfolio ~~investments, the fair value of~~investments. Our risk management systems and procedures are designed to identify and analyze our ~~fixed income investments,~~risk, to set appropriate policies and ~~our cost of funding.~~

limits and to continually monitor these risks. Our ~~interest~~investment income will be affected by changes in various interest rates, including LIBOR and prime rates, to the extent that any ~~of our~~ debt investments include floating interest rates. ~~We generally invest~~See “Risk Factors — Risks Relating to Our Investments — Changes related to the LIBOR calculation process, the phase-out of LIBOR and the use of replacement rates for LIBOR may adversely affect the value of our portfolio securities.” , “Risk Factors — Risk Related to Our Investments — Changes in interest rates may affect our cost of capital, net investment income and the value of our investments.” and “Risk Factors — Risk Related to Debt Financing — Because we borrow money, the potential for gain or loss on amounts invested in use is magnified and may increase the risk of investing in us.” included in our Form 10-K for the fiscal year ended December 31, 2020 for more information regarding risks associated with our debt investments and borrowings that utilize LIBOR as a reference rate.

The majority of our debt investments are made with either fixed interest rates or floating ~~rate debt instruments, meaning~~rates that are subject to contractual minimum interest rates for the ~~interest rate payable on such instrument resets periodically based upon changes in a specified interest rate index, typically~~term of the ~~one-month or three-month LIBOR.~~investment. As of March 31, ~~2020,~~2021, approximately ~~86.8%~~83% of our ~~LMM, Private~~debt investment portfolio (at cost) bore interest at floating rates, 92% of which were subject to contractual minimum interest rates. Our interest expense will be affected by changes in the published LIBOR rate in connection with our Credit Facilities; however, the interest rate on our outstanding Main Street Term Loan ~~and Middle Market portfolio debt investments (based on cost) contained floating interest rates.~~is fixed for the life of such debt. As of March 31, ~~2020, the one-month LIBOR was approximately 0.99% and the three-month LIBOR was approximately 1.45%. Many of our investments provide that the specified~~2021, we had not entered into any interest rate ~~index on such instruments will never fall below a level, or floor, generally between 100 and 150 basis points regardless~~hedging arrangements. Due to our limited use of derivatives, we have claimed an exclusion from the definition of the ~~level of~~term “commodity pool operator” under the ~~specified index rate, which minimizes the negative impact to our interest income that would result from a decline in index rates.~~

~~The COVID-19 pandemic has resulted in a decrease in LIBOR~~Commodity Exchange Act and, a general reduction of certain interest rates by the U.S. Federal Reserve and other central banks. A continued decline in interest rates, including LIBOR, could result in a reduction of our gross investment income. In addition, our net investment income could also decline if such decreases in LIBORtherefore, are not ~~offset by, among other things,~~subject to registration or regulation as a corresponding increase in the spread over LIBOR in our portfolio investments, a decrease in our operating expenses, or a decrease in the interest rates of our liabilities that are tied to LIBOR. See “~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — COVID-19 Developments.”~~

In addition, any fluctuations in prevailing interest rates may affect the fair value of our fixed rate debt instruments and result in changes in unrealized gains and losses, and may also affect a net increase or decrease in net assets resulting from operations. Such changes in unrealized appreciation and depreciation will materialize into realized gains and losses if we sell our investments before their respective debt maturity dates.

Further, because we borrow money to make investments, our net investment income is partially dependent upon the difference between the interest rate at which we invest borrowed funds and the interest rate at which we borrow funds. In periods of rising interest rates and when we have borrowed capital with floating interest rates, our interest expense will increase, which will increase our financing costs and reduce our net investment income, especially to the extent we hold fixed-rate debt investments. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.

pool operator under such Act. The following table shows the approximate annualized increase or decrease ~~(dollars in thousands)~~ in the components of net investment income due to hypothetical base rate changes in interest ~~rate index changes,~~rates, assuming no changes in our investments and borrowings as of March 31, ~~2020.~~2021.


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

	(dollars in thousands, except per share amounts)
(150)	$	(84)	$	463	$	379	$	—
(125)		(84)		463		379		—
(100)		(84)		463		379		—
(75)		(84)		463		379		—
(50)		(84)		463		379		—
(25)		(84)		463		379		—
25		123		(612)		(489)		(0.01)
50		246		(1,223)		(977)		(0.01)
75		422		(1,835)		(1,413)		(0.02)
100		1,285		(2,447)		(1,162)		(0.01)
125		2,494		(3,059)		(565)		(0.01)
150		3,833		(3,670)		163		—

Change in interest rates
Increase (Decrease) in
Interest Income

Increase (Decrease) in
Interest Expense

Net Increase (Decrease) in Net
Investment Income
Down 100 basis points $ (2,703 ) $ (4,030 ) $ 1,327
Down 50 basis points (2,227 ) (2,015 ) (212 )
Up 50 basis points 3,445
2,015
1,430
Up 100 basis points 7,121
4,030
3,091
Up 200 basis points 14,598
8,060
6,538

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~~Although we believe~~

The hypothetical results assume that ~~this analysis is indicative of our existing sensitivity to interest~~all LIBOR and prime rate changes ~~it does not adjust~~would be effective on the first day of the period. However, the contractual LIBOR and prime rate reset dates would vary throughout the period, on either a monthly or quarterly basis, for both our investments and our Credit Facilities. The hypothetical results would also be impacted by the changes in the ~~credit market, credit quality,~~amount of debt outstanding under our Credit Facilities (with an increase (decrease) in the ~~size and composition of the assets in our portfolio and other business developments, including borrowing~~debt outstanding under the Credit Facilities ~~or other borrowings, that could affect net increase in net assets~~ resulting ~~from operations, or net income. Accordingly, we can offer no assurances that actual results would not differ materially from the analysis above.~~

~~If deemed prudent, we may use interest rate risk management techniques~~ in an ~~effort to minimize our exposure to~~(increase) decrease in the hypothetical interest rate fluctuations. These techniques may include various interest rate hedging activities to the extent permitted by the 1940 Act. Adverse developments resulting from changes in interest rates or hedging transactions could have a material adverse effect on our business, financial conditionexpense).

Item 4. Controls and ~~results of operations.~~ Procedures

As of ~~March 31, 2020, we had not entered into any interest rate hedging arrangements.~~

~~Market Risk~~

~~The market value of a security may move up or down, sometimes rapidly and unpredictably. These fluctuations may cause a security to be worth less than~~ the ~~price originally paid for it, or less than it was worth at an earlier time. Market risk may affect a single issuer, industry, sector~~end of the economy or the market as a whole. Global economies and financial markets are increasingly interconnected, which increases the probabilities that conditions in one country or region might adversely impact issuers in a different country or region. Conditions affecting the general economy, including political, social, or economic instability at the local, regional, or global level may also affect the market value of a security. Health crises, such as pandemic and epidemic diseases, as well as other incidents that interrupt the expected course of events, such as natural disasters, war or civil disturbance, acts of terrorism, power outages and other unforeseeable and external events, and the public response to or fear of such diseases or events, have and may in the future have an adverse effect on a company’s investments and net asset value and can lead to increased market volatility. See ~~“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations — COVID-19 Developments.”~~

~~Item 4. Controls and Procedures.~~

~~In accordance with the Exchange Act, Rules 13a-15 and 15d-15,~~period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, ~~and~~President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as(as defined in Rule 13a-15 of the ~~end of the period covered by this Report.~~Exchange Act). Based on that evaluation, our Chief Executive Officer, ~~and~~President, Chief Financial Officer, Chief Compliance Officer and Chief Accounting Officer have concluded that our current disclosure controls and procedures ~~were~~are effective asin timely alerting them of ~~March 31, 2020~~material information relating to ~~provide reasonable assurance~~us that ~~information~~is required to be disclosed in ~~our~~the reports ~~filed~~we file or ~~submitted~~submit under the Exchange ~~Act is (i) recorded, processed, summarized and reported within~~Act. There have been no changes in our internal control over financial reporting that occurred during the ~~time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated~~quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our ~~management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.~~internal control over financial reporting. We have not experienced any material impact to our internal control over financial reporting ~~to date as a result~~despite the fact that many of ~~the majority of the~~MSC Adviser’s employees ~~of our Advisers~~are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the ~~effects of the~~ COVID-19 ~~pandemic~~situation on our internal ~~control over financial reporting to seek~~controls to minimize ~~any~~the impact toon their design and operating effectiveness.

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

PART

~~PART II —~~ II—OTHER INFORMATION

Item 1. Legal ~~Proceedings.~~

Proceedings

We ~~are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From~~and/or MSC Adviser may, from time to time, ~~we may~~ be ~~party to certain legal proceedings, including proceedings relating to the enforcement~~involved in litigation arising out of our ~~rights under contracts~~respective operations in the normal course of business or otherwise. Furthermore, third parties may seek to impose liability on us in connection with the activities of our portfolio companies. While the outcome of any current legal proceedings cannot at this time be predicted with certainty, we do not expect ~~that these~~any current matters will materially affect our or MSC Adviser’s financial condition or results of operations; however, there can be no assurance whether any pending legal proceedings will have a material adverse effect ~~upon~~on our or MSC Adviser’s financial condition or results of ~~operations.~~

operations in any future reporting period.

Item 1A. Risk ~~Factors.~~

Factors

In addition to ~~the risk factors set forth below and~~ the other information set forth in this report, you should carefully consider the ~~“Risk~~risk factors described in Part I, “Item 1A. Risk Factors” ~~discussed~~ in our ~~annual report~~Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019,~~2020 that we filed with the SEC on March 30, 2021, which could materially affect our business, financial condition and/or operating results. There have been no material changes to the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

We are operating in a period of capital markets disruption and economic uncertainty. These conditions have affected and any future disruptions or instability in capital markets could have a material adverse effect on our business, financial condition and results of operations.

From time to time, the global capital markets may experience periods of disruption and instability, which could materially and adversely impact the broader financial and credit markets and reduce the availability to us of debt and equity capital. The outbreak of COVID-19 (also referred to as the “coronavirus”) beginning in late 2019 and subsequently spreading across the world, including to the United States, has had and could continue to lead to extreme volatility and disruptions in local, regional, national and global markets and economies affected thereby. The COVID-19 pandemic has affected and will continue to affect the portfolio companies in which we invest. The COVID-19 outbreak has resulted in, and until fully resolved is likely to continue to result in, the following among other things: (i) imposition by various local, state, and federal governmental authorities of various forms of travel restrictions, business closures and other quarantine measures, resulting in significant disruption to the businesses of many LMM and Middle Market portfolio companies including supply chains, demand and practical aspects of their operations, as well as in lay-offs or furloughs of employees and deferral of capital expenditures, and, while these effects are hoped to be temporary, some effects could be persistent or even permanent; (ii) increased draws by borrowers on revolving lines of credit; (iii) increased requests by borrowers for amendments and waivers of their credit agreements to avoid default, increased defaults by such borrowers and/or increased difficulty in obtaining refinancing at the maturity dates of their loans; (iv) volatility and disruption of markets including greater volatility in pricing and spreads, difficulty in valuing loans during periods of increased volatility, and liquidity issues; (v) reduction in certain interest rates by the U.S. Federal Reserve and other central banks and decreased LIBOR; (vi) unfavorable economic conditions that would be expected to increase borrowers’ funding costs, limit borrowers’ access to the capital markets or result in a decision by lenders not to extend credit to borrowers; and (vii) rapidly evolving proposals and/or actions by local, 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 LMM and Middle Market businesses.

The COVID-19 pandemic and the related disruption and financial distress experienced by our portfolio companies have had a material adverse effect on our investment income, particularly our interest income, received from our investments, and we expect that such adverse effects will continue for the duration of the pandemic and potentially for some time thereafter. The effects of the COVID-19 pandemic have caused a steep decline in leveraged loan market values, which affects the value of many of the loans we hold. In connection with the adverse effects of the COVID-19 pandemic, we may need to restructure our investments in some of our portfolio companies, which could result in reduced interest payments, an increase the amount of PIK interest we receive, or permanent impairments on our investments. In addition, the effects of the COVID-19 pandemic increase the risk that more of our portfolio investments may be placed on non-accrual status in the future. Any decreases in our net investment income would increase the portion of our cash flows dedicated to servicing our existing borrowings under the Deutsche Bank Credit Facility and the TIAA Credit Facility (combined, the “Credit Facilities”) and distribution payments to stockholders. If these amounts become unsustainable, we may be required to reduce the amount of our distributions to stockholders.

Such capital markets disruptions and instability have also occurred in the past and may occur in the future. For example, between 2008 and 2009, instability in the global capital markets resulted in disruptions in liquidity in the debt capital markets, significant write-offs in the financial services sector, the repricing of credit risk in the broadly syndicated credit market and the failure of major domestic and international financial institutions. In particular, the financial services sector was negatively impacted by significant write-offs as the value of the assets held by financial firms declined, impairing their capital positions and abilities to lend and invest. The full implications of the decision by the United Kingdom to withdraw from the European Union are unclear

at present. In addition, U.S. government shutdowns, including the partial government shutdown that ended in January 2019, may cause disruptions or instability in capital markets, and the implications of policies that may be enacted from time to time on capital markets may not be clear at the time of proposal or enactment. Furthermore, uncertainty between the United States and other countries with respect to trade policies, treaties and tariffs, among other factors, have caused disruptions in the global markets, including markets in which we participate, and we cannot assure you that these market conditions will continue or worsen in the future.

Terrorist acts, acts of war, natural disasters, or disease outbreaks, pandemics or other public health crises may cause periods of market instability and volatility and may disrupt the operations of us and our portfolio companies for extended periods of time. Such events or other similar events may cause significantly diminished overall confidence in the debt and equity markets, declines in the values of certain assets, economic uncertainty and reduced availability of debt and equity capital for the market as a whole and financial services firms in particular. There can be no assurance that adverse market conditions will not repeat themselves in the future.

Volatility and dislocation in the capital markets could create a challenging environment in which to raise or access capital, including, for example, by making it difficult to extend the maturity of or refinance our existing indebtedness or obtain new indebtedness with similar terms. 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) and impairments of the market values or FMV of our investments, even if unrealized, must be reflected in our financial statements for the applicable period, which could result in significant reductions to our NAV for such period. As a BDC, we are generally not able to issue additional shares of our common stock at a price less than our NAV without first obtaining approval for such issuance from our stockholders and our independent directors. 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 investments to access capital if required, and as a result, we could realize significantly less than the value at which we have recorded then.

~~Events outside of our control, including public health crises, such as the COVID-19 pandemic, may negatively affect our portfolio companies and the results of our operations.~~

Periods of market volatility have occurred and may 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 our and our portfolio companies' operating results. For example, the outbreak of COVID-19 that began in late 2019 has resulted in restrictions on travel and the temporary closure of many corporate offices, retail stores, and manufacturing facilities and factories in affected jurisdictions, including the United States. In addition to these developments having adverse consequences for us and our portfolio companies, the operations of our Advisers (including those relating to us) could be adversely impacted, including through quarantine measures and travel restrictions imposed on their personnel or service providers based or temporarily located in affected countries, or any related health issues of such personnel or service providers. As the potential impact of COVID-19 is difficult to predict, the extent to which COVID-19 and/or other health pandemics may continue to negatively affect our and our portfolio companies' operating results and financial condition, or the duration of any potential business or supply-chain disruption for us, our Advisers and/or our portfolio companies, is uncertain. Any potential impact to our results will depend to a large extent on future developments and new information that may emerge regarding the duration and severity of the coronavirus and the actions taken by authorities and other entities to contain COVID-19 or treat its impact, all of which are beyond our control. These potential impacts, while uncertain, could adversely affect our and our portfolio companies' operating results.

Our share repurchase program allows us to repurchase our stockholders’ shares on a quarterly basis, subject to certain restrictions and limitations. As a result, our stockholders will have limited opportunities to sell their shares and, to the extent they are able to sell their shares under the program, our stockholders may not be able to recover the amount of their investment in our shares.

We have adopted a share repurchase program that allows us to repurchase during any calendar quarter shares of common stock in an amount equal to the lesser of (i) the number of shares we can repurchase with the proceeds we received from the issuance of shares of our common stock under our distribution reinvestment plan during the prior calendar quarter or (ii) 2.5% of the weighted average number of shares of common stock outstanding in the prior four calendar quarters. Our board of directors may amend, suspend or terminate the share repurchase program at any time, and, in light of the current uncertainty surrounding the ultimate impact of the COVID-19 pandemic on the global financial markets and our portfolio specifically, on March 31, 2020, our board of directors unanimously approved a temporary suspension of the share repurchase program commencing with the second quarter of 2020.

Our share repurchase program allows stockholders to sell back their shares of common stock to us on a quarterly basis at a price equal to the NAV per share, as determined within 48 hours of the repurchase date. The share repurchase program includes numerous restrictions that limit the ability to sell shares. At the discretion of our board of directors, we may also use cash on hand, cash available from borrowings and cash from the sale of our investments as of the end of the applicable period to repurchase shares. If the board of directors determines to re-implement our share repurchase program, to the extent that the number of shares put to us for repurchase exceeds the number of shares that we are able to purchase, we will repurchase shares on a pro rata basis, subject to limited exceptions, not on a first-come, first-served basis. Further, we will have no obligation to repurchase shares if the repurchase would violate the restrictions on distributions under federal law or Maryland law, which prohibit distributions that would cause a corporation to fail to meet statutory tests of solvency. These limits may prevent us from accommodating all repurchase requests made in any year. In addition, our board of directors may suspend or terminate the share repurchase program and therefore should not be relied upon as a method to sell shares promptly and at a desired price.

We may have limited ability to fund new investments if we are unable to expand, extend or refinance our TIAA Credit Facility or the Deutsche Bank Credit Facility (combined, the “Credit Facilities”).

On March 6, 2017, we entered into an amended and restated senior secured revolving credit agreement, (as amended, the “TIAA Credit Facility”) with TIAA, FSB (formerly known as EverBank Commercial Finance, Inc. prior to June 18, 2018) (“TIAA Bank”), as administrative agent and with TIAA Bank and other financial institutions as lenders. As of March 31, 2020, the TIAA Credit Facility features aggregate revolver commitments of $130.0 million, with an accordion provision allowing increases in aggregate commitments, not to exceed $150.0 million, with lender consent. The revolver commitments terminate on March 6, 2022, and all outstanding advances are payable on March 6, 2023, with two one-year extension options available for both such dates, subject to administrative agent and lender approval.

There can be no guarantee that we will be able to expand or extend the TIAA Credit Facility or replace either of the Credit Facilities, in each case, on terms that are favorable to us, if at all. Our ability to expand the TIAA Credit Facility, and to obtain replacement financing of either of the Credit Facilities at the time of maturity, will be constrained by then-current economic conditions affecting the credit markets.

As a BDC, we are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 200% (or 150% upon receipt of certain approvals and an offer by us to repurchase shares, subject to certain disclosure requirements). Stated differently, the amount of our total borrowings and other senior securities as a percentage of our total assets cannot exceed 50%. If this ratio declines below 200% (or 150% upon receipt of certain approvals and an offer by us to repurchase shares, subject to certain disclosure requirements), we cannot incur additional debt and could be required to sell a portion of our investments to repay some debt when it is disadvantageous to do so.

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

~~Issuer Purchases of Equity Securities~~

~~Repurchases~~Proceeds

During the three months ended March 31, 2021, we issued no shares of our common stock, ~~pursuant to~~including under our ~~tender offer are as follows:~~dividend reinvestment plan.

During the three months ended March 31, 2021, there were no shares of our common stock repurchased under our share repurchase program.

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)

January 1, 2020 through January 31, 2020 —
$ —
—
—
February 1, 2020 through February 29, 2020 791,488.18
7.70
791,488.18
—
March 1, 2020 through March 31, 2020 —
—
—
—
Total 791,488.18
791,488.18
—

Table of Contents

~~Item 3. Defaults upon Senior Securities.~~

~~None.~~

~~Item 4. Mine Safety Disclosures.~~

~~Not applicable.~~

Item 5. Other ~~Information.~~

Information

Not applicable.

Table of Contents

Item 6. ~~Exhibits.~~

Exhibits

Listed below are the exhibits which are filed as part of this report (according to the number assigned to them in Item 601 of Regulation S-K):


Exhibit Number		Description of Exhibit
~~Exhibit No.~~		~~Description~~
~~10.1~~ 10.1*		~~Sixth~~ Fourth Amendment to ~~the~~ Amended and Restated ~~Loan Financing and Servicing~~Senior Secured Revolving Credit Agreement dated as of April 24, 2020, by and among HMS Funding I LLC, as borrower, HMS Income Fund, Inc., as equityholder and servicer, the financial institutions party thereto, as lenders, Deutsche Bank AG, New York Branch, as administrative agent and lender, and U.S. Bank National Association, as collateral agent and collateral custodian (filedJanuary 27, 2021 (previously filed as Exhibit 10.1 to ~~the Registrant’s current report~~MSC Income Fund, Inc.’s Current Report on Form 8-K filed on ~~April 29, 2020~~January 28, 2021 (File No. 814-00939) ~~and incorporated herein by reference)~~).
~~31.1~~ 10.2*		Term Loan Agreement dated January 27, 2021 (previously filed as Exhibit 10.2 to MSC Income Fund, Inc.’s Current Report on Form 8-K filed on January 28, 2021 (File No. 814-00939)).
10.3*		Loan and Security Agreement dated February 3, 2021 (previously filed as Exhibit 10.1 to MSC Income Fund, Inc.’s Current Report on Form 8-K filed on February 4, 2021 (File No. 814-00939)).
31.1		Certification of Chief Executive Officer ~~of the Registrant, pursuant~~Pursuant to Rule 13a-14(a) ofunder the Securities Exchange Act of ~~1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).~~1934.
31.2		Certification of Chief Financial Officer ~~of the Registrant, pursuant~~Pursuant to Rule 13a-14(a) ofunder the Securities Exchange Act of ~~1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith).~~1934.
32.1		Certification of Chief Executive Officer ~~and Chief Financial Officer of the Registrant, pursuant to 18 U.S.C. Section 1350, as Adopted~~ Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~(Filed herewith)~~(18 U.S.C. 1350).
32.2		Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).


*		Exhibit previously filed with the Securities and Exchange Commission, as indicated, and incorporated herein by reference.

Table of Contents

SIGNATURES

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



		~~HMS~~ MSC INCOME FUND, INC.

~~Date:~~	/s/ DWAYNE L. HYZAK
Date: May 14, ~~2020~~2021	~~By:~~	~~/s/ SHERRI W. SCHUGART~~ Dwayne L. Hyzak
			~~Sherri W. Schugart~~
			~~Chairman and~~ Chief Executive Officer
			(principal executive officer)
~~Date:~~	/s/ BRENT D. SMITH
Date: May 14, ~~2020~~2021	~~By:~~	~~/s/ DAVID M. COVINGTON~~ Brent D. Smith
			~~David M. Covington~~
			Chief Financial Officer and Treasurer
	(principal financial officer)
	/s/ CORY E. GILBERT
Date: May 14, 2021	Cory E. Gilbert
	Chief Accounting Officer
	(principal accounting officer)


(Mark One)
~~(Mark One)~~ ⌧
þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, ~~2020~~2021
OR
¨ ◻	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period ~~from~~from: to



Maryland (State or ~~Other Jurisdiction~~other jurisdiction of ~~Incorporation~~ incorporation or ~~Organization)~~ organization)	45-3999996 (I.R.S. Employer Identification No.)

~~2800~~ 1300 Post Oak Boulevard, ~~Suite 5000~~ 8^th Floor Houston, ~~Texas~~ TX (Address of ~~Principal Executive Offices)~~ principal executive offices)	~~77056-6118~~ 77056 (Zip Code)

Title of Each Class		Trading Symbol	Name of Each Exchange on Which Registered
None
~~Title of each class~~ N/A	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~None~~	N/A	~~N/A~~



Large accelerated filer ◻o	Accelerated filer ◻o	Non-accelerated filer ⌧þ	Smaller reporting company ◻o	Emerging growth company ◻o



~~Item 1.~~	~~Condensed Consolidated Financial Statements:~~
	~~Condensed Consolidated Balance Sheets~~	1
PART I
FINANCIAL INFORMATION
Item 1.	~~Condensed~~ Consolidated Financial Statements
	Consolidated Balance Sheets—March 31, 2021 (unaudited) and December 31, 2020	1
	Consolidated Statements of Operations (unaudited)—Three months ended March 31, 2021 and 2020	2
	~~Condensed~~ Consolidated Statements of Changes in Net Assets (unaudited)—Three months ended March 31, 2021 and 2020	3
	~~Condensed~~ Consolidated Statements of Cash Flows (unaudited)—Three months ended March 31, 2021 and 2020	4
	~~Condensed~~ Consolidated Schedule of Investments (unaudited)—March 31, 2021	5
	Consolidated Schedule of Investments—December 31, 2020	20
	Notes to Consolidated Financial Statements (unaudited)	33
	Consolidated Schedules of Investments in and Advances to Affiliates (unaudited)—Three months ended March 31, 2021 and 2020	5 65
	~~Notes to the Condensed Consolidated Financial Statements~~	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27 71
Item 3.	Quantitative and Qualitative Disclosures ~~About~~about Market Risk	41 82
Item 4.	Controls and Procedures	43 83
			PART II
~~PART II —~~ OTHER INFORMATION
Item 1.	Legal Proceedings	83
Item 1.1A.	~~Legal Proceedings~~ Risk Factors	44 83
~~Item 1A.~~	~~Risk Factors~~	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47 83
Item 3.5.	~~Defaults Upon Senior Securities~~ Other Information	47 84
Item 4.6.	~~Mine Safety Disclosures~~ Exhibits	47 85
~~Item 5.~~	~~Other Information~~ Signatures	47
~~Item 6.~~	~~Exhibits~~	48

~~Signatures~~		49 86



	March 31, 2020			December 31, 2019
	(Unaudited)
ASSETS
Portfolio investments at fair value:
Non-Control/Non-Affiliate investments (amortized cost: $835,553 and $878,632 as of March 31, 2020 and December 31, 2019, respectively)	$	705,726		$	838,643
Affiliate investments (amortized cost: $147,574 and $144,006 as of March 31, 2020 and December 31, 2019, respectively)	154,472			154,158
Control investments (amortized cost: $18,285 and $17,417 as of March 31, 2020 and December 31, 2019, respectively)	34,665			34,796
Total portfolio investments (amortized cost: $1,001,412 and $1,040,055 as of March 31, 2020 and December 31, 2019, respectively)	894,863			1,027,597

Cash and cash equivalents	16,252			21,846
Interest receivable	8,650			8,749
Prepaid and other assets	3,948			4,403
Deferred financing costs (net of accumulated amortization of $3,339 and $2,990 as of March 31, 2020 and December 31, 2019, respectively)	3,627			3,516
Total assets	$	927,340		$	1,066,111

LIABILITIES
Accounts payable and other liabilities	$	3,139		$	1,684
Stockholder distributions payable	4,669			4,669
Base management and incentive fees payable	4,994			5,388
Due to affiliates	48			44
Directors’ fees payable	26			21
Payable for securities purchased	1,900			—
Credit facilities payable	403,000			445,000
Total liabilities	417,776			456,806

Commitments and Contingencies (Note 12)

NET ASSETS
Common stock, $.001 par value; 150,000,000 shares authorized, 78,423,129 and 78,463,377 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively	78			78
Additional paid-in capital	675,358			675,554
Accumulated loss	(165,872		)	(66,327		)
Total net assets	509,564			609,305

Total liabilities and net assets	$	927,340		$	1,066,111

Net asset value per share	$	6.50		$	7.77



	Three Months Ended
	March 31, 2020			March 31, 2019
INVESTMENT INCOME:
From non-control/non-affiliate investments:
Interest income	$	19,048		$	23,499
Fee income	540			307
Dividend income	281			327
From affiliate investments:
Interest income	2,557			2,602
Fee income	15			37
Dividend income	968			396
From control investments:
Interest income	180			123
Fee income	20			17
Dividend income	391			1,853
Total investment income	24,000			29,161
EXPENSES:
Interest expense	5,229			7,107
Base management and incentive fees	4,994			7,125
Internal administrative services expenses	784			758
Offering costs	88			95
Professional fees	547			316
Insurance	103			48
Other general and administrative	505			516
Expenses before fee and expense waivers	12,250			15,965
Waiver of incentive fees	—			—
Waiver of internal administrative services expenses	(784		)	(758		)
Total expenses, net of fee and expense waivers	11,466			15,207
Net investment income before taxes	12,534			13,954
Income tax expense, including excise tax	76			58
NET INVESTMENT INCOME	12,458			13,896
NET REALIZED LOSS ON INVESTMENTS
Non-Control/Non-Affiliate investments	(321		)	(1,631		)
Affiliate investments	(3,044		)	(5,508		)
Control investments	—			—
Total net realized loss on investments	(3,365		)	(7,139		)
NET REALIZED INCOME	9,093			6,757
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS
Non-Control/Non-Affiliate investments	(90,657		)	4,331
Affiliate investments	(3,254		)	3,626
Control investments	(998		)	4,106
Total net change in unrealized appreciation (depreciation) on investments	(94,909		)	12,063
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS	$	(85,816	)	$	18,820
PER SHARE INFORMATION - BASIC AND DILUTED
NET INVESTMENT INCOME PER SHARE	$	0.16		$	0.18
NET REALIZED INCOME PER SHARE	$	0.12		$	0.09
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS PER SHARE (EARNINGS PER SHARE)	$	(1.09	)	$	0.24
WEIGHTED AVERAGE SHARES OUTSTANDING – BASIC AND DILUTED	78,607,063			78,819,746



	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets resulting from operations	$	(85,816	)	$	18,820
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash generated from operating activities:
Principal repayments received and proceeds from sales of investments in portfolio companies	86,496			39,036
Investments in portfolio companies	(46,895		)	(34,152		)
Net change in unrealized (appreciation) depreciation on portfolio investments	94,909			(12,063		)
Net realized loss on sale of portfolio investments	3,365			7,139
Amortization of deferred financing costs	351			337
Amortization of deferred offering costs	88			95
Accretion of unearned income	(2,021		)	(1,562		)
Net payment-in-kind interest accrual	(828		)	(1,169		)
Changes in other assets and liabilities:
Interest receivable	99			1,036
Prepaid and other assets	875			518
Base management and incentive fees payable	(394		)	1,271
Due to affiliates	4			48
Directors’ fees payable	5			5
Accounts payable and other liabilities	643			88
Net cash generated from operating activities	50,881			19,447

CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of common stock	(6,094		)	(6,553		)
Payment of offering costs	(88		)	(95		)
Payment of stockholder distributions	(7,831		)	(7,243		)
Repayments on credit facilities payable	(117,000		)	(31,000		)
Proceeds from credit facilities payable	75,000			22,000
Payment of deferred financing costs	(462		)	—
Net cash used in financing activities	(56,475		)	(22,891		)

Net decrease in cash and cash equivalents	(5,594		)	(3,444		)

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD	21,846			21,757

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	$	16,252		$	18,313



			Three Months Ended March 31, 2020										Three Months Ended March 31, 2020
Portfolio Company	Fair Value at December 31, 2019		Gross Additions (Cost)^*		Gross Reductions (Cost)^**			Net Unrealized Gain (Loss) ^***			Fair Value at March 31, 2020		Net Realized Gain (Loss)			Interest Income		Fee Income		Dividend Income

Affiliate Investments
AFG Capital Group, LLC
Term loan	$	209	$	—	$	(21	)	$	—		$	188	$	—		$	5	$	—	$	—
Member units	1,295		—		—			(30		)	1,265		—			—		—		—
Analytical Systems Keco, LLC
Term loan	1,266		2		(17		)	—			1,251		—			44		—		—
Preferred member units	800		—		—			215			1,015		—			—		—		—
Warrants	79		—		—			56			135		—			—		—		—
Brewer Crane Holdings, LLC
Term loan	2,233		2		(31		)	—			2,204		—			68		—		—
Preferred member units	1,070		—		—			—			1,070		—			—		—		5
Centre Technologies Holdings, LLC
Term loan	3,008		3		(39		)	—			2,972		—			94		—		—
Preferred member units	1,460		—		—			—			1,460		—			—		7		—
Chamberlin HoldCo, LLC
Term loan	4,443		5		—			(5		)	4,443		—			139		—		—
Member units	6,009		—		—			28			6,037		—			—		—		46
Member units	363		—		—			(133		)	230		—			—		—		4
Charlotte Russe, Inc.
Common stock	—		—		—			—			—		—			—		—		—
Charps, LLC
Term loan	500		—		—			—			500		—			19		—		—
Preferred member units	1,730		—		—			160			1,890		—			—		—		6
Clad-Rex Steel, LLC
Term loan	2,696		3		—			21			2,720		—			77		—		—
Member units	2,408		—		—			(255		)	2,153		—			—		—		18
Term loan (Clad-Rex Steel RE Investor, LLC)	282		—		(2		)	—			280		—			7		—		—
Member units (Clad-Rex Steel RE Investor, LLC)	115		—		—			—			115		—			—		—		—
Cody Pools Holdings, LLC
Term loan	—		4,001		(84		)	4			3,921		—			37		—		—
Preferred member units	—		2,079		—			—			2,079		—			—		—		—
Copper Trail Energy Fund I, LP
LP interests	1,643		—		(155		)	(29		)	1,459		—			—		8		—
Digital Products Holdings LLC
Term loan	4,611		5		(83		)	(82		)	4,451		—			149		—		—
Preferred member units	1,294		—		—			(700		)	594		—			—		—		13
Direct Marketing Solutions, Inc.
Term loan	3,929		6		(59		)	(6		)	3,870		—			132		—		—
Preferred stock	5,051		—		—			(36		)	5,015		—			—		—		—
Freeport Financial Funds
LP interests	9,696		989		—			(1,054		)	9,631		—			—		—		255
Gamber-Johnson Holdings, LLC
Term loan	4,755		6		(195		)	(6		)	4,560		—			105		—		—
Member units	13,352		—		—			(41		)	13,311		—			—		—		514
Guerdon Modular Holdings, Inc.
Term loan	—		30		(3,147		)	3,117			—		(2,792		)	30		—		—
Term loan	—		1		(253		)	252			—		(252		)	—		—		—
Gulf Publishing Holdings, LLC
Term loan	3,124		4		—			(38		)	3,090		—			103		—		—
Revolving line of credit	70		—		(10		)	—			60		—			2		—		—
Member units	605		—		—			(605		)	—		—			—		—		—
Harris Preston Fund Investments
LP interests (HPEP 3, LP)	2,474		345		—			—			2,819		—			—		—		—
Hawk Ridge Systems, LLC
Term loan	3,350		4		—			(4		)	3,350		—			100		—		—
Revolving line of credit	148		1		—			—			149		—			—		—		—
Preferred member units	1,975		—		—			(145		)	1,830		—			—		—		—
Preferred member units (HRS Services, ULC)	105		—		—			(7		)	98		—			—		—		—
J&J Services, Inc.
Term Loan	$	4,315	$	4	$	—		$	—		$	4,319	$	—		$	132	$	—	$	—
Preferred stock	1,790		—		—			—			1,790		—			—		—		—
Kickhaefer Manufacturer Company, LLC
Term loan	6,146		151		(100		)	(5		)	6,192		—			191		—		—
Term loan	977		8		(2		)	—			983		—			32		—		—
Member units	290		—		—			—			290		—			—		—		—
Member units (KMC RE Investor, LLC)	3,060		—		—			(199		)	2,861		—			—		—		5
Market Force Information, Inc.
Term loan	5,625		94		—			(1,295		)	4,424		—			182		—		—
Revolving line of credit	674		—		—			(94		)	580		—			15		—		—
Member units	1,319		—		—			(1,319		)	—		—			—		—		—
M.H. Corbin Holding LLC
Term loan	2,213		12		(20		)	(20		)	2,185		—			75		—		—
Preferred member units	1,192		—		—			(100		)	1,092		—			—		—		—
Common units	5		—		—			(5		)	—		—			—		—		—
Mystic Logistics Holdings, LLC
Term loan	1,561		251		(75		)	(1		)	1,736		—			55		—		—
Common stock	2,103		—		—			444			2,547		—			—		—		—
NexRev, LLC
Term loan	4,331		5		(55		)	(392		)	3,889		—			125		—		—
Preferred member units	1,577		—		—			(1,577		)	—		—			—		—		(24		)
NuStep, LLC
Term loan	4,901		7		(40		)	—			4,868		—			156		—		—
Preferred member units	2,550		—		—			—			2,550		—			—		—		—
SI East, LLC
Term loan	10,988		8		—			(8		)	10,988		—			274		—		—
Preferred member units	2,734		—		—			150			2,884		—			—		—		119
Tedder Acquisition, LLC
Term loan	4,066		5		—			—			4,071		—			130		—		—
Revolving line of credit	158		—		—			—			158		—			5		—		—
Preferred member units	2,034		—		—			—			2,034		—			—		—		—
Trantech Radiator Topco, LLC
Term loan	2,237		5		(80		)	(1		)	2,161		—			74		—		—
Common stock	1,164		—		—			491			1,655		—			—		—		7
Total Affiliate Investments	$	154,158	$	8,036	$	(4,468	)	$	(3,254	)	$	154,472	$	(3,044	)	$	2,557	$	15	$	968



			Twelve Months Ended December 31, 2019										Twelve Months Ended December 31, 2019
Affiliate Investments	Fair Value at December 31, 2018		Gross Additions (Cost)^*		Gross Reductions (Cost)^**			Net Unrealized Gain (Loss)^***			Fair Value at December 31, 2019		Net Realized Gain (Loss)			Interest Income			Fee Income		Dividend Income

AFG Capital Group, LLC
Term loan	$	—	$	260	$	(51	)	$	—		$	209	$	—		$	16		$	—	$	—
Member units	995		1		—			299			1,295		—			—			—		(10		)
Warrants	237		195		(260		)	(172		)	—		195			—			—		—
Analytical Systems Keco, LLC
Term loan	—		1,403		(143		)	6			1,266		—			69			—		—
Preferred member units	—		800		—			—			800		—			—			—		—
Warrants	—		79		—			—			79		—			—			—		—
Brewer Crane Holdings, LLC
Term loan	2,347		10		(124		)	—			2,233		—			297			—		—
Preferred member units	1,070		—		—			—			1,070		—			—			—		30
Centre Technologies Holdings, LLC
Term loan	—		3,069		(67		)	6			3,008		—			362			30		—
Preferred member units	—		1,460		—			—			1,460		—			—			—		—
Chamberlin Holding, LLC
Term loan	4,933		28		(608		)	90			4,443		—			633			75		—
Member units	4,735		—		—			1,274			6,009		—			—			—		276
Member units (Langfield RE, LLC)	183		79		—			101			363		—			—			—		90
Charlotte Russe, Inc.
Common stock	3,090		—		(6,236		)	3,146			—		(5,430		)	(84		)	—		—
Charps, LLC
Term loan	2,975		452		(3,374		)	(53		)	—		—			236			—		—
Term loan	—		500		—			—			500		—			4			2		—
Preferred member units	568		—		—			1,162			1,730		—			—			—		134
Clad-Rex Steel, LLC
Term loan	3,020		14		(300		)	(38		)	2,696		—			348			—		—
Member units	2,653		—		—			(245		)	2,408		—			1			—		67
Term loan (Clad-Rex Steel RE Investor, LLC)	288		—		(5		)	(1		)	282		—			29			—		—
Member units (Clad-Rex Steel RE Investor, LLC)	88		—		—			27			115		—			—			—		—
Copper Trail Energy Fund I, LP
LP Interests	—		4,029		(1,916		)	(470		)	1,643		—			—			17		(250		)

Digital Products Holdings, LLC
Term loan	$	6,320	$	42	$	(1,530	)	$	(221	)	$	4,611	$	—		$	756		$	—	$	—
Preferred member units	2,116		259		—			(1,081		)	1,294		—			—			—		37
Direct Marketing Solutions, Inc.
Term loan	4,404		29		(574		)	70			3,929		—			612			—		—
Preferred stock	3,725		—		—			1,326			5,051		—			—			—		—
Freeport Financial Funds
LP interests	10,980		798		(1,998		)	(84		)	9,696		—			—			—		1,033
Gamber-Johnson Holdings, LLC
Term loan	5,371		23		(616		)	(23		)	4,755		—			503			—		—
Member units	11,365		—		—			1,987			13,352		—			—			—		930
Guerdon Modular Holdings, Inc.
Term loan	3,001		11		(19		)	(2,993		)	—		—			(252		)	—		—
Term loan	—		252		—			(252		)	—		—			2			3		—
Common stock	—		—		—			—			—		—			—			—		—
Class B preferred stock	—		—		—			—			—		—			—			—		—
Gulf Publishing Holdings, LLC
Term loan	3,131		14		(33		)	12			3,124		—			412			—		—
Revolving line of credit	—		80		(10		)	—			70		—			6			—		—
Member units	1,030		1		—			(426		)	605		—			—			—		—
Harris Preston Fund Investments
LP interests (HPEP 3, LP)	1,733		741		—			—			2,474		—			—			—		—
LP interests (2717 HM, LP)	1,133		1,195		(2,328		)	—			—		—			—			—		—
Hawk Ridge Systems, LLC
Term loan	3,575		17		(225		)	(17		)	3,350		—			379			—		—
Revolving line of credit	—		151		(3		)	—			148		—			1			—		—
Preferred member units	1,815		—		—			160			1,975		—			—			—		94
Preferred member units (HRS Services, ULC)	95		—		—			10			105		—			—			—		—
HW Temps, LLC
Term loan	2,484		391		(2,875		)	—			—		—			—			—		—
Preferred member units	986		—		(986		)	—			—		—			—			—		—
J & J Services, Inc.
Term loan	—		4,403		(88		)	—			4,315		—			90			—		—
Preferred member units	—		1,790		—			—			1,790		—			—			—		—
Kickhaefer Manufacturer Company, LLC
Term loan	6,795		51		(700		)	—			6,146		—			846			—		—
Term loan	259		3		(266		)	4			—		—			5			—		—
Term loan	991		—		(14		)	—			977		—			90			—		—
Preferred member units	3,060		—		—			—			3,060		—			—			—		27
Member units (KMC RE Investor, LLC)	248		—		—			42			290		—			—			—		—
Market Force Information, Inc.
Term loan	5,617		115		(1		)	(106		)	5,625		—			787			—		—
Revolving line of credit	50		696		(50		)	(22		)	674		—			33			—		—
Member units	3,275		485		—			(2,441		)	1,319		—			—			—		—
M.H. Corbin Holding, LLC
Term loan	2,934		272		(1,115		)	122			2,213		10			291			—		—
Preferred member units	250		—		—			(245		)	5		—			—			—		—
Common units	—		1,100		—			92			1,192		—			—			—		—
Mystic Logistics Holdings, LLC
Term loan	1,877		10		(320		)	(6		)	1,561		—			222			—		—
Common stock	52		1		—			2,050			2,103		—			—			—		67
NexRev, LLC
Term loan	4,322		218		(161		)	(48		)	4,331		—			506			—		—
Preferred member units	1,972		—		—			(395		)	1,577		—			—			—		49
NuStep, LLC
Term loan	5,073		28		(200		)	—			4,901		—			655			—		—
Preferred member units	2,550		—		—			—			2,550		—			—			—		—
SI East, LLC
Term loan	11,582		41		(762		)	127			10,988		—			1,227			—		—
Preferred member units	2,000		—		—			734			2,734		—			—			—		153
SoftTouch Medical Holdings, LLC
Term loan	—		—		—			—			—		(41		)	—			—		—

Tedder Acquisition, LLC
Term loan	$	3,983	$	20	$	(1	)	$	64		$	4,066	$	—		$	518		$	—	$	—
Revolving line of credit	118		300		(260		)	—			158		—			16			1		—
Preferred member units	1,869		165		—			—			2,034		—			—			—		—
Trantech Radiator Topco, LLC
Term loan	—		2,616		(378		)	(1		)	2,237		—			195			—		—
Common stock	—		1,164		—			—			1,164		—			—			—		17
Total Affiliate Investments	$	149,323	$	29,861	$	(28,597	)	$	3,571		$	154,158	$	(5,266	)	$	9,811		$	128	$	2,744



	Fair Value Measurements
	Level 1		Level 2		Level 3		Total
First lien secured debt investments	$	—	$	—	$	688,475	$	688,475
Second lien secured debt investments	—		—		35,529		35,529
Unsecured debt investments	—		—		14,075		14,075
Equity investments ⁽¹⁾	—		—		156,784		156,784
Total	$	—	$	—	$	894,863	$	894,863



	Fair Value		Valuation Technique	Significant Unobservable Inputs	Range	Weighted Average ⁽²⁾
LMM equity investments	$	92,275	Discounted Cash Flows	WACC	11.7% - 19.2%	14.2%
			Market Approach/Enterprise Value	EBITDA Multiples ⁽¹⁾	4.0x - 12.0x	7.0x
LMM debt investments	130,346		Discounted Cash Flows	Expected Principal Recovery	87.0% - 100.0%	99.3%
				Risk Adjusted Discount Factor	8.0% - 22.5%	13.9%
Private Loan debt investments	378,288		Discounted Cash Flows	Expected Principal Recovery	1.6% - 100.0%	99.7%
				Risk Adjusted Discount Factor	8.1% - 29.3%	11.8%
	35,697		Market Approach	Third Party Quotes	82.5% - 92.5%	88.6%
Private Loan equity investments	17,364		Market Approach/Enterprise Value	EBITDA Multiples ⁽¹⁾	4.9x - 11.9x	8.0x
			Discounted Cash Flows	WACC	11.2% - 15.0%	12.6%
Middle Market debt investments	7,943		Discounted Cash Flows	Expected Principal Recovery	0.0% - 100.0%	100.0%
				Risk Adjusted Discount Factor	9.0% - 40.5%	17.6%
	185,805		Market Approach	Third Party Quotes	18.1% - 99.5%	81.3%
Middle Market equity investments	6,075		Market Approach	Third Party Quotes	$0.0 - $140.0	$75.5
			Discounted Cash Flows	WACC	12.5% - 18.0%	12.5%
			Market Approach/Enterprise Value	EBITDA Multiples⁽¹⁾	3.9x - 7.7x	7.7x
Other Portfolio investments ⁽³⁾	28,621		Market Approach	NAV ⁽¹⁾	71.1% - 118.3%	92.9%
	12,449		Discounted Cash Flows	Constant Default Rate	1.0%	1.0%
				Constant Prepayment Rate	20.0%	20.0%
				Reinvestment Spread	3.3%	3.3%
				Reinvestment Price	99.5%	99.5%
				Recovery Rate	70.0%	70.0%
				Yield to Maturity	22.0%	22.0%
	$	894,863



Type of Investment	December 31, 2019 Fair Value		PIK Interest Accrual		New Investments⁽¹⁾		Sales/ Repayments			Net Change in Unrealized Appreciation (Depreciation) ⁽²⁾			Net Realized Gain (Loss)			March 31, 2020 Fair Value
LMM Equity	$	95,554	$	—	$	4,454	$	—		$	(7,733	)	$	—		$	92,275
LMM Debt	129,567		98		11,835		(7,915		)	(35		)	(3,204		)	130,346
Private Loan Equity	20,716		38		770		(10		)	(4,150		)	—			17,364
Private Loan Debt	460,436		555		27,617		(36,609		)	(37,924		)	(90		)	413,985
Middle Market Debt	264,787		137		5,140		(42,147		)	(34,098		)	(71		)	193,748
Middle Market Equity	7,641		—		—		—			(1,566		)	—			6,075
Other Portfolio ⁽³⁾	48,896		—		1,001		(236		)	(8,591		)	—			41,070
Total	$	1,027,597	$	828	$	50,817	$	(86,917	)	$	(94,097	)	$	(3,365	)	$	894,863



Type of Investment	December 31, 2018 Fair Value		PIK Interest Accrual		New Investments⁽¹⁾		Sales/ Repayments			Net Change in Unrealized Appreciation (Depreciation) ⁽²⁾			Net Realized Gain (Loss)			March 31, 2019 Fair Value
LMM Equity	$	79,641	$	—	$	2,560	$	(938	)	$	1,851		$	(47	)	$	83,067
LMM Debt	130,633		169		6,158		(2,637		)	(221		)	10			134,112
Private Loan Equity	16,905		—		19		(1,340		)	907			591			17,082
Private Loan Debt	392,034		928		23,299		(6,080		)	10,716			(2,263		)	418,634
Middle Market Debt	428,569		72		3,059		(26,870		)	(2,866		)	(5,430		)	396,534
Middle Market Equity	5,702		—		—		—			(1,661		)	—			4,041
Other Portfolio⁽³⁾	53,084		—		2,456		(1,860		)	2,978			—			56,658
Total	$	1,106,568	$	1,169	$	37,551	$	(39,725	)	$	11,704		$	(7,139	)	$	1,110,128



	Investments at Cost		Cost Percentage of Total Portfolio		Investments at Fair Value		Fair Value Percentage of Total Portfolio
First lien secured debt investments	$	786,367	78.5	%	$	688,475	76.9	%
Second lien secured debt investments	48,809		4.9		35,529		4.0
Unsecured debt investments	14,389		1.4		14,075		1.6
Equity investments ⁽¹⁾	150,177		15.0		154,726		17.3
Equity warrants	1,670		0.2		2,058		0.2
Total	$	1,001,412	100.0	%	$	894,863	100.0	%



HMS-ORIX SLF LLC
Statement of Operations
(dollars in thousands)
	Three Months Ended March 31, 2019
Investment income
Interest income	$	2,548
Dividend income	—
Fee income	—
Other income	—
Total investment income	2,548
Expenses
Interest expense	1,247
Other expenses	—
General and administrative expenses	11
Total expenses	1,258
Net investment income	1,290
Net realized loss from investments	(1		)
Net realized income	1,289
Net change in unrealized appreciation on investments	4,639
Net increase in net assets resulting from operations	$	5,928



	Payments Due By Period (dollars in thousands)
	Total		Less than 1 year		1-3 years		3-5 years		After 5 years
TIAA Credit Facility ⁽¹⁾	$	90,000	$	—	$	90,000	$	—	$	—
Deutsche Bank Credit Facility ⁽²⁾	313,000		—		313,000		—		—
Total Credit Facilities	$	403,000	$	—	$	403,000	$	—	$	—



Per Share Data:	Three Months Ended March 31, 2020			Three Months Ended March 31, 2019
NAV at beginning of period	$	7.77		$	7.96
Results from Operations
Net investment income ^{(1) (2)}	0.16			0.18
Net realized loss on investments ^{(1) (2)}	(0.04		)	(0.09		)
Net change in unrealized appreciation (depreciation) on investments^{(1) (2)}	(1.21		)	0.15
Net increase (decrease) in net assets resulting from operations	(1.09		)	0.24
Stockholder distributions^{(1) (3)}
Distributions from net investment income ^{(1) (2)}	(0.16		)	(0.17		)
Distributions in excess of net investment income ^{(1) (2)}	(0.01		)	—
Net decrease in net assets resulting from stockholder distributions	(0.17		)	(0.17		)
Other ⁽⁴⁾	(0.01		)	—
NAV at end of the period	$	6.50		$	8.03
Shares of common stock outstanding at end of period	78,423,129			78,547,196
Weighted average shares of common stock outstanding	78,607,063			78,819,746



	Distributions
	Per Share		Amount
2020
Three months ended March 31, 2020	$	0.17	$	13,730
2019
Three months ended March 31, 2019	$	0.17	$	13,606



	March 31, 2020			December 31, 2019
Deferred tax assets:
Net operating loss carryforwards	$	2,406		$	2,420
Foreign tax credit carryforwards	10			10
Capital loss carryforwards	15,482			14,750
Net basis differences in portfolio investments	67
Net unrealized depreciation of portfolio investments	5,668			67
Total deferred tax assets	23,633			17,247
Deferred tax liabilities:
Net basis differences in portfolio investments	(3,414		)	(3,217		)
Net unrealized appreciation of portfolio investments	(14		)	(1,576		)
Other	—			—
Total deferred tax liabilities	(3,428		)	(4,793		)
Valuation allowance	(20,205		)	(12,454		)
Total net deferred tax assets (liabilities)	$	—		$	—



	Year Ended December 31,
Tax Characteristics of Distributions	2019				2018				2017

Ordinary income	$	53,297	96.65	%	$	50,274	90.56	%	$	52,473	96.43	%
Capital gain distributions	1,848		3.35		5,238		9.44		1,941		3.57
Total distributions	$	55,145	100.00	%	$	55,512	100.00	%	$	54,414	100.00	%



	Management Fee⁽¹⁾				Subordinated Incentive Fee⁽¹⁾
Quarter Ended	Waivers		Repaid to Adviser⁽²⁾		Waivers		Repaid to Adviser⁽²⁾		Operating Expense Ratio ⁽³⁾	Annualized Distribution Rate ⁽⁴⁾	Eligible to be Repaid Through ⁽⁵⁾
6/30/2017	$	—	$	—	$	246	$	—	1.67%	$0.70	6/30/2020
9/30/2017	$	—	$	—	$	—	$	—	1.91%	$0.70	9/30/2020
12/31/2017	$	—	$	—	$	—	$	—	1.82%	$0.70	12/31/2020
3/31/2018	$	—	$	—	$	—	$	—	1.80%	$0.70	3/31/2021
6/30/2018	$	—	$	—	$	—	$	—	1.96%	$0.70	6/30/2021
9/30/2018	$	—	$	—	$	2,535	$	—	2.01%	$0.70	9/30/2021
12/31/2018	$	—	$	—	$	798	$	—	2.32%	$0.70	12/31/2021



	Incurred				Unpaid as of
	Three Months Ended March 31,				March 31, 2020		December 31, 2019
Type and Recipient	2020		2019		March 31, 2020		December 31, 2019
Offering Costs - the Adviser, Sub-Adviser	$	88	$	95	$	—	$	—
Other ⁽²⁾ - the Adviser	157		204		48		44
Selling Commissions - Dealer Manager	—		—		—		—
Dealer Manager Fee - Dealer Manager	—		—		—		—
Due to Affiliates					$	48	$	44

Base Management Fees- the Adviser, Sub-Adviser	4,994		5,726		$	4,994	$	5,388
Incentive Fees on Income - the Adviser, Sub-Adviser⁽¹⁾	—		1,399		—		—
Base Management and Incentive Fees Payable					$	4,994	$	5,388



For the Quarter Ended	Repurchase Date	Shares Repurchased	Percentage of Shares Tendered that were Repurchased	Repurchase Price per Share		Aggregate Consideration for Repurchased Shares
March 31, 2020	February 21, 2020	791,488.12	26.5%	$	7.70	$	6,094,455



	Commitments and Contingencies
	(dollars in thousands)
	March 31, 2020		December 31, 2019

Unfunded Loan Commitments
Adams Publishing Group, LLC	$	—	$	762
American Nuts, LLC	247		247
American Trailer Rental Group, LLC	—		400
Analytical Systems Keco, LLC	200		200
Arcus Hunting, LLC	1,470		1,398
ASC Ortho Management Company, LLC	—		750
Boccella Precast Products, LLC	500		500
Centre Technologies Holdings, LLC	600		600
Chamberlin Holding, LLC	400		400
Chisholm Energy Holdings, LLC	1,429		1,429
CTVSH, PLLC	200		200



	March 31, 2020								December 31, 2019
Cost:	LMM		Private Loan		Middle Market		Total		LMM		Private Loan		Middle Market		Total
First Lien Secured Debt	66.7	%	90.1	%	82.7	%	83.0	%	68.0	%	90.4	%	84.8	%	84.3	%
Second Lien Secured Debt	0.3		3.5		11.5		5.2		0.4		3.5		10.1		4.9
Unsecured Debt	0.1		2.6		0.7		1.5		0.1		2.5		0.6		1.4
Equity	32.3		3.7		5.1		10.1		30.9		3.5		4.5		9.2
Equity warrants	0.6		0.1		—		0.2		0.6		0.1		—		0.2
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%



	March 31, 2020								December 31, 2019
Fair Value:	LMM		Private Loan		Middle Market		Total		LMM		Private Loan		Middle Market		Total
First Lien Secured Debt	58.2	%	89.5	%	86.5	%	80.6	%	57.2	%	89.7	%	88.1	%	81.8	%
Second Lien Secured Debt	0.3		3.6		9.6		4.2		0.3		3.5		8.5		4.1
Unsecured Debt	0.1		2.9		0.9		1.7		0.1		2.5		0.6		1.4
Equity	41.3		3.6		3.0		13.3		42.3		4		2.8		12.5
Equity warrants	0.1		0.4		—		0.2		0.1		0.3		—		0.2
Total	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%



	March 31, 2020				December 31, 2019
Investment Rating	Investments at Fair Value		Percentage of Total LMM Portfolio		Investments at Fair Value		Percentage of Total LMM Portfolio
1	$	99,484	44.7	%	$	86,453	38.4	%
2	8,504		3.8		28,130		12.5
3	57,495		25.8		48,597		21.6
4	57,138		25.7		61,941		27.5
5	—		—		—		—
Total	$	222,621	100.0	%	$	225,121	100.0	%



Change in interest rates	Increase (Decrease) in Interest Income			Increase (Decrease) in Interest Expense			Net Increase (Decrease) in Net Investment Income
Down 100 basis points	$	(2,703	)	$	(4,030	)	$	1,327
Down 50 basis points	(2,227		)	(2,015		)	(212		)
Up 50 basis points	3,445			2,015			1,430
Up 100 basis points	7,121			4,030			3,091
Up 200 basis points	14,598			8,060			6,538



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)

January 1, 2020 through January 31, 2020	—	$	—	—	—
February 1, 2020 through February 29, 2020	791,488.18	7.70		791,488.18	—
March 1, 2020 through March 31, 2020	—	—		—	—
Total	791,488.18			791,488.18	—