Investments

3 Months Ended

Mar. 31, 2024

Investments, All Other Investments [Abstract]

Note 4 – Investments

Control and Affiliate Investments

The Company classifies its investment portfolio by level of affiliation and control in accordance with the requirements of the 1940 Act. As defined in the 1940 Act, investee companies are deemed as affiliated investments when a company or individual possesses, or has the right to acquire within 60 days or less, beneficial ownership of 5.0% or more of the outstanding voting securities of an investee company. Control investments are those where the investor has the ability or power to exercise a controlling influence over the management or policies of an investee company. Control is generally deemed to exist when a company or individual possesses, or has the right to acquire within 60 days or less, beneficial ownership of more than 25.0% of the outstanding voting securities of an investee company, or maintains greater than 50.0% representation on the investee company's board of directors.

The Company’s affiliate and control investments as of March 31, 2024, along with the transactions during the three months ended March 31, 2024, are as follows (in thousands):


				For the Three Months Ended March 31, 2024
				Investment Income Earned 2024		Fair Value as of December 31, 2023		Gross Additions(1)		Gross Reductions(2)		Net Realized Gain (Loss)		Net Change in Unrealized Gain (Loss)			Fair Value as of March 31, 2024(3)
Portfolio Company		Investment Type	Investment Description
Affiliate Investments
	Debt Investments
	Gynesonics, Inc.	Senior Secured	SOFR+8.75%, 8.00% ceiling, 5.00% ETP, due 11/30/2026	$	599	$	23,586	$	81	$	—	$	—	$	(11	)	$	23,656
	Total Debt Investments				599		23,586		81		—		—		(11	)		23,656

	Equity Investments
	Coginiti Corp	Equity	Common Stock		—		856		—		—		—		(732	)		124
	Gynesonics, Inc.	Equity	Series A-2 Preferred Stock		—		21,461		—		—		—		(215	)		21,246
		Equity	Series A-1 Preferred Stock		—		4,577		—		—		—		(37	)		4,540
	Total Equity Investments				—		26,894		—		—		—		(984	)		25,910
	Warrants
	Coginiti Corp	Warrants	Common Stock		—		663		—		—		—		(568	)		95
	Gynesonics, Inc.	Warrants	Success fee		—		313		—		—		—		11			324
	Total Warrants				—		976		—		—		—		(557	)		419
Total Affiliate Investments				$	599	$	51,456	$	81	$	—	$	—	$	(1,552	)	$	49,985
Control Investments
	Equity Investments
	Pivot3, Inc.	Equity	Equity Interest		—		950		—		—		—		—			950
	Total Equity Investments				—		950		—		—		—		—			950
Total Control Investments				$	—	$	950	$	—	$	—	$	—	$	—		$	950

(1)

Gross additions include increases in the basis of investments resulting from new portfolio investments, PIK interest, accretion of original issue discount (“OID”), the exchange of one or more existing investments for one or more new investments and the movement of an existing portfolio company into this category from a different category.

(2)

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

(3)

All investments in the portfolio companies, which as of March 31, 2024, represented 9.62% of the Company’s net assets, may be deemed to be restricted securities under the Securities Act, and were valued at fair value as determined in good faith by the Company’s Board of Directors.

The Company’s affiliate and control investments as of December 31, 2023, along with the transactions during the year ended December 31, 2023, are as follows (in thousands):


				For the Year Ended December 31, 2023
				Investment Income Earned 2023		Fair Value as of December 31, 2022		Gross Additions(1)		Gross Reductions(2)			Net Realized Gain (Loss)			Net Change in Unrealized Gain (Loss)			Fair Value as of December 31, 2023(3)
Portfolio Company		Investment Type	Investment Description
Affiliate Investments
	Debt Investments
	Gynesonics, Inc.	Senior Secured	SOFR+8.75%, 8.00% ceiling, 5.00% ETP, due 11/30/2026	$	2,105	$	—	$	25,897	$	—		$	—		$	(2,311	)	$	23,586
	Total Debt Investments				2,105		—		25,897		—			—			(2,311	)		23,586

	Equity Investments
	Coginiti Corp	Equity	Common Stock		—		1,174		—		—			—			(318	)		856
	Gynesonics, Inc.	Equity	Series A-2 Preferred Stock		—		—		25,000		—			—			(3,539	)		21,461
		Equity	Series A-1 Preferred Stock		—		—		3,100		—			—			1,477			4,577
	Total Equity Investments				—		1,174		28,100		—			—			(2,380	)		26,894
	Warrants
	Coginiti Corp	Warrants	Common Stock		—		910		—		—			—			(247	)		663
	Gynesonics, Inc.	Warrants	Success fee		—		—		313		—			—			—			313
	Total Warrants				—		910		313		—			—			(247	)		976
Total Affiliate Investments				$	2,105	$	2,084	$	54,310	$	—		$	—		$	(4,938	)	$	51,456
Control Investments
	Debt Investments
	Pivot3, Inc.	Senior Secured	LIBOR+8.50% PIK, 11.00% floor, 4.00% ETP, due 10/15/2023		—		9,290		—		(2,158	)		(17,014	)		9,882			—
	Total Debt Investments				—		9,290		—		(2,158	)		(17,014	)		9,882			—

	Equity Investments
	Pivot3, Inc.	Equity	Equity Interest		—		—		950		—			—			—			950
	Total Equity Investments				—		—		950		—			—			—			950
Total Control Investments				$	—	$	9,290	$	950	$	(2,158	)	$	(17,014	)	$	9,882		$	950

(1)

(2)

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

(3)

All investments in the portfolio company, which as of December 31, 2023, represented 9.58% of the Company’s net assets, may be deemed to be restricted securities under the Securities Act, and were valued at fair value as determined in good faith by the Company’s Board of Directors.

Portfolio Composition

The following tables show the fair value of the Company's portfolio of investments by geographic region and industry as of March 31, 2024 and December 31, 2023:


	March 31, 2024					December 31, 2023
Geographic Region	Investments at Fair Value		Percentage of Net Assets			Investments at Fair Value		Percentage of Net Assets
United States
Western United States	$	408,853		77.22	%	$	404,541		73.94	%
Northeastern United States		211,643		39.97			239,444		43.77
Midwestern United States		131,701		24.87			130,784		23.91
South Central United States		88,494		16.72			87,814		16.05
Northwestern United States		25,131		4.75			25,514		4.66
Southeastern United States		20,504		3.88			820		0.15
Total United States		886,326		167.41			888,917		162.48

United Kingdom		77,364		14.61			76,839		14.05
Germany		38,020		7.18			44,587		8.15
Canada		14,622		2.76			14,667		2.68
Total	$	1,016,332		191.96	%	$	1,025,010		187.36	%


	March 31, 2024					December 31, 2023
Industry	Investments at Fair Value		Percentage of Net Assets			Investments at Fair Value		Percentage of Net Assets
Health Care Technology	$	181,200		34.22	%		182,200		33.30	%
Application Software		174,042		32.87			200,645		36.67
Internet Software and Services		118,927		22.47			98,462		18.00
System Software		114,142		21.56			113,517		20.74
Human Resource & Employment Services		113,791		21.49			114,602		20.95
Data Processing & Outsourced Services		105,932		20.00			106,785		19.52
Property & Casualty Insurance		76,015		14.36			75,205		13.75
Internet & Direct Marketing Retail		54,168		10.23			55,588		10.16
Electronic Equipment & Instruments		27,439		5.18			27,535		5.04
Education Services		25,798		4.87			25,796		4.72
Health Care Equipment		15,587		2.94			15,524		2.83
Asset Management & Custody Banks		8,085		1.53			8,021		1.47
Technology Hardware, Storage & Peripherals		637		0.13			570		0.10
Specialized Consumer Services		365		0.07			373		0.07
Advertising		136		0.03			136		0.03
Biotechnology		68		0.01			51		0.01
Total	$	1,016,332		191.96	%	$	1,025,010		187.36	%

Derivative Financial Instruments

In the normal course of business, the Company may utilize derivative contracts in connection with its investment activities. Investments in derivative contracts are subject to additional risks that can result in a loss of all or part of an investment. The derivative activities and exposure to derivative contracts primarily involve equity price risks. In addition to the primary underlying risk, additional counterparty risk exists due to the potential inability of counterparties to meet the terms of their contracts.

Warrants provide exposure and potential gains upon equity gains of the portfolio company’s equity value. A warrant has a limited life and expires on a certain date. As a warrant’s expiration date approaches, the time value of the warrant will decline. In addition, if the stock underlying the warrant declines in price, the intrinsic value of an “in the money” warrant will decline. Further, if the price of the stock underlying the warrant does not exceed the strike price of the warrant on the expiration date, the warrant will expire worthless. As a result, there is the potential for the entire value of an investment in a warrant to be lost. The Company’s volume of warrant investment activity is closely correlated to its primary senior secured loans to portfolio companies. For the three months ended March 31, 2024, the Company had no realized gains or losses on investments and a net unrealized loss of $0.3 million from its investments in warrants. For the three months ended March 31, 2023, the Company had a net realized loss of $1.2 million and a net unrealized loss of $1.7 million from its investments in warrants. Realized gains and losses from warrants are included in the respective control, affiliate, or non-control/non-affiliate "Net realized gain (loss) on investments" on the Consolidated Statements of Operations. Unrealized gains and losses from investments in warrants is included in the respective control, affiliate, or non-control/non-affiliate "Net change in unrealized gain (loss) on investments" on the Consolidated Statements of Operations.

Counterparty risk exists from the potential failure of an issuer of warrants to settle its exercised warrants. The maximum risk of loss from counterparty risk is the fair value of the contracts and the purchase price of the warrants. The Board of Directors considers the effects of counterparty risk when determining the fair value of its investments in warrants.