Financial Data and Key Metrics Changes - For the quarter ending March 31, 2025, the company reported net investment income before taxes of $700,000 or $0.05 per share, down from $0.06 per share in the prior quarter [4] - The net asset value per share increased by $0.02 to $5.42 compared to $5.39 as of September 30, 2024 [4] - The fair value of the portfolio was $192.4 million, an increase from $191.6 million on December 31 [14] - Net assets increased by $500,000 from the prior quarter to $78.1 million [14] - The weighted average yield of the debt portfolio increased to 10.8% from 10.4% in the previous quarter [14] Business Line Data and Key Metrics Changes - The company invested in one new portfolio company and two existing portfolio companies during the quarter, with total fundings for new investments amounting to $5.1 million [9] - The weighted average yield of debt investments made in the quarter was approximately 10.2% [9] - The five largest industry concentrations by fair market value were professional services (15.5%), containers and packaging (9.2%), trading companies and distributors (8.6%), commercial services and suppliers (8%), and IT services (7.9%) [12] Market Data and Key Metrics Changes - There was a noticeable slowdown in new deal activity, attributed to a decline in M&A volume and sponsor-less financing [6] - The company estimates that less than 20% of its portfolio may experience moderate direct effects from tariffs [7] Company Strategy and Development Direction - The company is focused on maintaining NAV stability and sustainable net investment income while selectively deploying capital in high-quality opportunities [18] - The management is optimistic about the second half of the year providing interesting investment opportunities due to current market volatility [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the portfolio remains stable, with a significant reduction in non-accruals, now representing approximately 1.7% of the total portfolio at fair value [5] - There is cautious optimism that market fundamentals will improve, leading to a rebound in activity as macro uncertainty decreases [6] - Management indicated that they are currently in the process of raising another pool of capital, expected to benefit the company in the second half of 2025 [27] Other Important Information - The company declared a distribution of $0.12 per share payable in cash on June 14, 2025, to stockholders of record as of May 24, 2025 [16] - Gross leverage was 1.53x and net leverage was 1.37x as of March 31, compared to 1.57x and 1.42x in the previous quarter [17] Q&A Session Summary Question: How can the adviser scale or provide benefits to the BDC? - Management indicated that waiving fees is always a consideration and that they are working on scaling the private credit platform, which will help absorb overhead and expenses [21][23] Question: What is the timeline for capital raising? - Management confirmed that they are currently in the process of raising capital, which is expected to benefit shareholders in the second half of 2025 [27] Question: Why not consider share repurchases given the current stock price? - Management acknowledged that share repurchases are a tool they consider but have no immediate plans to implement [32] Question: Should there be an increase in net investment income in the second quarter? - Management suggested that there could be an increase in net investment income due to spread widening in new opportunities [34][35]

Financial Data and Key Metrics Changes - For the quarter ending March 31, 2025, the company reported net investment income before taxes of $700,000 or $0.05 per share, down from $0.06 per share in the prior quarter [4] - The net asset value per share increased by $0.02 to $5.42 compared to $5.39 as of September 30, 2024 [5] - The fair value of the portfolio was $192.4 million, up from $191.6 million on December 31 [14] - Net assets increased by $500,000 from the prior quarter to $78.1 million [14] - The weighted average yield of the debt portfolio increased to 10.8% from 10.4% in the previous quarter [14] Business Line Data and Key Metrics Changes - The company invested in one new portfolio company and two existing portfolio companies during the quarter, with total fundings for new investments amounting to $5.1 million [10] - Realized investments totaled $7.3 million with an internal rate of return (IRR) of approximately 9.6% [10] - The largest industry concentrations by fair market value included professional services at 15.5%, containers and packaging at 9.2%, and trading companies and distributors at 8.6% [13] Market Data and Key Metrics Changes - The company noted a noticeable slowdown in new deal activity, particularly in M&A volume and sponsor-less financing [6] - Less than 20% of the portfolio may experience moderate direct effects from tariffs, with proactive measures being implemented to mitigate impacts [8] Company Strategy and Development Direction - The company remains focused on maintaining net asset value stability and sustainable net investment income while selectively deploying capital in high-quality opportunities [17] - The management expressed cautious optimism about potential investment opportunities in the second half of 2025 as market volatility decreases [17] Management's Comments on Operating Environment and Future Outlook - Management highlighted that the portfolio remains stable despite reduced investment activity and prepayment trends, with a significant reduction in non-accrual investments [5][6] - The company expects more stabilized profiles for the remainder of 2025, notwithstanding any macroeconomic shocks [6] - Management is optimistic about the potential for increased net investment income in the second quarter due to spread widening in new opportunities [32] Other Important Information - The Board of Directors declared a distribution of $0.12 per share payable in cash on June 14, 2025 [16] - As of March 31, the company had approximately $13 million in cash, with $10.7 million being restricted cash [16] Q&A Session Summary Question: How can the adviser scale or provide benefits to the BDC? - Management indicated that waiving fees is always a consideration and that scaling the private credit platform is an ongoing effort that will help absorb overhead and expenses [20][22] Question: What is the timeline for capital raising? - Management confirmed that they are currently in the process of raising another pool of capital, expected to benefit shareholders in the second half of 2025 [26][27] Question: Why not consider share repurchases given the current stock price? - Management acknowledged that share repurchases are a tool they consider but have no immediate plans in place [30] Question: Should there be an increase in net investment income in the second quarter? - Management suggested that there could be an increase in net investment income due to spread widening, holding other factors constant [32]

Investment Objectives and Portfolio - Investcorp Credit Management BDC, Inc. has a primary investment objective to maximize total return to stockholders through investments in debt and equity of privately held middle-market companies [182]. - As of March 31, 2025, the investment portfolio was valued at $192.4 million, representing 92.7% of total assets, compared to 92.6% as of December 31, 2024 [200]. - The investment portfolio consisted of 43 portfolio companies, with 77.04% in first lien investments and 22.96% in equities, warrants, and other positions [216]. - The average investment per portfolio company was $4.5 million, while the largest investment was $13.6 million as of March 31, 2025 [216]. - The primary revenue source is interest on debt investments, supplemented by royalty income, dividends, and capital gains [213]. - The investment portfolio's industry composition showed an increase in Professional Services to 15.47% from 14.37% and a decrease in Containers & Packaging to 9.15% from 10.52% [220]. - During the three months ended March 31, 2025, the company made investments totaling approximately $5.1 million, with 86.71% in first lien investments [220]. - The company invested a total of $2.0 million in two existing portfolio companies between March 31, 2025, and May 13, 2025 [246]. Financial Performance - Investment income for the three months ended March 31, 2025, decreased to $4.4 million from $6.6 million for the same period in 2024 [226]. - Expenses decreased to $3.7 million for the three months ended March 31, 2025, compared to $4.4 million for the same period in 2024 [227]. - Net investment income before taxes decreased to $0.7 million for the three months ended March 31, 2025, from $2.2 million for the same period in 2024 [228]. - The company recorded a net realized loss on investments of $1.6 million for the three months ended March 31, 2025 [229]. - As of March 31, 2025, the average total yield of debt and income-producing securities was 11.02%, up from 10.60% as of December 31, 2024 [219]. Debt and Financing - As of March 31, 2025, there were $56.0 million in borrowings outstanding under the Capital One Revolving Financing, down from $58.5 million as of December 31, 2024 [204]. - The Capital One Revolving Financing was amended to decrease the applicable interest spread from SOFR plus 3.10% to SOFR plus 2.50% [204]. - The company closed a public offering of $65.0 million in aggregate principal amount of 4.875% notes due 2026, with net proceeds of approximately $63.1 million after expenses [205]. - The 2026 Notes will mature on April 1, 2026, and bear interest at a rate of 4.875% [206]. - As of March 31, 2025, the company's floating rate borrowings totaled $56.0 million, representing 46.3% of its outstanding debt [250]. - A 1.00% increase in interest rates would increase the company's net interest income by approximately 5.30%, while a 2.00% increase would increase it by approximately 15.82% [251]. - The company had no hedging transactions in place as of March 31, 2025, as it deemed the interest rate risk acceptable [253]. Regulatory and Compliance - The Company has no Taxable Subsidiaries as of March 31, 2025, and December 31, 2024 [188]. - The company did not hold any non-qualifying assets in its portfolio as of March 31, 2025, complying with regulatory requirements [211]. - The Adviser has been granted exemptive relief by the SEC to co-invest in certain private placement transactions, subject to conditions [190]. - The company intends to distribute between 90% and 100% of its annual taxable income to stockholders, which includes taxable interest and fee income [241]. - As of March 31, 2025, the company had off-balance sheet arrangements consisting of $5.7 million in unfunded commitments to five portfolio companies, up from $4.6 million to six companies as of December 31, 2024 [245]. Market Conditions and Risks - The current inflationary environment and potential global recession may impact the portfolio companies, necessitating adjustments to operational plans [191]. - The company is subject to financial market risks, including changes in interest rates, which could materially affect its net investment income [248]. - As of March 31, 2025, 98.2% of debt investments bore interest based on floating rates, an increase from 96.4% as of December 31, 2024 [222]. - The asset coverage ratio based on par value was 164.5% as of March 31, 2025 [235]. Ownership and Management Changes - The Company has undergone significant ownership changes, with Investcorp acquiring approximately 83% of the Adviser as of August 31, 2023 [183]. - The Company’s fiscal year end was changed from June 30 to December 31, effective September 18, 2024 [181]. - The board of directors declared a distribution of $0.12 per share for the quarter ended June 30, 2025, payable on June 14, 2025 [247].

Financial Performance - Net investment income for the quarter was $0.8 million, resulting in a net investment income per share of $0.06[3][10] - The net decrease in net assets from operations was $0.6 million, or $0.04 per share, reflecting a decrease of 2.86% in net assets during the quarter[5][10] - Total investment income for the six months ended December 31, 2024, was $11,622,757, a decrease of 51.3% compared to $23,878,302 for the same period in 2023[16] - Net investment income after taxes for the six months ended December 31, 2024, was $3,146,239, down 66.7% from $9,428,066 in the same period of 2023[16] - Total expenses for the six months ended December 31, 2024, were $8,293,178, a slight increase from $17,349,068 in the same period of 2023[16] - The company reported a net increase in net assets resulting from operations of $6,042,089 for the six months ended December 31, 2024, compared to a net decrease of $4,092,470 in the same period of 2023[16] - Earnings per share for the six months ended December 31, 2024, was $0.42, compared to a loss of $0.28 in the same period of 2023[16] Investments - The company made investments totaling $9.9 million during the quarter, with a weighted average yield of 11.81% on new debt investments[5][9] - As of December 31, 2024, the investment portfolio consisted of 43 companies, with 81.17% in first lien investments[11] - The internal rate of return on fully realized investments during the quarter was 17.20%, with total proceeds of $7.6 million[5][9] - The weighted average yield on debt investments at fair value decreased to 10.36% from 10.51% in the previous quarter[5] Company Assets and Liabilities - Total assets as of December 31, 2024, were $206.9 million, with a net asset value per share of $5.39[3][15] - The company had $12.1 million in cash, of which $11.3 million was restricted cash, and $41.5 million of unused capacity under its revolving credit facility[12] Corporate Governance - The company appointed Andrew Muns as the new Chief Operating Officer, effective March 24, 2025[4][14] Shareholder Returns - The company declared a distribution of $0.12 per share for the quarter ending March 31, 2025, representing a yield of 15.84% based on a share price of $3.03[5][8] - The weighted average shares of common stock outstanding increased slightly to 14,404,510 from 14,396,201 in the previous year[16] - The company aims to maximize total return to stockholders through debt and related equity investments in middle-market companies with annual revenues of at least $50 million[17] Forward-Looking Statements - Forward-looking statements indicate that actual results may differ materially from anticipated results due to various risks and uncertainties[18] - The company has no obligation to publicly update or revise any forward-looking statements unless required by law[19] Investor Relations - Investor relations contact information includes an email address and phone number for inquiries[20]

Financial Data and Key Metrics Changes - For the quarter ending December 31, 2024, the company reported net investment income of $0.8 million or $0.06 per share, down from $0.16 per share in the prior quarter [4] - The net asset value per share decreased by $0.16 to $5.39 compared to $5.55 as of September 30, 2024 [4] - The fair value of the portfolio was $191.6 million, an increase from $190.1 million at September 30 [17] - Net assets declined by $2.3 million from the prior quarter to $77.6 million [17] - The weighted average yield of the debt portfolio decreased slightly from 10.5% to 10.4% [17] Business Line Data and Key Metrics Changes - The median EBITDA of the portfolio remained flat at approximately $61.76 million, while the weighted average net leverage increased from 4.8 times to 5 times [9] - The percentage of covenant appeals increased from 70% to 77% [9] - The weighted average yield of debt investments made in the quarter was approximately 11.8% [11] Market Data and Key Metrics Changes - Approximately 30% of the portfolio may experience moderate effects from tariffs, with strategies in place to mitigate these risks [7] - The company is strategically targeting investments in critical sectors and defensive industries, including a recent investment in the data center sector [8] Company Strategy and Development Direction - The company remains focused on capital preservation and NAV stability, with a disciplined investment approach [22] - The management is adapting to market volatility and heightened competition among lenders, with a focus on quality assets [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties and delivering value to shareholders [6] - The potential impact of tariffs on the portfolio and M&A market is being closely monitored [36] Other Important Information - The company appointed Andrew Muns as Chief Operating Officer, enhancing the executive team [3] - The company declared a distribution of $0.12 per share for the quarter ending March 31, 2025, payable in cash [19] Q&A Session Summary Question: What was the cause for the drop in PIK income quarter-over-quarter? - The drop in PIK income was due to a reversal of non-accrual for one portfolio company in the previous quarter, which inflated PIK income [25] Question: What are the comments on the sustainability of the dividend given lower yields and higher leverage? - The company is constantly evaluating the sustainability of the dividend and will monitor the portfolio's performance [26][27] Question: Is the company changing to a calendar fiscal year? - Yes, the company has changed its fiscal year from June to December [28][30] Question: What is the trend for investment yield over the next quarter or two? - The investment yield is expected to remain similar, around 10.5% plus or minus, unless there is a significant economic shock [34][36]

Financial Data and Key Metrics Changes - For the quarter ending December 31, 2024, the company reported net investment income of $0.8 million or $0.06 per share, down from $0.16 per share in the prior quarter [4] - The net asset value per share decreased by $0.16 to $5.39 compared to $5.55 as of September 30, 2024 [4] - The fair value of the portfolio was $191.6 million compared to $190.1 million at September 30 [17] - Net assets were $77.6 million, a decline of $2.3 million from the prior quarter [17] - The weighted average yield of the debt portfolio decreased slightly from 10.5% to 10.4% [17] Business Line Data and Key Metrics Changes - The median EBITDA of the portfolio remained flat at approximately $61.76 million, while the weighted average net leverage increased from 4.8 times to 5 times [9] - The percentage of covenant appeals increased from 70% to 77% [9] - The weighted average yield of debt investments made in the quarter was approximately 11.8% [11] Market Data and Key Metrics Changes - Approximately 30% of the portfolio may experience moderate effects from tariffs, with strategies in place to mitigate these risks [7] - The company is strategically targeting investments in critical sectors and defensive industries, including a recent investment in the data center sector [8] Company Strategy and Development Direction - The company remains focused on capital preservation and NAV stability, with a disciplined investment approach [22] - The management is adapting to economic uncertainties and believes the portfolio is well-positioned for the shifting economic environment [6][7] Management's Comments on Operating Environment and Future Outlook - Management noted that heightened market volatility has created a tightening spread environment, impacting investment yields [5] - There is optimism for a resurgence in M&A activity post-election, although risks from tariff wars and fiscal policy changes create uncertainty [5][6] - The company does not foresee significant changes in investment yields in the near term, expecting them to remain around 10.5% [34] Other Important Information - The company appointed Andrew Muns as Chief Operating Officer, enhancing the executive team [3] - The company has approximately $12.1 million in cash, with $11.3 million being restricted cash [20] - A distribution of $0.12 per share was declared for the quarter ending March 31, 2025, payable in cash [19] Q&A Session Summary Question: What was the cause for the drop in PIK income quarter-over-quarter? - The drop was due to a reversal of non-accrual for one portfolio company in the previous quarter, which inflated PIK income [25] Question: What are the comments on the sustainability of the dividend given lower yields and higher leverage? - The company is constantly evaluating the dividend sustainability and will monitor the portfolio's performance [26][27] Question: Is the company changing to a calendar fiscal year? - Yes, the company has changed its fiscal year from June to December [28][30] Question: Where does the company see the trend for investment yield over the next quarter or two? - The investment yield is expected to remain stable around 10.5%, barring any economic shocks [34][36]

Financial Performance - The Company reported net investment income of $2.3 million, or $0.16 per share, for the quarter[3]. - Total investment income for the three months ended September 30, 2024, was $6,846,775, an increase from $5,897,706 in the same period last year, representing a growth of approximately 16.1%[13]. - Net investment income for the quarter was $2,325,943, compared to $1,627,667 in the prior year, reflecting an increase of about 42.8%[13]. - The net increase in net assets resulting from operations was $6,606,629, a significant recovery from a net decrease of $1,684,362 in the previous year[13]. - Basic and diluted earnings per share for the quarter were $0.46, compared to a loss of $(0.12) per share in the same quarter last year[13]. - Total expenses for the quarter were $4,590,410, up from $4,356,669 in the prior year, marking an increase of approximately 5.4%[13]. Investment Activity - Total investments made during the quarter amounted to $13.1 million, with a weighted average yield of 10.73%[2][7]. - The Company realized investments totaling $13.4 million during the quarter, achieving an internal rate of return of 11.75%[2]. - The company reported a net realized loss from investments of $(4,056,505) for the quarter, while the net change in unrealized appreciation was $8,337,191, indicating a strong recovery in investment values[13]. - Interest income from non-controlled, non-affiliated investments was $4,674,329, down from $5,465,288, a decrease of about 14.4%[13]. Asset Management - Net asset value increased by $0.34 per share to $5.55, reflecting a 6.50% increase in net assets, totaling $4.9 million[2]. - Total assets as of September 30, 2024, were $203.0 million, with net assets of $79.89 million[3][12]. - Cash resources included $10.1 million, with $8.3 million classified as restricted cash[11]. - The weighted average yield on debt investments at cost for the quarter was 10.51%, down from 12.33% in the previous quarter[2]. - The Company had net repayments of $7,500 on existing credit commitments during the quarter[2][8]. - As of September 30, 2024, the investment portfolio consisted of 45 portfolio companies, with 82.47% in first lien investments[10]. Shareholder Returns - The Company declared a distribution of $0.12 per share for the quarter ending December 31, 2024, with a yield of 15.34% based on a share price of $3.13 as of September 30, 2024[2][6]. - The weighted average shares of common stock outstanding increased slightly to 14,403,752 from 14,392,714 year-over-year[13]. Strategic Outlook - The company has a strategy focused on investing in middle-market companies with annual revenues of at least $50 million and EBITDA of at least $15 million[14]. - Forward-looking statements indicate that the company anticipates potential market volatility and interest rate changes may impact future performance[15].

Financial Data and Key Metrics Changes - The net asset value increased by $0.34 per share to $5.55 from $5.21 as of June 30, 2024, driven by higher net investment income and unrealized gains on investments [6][21] - Net investment income for the quarter was $2.3 million or approximately $0.16 per share, reflecting a $1 million increase over the prior quarter [7] - The fair value of the portfolio rose to $190.1 million from $184.6 million, with net assets increasing by $4.9 million to $79.7 million [21][25] - The weighted average of the debt portfolio decreased to 10.5% from 12.3% in the previous quarter, influenced by declining SOFR and tighter spreads [22] Business Line Data and Key Metrics Changes - The median EBITDA of the portfolio increased from approximately $55 million to $61 million, while the weighted average net leverage declined from 5.1 times to 4.7 times [11] - Non-accruals as a percentage of total fair market value improved to 4.8% from 5% in the previous quarter [11] Market Data and Key Metrics Changes - New deal flow in M&A and LBO activity remained subdued, but origination volumes increased due to refinancing deposits [8] - The investment pipeline is described as robust, with a focus on high-quality sponsors and companies in defensible industries [10] Company Strategy and Development Direction - The company aims to build a business around core middle market companies, focusing on those with $15 million to $75 million in EBITDA [35][38] - The strategy includes increasing the average EBITDA of the portfolio, decreasing leverage, and sourcing more directly from sponsors [38] - The company is also looking to improve operating efficiencies and reduce expenses over time [40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating economic uncertainties and delivering value to shareholders [5] - The company is optimistic about future opportunities despite intense competition and a challenging market environment [10][27] Other Important Information - The Board of Directors declared a distribution of $0.12 per share for the quarter ended December 1, 2024, payable on January 8, 2025 [24] - As of September 30, the company had approximately $10.1 million in cash, with $52.5 million of capacity under its revolving credit facility [25] Q&A Session Summary Question: What was the driver of the PIK income for the quarter? - The primary driver was the reversal of non-accrual to accrual of Klein Hersh, which had been on non-accrual for the previous three quarters [28] Question: Were there any timing issues affecting the quarter's results? - Yes, some deals that were expected to close last quarter spilled over into this quarter, which is common in this business [29] Question: Can you provide details on realized loss and unrealized gain? - The realized loss was due to Crafty Apes, while unrealized gains were attributed to the markups of Klein Hersh and Bioplan [33] Question: What is the vision for sourcing deals in the market? - The focus is on core middle market companies, with a significant portion of transactions sourced directly from sponsors [35][36] Question: Are there plans to improve operating efficiencies? - The company is conducting a deep dive into managing expenses efficiently, with expectations that the expense ratio will decrease as the business grows [40]

Investment Objectives and Strategy - Investcorp Credit Management BDC, Inc. has a primary investment objective to maximize total return to stockholders through investments in debt and equity of privately held middle-market companies [148]. - The company has a strong track record of consistent performance and growth, positioning it well to manage current market challenges [156]. - Revenue is primarily generated from interest on debt, with additional income from royalties, dividends, and capital gains [172]. Financial Position and Assets - As of September 30, 2024, Investcorp manages assets totaling $21.8 billion, indicating a strong position in the credit investment market [149]. - As of September 30, 2024, the investment portfolio represented 93.7% of total assets, down from 96.0% as of June 30, 2024 [165]. - The company had a total cash balance of $1.7 million, $8.3 million in restricted cash, and $52.5 million of capacity under the Capital One Revolving Financing [193]. Debt and Financing - The Base Management Fee for the Adviser is set at 1.75% of gross assets, with an Incentive Fee of 20% on pre-incentive fee net investment income above an 8% hurdle rate [152]. - The company is permitted to issue multiple classes of indebtedness if asset coverage is at least 150% immediately after issuance [155]. - Borrowings under the Capital One Revolving Financing amounted to $47.5 million as of September 30, 2024, compared to $43.0 million as of June 30, 2024 [166]. - The company amended the Capital One Revolving Financing to extend the maturity date to January 17, 2029, and increased applicable interest spreads [166]. Investment Performance - Investment income for the three months ended September 30, 2024, increased to $6.8 million from $5.9 million for the same period in 2023, primarily due to an increase in PIK interest income [186]. - Net investment income rose to $2.3 million for the three months ended September 30, 2024, compared to $1.6 million for the same period in 2023, driven by increased PIK interest income and lower interest expenses [188]. - Net realized loss from investments was $4.1 million for the three months ended September 30, 2024, primarily due to losses from the restructuring of the investment in Klein Hersh, LLC [189]. Regulatory Compliance and Risk Management - The company has no Taxable Subsidiaries as of September 30, 2024, maintaining compliance with RIC requirements [154]. - The company is required to comply with regulatory requirements, including maintaining at least 70% of total assets in qualifying assets [170]. - The company is subject to financial market risks, including changes in interest rates, which could materially affect net investment income [204]. Valuation and Investment Process - Fair value of portfolio investments is determined based on principles set forth by the board of directors, with significant reliance on market quotations [159]. - The valuation process for investments involves a multi-step review by the board of directors and independent valuation firms [163]. - The investment rating system indicated that as of September 30, 2024, 12.1% of the portfolio was rated 1, 62.0% rated 2, and 19.4% rated 3, with 4.8% rated 5 [185]. Cash Flow and Distributions - For the three months ended September 30, 2024, the total cash balance increased by $5.0 million, with cash from operating activities contributing $0.5 million, primarily due to $14.3 million from sales and repayments of portfolio companies [192]. - The company intends to distribute between 90% and 100% of its annual taxable income to stockholders, but may face limitations due to covenants in financing arrangements [199]. - The board of directors declared a distribution of $0.12 per share for the quarter ended December 31, 2024, payable on January 8, 2025 [203]. Interest Rate Exposure - Approximately 96.9% of debt investments bore interest based on floating rates as of September 30, 2024, exposing net interest income to interest rate fluctuations [205]. - A 1.00% increase in interest rates would increase the company's net interest income by approximately 7.42%, while a 2.00% increase would raise it by approximately 18.38% [207]. - The company had no hedging transactions in place as of September 30, 2024, as management deemed the interest rate risk acceptable [209].

Portfolio Overview - As of June 30, 2024, the company's portfolio had a fair value of $184.6 million, consisting of 85.02% first lien investments and 14.98% equity and other positions[12]. - The total fair value of the portfolio as of June 30, 2024, is $184,569,530, with 60 investments, compared to $220,111,329 with 65 investments as of June 30, 2023[48]. - The company's portfolio as of June 30, 2024, consisted of 85.02% first lien investments and 14.98% equity, warrant, or other positions[91]. Investment Strategy - The company focuses on middle-market companies due to reduced availability of capital and robust demand for debt capital, with private equity firms holding approximately $965.0 billion of uncalled capital as of March 31, 2024[25]. - The company primarily invests in middle-market companies with annual revenues of at least $50 million and EBITDA of at least $15 million[28]. - Investments typically range in size from $5 million to $25 million, with a focus on standalone first and second lien loans, unitranche loans, and selectively in unsecured debt[28]. - The investment strategy includes a focus on companies with significant asset or franchise values and strong free cash flow[28]. - The company aims to capitalize on the limited competition in the middle-market lending space, facilitating higher quality deal flow[24]. - The company believes that current market conditions allow for attractively priced debt investments with potential return-enhancing mechanisms[27]. Risk Management and Underwriting - The company emphasizes disciplined underwriting policies and rigorous portfolio management to achieve favorable risk-adjusted returns[26]. - The underwriting process includes evaluating historical and projected financial performance, management team experience, and industry dynamics[35][37]. - The investment rating system categorizes investments from 1 (performing above expectations) to 5 (substantially below expectations), with 18.4% of the portfolio rated 3 or below as of June 30, 2024[45][46]. - The company utilizes hedging techniques, such as interest rate swaps, to mitigate potential interest rate risks on indebtedness[58]. - A 1.00% increase or decrease in interest rates would affect the company's net interest income by approximately 5.93%[410]. - A 2.00% increase or decrease in interest rates would affect the company's net interest income by approximately 14.94%[410]. Management and Advisory Fees - The Base Management Fee is set at an annual rate of 1.75% of gross assets, calculated based on the average value at the end of the two most recently completed calendar quarters[66]. - The Income-Based Fee is 20.0% of the Pre-Incentive Fee Net Investment Income exceeding a 2.0% hurdle rate, with a catch-up provision for amounts between 2.0% and 2.5%[68]. - The management fee is set at an annualized rate of 1.75%[82]. - The advisory fee structure is considered reasonable and beneficial to stockholders, particularly due to the exclusion of cash and cash equivalents from the Base Management Fee calculation[90]. - The board of directors concluded that the proposed advisory fees are reasonable, considering indirect benefits to the Adviser[94]. Compliance and Regulatory Requirements - The company is a BDC under the 1940 Act, which imposes restrictions on transactions with affiliates and requires a majority of independent directors[103]. - The company must provide significant managerial assistance to portfolio companies, except in cases of control or group purchases[107]. - 70% of the company's assets are required to be in qualifying assets or temporary investments, which include cash and U.S. government securities[108]. - The company is required to distribute at least 90% of its investment company taxable income to qualify as a Regulated Investment Company (RIC)[124]. - To avoid a 4% excise tax, the company must distribute 98% of its net ordinary income and 98.2% of its capital gain net income annually[125]. - The company must satisfy the 90% Income Test and Diversification Tests to maintain its RIC status[130]. - If the company fails to maintain its RIC qualification, it could be subject to corporate-level U.S. federal income taxes on all taxable income[131]. Performance and Returns - The weighted average total yield of debt and income-producing securities at amortized cost was 12.47%, while the total portfolio yield was 10.60%[12]. - The company expects to receive interest income over the investment period, providing significant returns on invested capital prior to final exit[57]. - The company aims to exit investments through company sales, recapitalizations, or loan repayments, with a focus on maintaining significant underlying equity value[31]. - Cumulative incentive compensation accrued for the preceding 11 calendar quarters was $9,000,000, with a cumulative net increase in net assets of $8,000,000[80]. Competition and Market Position - The company faces competition from larger public and private funds, other BDCs, and commercial banks, which may have access to funding sources not available to it[60]. - The investment adviser, CM Investment Partners, has a team with over 100 combined years of experience in structuring customized debt solutions for middle-market companies[18]. - The investment team has extensive networks for sourcing investment opportunities, enhancing the company's competitive advantage in identifying investments[26]. Governance and Operations - The company does not have direct employees; day-to-day operations are managed by the Adviser, with key officers being employees of the Adviser[62]. - The Advisory Agreement allows for a termination notice of 60 days without penalty from either party[85]. - The Board of Directors approved the continuation of the Advisory Agreement on July 23, 2024, considering various factors including advisory fees and operating expenses[87]. - The Administration Agreement allows the Adviser to provide various administrative services, including maintaining financial records and preparing reports for stockholders[95]. - The company has adopted a code of ethics to govern personal investments and restrict certain transactions by its personnel[112].