Workflow
Trinity Capital (TRIN) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Presents Trinity Capital Inc.'s unaudited consolidated financial statements, offering a detailed financial snapshot and performance overview Consolidated Statements of Assets and Liabilities Snapshot of financial position, showing significant asset growth driven by investments and increased KeyBank Credit Facility | Metric | June 30, 2025 (Unaudited) (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------------------ | :--------------------------------------- | :------------------------------- | :--------------------- | :--------- | | ASSETS | | | | | | Total investments at fair value | $1,978,330 | $1,725,570 | $252,760 | 14.65% | | Cash and cash equivalents | $26,251 | $9,627 | $16,624 | 172.69% | | Total assets | $2,045,024 | $1,774,241 | $270,783 | 15.26% | | LIABILITIES | | | | | | KeyBank Credit Facility | $483,000 | $113,000 | $370,000 | 327.43% | | Unsecured Notes, net | $569,808 | $764,673 | $(194,865) | -25.48% | | Total liabilities | $1,121,456 | $951,259 | $170,197 | 17.89% | | NET ASSETS | | | | | | Total net assets | $923,568 | $822,982 | $100,586 | 12.22% | | Net asset value per share | $13.27 | $13.35 | $(0.08) | -0.60% | - Total investments at fair value increased by $252.76 million (14.65%) from December 31, 2024, to June 30, 2025, reaching $1,978.33 million10 - The KeyBank Credit Facility saw a substantial increase of $370 million (327.43%), indicating increased leverage, while Unsecured Notes decreased by $194.87 million (-25.48%)10 Consolidated Statements of Operations Highlights financial performance with growth in investment income, net investment income, and unrealized appreciation | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Total investment income | $69,483 | $54,641 | $14,842 | 27.16% | $134,868 | $105,094 | $29,774 | 28.33% | | Total net expenses | $34,058 | $27,259 | $6,799 | 24.94% | $66,445 | $51,916 | $14,529 | 27.98% | | NET INVESTMENT INCOME | $34,804 | $26,743 | $8,061 | 30.14% | $67,185 | $51,900 | $15,285 | 29.45% | | Net realized gain/(loss) from investments | $(8,262) | $(6,488) | $(1,774) | 27.34% | $(10,416) | $(5,136) | $(5,280) | 102.80% | | Net change in unrealized appreciation/(depreciation) from investments | $14,872 | $10,573 | $4,299 | 40.66% | $11,730 | $(1,427) | $13,157 | 922.00% | | NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $41,414 | $30,828 | $10,986 | 35.63% | $68,499 | $45,337 | $23,162 | 51.09% | | NET INVESTMENT INCOME PER SHARE - BASIC | $0.53 | $0.53 | $0.00 | 0.00% | $1.05 | $1.07 | $(0.02) | -1.87% | | NET INVESTMENT INCOME PER SHARE - DILUTED | $0.53 | $0.51 | $0.02 | 3.92% | $1.05 | $1.03 | $0.02 | 1.94% | - Total investment income increased by 27.16% for the three months and 28.33% for the six months ended June 30, 2025, compared to the prior year, driven by growth in interest and dividend income from non-control/non-affiliate investments13 - Net increase in net assets resulting from operations rose significantly by 35.63% for the three months and 51.09% for the six months ended June 30, 2025, primarily due to a positive shift in unrealized appreciation13 Consolidated Statements of Changes in Net Assets Details movements in net assets, driven by common stock issuances, stock-based compensation, and distributions | Metric (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Balance as of March 31 / December 31 | $833,395 | $626,316 | $822,982 | $611,159 | | Issuance of common stock, net of costs | $81,513 | $46,933 | $111,981 | $71,174 | | Stock-based compensation | $3,194 | $2,892 | $5,803 | $5,343 | | Distributions to stockholders | $(35,483) | $(26,443) | $(68,062) | $(51,252) | | Net increase in net assets from operations | $41,414 | $30,828 | $68,499 | $45,337 | | Balance as of June 30 | $923,568 | $680,039 | $923,568 | $680,039 | - Net assets increased by $100.59 million from December 31, 2024, to June 30, 2025, reaching $923.57 million18 - This was primarily driven by $111.98 million from common stock issuances and $68.50 million from net increase in net assets resulting from operations, partially offset by $68.06 million in distributions to stockholders18 - Common stock shares issued and outstanding increased from 61,669,059 as of December 31, 2024, to 69,574,146 as of June 30, 2025, reflecting significant equity financing activities1018 Consolidated Statements of Cash Flows Shows cash movements, with increased operating cash usage and significant financing from borrowings and equity | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | Change (%) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------- | :--------- | | Net cash provided by/(used in) operating activities | $(186,873) | $(103,292) | $(83,581) | 80.92% | | Net cash provided by/(used in) investing activities | $(286) | $(159) | $(127) | 79.87% | | Net cash provided by/(used in) financing activities | $203,783 | $144,792 | $58,991 | 40.74% | | Net increase/(decrease) in cash, cash equivalents and restricted cash | $16,624 | $41,341 | $(24,717) | -59.79% | | Cash, cash equivalents and restricted cash at end of period | $26,251 | $46,102 | $(19,851) | -43.06% | - Operating activities used $186.87 million in cash for the six months ended June 30, 2025, an 80.92% increase in cash usage compared to the same period in 2024, primarily due to higher net purchases of investments22 - Financing activities provided $203.78 million in cash, a 40.74% increase, driven by $727.2 million in borrowings under the Credit Facility and $111.98 million from common stock issuances, partially offset by $357.2 million in repayments under the Credit Facility and $217.76 million in repayment of Unsecured Notes22 Consolidated Schedule of Investments as of June 30, 2025 Detailed breakdown of the investment portfolio by type, industry, and region, with focus on Debt Securities | Investment Type | Cost (in thousands) | Fair Value (in thousands) | % of Total Portfolio (Fair Value) | | :---------------------- | :------------------ | :------------------------ | :-------------------------------- | | Debt Securities | $1,875,064 | $1,834,423 | 92.7% | | Warrant Investments | $45,852 | $63,660 | 3.2% | | Equity Investments | $80,022 | $80,247 | 4.1% | | Total Investments | $2,000,938 | $1,978,330 | 100.0% | | Industry (Top 5 by Fair Value) | Fair Value (in thousands) | % of Total Portfolio (Fair Value) | | :----------------------------- | :------------------------ | :-------------------------------- | | Finance and Insurance | $307,007 | 15.6% | | Other Healthcare Services | $219,376 | 11.1% | | Medical Devices | $212,582 | 10.7% | | SaaS | $197,922 | 10.0% | | Space Technology | $170,336 | 8.6% | - As of June 30, 2025, 99.2% of the company's investments in portfolio companies are considered Level 3 assets, indicating reliance on unobservable inputs for fair value measurement due to the illiquid nature of these venture capital-backed growth-oriented companies175 Consolidated Schedule of Investments as of December 31, 2024 Details the investment portfolio by type and industry, providing a comparative view to the current period | Investment Type | Cost (in thousands) | Fair Value (in thousands) | % of Total Portfolio (Fair Value) | | :---------------------- | :------------------ | :------------------------ | :-------------------------------- | | Debt Securities | $1,640,961 | $1,602,131 | 92.8% | | Warrant Investments | $40,680 | $51,454 | 3.0% | | Equity Investments | $78,585 | $71,985 | 4.2% | | Total Investments | $1,760,226 | $1,725,570 | 100.0% | | Industry (Top 5 by Fair Value) | Fair Value (in thousands) | % of Total Portfolio (Fair Value) | | :----------------------------- | :------------------------ | :-------------------------------- | | Finance and Insurance | $322,735 | 18.7% | | Medical Devices | $172,395 | 10.0% | | Green Technology | $158,852 | 9.2% | | SaaS | $146,778 | 8.5% | | Space Technology | $142,034 | 8.2% | - As of December 31, 2024, the company had five foreign domiciled portfolio companies (two in Canada, three in Europe), representing 6.3% of total net asset value based on fair value148 Notes to Consolidated Financial Statements Provides detailed explanations for financial statements, covering accounting policies, valuations, and debt instruments Note 1. Organization and Basis of Presentation Trinity Capital Inc. is a specialty lending BDC, commencing operations in January 2020, regulated as a BDC and RIC - Trinity Capital Inc. was formed on August 12, 2019, and commenced operations on January 16, 2020, as a specialty lending company providing debt to growth-oriented companies154 - The company is regulated as a Business Development Company (BDC) under the 1940 Act and intends to qualify annually as a Regulated Investment Company (RIC) for U.S. federal income tax purposes155 - The company generally does not consolidate portfolio company investments, even those with controlling interests, unless the portfolio company is another investment company or provides substantially all services directly to Trinity Capital or its portfolio companies164 Note 2. Summary of Significant Accounting Policies Outlines accounting policies, including investment valuation (Level 3 assets), income recognition, and non-accrual status - The most significant estimate is the valuation of investments, carried at fair value in accordance with ASC 946 and measured under ASC 820, with 99.2% of investments classified as Level 3 assets due to illiquidity171172175 - Interest income is recognized on an accrual basis, including accretion of Original Issue Discount (OID) and End-of-Term (EOT) payments, and Payment-in-Kind (PIK) interest190 - PIK interest income was $1.5 million for Q2 2025 and $3.0 million for H1 2025191 - As of June 30, 2025, four portfolio companies (three loans, one equipment financing) were on non-accrual status, with a total cost of $47.8 million and a fair value of $15.6 million (0.9% of debt investment portfolio)196 Note 3. Investments Details investment strategy, portfolio breakdown by industry and region, and highlights concentrations and market risks | Investment Type | June 30, 2025 Cost (%) | June 30, 2025 Fair Value (%) | December 31, 2024 Cost (%) | December 31, 2024 Fair Value (%) | | :---------------------- | :--------------------- | :--------------------------- | :------------------------- | :----------------------------- | | Secured Loans | 76.4% | 75.4% | 75.1% | 74.5% | | Equipment Financings | 17.3% | 17.3% | 18.1% | 18.3% | | Equity | 4.0% | 4.1% | 4.5% | 4.2% | | Warrants | 2.3% | 3.2% | 2.3% | 3.0% | | Total | 100.0% | 100.0% | 100.0% | 100.0% | | Industry (Top 3 by Fair Value) | June 30, 2025 Fair Value (%) | December 31, 2024 Fair Value (%) | | :----------------------------- | :--------------------------- | :------------------------------- | | Finance and Insurance | 15.6% | 18.7% | | Other Healthcare Services | 11.1% | 8.3% | | Medical Devices | 10.7% | 10.0% | - The portfolio is primarily concentrated in the United States (94.4% fair value as of June 30, 2025), with significant exposure to the West (29.0%) and Northeast (24.1%) regions212 Note 4. Fair Value of Financial Instruments Details fair value measurements, mostly Level 3 assets, and summarizes changes in Level 3 investments and debt fair values | Asset Type | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | NAV (in thousands) | Total (in thousands) | | :------------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :----------------- | :------------------- | | Secured Loans | — | — | $1,491,803 | — | $1,491,803 | | Equipment Financings | — | — | $342,620 | — | $342,620 | | Warrants | — | — | $63,660 | — | $63,660 | | Equity | — | — | $64,048 | $16,199 | $80,247 | | Cash and cash equivalents | $26,251 | — | — | — | $26,251 | | Derivative Instruments | — | $(317) | — | — | $(317) | | Total Investments including cash and cash equivalents and derivative instruments | $26,251 | $(317) | $1,962,131 | $16,199 | $2,004,264 | - The majority of the company's investments ($1,962.13 million) are classified as Level 3, indicating that their fair values are based on significant unobservable inputs223 | Debt Instrument | June 30, 2025 Carrying Value (in thousands) | June 30, 2025 Fair Value (in thousands) | December 31, 2024 Carrying Value (in thousands) | December 31, 2024 Fair Value (in thousands) | | :-------------------------------- | :------------------------------------------ | :---------------------------------------- | :------------------------------------------ | :---------------------------------------- | | KeyBank Credit Facility | $483,000 | ~$483,000 | $113,000 | ~$113,000 | | August 2026 Notes | $124,339 | $115,800 | $124,050 | $114,100 | | December 2026 Notes | $74,458 | $69,700 | $74,271 | $68,600 | | March 2029 Notes | $113,947 | $117,200 | $112,121 | $116,200 | | September 2029 Notes | $115,973 | $120,200 | $111,567 | $118,000 | | Series A Notes | $141,091 | $143,000 | $140,850 | $142,500 | Note 5. Borrowings Details borrowing arrangements, including KeyBank Credit Facility and Unsecured Notes, highlighting significant activity | Debt Instrument | June 30, 2025 Outstanding (in thousands) | December 31, 2024 Outstanding (in thousands) | Change (in thousands) | Change (%) | | :------------------------ | :--------------------------------------- | :--------------------------------------- | :-------------------- | :--------- | | KeyBank Credit Facility | $483,000 | $113,000 | $370,000 | 327.43% | | Unsecured Notes (Net) | $569,808 | $764,673 | $(194,865) | -25.48% | | Total Borrowings | $1,052,808 | $877,673 | $175,135 | 19.95% | - The KeyBank Credit Facility increased significantly, with $727.2 million borrowed and $357.2 million repaid during the six months ended June 30, 2025, resulting in a $370 million net increase244 - The 2025 Notes matured and were repaid in full on January 16, 2025254 - The Convertible Notes were converted and repaid in full on February 20, 2025, with a cash payment of $66.2 million260 Note 6. Commitments and Contingencies Outlines unfunded commitments to portfolio companies and joint ventures, and details operating lease obligations | Commitment Type | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :---------------------- | :--------------------------- | :------------------------------- | | Unfunded commitments to portfolio companies | $51,600 | $31,200 | | Unfunded commitment to JV | $3,000 | $3,000 | | Unfunded commitment to EPT 16 | $800 | $800 | | Total Unfunded Commitments | $55,400 | $35,000 | - The company had aggregate unfunded commitments of $51.6 million to six portfolio companies as of June 30, 2025, an increase from $31.2 million to two portfolio companies as of December 31, 2024298 | Operating Lease Payments Due (in thousands) | Total | | :------------------------------------ | :---- | | 2025 | $718 | | 2026 | $1,144 | | 2027 | $1,066 | | 2028 | $1,051 | | 2029 | $1,080 | | Thereafter | $1,565 | | Total | $6,624 | Note 7. Stockholders' Equity Details stockholders' equity activities, including stock offerings, DRIP, and distributions, showing consistent payouts - During the six months ended June 30, 2025, the company issued and sold 7,694,584 shares of common stock through its ATM Program, raising $112.0 million in net proceeds314 - The company's Distribution Reinvestment Plan (DRIP) resulted in the issuance of 41,421 shares of common stock for approximately $0.6 million during the six months ended June 30, 2025323 | Distribution Date | Type | Per Share Amount | | :---------------- | :-------- | :--------------- | | March 19, 2025 | Quarterly | $0.51 | | June 18, 2025 | Quarterly | $0.51 | | December 12, 2024 | Quarterly | $0.51 | | September 18, 2024| Quarterly | $0.51 | | June 13, 2024 | Quarterly | $0.51 | | March 14, 2024 | Quarterly | $0.51 | Note 8. Equity Incentive Plans Details equity incentive plans, including shares granted, compensation costs, and new Option Awards in March 2025 | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Shares Granted (2019 LTIP) | 319,956 | 753,051 | | Fair Value of Granted Stock | $5,065 | $11,145 | | Compensation Cost Recognized | $5,596 | $5,242 | | Unrecognized Compensation Costs | $25,700 | $26,300 | | Weighted Average Period (years) | 2.8 | 3.0 | - In March 2025, the Board approved grants of non-statutory stock options (Option Awards) for 1.5 million shares to executive officers, with an exercise price of $15.83, subject to time-based and market-based vesting conditions (VWAP of $23.75 over 90 days)332333334 | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Shares Granted (2019 RSP) | 13,772 | 13,340 | | Fair Value of Granted Stock | $200 | $200 | | Compensation Cost Recognized | $99 | $101 | Note 9. Earnings Per Share Provides basic and diluted EPS computation, noting Option Awards and Convertible Notes were not dilutive in current period | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Numerator for basic earnings per share | $41,414 | $30,828 | $68,499 | $45,337 | | Denominator for basic weighted average shares | 65,911,570 | 50,161,680 | 64,242,822 | 48,455,033 | | Earnings/(Loss) per common share - basic | $0.63 | $0.61 | $1.07 | $0.94 | | Numerator for diluted earnings per share | $41,414 | $31,738 | $68,499 | $47,162 | | Denominator for diluted weighted average shares | 65,911,570 | 54,064,395 | 64,242,822 | 52,357,748 | | Earnings/(Loss) per common share - diluted | $0.63 | $0.59 | $1.07 | $0.90 | - For the three and six months ended June 30, 2025, basic and diluted EPS were identical at $0.63 and $1.07, respectively, as Option Awards' market-based conditions were not met and Convertible Notes were fully converted, thus not having a dilutive effect341 - In contrast, for the three and six months ended June 30, 2024, diluted EPS ($0.59 and $0.90) was lower than basic EPS ($0.61 and $0.94) due to the dilutive effect of Convertible Notes341 Note 10. Income Taxes Confirms RIC status, details excise tax accrual, and summarizes tax cost basis and unrealized appreciation/depreciation - Trinity Capital Inc. has elected and intends to continue to qualify annually as a RIC, requiring distribution of at least 90% of its investment company taxable income342 - The company is subject to a 4% nondeductible federal excise tax on undistributed taxable income and gains, with $0.6 million recorded for Q2 2025 and $1.2 million for H1 2025344345 | Metric (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Tax Cost of Investments | $2,003,895 | $1,763,183 | | Unrealized appreciation | $80,137 | $60,872 | | Unrealized depreciation | $(105,702) | $(113,528) | | Net change in unrealized appreciation/(depreciation) from investments | $(25,565) | $(52,656) | Note 11. Financial Highlights Presents key financial highlights, including per share data, total returns, and various financial ratios for the period | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | | Net asset value, beginning of period | $13.35 | $13.19 | | Net investment income | $1.05 | $1.07 | | Net realized and unrealized gains/(losses) on investments | $0.02 | $(0.13) | | Net increase/(decrease) in net assets resulting from operations | $1.07 | $0.94 | | Distributions | $(1.02) | $(1.02) | | Net asset value, end of period | $13.27 | $13.12 | | Total return based on net asset value | 7.0% | 7.2% | | Total return based on market value | 4.2% | 4.3% | | Ratio of total expenses to average net assets | 16.0% | 16.8% | | Ratio of net investment income to average net assets | 15.9% | 16.4% | | Asset coverage ratio | 187.0% | 188.1% | - Net asset value per share decreased slightly from $13.35 at the beginning of the period to $13.27 at the end of June 30, 2025, while net increase in net assets from operations per share improved to $1.07 from $0.94 in the prior year346 - The asset coverage ratio remained strong at 187.0% as of June 30, 2025, slightly down from 192.7% as of December 31, 2024, indicating continued compliance with regulatory requirements346447 Note 12. Related Party Transactions Details related party transactions, including JV activities, Adviser Sub allocations, and indemnification agreements - The company co-manages Senior Credit Corp 2022 LLC (JV) with a JV Partner, contributing $18.4 million in capital (debt and equity) as of June 30, 2025, with an unfunded commitment of $3.0 million354356 - During the six months ended June 30, 2025, the company received $46.6 million in net proceeds from investment sales to the JV and earned $1.3 million in origination and administrative agent fees from the JV357358 - Trinity Capital Adviser LLC (Adviser Sub) commenced operations on June 28, 2024, and allocated $0.9 million in shared resource expenses from the company for the six months ended June 30, 2025359360 Note 13. Segment Reporting Operates as a single segment, with the CEO as CODM, evaluating performance based on consolidated net investment income - The company has determined it operates as a single operating segment, with the CEO as the Chief Operating Decision Maker (CODM)365 - The CODM evaluates and monitors business performance on a consolidated basis, using consolidated net investment income and net increase/decrease in net assets from operations as key metrics366 Note 14. Recent Accounting Pronouncements Highlights ASU 2024-03, requiring disaggregated income statement expense disclosures, effective after December 15, 2026 - ASU 2024-03, issued in November 2024, mandates disaggregated disclosure of income statement expenses and additional selling expense disclosures for public entities367 - The new accounting guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027367 Note 15. Subsequent Events Discloses subsequent events: ATM program share issuance, July 2030 Notes, and SEC co-investment exemptive relief order - From July 1, 2025, to August 4, 2025, the company issued 717,285 common shares via its Equity ATM Program, generating $10.2 million in net proceeds369 - On July 3, 2025, the company issued $125.0 million in unsecured 6.750% Notes due 2030 (July 2030 Notes), with semi-annual interest payments starting January 3, 2026370372 - On July 8, 2025, the SEC granted an exemptive relief order, permitting the company to engage in co-investment transactions with affiliates under specific conditions and Board oversight373 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Trinity Capital Inc.'s financial condition, results of operations, and liquidity Forward-Looking Statements Cautions that the report contains forward-looking statements subject to substantial risks and uncertainties - The report contains forward-looking statements that involve substantial risks and uncertainties, and undue reliance should not be placed on them376 - Actual results could differ materially from anticipated outcomes due to factors such as future operating results, dependence on management, ability to manage growth, risks in growth-oriented companies, use of leverage, and changes in political, economic, or industry conditions376 - Forward-looking statements are excluded from the safe harbor protections of the Private Securities Litigation Reform Act of 1995 due to the company's status as an investment company377 Overview Specialty lending BDC providing debt and equity to growth-oriented companies, aiming for income and capital appreciation - Trinity Capital Inc. is a specialty lending company providing debt (loans, equipment financings, asset-based lending) and, to a lesser extent, equity investments to growth-oriented companies378379 - The company's investment objective is to generate current income and capital appreciation, targeting private companies with significant ownership by sponsors and expected annual revenues up to $100 million379380 - As a BDC and RIC, the company must invest at least 70% of its total assets in qualifying assets and is not limited to specific industries or geographic areas379380 Our History Incorporated in 2019, commenced operations in 2020, completed IPO in 2021, and formed strategic joint ventures - Trinity Capital Inc. commenced operations on January 16, 2020, after acquiring Legacy Funds and Trinity Capital Holdings through private equity and debt offerings382383 - The company completed its initial public offering (IPO) on February 2, 2021, with common stock trading on Nasdaq under the symbol "TRIN" since January 29, 2021384 - Recent strategic initiatives include forming a joint venture (Senior Credit Corp 2022 LLC) in December 2022, establishing Trinity Capital Adviser LLC in March 2023, and funding EPT 16 LLC in June 2024384385386 Critical Accounting Estimates and Policies Focuses on investment valuation (Level 3 assets) and income recognition (interest, OID, EOT, PIK, fees, dividends) Valuation of Investments Valuation of investments is a critical estimate, primarily Level 3 assets, requiring significant unobservable inputs - Investment valuation is the most significant estimate, with fair value determined in good faith by the Board in accordance with ASC 820 and the 1940 Act388 - Substantially all investments are Level 3 assets, relying on unobservable inputs due to the illiquid nature of venture capital-backed growth-oriented companies394 - Independent valuation firms are engaged on a discretionary basis to assist in valuing portfolio investments, particularly those with potential for material fluctuations, significant size, or credit quality concerns390 Income Recognition Interest income, OID, EOT, PIK, and nonrecurring fees are accrued as earned; dividend income is recorded when declared - Interest income, including OID, EOT, and PIK, is recognized on an accrual basis, with OID and EOT accreted over the loan term as yield enhancements396397 - Nonrecurring fees (structuring, prepayment penalties, exit fees) are recognized as other income when earned, typically upon equipment financing arrangement or early debt payoff400 - Dividend income is recorded on an accrual basis when declared by the portfolio company, with $0.5 million for Q2 2025 and $1.3 million for H1 2025399 Portfolio Composition and Investment Activity Details the company's investment portfolio composition by type, geographic region, and industry, highlighting a continued focus on secured loans and equipment financings Portfolio Composition As of June 30, 2025, the investment portfolio had a fair value of $1,978.3 million, primarily comprising secured loans (75.4%) and equipment financings (17.3%) | Type | June 30, 2025 Fair Value (%) | December 31, 2024 Fair Value (%) | | :-------------------- | :--------------------------- | :------------------------------- | | Secured Loans | 75.4% | 74.5% | | Equipment Financings | 17.3% | 18.3% | | Equity | 4.1% | 4.2% | | Warrants | 3.2% | 3.0% | | Total | 100.0% | 100.0% | | Geographic Region | June 30, 2025 Fair Value (%) | December 31, 2024 Fair Value (%) | | :---------------- | :--------------------------- | :------------------------------- | | United States | 94.4% | 97.0% | | Western Europe | 3.6% | 2.4% | | Canada | 3.0% | 0.6% | | Industry (Top 3 by Fair Value) | June 30, 2025 Fair Value (%) | December 31, 2024 Fair Value (%) | | :----------------------------- | :--------------------------- | :------------------------------- | | Finance and Insurance | 15.6% | 18.7% | | Other Healthcare Services | 11.1% | 8.3% | | Medical Devices | 10.7% | 10.0% | Concentrations of Credit Risk Credit risk managed through diversification, with top ten companies representing 26.9% of total investments - The ten largest portfolio companies represented approximately 26.9% of the total fair value of investments as of June 30, 2025406 - As of June 30, 2025, seven portfolio companies each represented 5% or more of the company's net assets406 Investment Activity Details investment activity, including new and existing portfolio company investments, repayments, and sales - During the six months ended June 30, 2025, the company invested $387.1 million in 21 new portfolio companies and $198.8 million in 25 existing portfolio companies407 - Proceeds from repayments and sales of investments totaled $352.1 million, including $168.4 million from early debt repayments and $69.6 million from investments sold to Multi-Sector Holdings407 | Metric (in thousands) | Six Months Ended June 30, 2025 | Year Ended December 31, 2024 | | :------------------------------------------ | :------------------------------- | :----------------------------- | | Beginning Portfolio, at fair value | $1,725,570 | $1,275,180 | | Purchases, net of deferred fees | $579,821 | $1,218,931 | | Proceeds from early debt repayments | $(168,401) | $(313,207) | | Sales of investments | $(69,931) | $(287,331) | | Ending Portfolio, at fair value | $1,978,330 | $1,725,570 | Portfolio Asset Quality Uses a 1 to 5 risk rating system, with 55.7% of debt investments rated 'Performing' and weighted average score of 2.9 - The company uses a 1 to 5 investment risk rating system (1.0-1.5: Default/Workout, 1.6-1.9: Watch, 2.0-2.9: Performing, 3.0-3.9: Strong Performance, 4.0-5.0: Very Strong Performance)414 | Investment Risk Rating Scale Range | Designation | June 30, 2025 Investments at Fair Value (in thousands) | June 30, 2025 Percentage of Total Portfolio | | :--------------------------------- | :-------------------- | :--------------------------------------------------- | :------------------------------------------ | | 4.0 - 5.0 | Very Strong Performance | $97,881 | 5.3% | | 3.0 - 3.9 | Strong Performance | $589,329 | 32.1% | | 2.0 - 2.9 | Performing | $1,021,331 | 55.7% | | 1.6 - 1.9 | Watch | $97,396 | 5.3% | | 1.0 - 1.5 | Default/Workout | $15,601 | 0.9% | - As of June 30, 2025, the weighted average risk rating score for debt investments was 2.9, consistent with December 31, 2024416 Debt Investments on Non-Accrual Status Four portfolio companies on non-accrual status, representing 0.9% of debt investment fair value as of June 30, 2025 - As of June 30, 2025, loans to three portfolio companies and equipment financings to one portfolio company were on non-accrual status418 - These non-accrual investments had a total cost of approximately $47.8 million and a total fair value of approximately $15.6 million418 - The fair value of non-accrual debt investments represented 0.9% of the company's debt investment portfolio as of June 30, 2025, an increase from 0.8% as of December 31, 2024418 Results of Operations Analyzes financial performance, showing increased investment income, net investment income, and unrealized appreciation Investment Income Total investment income increased due to higher stated interest, amortization, and acceleration of OID and EOT | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :-------------------------- | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Stated interest income | $51,903 | $41,827 | $10,076 | 24.09% | $102,096 | $79,667 | $22,429 | 28.15% | | Amortization of OID and EOT | $7,115 | $6,065 | $1,050 | 17.31% | $14,037 | $12,375 | $1,662 | 13.43% | | Acceleration of OID and EOT | $5,702 | $2,243 | $3,459 | 154.21% | $8,960 | $3,194 | $5,766 | 180.52% | | PIK interest income | $1,493 | $1,452 | $41 | 2.82% | $2,993 | $5,543 | $(2,550) | -45.99% | | Total investment income | $69,483 | $54,641 | $14,842 | 27.16% | $134,868 | $105,094 | $29,774 | 28.33% | - Total investment income increased by 27.16% for the three months and 28.33% for the six months ended June 30, 2025, compared to the prior year, reaching $69.5 million and $134.9 million, respectively420 - The effective yield on average investments was approximately 15.7% for the three months and 15.5% for the six months ended June 30, 2025420 Net Operating Expenses and Excise Taxes Net operating expenses and excise taxes increased due to higher interest expense, headcount, and professional fees | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Total gross expenses | $34,566 | $27,259 | $7,307 | 26.81% | $67,361 | $51,916 | $15,445 | 29.75% | | Allocated expenses to Trinity Capital Adviser, LLC | $(508) | — | $(508) | -100.00% | $(916) | — | $(916) | -100.00% | | Total net expenses | $34,058 | $27,259 | $6,799 | 24.94% | $66,445 | $51,916 | $14,529 | 27.98% | | Excise tax expense | $621 | $639 | $(18) | -2.82% | $1,238 | $1,278 | $(40) | -3.13% | | Total Operating Expenses and Excise Taxes | $34,679 | $27,898 | $6,781 | 24.31% | $67,683 | $53,194 | $14,489 | 27.24% | - Total operating expenses and excise taxes increased by 24.31% for the three months and 27.24% for the six months ended June 30, 2025, compared to the prior year421 - The increase is primarily due to higher interest expense from increased borrowings, increased employee compensation due to higher headcount and stock-based compensation, and elevated professional and general administrative fees421422423424425 Interest Expense and Other Debt Financing Costs Interest expense rose due to increased KeyBank Credit Facility borrowings, despite a stable effective interest rate | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Interest expense and other debt financing costs | $18,044 | $13,885 | $4,159 | 29.95% | $35,700 | $26,029 | $9,671 | 37.15% | | Weighted average effective interest rate | 7.4% | 7.6% | -0.2% | -2.63% | 7.5% | 7.5% | 0.0% | 0.00% | - Interest expense and other debt financing costs increased by 29.95% for the three months and 37.15% for the six months ended June 30, 2025, compared to the prior year13 - The increase was primarily due to increased borrowings under the KeyBank Credit Facility422 Employee Compensation and Benefits Employee compensation and benefits increased due to higher headcount and increased stock-based compensation | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Compensation and benefits | $12,489 | $9,944 | $2,545 | 25.60% | $23,134 | $19,808 | $3,326 | 16.79% | - Employee compensation and benefits increased by 25.60% for the three months and 16.79% for the six months ended June 30, 202513 - The increase is primarily due to a higher headcount (95 employees as of June 30, 2025, compared to 83 in 2024) and increased stock-based compensation423 Professional Fees Expenses Professional fees increased due to higher legal, accounting, and third-party valuation fees | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :-------------------------- | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Professional fees | $1,787 | $1,338 | $449 | 33.56% | $3,814 | $2,058 | $1,756 | 85.33% | - Professional fees expenses increased by 33.56% for the three months and 85.33% for the six months ended June 30, 202513 - The increase was primarily due to higher legal fees, third-party valuation fees, and other consulting fees424 General and Administrative Expenses General and administrative expenses increased due to additional office rent and related expenses | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | General and administrative | $2,246 | $2,092 | $154 | 7.36% | $4,713 | $4,021 | $692 | 17.21% | - General and administrative expenses increased by 7.36% for the three months and 17.21% for the six months ended June 30, 202513 - The increase was primarily due to additional office rent and related expenses425 Allocated Expenses to Trinity Capital Adviser, LLC Expenses allocated to Trinity Capital Adviser, LLC, reflecting its commencement of operations in June 2024 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :------------------------------- | :------------------------------- | :---------- | | Allocated expenses to Trinity Capital Adviser, LLC | $(508) | — | $(508) | $(916) | — | $(916) | - The company allocated $0.5 million and $0.9 million in expenses to Trinity Capital Adviser, LLC for the three and six months ended June 30, 2025, respectively, with no allocations in the prior year426 - As of June 30, 2025, $3.1 million was receivable from the Adviser Sub426 Excise Taxes Excise taxes remained stable at approximately $0.6 million for Q2 and $1.2 million for H1 2025 | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :-------------------------- | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Excise tax expense | $621 | $639 | $(18) | -2.82% | $1,238 | $1,278 | $(40) | -3.13% | - Excise taxes totaled approximately $0.6 million for the three months and $1.2 million for the six months ended June 30, 2025427 Net Investment Income Net investment income increased due to higher total investment income outpacing the rise in total expenses | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :-------------------------- | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Total investment income | $69,483 | $54,641 | $14,842 | 27.16% | $134,868 | $105,094 | $29,774 | 28.33% | | Total expenses (incl. excise tax) | $34,679 | $27,898 | $6,781 | 24.31% | $67,683 | $53,194 | $14,489 | 27.24% | | Net Investment Income | $34,804 | $26,743 | $8,061 | 30.14% | $67,185 | $51,900 | $15,285 | 29.45% | - Net investment income increased by 30.14% for the three months and 29.45% for the six months ended June 30, 2025, compared to the prior year13 Net Realized Gains and Losses Net realized losses increased due to gross realized losses from equipment financing sales and debt extinguishments | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Gross realized gains | $2,249 | $4,282 | $(2,033) | -47.48% | $2,623 | $8,559 | $(5,936) | -69.35% | | Gross realized losses | $(10,511) | $(10,770) | $259 | -2.40% | $(13,039) | $(13,695) | $656 | -4.79% | | Total net realized gains/(losses) on investments | $(8,262) | $(6,488) | $(1,774)| 27.34% | $(10,416) | $(5,136) | $(5,280)| 102.80% | - Net realized losses from investments increased by 27.34% for the three months and 102.80% for the six months ended June 30, 2025, compared to the prior year431 - Gross realized losses primarily stemmed from the sale of one equipment financing position and the extinguishment of one debt position during the six months ended June 30, 2025430 Net Change in Unrealized Appreciation / (Depreciation) from Investments Net change in unrealized appreciation improved significantly, driven by positive shifts in warrant, equity, and debt investments | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :------------------------------- | :------------------------------- | :---------- | | Net unrealized appreciation/(depreciation) on portfolio investments | $15,189 | $10,573 | $4,616 | $12,047 | $(1,427) | $13,474 | | Other net changes in unrealized appreciation/(depreciation) | $(317) | — | $(317) | $(317) | — | $(317) | | Total net unrealized gains/(losses) on investments | $14,872 | $10,573 | $4,299 | $11,730 | $(1,427) | $13,157 | - Net unrealized appreciation totaled approximately $15.2 million for the three months and $12.0 million for the six months ended June 30, 2025434435 - This appreciation was driven by positive changes in warrant investments ($7.3 million for 3M, $7.0 million for 6M), equity investments ($5.5 million for 3M, $6.8 million for 6M), and debt investments ($2.4 million for 3M)434435 Net Increase (Decrease) in Net Assets Resulting from Operations Net increase in net assets from operations rose significantly due to increased net investment income and unrealized appreciation | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (3M) | Change (3M %) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (6M) | Change (6M %) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | :------------------------------- | :------------------------------- | :---------- | :------------ | | Net Increase (Decrease) in Net Assets Resulting from Operations | $41,414 | $30,828 | $10,586 | 34.34% | $68,499 | $45,337 | $23,162 | 51.09% | - Net increase in net assets resulting from operations increased by 34.34% for the three months and 51.09% for the six months ended June 30, 2025, compared to the prior year13 Net Increase (Decrease) in Net Assets Resulting from Operations and Earnings Per Share Basic and diluted EPS were $0.63 and $1.07, with no dilutive effect from Option Awards or converted Convertible Notes | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Basic net increase in net assets per common share | $0.63 | $0.61 | $1.07 | $0.94 | | Diluted net increase in net assets per common share | $0.63 | $0.59 | $1.07 | $0.90 | - Basic and diluted net increase in net assets per common share were $0.63 for the three months and $1.07 for the six months ended June 30, 2025439 - For the current period, Option Awards' market-based conditions were not met, and Convertible Notes were fully converted, resulting in no dilutive effect on EPS341 Financial Condition, Liquidity and Capital Resources Discusses financial health, liquidity, and capital management, highlighting asset coverage and unfunded commitments Asset Coverage Requirements Required to maintain 150% asset coverage ratio; achieved 187.0% as of June 30, 2025, demonstrating compliance - The company is required to maintain an asset coverage ratio of at least 150% to incur borrowings or issue debt/preferred stock447 - As of June 30, 2025, the asset coverage ratio was approximately 187.0%, and the asset coverage ratio per unit was approximately $1,870447 - This ratio allows the company to potentially borrow $2 for every $1 of investor equity447 Commitments and Off-Balance Sheet Arrangements Unfunded commitments total $55.4 million, primarily to portfolio companies, with sufficient liquidity maintained - As of June 30, 2025, unfunded commitments totaled $51.6 million to six portfolio companies, $3.0 million for the JV, and $0.8 million for EPT 16448 - These commitments are often dependent on portfolio companies reaching certain milestones or are subject to customary lending provisions allowing relief from funding obligations in case of materially adverse events449 - The company maintains adequate liquidity through existing cash and KeyBank Credit Facility borrowings to fund these commitments449 Contractual Obligations Total contractual obligations amount to $1,067.96 million, mainly from KeyBank Credit Facility and Unsecured Notes | Obligation | Less than 1 year (in thousands) | 1 - 3 years (in thousands) | 4 - 5 years (in thousands) | After 5 years (in thousands) | Total (in thousands) | | :---------------------- | :------------------------------ | :------------------------- | :------------------------- | :--------------------------- | :------------------- | | KeyBank Credit Facility | — | — | $483,000 | — | $483,000 | | August 2026 Notes | — | $125,000 | — | — | $125,000 | | December 2026 Notes | — | $75,000 | — | — | $75,000 | | March 2029 Notes | — | — | $116,637 | — | $116,637 | | September 2029 Notes | — | — | $119,194 | — | $119,194 | | Series A Notes | — | $55,500 | $87,000 | — | $142,500 | | Operating Leases | $718 | $2,210 | $2,131 | $1,565 | $6,624 | | Total | $718 | $257,710 | $807,962 | $1,565 | $1,067,955 | - The largest contractual obligations are the KeyBank Credit Facility ($483.0 million) and various Unsecured Notes, with significant maturities in the 4-5 year timeframe451 Distributions Intends to pay quarterly distributions, consistently $0.51 per share, based on earnings and regulatory requirements - The company intends to pay quarterly distributions to stockholders, with amounts determined by the Board based on earnings, financial condition, RIC tax treatment, and BDC regulations452 | Declaration Date | Type | Per Share Amount | | :--------------- | :-------- | :--------------- | | March 19, 2025 | Quarterly | $0.51 | | June 18, 2025 | Quarterly | $0.51 | | December 12, 2024 | Quarterly | $0.51 | | September 18, 2024| Quarterly | $0.51 | | June 13, 2024 | Quarterly | $0.51 | | March 14, 2024 | Quarterly | $0.51 | Price Range of Common Stock Common stock traded on Nasdaq, closing at $14.95 per share, a 12.7% premium to NAV as of June 30, 2025 - The common stock began trading on Nasdaq under "TRIN" on January 29, 2021, and has since traded at prices both above and below its net asset value per share455458 - As of August 4, 2025, the closing sales price was $14.95 per share, representing a premium of approximately 12.7% to the net asset value per share of $13.27 as of June 30, 2025456 | Period (Quarter) | Net Asset Value | High Sales Price | Low Sales Price | High Premium (Discount) to NAV | Low Premium (Discount) to NAV | | :--------------- | :-------------- | :--------------- | :-------------- | :----------------------------- | :---------------------------- | | Q2 2025 | $13.27 | $15.52 | $13.53 | 16.9% | 1.9% | | Q1 2025 | $13.05 | $16.56 | $14.26 | 26.9% | 9.3% | | Q4 2024 | $13.35 | $14.87 | $13.11 | 11.4% | (1.8)% | | Q3 2024 | $13.13 | $14.74 | $13.57 | 12.3% | 3.4% | Related Party Transactions Management and employees hold company stock; directors and officers have indemnification agreements and D&O insurance - Certain members of management and employees hold shares of the company's stock459 - The company has indemnification agreements with its directors and executive officers, providing maximum indemnification permitted under Maryland law and the 1940 Act, including advancement of legal expenses460 - Directors and officers are covered by directors and officers insurance353 Recent Developments Recent developments include ATM program share issuance and $125.0 million in July 2030 Notes - From April 1, 2025, to August 4, 2025, the company issued 717,285 common shares through its Equity ATM Program, raising $10.2 million in net proceeds462 - On July 3, 2025, the company issued $125.0 million in unsecured 6.750% Notes due 2030 (July 2030 Notes) under its shelf Registration Statement on Form N-2463 Equity ATM Program Issued 717,285 common shares through Equity ATM Program, generating $10.2 million in net proceeds - From April 1, 2025, to August 4, 2025, the company issued 717,285 shares of common stock through its Equity ATM Program462 - These sales generated $10.2 million in net proceeds after deducting commissions to sales agents462 July 2030 Notes Issued $125.0 million in unsecured 6.750% Notes due 2030, with semi-annual interest payments - On July 3, 2025, the company issued $125.0 million in unsecured 6.750% Notes due 2030 (July 2030 Notes)463 - The July 2030 Notes bear interest at a fixed rate of 6.750% per year, payable semi-annually on January 3 and July 3 each year, commencing on January 3, 2026465 - These notes are redeemable, in whole or in part, at the company's option prior to June 3, 2030, at par plus a "make-whole" premium, and at par on or after June 3, 2030464 Co-Investment Exemptive Relief Order SEC granted exemptive relief for co-investment transactions with affiliates, subject to Board oversight - On July 8, 2025, the SEC granted an exemptive relief order allowing the company and its affiliates to enter into certain negotiated co-investment transactions467 - The order permits co-investments alongside affiliates, consistent with investment objectives, policies, strategies, and regulatory requirements, subject to Board oversight467 - It requires a "required majority" of eligible directors to make conclusions for certain co-investment transactions, including non-pro rata follow-on investments and dispositions467 Item 3. Quantitative and Qualitative Disclosures About Market Risk Addresses exposure to valuation, interest rate, and currency risks, and potential use of hedging instruments Valuation Risk Valuation risk arises from illiquid investments requiring Board judgment, leading to potential fair value fluctuations - Many investments lack readily available market quotations, requiring fair value determination by the Board, which involves significant judgment469 - The fair value of investments may fluctuate significantly from period to period, and estimated values could differ materially from market-determined values469 - The Board periodically assesses and manages material risks associated with fair value determination in accordance with Rule 2a-5470 Interest Rate Risk Net investment income is sensitive to interest rate changes, with 80.0% floating-rate debt investments - The company's net investment income is affected by the difference between borrowing and investment rates, making it sensitive to interest rate changes471 - As of June 30, 2025, approximately 80.0% of debt investments were floating-rate (Prime, SOFR, CORRA), and KeyBank Credit Facility borrowings also bear floating interest rates (Adjusted Term SOFR plus 2.85% to 3.25%)472 | Hypothetical Base Rate Change | Interest Income (in thousands) | Interest Expense (in thousands) | Net Income/(Loss) (in thousands) | | :---------------------------- | :----------------------------- | :------------------------------ | :------------------------------- | | Up 300 basis points | $43,886 | $14,490 | $29,396 | | Up 200 basis points | $29,257 | $9,660 | $19,597 | | Up 100 basis points | $14,503 | $4,830 | $9,673 | | Down 100 basis points | $(5,280) | $(4,830) | $(450) | | Down 200 basis points | $(9,649) | $(9,660) | $11 | | Down 300 basis points | $(11,833) | $(14,490) | $2,657 | Currency Risk Currency risk is minimal as payments from foreign portfolio companies are primarily in U.S. dollars - Investments denominated in foreign currencies are subject to risks from chan