Financial Data and Key Metrics Changes - For Q1 2025, the company generated $12,100,000 in investment income, a decrease of $2,300,000 or $0.25 per share compared to $14,400,000 in Q4 2024 [10] - Net investment income for Q1 2025 was $4,300,000 or $0.47 per share, down from $5,500,000 or $0.60 per share in the previous quarter [12] - Net asset value (NAV) as of March 31, 2025, was $173,500,000, a decrease of $5,000,000 from $178,500,000 in Q4 2024, with NAV per share dropping from $19.41 to $18.85 [12] Business Line Data and Key Metrics Changes - The company deployed approximately $17,500,000 into new investment opportunities during the quarter, with $15,700,000 in repayments and sales, resulting in a net deployment of approximately $1,800,000 [3][4] - The overall yield on new investments was 10.6%, slightly below the overall portfolio yield of 11% [8] - Six investments were on non-accrual status at the end of Q1 2025, representing 2.64% of the investment portfolio at fair value [8] Market Data and Key Metrics Changes - Approximately 88.5% of the debt securities portfolio was based on floating rates, primarily linked to SOFR, which has slightly decreased over the last few quarters [7] - The company’s gross and net leverage ratios remained flat at 1.5 times and 1.3 times, respectively [12] Company Strategy and Development Direction - The merger with Logan Ridge is expected to provide increased scale, improved liquidity, and greater operational efficiency, enhancing long-term shareholder value [4] - The company is focused on disciplined credit selection and prudent risk management amid a challenging macroeconomic environment [5] - The management team is cautious about the current market environment, anticipating that economic conditions may not improve in the near term [22] Management's Comments on Operating Environment and Future Outlook - The current macroeconomic backdrop, characterized by shifting trade dynamics and inflation, continues to create uncertainty in the market [5] - Management remains confident in the ability to generate strong risk-adjusted returns and drive long-term value for shareholders [6] - The company is planning for potential adverse economic conditions while remaining open to opportunities that may arise [25] Other Important Information - The Board of Directors approved a stable base distribution of $0.47 per share, which is anticipated to be sustainable across market cycles [5] - The company has a healthy pipeline of investments, although new deal flow has decreased significantly [22] Q&A Session Summary Question: Follow-up on Sundance interest reversal - The out-of-period impact from Sundance was approximately $450,000 [15] Question: Normalized level of investment income - The increase in PIK income was noted, with expectations for normalization in the coming quarters [17] Question: Composition of non-accruals and recovery prospects - Two main positions in non-accruals were discussed, with potential upside for Sundance and Naviga estimated at about $0.02 per share [39][41] Question: Dividend policy clarification - The base dividend is set at $0.47, with supplemental dividends dependent on incremental net investment income exceeding this base [30] Question: Risks from private equity sponsors - The company noted that middle market sponsors have been supportive, with ongoing negotiations being relatively non-controversial [31][32] Question: KCAP Freedom joint venture dividends - The company continues to receive distributions from KCAP Freedom, recognized as a return of capital rather than income [52][56] Question: Commentary on Great Lakes joint venture performance - The Great Lakes joint venture is performing better historically compared to KCAP Freedom, with a different structure leading to more straightforward valuations [59]