In accordance with ASC 820, we determine the fair value of our investments to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between willing market participants on the measurement date. This fair value definition focuses on exit price in the principal, or most advantageous, market and prioritizes, within a measurement of fair value, the use of market-based inputs over entity-specific inputs. ASC 820 also establishes the following three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of a financial instrument as of the measurement date.

•Level 2 — inputs to the valuation methodology include quoted prices for similar financial instruments in active or inactive markets, and inputs that are observable for the financial instrument, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are those in markets for which there are few transactions, the prices are not current, little public information exists, or instances where prices vary substantially over time or among brokered market makers; and

•Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. Unobservable inputs are those inputs that reflect assumptions that market participants would use when pricing the financial instrument and can include the Valuation Team’s assumptions based upon the best available information.

When a determination is made to classify our investments within Level 3 of the valuation hierarchy, such determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable, or Level 3, inputs, observable inputs (or components that are actively quoted and can be validated to external sources). The level in the fair value hierarchy within which the fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement.

We transfer investments in and out of Level 1, 2 and 3 of the valuation hierarchy as of the beginning balance sheet date, based on changes in the use of observable and unobservable inputs utilized to perform the valuation for the period. There were no transfers in or out of Level 1, 2 and 3 during the six months ended September 30, 2022 and 2021, respectively.


			Fair Value Measurements

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
As of September 30, 2022:
Secured first lien debt	$	420,907	$	—	$	—		$	420,907
Secured second lien debt	76,751		—		—			76,751
Preferred equity	229,430		—		—			229,430
Common equity/equivalents	10,847		—		58		(A)	10,789
Total Investments as of September 30, 2022	$	737,935	$	—	$	58		$	737,877


			Fair Value Measurements

	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
As of March 31, 2022:
Secured first lien debt	$	425,087	$	—	$	—		$	425,087
Secured second lien debt	67,958		—		—			67,958
Preferred equity	217,599		—		—			217,599
Common equity/equivalents	3,752		—		74		(A)	3,678
Total Investments as of March 31, 2022	$	714,396	$	—	$	74		$	714,322


	Total Recurring Fair Value Measurements Reported in Consolidated Statements of Assets and Liabilities Valued Using Level 3 Inputs
	September 30, 2022		March 31, 2022
Non-Control/Non-Affiliate Investments
Secured first lien debt	$	273,715	$	233,673
Secured second lien debt	53,109		66,917
Preferred equity	160,290		139,927
Common equity/equivalents(A)	1,827		1,533
Total Non-Control/Non-Affiliate Investments	488,941		442,050

Affiliate Investments
Secured first lien debt	147,192		191,414
Secured second lien debt	23,642		1,041
Preferred equity	69,140		77,672
Common equity/equivalents	8,249		1,432
Total Affiliate Investments	248,223		271,559

Control Investments
Secured first lien debt	—		—
Secured second lien debt	—		—
Preferred equity	—		—
Common equity/equivalents	713		713
Total Control Investments	713		713

Total investments at fair value using Level 3 inputs	$	737,877	$	714,322

In accordance with ASC 820, the following table provides quantitative information about our investments valued using Level 3 fair value measurements as of September 30, 2022 and March 31, 2022. The table below is not intended to be all-inclusive, but rather provides information on the significant Level 3 inputs as they relate to our fair value measurements. The weighted-average calculations in the table below are based on the principal balances for all debt-related calculations and on the cost basis for all equity-related calculations for the particular input.

Quantitative Information about Level 3 Fair Value Measurements

Fair Value as of

Valuation
Technique/
Methodology

Unobservable
Input

Range / Weighted-Average as of

September 30,
2022

March 31,
2022

September 30,
2022

March 31,
2022

Secured first
lien debt

415,473

411,023

TEV

EBITDA multiple

3.2x – 8.0x /

6.4x

3.4x – 9.3x /

7.0x

EBITDA

$3,604–$17,320 /

$10,537

$3,990 - $13,707/$8,221

Revenue multiple

0.3x –0.6x /

0.3x

0.7x – 0.7x /

0.7x

Revenue

$13,188 – $99,672 /

$80,503

$14,072 – $14,072/$14,072

5,434

14,064

Yield Analysis

Discount Rate

14.5% – 17.5% / 16.2%

11.3% – 15.2% / 14.6%

Secured second
lien debt

62,252

39,637

TEV

EBITDA multiple

5.1x – 6.4x /

5.7x

5.6x – 6.8x /

6.0x

EBITDA

$5,302 – $5,616 /

$5,489

$3,953 – $5,488 / $4,959

Revenue multiple

0.5x –0.5x /

0.5x

0.7x – 0.7x

/0.7x

Revenue

$13,188 – $13,188 /

$13,188

$14,072 – $14,072 / $14,072

14,499

28,321

Yield Analysis

Discount Rate

11.2% –12.1% /

12.0%

10.0% – 12.2% / 11.6%

Preferred
equity

229,430

217,599

TEV

EBITDA multiple

3.2x – 8.0x /

6.1x

3.4x – 9.3x /

6.8x

EBITDA

$3,604 – $17,320 /

$8,714

$1,210 – $13,707 / $6,926

Revenue multiple

0.3x – 0.6x /

0.4x

0.7x – 0.7x /

0.7x

Revenue

$13,188 – $99,672 /

$50,473

$14,072 – $14,072 / $14,072

Common equity/

equivalents(A)

10,789

3,678

TEV

EBITDA multiple

4.4x – 7.5x /

5.2x

4.8x – 8.4x /

5.8x

EBITDA

$1,065 – $22,002 /

$6,562

$829 – $13,707 / $5,709

Revenue multiple

0.5x – 0.5x /

0.5x

0.7x – 0.7x /

0.7x

Revenue

$13,188 – $13,188 /

$13,188

$14,072 – $14,072 / $14,072

Total

737,877

714,322

Fair value measurements can be sensitive to changes in one or more of the valuation inputs. Changes in discount rates, EBITDA or EBITDA multiples (or revenue or revenue multiples), each in isolation, may change the fair value of certain of our investments. Generally, an increase/(decrease) in discount rates or a (decrease)/increase in EBITDA or EBITDA multiples (or revenue or revenue multiples) may result in a (decrease)/increase in the fair value of certain of our investments.


	Secured First Lien Debt		Secured Second Lien Debt		Preferred Equity		Common Equity/ Equivalents		Total
Three Months ended September 30, 2022:
Fair value as of June 30, 2022	$	376,752	$	67,936	$	238,665	$	6,072	$	689,425
Total gain (loss):
Net realized gain (loss)(A)	—		—		2,218		—		2,218
Net unrealized appreciation (depreciation)(B)	(11,677)		(4,507)		845		4,717		(10,622)
Reversal of previously recorded (appreciation) depreciation upon realization(B)	—		—		—		—		—
New investments, repayments and settlements(C):
Issuances / originations	70,250		4,000		—		—		74,250
Settlements / repayments	—		(5,096)		—		—		(5,096)
Sales(D)	—		—		(12,298)		—		(12,298)
Transfers(E)	(14,418)		14,418		—		—		—
Fair value as of September 30, 2022	$	420,907	$	76,751	$	229,430	$	10,789	$	737,877


	Secured First Lien Debt		Secured Second Lien Debt		Preferred Equity		Common Equity/ Equivalents		Total
Six Months ended September 30, 2022:
Fair value as of March 31, 2022	$	425,087	$	67,958	$	217,599	$	3,678	$	714,322
Total gain (loss):
Net realized gain (loss)(A)	—		—		6,946		—		6,946
Net unrealized appreciation (depreciation)(B)	(18,812)		(4,534)		18,061		7,111		1,826
Reversal of previously recorded (appreciation) depreciation upon realization(B)	—		—		(12,250)		—		(12,250)
New investments, repayments and settlements(C):
Issuances / originations	77,050		4,005		21,000		—		102,055
Settlements / repayments	(48,000)		(5,096)		—		—		(53,096)
Sales(D)	—		—		(21,926)		—		(21,926)
Transfers(E)	(14,418)		14,418		—		—		—
Fair value as of September 30, 2022	$	420,907	$	76,751	$	229,430	$	10,789	$	737,877


	Secured First Lien Debt		Secured Second Lien Debt		Preferred Equity		Common Equity/ Equivalents		Total
Three Months ended September 30, 2021:
Fair value as of June 30, 2021	$	416,973	$	57,044	$	202,465	$	2,021	$	678,503
Total gain (loss):
Net realized gain (loss)(A)	—		—		—		—		—
Net unrealized appreciation (depreciation)(B)	(2,618)		4,098		36,500		(10,463)		27,517
Reversal of previously recorded (appreciation) depreciation upon realization(B)	—		—		—		—		—
New investments, repayments and settlements(C):
Issuances / originations	24,400		5		6,000		—		30,405
Settlements / repayments	—		—		—		—		—
Sales	—		—		—		—		—
Transfers(E)	(7,342)		7,342		(16,034)		16,034		—
Fair value as of September 30, 2021	$	431,413	$	68,489	$	228,931	$	7,592	$	736,425


	Secured First Lien Debt		Secured Second Lien Debt		Preferred Equity		Common Equity/ Equivalents		Total
Six Months ended September 30, 2021:
Fair value as of March 31, 2021	$	368,688	$	102,897	$	159,478	$	2,671	$	633,734
Total gain (loss):
Net realized gain (loss)(A)	—		—		1,786		—		1,786
Net unrealized appreciation (depreciation)(B)	3,232		4,126		79,356		(11,113)		75,601
Reversal of previously recorded (appreciation) depreciation upon realization(B)	60		—		(629)		—		(569)
New investments, repayments and settlements(C):
Issuances / originations	28,450		6,509		12,600		—		47,559
Settlements / repayments	(14,060)		—		—		—		(14,060)
Sales	—		—		(7,626)		—		(7,626)
Transfers(E)	45,043		(45,043)		(16,034)		16,034		—
Fair value as of September 30, 2021	$	431,413	$	68,489	$	228,931	$	7,592	$	736,425

(C)Includes increases in the cost basis of investments resulting from new portfolio investments, the amortization of discounts and other non-cash disbursements to portfolio companies, as well as decreases in the cost basis of investments resulting from principal repayments or sales, the amortization of premiums and acquisition costs, and other cost-basis adjustments.

(E)2022: Transfers represent (1) secured second lien debt of Ginsey with a total cost basis and fair value of $12.2 million, which was converted into secured first lien debt during the three months ended September 30, 2022 and (2) secured first lien debt of PSI Molded Plastics, Inc. with a total cost basis and fair value of $26.6 million, which was converted into secured second lien debt during the three months ended September 30, 2022.

2021: Transfers represent (1) secured second lien debt of J.R. Hobbs with a total cost basis and fair value of $52.5 million and $52.4 million, respectively, which was converted into secured first lien debt during the three months ended June 30, 2021, (2) secured first lien debt of D.P.M.S., Inc. with a total cost basis and fair value of $12.3 million and $7.3 million, respectively, which was converted into secured second lien debt of Galaxy Technologies Holdings, Inc. (“Galaxy Technologies Holdings”) during the three months ended September 30, 2021 and (3) preferred equity of Galaxy Technologies, Inc. with a total cost basis and fair value of $11.5 million and $16.0 million, respectively, which was converted into common equity of Galaxy Technologies Holdings during the three months ended September 30, 2021.

•In June 2022, we sold our investment in Bassett Creek Services, Inc. ("Bassett Creek"), which resulted in success fee income of $3.0 million and a realized gain on preferred equity of $4.7 million. In connection with the sale, we received net cash proceeds of $57.6 million, including the repayment of our debt investment of $48.0 million at par.

•In June 2022, we invested $21.0 million in a new portfolio company, Dema/Mai Holdings, Inc. (“Dema/Mai”), in the form of preferred equity to acquire Mai Mechanical, LLC, a leading provider of plumbing and mechanical services focused on multi-family residential construction headquartered in Denver, Colorado, from J.R. Hobbs, an existing portfolio company. In July 2022, we invested an additional $39.1 million in the form of secured first lien debt in Dema/Mai to fund the acquisition of Dema Plumbing, a plumbing and mechanical systems installation and service provider to single-family residential homebuilders.

•In July 2022, we recapitalized our investment in Horizon and invested an additional $30.0 million in the form of secured first lien debt. In connection with this investment, we received equity proceeds of $12.3 million, which were recognized as a $10.1 million return of preferred equity cost basis and a realized gain of $2.2 million, as well as dividend income of $3.1 million and success fee income of $1.7 million.

•In August 2022, in conjunction with a refinancing at Ginsey, our outstanding $13.3 million of secured second lien debt was reduced to $12.2 million and converted to secured first lien debt. The reduction in our cost basis was the result of a $5.1 million payment made by Ginsey to extinguish our secured borrowing liability, which was partially offset by an additional investment in Ginsey of $4.0 million. Refer to Note 5 - Borrowings for discussion of the secured borrowing liability.

As of September 30, 2022, our investment portfolio consisted of investments in 26 portfolio companies located in 18 states across 15 different industries with an aggregate fair value of $737.9 million. Our investments in Horizon, Old World Christmas, Inc., Dema/Mai, Counsel Press, Inc., and Nocturne represented our five largest portfolio investments at fair value and collectively comprised $315.7 million, or 42.8%, of our total investment portfolio at fair value as of September 30, 2022.


	September 30, 2022								March 31, 2022
	Cost				Fair Value				Cost				Fair Value
Secured first lien debt	$	444,089	63.2	%	$	420,907	57.0	%	$	429,457	64.2	%	$	425,087	59.5	%
Secured second lien debt	94,474		13.4	%	76,751		10.4	%	81,147		12.1	%	67,958		9.5	%
Total debt	538,563		76.6	%	497,658		67.4	%	510,604		76.3	%	493,045		69.0	%

Preferred equity	149,099		21.2	%	229,430		31.1	%	143,079		21.4	%	217,599		30.5	%
Common equity/equivalents	15,556		2.2	%	10,847		1.5	%	15,565		2.3	%	3,752		0.5	%
Total equity/equivalents	164,655		23.4	%	240,277		32.6	%	158,644		23.7	%	221,351		31.0	%
Total investments	$	703,218	100.0	%	$	737,935	100.0	%	$	669,248	100.0	%	$	714,396	100.0	%


	September 30, 2022				March 31, 2022
	Fair Value		Percentage of Total Investments		Fair Value		Percentage of Total Investments
Diversified/Conglomerate Services	$	267,913	36.3	%	$	307,403	43.0	%
Home and Office Furnishings, Housewares, and Durable Consumer Products	133,359		18.1	%	125,440		17.6	%
Buildings and Real Estate	60,050		8.1	%	—		—	%
Hotels, Motels, Inns, and Gaming	53,090		7.2	%	37,923		5.3	%
Leisure, Amusement, Motion Pictures, and Entertainment	45,169		6.1	%	46,514		6.5	%
Healthcare, Education, and Childcare	38,937		5.3	%	39,252		5.5	%
Aerospace and Defense	23,746		3.2	%	25,296		3.5	%
Chemicals, Plastics, and Rubber	23,642		3.2	%	26,618		3.7	%
Mining, Steel, Iron and Non-Precious Metals	23,368		3.2	%	24,250		3.4	%
Telecommunications	23,200		3.1	%	32,467		4.6	%
Machinery (Non-Agriculture, Non-Construction, and Non-Electronic)	17,407		2.4	%	13,823		1.9	%
Cargo Transport	14,827		2.0	%	14,533		2.0	%
Diversified/Conglomerate Manufacturing	9,259		1.3	%	14,064		2.0	%
Other < 2.0%	3,968		0.5	%	6,813		1.0	%
Total investments	$	737,935	100.0	%	$	714,396	100.0	%


	September 30, 2022				March 31, 2022
Location	Fair Value		Percentage of Total Investments		Fair Value		Percentage of Total Investments
West	$	236,774	32.1	%	$	158,607	22.2	%
Northeast	218,107		29.6	%	194,100		27.2	%
South	172,784		23.4	%	188,978		26.4	%
Midwest	110,270		14.9	%	172,711		24.2	%
Total investments	$	737,935	100.0	%	$	714,396	100.0	%


		Amount
For the remaining six months ending March 31, 2023		$	87,050
For the fiscal years ending March 31:
	2024	54,268
	2025	85,834
	2026	136,369
	2027	135,295
	Thereafter	39,750
	Total contractual repayments	$	538,566
	Adjustments to cost basis of debt investments	(3)
	Investments in equity securities	164,655
	Total cost basis of investments held as of September 30, 2022:	$	703,218

Receivables from portfolio companies represent non-recurring costs that we incurred on behalf of portfolio companies. Such receivables, net of any allowance for uncollectible receivables, are included in Other assets, net on our accompanying Consolidated Statements of Assets and Liabilities. We generally maintain an allowance for uncollectible receivables from portfolio companies when the receivable balance becomes 90 days or more past due or if it is determined, based upon management’s judgment, that the portfolio company is unable to pay its obligations. We write-off accounts receivable when we have exhausted collection efforts and have deemed the receivables uncollectible. As of September 30, 2022 and March 31, 2022, we had gross receivables from portfolio companies of $2.1 million and $1.7 million, respectively. As of September 30, 2022 and March 31, 2022, the allowance for uncollectible receivables was $1.4 million and $1.3 million, respectively.