XML 24 R17.htm IDEA: XBRL DOCUMENT
v3.24.1.1.u2

Investments | 9 Months Ended
--- | ---
Mar. 31, 2024
Investments, Debt and Equity Securities [Abstract] |
Investments | Note 4. Investments The Company’s investments, at any time, may include securities and other financial instruments, including, without limitation, corporate and government bonds, convertible securities, collateralized loan obligations, term loans, revolvers and delayed draw facilities, trade claims, equity securities, privately negotiated securities, direct placements, working interests, warrants and investment derivatives (such as credit default swaps, recovery swaps, total return swaps, options, forward contracts, and futures) (all of the foregoing collectively referred to in these financial statements as “investments”). a. Certain Risk Factors In the ordinary course of business, the Company manages a variety of risks including market risk, liquidity risk and credit risk. The Company identifies, measures and monitors risk through various control mechanisms, including trading limits and diversifying exposures and activities across a variety of instruments, markets and counterparties. Market risk is the risk of potential adverse changes to the value of financial instruments because of changes in market conditions, including as a result of changes in the credit quality of a particular issuer, credit spreads, interest rates, and other movements and volatility in security prices or commodities. In particular, the Company may invest in issuers that are experiencing or have experienced financial or business difficulties (including difficulties resulting from the initiation or prospect of significant litigation or bankruptcy proceedings), which involves significant risks. The Company manages its exposure to market risk through the use of risk management strategies and various analytical monitoring techniques. With respect to liquidity risk, the Company’s assets may, at any time, include securities and other financial instruments or obligations that are illiquid or thinly traded, making the purchase or sale of such securities and financial instruments at desired prices or in desired quantities difficult. Furthermore, the sale of any such investments may be possible only at substantial discounts, and it may be extremely difficult to value any such investments accurately. Credit risk is the potential loss the Company may incur from a failure of an issuer to make payments according to the terms of a contract. The Company is subject to credit risk because of its strategy of investing in the debt of leveraged companies and its involvement in derivative instruments. The Company’s exposure to credit risk on its investments is limited to the fair value of the investments. With regard to derivatives, the Company attempts to limit its credit risk by considering its counterparty’s (or its guarantor’s) credit rating. b. Investments Investment purchases, sales and principal payments/paydowns are summarized below for the three and nine months ended March 31, 2024 and March 31, 2023, respectively. These purchase and sale amounts exclude derivative instruments as well as non-cash restructurings.
|  | For the three months ended March 31, |  | For the nine months ended March 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Investment purchases, at cost (including PIK interest) |  | $ | 10,224,161 |  | $ | 11,109,646 |  | $ | 46,532,123 |  | $ | 39,636,459
Investment sales and repayments |  |  | 26,658,550 |  |  | 14,917,260 |  |  | 68,788,139 |  |  | 46,998,760
The composition of the Company’s investments as of March 31, 2024, by investment type, as a percentage of the total portfolio, at amortized cost and fair value, are as follows:
Investment Type |  | Investments at Amortized Cost |  |  | Percentage of Total Portfolio |  | Investments at Fair Value |  |  | Percentage of Total Portfolio
Senior Secured First Lien Debt Investments |  | $ | 172,563,397 |  |  | 81.91 | % |  | $ | 161,098,158 |  |  | 83.82 | %
Equity, Warrants and Other Investments |  |  | 38,106,676 |  |  | 18.09 |  |  |  | 31,105,123 |  |  | 16.18 |
Total |  | $ | 210,670,073 |  |  | 100.00 | % |  | $ | 192,203,281 |  |  | 100.00 | %
The composition of the Company’s investments as of June 30, 2023, by investment type, as a percentage of the total portfolio, at amortized cost and fair value, are as follows:
Investment Type |  | Investments at Amortized Cost |  |  | Percentage of Total Portfolio |  | Investments at Fair Value |  |  | Percentage of Total Portfolio
Senior Secured First Lien Debt Investments |  | $ | 214,100,857 |  |  | 88.00 | % |  | $ | 196,370,955 |  |  | 89.21 | %
Equity, Warrants and Other Investments |  |  | 29,197,959 |  |  | 12.00 |  |  |  | 23,740,374 |  |  | 10.79 |
Total |  | $ | 243,298,816 |  |  | 100.00 | % |  | $ | 220,111,329 |  |  | 100.00 | %
The Company uses Global Industry Classification Standard (“GICS”) codes to identify the industry groupings in its portfolio. The following table shows the portfolio composition by industry grouping at fair value at March 31, 2024:
Industry Classification |  | Investments at Fair Value |  | Percentage of Total Portfolio
Trading Companies & Distributors |  | $ | 27,977,942 |  | 14.56 | %
Commercial Services & Supplies |  |  | 22,235,432 |  | 11.57 |
Professional Services |  |  | 18,999,703 |  | 9.88 |
Containers & Packaging |  |  | 14,626,631 |  | 7.61 |
Internet & Direct Marketing Retail |  |  | 8,782,859 |  | 4.57 |
IT Services |  |  | 8,624,528 |  | 4.49 |
Food Products |  |  | 8,618,750 |  | 4.48 |
Entertainment |  |  | 8,448,755 |  | 4.40 |
Household Durables |  |  | 7,865,115 |  | 4.09 |
Diversified Consumer Services |  |  | 7,213,156 |  | 3.75 |
Chemicals |  |  | 7,152,600 |  | 3.72 |
Specialty Retail |  |  | 6,713,041 |  | 3.49 |
Software |  |  | 6,514,755 |  | 3.39 |
Automotive Retail |  |  | 5,665,872 |  | 2.95 |
Health Care Providers & Services |  |  | 5,400,000 |  | 2.81 |
Automobile Components |  |  | 5,255,262 |  | 2.73 |
Consumer Staples Distribution & Retail |  |  | 4,970,509 |  | 2.59 |
Consumer Services |  |  | 4,911,518 |  | 2.56 |
Construction & Engineering |  |  | 3,830,758 |  | 1.99 |
Hotels, Restaurants, and Leisure |  |  | 2,955,000 |  | 1.54 |
Paper Packaging |  |  | 2,925,057 |  | 1.52 |
Electronic Equipment, Instruments & Components |  |  | 2,516,038 |  | 1.31 |
Total |  | $ | 192,203,281 |  | 100.00 | %
The following table shows the portfolio composition by industry grouping at fair value at June 30, 2023:
Industry Classification |  | Investments at Fair Value |  | Percentage of Total Portfolio
Trading Companies & Distributors |  | $ | 35,176,879 |  | 15.98 | %
Professional Services |  |  | 28,238,167 |  | 12.83 |
IT Services |  |  | 23,576,450 |  | 10.71 |
Commercial Services & Supplies |  |  | 14,329,460 |  | 6.51 |
Software |  |  | 13,772,487 |  | 6.26 |
Containers & Packaging |  |  | 12,958,772 |  | 5.89 |
Machinery |  |  | 9,602,806 |  | 4.36 |
Internet & Direct Marketing Retail |  |  | 8,969,729 |  | 4.08 |
Entertainment |  |  | 7,640,000 |  | 3.47 |
Household Durables |  |  | 7,610,242 |  | 3.46 |
Chemicals |  |  | 7,568,617 |  | 3.44 |
Diversified Consumer Services |  |  | 7,268,500 |  | 3.30 |
Automobile Components |  |  | 7,261,275 |  | 3.30 |
Hotels, Restaurants, and Leisure |  |  | 6,283,541 |  | 2.85 |
Consumer Staples Distribution & Retail |  |  | 6,061,396 |  | 2.75 |
Specialty Retail |  |  | 5,148,000 |  | 2.34 |
Building Products |  |  | 4,511,719 |  | 2.05 |
Food Products |  |  | 4,288,750 |  | 1.95 |
Automotive Retail |  |  | 3,878,905 |  | 1.76 |
Electronic Equipment, Instruments & Components |  |  | 3,265,598 |  | 1.48 |
Energy Equipment & Services |  |  | 2,700,036 |  | 1.23 |
Total |  | $ | 220,111,329 |  | 100.00 | %
The following table shows the portfolio composition by geographic grouping at fair value at March 31, 2024:
Geographic Region |  | Investments at Fair Value |  | Percentage of Total Portfolio
U.S. Northeast |  | $ | 75,778,770 |  | 39.43 | %
U.S. West |  |  | 56,624,278 |  | 29.46 |
U.S. Southeast |  |  | 23,727,611 |  | 12.35 |
U.S. Midwest |  |  | 21,331,349 |  | 11.10 |
U.S. Mid-Atlantic |  |  | 6,670,095 |  | 3.47 |
International |  |  | 4,756,178 |  | 2.47 |
U.S. Southwest |  |  | 3,315,000 |  | 1.72 |
Total |  | $ | 192,203,281 |  | 100.00 | %
The following table shows the portfolio composition by geographic grouping at fair value at June 30, 2023:
Geographic Region |  | Investments at Fair Value |  | Percentage of Total Portfolio
U.S. Northeast |  | $ | 94,658,227 |  | 43.00 | %
U.S. West |  |  | 44,911,266 |  | 20.40 |
U.S. Midwest |  |  | 26,602,440 |  | 12.09 |
U.S. Southeast |  |  | 20,803,349 |  | 9.45 |
U.S. Mid-Atlantic |  |  | 17,721,607 |  | 8.05 |
U.S. Southwest |  |  | 10,367,607 |  | 4.71 |
International |  |  | 5,046,833 |  | 2.30 |
Total |  | $ | 220,111,329 |  | 100.00 | %
The Company’s primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing directly in debt and related equity of privately held middle-market companies to help these companies fund acquisitions, growth or refinancing. During the nine months ended March 31, 2024, the Company made investments in new and existing portfolio companies of approximately $42.5 million, to which it was not previously contractually committed to provide financial support. During the nine months ended March 31, 2024, the Company made investments of approximately $2.2 million in companies to which it was previously committed to provide financial support through the terms of the revolvers and delayed draw term loans. The details of the Company’s investments have been disclosed on the Unaudited Consolidated Schedule of Investments. c. Derivatives Derivative contracts include total return swaps and embedded derivatives in the Company’s borrowings. The Company may enter into derivative contracts as part of its investment strategies. On October 28, 2020, the SEC adopted a rule that modifies the conditions by which BDCs can enter into, or “cover” open positions pursuant to, certain derivatives contracts that involve potential future payment obligations (the “Derivatives Rule”). The Derivatives Rule requires a BDC entering into a derivatives contract to develop and implement a derivatives risk management program, to comply with an outer limit on asset coverage ratio based on the VaR (“value-at-risk”) test, and to report its derivative activity to its board of directors on a regular basis. The Derivatives Rule also contains exceptions to these conditions for any fund that limits its exposure to derivatives positions to 10 percent of its net assets. At March 31, 2024 and June 30, 2023, the Company held no derivative contracts. d. Fair Value Measurements ASC 820 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a framework for measuring fair value and a valuation hierarchy that prioritizes the inputs used in the valuation of an asset or liability based upon their transparency. The valuation hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company’s assets and liabilities measured at fair value have been classified in the following three categories: Level 1 – valuation is based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 – valuation is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, such as (a) quoted prices for similar assets or liabilities in active markets; (b) quoted prices for identical or similar assets or liabilities in markets that are not active, that is, markets in which there are few transactions for the asset or liability, the prices are not current, or price quotations vary substantially either over time or among market makers, or in which little information is released publicly; (c) inputs other than quoted prices that are observable for the asset or liability; or (d) inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 – valuation is based on unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is, an exit price from the perspective of a market participant that holds the asset or owes the liability. Therefore, unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Unobservable inputs are developed based on the best information available under the circumstances, which might include the Company’s own data. The Company’s own data used to develop unobservable inputs is adjusted if information is reasonably available without undue cost and effort that indicates that market participants would use different assumptions. The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of the market and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3. Estimates of fair value for cash and restricted cash are measured using observable, quoted market prices, or Level 1 inputs. All other fair value significant estimates are measured using unobservable inputs, or Level 3 inputs. The following table summarizes the classifications within the fair value hierarchy of the Company’s assets measured at fair value as of March 31, 2024:
|  | Level 1 |  | Level 2 |  |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |  |  |  |  |  |  |
Investments |  |  |  |  |  |  |  |  |  |  |  |  |
Senior Secured First Lien Debt Investments |  | $ | — |  | $ | — |  |  | $ | 161,098,158 |  | $ | 161,098,158
Equity, Warrants and Other Investments |  |  | — |  |  | — |  |  |  | 31,105,123 |  |  | 31,105,123
Total Investments |  | $ | — |  | $ | — |  |  | $ | 192,203,281 |  | $ | 192,203,281
The following table summarizes the classifications within the fair value hierarchy of the Company’s assets measured at fair value as of June 30, 2023:
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |  |  |  |  |  |
Investments |  |  |  |  |  |  |  |  |  |  |  |
Senior Secured First Lien Debt Investments |  | $ | — |  | $ | — |  | $ | 196,370,955 |  | $ | 196,370,955
Equity, Warrants and Other Investments |  |  | — |  |  | — |  |  | 23,740,374 |  |  | 23,740,374
Total Investments |  | $ | — |  | $ | — |  | $ | 220,111,329 |  | $ | 220,111,329
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended March 31, 2024:
|  | Senior Secured First Lien Debt Investments |  | Senior Secured Second Lien Debt Investments |  | Unsecured Debt Investments |  | Equity, Warrants and Other Investments |  | Total Investments
Fair value at June 30, 2023 |  | $ | 196,370,955 |  | $ | — |  | $ | — |  | $ | 23,740,374 |  | $ | 220,111,329
Purchases (including PIK interest) |  |  | 41,923,318 |  |  | — |  |  | — |  |  | 4,608,805 |  |  | 46,532,123
Sales and repayments |  |  | (68,788,139) |  |  | — |  |  | — |  |  | — |  |  | (68,788,139)
Amortization |  |  | 1,770,280 |  |  | — |  |  | — |  |  | — |  |  | 1,770,280
Net realized gains (losses) |  |  | (12,080,895) |  |  | — |  |  | — |  |  | (62,112) |  |  | (12,143,007)
Transfers in |  |  | — |  |  | — |  |  | — |  |  | 4,362,023 |  |  | 4,362,023
Transfers out |  |  | (4,362,023) |  |  | — |  |  | — |  |  | — |  |  | (4,362,023)
Net change in unrealized appreciation (depreciation) |  |  | 6,264,662 |  |  | — |  |  | — |  |  | (1,543,967) |  |  | 4,720,695
Fair value at March 31, 2024 |  | $ | 161,098,158 |  | $ | — |  | $ | — |  | $ | 31,105,123 |  | $ | 192,203,281
Change in unrealized appreciation (depreciation) relating to assets still held as of March 31, 2024 |  | $ | (2,413,463) |  | $ | — |  | $ | — |  | $ | (1,606,082) |  | $ | (4,019,545)
The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended March 31, 2023:
|  | Senior Secured First Lien Debt Investments |  | Senior Secured Second Lien Debt Investments |  | Unsecured Debt Investments |  | Equity, Warrants and Other Investments |  | Total Investments
Fair value at June 30, 2022 |  | $ | 214,858,036 |  | $ | — |  | $ | — |  | $ | 18,825,950 |  | $ | 233,683,986
Purchases (including PIK interest) |  |  | 38,403,669 |  |  | — |  |  | — |  |  | 1,232,790 |  |  | 39,636,459
Sales and repayments |  |  | (46,998,760) |  |  | — |  |  | — |  |  | — |  |  | (46,998,760)
Amortization |  |  | 1,056,482 |  |  | — |  |  | — |  |  | — |  |  | 1,056,482
Net realized gains (losses) |  |  | (9,515,487) |  |  | (17,374,608) |  |  | — |  |  | — |  |  | (26,890,095)
Transfers in |  |  | — |  |  | — |  |  | — |  |  | 1,708,942 |  |  | 1,708,942
Transfers out |  |  | (1,708,942) |  |  | — |  |  | — |  |  | — |  |  | (1,708,942)
Net change in unrealized (depreciation) appreciation |  |  | 4,328,279 |  |  | 17,374,608 |  |  | — |  |  | (875,530) |  |  | 20,827,357
Fair value at March 31, 2023 |  | $ | 200,423,277 |  | $ | — |  | $ | — |  | $ | 20,892,152 |  | $ | 221,315,429
Change in unrealized appreciation (depreciation) relating to assets still held as of March 31, 2023 |  | $ | (4,639,143) |  | $ | — |  | $ | — |  | $ | (1,290,076) |  | $ | (5,929,219)
Transfers into Level 3 during or at the end of the reporting period are reported under Level 1 or Level 2 as of the beginning of the period. Transfers out of Level 3 during or at the end of the reporting period are reported under Level 3 as of the beginning of the period. Changes in unrealized gains (losses) relating to Level 3 instruments are included in net change in unrealized (depreciation) appreciation on investments and derivatives on the Unaudited Consolidated Statements of Operations. During the three and nine months ended March 31, 2024 and March 31, 2023, the Company did no t transfer any investments among Levels 1, 2 and 3. The following tables provide quantitative information regarding the Company’s Level 3 fair value measurements as of March 31, 2024 and June 30, 2023. This information presents the significant unobservable inputs that were used in the valuation of each type of investment. These inputs are not representative of the inputs that could have been used in the valuation of any one investment. For example, the highest market yield presented in the table for senior secured notes is appropriate for valuing a specific investment but may not be appropriate for valuing any other investment. Accordingly, the ranges of inputs presented below do not represent uncertainty in, or possible ranges of, fair value measurements of the Company’s Level 3 investments. In addition to the techniques and inputs noted in the tables below, according to our valuation policy we may also use other valuation techniques and methodologies when determining our fair value measurements. The below tables are not intended to be all-inclusive, but rather provide information on the significant unobservable inputs as they relate to the Company’s determination of fair values.
|  | Fair Value as of March 31, 2024 |  | Valuation Methodology |  | Unobservable Input(s) |  | Weighted Average |  | Range
Senior Secured First Lien Debt Investments |  | $ | 148,050,513 |  | Income Approach |  | Market Yields |  | 13.2% |  |  | 9.8%-19.9%
Senior Secured First Lien Debt Investments |  |  | 5,527,539 |  | Market Comparable Approach |  | EBITDA Multiple |  | 7.7 x |  |  | 6.1 x-8.9 x
Senior Secured First Lien Debt Investments |  |  | 1,854,081 |  | Market Comparable Approach |  | Revenue Multiple |  | 0.36 x |  |  | 0.36 x
Senior Secured First Lien Debt Investments |  |  | — |  | Recent Transaction |  | Recent Transaction |  | N/A |  |  | N/A
Senior Secured First Lien Debt Investments |  |  | 5,666,025 |  | Recovery Analysis |  | Recovery Amount |  | N/A |  |  | N/A
Equity, Warrants, and Other Investments |  |  | 5,928,121 |  | Income Approach |  | Market Yields |  | 16.3% |  |  | 16.3%
Equity, Warrants, and Other Investments |  |  | 25,177,002 |  | Market Comparable Approach |  | EBITDA multiple |  | 10.0 x |  |  | 5.0 x-19.9 x
Equity, Warrants, and Other Investments |  |  | — |  | Recent Transaction |  | Recent Transaction |  | N/A |  |  | N/A
|  | Fair Value as of June 30, 2023 |  | Valuation Methodology |  | Unobservable Input(s) |  | Weighted Average |  |  | Range
Senior Secured First Lien Debt Investments |  | $ | 161,776,983 |  | Income Approach |  | Market Yields |  | 13.3% |  |  | 10.1% - 18.0%
Senior Secured First Lien Debt Investments |  |  | 13,895,260 |  | Market Comparable Approach |  | EBITDA Multiple |  | 17.3 x |  |  | 5.7 x – 21.2 x
Senior Secured First Lien Debt Investments |  |  | 5,272,355 |  | Market Comparable Approach |  | Revenue Multiple |  | 0.3 x |  |  | 0.30 x – 0.38 x
Senior Secured First Lien Debt Investments |  |  | 15,209,280 |  | Recent Transaction |  | Recent Transaction |  | N/A |  |  | N/A
Senior Secured First Lien Debt Investments |  |  | 217,077 |  | Recovery Analysis |  | Recovery Amount |  | N/A |  |  | N/A
Equity, Warrants and Other Investments |  |  | 4,824,752 |  | Income Approach |  | Market Yields |  | 18.0% |  |  | 18.0%
Equity, Warrants and Other Investments |  |  | 18,915,622 |  | Market Comparable Approach |  | EBITDA multiple |  | 8.7 x |  |  | 5.7 x – 24.2 x
Equity, Warrants and Other Investments |  |  | — |  | Market Comparable Approach |  | Revenue Multiple |  | 0.3 x |  |  | 0.3 x
Fair value measurements categorized within Level 3 are sensitive to changes in the assumptions or methodology used to determine fair value and such changes could result in a significant increase or decrease in the fair value. Significant increases in illiquidity discounts, PIK discounts and market yields would result in significantly lower fair value measurements.

X
- Definition The entire disclosure for investment. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Topic 320 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//320/tableOfContent Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Name Accounting Standards Codification -Topic 321 -Publisher FASB -URI https://asc.fasb.org//321/tableOfContent Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef -Name Accounting Standards Codification -Topic 325 -Publisher FASB -URI https://asc.fasb.org//325/tableOfContent + Details
Name: | us-gaap_InvestmentTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsDebtAndEquitySecuritiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration