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What changed in Investcorp Credit Management BDC, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Investcorp Credit Management BDC, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+400 added−329 removedSource: 10-K (2026-03-31) vs 10-K (2024-09-25)

Top changes in Investcorp Credit Management BDC, Inc.'s 2025 10-K

400 paragraphs added · 329 removed · 272 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

89 edited+19 added−20 removed236 unchanged
Biggest changeAlternative 2: Assumptions Investment income (including interest, dividends, fees, etc.) = 3.5% Hurdle rate (1) = 2.0% Management fee (2) = 0.4375% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.2% Pre-incentive fee net investment income (investment income – (management fee + other expenses) = 2.8625% Cumulative incentive compensation accrued and/or paid for preceding 11 calendar quarters = $9,000,000 20.0% of cumulative net increase in net assets resulting from operations over current and preceding 11 calendar quarters = $10,000,000 Because our pre-incentive fee net investment income exceeds the hurdle rate of 2.0% and because 20.0% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative income and capital gains incentive fees accrued and/or paid for the preceding 11 calendar quarters, an incentive fee would be payable, as shown in Alternative 3 of Example 1 above.
Biggest changeExample 2: Income Portion of Incentive Fee with Total Return Requirement Calculation: Alternative 1: Assumptions Investment income (including interest, dividends, fees, etc.) = 3.5% Hurdle rate (1) = 2.0% Management fee (2) = 0.4375% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.2% Pre-incentive fee net investment income (investment income – (management fee + other expenses) = 2.8625% Cumulative incentive compensation accrued and/or paid for preceding 11 calendar quarters = $9,000,000 20.0% of cumulative net increase in net assets resulting from operations over current and preceding 11 calendar quarters = $8,000,000 Although our pre-incentive fee net investment income exceeds the hurdle rate of 2.0% (as shown in Alternative 3 of Example 1 above), no incentive fee is payable because 20.0% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters did not exceed the cumulative income and capital gains incentive fees accrued and/or paid for the preceding 11 calendar quarters. 15 Alternative 2: Assumptions Investment income (including interest, dividends, fees, etc.) = 3.5% Hurdle rate (1) = 2.0% Management fee (2) = 0.4375% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.2% Pre-incentive fee net investment income (investment income – (management fee + other expenses) = 2.8625% Cumulative incentive compensation accrued and/or paid for preceding 11 calendar quarters = $9,000,000 20.0% of cumulative net increase in net assets resulting from operations over current and preceding 11 calendar quarters = $10,000,000 Because our pre-incentive fee net investment income exceeds the hurdle rate of 2.0% and because 20.0% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative income and capital gains incentive fees accrued and/or paid for the preceding 11 calendar quarters, an incentive fee would be payable, as shown in Alternative 3 of Example 1 above.
(1) Represents 8.0% annualized hurdle rate. (2) Represents 1.75% annualized base management fee. (3) Excludes organizational and offering expenses.
(1) Represents 8.0% annualized hurdle rate. (2) Represents 1.75% annualized base management fee. (3) Excludes organizational and offering expenses.
Example 3: Capital Gains Portion of Incentive Fee(*): Alternative 1: Assumptions Year 1: $2.0 million investment made in Company A (“Investment A”), and $3.0 million investment made in Company B (“Investment B”) Year 2: Investment A sold for $5.0 million and fair market value (“FMV”) of Investment B determined to be $3.5 million Year 3: FMV of Investment B determined to be $2.0 million Year 4: Investment B sold for $3.25 million 16 The capital gains portion of the incentive fee would be: Year 1: None Year 2: Capital gains incentive fee of $0.6 million — ($3.0 million realized capital gains on sale of Investment A multiplied by 20.0%) Year 3: None — $0.4 million (20.0% multiplied by ($3.0 million cumulative capital gains less $1.0 million cumulative capital depreciation)) less $0.6 million (previous capital gains fee paid in Year 2) Year 4: Capital gains incentive fee of $50,000 — $0.65 million ($3.25 million cumulative realized capital gains multiplied by 20%) less $0.6 million (capital gains incentive fee taken in Year 2) Alternative 2 Assumptions Year 1: $2.0 million investment made in Company A (“Investment A”), $5.25 million investment made in Company B (“Investment B”) and $4.5 million investment made in Company C (“Investment C”) Year 2: Investment A sold for $4.5 million, FMV of Investment B determined to be $4.75 million and FMV of Investment C determined to be $4.5 million Year 3: FMV of Investment B determined to be $5.0 million and Investment C sold for $5.5 million Year 4: FMV of Investment B determined to be $6.0 million Year 5: Investment B sold for $4.0 million The capital gains incentive fee, if any, would be: Year 1: None Year 2: Capital gains incentive fee of $0.4 million — 20.0% multiplied by $2.0 million ($2.5 million realized capital gains on Investment A less $0.5 million unrealized capital depreciation on Investment B) Year 3: $0.25 million capital gains incentive fee (1) — $0.65 million (20.0% multiplied by $3.25 million ($3.5 million cumulative realized capital gains less $0.25 million unrealized capital depreciation)) less $0.4 million capital gains incentive fee received in Year 2 Year 4: $0.05 million capital gains incentive fee — $0.7 million ($3.50 million cumulative realized capital gains multiplied by 20.0%) less $0.65 million cumulative capital gains incentive fee paid in Year 2 and Year 3 Year 5: None — $0.45 million (20.0% multiplied by $2.25 million (cumulative realized capital gains of $3.5 million less realized capital losses of $1.25 million)) less $0.7 million cumulative capital gains incentive fee paid in Year 2, Year 3 and Year 4 (2) * The hypothetical amounts of returns shown are based on a percentage of our total net assets and assume no leverage.
Example 3: Capital Gains Portion of Incentive Fee(*): Alternative 1: Assumptions Year 1: $2.0 million investment made in Company A (“Investment A”), and $3.0 million investment made in Company B (“Investment B”) Year 2: Investment A sold for $5.0 million and fair market value (“FMV”) of Investment B determined to be $3.5 million Year 3: FMV of Investment B determined to be $2.0 million Year 4: Investment B sold for $3.25 million The capital gains portion of the incentive fee would be: Year 1: None Year 2: Capital gains incentive fee of $0.6 million — ($3.0 million realized capital gains on sale of Investment A multiplied by 20.0%) Year 3: None — $0.4 million (20.0% multiplied by ($3.0 million cumulative capital gains less $1.0 million cumulative capital depreciation)) less $0.6 million (previous capital gains fee paid in Year 2) Year 4: Capital gains incentive fee of $50,000 — $0.65 million ($3.25 million cumulative realized capital gains multiplied by 20%) less $0.6 million (capital gains incentive fee taken in Year 2) Alternative 2 Assumptions Year 1: $2.0 million investment made in Company A (“Investment A”), $5.25 million investment made in Company B (“Investment B”) and $4.5 million investment made in Company C (“Investment C”) Year 2: Investment A sold for $4.5 million, FMV of Investment B determined to be $4.75 million and FMV of Investment C determined to be $4.5 million Year 3: FMV of Investment B determined to be $5.0 million and Investment C sold for $5.5 million Year 4: FMV of Investment B determined to be $6.0 million Year 5: Investment B sold for $4.0 million 16 The capital gains incentive fee, if any, would be: Year 1: None Year 2: Capital gains incentive fee of $0.4 million — 20.0% multiplied by $2.0 million ($2.5 million realized capital gains on Investment A less $0.5 million unrealized capital depreciation on Investment B) Year 3: $0.25 million capital gains incentive fee (1) — $0.65 million (20.0% multiplied by $3.25 million ($3.5 million cumulative realized capital gains less $0.25 million unrealized capital depreciation)) less $0.4 million capital gains incentive fee received in Year 2 Year 4: $0.05 million capital gains incentive fee — $0.7 million ($3.50 million cumulative realized capital gains multiplied by 20.0%) less $0.65 million cumulative capital gains incentive fee paid in Year 2 and Year 3 Year 5: None — $0.45 million (20.0% multiplied by $2.25 million (cumulative realized capital gains of $3.5 million less realized capital losses of $1.25 million)) less $0.7 million cumulative capital gains incentive fee paid in Year 2, Year 3 and Year 4 (2) * The hypothetical amounts of returns shown are based on a percentage of our total net assets and assume no leverage.
We bear all other out-of-pocket costs and expenses of our operations and transactions, including, without limitation, those relating to: • our organization, the formation transactions and offerings; • calculating our net asset value (including the cost and expenses of any independent valuation firm(s)); • fees and expenses incurred by the Adviser or payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or associated with, evaluating and making investments; 17 • interest payable on debt, if any, incurred to finance our investments and expenses related to unsuccessful portfolio acquisition efforts; • other offerings of our common stock and other securities; • administration fees and expenses, if any, payable under the Administration Agreement (including our allocable portion of the Adviser’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our Chief Compliance Officer, Chief Financial Officer and their respective staffs); • transfer agent, dividend agent and custodial fees and expenses; • costs associated with our reporting and compliance obligations under the 1940 Act, as amended, and other applicable federal and state securities laws, and stock exchange listing fees; • fees and expenses associated with independent audits and outside legal costs; • U.S. federal, state and local taxes; • Independent Directors’ fees and expenses; • costs of any reports, proxy statements or other notices to or communications and meetings with stockholders; • costs associated with investor relations; • costs and fees associated with any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; • direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff; and • all other expenses incurred by us or the Adviser in connection with administering our business.
We bear all other out-of-pocket costs and expenses of our operations and transactions, including, without limitation, those relating to: • our organization, the formation transactions and offerings; • calculating our net asset value (including the cost and expenses of any independent valuation firm(s)); • fees and expenses incurred by the Adviser or payable to third parties, including agents, consultants or other advisors, in monitoring financial and legal affairs for us and in monitoring our investments and performing due diligence on our prospective portfolio companies or otherwise relating to, or associated with, evaluating and making investments; • interest payable on debt, if any, incurred to finance our investments and expenses related to unsuccessful portfolio acquisition efforts; • other offerings of our common stock and other securities; • administration fees and expenses, if any, payable under the Administration Agreement (including our allocable portion of the Adviser’s overhead in performing its obligations under the Administration Agreement, including rent and the allocable portion of the cost of our Chief Compliance Officer, Chief Financial Officer and their respective staffs); • transfer agent, dividend agent and custodial fees and expenses; • costs associated with our reporting and compliance obligations under the 1940 Act, as amended, and other applicable federal and state securities laws, and stock exchange listing fees; • fees and expenses associated with independent audits and outside legal costs; • U.S. federal, state and local taxes; • Independent Directors’ fees and expenses; • costs of any reports, proxy statements or other notices to or communications and meetings with stockholders; • costs associated with investor relations; • costs and fees associated with any fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums; 17 • direct costs and expenses of administration, including printing, mailing, long distance telephone, copying, secretarial and other staff; and • all other expenses incurred by us or the Adviser in connection with administering our business.
We believe that, as a result of that downturn: • many financing providers have chosen to focus on large, liquid corporate loans and syndicated capital markets transactions rather than lending to middle-market businesses; • regulatory changes have caused decreased capacity to hold non-investment grade leveraged loans, causing banks to curtail lending to middle-market companies; 4 • hedge funds and collateralized loan obligation managers are less likely to pursue investment opportunities in our target market as a result of reduced availability of funding for new investments; and • consolidation of regional banks into money center banks has reduced their focus on middle-market lending.
We believe that, as a result of that downturn: • many financing providers have chosen to focus on large, liquid corporate loans and syndicated capital markets transactions rather than lending to middle-market businesses; • regulatory changes have caused decreased capacity to hold non-investment grade leveraged loans, causing banks to curtail lending to middle-market companies; • hedge funds and collateralized loan obligation managers are less likely to pursue investment opportunities in our target market as a result of reduced availability of funding for new investments; and • consolidation of regional banks into money center banks has reduced their focus on middle-market lending.
It should be expected that the negative effects described above will be more pronounced in connection with transactions in, or the Company’s use of, small capitalization, emerging market, distressed or less liquid strategies. Exchange Act Reports We maintain a website at www.icmbdc.com. The information on our website is not incorporated by reference in this annual report on Form 10-K.
It should be expected that the negative effects described above will be more pronounced in connection with transactions in, or the Company’s use of, small capitalization, emerging market, distressed or less liquid strategies. 20 Exchange Act Reports We maintain a website at www.icmbdc.com. The information on our website is not incorporated by reference in this annual report on Form 10-K.
Shaikh, is supported by eight additional investment professionals, who, together with Mr. Shaikh, we refer to as the “Investment Team.” The members of the Investment Team have over 100 combined years of structuring customized debt solutions for middle-market companies, which we believe will enable us to generate favorable returns across credit cycles with an emphasis on preserving capital. Mr.
Shaikh, is supported by eight additional investment professionals, who, together with Mr. Shaikh, we refer to as the “Investment Team.” The members of the Investment Team have over 100 combined years of experience structuring customized debt solutions for middle-market companies, which we believe will enable us to generate favorable returns across credit cycles with an emphasis on preserving capital. Mr.
Alternative 2 Assumptions Investment income (including interest, dividends, fees, etc.) = 2.9% Hurdle rate (1) = 2.0% Management fee (2) = 0.4375% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.2% Pre-incentive fee net investment income (investment income – (management fee + other expenses) = 2.2625% Incentive fee = 100% × Pre-incentive fee net investment income (subject to “catch-up”) (4) = 100% × (2.2625% – 2.0%) = 0.2625% Pre-incentive fee net investment income exceeds the hurdle rate, but does not fully satisfy the “catch-up” provision; therefore, the income related portion of the incentive fee is 0.2625%.
Alternative 2 Assumptions Investment income (including interest, dividends, fees, etc.) = 2.9% Hurdle rate (1) = 2.0% Management fee (2) = 0.4375% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.2% Pre-incentive fee net investment income (investment income – (management fee + other expenses) = 2.2625% 14 Incentive fee = 100% × Pre-incentive fee net investment income (subject to “catch-up”) (4) = 100% × (2.2625% – 2.0%) = 0.2625% Pre-incentive fee net investment income exceeds the hurdle rate, but does not fully satisfy the “catch-up” provision; therefore, the income related portion of the incentive fee is 0.2625%.
Investcorp Group employs approximately 500 people across its offices in Los Angeles, New York, London, Bahrain, Abu Dhabi, Riyadh, Doha, Mumbai, Delhi, Beijing, Singapore, Luxembourg and Tokyo. Investcorp Group has been engaged in the investment management and related services business since 1982, and brings enhanced capabilities to the Adviser. 3 The Adviser’s investment team, led by Mr.
Investcorp Group employs approximately 500 people across its offices in Los Angeles, New York, London, Bahrain, Abu Dhabi, Riyadh, Doha, Mumbai, Delhi, Beijing, Singapore, Luxembourg and Tokyo. Investcorp Group has been engaged in the investment management and related services business since 1982, and brings enhanced capabilities to the Adviser. The Adviser’s investment team, led by Mr.
The Adviser evaluates a private equity sponsor or specialty lender along several key criteria, including: • investment track record; • industry experience. • capacity and willingness to provide additional financial support to the company through additional capital contributions, if necessary; and • reference checks. 8 Investments The following describes the types of loans we generally make: Standalone first lien loans .
The Adviser evaluates a private equity sponsor or specialty lender along several key criteria, including: • investment track record; • industry experience. • capacity and willingness to provide additional financial support to the company through additional capital contributions, if necessary; and • reference checks. Investments The following describes the types of loans we generally make: Standalone first lien loans .
Examples of Quarterly Incentive Fee Calculation Example 1: Income Related Portion of Incentive Fee before Total Return Requirement Calculation: Alternative 1 Assumptions Investment income (including interest, dividends, fees, etc.) = 1.25% Hurdle rate (1) = 2.0% 14 Management fee (2) = 0.4375% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.2% Pre-incentive fee net investment income (investment income – (management fee + other expenses) = 0.6125% Pre-incentive fee net investment income does not exceed hurdle rate, therefore there is no income-related incentive fee.
Examples of Quarterly Incentive Fee Calculation Example 1: Income Related Portion of Incentive Fee before Total Return Requirement Calculation: Alternative 1 Assumptions Investment income (including interest, dividends, fees, etc.) = 1.25% Hurdle rate (1) = 2.0% Management fee (2) = 0.4375% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.2% Pre-incentive fee net investment income (investment income – (management fee + other expenses) = 0.6125% Pre-incentive fee net investment income does not exceed hurdle rate, therefore there is no income-related incentive fee.
Because any original issue discount or other amounts accrued will be included in our investment company taxable income for 25 the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.
Because any original issue discount or other amounts accrued will be included in our investment company taxable income for the year of accrual, we may be required to make a distribution to our stockholders in order to satisfy the Annual Distribution Requirement, even though we will not have received any corresponding cash amount.
Investment Strategy We invest in standalone first and second lien loans and unitranche loans, and selectively in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments, in most cases taking advantage of a potential benefit from an increase in the value of such portfolio company as part of an overall relationship.
Investment Strategy We invest in standalone first and second lien loans and unitranche loans, and selectively in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments, in most cases taking advantage of a potential benefit from an increase in 5 the value of such portfolio company as part of an overall relationship.
In addition, pursuant to the Advisory Agreement, we pay the Adviser an incentive fee equal to 20.0% of pre-incentive fee net investment income, subject to an annualized hurdle rate of 8.0% with a “catch up” fee for returns between the 8.0% hurdle and 10.0%, as well as 20.0% of net capital gains.
In 3 addition, pursuant to the Advisory Agreement, we pay the Adviser an incentive fee equal to 20.0% of pre-incentive fee net investment income, subject to an annualized hurdle rate of 8.0% with a “catch up” fee for returns between the 8.0% hurdle and 10.0%, as well as 20.0% of net capital gains.
Our board of directors reviewed a detailed comparison of performance metrics of the Company and a sample of peer BDCs. In considering the appropriate performance metrics by which to benchmark the Company’s performance against its peers, our board of directors focused on certain factors that it believes are significant drivers of stockholder value.
Our board of directors reviewed a detailed comparison of performance metrics of the Company and a sample of peer BDCs. In considering the appropriate performance metrics by 18 which to benchmark the Company’s performance against its peers, our board of directors focused on certain factors that it believes are significant drivers of stockholder value.
Lending to smaller capitalization companies requires due diligence and underwriting practices consistent with the demands and economic limitations of the middle-market and may also require more extensive ongoing monitoring by the lender. As a result, middle-market companies historically have been served by a limited segment of the lending community.
Lending to smaller capitalization companies requires due diligence and underwriting practices consistent with the demands and economic limitations of the middle-market and may require more extensive ongoing monitoring by the lender. As a result, middle-market companies historically have been served by a limited segment of the lending community.
The following outlines the general parameters and areas of evaluation and due diligence for investment decisions, although not all are necessarily considered or given equal weighting in the evaluation process. 7 Business model and financial assessment The Adviser undertakes a review and analysis of the financial and strategic plans for the potential investment.
The following outlines the general parameters and areas of evaluation and due diligence for investment decisions, although not all are necessarily considered or given equal weighting in the evaluation process. Business model and financial assessment The Adviser undertakes a review and analysis of the financial and strategic plans for the potential investment.
Such hedging strategies would be utilized to seek to protect the value of our portfolio investments, for example, against possible adverse changes in the market value of securities held in our portfolio. 11 Managerial Assistance As a BDC, we offer, and must provide upon request, managerial assistance to our portfolio companies.
Such hedging strategies would be utilized to seek to protect the value of our portfolio investments, for example, against possible adverse changes in the market value of securities held in our portfolio. Managerial Assistance As a BDC, we offer, and must provide upon request, managerial assistance to our portfolio companies.
Taxation as a Regulated Investment Company As a BDC, we have elected to be treated as a RIC under Subchapter M of the Code. As a RIC, we generally do not have to pay corporate-level U.S. federal income taxes on any income that we distribute to our stockholders as dividends.
Taxation as a Regulated Investment Company As a BDC, we have elected to be treated as a RIC under Subchapter M of the Code. As a RIC, we generally do not have to pay corporate-level U.S. federal income taxes on any income that we timely distribute to our stockholders as dividends.
The Adviser seeks investments in portfolio companies where it believes that the aggregate enterprise value significantly exceeds aggregate indebtedness, after consideration of our investment. The Adviser believes that the existence of significant underlying equity value (i.e., the amount by which the aggregate enterprise value exceeds the aggregate indebtedness) provides important support to our debt investments. 6 • Investment Partnerships .
The Adviser seeks investments in portfolio companies where it believes that the aggregate enterprise value significantly exceeds aggregate indebtedness, after consideration of our investment. The Adviser believes that the existence of significant underlying equity value (i.e., the amount by which the aggregate enterprise value exceeds the aggregate indebtedness) provides important support to our debt investments. • Investment Partnerships .
For the foregoing purpose, the “cumulative net increase in net assets resulting from 13 operations” is the amount, if positive, of the sum of Pre-Incentive Fee Net Investment Income, realized gains and losses and unrealized appreciation and depreciation of the Company for the then current fiscal quarter and the Lookback Period.
For the foregoing purpose, the “cumulative net increase in net assets resulting from operations” is the amount, if positive, of the sum of Pre-Incentive Fee Net Investment Income, realized gains and losses and unrealized appreciation and depreciation of the Company for the then current fiscal quarter and the Lookback Period.
The Administration Agreement had an initial term of two years and continues thereafter from year-to-year if approved annually by our board of directors. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.
The Administration Agreement had an initial term of two years and 19 continues thereafter from year-to-year if approved annually by our board of directors. The Administration Agreement may be terminated by either party without penalty upon 60 days’ written notice to the other party.
We do not disclose any nonpublic personal information about our stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, to a transfer agent or third-party administrator).
We do not disclose any nonpublic personal information about our 23 stockholders or former stockholders to anyone, except as permitted by law or as is necessary in order to service stockholder accounts (for example, to a transfer agent or third-party administrator).
In any such case, the price at which our securities are to be issued and sold may not be less than a price which, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount).
In any such case, the price at which our 22 securities are to be issued and sold may not be less than a price which, in the determination of our board of directors, closely approximates the market value of such securities (less any distributing commission or discount).
On January 17, 2024, we amended the Capital One Revolving Financing to (i) extend the maturity date to January 17, 2029, (ii) increase the applicable interest spreads under the Capital One Revolving Financing and (iii) extend the Scheduled Revolving Period End Date (as defined in the Capital One Revolving Financing) to January 17, 2027.
On January 17, 2024, we amended the Capital One Revolving Financing to (i) extend the maturity date to January 17, 2029, (ii) increase the applicable interest 1 spreads under the Capital One Revolving Financing and (iii) extend the Scheduled Revolving Period End Date (as defined in the Capital One Revolving Financing) to January 17, 2027.
Shaikh, the 5 Investment Team’s senior investment professionals monitor the portfolio for developments on a daily basis, perform credit updates on each investment, review financial performance on at least a quarterly basis, and have regular discussions with the management of portfolio companies.
Shaikh, the Investment Team’s senior investment professionals monitor the portfolio for developments on a daily basis, perform credit updates on each investment, review financial performance on at least a quarterly basis, and have regular discussions with the management of portfolio companies.
Unitranche loans . Unitranche loans are loans structured as first lien loans with certain characteristics of mezzanine loan risk in one security. Unitranche loans typically provide for moderate loan amortization in the initial years of the loan with the majority of the principal repayment deferred until loan maturity.
Unitranche loans . Unitranche loans are loans structured as first lien loans with certain characteristics of mezzanine loan risk in one security. Unitranche loans typically provide for moderate loan amortization in the initial years of the loan with the majority of the 8 principal repayment deferred until loan maturity.
In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of our investments than on the fair values of our investments 10 for which market quotations are not readily available.
In addition, changes in the market environment and other events may have differing impacts on the market quotations used to value some of our investments than on the fair values of our investments for which market quotations are not readily available.
Shaikh has served as President of Investcorp Credit Management BDC, Inc. since 2023 and as Co-Chief Investment Officer of CM Investment Partners since 2023. In May 2024, Mr. Shaikh was appointed as our Chief Executive Officer and sole Chief Investment Officer of the CM Investment Partners.
Shaikh has served as President of Investcorp Credit Management BDC, Inc. since 2023 and as Co-Chief Investment Officer of CM Investment Partners since 2023. In May 2024, Mr. Shaikh was appointed as our Chief Executive Officer and sole Chief Investment Officer of CM Investment Partners. Mr.
Alternative 3 Assumptions Investment income (including interest, dividends, fees, etc.) = 3.5% Hurdle rate (1) = 2.0% Management fee (2) = 0.4375% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.2% Pre-incentive fee net investment income (investment income – (management fee + other expenses) = 2.8625% Incentive fee = 100% × Pre-incentive fee net investment income (subject to “catch-up”) (4) Incentive fee = 100% × “catch-up” + (20.0% × (Pre-Incentive Fee Net Investment Income – 2.5%)) “Catch-up” = 2.5% – 2.0% = 0.5% Incentive fee = (100% × 0.5%) + (20.0% × (2.8625% – 2.5%)) = 0.5% + (20.0% × 0.3625%) = 0.5% + 0.725% = 0.5725% Pre-incentive fee net investment income exceeds the hurdle rate, and fully satisfies the “catch-up” provision; therefore, the income related portion of the incentive fee is 0.5725%.
Alternative 3 Assumptions Investment income (including interest, dividends, fees, etc.) = 3.5% Hurdle rate (1) = 2.0% Management fee (2) = 0.4375% Other expenses (legal, accounting, custodian, transfer agent, etc.) (3) = 0.2% Pre-incentive fee net investment income (investment income – (management fee + other expenses) = 2.8625% Incentive fee = 100% × Pre-incentive fee net investment income (subject to “catch-up”) (4) Incentive fee = 100% × “catch-up” + (20.0% × (Pre-Incentive Fee Net Investment Income – 2.5%)) “Catch-up” = 2.5% – 2.0% = 0.5% Incentive fee = (100% × 0.5%) + (20.0% × (2.8625% – 2.5%)) = 0.5% + (20.0% × 0.3625%) = 0.5% + 0.0725% = 0.5725% Pre-incentive fee net investment income exceeds the hurdle rate, and fully satisfies the “catch-up” provision; therefore, the income related portion of the incentive fee is 0.5725%.
Our Investment Team has the expertise and ability to structure investments across all levels of a company’s capital structure. These individuals have extensive experience in cash flow, asset-based lending, workout situations and investing in distressed debt, which should enable us to take advantage of attractive investments in recently restructured companies.
Our Investment Team has the expertise and ability to structure investments across all levels of a company’s capital structure. These individuals have extensive experience in cash flow, asset-based lending, workout situations and investing in distressed debt, which we believe should enable us to take advantage of attractive investments in recently restructured companies.
In most cases, the Adviser will vote in favor of proposals that the Adviser believes are likely to increase the value 23 of the portfolio securities we hold.
In most cases, the Adviser will vote in favor of proposals that the Adviser believes are likely to increase the value of the portfolio securities we hold.
Investment Rating 2 Investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. All new loans are initially rated 2. Investment Rating 3 Investments that are performing below expectations and that require closer monitoring, but where no loss of return or principal is expected.
Investment Rating 2 Investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. Generally, all new investments are initially rated 2. Investment Rating 3 Investments that are performing below expectations and that require closer monitoring, but where no loss of return or principal is expected.
Incentive Fees are calculated as described below and payable quarterly in arrears (or, upon termination of the Advisory Agreement, as of the termination date).
Incentive Fees 12 are calculated as described below and payable quarterly in arrears (or, upon termination of the Advisory Agreement, as of the termination date).
Shaikh, who has over 40 years of experience investing in, providing corporate finance services to, restructuring and consulting with middle-market companies. Mr. Shaikh is supported by eight additional investment professionals, who collectively with Mr.
Shaikh, who has over 30 years of experience investing in, providing corporate finance services to, restructuring and consulting with middle-market companies. Mr. Shaikh is supported by eight additional investment professionals, who collectively with Mr.
We will be subject to U.S. federal income tax at the regular corporate rates on any income or capital gains not distributed (or deemed distributed) to our stockholders.
We will be subject to U.S. federal income tax at the regular corporate rate on any income or capital gains not distributed (or deemed distributed) to our stockholders.
The “Lookback Period” means (1) through June 30, 2024, the period that commences on the last day of the fiscal quarter in which the Commencement Date occurs and ends on the last day of the fiscal quarter immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated, and (2) after June 30, 2024, the eleven fiscal quarters immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated.
The “Lookback Period” means (1) through December 31, 2024, the period that commences on the last day of the fiscal quarter in which the Commencement Date occurs and ends on the last day of the fiscal quarter immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated, and (2) after December 31, 2024, the eleven fiscal quarters immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated.
As a result, we believe we will be able to achieve appropriate risk-adjusted returns by investing in companies that have restructured but do not have sufficient track records to receive traditional lending terms from a commercial bank or the broadly syndicated leveraged finance market.
As a result of the Investment Team's extensive experience, we believe we will be able to achieve appropriate risk-adjusted returns by investing in companies that have restructured but do not have sufficient track records to receive traditional lending terms from a commercial bank or the broadly syndicated leveraged finance market.
If the Adviser determines that an investment is underperforming, or circumstances suggest that the risk associated with a particular investment has significantly increased, the Adviser will increase its monitoring intensity and prepare regular updates for the Investment Committee, summarizing current operating results and material impending events and suggesting recommended actions.
If the Adviser determines that an investment is underperforming, or circumstances suggest that the risk associated with a particular investment has significantly increased, the Adviser will increase its monitoring intensity and update the Investment Committee, summarizing current operating results and material impending events and suggesting recommended actions.
Under the terms of the Advisory Agreement, the Adviser: • determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes; • identifies, evaluates and negotiates the structure of the investments we make; • executes, closes, services and monitors the investments we make; • determines the securities and other assets that we will purchase, retain or sell; • performs due diligence on prospective portfolio companies; and • provides us with such other investment advisory, research and related services as we may, from time to time, reasonably require for the investment of our funds. 12 The Adviser’s services under the Advisory Agreement are not exclusive, and it may furnish similar services to other entities.
Under the terms of the Advisory Agreement, the Adviser: • determines the composition of our portfolio, the nature and timing of the changes to our portfolio and the manner of implementing such changes; • identifies, evaluates and negotiates the structure of the investments we make; • executes, closes, services and monitors the investments we make; • determines the securities and other assets that we will purchase, retain or sell; • performs due diligence on prospective portfolio companies; and • provides us with such other investment advisory, research and related services as we may, from time to time, reasonably require for the investment of our funds.
The weighted average total yield was computed using an internal rate of return calculation of our debt investments based on contractual cash flows, including interest and amortization payments, and, for floating rate investments, SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate as of June 30, 2024 of all of our debt investments.
The weighted average total yield was computed using an internal rate of return calculation of our debt investments based on contractual cash flows, including interest and amortization payments, and, for floating rate investments, SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate as of December 31, 2025 of all of our debt investments.
The origination process is designed to thoroughly evaluate potential financings and to identify the most attractive of these opportunities on the basis of risk-adjusted returns. Each investment is analyzed from its initial stages through our investment by the Chief Investment Officer of the Adviser and an additional investment professional.
The Adviser’s Investment Team continues to enhance and expand these relationships. The origination process is designed to thoroughly evaluate potential financings and to identify the most attractive of these opportunities on the basis of risk-adjusted returns. Each investment is analyzed from its initial stages through our investment by the Chief Investment Officer of the Adviser and an additional investment professional.
Debt and equity securities that are not publicly traded or whose market price is not readily available are valued at fair value as determined in good faith by our board of directors based on the input of our management and valuation committee.
Debt and equity securities that are not publicly traded or whose market price is not readily available are valued at fair value as determined in good faith by our board of directors based on the input of our management, our valuation committee and any independent valuation firm that we may retain.
Our officers are all employees of the Adviser and our allocable portion of the cost of Walter Tsin, as our Chief Financial Officer, Paolo Cloma, our Chief Compliance Officer, and their staff, is paid by us pursuant to the Administration Agreement with the Adviser.
Our officers are all employees of the Adviser and our allocable portion of the cost of Robert Andrew Muns, as our Chief Financial Officer, Paolo Cloma, our Chief Compliance Officer, and their staff, is paid by us pursuant to the Administration Agreement with the Adviser.
Our investments typically range in size from $5 million to $25 million. We expect that our portfolio companies will use our capital for organic growth, acquisitions, market or product expansion, refinancings, and/or recapitalizations. We invest, and intend to continue to invest, in standalone first and second lien loans and unitranche loans, with an emphasis on floating rate debt.
We expect that our portfolio companies will use our capital for organic growth, acquisitions, market or product expansion, refinancings, and/or recapitalizations. We invest, and intend to continue to invest, in standalone first and second lien loans and unitranche loans, with an emphasis on floating rate debt.
Shaikh, have over 100 combined years of structuring strategic capital for business expansion, refinancings, capital restructuring , post-reorganization financing and servicing the general corporate needs of middle-market companies. The Adviser also benefits from its alignment with Investcorp, its parent company, which is the leading global credit investment platform with assets under management of $21.5 billion as of June 30, 2024.
Shaikh, have over 100 combined years of structuring strategic capital for business expansion, refinancings, capital restructuring, post-reorganization financing and servicing the general corporate needs of middle-market companies. The Adviser also benefits from its alignment with IVC, its parent company, which is a leading global credit investment platform with assets under management of $21.3 billion as of December 31, 2025.
Under the terms of the Exemptive Relief, in order for the Company to participate in a co-investment transaction a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Independent Directors must conclude that (i) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (ii) the proposed transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objectives and strategies. 24 Sarbanes-Oxley Act of 2002 The Sarbanes-Oxley Act of 2002 imposes a wide variety of regulatory requirements on publicly held companies and their insiders.
Under the terms of the Exemptive Relief, in order for the Company to participate in a co-investment transaction a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Independent Directors must conclude that (i) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned, and (ii) the proposed transaction is consistent with the interests of the Company’s stockholders and is consistent with the Company’s investment objectives and strategies.
Under U.S. generally accepted accounting principles, we calculate the Capital Gains Fee as if we had realized all assets at their fair values as of the reporting date. Accordingly, we accrue a provisional Capital Gains Fee taking into account any unrealized gains or losses. As of June 30, 2024 and June 30, 2023 there were no Capital Gains Fees.
Under U.S. generally accepted accounting principles, we calculate the Capital Gains Fee as if we had realized all assets at their fair values as of the reporting date. Accordingly, we accrue a provisional Capital Gains Fee taking into account any unrealized gains or losses.
Board Approval of the Advisory Agreement On July 23, 2024, our board of directors, including all of the Independent Directors, held a meeting to consider and approve the continuation of the Advisory Agreement.
Board Approval of the Advisory Agreement On August 7, 2025, our board of directors, including all of the Independent Directors, held a meeting to consider and approve the continuation of the Advisory Agreement.
Every follow-on investment decision in an existing portfolio company and every investment disposition require approval by a majority of the Investment Committee. The Investment Committee currently consists of Messrs. Mauer and Shaikh and Andrew Muns, an Investment Partner of Investcorp, Branko Krmpotic, a Managing Director of Investcorp and Timothy Waller, a Director of Investcorp.
Every follow-on investment decision in an existing portfolio company and every investment disposition require approval by a majority of the Investment Committee. The Investment Committee currently consists of Mr. Shaikh, Chief Investment Officer of the Adviser, Mr. Mauer, Robert Andrew Muns, a Managing Director of Investcorp, Branko Krmpotic, consultant to Investcorp and Timothy Waller, a Principal of Investcorp.
The following is a graphic representation of the calculation of the Income-Based Fee: Quarterly Incentive Fee Based on Net Investment Income Pre-incentive Fee Net Investment Income (expressed as a percentage of the value of net assets) Percentage of Pre-incentive Fee Net Investment Income Allocated to Income-Based Fee Capital Gains Fee Under the Advisory Agreement, the Capital Gains Fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date), commencing with the fiscal year ended June 30, 2021, and is equal to 20.0% of our cumulative aggregate realized capital gains from the Commencement Date through the end of each fiscal year, computed net of our aggregate cumulative realized capital losses and our aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid Capital Gains Fees.
Notwithstanding any such Incentive Fee reduction or elimination, there is no accumulation of amounts on the hurdle rate from quarter to quarter, and accordingly there is no clawback of amounts previously paid if subsequent quarters are below the quarterly hurdle, and there is no delay of payment if prior quarters are below the quarterly hurdle. 13 The following is a graphic representation of the calculation of the Income-Based Fee: Quarterly Incentive Fee Based on Net Investment Income Pre-incentive Fee Net Investment Income (expressed as a percentage of the value of net assets) Percentage of Pre-incentive Fee Net Investment Income Allocated to Income-Based Fee Capital Gains Fee Under the Advisory Agreement, the Capital Gains Fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date), commencing with the fiscal year ended June 30, 2021, and is equal to 20.0% of our cumulative aggregate realized capital gains from the Commencement Date through the end of each fiscal year, computed net of our aggregate cumulative realized capital losses and our aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid Capital Gains Fees.
As of June 30, 2024, Investcorp Group had $52.8 billion in total assets under management, including assets managed by third party managers and assets subject to a non-discretionary advisory mandate where Investcorp Group receives fees calculated on the basis of assets under management.
As of December 31, 2025, Investcorp Group had $62.0 billion in total assets under management, including assets managed by third party managers and assets subject to a non-discretionary advisory mandate where Investcorp Group receives fees calculated on the basis of assets under management.
The Adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions. 22 Senior Securities We are generally permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance.
Senior Securities We are generally permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance.
Our board of directors considered existing and potential sources of indirect income the Adviser receive as a result of the relationship with us, including reimbursements to the Adviser of allocable expenses under the Administration Agreement, and whether there would be potential for additional benefits to be derived by the Adviser as a result of our relationship with the Adviser, and was advised any such potential would be limited. 19 Our board of directors concluded that the proposed advisory fees are reasonable, taking into consideration these other indirect benefits.
Our board of directors considered existing and potential sources of indirect income the Adviser receives as a result of the relationship with us, including reimbursements to the Adviser of allocable expenses under the Administration Agreement, and whether there would be potential for additional benefits to be derived by the Adviser as a result of our relationship with the Adviser, and was advised any such potential would be limited.
Risk Ratings In addition to various risk management and monitoring tools, we use the Adviser’s investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. This investment rating system uses a five-level numeric rating scale.
Risk Ratings In addition to various risk management and monitoring tools, the Adviser utilizes an internal investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. This investment rating system uses a five-level numeric rating scale, with higher rating indicating greater risk profiles.
As of June 30, 2024 and June 30, 2023, there were $43.0 million and $71.9 million in borrowings outstanding under the Capital One Revolving Financing, respectively. Portfolio Composition As of June 30, 2024, our portfolio consisted of debt and equity investments in 41 portfolio companies with a fair value of $184.6 million.
As of December 31, 2025, December 31, 2024 and June 30, 2024, there were $58.9 million, $58.5 million and $43.0 million in borrowings outstanding under the Capital One Revolving Financing, respectively. Portfolio Composition As of December 31, 2025, our portfolio consisted of debt and equity investments in 37 portfolio companies with a fair value of $172.7 million.
The Adviser is responsible for sourcing investment opportunities, conducting industry research, performing diligence on potential investments, structuring our investments and monitoring our portfolio companies on an ongoing basis. The Adviser is led by Mr. Shaikh, the Chief Investment Officer of the Adviser, and Mr. Mauer as a member of the Adviser’s Investment Committee . Mr.
The Adviser is responsible for sourcing investment opportunities, conducting industry research, performing diligence on potential investments, structuring our investments and monitoring our portfolio companies on an ongoing basis. The Adviser is led by Suhail A.
The Adviser is able to pursue rights, provide advice or engage in other activities, or refrain from pursuing rights, providing advice or engaging in other activities, on behalf of such Other Accounts with respect to an issuer in which the Company has invested, and such actions (or inaction) may have a material adverse effect on the Company. 20 For example, in the event that the Other Account holds loans, securities or other positions in the capital structure of an issuer that ranks senior in preference to the holdings of the Company in the same issuer, and the issuer experiences financial or operational challenges, the Adviser, acting on behalf of the Other Account, may seek a liquidation, reorganization or restructuring of the issuer that has, or terms in connection with the foregoing, that have, an adverse effect on or otherwise conflict with the interests of the Company’s holdings in the issuer.
For example, in the event that the Other Account holds loans, securities or other positions in the capital structure of an issuer that ranks senior in preference to the holdings of the Company in the same issuer, and the issuer experiences financial or operational challenges, the Adviser, acting on behalf of the Other Account, may seek a liquidation, reorganization or restructuring of the issuer that has, or terms in connection with the foregoing, that have, an adverse effect on or otherwise conflict with the interests of the Company’s holdings in the issuer.
Failure to Maintain our Qualification as a RIC If we fail to satisfy the 90% Income Test or the Diversification Tests for any taxable year, we may nevertheless continue to qualify as a RIC for such year if certain relief provisions are applicable (which may, among other things, require us to pay certain corporate-level U.S. federal income taxes or to dispose of certain assets).
Failure to Maintain our Qualification as a RIC If we fail to satisfy the 90% Income Test or the Diversification Tests for any taxable year, we may nevertheless continue to qualify as a RIC for such year if certain relief provisions are applicable (which may, among other things, require us to pay certain corporate-level U.S. federal income taxes or to dispose of certain assets). 25 If we were unable to qualify for treatment as a RIC and the foregoing relief provisions are not applicable, we would be subject to tax on all of our taxable income at the regular corporate rate, regardless of whether we make any distributions to our stockholders.
Investcorp Group is a global provider and manager of alternative investments, offering such investments to its high-net-worth private and institutional clients on a global basis.
(“Investcorp Holdings”). Investcorp Holdings and its consolidated subsidiaries, including Investcorp, are referred to as “Investcorp Group”. Investcorp Group is a global provider and manager of alternative investments, offering such investments to its high-net-worth private and institutional clients on a global basis.
None of these policies is fundamental and may be changed without stockholder approval upon 60 days’ prior written notice to stockholders. 21 Qualifying Assets Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in section 55(a) of the 1940 Act, which are referred to as “qualifying assets,” unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets.
Qualifying Assets Under the 1940 Act, a BDC may not acquire any asset other than assets of the type listed in section 55(a) of the 1940 Act, which are referred to as “qualifying assets,” unless, at the time the acquisition is made, qualifying assets represent at least 70% of the company’s total assets.
Areas of evaluation include: • historical and projected financial performance; • quality of earnings, including source and predictability of cash flows; • customer and vendor interviews and assessments; • potential exit scenarios, including probability of a liquidity event; • internal controls and accounting systems; and • assets, liabilities and contingent liabilities.
Areas of evaluation include: • historical and projected financial performance; • quality of earnings, including source and predictability of cash flows; • customer and vendor interviews and assessments; • potential exit scenarios, including probability of a liquidity event; • internal controls and accounting systems; and • assets, liabilities and contingent liabilities. 7 Industry dynamics The Adviser evaluates the portfolio company’s industry, and may, if considered appropriate, consult or retain industry experts.
In its deliberations, our board of directors did not identify any single piece of information discussed below that was all-important, controlling or determinative of its decision. 18 Based on the information reviewed and the discussion thereof, our board of directors, including all of the Independent Directors, determined that the investment advisory fee rates are reasonable in relation to the services provided and approved the continuation of the Advisory Agreement as being in the best interests of our stockholders.
Based on the information reviewed and the discussion thereof, our board of directors, including all of the Independent Directors, determined that the investment advisory fee rates are reasonable in relation to the services provided and approved the continuation of the Advisory Agreement as being in the best interests of our stockholders.
Accordingly, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit.
Accordingly, we do not intend to enter into repurchase agreements with a single counterparty in excess of this limit. The Adviser will monitor the creditworthiness of the counterparties with which we enter into repurchase agreement transactions.
Conclusions. No single factor was determinative of the decision of our board of directors, including all of the Independent Directors, to approve the Advisory Agreement and individual directors may have weighed certain factors differently.
Our board of directors concluded that the proposed advisory fees are reasonable, taking into consideration these other indirect benefits. Conclusions. No single factor was determinative of the decision of our board of directors, including all of the Independent Directors, to approve the Advisory Agreement and individual directors may have weighed certain factors differently.
In addition, to qualify for RIC tax treatment we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses (the “Annual Distribution Requirement”).
In addition, to qualify for RIC tax treatment we must distribute to our stockholders, for each taxable year, at least 90% of our “investment company taxable income,” which is generally our ordinary income plus the excess of our realized net short-term capital gains over our realized net long-term capital losses (the “Annual Distribution Requirement”). 24 If we qualify as a RIC and satisfy the Annual Distribution Requirement, then we generally will not be subject to U.S. federal income tax on the portion of our income we distribute (or are deemed to distribute) to stockholders.
On August 30, 2019, Investcorp Credit Management US LLC (“Investcorp”) acquired an approximate 76% ownership interest in the Adviser through the acquisition of the interests held by Stifel Venture Corp. (“Stifel”) and certain funds managed Cyrus Capital Partners, L.P. (the “Cyrus Funds”) and through a direct purchase of equity from the Adviser (the “Investcorp Transaction”).
Shaikh was formerly Head of US Direct Lending and Vice Chairperson of global Direct Lending investment committee of Alcentra Group. On August 30, 2019, Investcorp Credit Management US LLC (“Investcorp”) acquired an approximate 76% ownership interest in the Adviser through the acquisition of the interests held by Stifel Venture Corp. (“Stifel”) and certain funds managed Cyrus Capital Partners, L.P.
The regulations defining qualifying assets may change over time. We may adjust our investment focus as needed to comply with and/or take advantage of any regulatory, legislative, administrative or judicial actions in this area.
(6) Cash, cash equivalents, U.S. government securities or high-quality debt securities that mature in one year or less from the date of investment. The regulations defining qualifying assets may change over time. We may adjust our investment focus as needed to comply with and/or take advantage of any regulatory, legislative, administrative or judicial actions in this area.
At June 30, 2024, our weighted average total yield on the total portfolio at amortized cost (which includes interest income and amortization of fees and discounts) was 10.60%.
At December 31, 2025, our average total yield on the total portfolio weighted by amortized cost (which includes interest income and amortization of fees and discounts) was 7.71%.
Staffing We do not have any direct employees, and our day-to-day investment operations are managed by the Adviser. We have a Chief Executive Officer, President, Chief Financial Officer and Chief Compliance Officer. To the extent necessary, our board of directors may hire additional personnel in the future.
We have a Chief Executive Officer, President, Chief Financial Officer and Chief Compliance Officer. To the extent necessary, our board of directors may hire additional personnel in the future.
(4) Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company.
(4) Securities of an eligible portfolio company purchased from any person in a private transaction if there is no ready market for such securities and we already own 60% of the outstanding equity of the eligible portfolio company. 21 (5) Securities received in exchange for or distributed on or with respect to securities described above, or pursuant to the exercise of warrants or rights relating to such securities.
As of June 30, 2024, our portfolio at fair value consisted of 85.02% first lien investments and 14.98% equity, warrant or other positions. At June 30, 2024, our weighted average total yield of debt and income producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 12.47%.
As of December 31, 2025, our portfolio at fair value consisted of 80.76% first lien investments and 19.24% equity, warrant or other positions. At December 31, 2025, our average total yield of debt and income producing securities weighted by amortized cost (which includes interest income and amortization of fees and discounts) was 10.34%.
As of June 30, 2024, the Company’s portfolio at fair value consisted of 85.02% first lien investments and 14.98% equity, warrant or other positions. • Costs of Services Provided and Economies of Scale.
As of December 31, 2025, the Company’s portfolio at fair value consisted of 80.76% first lien investments and 19.24% equity, warrant or other positions. • Costs of Services Provided and Economies of Scale.
Investments with a rating of 4 are those for which some loss of return but no loss of principal is expected. Investment Rating 5 Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are almost always in workout.
Investment Rating 4/5 Investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are often or almost always in workout.
We use the expertise of the investment professionals of the Adviser to assess investment risks and determine appropriate pricing for our investments in portfolio companies. In addition, we believe the relationships of these investment professionals will enable us to learn about, and compete effectively for, financing opportunities with attractive middle-market companies in the industries in which we seek to invest.
In addition, we believe the relationships of these investment professionals will enable us to learn 11 about, and compete effectively for, financing opportunities with attractive middle-market companies in the industries in which we seek to invest. Staffing We do not have any direct employees, and our day-to-day investment operations are managed by the Adviser.
Management Fee Under the Advisory Agreement, we have agreed to pay the Adviser a fee for investment advisory and management services consisting of two components — a base management fee (the “Base Management Fee”) and an incentive fee (the “Incentive Fee”). The cost of both the Base Management Fee and the Incentive Fee will ultimately be borne by our stockholders.
The Adviser’s services under the Advisory Agreement are not exclusive, and it may furnish similar services to other entities. Management Fee Under the Advisory Agreement, we have agreed to pay the Adviser a fee for investment advisory and management services consisting of two components — a base management fee (the “Base Management Fee”) and an incentive fee (the “Incentive Fee”).
As a result, we believe that less competition facilitates higher quality deal flow and allows for greater selectivity throughout the investment process. • Robust Demand for Debt Capital. According to Pitchbook, a market research firm, private equity firms had approximately $965.0 billion of uncalled capital as of March 31, 2024.
As a result, we believe that less competition facilitates higher quality deal flow and allows for greater selectivity throughout the investment process. • Robust Demand for Debt Capital.
With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described below: • our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Adviser responsible for the portfolio investment; • preliminary valuation conclusions are then documented and discussed by senior management and the Adviser; • on a periodic basis, at least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm engaged by our board of directors; • the valuation committee of our board of directors then reviews these preliminary valuations and makes a recommendation to our board of directors regarding the fair value of each investment; and • the board of directors then discusses these preliminary valuations and determines the fair value of each investment in our portfolio in good faith, based on the input of the Adviser, the independent valuation firm and the valuation committee.
In following these approaches, the types of factors that we may take into account in determining the fair value of our investments include, as relevant and among other factors: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, call protection provisions, information rights, the nature and realizable value of any collateral, the portfolio company’s ability to make payments, its earnings and discounted cash flows, the markets in which the portfolio company does business, comparisons of financial ratios of peer companies that are public, merger and acquisition comparables, our principal market (as the reporting entity) and enterprise values. 10 With respect to investments for which market quotations are not readily available, our board of directors undertakes a multi-step valuation process each quarter, as described below: • our quarterly valuation process begins with each portfolio company or investment being initially valued by the investment professionals of the Adviser responsible for the portfolio investment; • preliminary valuation conclusions are then documented and discussed by senior management and the Adviser; • on a periodic basis, at least once annually, the valuation for each portfolio investment is reviewed by an independent valuation firm engaged by our board of directors; • the valuation committee of our board of directors then reviews these preliminary valuations and makes a recommendation to our board of directors regarding the fair value of each investment; and • the board of directors then discusses these preliminary valuations and determines the fair value of each investment in our portfolio in good faith, based on the input of the Adviser, the independent valuation firm and the valuation committee.
On June 14, 2023, we amended the Capital One Revolving Financing to decrease the facility size from $115 million to $100 million.
(“Capital One”), which is secured by collateral consisting primarily of loans in the Company’s investment portfolio. On June 14, 2023, we amended the Capital One Revolving Financing to decrease the facility size from $115 million to $100 million.
There can be no assurance that the weighted average total yield will remain at its current level. 2 The industry composition of our portfolio at fair value at June 30, 2024 was as follows: Percentage of Total Portfolio at June 30, 2024 Commercial Services & Supplies 13.50 % Professional Services 11.22 Trading Companies & Distributors 9.11 Containers & Packaging 7.34 Food Products 4.79 Entertainment 4.77 IT Services 4.70 Household Durables 4.13 Insurance 4.01 Chemicals 3.90 Diversified Consumer Services 3.90 Specialty Retail 3.61 Automotive Retail 3.08 Health Care Providers & Services 2.93 Consumer Staples Distribution & Retail 2.89 Software 2.73 Consumer Services 2.67 Paper Packaging 2.66 Construction & Engineering 1.99 Human Resources & Employment Services 1.62 Hotels, Restaurants, and Leisure 1.60 Electronic Equipment, Instruments & Components 1.43 Automobile Components 1.42 100.00 % The Adviser and Administrator – CM Investment Partners LLC CM Investment Partners, our external investment adviser, was formed in July 2013 and is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).
The industry composition of our portfolio at fair value at December 31, 2025 was as follows: Percentage of Total Portfolio at December 31, 2025 Professional Services 14.50% IT Services 9.18% Insurance 8.87% Diversified Consumer Services 8.57% Commercial Services & Supplies 7.89% Trading Companies & Distributors 7.82% Specialty Retail 6.68% Containers & Packaging 6.61% Food Products 5.87% Entertainment 4.66% Health Care Providers & Services 4.05% Household Durables 3.53% Interactive Media & Services 3.15% Consumer Staples Distribution & Retail 2.68% Software 2.57% Construction & Engineering 2.23% Automobile Components 1.05% Electronic Equipment, Instruments & Components 0.09% Total 100.00% 2 The Adviser and Administrator – CM Investment Partners LLC CM Investment Partners, our external investment adviser, was formed in July 2013 and is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur ability to recapitalize, incur additional debt (including additional debt that matures prior to the maturity of the 2026 Notes) and take a number of other actions that are not limited by the terms of the 2026 Notes may have important consequences for you as a holder of the 2026 Notes, including making it more difficult for us to satisfy our obligations with respect to the 2026 Notes or negatively affecting the market value of the 2026 Notes.
Biggest changeFurthermore, the terms of the Indenture and the 2026 Notes do not protect holders of the 2026 Notes in the event that we experience changes (including significant adverse changes) in our financial condition, results of operations or credit ratings, if any, as they do not require that we or our subsidiaries adhere to any financial tests or ratios or specified levels of net worth, revenues, income, cash flow or liquidity. 46 Our ability to recapitalize, incur additional debt (including additional debt that matures prior to the maturity of the 2026 Notes) and take a number of other actions that are not limited by the terms of the 2026 Notes may have important consequences for you as a holder of the 2026 Notes, including making it more difficult for us to satisfy our obligations with respect to the 2026 Notes or negatively affecting the market value of the 2026 Notes.
These factors include: • price and volume fluctuations in the overall stock market from time to time; • investor demand for our shares; • significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which is not necessarily related to the operating performance of these companies; • changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs; • loss of our qualification as a RIC or BDC; • changes in earnings or variations in operating results; • changes in the value of our portfolio of investments; • increases in the interest rates we pay; • changes in accounting guidelines governing valuation of our investments; • any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts; • departure of the Adviser’s key personnel; • change in the Adviser’s relationship with Investcorp under the Investcorp Services Agreement; • operating performance of companies comparable to us; and • general economic trends and other external factors.
These factors include: • price and volume fluctuations in the overall stock market from time to time; • investor demand for our shares; • significant volatility in the market price and trading volume of securities of BDCs or other companies in our sector, which is not necessarily related to the operating performance of these companies; • changes in regulatory policies or tax guidelines, particularly with respect to RICs or BDCs; • loss of our qualification as a RIC or BDC; • changes in earnings or variations in operating results; • changes in the value of our portfolio of investments; • increases in the interest rates we pay; • changes in accounting guidelines governing valuation of our investments; • any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts; • departure of the Adviser’s key personnel; 44 • change in the Adviser’s relationship with Investcorp under the Investcorp Services Agreement; • operating performance of companies comparable to us; and • general economic trends and other external factors.
As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments: • available current market data, including relevant and applicable market trading and transaction comparables; • applicable market yields and multiples; • security covenants; • call protection provisions; • information rights; • the nature and realizable value of any collateral; • the portfolio company’s ability to make payments, its earnings and discounted cash flows and the markets in which it does business; • comparisons of financial ratios of peer companies that are public; • comparable merger and acquisition transactions; and • principal market and enterprise values.
As part of the valuation process, we may take into account the following types of factors, if relevant, in determining the fair value of our investments: • available current market data, including relevant and applicable market trading and transaction comparables; • applicable market yields and multiples; • security covenants; • call protection provisions; • information rights; 37 • the nature and realizable value of any collateral; • the portfolio company’s ability to make payments, its earnings and discounted cash flows and the markets in which it does business; • comparisons of financial ratios of peer companies that are public; • comparable merger and acquisition transactions; and • principal market and enterprise values.
The occurrence of a disaster such as a cyber-attack against us or against a third-party that has access to our data or networks, a natural catastrophe, an industrial accident, a terrorist attack or war, disease pandemics, events unanticipated in our disaster recovery systems, consequential employee error or a support failure from external providers, could have an adverse effect on our ability to communicate or conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or impact the availability, integrity, or confidentiality of our data.
The occurrence of a disaster such as a cyber-attack against us or against a third-party that has access to our data or networks, a natural catastrophe, an industrial accident, a terrorist attack or war, pandemics, events unanticipated in our disaster recovery systems, consequential employee error or a support failure from external providers, could have an adverse effect on our ability to communicate or conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or impact the availability, integrity, or confidentiality of our data.
The types of factors that the board of directors may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly traded securities including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business and other relevant 33 factors.
The types of factors that the board of directors may take into account in determining the fair value of our investments generally include, as appropriate, comparison to publicly traded securities including such factors as yield, maturity and measures of credit quality, the enterprise value of a portfolio company, the nature and realizable value of any collateral, the portfolio company’s ability to make payments and its earnings and discounted cash flow, the markets in which the portfolio company does business and other relevant factors.
Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks (i.e., efforts to make network services unavailable to intended users) on websites, servers or other online systems. Cyber security incidents and cyber-attacks have been occurring more frequently and will likely continue to increase.
Cyber-attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks (i.e., efforts to make network services unavailable to intended users) on websites, servers or other online systems. 52 Cyber security incidents and cyber-attacks have been occurring more frequently and will likely continue to increase.
Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows. There are conflicts related to other arrangements with the Adviser.
Even if we are able to retain comparable management, whether internal or external, the integration of such management and their lack of familiarity with our 36 investment objective may result in additional costs and time delays that may adversely affect our business, financial condition, results of operations and cash flows. There are conflicts related to other arrangements with the Adviser.
In addition, lenders can be subject to lender liability claims for actions taken by them where they become too involved in the borrower’s business or exercise control over the borrower. It is possible that we could become subject to a lender’s liability claim, including as a result of actions taken if we actually render significant managerial assistance.
In addition, lenders can be subject to lender liability claims for actions taken by them where they become too involved in the borrower’s 38 business or exercise control over the borrower. It is possible that we could become subject to a lender’s liability claim, including as a result of actions taken if we actually render significant managerial assistance.
We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the loans and debt securities we acquire, the default rate on such loans and securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general economic conditions.
We could experience fluctuations in our quarterly operating results due to a number of factors, including the interest rate payable on the loans and debt securities we acquire, the default rate on such loans and securities, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses, the degree to which we encounter competition in our markets and general 55 economic conditions.
If this ratio declines below 150%, we will not be able to incur additional debt and could be required to sell a portion of our investments to repay some debt when it is otherwise disadvantageous for us to do so. This could have a material adverse effect on our operations, and we may not be able to make distributions.
If this ratio declines below 150%, we will not be able to incur additional debt and could be required to sell a portion of our investments to repay some debt when it is otherwise disadvantageous for us to do so. This could have a material adverse effect on our operations, and we may not be able to make 29 distributions.
Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these 51 events occurs, it could potentially jeopardize the confidential, proprietary and other information processed, stored in, and transmitted through our computer systems and networks.
Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed, stored in, and transmitted through our computer systems and networks.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. 48 Recent legislation has made many changes to the Code, including significant changes to the taxation of business entities, the deductibility of interest expense, and the tax treatment of capital investment.
The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Recent legislation has made many changes to the Code, including significant changes to the taxation of business entities, the deductibility of interest expense, and the tax treatment of capital investment.
As a result, it may be difficult for us to obtain desired financing to finance the growth of our investments on acceptable economic terms, or at all, during such periods of market volatility. If we are unable to consummate borrowing or financing arrangements on commercially reasonable terms, our liquidity may be reduced significantly.
As a result, it may be difficult for us to obtain desired financing to finance the growth of our investments on acceptable economic terms, or at all, during such periods of market volatility. 50 If we are unable to consummate borrowing or financing arrangements on commercially reasonable terms, our liquidity may be reduced significantly.
Furthermore, we cannot assure you that market disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy, and we cannot assure you that 50 assistance packages will be available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial crisis.
Furthermore, we cannot assure you that market disruptions in Europe, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy, and we cannot assure you that assistance packages will be available, or if available, be sufficient to stabilize countries and markets in Europe or elsewhere affected by a financial crisis.
Even if we have 40 sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our level of risk, because we prefer other opportunities or because we are inhibited by compliance with BDC requirements of the 1940 Act or the desire to maintain our qualification as a RIC.
Even if we have sufficient capital to make a desired follow-on investment, we may elect not to make a follow-on investment because we may not want to increase our level of risk, because we prefer other opportunities or because we are inhibited by compliance with BDC requirements of the 1940 Act or the desire to maintain our qualification as a RIC.
Risks Relating to an Investment in Our Common Stock We cannot assure you that the market price of shares of our common stock will not decline. Shares of closed-end investment companies, including BDCs, frequently trade at a discount from their net asset value and our stock may also be discounted in the market.
Risks Relating to an Investment in Our Securities We cannot assure you that the market price of shares of our common stock will not decline. Shares of closed-end investment companies, including BDCs, frequently trade at a discount from their net asset value and our stock may also be discounted in the market.
We may also be required to indemnify the purchasers of such investment to the extent that any such representations turn out to be inaccurate or with respect to potential liabilities. These arrangements may result in contingent liabilities that ultimately result in funding obligations that we must satisfy through our return of distributions previously made to us.
We may also be required to indemnify the purchasers of such investment 42 to the extent that any such representations turn out to be inaccurate or with respect to potential liabilities. These arrangements may result in contingent liabilities that ultimately result in funding obligations that we must satisfy through our return of distributions previously made to us.
Any public health emergency or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments and our portfolio companies. 49 Adverse developments in the credit markets may impair our ability to secure debt financing.
Any public health emergency or the threat thereof, and the resulting financial and economic market uncertainty could have a significant adverse impact on us and the fair value of our investments and our portfolio companies. Adverse developments in the credit markets may impair our ability to secure debt financing.
Upon a Change of 47 Control Repurchase Event, holders of the 2026 Notes may require us to repurchase for cash some or all of the 2026 Notes at a repurchase price equal to 100% of the aggregate principal amount of the 2026 Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date.
Upon a Change of Control Repurchase Event, holders of the 2026 Notes may require us to repurchase for cash some or all of the 2026 Notes at a repurchase price equal to 100% of the aggregate principal amount of the 2026 Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase date.
Nevertheless, any such changes could adversely affect our business and impair our ability to make distributions to our stockholders. Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.
Nevertheless, any such changes could adversely affect our business and impair our ability to make distributions to our stockholders. 34 Provisions of the Maryland General Corporation Law and of our charter and bylaws could deter takeover attempts and have an adverse impact on the price of our common stock.
If the resolution exempting business combinations is 34 repealed or our board of directors does not approve a business combination, the Business Combination Act may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.
If the resolution exempting business combinations is repealed or our board of directors does not approve a business combination, the Business Combination Act may discourage third parties from trying to acquire control of us and increase the difficulty of consummating such an offer.
Adverse economic, business, or regulatory developments affecting the professional services sector could have a negative impact on the value of our investments in portfolio companies operating in this industry, and therefore could negatively impact our business and results of operations. Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
Adverse economic, business, or regulatory developments affecting the professional services industry could have a negative impact on the value of our investments in portfolio companies operating in this industry, and therefore could negatively impact our business and results of operations. Our failure to make follow-on investments in our portfolio companies could impair the value of our portfolio.
Securities litigation could result in substantial costs and divert management’s attention and resources from our business. 44 Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock. Our two largest investors are Investcorp and Stifel.
Securities litigation could result in substantial costs and divert management’s attention and resources from our business. Sales of substantial amounts of our common stock in the public market may have an adverse effect on the market price of our common stock. Our two largest investors are Investcorp and Stifel.
However, the equity interests we receive may not appreciate in value and may decline in 42 value. As a result, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.
However, the equity interests we receive may not appreciate in value and may decline in value. As a result, we may not be able to realize gains from our equity interests, and any gains that we do realize on the disposition of any equity interests may not be sufficient to offset any other losses we experience.
All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally automatically reinvested in shares of our common stock. As a result, stockholders that do not participate in the dividend reinvestment 43 plan may experience dilution over time.
All distributions declared in cash payable to stockholders that are participants in our dividend reinvestment plan are generally automatically reinvested in shares of our common stock. As a result, stockholders that do not participate in the dividend reinvestment plan may experience dilution over time.
Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors of our subsidiaries will have priority over our equity interests in such entities (and therefore the claims of our 45 creditors, including holders of the 2026 Notes) with respect to the assets of such entities.
Except to the extent we are a creditor with recognized claims against our subsidiaries, all claims of creditors of our subsidiaries will have priority over our equity interests in such entities (and therefore the claims of our creditors, including holders of the 2026 Notes) with respect to the assets of such entities.
In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board, closely 32 approximates the fair value of such securities (less any distributing commission or discount).
In any such case, the price at which our securities are to be issued and sold may not be less than a price that, in the determination of our Board, closely approximates the fair value of such securities (less any distributing commission or discount).
The non-binding nature of consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information. We have retained the services of independent service providers to review the valuation of these loans and securities.
The non-binding nature of 33 consensus pricing and/or quotes accompanied by disclaimers materially reduces the reliability of such information. We have retained the services of independent service providers to review the valuation of these loans and securities.
If we decide to make any distributions consistent with this revenue procedure that are payable in part in our stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly designated as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes.
If we decide to make any distributions consistent with this Revenue Procedure that are payable in part in our stock, taxable stockholders receiving such dividends will be required to include the full amount of the dividend (whether received in cash, our stock, or combination thereof) as ordinary income (or as long-term capital gain to the extent such distribution is properly reported as a capital gain dividend) to the extent of our current and accumulated earnings and profits for U.S. federal income tax purposes.
Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in stock.
Furthermore, with respect to non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such dividends, including 43 in respect of all or a portion of such dividend that is payable in stock.
We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. 39 Our portfolio may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated.
We may also be more susceptible to any single economic or regulatory occurrence than a diversified investment company. 40 Our portfolio may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated.
As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock. We are subject to the Sarbanes-Oxley Act, and the related rules and regulations promulgated by the SEC.
As a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the market price of our common stock. We are subject to the Sarbanes-Oxley Act, and the related rules and regulations promulgated by the SEC.
The distribution requirement for a RIC is satisfied if we distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an annual basis.
The distribution requirement for a RIC is satisfied if we distribute at least 90% of our net ordinary income, net exempt interest income, and net short-term capital gains in excess of net long-term capital losses, if any, to our stockholders on an annual basis.
In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access 54 to credit and liquidity sources, thereby making it more difficult for us, our Adviser, or our portfolio companies to acquire financing on acceptable terms or at all.
In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us, our Adviser, or our portfolio companies to acquire financing on acceptable terms or at all. 56 Item 1B.
In 28 addition, individuals with whom the Adviser has relationships are not obligated to provide us with investment opportunities, and we can offer no assurance that these relationships will generate investment opportunities for us in the future. Our relationship with Investcorp may create conflicts of interest. Investcorp has an approximate 76% interest in the Adviser.
In addition, individuals with whom the Adviser has relationships are not obligated to provide us with investment opportunities, and we can offer no assurance that these relationships will generate investment opportunities for us in the future. 28 Our relationship with Investcorp may create conflicts of interest.
Middle-market companies also may be parties to litigation and may be engaged in 38 rapidly changing businesses with products subject to a substantial risk of obsolescence. In addition, our executive officers, directors and investment adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in portfolio companies.
Middle-market companies also may be parties to litigation and may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence. In addition, our executive officers, directors and investment adviser may, in the ordinary course of business, be named as defendants in litigation arising from our investments in portfolio companies. Our investments may include PIK interest.
Any of these events could disrupt our recognition in the market place, damage any goodwill we may have generated and otherwise harm our business. 36 Risks Relating to our Investments Economic recessions or downturns could adversely affect our portfolio companies, leading to defaults on our investments, which would harm our operating results.
Any of these events could disrupt our recognition in the marketplace, damage any goodwill we may have generated and otherwise harm our business. Risks Relating to Our Investments Economic recessions or downturns could adversely affect our portfolio companies, leading to defaults on our investments, which would harm our operating results.
Risks Relating to Our Investments • Economic recessions or downturns could adversely affect our portfolio companies, leading to defaults on our investments, which would harm our operating results. • The lack of liquidity in our investments may adversely affect our business. 27 • Our portfolio may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated. • Risks related to the transition away from LIBOR.
Risks Relating to Our Investments • Economic recessions or downturns could adversely affect our portfolio companies, leading to defaults on our investments, which would harm our operating results. • The lack of liquidity in our investments may adversely affect our business. 27 • Our portfolio may be concentrated in a limited number of industries, which may subject us to a risk of significant loss if there is a downturn in a particular industry in which a number of our investments are concentrated.
A decrease in energy use due to weather changes may affect some of our portfolio companies’ financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including service interruptions.
A decrease in energy use due to weather changes may affect some of our portfolio companies’ financial condition, through decreased revenues. Extreme weather conditions (including wildfires, droughts, hurricanes and floods) in general require more system backup, adding to costs, and can contribute to increased system stresses, including service interruptions.
These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the United States.
These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S.
As a result, our board of directors will determine the fair value of these loans and securities in good faith as described below in “— Most of our portfolio investments will be recorded at fair value as determined in good faith by our board of directors and, as a result, there may be uncertainty as to the value of our portfolio investments.” In connection with that determination, investment professionals from the Adviser may provide our board of directors with valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company.
Most of our portfolio investments will be recorded at fair value as determined in good faith by our board of directors and, as a result, there may be uncertainty as to the value of our portfolio investments.” In connection with that determination, investment professionals from the Adviser may provide our board of directors with valuations based upon the most recent portfolio company financial statements available and projected financial results of each portfolio company.
Efforts to comply with Section 404 of the Sarbanes-Oxley Act involve significant expenditures, and if we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Our Compliance with Section 404 of the Sarbanes-Oxley Act involves significant expenditures, and if we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Lenders of these funds have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default. As of June 30, 2024, substantially all of our assets were pledged as collateral under the Capital One Revolving Financing.
Lenders of these funds have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such lenders to seek recovery against our assets in the event of a default. As of December 31, 2025, substantially all of our assets were pledged as collateral under the Capital One Revolving Financing.
The occurrence of events similar to those in recent years, such as the aftermath of the war in Iraq, instability in Afghanistan, Pakistan, Egypt, Libya, Syria, Russia, Ukraine and the Middle East, ongoing epidemics of infectious diseases in certain parts of the world, such as the COVID-19 outbreak, terrorist attacks in the U.S. and around the world, social and political discord, debt crises, sovereign debt downgrades, continued tensions between North Korea and the United States and the international community generally, new and continued political unrest in various countries, such as Venezuela, the exit or potential exit of one or more countries from the EU or the Economic and Monetary Union, the change in the U.S. president and the new administration, among others, may result in market volatility, may have long term effects on the U.S. and worldwide financial markets, and may cause further economic uncertainties in the U.S. and worldwide.
The occurrence of events similar to those in recent years, such as the aftermath of the war in Iraq, instability in Afghanistan, Pakistan, Egypt, Libya, Syria, Russia, Ukraine and the Middle East, ongoing epidemics of infectious diseases in certain parts of the world, terrorist attacks in the U.S. and around the world, social and political discord, debt crises, sovereign debt downgrades, continued tensions between North Korea and the United States and the international community generally, new and continued political unrest in various countries, such as Venezuela, the exit or potential exit of one or more countries from the EU or the Economic and Monetary Union, the change in the U.S. president and the new administration, among others, may result in market volatility, may have long term effects on the U.S. and worldwide financial markets, and may cause further economic uncertainties in the U.S. and worldwide. 51 In addition, the foreign and fiscal policies of foreign nations, such as Russia and mainland China, may have a severe impact on the worldwide and U.S. financial markets.
Investcorp owns approximately 25% and Stifel owns approximately 15% of our total outstanding common stock. The shares held by Investcorp and Stifel are generally freely tradable in the public market, subject to the volume limitations, applicable holding periods and other provisions of Rule 144 under the Securities Act.
As of March 20, 2026, Investcorp owns approximately 25% and Stifel owns approximately 17% of our total outstanding common stock. The shares held by Investcorp and Stifel are generally freely tradable in the public market, subject to the volume limitations, applicable holding periods and other provisions of Rule 144 under the Securities Act.
We will also be negatively affected if the operations and effectiveness of the Adviser or a portfolio company (or any of the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted.
We will also be negatively affected if the operations and effectiveness of any of our portfolio companies (or any of the key personnel or service providers of the foregoing) is compromised or if necessary or beneficial systems and processes are disrupted.
As of June 30, 2024, we are a non-accelerated filer under the Securities Exchange Act of 1934, as amended, and, therefore, we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.
As of December 31, 2025, we are a non-accelerated filer under the Securities Exchange Act of 1934, as amended, and, therefore, we are not required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.
Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of customers of energy companies vary with weather conditions, primarily temperature and humidity.
The effect of global climate change may impact the operations of our portfolio companies. There may be evidence of global climate change. Climate change creates physical and financial risk and some of our portfolio companies may be adversely affected by climate change. For example, the needs of customers of energy companies vary with weather conditions, primarily temperature and humidity.
Because the Capital One Revolving Financing has, and any future borrowing or financing arrangements will likely have, customary cross-default provisions, if we have a default under the terms of the 2026 Notes, the obligations under the Capital One Revolving Financing or any future credit facility may be accelerated and we may be unable to repay or finance the amounts due.
Because the Capital One Revolving Financing has, and any future borrowing or financing arrangements will likely have, customary cross-default provisions, if we have a default under the terms of the 2026 Notes, the obligations under the Capital One Revolving Financing or any future credit facility may be accelerated and we may be unable to repay or finance the amounts due. 47 We may choose to redeem the 2026 Notes when prevailing interest rates are relatively low.
Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to maintain our qualification as a RIC.
We also may be required to include in income certain other amounts that we will not receive in cash. 48 Since in certain cases we may recognize income before or without receiving cash representing such income, we may have difficulty meeting the requirement to distribute at least 90% of our net ordinary income and net short-term capital gains in excess of net long-term capital losses, if any, to maintain our qualification as a RIC.
Such OID, which could be significant relative to our overall investment activities and increases in loan balances as a result of contracted PIK arrangements will be included in income before we receive any corresponding cash payments. We also may be required to include in income certain other amounts that we will not receive in cash.
Such OID, which could be significant relative to our overall investment activities and increases in loan balances as a result of contracted PIK arrangements will be included in income before we receive any corresponding cash payments.
Investment in leveraged companies involves a number of significant risks. Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold.
Leveraged companies in which we invest may have limited financial resources and may be unable to meet their obligations under their loans and debt securities that we hold.
As of June 30, 2024, we had, through SPV LLC, $43.0 million in outstanding indebtedness under the Capital One Revolving Financing, which are secured by the assets held at SPV LLC. The indebtedness under the Capital One Revolving Financing is effectively senior to the 2026 Notes to the extent of the value of the assets securing such indebtedness.
As of December 31, 2025, we had, through SPV LLC, $58.9 million in outstanding indebtedness under the Capital One Revolving Financing, which are secured by the assets held at SPV LLC. The indebtedness under the Capital One Revolving Financing is effectively senior to the 2026 Notes to the extent of the value of the assets securing such indebtedness.
Any of these factors could depress economic activity and restrict our portfolio companies’ access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us.
Any of these factors could depress economic activity and restrict our portfolio companies' access to suppliers or customers and have a material adverse effect on their business, financial condition and results of operations, which in turn would negatively impact us. We are subject to risks associated with artificial intelligence and machine learning technology.
We intend to invest a portion of our capital in second lien and subordinated loans issued by our portfolio companies. The portfolio companies usually have, or may be permitted to incur, other debt that ranks equally with, or senior to, the loans in which we invest.
Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies. We intend to invest a portion of our capital in second lien and subordinated loans issued by our portfolio companies.
In total, these general liabilities were $11.0 million as of June 30, 2024. The 2026 Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries. The 2026 Notes are obligations exclusively of Investcorp Credit Management BDC, Inc., and not of any of our subsidiaries.
In total, these general liabilities were $4.4 million as of December 31, 2025. 45 The 2026 Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries. The 2026 Notes are obligations exclusively of Investcorp Credit Management BDC, Inc., and not of any of our subsidiaries.
We may choose to redeem the 2026 Notes when prevailing interest rates are relatively low. The 2026 Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option.
The 2026 Notes are redeemable in whole or in part upon certain conditions at any time or from time to time at our option. We may choose to redeem the 2026 Notes from time to time, especially if prevailing interest rates are lower than the rate borne by the 2026 Notes.
We expect to make most of our portfolio investments in the form of loans and securities that are not publicly traded and for which there are limited or no market-based price quotations available.
We expect to make most of our portfolio investments in the form of loans and securities that are not publicly traded and for which there are limited or no market-based price quotations available. As a result, our board of directors will determine the fair value of these loans and securities in good faith.
However, the Adviser will likely not make investment decisions for us solely on the basis of ESG considerations. In evaluating an investment that may have scored less favorably on ESG factors initially, the Adviser will consider other factors in its investment decision. Additionally, new regulatory initiatives related to ESG could adversely affect our business.
In evaluating an investment that may have scored less favorably on ESG factors initially (to the extent applicable), the Adviser will consider other factors in its investment decision. Additionally, new regulatory initiatives related to ESG could adversely affect our business.
Other debt we issue or incur in the future could contain more protections for its holders than the Indenture and the 2026 Notes, including additional covenants and events of default.
Other debt we issue or incur in the future could contain more protections for its holders than the Indenture and the 2026 Notes, including additional covenants and events of default. The issuance or incurrence of any such debt with incremental protections could affect the market for trading levels and prices of the 2026 Notes.
Our investments in private and middle-market portfolio companies are risky, and we could lose all or part of our investment. Investment in private and middle-market companies involves a number of significant risks.
We may participate in “first out” and “last out” tranches of unitranche loans and make single unitranche loans. Our investments in private and middle-market portfolio companies are risky, and we could lose all or part of our investment. Investment in private and middle-market companies involves a number of significant risks.
The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before us.
The holders of obligations secured by such liens will generally control the liquidation of, and be entitled to receive proceeds from, any realization of such collateral to repay their obligations in full before us. In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors.
There is significant uncertainty about the future relationship between the United States and other countries with respect to the trade policies, treaties and tariffs.
There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, treaties and tariffs.
Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. If we issue senior securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss.
Also, any amounts that we use to service our indebtedness would not be available for distributions to our common stockholders. If we issue senior securities, we will be exposed to typical risks associated with leverage, including an increased risk of loss. Before the repayment of debt subsequent to year end, the Company's asset coverage ratio was near this 150% limit.
Our portfolio may be concentrated in a limited number of industries. A downturn in any particular industry in which we are invested could significantly impact the aggregate returns we realize.
Our portfolio may be concentrated in a limited number of industries. A downturn in any particular industry in which we are invested could significantly impact the aggregate returns we realize. As of December 31, 2025, our investments in the professional services industry represented 14.50% of the fair value of our portfolio.
Thus, we may be required to pay the Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.
The Advisory Agreement entitles our Adviser to receive an incentive fee based on our pre-incentive fee net investment income regardless of any capital losses. Thus, we may be required to pay the Adviser incentive compensation for a fiscal quarter even if there is a decline in the value of our portfolio or we incur a net loss for that quarter.
The 2026 Notes are not listed on any securities exchange or for quotation on any automated dealer quotation system. As such, there currently is no trading market.
There is no active trading market for the 2026 Notes. If an active trading market does not develop for the 2026 Notes, you may not be able to sell them. The 2026 Notes are not listed on any securities exchange or for quotation on any automated dealer quotation system. As such, there currently is no trading market.
Losses from terrorist attacks are generally uninsurable. Changes to United States tariff and import/export regulations may have a negative effect on our portfolio companies and, in turn, harm us. There has been ongoing discussion and commentary regarding potential significant changes to United States trade policies, treaties and tariffs.
Losses from terrorist attacks are generally uninsurable. Changes to United States tariff and import/export regulations may have a negative effect on our portfolio companies and, in turn, harm us. The United States has recently enacted and proposed to enact significant new tariffs.
In addition, our common stockholders will bear the burden of any increase in our expenses as a result of our use of leverage, including interest expenses and any increase in the Base Management Fee payable to the Adviser. 29 As a BDC, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 150%.
As a BDC, we generally are required to meet a coverage ratio of total assets to total borrowings and other senior securities, which include all of our borrowings and any preferred stock that we may issue in the future, of at least 150%.
In addition, the value of such collateral in the event of liquidation will depend on market and economic conditions, the availability of buyers and other factors. 41 There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured loan obligations after payment in full of all secured loan obligations.
There can be no assurance that the proceeds, if any, from sales of such collateral would be sufficient to satisfy our unsecured loan obligations after payment in full of all secured loan obligations.
Additionally, remote working environments may be less secure and more susceptible to cyber-attacks, including phishing and social engineering attempts. We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.
We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our common stock and our ability to pay dividends.
In addition, any such increase in a loan balance due to the receipt of PIK interest will cause such loan to accrue interest on the higher loan balance, which will result in an increase in our pre-incentive fee net investment income and, as a result, an increase in incentive fees that are payable to the Adviser. 35 Our incentive fee arrangements with the Adviser may vary from those of other investment funds, account or investment vehicles that the Adviser may manage in the future, which may create an incentive for the Adviser to devote time and resources to a higher fee-paying fund.
In addition, any such increase in a loan balance due to the receipt of PIK interest will cause such loan to accrue interest on the higher loan balance, which will result in an increase in our pre-incentive fee net investment income and, as a result, an increase in incentive fees that are payable to the Adviser.
In addition, under the Capital One Revolving Financing or any future borrowing facility we will be subject to limitations as to how borrowed funds may be used, which may include restrictions on geographic and industry concentrations, loan size, payment frequency and status, average life, collateral interests and investment ratings, as well as regulatory restrictions on leverage, which may affect the amount of funding that may be obtained.
In the event that all of our assets are secured at the time of such a borrowing base deficiency, we could be required to repay advances under the Capital One Revolving Financing or any other borrowing facility or make deposits to a collection account, either of which could have a material adverse impact on our ability to fund future investments and to make stockholder distributions. 30 In addition, under the Capital One Revolving Financing or any future borrowing facility we will be subject to limitations as to how borrowed funds may be used, which may include restrictions on geographic and industry concentrations, loan size, payment frequency and status, average life, collateral interests and investment ratings, as well as regulatory restrictions on leverage, which may affect the amount of funding that may be obtained.
Assumed Return on Our Portfolio (1) (net of expenses) (10.0)% (5.0)% 0.0% 5.0% 10.0% Corresponding net return to common stockholder ( 32.7 )% ( 19.9 )% ( 7.1 )% 5.7 % 18.6 % (1) Assumes $192.2 million in total assets, $106.2 million in debt outstanding, $75.0 million in net assets, and an average cost of funds of 5.00%.
Assumed Return on Our Portfolio (1) (net of expenses) (10.0)% (5.0)% 0.0% 5.0% 10.0% Corresponding net return to common stockholder ( 41.0 )% ( 25.6 )% ( 10.1 )% 5.3 % 20.8 % (1) Assumes $188.8 million in total assets, $123.9 million in debt outstanding at par value, $61.3 million in net assets, and an average cost of funds of 5.00%.
These events, in turn, could have a material adverse effect on our operating results and negatively affect the market price of our common stock and our ability to pay dividends to our stockholders. 52 Increased geopolitical unrest, terrorist attacks, or acts of war may affect any market for our common stock, impact the businesses in which we invest, and harm our business, operating results, and financial conditions.
Increased geopolitical unrest, terrorist attacks, or acts of war may affect any market for our common stock, impact the businesses in which we invest, and harm our business, operating results, and financial condition.
The effects of a public health emergency may materially and adversely impact (i) the value and performance of us and our portfolio companies, (ii) the ability of our borrowers to continue to meet loan covenants or repay loans provided by us on a timely basis or at all, which may require us to restructure our investments or write down the value of our investments, (iii) our ability to repay debt obligations, on a timely basis or at all, or (iv) our ability to source, manage and divest investments and achieve our investment objectives, all of which could result in significant losses to us.
Other adverse developments may occur or reoccur, including: (i) the decline in value and performance of us and our portfolio companies; (ii) the ability of our borrowers to continue to meet loan covenants or repay loans provided by us on a timely basis or at all, which may require us to restructure our investments or write down the value of our investments; (iii) our ability to comply with the covenants and other terms of our debt obligations and to repay such obligations, on a timely basis or at all; (iv) our ability to comply with certain regulatory requirements, such as asset coverage requirements under the 1940 Act; (v) our ability to maintain our distributions at their current level or to pay them at all; or (vi) our ability to source, manage and divest investments and achieve our investment objectives, all of which could result in significant losses to us.
The consideration of ESG factors as part of the Adviser’s investment process and the exclusion of certain investments due to ESG considerations may reduce the types and number of investment opportunities available to us. As a result, we may underperform compared to other funds that do not consider ESG factors or exclude investments due to ESG considerations.
The consideration of ESG factors as part of the Adviser’s investment process (to the extent that the Adviser considers such ESG factors) and the potential exclusion of certain investments due to ESG considerations (to the extent applicable) may reduce the types and number of investment opportunities available to us.
Depending on market conditions, we could incur substantial realized losses and may suffer additional unrealized losses in future periods, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 37 We may hold the loans and debt securities of leveraged companies that may, due to the significant operating volatility typical of such companies, enter into bankruptcy proceedings, and we could lose all or part of our investment, which would harm our operating results.
We may hold the loans and debt securities of leveraged companies that may, due to the significant operating volatility typical of such companies, enter into bankruptcy proceedings, and we could lose all or part of our investment, which would harm our operating results. Investment in leveraged companies involves a number of significant risks.
Portfolio companies in the professional services sector are subject to many risks, including the negative impact of regulation, changing technology, a competitive marketplace and difficulty in obtaining financing. Portfolio companies in the professional services industry must respond quickly to technological changes and understand the impact of these changes on customers’ preferences.
Portfolio companies in the professional services industry must respond quickly to technological changes and understand the impact of these changes on customers’ preferences.
Additionally, prepayments could negatively impact our ability to make, or the amount of, stockholder distributions with respect to our common stock, which could result in a decline in the market price of our shares. Our portfolio companies may incur debt that ranks equally with, or senior to, our investments in such companies.
As a result, our results of operations could be materially adversely affected if one or more of our portfolio companies elects to prepay amounts owed to us. 41 Additionally, prepayments could negatively impact our ability to make, or the amount of, stockholder distributions with respect to our common stock, which could result in a decline in the market price of our shares.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeManagement of the Company is informed about and monitors the prevention, detection, mitigation, and remediation of cyber security incidents impacting the Company, including through the receipt of notifications from service providers and reliance on communications with risk management, legal, information technology, and/or compliance personnel of the Adviser. 55 Assessment of Cyber Security Risk The potential impact of risks from cyber security threats on the Company are assessed on an ongoing basis, and how such risks could materially affect the Company’s business strategy, results of operation, and financial condition are regularly evaluated.
Biggest changeManagement of the Company is informed about and monitors the prevention, detection, mitigation, and remediation of cyber security incidents impacting the Company, including through the receipt of notifications from service providers and reliance on communications with risk management, legal, information technology, and/or compliance personnel of the Adviser.
During the reporting period, the Company has not identified any risks from cyber security threats, including as a result of previous cyber security incidents, that the Company believes have materially affected, or are reasonably likely to materially affect, the Company, including its business strategy, results of operation, and financial condition.
During the reporting period, the Company has not identified any risks from cyber security threats, including as a result of previous cyber security incidents, that the Company believes have materially affected , or are reasonably likely to materially affect, the Company, including its business strategy, results of operation, and financial condition. 57
Added
Assessment of Cyber Security Risk The potential impact of risks from cyber security threats on the Company are assessed on an ongoing basis, and how such risks could materially affect the Company’s business strategy, results of operation, and financial condition are regularly evaluated.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We do not own any real estate. Our principal executive offices are currently located at 280 Park Avenue 39 h Floor, New York, New York 10017. All locations are provided to us by the Adviser pursuant to the Administration Agreement.
Biggest changeItem 2. Properties We do not own any real estate. Our principal executive offices are currently located at 280 Park Avenue 39 th Floor, New York, New York 10017. All locations are provided to us by the Adviser pursuant to the Administration Agreement.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations. Item 4. Min e Safety Disclosures Not applicable. 56 PA RT II
Biggest changeWhile the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations. Item 4. Min e Safety Disclosures Not applicable. 58 PA RT II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table reflects, for the periods indicated, the distributions per share that our board of directors has declared on our common stock: Fiscal Year Ended Distribution Date Declared Record Date Pay Date Amount Per Share June 30, 2025 First Quarter Base September 18, 2024 October 16, 2024 November 6, 2024 $0.12 June 30, 2024 Fourth Quarter Base April 12, 2024 May 26, 2024 June 14, 2024 $0.12 Fourth Quarter Supplemental April 12, 2024 May 26, 2024 June 14, 2024 $0.03 Third Quarter Base February 8, 2024 March 15, 2024 April 5, 2024 $0.12 Third Quarter Supplemental February 8, 2024 March 15, 2024 April 5, 2024 $0.03 Second Quarter Base November 9, 2023 December 14, 2023 January 8, 2024 $0.12 Second Quarter Supplemental November 9, 2023 December 14, 2023 January 8, 2024 $0.03 First Quarter Base September 14, 2023 October 12, 2023 November 2, 2023 $0.12 First Quarter Supplemental September 14, 2023 October 12, 2023 November 2, 2023 $0.03 June 30, 2023 Fourth Quarter Base May 4, 2023 June 16, 2023 July 7, 2023 $0.13 Fourth Quarter Supplemental May 4, 2023 June 16, 2023 July 7, 2023 $0.05 Third Quarter Base February 2, 2023 March 10, 2023 March 30, 2023 $0.13 Third Quarter Supplemental February 2, 2023 March 10, 2023 March 30, 2023 $0.02 Second Quarter Base November 11, 2022 December 16, 2022 January 10, 2023 $0.13 Second Quarter Supplemental November 11, 2022 December 16, 2022 January 10, 2023 $0.02 First Quarter Base August 25, 2022 September 23, 2022 October 14, 2022 $0.15 June 30, 2022 Fourth Quarter Base May 5, 2022 June 17, 2022 July 8, 2022 $0.15 Third Quarter Base February 3, 2022 March 11, 2022 March 31, 2022 $0.15 Second Quarter Base November 3, 2021 December 10, 2021 January 4, 2022 $0.15 First Quarter Base August 25, 2021 September 24, 2021 October 14, 2021 $0.15 Total $2.64 Sales of Unregistered Securities Except as previously reported by the Company on its current reports on Form 8-K, the Company did not engage in any sales of unregistered securities during the fiscal year ended June 30, 2024 .
Biggest changeThe following table reflects, for the periods indicated, the distributions per share that our board of directors has declared on our common stock: Fiscal Year Ended Distribution Date Declared Record Date Pay Date Amount per Share December 31, 2025 Fourth Quarter Base November 10, 2025 December 1, 2025 December 12, 2025 $0.12 Fourth Quarter Supplemental November 10, 2025 December 1, 2025 December 12, 2025 0.02 Third Quarter Base August 7, 2025 September 18, 2025 October 9, 2025 0.12 Third Quarter Supplemental August 7, 2025 September 18, 2025 October 9, 2025 0.02 Second Quarter Base April 15, 2025 May 24, 2025 June 14, 2025 0.12 First Quarter Base March 20, 2025 April 25, 2025 May 16, 2025 0.12 December 31, 2024 Second Quarter Base November 6, 2024 December 20, 2024 January 8, 2025 0.12 First Quarter Base September 18, 2024 October 16, 2024 November 6, 2024 0.12 June 30, 2024 Fourth Quarter Base April 12, 2024 May 26, 2024 June 14, 2024 0.12 Fourth Quarter Supplemental April 12, 2024 May 26, 2024 June 14, 2024 0.03 Third Quarter Base February 8, 2024 March 15, 2024 April 5, 2024 0.12 Third Quarter Supplemental February 8, 2024 March 15, 2024 April 5, 2024 0.03 Second Quarter Base November 9, 2023 December 14, 2023 January 8, 2024 0.12 Second Quarter Supplemental November 9, 2023 December 14, 2023 January 8, 2024 0.03 First Quarter Base September 14, 2023 October 12, 2023 November 2, 2023 0.13 First Quarter Supplemental September 14, 2023 October 12, 2023 November 2, 2023 0.02 June 30, 2023 Fourth Quarter Base May 4, 2023 June 16, 2023 July 7, 2023 0.13 Fourth Quarter Supplemental May 4, 2023 June 16, 2023 July 7, 2023 0.05 Third Quarter Base February 2, 2023 March 10, 2023 March 30, 2023 0.13 Third Quarter Supplemental February 2, 2023 March 10, 2023 March 30, 2023 0.02 Second Quarter Base November 11, 2022 December 16, 2022 January 10, 2023 0.13 Second Quarter Supplemental November 11, 2022 December 16, 2022 January 10, 2023 0.02 First Quarter Base August 25, 2022 September 23, 2022 October 14, 2022 0.15 $1.99 60 Stock Performance Graph This graph compares the return on our common stock with that of the NASDAQ Financial Index and a customized peer group of six companies that includes CION Investment Corporation, Crescent Capital BDC, Inc., Fidus Investment Corporation, Monroe Capital Corporation, Stellus Capital Investment Corporation, and WhiteHorse Finance Inc., for the period from June 30, 2020 through December 31, 2025.
Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. We may, in the future, make actual distributions to our stockholders of our net capital gains.
Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. We 59 may, in the future, make actual distributions to our stockholders of our net capital gains.
If we qualify as a RIC, we will not be taxed on our investment 57 company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to stockholders on a timely basis.
If we qualify as a RIC, we will not be taxed on our investment company taxable income or realized net capital gains, to the extent that such taxable income or gains are distributed, or deemed to be distributed, to stockholders on a timely basis.
The graph assumes that, on June 30, 2019 an investment of $100 (with reinvestment of all dividends) was made in our common stock, in each index and in the peer group. The graph measures total stockholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in like securities.
The graph assumes that, on June 30, 2020 an investment of $100 (with reinvestment of all dividends) was made in our common stock, in each index and in the peer group. The graph measures total stockholder return, which takes into account both changes in stock price and dividends. It assumes that dividends paid are invested in like securities.
To qualify for RIC tax treatment, we must, among other things, distribute at least 90% of our net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any.
To qualify for RIC tax treatment, we must, among other things, distribute at least 90% of our net ordinary income, net exempt interest income, and realized net short-term capital gains in excess of realized net long-term capital losses, if any.
See “Dividend Reinvestment Plan.” * The last reported sale price for our common stock on the NASDAQ Global Select Market on September 24, 2024 was $3.16 per share. As of September 24, 2024, we had 30 stockholders of record, which did not include stockholders for whom shares are held in nominee or “street” name.
See “Dividend Reinvestment Plan.” * The last reported sale price for our common stock on the NASDAQ Global Select Market on March 20, 2026 was $1.71 per share. As of March 20, 2026, we had 24 stockholders of record, which did not include stockholders for whom shares are held in nominee or “street” name.
Market for Re gistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Price Range of Common Stock Our common stock is traded on the NASDAQ Global Select Market under the symbol “ICMB.” The following table sets forth, for the periods indicated, the range of high and low sales prices of our common stock, as reported on the NASDAQ Global Select Market: NAV Per Share (1) Closing Sales Price (2) Premium or Discount of High Sales to NAV (3) Premium or Discount of Low Sales to NAV (3) Distributions Per Share (4) Fiscal Year Ended High Low June 30, 2025 First quarter (through September 24, 2024) $ * $ 3.39 $ 3.05 * % * % $0.12 June 30, 2024 Fourth quarter 5.21 3.55 3.12 ( 31.86 )% ( 40.21 )% 0.15 Third quarter 5.49 3.73 2.99 ( 32.06 )% ( 45.54 )% 0.15 Second quarter 5.48 4.09 3.23 ( 25.36 )% ( 41.06 )% 0.15 First quarter 5.83 4.35 3.68 ( 25.47 )% ( 36.88 )% 0.15 June 30, 2023 Fourth quarter 6.09 3.98 3.24 ( 34.97 )% ( 46.99 )% 0.18 Third quarter 6.13 4.23 3.39 ( 31.00 )% ( 44.70 )% 0.15 Second quarter 6.36 4.32 3.42 ( 32.08 )% ( 46.23 )% 0.15 First quarter 6.47 4.85 3.52 ( 25.04 )% ( 45.60 )% 0.15 June 30, 2022 Fourth quarter 6.50 5.35 3.75 ( 17.69 )% ( 42.31 )% 0.15 Third quarter 6.93 5.72 5.08 ( 17.46 )% ( 26.70 )% 0.15 Second quarter 7.09 5.70 4.87 ( 19.61 )% ( 31.38 )% 0.15 First quarter 7.00 6.42 5.30 ( 8.29 )% ( 24.29 )% 0.15 (1) Net asset value (“ NAV”) is determined as of the last date in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices.
Market for Re gistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Price Range of Common Stock Our common stock is traded on the NASDAQ Global Select Market under the symbol “ICMB.” The following table sets forth, for the periods indicated, the range of high and low sales prices of our common stock, as reported on the NASDAQ Global Select Market: NAV Per Share (1) Closing Sales Price (2) Premium or Discount of High Sales to NAV (3) Premium or Discount of Low Sales to NAV (3) Distributions Per Share (4) Fiscal Year Ended High Low December 31, 2026 First quarter (through March 20, 2026) $ * $ 3.09 $ 1.60 * % * % $— December 31, 2025 Fourth quarter 4.25 3.05 2.61 ( 28.24 )% ( 38.59 )% 0.14 Third quarter 5.04 3.07 2.65 ( 39.19 )% ( 47.42 )% 0.14 Second quarter 5.27 3.22 2.56 ( 38.99 )% ( 51.42 )% 0.12 First quarter 5.42 3.34 3.03 ( 38.47 )% ( 44.10 )% 0.12 December 31, 2024 Second quarter 5.39 3.33 2.93 ( 38.22 )% ( 45.64 )% 0.12 First quarter 5.55 3.39 3.05 ( 38.92 )% ( 45.05 )% 0.12 June 30, 2024 Fourth quarter 5.21 3.55 3.12 ( 31.86 )% ( 40.21 )% 0.15 Third quarter 5.49 3.73 2.99 ( 32.06 )% ( 45.54 )% 0.15 Second quarter 5.48 4.09 3.23 ( 25.36 )% ( 41.06 )% 0.15 First quarter 5.83 4.35 3.68 ( 25.47 )% ( 36.88 )% 0.15 June 30, 2023 Fourth quarter 6.09 3.98 3.24 ( 34.97 )% ( 46.99 )% 0.18 Third quarter 6.13 4.23 3.39 ( 31.00 )% ( 44.70 )% 0.15 Second quarter 6.36 4.32 3.42 ( 32.08 )% ( 46.23 )% 0.15 First quarter 6.47 4.85 3.52 ( 25.04 )% ( 45.60 )% 0.15 (1) Net asset value (“NAV”) is determined as of the last date in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices.
As of September 24, 2024 , our shares of common stock traded at a discount equal to approximately 39.35 % of the net assets attributable to those shares based upon our $ 5.21 net asset value per share as of June 30, 2024.
As of March 20, 2026, our shares of common stock traded at a discount equal to approximately 59.76 % of the net assets attributable to those shares based upon our $ 4.25 net asset value per share as of December 31, 2025.
Removed
Purchases of Equity Securities None. 58 Stock Performance Graph This graph compares the return on our common stock with that of the NASDAQ Financial Index and a customized peer group of six companies that includes Crescent Capital BDC, Inc., Stellus Capital Investment Corporation, First Eagle Alternative Capital BDC, Inc., Monroe Capital Corporation, CION Investment Corporation, and WhiteHorse Finance Inc., for the period from June 30, 2019 through June 30, 2024.
Added
The stock price performance included in the above graph is not necessarily indicative of future stock price performance. Sales of Unregistered Securities Except as previously reported by the Company on its current reports on Form 8-K, the Company did not engage in any sales of unregistered securities during the fiscal year ended December 31, 2025 .
Removed
The stock price performance included in the above graph is not necessarily indicative of future stock price performance. Item 6. [Reserved] 59
Added
Purchases of Equity Securities On August 7, 2025, our Board authorized a share repurchase program to acquire up to $5 million in the aggregate of our common stock at prices below our net asset value per share over a one-year period, effective August 7, 2025 and terminating on August 7, 2026 in accordance with all applicable securities laws and regulations. 61 The following table summarizes the shares repurchased under the share repurchase program during the year ended December 31, 2025: Monthly Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Program August 1 - August 31, 2025 — $— — $5,000,000 September 1 - September 30, 2025 — — — 5,000,000 October 1 - October 31, 2025 13,627 2.84 13,627 4,961,232 November 1 - November 30, 2025 — — — 4,961,232 December 1 - December 31, 2025 — — — 4,961,232 Total Repurchases 13,627 13,627 Item 6. [Reserved] 62

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

84 edited+44 added−12 removed108 unchanged
Biggest changeThe following table shows the investment rankings of the investments in our portfolio, according to the Adviser’s investment rating system: As of June 30, 2024 As of June 30, 2023 Investment Rating Fair Value % of Portfolio Number of Investments Fair Value % of Portfolio Number of Investments 1 $ 18,475,458 10.0 % 3 $ 16,538,345 7.5 % 3 2 116,964,511 63.4 35 114,979,324 52.2 32 3 34,035,340 18.4 13 62,588,392 28.4 19 4 2,621,154 1.4 2 13,067,850 6 5 5 12,473,067 6.8 7 12,937,418 5.9 6 Total $ 184,569,530 100.0 % 60 $ 220,111,329 100.0 % 65 69 Results of Operations Comparison of the years ended June 30, 2024 and June 30, 2023 Investment income Investment income, attributable primarily to dividends, interest and fees on our debt investments, for the year ended June 30, 2024 decreased to $23.9 million from $26.7 million for the year ended June 30, 2023, primarily due to a decrease in interest income related to the sale of two portfolio companies and the repayment of twelve portfolio companies, and portfolio companies on non-accrual status, partially offset by an increase in payment in-kind interest income earned on Crafty Apes, LLC and American Nuts Holdings, LLC - Term Loan A, which were removed from non-accrual status during the quarter ended December 31, 2023.
Biggest changeThe following table shows the investment ratings of the investments in our portfolio, according to the Adviser’s investment rating system: As of December 31, 2025 As of December 31, 2024 As of June 30, 2024 Investment Rating Fair Value % of Portfolio Number of Investments Fair Value % of Portfolio Number of Investments Fair Value % of Portfolio Number of Investments 1 $4,323,793 2.5% 3 $13,652,523 7.1% 3 $18,475,458 10.0% 3 2 111,975,828 64.9% 36 143,015,256 74.6% 47 116,964,511 63.4% 35 3 43,224,192 25.0% 12 27,867,563 14.6% 11 34,035,340 18.4% 13 4 13,125,458 7.6% 8 — — — 2,621,154 1.4% 2 5 9,591 0.0% 9 7,081,616 3.7% 10 12,473,067 6.8% 7 Total $172,658,862 100.0% 68 $191,616,958 100.0% 71 $184,569,530 100.0% 60 72 Results of Operations Comparison of the twelve months ended December 31, 2025 and twelve months ended December 31, 2024 Investment income Investment income, attributable primarily to dividends, interest and fees on our debt investments, for the twelve months ended December 31, 2025 decreased to $17.4 million from $23.4 million for the twelve months ended December 31, 2024 primarily due to a decrease in interest income due to lower index and interest rates and the sale and repayment of twelve portfolio companies and a decrease in PIK interest income primarily related to the removal of the Klein Hersh, LLC Term Loan from non-accrual status during the twelve months ended December 31, 2024 as well as overall lower PIK rates and a decrease in PIK dividend income related to Fusion Connect, Inc. - Series A Preferred, partially offset by an increase in other fee income related to prepayment fee income on 4L Technologies, Inc.
You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Overview Investcorp Credit Management BDC, Inc.
You are advised to consult any additional disclosures that we may make directly to you or through reports that we may file in the future with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Overview Investcorp Credit Management BDC, Inc.
(9) On March 26, 2021, we caused notice to be issued to the holders of the 2023 Notes regarding our exercise of the option to redeem in full all $51,375,000 in aggregate principal amount of the 2023 Notes at 100% of their principal amount ($25 per 72 Note), plus the accrued and unpaid interest thereon from April 1, 2021, through, but excluding, the redemption date, April 25, 2021.
(9) On March 26, 2021, we caused notice to be issued to the holders of the 2023 Notes regarding our exercise of the option to redeem in full all $51,375,000 in aggregate principal amount of the 2023 Notes at 100% of their principal amount ($25 per Note), plus the accrued and unpaid interest thereon from April 1, 2021, through, but excluding, the redemption date, April 25, 2021.
Department of the Treasury (“Treasury”) regulations and a revenue procedure issued by the Internal Revenue Service, a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder elects to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution.
Department of the Treasury Regulations and a Revenue Procedure issued by the Internal Revenue Service, a RIC may treat a distribution of its own stock as fulfilling its RIC distribution requirements if each stockholder elects to receive his or her entire distribution in either cash or stock of the RIC, subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least 20% of the aggregate declared distribution.
The total net proceeds to us from the 2026 Notes after deducting underwriting discounts and commissions of approximately $1.3 million and estimated offering expenses of approximately $215,000, were approximately $63.1 million. Regulated Investment Company Status and Distributions We have elected to be treated as a RIC under Subchapter M of the Code.
The total net proceeds to us from the 2026 Notes after deducting underwriting discounts and commissions of approximately $1.3 million and estimated offering expenses of approximately $215,000, were approximately $63.1 million. 76 Regulated Investment Company Status and Distributions We have elected to be treated as a RIC under Subchapter M of the Code.
Because a readily available market value for many of the investments in our portfolio is often not available, we value many of our portfolio investments at fair value as 62 determined in good faith by our board of directors using a consistently applied valuation process in accordance with a documented valuation policy that has been reviewed and approved by our board of directors.
Because a readily available market value for many of the investments in our portfolio is often not available, we value many of our portfolio investments at fair value as determined in good faith by our board of directors using a consistently applied valuation process in accordance with a documented valuation policy that has been reviewed and approved by our board of directors.
As markets change, new types of investments are made, or pricing for certain investments becomes more or less observable, our board of directors may refine our valuation methodologies to best reflect the fair value of our investments appropriately. Our investments are categorized based on the types of inputs used in their valuation.
As markets change, new types of investments are made, or pricing for certain investments becomes more or less observable, our board of directors may refine our valuation methodologies to best reflect the fair value of our investments appropriately. 66 Our investments are categorized based on the types of inputs used in their valuation.
Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market revalue, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that we may ultimately realize.
Due to the inherent uncertainty and subjectivity of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may differ significantly from the values that would have been used had a readily available market value existed for such investments and may differ materially from the values that we may ultimately realize.
If such amount is negative, then no Capital Gains Fee will be payable for such year. Additionally, if the Advisory Agreement is terminated as of a date that is not a fiscal year 74 end, the termination date will be treated as though it were a fiscal year end for purposes of calculating and paying the Capital Gains Fee.
If such amount is negative, then no Capital Gains Fee will be payable for such year. Additionally, if the Advisory Agreement is terminated as of a date that is not a fiscal year end, the termination date will be treated as though it were a fiscal year end for purposes of calculating and paying the Capital Gains Fee.
There can be no assurance that such unrealized capital appreciation will be realized in the future. Accordingly, the amount of the accrued Capital Gains Fee at a reporting date may vary from the Capital Gains Fee that is ultimately realized, and the differences could be material.
There can 78 be no assurance that such unrealized capital appreciation will be realized in the future. Accordingly, the amount of the accrued Capital Gains Fee at a reporting date may vary from the Capital Gains Fee that is ultimately realized, and the differences could be material.
To maintain our RIC status, we generally must distribute substantially all of our net taxable income to stockholders in the form of dividends. Our net taxable income does not necessarily equal our net income as calculated in accordance with U.S.
To maintain our RIC status, we generally must distribute substantially all of our net taxable income to stockholders in the form of dividends. Our net taxable income does not necessarily equal our net income as calculated in accordance with U.S. GAAP.
Net investment income Net investment income decreased to $6.6 million for the year ended June 30, 2024 from $9.4 million for the year ended June 30, 2023, primarily due to a decrease in interest income related to the sale of two portfolio companies and the repayment of twelve portfolio companies, and portfolio companies on non-accrual status, partially offset by an increase in payment in-kind interest income earned on Crafty Apes, LLC and American Nuts Holdings, LLC - Term Loan A, which were removed from non-accrual status during the quarter ended December 31, 2023.
Net investment income Net investment income decreased to $6.6 million for the twelve months ended June 30, 2024 from $9.4 million for the twelve months ended June 30, 2023 primarily due to a decrease in interest income related to the sale of two portfolio companies and the repayment of twelve portfolio companies, and portfolio companies on non-accrual status, partially offset by an increase in payment in-kind interest income earned on Crafty Apes, LLC and American Nuts Holdings, LLC - Term Loan A, which were removed from non-accrual status during the quarter ended December 31, 2023.
You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report on Form 10-K. 60 We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation.
You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Annual Report on Form 10-K. 63 We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation.
We recorded a net change in unrealized depreciation of $8.1 million for the year ended June 30, 2022, primarily due to the restructure of 1888 Industrial Services, LLC –Term B and Fusion Connect Inc. –Take-Back Term Loan offset by the decrease in fair value of Techniplas Foreign Holdco LP common stock.
We recorded a net change in unrealized appreciation of $8.1 million for the year ended June 30, 2022, primarily due to the restructure of 1888 Industrial Services, LLC –Term B and Fusion Connect Inc. –Take-Back Term Loan offset by the decrease in fair value of Techniplas Foreign Holdco LP common stock.
Net realized gain or loss The net realized loss on investments totaled $26.9 million for the year ended June 30, 2023, primarily due to the write off of our investments in the American Teleconferencing Services, Ltd. (d/b/a Premiere Global Services, Inc.) 1st and 2nd lien term loans.
Net realized gain (loss) from investments The net realized loss on investments totaled $26.9 million for the year ended June 30, 2023, primarily due to the write off of our investments in the American Teleconferencing Services, Ltd. (d/b/a Premiere Global Services, Inc.) 1st and 2nd lien term loans.
Net change in unrealized (depreciation) appreciation on investments We recorded a net change in unrealized appreciation of $3.3 million for the year ended June 30, 2024, primarily due to the decrease in fair value of our investments in ArborWorks, LLC A-1 Preferred, Klein Hersh, LLC, and Techniplas Foreign Holdco LP, partially offset by the increase in fair value of our investment in Discovery Behavioral Health and due to the realization of previously unrealized losses resulting from the sale and write off of our investments in 1888 Industrial Services, LLC and the restructuring or Arborworks Acquisition LLC.
Net change in unrealized (depreciation) appreciation on investments We recorded a net change in unrealized appreciation of $3.3 million for the twelve months ended June 30, 2024 primarily due to the decrease in fair value of our investments in ArborWorks, LLC A-1 Preferred, Klein Hersh, LLC, and Techniplas Foreign Holdco LP, partially offset by the increase in fair value of our investment in Discovery Behavioral Health and due to the realization of previously unrealized losses resulting from the sale and write off of our investments in 1888 Industrial Services, LLC and the restructuring or Arborworks Acquisition LLC.
(2) Asset coverage per unit is the ratio of the carrying value of our total assets, less all liabilities and indebtedness not represented by senior securities, in relation to the aggregate amount of senior securities representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.
(2) Asset coverage per unit is the ratio of the carrying value of our total assets, less all liabilities and indebtedness not represented by senior securities at par value, in relation to the aggregate amount of senior securities at par value representing indebtedness. Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness.
As of June 30, 2024, our investment portfolio of $184.6 million (at fair value) consisted of debt and equity investments in 41 portfolio companies, of which 85.02% were first lien investments, 0% were second lien investments, and 14.98% were in equities, warrants and other positions.
As of June 30, 2024, our investment portfolio of $184.6 million (at fair value) consisted of debt and equity investments in 41 portfolio companies, of which 85.02% were first lien investments and 14.98% were in equities, warrants and other positions.
Non-accrual: Loans are placed on non-accrual status when principal or interest payments are past due 90 days or more or when there is reasonable doubt that principal or interest will be collected. Accrued interest is generally reversed when a loan is placed on non-accrual status.
Non-accrual: Loans are placed on non-accrual status when principal or interest payments are past due 90 days or more or when there is reasonable doubt that principal or interest will be collected. Accrued and unpaid interest is generally reversed when a loan is placed on non-accrual status.
The 2026 Notes are structurally subordinated to all existing and future indebtedness and other obligations of any of our existing and future subsidiaries and financing vehicles, including, without limitation, borrowings under the Capital One Financing. 65 The 2026 Notes are exclusively our obligations and not of any of our subsidiaries.
The 2026 Notes are structurally subordinated to all existing and future indebtedness and other obligations of any of our existing and future subsidiaries and financing vehicles, including, without limitation, borrowings under the Capital One Financing. The 68 2026 Notes are exclusively our obligations and not of any of our subsidiaries.
The net realized loss on investments totaled $26.9 million for the year ended June 30, 2023, primarily due to the write off of our investments in the American Teleconferencing Services, Ltd. (d/b/a Premiere Global Services, Inc.) 1st and 2nd lien term loans.
The net realized loss on investments totaled $26.9 million for the twelve months ended June 30, 2023 primarily due to the write off of our investments in the American Teleconferencing Services, Ltd. (d/b/a Premiere Global Services, Inc.) 1st and 2nd lien term loans.
Net realized gain or loss The net realized loss on investments totaled $14.0 million for the year ended June 30, 2024, primarily due to the realization of losses from restructurings and loan modifications of our investments in American Nuts Holdings, LLC, Arborworks Acquisition LLC, ArborWorks, LLC, Crafty Apes, LLC, Sandvine Corporation, and Xenon Arc, Inc. and the realization of losses associated with the sale and write off of our investments in 1888 Industrial Services, LLC.
Net realized gain (loss) from investments The net realized loss on investments totaled $14.0 million for the twelve months ended June 30, 2024 primarily due to the realization of losses from restructurings and loan modifications of our investments in American Nuts Holdings, LLC, Arborworks Acquisition LLC, ArborWorks, LLC, Crafty Apes, LLC, Sandvine Corporation, and Xenon Arc, Inc. and the realization of losses associated with the sale and write off of our investments in 1888 Industrial Services, LLC.
The weighted average total yield was computed using an internal rate of return calculation of our debt investments based on contractual cash flows, including interest and amortization payments, and, for floating rate investments, the spot SOFR, as applicable, as of June 30, 2024 of all of our debt investments.
The weighted average total yield was computed using an internal rate of return calculation of our debt investments based on contractual cash flows, including interest and amortization payments, and, for floating rate investments, the spot SOFR, as applicable, of all of our debt investments.
The business has a strong track record of consistent performance and growth, employing approximately 45 investment professionals in London and New York. Investcorp is a subsidiary of Investcorp Holdings B.S.C. (“Investcorp Holdings”). Investcorp Holdings and its consolidated subsidiaries, including Investcorp, are referred to as “Investcorp Group”.
The business has a favorable track record of consistent performance and growth, employing approximately 60 investment professionals in London and New York. Investcorp is a subsidiary of Investcorp Holdings B.S.C. (“Investcorp Holdings”). Investcorp Holdings and its consolidated subsidiaries, including Investcorp, are referred to as “Investcorp Group”.
Under the Advisory Agreement, the Base Management Fee is calculated at an annual rate of 1.75% of the Company’s gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents (such amount, “Gross Assets”).
Advisory Agreement The Company is party to the Advisory Agreement with the Adviser. Under the Advisory Agreement, the Base Management Fee is calculated at an annual rate of 1.75% of the Company’s gross assets, including assets purchased with borrowed funds or other forms of leverage and excluding cash and cash equivalents (such amount, “Gross Assets”).
The “Lookback Period” means (1) through June 30, 2024, the period that commences on the last day of the fiscal quarter in which the Commencement Date occurs and ends on the last day of the fiscal quarter immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated, and (2) after June 30, 2024, the eleven fiscal quarters immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated.
The “Lookback Period” means (1) through December 31, 2024, the period that commences on the last day of the fiscal quarter in which the Commencement Date occurs and ends on the last day of the fiscal quarter immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated, and (2) after December 31, 2024, the eleven fiscal quarters immediately preceding the fiscal quarter for which the Income-Based Fee is being calculated.
Agreements and Related Party Transactions” in the notes to our 61 consolidated financial statements in this Annual Report on Form 10-K for more information regarding the Advisory Agreement and Administration Agreement and the fees and expenses paid or reimbursed by us thereunder.
See “Note 7. Agreements and Related Party Transactions” in the notes to our consolidated financial statements in this Annual Report on Form 10-K for more information regarding the Advisory Agreement and Administration Agreement and the fees and expenses paid or reimbursed by us thereunder.
Under the Advisory Agreement, the Income-Based Fee is calculated and payable quarterly in arrears based on our Pre-Incentive Fee Net Investment Income (as defined below) for the immediately preceding fiscal quarter, subject to a total return requirement (the “Total Return Requirement”) and deferral of non-cash amounts, and is 20.0% of the amount, if any, by which our Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of our net assets attributable to its common stock, for the immediately preceding fiscal quarter, exceeds a 2.0% (which is 8.0% annualized) hurdle rate and a “catch-up” provision measured as of the end of each fiscal quarter.
The Base Management Fee is payable quarterly in arrears and the Base Management Fees for any partial month or quarter will be appropriately pro-rated. 77 Under the Advisory Agreement, the Income-Based Fee is calculated and payable quarterly in arrears based on our Pre-Incentive Fee Net Investment Income (as defined below) for the immediately preceding fiscal quarter, subject to a total return requirement (the “Total Return Requirement”) and deferral of non-cash amounts, and is 20.0% of the amount, if any, by which our Pre-Incentive Fee Net Investment Income, expressed as a rate of return on the value of our net assets attributable to its common stock, for the immediately preceding fiscal quarter, exceeds a 2.0% (which is 8.0% annualized) hurdle rate and a “catch-up” provision measured as of the end of each fiscal quarter.
As of June 30, 2024 and June 30, 2023, we had no Taxable Subsidiaries. We are generally permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance.
We are generally permitted, under specified conditions, to issue multiple classes of indebtedness and one class of stock senior to our common stock if our asset coverage, as defined in the 1940 Act, is at least equal to 150% immediately after each such issuance.
As of June 30, 2024 we had sufficient liquidity (through cash on hand and available borrowings under our Capital One Revolving Financing) to fund such unfunded loan commitments should the need arise.
As of December 31, 2025, we had sufficient liquidity (through cash on hand and available borrowings under our Capital One Revolving Financing) to fund such unfunded loan commitments should the need arise.
At June 30, 2023, 99.6% of our debt investments bore interest based on floating rates based on indices such as LIBOR, SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate (in certain cases, subject to interest rate floors), and 0.4% bore interest at fixed rates.
At June 30, 2024, 97.4% of our debt investments bore interest based on floating rates based on indices such as London Interbank Offering Rate ("LIBOR"), SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate (in certain cases, subject to interest rate floors), and 2.6% bore interest at fixed rates.
Structuring fees and similar fees are recognized as income as earned, usually when received. Structuring fees, excess deal deposits, net profits interests and overriding royalty interests are included in other fee income. We may hold debt investments in our portfolio that contain a PIK interest provision.
Structuring fees, excess deal deposits, net profits interests and overriding royalty interests are included in other fee income. We may hold debt investments in our portfolio that contain a PIK interest provision.
Expenses Total expenses for the year ended June 30, 2024 of $17.3 million were flat compared to $17.3 million for the year ended June 30, 2023.
Expenses Expenses for the twelve months ended June 30, 2024 of $17.3 million were flat compared to $17.3 million for the twelve months ended June 30, 2023.
The forward-looking statements contained in this annual report on Form 10-K involve risks and uncertainties, and include statements regarding the following, without limitation: • our, or our portfolio companies’, future business, operations, operating results or prospects; • our business prospects and the prospects of our portfolio companies; • the return or impact of current and future investments; • the impact of global health pandemics, such as the coronavirus pandemic or other large scale events, on our or our portfolio companies’ business and the global economy; • our contractual arrangements and relationships with Investcorp and its affiliates; • our contractual arrangements and relationships with lenders and other third parties; • actual and potential conflicts of interest with the Adviser (as defined below); • the dependence of our future success on the general economy, interest rates and the effects of each on the industries in which we invest; • the impact of fluctuations in interest rates on our business; • the elevating levels of inflation and its impact on our investment activities and the industries in which we invest; • the ability of our portfolio companies to achieve their objectives or service their debt obligations to us; • the use of borrowed money to finance a portion of our investments; • the adequacy of our financing sources and working capital; • the timing of cash flows, if any, from the operations of our portfolio companies; • the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments; • the ability of the Adviser to attract and retain highly talented professionals; • our ability to qualify and maintain our qualification as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”) and as a business development company (“BDC"); • our ability to obtain exemptive relief from the Securities and Exchange Commission (“SEC”); • the effect of changes to tax legislation and our tax position and other legislative and regulatory changes; and • the effect of new or modified laws or regulations governing our operations.
The forward-looking statements contained in this annual report on Form 10-K involve risks and uncertainties, and include statements regarding the following, without limitation: • our, or our portfolio companies’, future business, operations, operating results or prospects; • our business prospects and the prospects of our portfolio companies; • the return or impact of current and future investments; • the impact of global health pandemics other large scale events on our or our portfolio companies’ business and the global economy; • United States trade policy developments, tariffs and other trade restrictions; • our contractual arrangements and relationships with Investcorp and its affiliates; • our contractual arrangements and relationships with lenders and other third parties; • actual and potential conflicts of interest with the Adviser (as defined below); • the dependence of our future success on the general economy, interest rates and the effects of each on the industries in which we invest; the impact to us and our portfolio companies of rapid technological advances, including artificial intelligence; • the impact of fluctuations in interest rates on our business; • the elevating levels of inflation and its impact on our investment activities and the industries in which we invest; • the ability of our portfolio companies to achieve their objectives or service their debt obligations to us; • the use of borrowed money to finance a portion of our investments; • the adequacy of our financing sources and working capital; • the timing of cash flows, if any, from the operations of our portfolio companies; • the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments; • the ability of the Adviser to attract and retain highly talented professionals; • our ability to qualify and maintain our qualification as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code (the “Code”) and as a business development company (“BDC"); • our ability to obtain exemptive relief from the U.S.
Expenses Total expenses for the year ended June 30, 2023 increased to $17.3 million from $15.5 million for the year ended June 30, 2022, primarily due to the increase in SOFR and LIBOR Rates. 70 Net investment income Net investment income increased to $9.4 million for the year ended June 30, 2023 from $8.9 million for the year ended June 30, 2022, primarily due to an increase in interest and payment-in-kind income offset by an increase in expenses related to an increase in borrowing costs.
Net investment income Net investment income increased to $9.4 million for the year ended June 30, 2023 from $8.9 million for the year ended June 30, 2022, primarily due to an increase in interest and payment-in-kind income offset by an increase in expenses related to an increase in borrowing costs.
As of June 30, 2024, June 30, 2023 and June 30, 2022, there was no Capital Gains Fee accrued, earned or payable to the Adviser under the Advisory Agreement.
As of December 31, 2025, December 31, 2024, June 30, 2024, and June 30, 2023, there were no Capital Gains Fee accrued, earned or payable to the Adviser under the Advisory Agreement.
Investments are classified by GAAP into the three broad levels as follows: 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. 63 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 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.
In each case, the company must be organized in the United States. As of June 30, 2024, approximately 1.68% of our total assets were non-qualifying assets. To qualify as a RIC, we must, among other things, meet certain source-of-income, asset diversification and annual distribution requirements.
In each case, the company must be organized in the United States. As of December 31, 2025, none of our total assets were non-qualifying assets. To qualify as a RIC, we must, among other things, meet certain source-of-income, asset diversification and annual distribution requirements.
As of June 30, 2024 and June 30, 2023, there were $43.0 million and $71.9 million in borrowings outstanding under the Capital One Revolving Financing, respectively. For more information, see "Recent Developments." Notes due 2026 On March 31, 2021, we closed the public offering of $65 million in aggregate principal amount of 4.875% notes due 2026 (the “2026 Notes”).
As of December 31, 2025, December 31, 2024 and June 30, 2024, there were $58.9 million, $58.5 million and $43.0 million in borrowings outstanding under the Capital One Revolving Financing, respectively. Notes due 2026 On March 31, 2021, we closed the public offering of $65 million in aggregate principal amount of 4.875% notes due 2026 (the “2026 Notes”).
As of June 30, 2024 and June 30, 2023, the outstanding principal balance of the 2026 Notes was approximately $65.0 million and $65.0 million, respectively.
As of December 31, 2025, December 31, 2024 and June 30, 2024 the outstanding principal balance of the 2026 Notes was approximately $65.0 million.
Class and Year Total Amount Outstanding Exclusive of Treasury Securities (1) Asset Coverage per Unit (2) Involuntary Liquidating Preference per Unit (3) Average Market Value per Unit (4) Capital One Revolving Financing Fiscal Year ended June 30, 2024 $ 43,000,000 (5) $ 4,383 — N/A Fiscal Year ended June 30, 2023 $ 71,900,000 (5) $ 3,133 — N/A Fiscal Year ended June 30, 2022 $ 84,000,000 (5) $ 2,864 — N/A UBS Financing Facility Fiscal Year ended June 30, 2021 $ 102,000,000 (6) $ 2,567 — N/A Fiscal Year ended June 30, 2020 $ 132,000,000 (6) $ 2,200 — N/A Fiscal Year ended June 30, 2019 $ 133,026,670 (6) $ 2,329 — N/A Fiscal Year ended June 30, 2018 $ 119,823,000 (6) $ 2,431 — N/A Fiscal Year ended June 30, 2017 $ 102,000,000 $ 2,666 — N/A Fiscal Year ended June 30, 2016 $ 132,478,329 (7) $ 2,229 — N/A Fiscal Year ended June 30, 2015 $ 150,847,459 (7) $ 2,306 — N/A Citi Revolving Financing (8) Fiscal Year ended June 30, 2021 $ — N/A — N/A Fiscal Year ended June 30, 2020 $ — N/A — N/A Fiscal Year ended June 30, 2019 $ — N/A — N/A Fiscal Year ended June 30, 2018 $ — N/A — N/A Fiscal Year ended June 30, 2017 $ — N/A — N/A 6.125% notes due 2023 (9) Fiscal Year ended June 30, 2021 $ — $ — — $ — Fiscal Year ended June 30, 2020 $ 51,375,000 $ 5,674 — $ 926 Fiscal Year ended June 30, 2019 $ 34,500,000 $ 8,969 — $ 1,012 4.875% notes due 2026 (10) Fiscal Year ended June 30, 2024 $ 65,000,000 $ 2,900 — N/A Fiscal Year ended June 30, 2023 $ 65,000,000 $ 3,466 — N/A Fiscal Year ended June 30, 2022 $ 65,000,000 $ 3,701 — N/A Fiscal Year ended June 30, 2021 $ 65,000,000 $ 4,027 — N/A (1) Total amount of senior securities outstanding at the end of the period presented.
Class and Year Total Amount Outstanding Exclusive of Treasury Securities (1) Asset Coverage per Unit (2) Involuntary Liquidating Preference per Unit (3) Average Market Value per Unit (4) Capital One Revolving Financing Fiscal Year ended December 31, 2025 $ 58,900,000 (5) $ 1,495 — N/A Fiscal Period ended December 31, 2024 $ 58,500,000 (5) $ 1,628 — N/A Fiscal Year ended June 30, 2024 $ 43,000,000 (5) $ 1,747 — N/A Fiscal Year ended June 30, 2023 $ 71,900,000 (5) $ 1,643 — N/A Fiscal Year ended June 30, 2022 $ 84,000,000 (5) $ 1,615 — N/A UBS Financing Facility Fiscal Year ended June 30, 2021 $ 102,000,000 (6) $ 1,568 — N/A Fiscal Year ended June 30, 2020 $ 132,000,000 (6) $ 1,584 — N/A Fiscal Year ended June 30, 2019 $ 133,026,670 (6) $ 1,975 — N/A Fiscal Year ended June 30, 2018 $ 119,823,000 (6) $ 2,431 — N/A Fiscal Year ended June 30, 2017 $ 102,000,000 $ 2,666 — N/A Fiscal Year ended June 30, 2016 $ 132,478,329 (7) $ 2,229 — N/A Citi Revolving Financing (8) Fiscal Year ended June 30, 2021 $ — N/A — N/A Fiscal Year ended June 30, 2020 $ — N/A — N/A Fiscal Year ended June 30, 2019 $ — N/A — N/A Fiscal Year ended June 30, 2018 $ — N/A — N/A Fiscal Year ended June 30, 2017 $ — N/A — N/A 6.125% notes due 2023 (9) Fiscal Year ended June 30, 2021 $ — $ — — $ — Fiscal Year ended June 30, 2020 $ 51,375,000 $ 1,584 — $ 926 Fiscal Year ended June 30, 2019 $ 34,500,000 $ 1,975 — $ 1,012 4.875% notes due 2026 (10) Fiscal Year ended December 31, 2025 $ 65,000,000 $ 1,495 — N/A Fiscal Period ended December 31, 2024 $ 65,000,000 $ 1,628 — N/A Fiscal Year ended June 30, 2024 $ 65,000,000 $ 1,747 — N/A Fiscal Year ended June 30, 2023 $ 65,000,000 $ 1,643 — N/A Fiscal Year ended June 30, 2022 $ 65,000,000 $ 1,615 — N/A Fiscal Year ended June 30, 2021 $ 65,000,000 $ 1,568 — N/A (1) Total amount of senior securities outstanding at the end of the period presented.
As of June 30, 2023, $201,817 of Income-Based Fees are currently payable to the Adviser and $201,817 in incentive fees related to Income-Based Fees incurred by the Company were generated from deferred interest (i.e. PIK and certain discount accretion) and are not payable until such amounts are received in cash.
As of June 30, 2024, $128,876 in incentive fees related to Income-Based Fees incurred by the Company were payable to the Adviser, of which fees of $16,929 are payable and fees of $111,947 generated from deferred interest (i.e. PIK and certain discount accretion) are not payable until such amounts are received in cash.
We intend to generate additional cash primarily from future offerings of securities, future borrowings under our Capital One Revolving Financing as well as cash flows from operations, including income earned from investments in our portfolio companies and, to a lesser extent, from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less.
We intend to generate additional cash primarily from future offerings of equity and/or debt securities, future borrowings or debt issuances, as well as cash flows from operations, including income earned from investments in our portfolio companies and, to a lesser extent, from the temporary investment of cash in U.S. government securities and other high-quality debt investments that mature in one year or less. 75 As discussed below in further detail, we have elected to be treated as a RIC under the Code.
Of these new investments, 98.25% consisted of first lien investments and 1.75% were in equity, warrants, and other investments. 68 At June 30, 2024, 97.4% of our debt investments bore interest based on floating rates based on indices such as SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate (in certain cases, subject to interest rate floors), and 2.6% bore interest at fixed rates.
Of these new investments, 93.23% consisted of first lien investments and 6.77% were in equity, warrants, and other investments. 71 At December 31, 2025, 98.0% of our debt investments bore interest based on floating rates based on indices such as SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate (in certain cases, subject to interest rate floors), and 2.0% bore interest at fixed rates.
For the year ended June 30, 2024, $3,800,693 in Base Management Fees were earned by the Adviser, of which $365,225 was waived and $816,777 was payable at June 30, 2024. For the year ended June 30, 2023, $4,201,394 in Base Management Fees were earned by the Adviser, of which $387,311 was waived and $906,218 was payable at June 30, 2023.
For the twelve months ended June 30, 2024, $3,800,693 in Base Management Fees were earned by the Adviser, of which $365,225 was waived and $816,777 was payable at June 30, 2024.
Off-Balance Sheet Arrangements We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of June 30, 2024, our off-balance sheet arrangements consisted of $1.8 million in unfunded commitments to three of our portfolio companies.
Off-Balance Sheet Arrangements We may be a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financial needs of our portfolio companies. As of December 31, 2025, our off-balance sheet arrangements consisted of $3.7 million in unfunded commitments to six of our portfolio companies.
Our 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.
On September 18, 2024, the Company changed its fiscal year end from June 30 to December 31. Our 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.
In addition, we may generate revenue in the form of prepayment fees, commitment, origination, structuring or due diligence fees, fees for providing significant managerial assistance, consulting fees and other investment related income. 66 Expenses Our primary operating expenses include the payment of the base management fee (the “Base Management Fee”) and, depending on our operating results, the incentive fees (the “Incentive Fee”) under the Advisory Agreement, as well as the payment of reimbursable expenses to the Adviser for the costs and expenses incurred by the Adviser in performing its obligations and providing personnel and facilities under the Administration Agreement, such as our allocable portion of overhead expenses, including rent and the allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs.
Expenses Our primary operating expenses include the payment of the base management fee (the “Base Management Fee”) and, depending on our operating results, the incentive fees (the “Incentive Fee”) under the Advisory Agreement, as well as the payment of reimbursable expenses to the Adviser for the costs and expenses incurred by the Adviser in performing its obligations and providing personnel and facilities under the Administration Agreement, such as our allocable portion of overhead expenses, including rent and the allocable portion of the cost of our chief financial officer and chief compliance officer and their respective staffs.
Comparison of the years ended June 30, 2023 and June 30, 2022 Investment income Investment income, attributable primarily to dividends, interest and fees on our debt investments, for the year ended June 30, 2023 increased to $26.7 million from $24.4 million for the year ended June 30, 2022, primarily due to an increase in the SOFR and LIBOR rates and payment-in-kind income.
(d/b/a Premiere Global Services, Inc.) 1st and 2nd lien term loans. 74 Comparison of the twelve months ended June 30, 2023 and twelve months ended June 30, 2022 Investment income Investment income, attributable primarily to dividends, interest and fees on our debt investments, for the year ended June 30, 2023 increased to $26.7 million from $24.4 million for the year ended June 30, 2022, primarily due to an increase in the SOFR and LIBOR rates and payment-in-kind income.
GAAP. 71 Senior Securities Information about our senior securities is shown in the following table as of each of the fiscal years ended June 30, 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016 and 2015, respectively.
Senior Securities Information about our senior securities is shown in the following table as of the fiscal year ended December 31, 2025, the six-month transition period ended December 31, 2024, and the fiscal years ended June 30, 2024, 2023, 2022, 2021, 2020, 2019, 2018, 2017 and 2016, respectively.
Investcorp is a leading global credit investment platform with assets under management of $21.5 billion as of June 30, 2024. Investcorp manages funds which invest primarily in senior secured corporate debt issued by mid and large-cap corporations in Western Europe and the United States.
Investcorp and its credit advisory affiliates are a leading global credit investment platform with assets under management of $21.3 billion as of December 31, 2025. Investcorp and its credit advisory affiliates manage funds which invest primarily in senior secured corporate debt issued by mid and large-cap corporations in Western Europe and the United States.
Federal Reserve and other global central banks, the failures of certain regional banks earlier this year and the potential for disruptions in the availability of credit in the United States and elsewhere, in conjunction with other factors, including those described elsewhere in this Annual Report and in other filings we have made with the SEC, could affect our portfolio companies, our financial condition and our results of operations.
Government spending, government policies and the potential for disruptions in the availability of credit in the United States and elsewhere, in conjunction with other factors, including those described elsewhere in this Transition Report and in other filings we have made with the SEC, could affect our portfolio companies, our financial condition and our results of operations.
PIK interest is not accrued if we do not expect the issuer to be able to pay all principal and interest when due. As of June 30, 2024, we had four investments on non-accrual status, which represented approximately 5.00% of our portfolio at fair value.
PIK interest is not accrued if management does not expect the issuer to be able to pay all principal and interest when due. As of December 31, 2025, we had five investments on non-accrual status, which represented approximately 6.93% of our portfolio at fair value.
The Capital Gains Fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date), commencing with the fiscal year ended June 30, 2021, and is equal to 20.0% of the Company’s cumulative aggregate realized capital gains from the Commencement Date through the end of each fiscal year, computed net of the Company’s aggregate cumulative realized capital losses and the Company’s aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid Capital Gains Fees.
The Capital Gains Fee is determined and payable in arrears as of the end of each fiscal year (or upon termination of the Advisory Agreement, as of the termination date), commencing with the fiscal year ended June 30, 2021, and is equal to 20.0% of the Company’s cumulative aggregate realized capital gains from the Commencement Date through the end of each fiscal year, computed net of the Company’s aggregate cumulative realized capital losses and the Company’s aggregate cumulative unrealized capital depreciation through the end of such year, less the aggregate amount of any previously paid Capital Gains Fees. 64 We have entered into an investment advisory agreement (the “Advisory Agreement”) and an administration agreement (the “Administration Agreement”) with the Adviser, pursuant to which the Adviser provides us with investment advisory and administrative services necessary for our operations.
We recorded a net change in unrealized appreciation of $20.7 million for the year ended June 30, 2023, primarily due to the reversal of depreciation related to the write off of our investments in the American Teleconferencing Services, Ltd. (d/b/a Premiere Global Services, Inc.) 1st and 2nd lien term loans.
We recorded a net change in unrealized appreciation of $20.7 million for the twelve months ended June 30, 2023 primarily due to the reversal of depreciation related to the write off of our investments in the American Teleconferencing Services, Ltd.
As of June 30, 2024, and June 30, 2023, our weighted average total yield on the total portfolio at amortized cost (which includes interest income and amortization of fees and discounts) was 10.60% and 11.32%, respectively.
As of December 31, 2025, December 31, 2024 and June 30, 2024 our average total yield on the total portfolio weighted by amortized cost (which includes interest income and amortization of fees and discounts) was 7.71%, 8.72% and 10.60%, respectively.
If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock.
If these and certain other requirements are met, for U.S. federal income tax purposes, the amount of the dividend paid in stock will be equal to the amount of cash that could have been received instead of stock. We have no current intention of paying dividends in shares of our stock in accordance with these Treasury Regulations or Revenue Procedure.
As of June 30, 2024, we had three investments with aggregate unfunded commitments of $1.8 million, and as of June 30, 2023, we had nine investments with aggregate unfunded commitments of $5.7 million.
As of December 31, 2025, we had nine investments with aggregate unfunded commitments of $3.7 million, as of December 31, 2024, we had eight investments with aggregate unfunded commitments of $4.6 million, and as of June 30, 2024, we had three investments with aggregate unfunded commitments of $1.8 million.
Portfolio and Investment activity Portfolio composition We invest primarily in middle-market companies in the form of standalone first and second lien loans and unitranche loans. We may also invest in unsecured debt, bonds and in the equity of portfolio companies through warrants and other instruments.
Portfolio and Investment Activity Portfolio composition We invest primarily in middle-market companies in the form of standalone first and second lien loans and unitranche loans.
For the year ended June 30, 2022, 73 $4,594,588 in Base Management Fees were earned by the Adviser, of which $480,032 was waived and $1,054,063 was payable at June 30, 2022. The Base Management Fee is calculated based on the average value of the Company’s Gross Assets at the end of the two most recently completed fiscal quarters.
For the twelve months ended June 30, 2023, $4,201,394 in Base Management Fees were earned by the Adviser, of which $387,311 was waived and $906,218 was payable at June 30, 2023. The Base Management Fee is calculated based on the average value of the Company’s Gross Assets at the end of the two most recently completed fiscal quarters.
Debt and equity securities for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued at fair value as determined in good faith by our board of directors.
We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker dealers or market makers. 65 Debt and equity securities for which market quotations are not readily available or for which market quotations are deemed not to represent fair value are valued at fair value as determined in good faith by our board of directors.
These investments totaled approximately $60.4 million. Of these new investments, 93.23% consisted of first lien investments and 6.77% were in equity, warrants, and other investments. During the year ended June 30, 2023, we made investments in eight new portfolio companies and four existing portfolio companies. These investments totaled approximately $41.3 million.
Of these new investments, 99.80% consisted of first lien investments and 0.20% were in equity, warrants, and other investments. During the twelve months ended June 30, 2024, we made investments in eleven new portfolio companies and four existing portfolio companies. These investments totaled approximately $60.4 million.
Market Developments The current inflationary environment and uncertainty as to the probability of, and length and depth of a global recession could affect our portfolio companies. Government spending, government policies, including recent increases in certain interest rates by the U.S.
Market Developments The current inflationary environment and uncertainty as to the probability of, and length and depth of a global recession could affect our portfolio companies.
As of June 30, 2024, and June 30, 2023 all of our investments were classified as Level 3 investments, determined based on valuations by our board of directors. Determination of fair value involves subjective judgments and estimates.
As of December 31, 2025 and December 31, 2024, our investments were classified as Level 2 and Level 3 investments. Level 3 investments were determined based on valuations by our board of directors. As of June 30, 2024, all of our investments were classified as Level 3 investments determined based on valuations by our board of directors.
At June 30, 2024 and June 30, 2023, respectively, the industry composition of our portfolio in accordance with GICS at fair value, as a percentage of our total portfolio, was as follows: Percentage of Total Portfolio at June 30, 2024 2023 Commercial Services & Supplies 13.50 % 6.51 % Professional Services 11.22 12.83 Trading Companies & Distributors 9.11 15.98 Containers & Packaging 7.34 5.89 Food Products 4.79 1.95 Entertainment 4.77 3.47 IT Services 4.70 10.71 Household Durables 4.13 3.46 Insurance 4.01 0.00 Chemicals 3.90 3.44 Diversified Consumer Services 3.90 3.30 Specialty Retail 3.61 2.34 Automotive Retail 3.08 1.76 Health Care Providers & Services 2.93 0.00 Consumer Staples Distribution & Retail 2.89 2.75 Software 2.73 6.26 Consumer Services 2.67 0.00 Paper Packaging 2.66 0.00 Construction & Engineering 1.99 0.00 Human Resources & Employment Services 1.62 0.00 Hotels, Restaurants and Leisure 1.60 2.85 Electronic Equipment, Instruments & Components 1.43 1.48 Automobile Components 1.42 3.30 Machinery 0.00 4.36 Internet & Direct Marketing Retail 0.00 4.08 Building Products 0.00 2.05 Energy Equipment & Services 0.00 1.23 100.00 % 100.00 % During the year ended June 30, 2024, we made investments in eleven new portfolio companies and four existing portfolio companies.
At December 31, 2025, December 31, 2024 and June 30, 2024, respectively, the industry composition of our portfolio in accordance with GICS at fair value, as a percentage of our total portfolio, was as follows: Percentage of Total Portfolio at December 31, 2025 Percentage of Total Portfolio at December 31, 2024 Percentage of Total Portfolio at June 30, 2024 Professional Services 14.50% 14.37% 12.84% IT Services 9.18% 7.14% 4.70% Insurance 8.87% 7.77% 4.01% Diversified Consumer Services 8.57% 7.07% 6.57% Commercial Services & Supplies 7.89% 6.67% 13.50% Trading Companies & Distributors 7.82% 8.64% 9.11% Specialty Retail 6.68% 7.12% 6.69% Containers & Packaging 6.61% 10.52% 10.00% Food Products 5.87% 4.67% 4.79% Entertainment 4.66% 3.32% 4.77% Health Care Providers & Services 4.05% 3.13% 2.93% Household Durables 3.53% 4.00% 4.13% Interactive Media & Services 3.15% 2.86% —% Consumer Staples Distribution & Retail 2.68% 3.02% 2.89% Software 2.57% 3.72% 2.73% Construction & Engineering 2.23% 1.93% 1.99% Automobile Components 1.05% 1.57% 1.42% Electronic Equipment, Instruments & Components 0.09% 0.92% 1.43% Hotels, Restaurants & Leisure —% 1.56% 1.60% Chemicals —% —% 3.90% Total 100.00% 100.00% 100.00% During the twelve months ended December 31, 2025, we made investments in two new portfolio companies and eight existing portfolio companies.
PIK and certain discount accretion) are not payable until such amounts are received in cash. For the year ended June 30, 2023, the Company incurred $401,597 of Income-Based Fees.
PIK and certain discount accretion) and are not payable until such amounts are received in cash. For the twelve months ended June 30, 2024, the Company wrote off $72,942 in previously deferred Income-Based Fees and incurred no Income-Based Fees.
As of June 30, 2023, our off-balance sheet arrangements consisted of $5.7 million in unfunded commitments to nine of our portfolio companies. We maintain sufficient liquidity (through cash on hand and available borrowings under our Capital One Revolving Financing) to fund such unfunded loan commitments should the need arise.
We maintain sufficient liquidity (through cash on hand and available borrowings under our Capital One Revolving Financing) to fund such unfunded loan commitments should the need arise.
As of June 30, 2024 and June 30, 2023, there were no borrowings outstanding under the Revolving Financing. On August 23, 2021, we, through Investcorp Credit Management BDC SPV, LLC, our wholly-owned subsidiary, entered into a five-year, $115 million senior secured revolving credit facility (the “Capital One Revolving Financing”) with Capital One, N.A.
Financing Facility On August 23, 2021, we, through Investcorp Credit Management BDC SPV, LLC, our wholly-owned subsidiary, entered into a five-year, $115 million senior secured revolving credit facility (the “Capital One Revolving Financing”) with Capital One, N.A. (“Capital One”), which is secured by collateral consisting primarily of loans in our investment portfolio.
Interest Income: Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis. Origination, closing, commitment, and amendment fees, purchase and original issue discounts associated with loans to portfolio companies are accreted into interest income over the respective terms of the applicable loans.
Origination, closing, and commitment fees, and purchase and original issue discounts associated with loans to portfolio companies are accreted into interest income over the respective terms of the applicable loans. Accretion of discounts or premiums is calculated by the effective interest or straight-line method, as applicable, as of the purchase date and adjusted only for material amendments or prepayments.
During the same period, cash from financing activities decreased by $41.1 million, resulting primarily from proceeds of $37.1 million from borrowings under the Capital One Revolving Financing, offset by repayments of $66.0 million of borrowings under the Capital One Revolving Financing, distributions of $11.2 million to our stockholders, and payments of $1.0 million for deferred financing costs.
During the same period, $8.8 million in cash was used in financing activities primarily for $20.1 million in repayments of borrowings under the Capital One Revolving Financing and distributions of approximately $9.1 million to our stockholders, offset by $20.5 million from borrowings under the Capital One Revolving Financing.
For the year ended June 30, 2022, the Company wrote off $348,670 in previously deferred Income-Based incentive fees and incurred no Income-Based Fees. As of June 30, 2022, $182,095 of Income-Based Fees are currently payable to the Adviser and were generated from deferred interest (i.e.
For the twelve months ended June 30, 2023, the Company incurred $401,597 of Income-Based Fees. As of June 30, 2023, $201,817 of Income-Based Fees were currently payable to the Adviser and $201,817 in incentive fees related to Income-Based Fees incurred by the Company were generated from deferred interest (i.e.
At June 30, 2023, our average and largest portfolio company investment at fair value was $6.1 million and $13.0 million, respectively. As of June 30, 2024, and June 30, 2023, our weighted average total yield of debt and income producing securities at amortized cost (which includes interest income and amortization of fees and discounts) was 12.47% and 12.46%, respectively.
As of December 31, 2025, December 31, 2024 and June 30, 2024 our average total yield of debt and income producing securities weighted by amortized cost (which includes interest income and amortization of fees and discounts) was 10.34%, 10.60% and 12.47%, respectively.
(“Capital One”), which is secured by collateral consisting primarily of loans in our investment portfolio. On June 14, 2023, we amended the Capital One Revolving Financing to decrease the facility size from $115 million to $100 million.
On June 14, 2023, we amended the Capital One Revolving Financing to decrease the facility size from $115 million to $100 million.
For the year ended June 30, 2024, the Company wrote off $72,942 in previously deferred Income-Based Fees and incurred no Income-Based Fees. As of June 30, 2024, $128,876 in incentive fees related to Income-Based Fees incurred by the Company were payable to the Adviser, of which fees of $16,929 are payable and fees of $111,947generated from deferred interest (i.e.
For the twelve months ended December 31, 2025, the Company wrote off $150,384 in previously deferred Income-Based fees and incurred no Income-Based Fees. As of December 31, 2025, $351,571 in incentive fees related to Income-Based Fees incurred by the Company were payable to the Adviser, of which $271 are payable and fees of $351,300 generated from deferred interest (i.e.
Accordingly, the notes to our financial statements express the uncertainty with respect to the possible effect of such valuations, and any change in such valuations, on the consolidated financial statements. Rule 2a-5 under the 1940 Act was adopted in December 2020 by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act.
Rule 2a-5 under the 1940 Act was adopted in December 2020 by the SEC and establishes requirements for determining fair value in good faith for purposes of the 1940 Act. Our board of directors has adopted valuation policies and procedures that are intended to comply with Rule 2a-5.
Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value. We generally obtain market quotations from recognized exchanges, market quotation systems, independent pricing services or one or more broker dealers or market makers.
Investments for which market quotations are readily available are valued at such market quotations unless the quotations are deemed not to represent fair value.
At June 30, 2024, our average and largest portfolio company investment at fair value was $4.6 million and $13.5 million, respectively. 67 As of June 30, 2023, our investment portfolio of 220.1 million (at fair value) consisted of debt and equity investments in 36 portfolio companies, of which 89.21% were first lien investments, 0% were second lien investments, and 10.79% were in equities, warrants and other positions.
As of December 31, 2024, our investment portfolio of $191.6 million (at fair value) consisted of debt and equity investments in 43 portfolio companies, of which 81.17% were first lien investments and 18.83% were in equities, warrants and other positions.
Accretion of discounts or premiums is calculated by the effective interest or straight-line method, as applicable, as of the purchase date and adjusted only for material amendments or prepayments. Upon the prepayment of a loan or debt security, any prepayment penalties and unamortized fees and discounts are recorded as interest income and are non-recurring in nature.
Upon the prepayment of a loan or debt security, any prepayment penalties are recorded as other fee income and unamortized fees and discounts are recorded as interest income and both are non-recurring in nature. Structuring fees and similar fees are recognized as income as earned, usually when received.
Our board of directors has adopted valuation policies and procedures that are intended to comply with Rule 2a-5. Revenue recognition Our revenue recognition policies are as follows: Net realized gains (losses) on investments: Gains or losses on the sale of investments are calculated using the specific identification method.
Revenue recognition Our revenue recognition policies are as follows: Net realized gains (losses) on investments: Gains or losses on the sale of investments are calculated using the specific identification method. Interest Income: Interest income, adjusted for amortization of premium and accretion of discount, is recorded on an accrual basis.
Any outstanding principal amount of our debt investments and any accrued but unpaid interest will generally become due at the maturity date.
Any outstanding principal 69 amount of our debt investments and any accrued but unpaid interest will generally become due at the maturity date. In addition, we may generate revenue in the form of prepayment fees, commitment, origination, structuring or due diligence fees, fees for providing significant managerial assistance, consulting fees and other investment related income.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeUnder these loans, we do not benefit from increases in interest rates until such rates exceed the floor and thereafter benefit from market rates above any such floor. 75 Although management believes that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit markets, the size, credit quality or composition of the assets in our portfolio and other business developments, including borrowing, that could affect the net increase in net assets resulting from operations, or net income.
Biggest changeAlthough management believes that this analysis is indicative of our existing sensitivity to interest rate changes, it does not adjust for changes in the credit markets, the size, credit quality or composition of the assets in our portfolio and other business developments, including borrowing, that could affect the net increase in net assets resulting from operations, or net income.
It also does not adjust for the effect of the time lag between a change in the relevant interest rate index and the rate adjustment under the applicable loan. Accordingly, we can offer no assurances that actual results would not differ materially from the statement above. 76
It also does not adjust for the effect of the time lag between a change in the relevant interest rate index and the rate adjustment under the applicable loan. Accordingly, we can offer no assurances that actual results would not differ materially from the statement above. 79
Item 7A. Quantitative and Qualitative Disclosure about Market Risk We are subject to financial market risks, including changes in interest rates. At June 30, 2024, 97.4% of our debt investments bore interest based on floating rates, such as SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk We are subject to financial market risks, including changes in interest rates. At December 31, 2025, 98.0% of our debt investments bore interest based on floating rates, such as SOFR, the Euro Interbank Offered Rate, the Federal Funds Rate or the Prime Rate.
Based on our in-place portfolio with certain interest rate floors and our financing at June 30, 2024, a 1.00% increase or decrease in interest rates would increase or decrease, as applicable, our net interest income by approximately 5.93% and a 2.00% increase or decrease in interest rates would increase or decrease, as applicable, our net interest income by approximately 14.94%.
Based on our in-place portfolio with certain interest rate floors and our financing at December 31, 2025, a 1.00% increase or decrease in interest rates would increase or decrease, as applicable, our net interest income by approximately 44.27% or (41.77)%, respectively, and a 2.00% increase or decrease in interest rates would increase or decrease, as applicable, our net interest income by approximately 89.87% or (83.54)%, respectively.
Added
Under these loans, we do not benefit from increases in interest rates until such rates exceed the floor and thereafter benefit from market rates above any such floor.

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