x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2026
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 814-00646
MIDCAP FINANCIAL INVESTMENT CORPORATION
(Exact name of Registrant as specified in its charter)
Maryland
52-2439556
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
9 West 57th Street
New York, New York
10019
(Address of principal executive offices)
(Zip Code)
(212) 515-3200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common Stock, $0.001 par value
8.00% Notes due 2028
MFIC
MFICL
NASDAQ Global Select Market
NASDAQ Global Select Market
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesx No ¨
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesx No ¨
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
¨
Non-accelerated filer
¨
Smaller reporting company
¨
Emerging growth company
¨
(Do not check if a smaller reporting company)
If an emerging growth company indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of August 5, 2026, the Registrant had 82,372,628 Common Shares outstanding.
In this report, the terms the “Company,” “we,” “us,” and “our” refer to MidCap Financial Investment Corporation unless the context specifically states otherwise.
Item 1. Consolidated Financial Statements
MIDCAP FINANCIAL INVESTMENT CORPORATION
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except share and per share data)
June 30, 2026
December 31, 2025
(Unaudited)
Assets
Investments at fair value:
Non-controlled/non-affiliated investments (cost — $2,658,642 and $2,955,173, respectively)
$
2,466,332
$
2,819,511
Non-controlled/affiliated investments (cost — $212,542 and $176,978, respectively)
124,185
107,111
Controlled investments (cost — $190,625 and $224,619, respectively)
179,825
241,216
Cash and cash equivalents
43,284
98,184
Foreign currencies (cost — $108 and $1,286, respectively)
70
1,264
Receivable for investments sold
2,195
6,253
Interest receivable
21,268
23,678
Dividends receivable
201
630
Deferred financing costs
21,216
23,626
Unrealized appreciation on foreign currency forward contracts
772
—
Prepaid expenses and other assets
1,201
2,171
Total Assets
$
2,860,549
$
3,323,644
Liabilities
Debt (net of deferred financing costs and unamortized original discount of $5,396 and $5,838, respectively)
$
1,739,604
$
1,995,210
Payable for investments purchased
—
558
Management fees payable
5,132
6,034
Interest payable
12,336
12,867
Accrued administrative services expense
581
228
Other liabilities and accrued expenses
1,576
1,486
Total Liabilities
$
1,759,229
$
2,016,383
Commitments and contingencies (Note 8)
Net Assets
$
1,101,320
$
1,307,261
Net Assets
Common stock, $0.001 par value (130,000,000 shares authorized; 82,372,628 and 92,211,869 shares issued and outstanding, respectively)
Painters Supply and Equipment Co. (fka Graffiti Buyer, Inc.)
First Lien Secured Debt - Term Loan
SOFR+560, 1.00% Floor
08/10/27
10,692
10,574
10,330
(9)(23)
First Lien Secured Debt - Delayed Draw
SOFR+560, 1.00% Floor
08/10/27
3,608
3,591
3,485
(9)(23)
First Lien Secured Debt - Revolver
SOFR+560, 1.00% Floor
08/10/27
131
125
86
(9)(17)(18)(23)
14,534
14,072
Total Trading Companies & Distributors
$
77,104
$
66,901
Total Investments before Cash Equivalents
$
3,061,809
$
2,770,342
(7)(12)
J.P. Morgan U.S. Government Money Market Fund
N/A
N/A
$
185
$
185
$
185
(11)
Total Investment after Cash Equivalents
$
3,061,994
$
2,770,527
Derivative Instrument
Settlement Date
Notional amount to be purchased
Notional amount to be sold
Footnote Reference
Foreign currency forward contract
9/16/2026
$
12,981
C$
18,045
Note 5
Foreign currency forward contract
9/16/2026
8,479
€
7,285
Note 5
Foreign currency forward contract
9/16/2026
35,974
£
26,815
Note 5
(1)
Fair value is determined in good faith subject to the oversight of the board of directors of the Company (the “Board”) (See Note 2 to the consolidated financial statements).
(2)
Par amount is denominated in USD unless otherwise noted, and represents funded commitments. See Note 18 in the Consolidated Schedule of Investments and Note 8 to the consolidated financial statements for further information on undrawn revolving and delayed draw loan commitments, including commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies.
(3)
Denotes investments in which the Company owns greater than 25% of the equity, where the governing documents of each entity preclude the Company from exercising a controlling influence over the management or policies of such entity. The Company does not have the right to elect or appoint more than 25% of the directors or another party has the right to elect or appoint more directors than the Company and has the right to appoint certain members of senior management. Therefore, the Company has determined that these entities are not controlled affiliates. As of June 30, 2026, we had a 100% equity ownership interest in Golden Bear 2016-R, LLC, a collateralized loan obligation.
See notes to the consolidated financial statements.
Denotes investments in which we are an “Affiliated Person,” as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), due to holding the power to vote or owning 5% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of December 31, 2025 and June 30, 2026 along with transactions during the six months ended June 30, 2026 in these affiliated investments are as follows:
Auto Pool 2023 Trust (Del. Stat. Trust) ,Membership Interests
10,317
—
(701
)
(2,061
)
7,555
—
—
Blue Jay Transit Inc.,Term Loan
19,344
9,583
(133
)
(3,020
)
25,779
4
—
Arrivia, Inc. (International Cruise & Excursion Gallery, Inc),Membership Interests
2,628
—
—
215
2,843
—
—
Arrivia, Inc. (International Cruise & Excursion Gallery, Inc),Term Loan
3,962
—
—
(12
)
3,950
—
195
Third Lane Mobility Inc.,Common Stock
—
—
—
—
—
—
—
Third Lane Mobility Inc.,Warrants
—
—
—
—
—
—
—
Amplity Parent, Inc.,Revolver
—
359
—
(42
)
317
—
57
Amplity Parent, Inc.,Term Loan
—
11,511
—
(3,319
)
8,189
(0
)
260
Amplity Topco, LLC,Common Stock
—
—
—
—
—
—
—
Amplity Topco, LLC,Preferred Equity
—
17,556
—
(6,501
)
11,055
—
—
$
107,111
$
44,863
$
(9,165
)
$
(18,491
)
$
124,185
$
(131
)
$
2,563
•
Gross additions include increases in the basis of investments resulting from new portfolio investments, payment-in-kind interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
▪
Gross reductions include decreases in the basis of investments resulting from principal collections related to investment repayments or sales, the amortization of premiums, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
See notes to the consolidated financial statements.
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Fair value as of December 31, 2025 and June 30, 2026 along with transactions during the six months ended June 30, 2026 in these controlled investments are as follows:
Name of Issuer
Fair Value at December 31, 2025
Gross Additions ●
Gross Reductions ■
Net Change in Unrealized Gains (Losses)
Fair Value at June 30, 2026
Net Realized Gains (Losses)
Interest/ Dividend/ Other Income
Majority Owned Company
ChyronHego US Holding Corporation
$
19,467
$
3,502
$
(17,956
)
$
(11
)
$
5,000
$
(2
)
$
941
ChyronHego US Holding Corporation
105,906
—
(44,287
)
(745
)
60,874
—
3,818
ChyronHego Corporation
13,045
59,250
—
(26,960
)
45,335
—
—
Merx Aviation Finance, LLC
84,222
—
(15,924
)
318
68,616
—
—
Merx Aviation Finance, LLC
18,576
—
(18,576
)
—
—
—
209
$
241,216
$
62,752
$
(96,743
)
$
(27,398
)
$
179,825
$
(2
)
$
4,968
•
Gross additions include increases in the basis of investments resulting from new portfolio investments, payment-in-kind interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
▪
Gross reductions include decreases in the basis of investments resulting from principal collections related to investment repayments or sales, the amortization of premiums, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
As of June 30, 2026, the Company had a 93.14% and 100% equity ownership interest in ChyronHego Corporation and Merx Aviation Finance, LLC, respectively.
(6)
Unless otherwise indicated, loan contains a variable rate structure, and the terms in the Consolidated Schedule of Investments disclose the actual interest rate in effect as of the reporting period which may be subject to interest floors. Variable rate loans bear interest at a rate that may be determined by reference to the Secured Overnight Financing Rate (“SOFR” or “S”) or an alternate base rate (which can include but is not limited to the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement. Certain borrowers may elect to borrow Prime rate on select contracts and switch to an alternative base rate contract in the future.
(7)
Substantially all securities are pledged as collateral to the Company's credit facilities (see Note 6 to the consolidated financial statements). For investments that are pledged to the Company's credit facilities, a single investment may be divided into parts that are individually pledged as collateral to separate credit facilities. As such, these securities are not available as collateral to our general creditors.
(8)
The negative fair value is the result of the commitment being valued below par.
See notes to the consolidated financial statements.
These are co-investments made with the Company’s affiliates in accordance with the terms of the exemptive order the Company received from the Securities and Exchange Commission (the “SEC”) permitting us to do so. (See Note 3 to the consolidated financial statements for discussion of the exemptive order from the SEC.)
(10)
Other than the investments noted by this footnote, the fair value of the Company’s investments is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 2 to the consolidated financial statements for more information regarding ASC 820, Fair Value Measurements (“ASC 820”).
(11)
This security is included in the Cash and Cash Equivalents on the Consolidated Statements of Assets and Liabilities.
(12)
Aggregate gross unrealized gain and loss for federal income tax purposes is $26,955 and $357,709, respectively. Net unrealized loss is $330,754 based on a tax cost of $3,101,096.
(13)
Non-income producing security.
(14)
Non-accrual status (see Note 2 to the consolidated financial statements).
(15)
Investments that the Company has determined are not “qualifying assets” under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. The status of these assets under the 1940 Act is subject to change. The Company monitors the status of these assets on an ongoing basis. As of June 30, 2026, non-qualifying assets represented approximately 7.7% of the total assets of the Company.
(16)
As of June 30, 2026, there were letters of credit issued and outstanding through the Company under this first lien senior secured revolving loan.
(17)
The undrawn portion of these committed revolvers and delayed draw term loans includes a commitment and unused fee rate.
See notes to the consolidated financial statements.
As of June 30, 2026, the Company had the following commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies. Such commitments are subject to the satisfaction of certain conditions set forth in the documents governing these loans and letters of credit and there can be no assurance that such conditions will be satisfied. See Note 8 to the consolidated financial statements for further information on revolving and delayed draw loan commitments, including commitments to issue letters of credit, related to certain portfolio companies.
Name of Issuer
Total Commitment
Drawn Commitment
Letters of Credit **
Undrawn Commitment
ACP Avenu Buyer, LLC
$
7,247
$
322
$
—
$
6,925
ACP Packaging Intermediateco, LLC
1,829
305
—
1,524
AGDATA Midco, LLC
3,828
236
—
3,592
AMI Buyer, Inc.
1,905
—
—
1,905
Accelevation LLC
3,540
—
—
3,540
Acentra Holdings, LLC (fka CNSI Holdings, LLC)
2,000
—
—
2,000
Alcresta Therapeutics Inc.
441
103
—
338
All Star Recruiting Locums, LLC
3,478
848
—
2,630
American Restoration Holdings, LLC
7,634
2,268
—
5,366
Amplity Parent, Inc.
2,796
359
—
2,437
Amylu Borrower Sub, LLC
3,747
—
—
3,747
Arcadia Solutions, Inc.
1,786
—
—
1,786
Aspen Aerogels, Inc.
100
11
—
89
Athlete Buyer, LLC
5,237
3,201
368
1,668
August Bioservices, LLC
500
275
—
225
Banner Buyer, LLC
1,935
592
—
1,343
Berner Food & Beverage, LLC
2,881
2,167
—
714
Biamp
120
28
4
88
Bingo Group Buyer, Inc.
3,508
25
—
3,483
Birch Group of Clinics Acquireco Inc.
1,702
—
—
1,702
Blue Jay Transit Inc.
—
—
—
—
Brush Group Bidco Limited*
1,989
—
—
1,989
Bullcave Limited
5,526
4,052
—
1,474
BusPatrol Holdco
2,000
1,733
—
267
CARDS-Live Oak Holdings, Inc.
1,030
355
—
675
CI (MG) GROUP, LLC
4,411
1,164
—
3,247
CRS Holdings, Inc.
943
—
194
749
CSC Holdings, LLC
100
90
6
4
Camin Cargo Control Holdings, Inc.
1,000
827
—
173
Cerus Corporation
3,000
2,476
—
524
Channelside AcquisitionCo, Inc. (fka Gruden Acquisition, Inc.)
333
—
127
206
Chronicle Parent LLC
2,570
—
—
2,570
ChyronHego US Holding Corporation
15,000
5,000
—
10,000
CircusTrix Holdings LLC
1,000
1,000
—
—
Club Car Wash Operating, LLC
1,625
1,625
—
—
Club Champion LLC
1,807
668
—
1,139
Colonnade Parent Inc (fka Naviga Inc.)
502
500
—
2
Cool Buyer, Inc.
6,667
3,637
—
3,030
Coretrust Purchasing Group LLC (HPG Enterprises LLC)
677
—
—
677
Crewline Buyer, Inc.
377
—
—
377
Crumbl Enterprises LLC
741
—
—
741
DCM Parent, LLC
2,326
—
—
2,326
DRS Holdings III, Inc.
1,483
—
—
1,483
DecisionHR Holdings, Inc.
3,191
—
—
3,191
Digital.ai Software Holdings, Inc.
2,419
242
—
2,177
See notes to the consolidated financial statements.
* These investments are in a foreign currency and the total commitment has been converted to USD using the June 30, 2026 exchange rate.
**For all letters of credit issued and outstanding on June 30, 2026, $5,671 will expire in 2026, $1,137 will expire in 2027, $214 will expire in 2029 and $190 will expire in 2030.
See notes to the consolidated financial statements.
Securities that are exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. As of June 30, 2026, the aggregate fair value of these securities is $146,564 or 13% of the Company's net assets. The acquisition dates of the restricted securities are as follows:
Issuer
Investment Type
Acquisition Date
1244311 B.C. Ltd.
Common Equity - Common Stock
9/30/2020
Amplity Topco, LLC
Preferred Equity - Preferred Equity
4/20/2026
Amplity Topco, LLC
Common Equity - Common Equity / Interest
4/20/2026
Arrivia, Inc. (International Cruise & Excursion Gallery, Inc)
Common Equity - Membership Interests
12/31/2024
Carbonfree Chemicals Holdings LLC
Common Equity - Common Equity / Interest
11/1/2019
ChyronHego Corporation
Preferred Equity - Preferred Equity
12/29/2020
Eagle Aggregator Ltd
Preferred Equity - Preferred Equity
12/31/2025
Eagle Aggregator Ltd
Preferred Equity - Preferred Equity
12/31/2025
FC2 LLC
Common Equity - Common Stock
10/14/2022
Justin's LLC
Common Equity - Common Stock
12/15/2025
LendingPoint Consolidated, Inc.
Preferred Equity - Preferred Equity
12/30/2025
LendingPoint Consolidated, Inc.
Common Equity - Common Stock
12/30/2025
Merx Aviation Finance, LLC
Common Equity - Membership Interests
9/1/2022
New Era Technology, Inc.
Preferred Equity - Preferred Equity
8/21/2025
Norvax, LLC (dba GoHealth)
Common Equity - Common Stock
8/6/2025
Overhaul Group, Inc.
Preferred Equity - Preferred Equity
8/18/2025
Surf Opco, LLC
Preferred Equity - Class P-1 Preferred
3/17/2021
Third Lane Mobility Inc.
Common Equity - Common Stock
3/22/2024
Third Lane Mobility Inc.
Warrants - Warrants
1/31/2025
Trench Safety Solutions Holdings, LLC
Preferred Equity - Preferred Equity
4/3/2025
Xanitos TopCo, LLC
Common Equity - Membership Interests
12/3/2025
(20)
The interest rate on these loans is subject to Prime, which as of June 30, 2026 was 6.75%.
(21)
The interest rate on these loans is subject to SONIA, which as of June 30, 2026 was 3.73%.
(22)
The interest rate on these loans is subject to 1 month SOFR, which as of June 30, 2026 was 3.65%.
(23)
The interest rate on these loans is subject to 3 months SOFR, which as of June 30, 2026 was 3.73%.
(24)
The interest rate on these loans is subject to 6 months SOFR, which as of June 30, 2026 was 3.85%.
(25)
The interest rate on these loans is subject to 12 months SOFR, which as of June 30, 2026 was 3.99%.
(26)
The interest rate on these loans is subject to 1 month CORRA, which as of June 30, 2026 was 2.28%.
(27)
The interest rate on these loans is subject to 3 months EURIBOR, which as of June 30, 2026 was 2.32%.
(28)
The interest rate on these loans is subject to 6 months EURIBOR, which as of June 30, 2026 was 2.57%.
(29)
The underlying investments of AIC SPV Holdings II, LLC is a securitization in which the Company owns preferred shares representing 14.25% economic interest.
See notes to the consolidated financial statements.
AIC SB Holdings LLC, AIC SHD Holdings, AP Surf Investments, LLC are wholly-owned special purpose vehicles which only hold investments of the underlying portfolio companies and have no other significant assets or liabilities. AIC SB Holdings LLC holds equity investments in Gainline Galaxy Holdings LLC. AP Surf Investments, LLC holds equity investments in Surf Opco, LLC. AIC SHD Holdings LLC holds equity investments in both Carbonfree Chemicals Holdings, LLC and Carbonfree Chemicals SA, LLC.
(31)
The Company has approximately 22.5% ownership interest in Auto Pool 2023 Trust. Auto Pool 2023 Trust holds underlying assets that consist of a pool of retail auto loans and residual interests in auto loan trusts. The Company also continues to have an interest in any residual assets from the bankruptcy proceedings related to U.S. Auto Finance.
(32)
Common shares in 1244311 B.C. Ltd. are CAD denominated equity investments. Ordinary shares in Paladone Group Holdings Limited and Ordinary and Preference shares in Eagle Aggregator Ltd are GBP denominated equity investments.
(33)
The following shows the composition of the Company’s portfolio at cost by control designation, investment type and industry as of June 30, 2026:
Industry
First Lien - Secured Debt
Second Lien - Secured Debt
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
Non-Controlled / Non-Affiliated Investments
Aerospace & Defense
$
17,171
$
—
$
—
$
—
$
49
$
110
$
—
$
17,330
Air Freight & Logistics
25,911
—
—
—
—
—
—
25,911
Automobile Components
20,170
—
—
—
—
23,856
—
44,026
Beverages
5,749
—
—
—
100
—
—
5,849
Biotechnology
—
—
—
—
333
—
389
722
Building Products
4,942
—
—
—
—
—
—
4,942
Chemicals
26,150
—
—
—
—
—
—
26,150
Commercial Services & Supplies
118,375
—
—
—
111
683
—
119,169
Communications Equipment
10,100
—
—
—
—
584
—
10,684
Construction & Engineering
57,598
—
—
—
4
50
—
57,652
Consumer Finance
57,646
—
1,842
—
2,943
750
—
63,181
Consumer Staples Distribution & Retail
42,465
—
—
—
—
169
—
42,634
Containers & Packaging
70,298
—
—
—
—
—
—
70,298
Diversified Consumer Services
206,999
—
—
—
—
632
—
207,631
Diversified Telecommunication Services
71
—
1,524
—
—
—
—
1,595
Electrical Equipment
33,230
—
—
—
—
250
—
33,480
Electronic Equipment, Instruments & Components
71,316
—
—
—
—
—
—
71,316
Energy Equipment & Services
3,797
—
—
—
—
—
—
3,797
Entertainment
13,330
—
—
—
—
—
—
13,330
Financial Services
74,587
—
—
—
534
17,006
—
92,127
Food Products
68,731
—
—
—
448
1,688
—
70,867
Ground Transportation
46,481
—
—
—
—
—
—
46,481
Health Care Equipment & Supplies
84,006
—
—
—
—
—
—
84,006
Health Care Providers & Services
261,182
—
—
—
76
417
—
261,675
Health Care Technology
62,033
92
—
—
—
—
—
62,125
Hotels, Restaurants & Leisure
96,728
—
—
—
—
—
—
96,728
Household Durables
30,671
—
—
—
—
—
—
30,671
Insurance
51,031
—
—
—
—
—
—
51,031
Interactive Media & Services
2,195
7,686
—
—
—
—
—
9,881
IT Services
75,880
—
—
—
10,818
77
—
86,775
See notes to the consolidated financial statements.
Painters Supply and Equipment Co. (fka Graffiti Buyer, Inc.)
First Lien Secured Debt - Term Loan
SOFR+560, 1.00% Floor
08/10/27
10,748
10,629
10,505
(9)(23)
First Lien Secured Debt - Delayed Draw
SOFR+560, 1.00% Floor
08/10/27
3,629
3,597
3,465
(9)(17)(18) (23)
First Lien Secured Debt - Revolver
SOFR+560, 1.00% Floor
08/10/27
—
(8
)
(29
)
(8)(9)(17) (18)
14,462
14,120
Total Trading Companies & Distributors
$
86,637
$
81,488
Transportation Infrastructure
GAT-Airline Ground Support Inc
GAT-Airline Ground Support Inc
First Lien Secured Debt - Term Loan
SOFR+525, 1.00% Floor
05/09/29
$
15,010
$
14,829
$
15,010
(9)(23)
First Lien Secured Debt - Delayed Draw
SOFR+525, 1.00% Floor
05/09/29
3,484
3,434
3,483
(9)(17)(18) (23)
First Lien Secured Debt - Revolver
SOFR+525, 1.00% Floor
05/09/29
635
611
635
(9)(17)(18) (23)
Total Transportation Infrastructure
$
18,874
$
19,128
Total Investment before Cash Equivalents
$
3,356,770
$
3,167,838
Goldman Sachs Financial Square Government Fund, Institutional
N/A
N/A
$
230
$
230
$
230
(11)
J.P. Morgan U.S. Government Money Market Fund
N/A
N/A
$
153
$
153
$
153
(11)
Total Investment after Cash Equivalents
$
3,357,153
$
3,168,221
(1)
Fair value is determined in good faith subject to the oversight of the board of directors of the Company (the “Board”) (See Note 2 to the consolidated financial statements).
(2)
Par amount is denominated in USD unless otherwise noted, and represents funded commitments. See Note 18 in the Consolidated Schedule of Investments and Note 8 to the consolidated financial statements for further information on undrawn revolving and delayed draw loan commitments, including commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies.
(3)
Denotes investments in which the Company owns greater than 25% of the equity, where the governing documents of each entity preclude the Company from exercising a controlling influence over the management or policies of such entity. The Company does not have the right to elect or appoint more than 25% of the directors or another party has the right to elect or appoint more directors than the Company and has the right to appoint certain members of senior management. Therefore, the Company has determined that these entities are not controlled affiliates. As of December 31, 2025, we had a 100% equity ownership interest in Golden Bear 2016-R, LLC, a collateralized loan obligation.
See notes to the consolidated financial statements.
Denotes investments in which we are an “Affiliated Person,” as defined in the Investment Company Act of 1940, as amended (the "1940 Act"), due to holding the power to vote or owning 5% or more of the outstanding voting securities of the investment but not controlling the company. Fair value as of December 31, 2024 and December 31, 2025 along with transactions during the year ended December 31, 2025 in these affiliated investments are as follows:
Auto Pool 2023 Trust (Del. Stat. Trust) ,Membership Interests
16,366
—
(3,783
)
(2,266
)
10,317
—
2,502
Blue Jay Transit Inc.,Term Loan
19,940
4,580
(868
)
(4,308
)
19,344
—
—
Blue Jay Transit Inc.,Unfunded Delayed Draw
—
—
—
—
—
—
—
Bird Scooter Acquisition Corp.,Common Stock
373
—
(373
)
—
—
—
—
Arrivia, Inc. (International Cruise & Excursion Gallery, Inc),Membership Interests
2,144
—
—
484
2,628
—
—
Arrivia, Inc. (International Cruise & Excursion Gallery, Inc),Term Loan
4,183
(48
)
(187
)
296
3,962
(282
)
427
Third Lane Mobility Inc.,Common Stock
—
728
—
(728
)
—
—
—
Third Lane Mobility Inc.,Warrants
—
—
—
—
—
—
—
$
84,334
$
50,025
$
(18,310
)
$
(8,601
)
$
107,111
$
(338
)
$
7,209
•
Gross additions include increases in the basis of investments resulting from new portfolio investments, payment-in-kind interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
▪
Gross reductions include decreases in the basis of investments resulting from principal collections related to investment repayments or sales, the amortization of premiums, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
See notes to the consolidated financial statements.
Denotes investments in which we are deemed to exercise a controlling influence over the management or policies of a company, as defined in the 1940 Act, due to beneficially owning, either directly or through one or more controlled companies, more than 25% of the outstanding voting securities of the investment. Fair value as of December 31, 2024 and December 31, 2025 along with transactions during the year ended December 31, 2025 in these controlled investments are as follows:
Name of Issuer
Fair Value at December 31, 2024
Gross Additions ●
Gross Reductions ■
Net Change in Unrealized Gains (Losses)
Fair Value at December 31, 2025
Net Realized Gains (Losses)
Interest/ Dividend/ Other Income
Majority Owned Company
ChyronHego US Holding Corporation
$
15,500
$
15,369
$
(11,400
)
$
(1
)
$
19,467
$
—
$
1,692
ChyronHego US Holding Corporation
106,406
6
(500
)
(6
)
105,906
—
8,334
ChyronHego Corporation
19,456
—
—
(6,411
)
13,045
—
—
Merx Aviation Finance, LLC
123,815
—
(71,609
)
32,016
84,222
—
—
Merx Aviation Finance, LLC
59,576
—
(41,000
)
—
18,576
—
4,419
Merx Aviation Finance Holdings, LLC
—
225,000
(225,000
)
—
—
—
—
$
324,753
$
240,375
$
(349,509
)
$
25,598
$
241,216
$
—
$
14,444
•
Gross additions include increases in the basis of investments resulting from new portfolio investments, payment-in-kind interest or dividends, the accretion of discounts, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category.
▪
Gross reductions include decreases in the basis of investments resulting from principal collections related to investment repayments or sales, the amortization of premiums, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category.
As of December 31, 2025, the Company had a 87% and 100% equity ownership interest in ChyronHego Corporation and Merx Aviation Finance, LLC, respectively.
(6)
Unless otherwise indicated, loan contains a variable rate structure, and the terms in the Consolidated Schedule of Investments disclose the actual interest rate in effect as of the reporting period which may be subject to interest floors. Variable rate loans bear interest at a rate that may be determined by reference to the Secured Overnight Financing Rate (“SOFR” or “S”) or an alternate base rate (which can include but is not limited to the Federal Funds Effective Rate or the Prime Rate), at the borrower’s option, and which reset periodically based on the terms of the loan agreement. Certain borrowers may elect to borrow Prime rate on select contracts and switch to an alternative base rate contract in the future.
(7)
Substantially all securities are pledged as collateral to the Company's credit facilities (see Note 6 to the consolidated financial statements). For investments that are pledged to the Company's credit facilities, a single investment may be divided into parts that are individually pledged as collateral to separate credit facilities. As such, these securities are not available as collateral to our general creditors.
(8)
The negative fair value is the result of the commitment being valued below par.
See notes to the consolidated financial statements.
These are co-investments made with the Company’s affiliates in accordance with the terms of the exemptive order the Company received from the Securities and Exchange Commission (the “SEC”) permitting us to do so. (See Note 3 to the consolidated financial statements for discussion of the exemptive order from the SEC.)
(10)
Other than the investments noted by this footnote, the fair value of the Company’s investments is determined using unobservable inputs that are significant to the overall fair value measurement. See Note 2 to the consolidated financial statements for more information regarding ASC 820, Fair Value Measurements (“ASC 820”).
(11)
This security is included in the Cash and Cash Equivalents on the Consolidated Statements of Assets and Liabilities.
(12)
Aggregate gross unrealized gain and loss for federal income tax purposes is $39,682 and $270,079, respectively. Net unrealized loss is $230,397 based on a tax cost of $3,398,235.
(13)
Non-income producing security.
(14)
Non-accrual status (see Note 2 to the consolidated financial statements).
(15)
Investments that the Company has determined are not “qualifying assets” under Section 55(a) of the 1940 Act. Under the 1940 Act, we may not acquire any non-qualifying asset unless, at the time such acquisition is made, qualifying assets represent at least 70% of our total assets. The status of these assets under the 1940 Act is subject to change. The Company monitors the status of these assets on an ongoing basis. As of December 31, 2025, non-qualifying assets represented approximately 8.8% of the total assets of the Company.
(16)
As of December 31, 2025, there were letters of credit issued and outstanding through the Company under this first lien senior secured revolving loan.
(17)
The undrawn portion of these committed revolvers and delayed draw term loans includes a commitment and unused fee rate.
See notes to the consolidated financial statements.
As of December 31, 2025, the Company had the following commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies. Such commitments are subject to the satisfaction of certain conditions set forth in the documents governing these loans and letters of credit and there can be no assurance that such conditions will be satisfied. See Note 8 to the consolidated financial statements for further information on revolving and delayed draw loan commitments, including commitments to issue letters of credit, related to certain portfolio companies.
Name of Issuer
Total Commitment
Drawn Commitment
Letters of Credit **
Undrawn Commitment
ACP Avenu Buyer, LLC
$
7,247
$
—
$
—
$
7,247
ACP Packaging Intermediateco, LLC
1,829
—
—
1,829
AGDATA Midco, LLC
3,828
189
—
3,639
AMI Buyer, Inc.
1,905
—
—
1,905
Accelerate360 Holdings, LLC
2,544
1,382
—
1,162
Accelevation LLC
3,540
385
—
3,155
Acentra Holdings, LLC (fka CNSI Holdings, LLC)
2,000
—
—
2,000
Alcami Corporation
1,096
233
—
863
Alcresta Therapeutics Inc.
441
29
—
412
All Star Recruiting Locums, LLC
3,478
761
—
2,717
Alpinex Opco, LLC
1,489
1,102
—
387
American Restoration Holdings, LLC
8,554
1,490
—
7,064
Amplity Parent, Inc.
3,243
2,732
—
511
Amylu Borrower Sub, LLC
4,063
—
—
4,063
Arcadia Solutions, Inc.
1,786
—
—
1,786
Arcwood Environmental, Inc. (f/k/a Heritage Environmental Services, Inc.)
242
—
4
238
Aspen Aerogels, Inc.
100
15
—
85
Athlete Buyer, LLC
5,237
3,201
214
1,822
August Bioservices, LLC
500
434
—
66
Banner Buyer, LLC
1,935
587
—
1,348
Berner Food & Beverage, LLC
2,881
1,383
—
1,498
Biamp
120
—
4
116
Bingo Group Buyer, Inc.
4,130
25
—
4,105
Birch Group of Clinics Acquireco Inc.
1,702
—
—
1,702
Blue Jay Transit Inc.
—
—
—
—
Brush Group Bidco Limited*
2,021
—
—
2,021
Bullcave Limited
5,526
3,684
—
1,842
BusPatrol Holdco
7,000
1,800
—
5,200
CARDS-Live Oak Holdings, Inc.
1,850
200
—
1,650
CI (MG) GROUP, LLC
6,259
1,176
—
5,083
CRS Holdings, Inc.
4,472
—
150
4,322
CSC Holdings, LLC
100
86
7
7
Camin Cargo Control Holdings, Inc.
1,930
537
—
1,393
Celerion Buyer, Inc.
639
—
—
639
Cerus Corporation
5,000
450
—
4,550
Channelside AcquisitionCo, Inc. (fka Gruden Acquisition, Inc.)
333
28
154
151
Chronicle Parent LLC
2,781
—
—
2,781
ChyronHego US Holding Corporation
21,000
19,467
—
1,533
CircusTrix Holdings LLC
1,000
400
—
600
Club Car Wash Operating, LLC
1,625
—
—
1,625
Club Champion LLC
1,807
669
—
1,138
Colonnade Parent Inc (fka Naviga Inc.)
500
500
—
—
Cool Buyer, Inc.
6,667
1,818
28
4,821
Coretrust Purchasing Group LLC (HPG Enterprises LLC)
963
—
—
963
Crewline Buyer, Inc.
377
—
—
377
See notes to the consolidated financial statements.
* These investments are in a foreign currency and the total commitment has been converted to USD using the December 31, 2025 exchange rate.
**For all letters of credit issued and outstanding on December 31, 2025, $6,353 will expire in 2026, $324 will expire in 2027, $214 will expire in 2029 and $145 will expire in 2030.
See notes to the consolidated financial statements.
Securities that are exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), and may be deemed to be “restricted securities” under the Securities Act. As of December 31, 2025, the aggregate fair value of these securities is $131,042 or 10% of the Company's net assets. The acquisition dates of the restricted securities are as follows:
Issuer
Investment Type
Acquisition Date
1244311 B.C. Ltd.
Common Equity - Common Stock
9/30/2020
Arrivia, Inc. (International Cruise & Excursion Gallery, Inc)
Common Equity - Membership Interests
12/31/2024
Carbonfree Chemicals Holdings LLC
Common Equity - Common Equity / Interest
11/1/2019
ChyronHego Corporation
Preferred Equity - Preferred Equity
12/29/2020
Eagle Aggregator Ltd
Preferred Equity - Preferred Equity
12/31/2025
Eagle Aggregator Ltd
Preferred Equity - Preferred Equity
12/31/2025
FC2 LLC
Common Equity - Common Stock
10/14/2022
Justin's LLC
Common Equity - Common Stock
12/15/2025
LendingPoint Consolidated, Inc.
Preferred Equity - Preferred Equity
12/30/2025
LendingPoint Consolidated, Inc.
Common Equity - Common Stock
12/30/2025
Merx Aviation Finance, LLC
Common Equity - Membership Interests
9/1/2022
Mitel Networks (International) Limited
Common Equity - Common Stock
6/20/2025
New Era Technology, Inc.
Preferred Equity - Preferred Equity
8/21/2025
Norvax, LLC (dba GoHealth)
Common Equity - Common Stock
8/6/2025
Overhaul Group, Inc.
Preferred Equity - Preferred Equity
8/18/2025
PAI Co-Investor FT Aggregator LLC
Common Equity - Common Stock
2/13/2025
Paladone Group Holdings Limited
Common Equity - Common Stock
5/1/2025
Renovo Home Partners
Preferred Equity - Preferred Equity
4/14/2025
Renovo Home Partners
Common Equity - Common Stock
4/14/2025
Ronnoco Holdings, Inc.
Preferred Equity - Preferred Equity
3/17/2025
Ronnoco Holdings, Inc.
Common Equity - Common Stock
4/1/2025
SMC IR Holdings, LLC
Common Equity - Common Stock
12/24/2024
Space Parent, LP
Common Equity - Common Stock
2/5/2025
Space Parent, LP
Preferred Equity - Preferred Equity
2/5/2025
Sperry Parent Holdings, L.P.
Common Equity - Common Stock
2/3/2025
SPS Commerce, Inc.
Common Equity - Common Stock
2/10/2025
Surf Opco, LLC
Common Equity - Class A-1 Common
3/17/2021
Surf Opco, LLC
Preferred Equity - Class P-1 Preferred
3/17/2021
Third Lane Mobility Inc.
Common Equity - Common Stock
3/22/2024
Third Lane Mobility Inc.
Warrants - Warrants
1/31/2025
Trench Safety Solutions Holdings, LLC
Preferred Equity - Preferred Equity
4/3/2025
(20)
The interest rate on these loans is subject to Prime, which as of December 31, 2025 was 6.75%.
(21)
The interest rate on these loans is subject to SONIA, which as of December 31, 2025 was 3.73%.
(22)
The interest rate on these loans is subject to 1 month SOFR, which as of December 31, 2025 was 3.69%.
(23)
The interest rate on these loans is subject to 3 months SOFR, which as of December 31, 2025 was 3.65%.
(24)
The interest rate on these loans is subject to 6 months SOFR, which as of December 31, 2025 was 3.57%.
(25)
The interest rate on these loans is subject to 12 months SOFR, which as of December 31, 2025 was 3.41%.
(26)
The interest rate on these loans is subject to 1 month CORRA, which as of December 31, 2025 was 2.26%.
(27)
The interest rate on these loans is subject to 3 month CORRA, which as of December 31, 2025 was 2.26%.
(28)
The interest rate on these loans is subject to 3 months EURIBOR, which as of December 31, 2025 was 2.03%.
(29)
The interest rate on these loans is subject to 6 months EURIBOR, which as of December 31, 2025 was 2.11%.
(30)
The underlying investments of AIC SPV Holdings II, LLC is a securitization in which the Company owns preferred shares representing 14.25% economic interest.
See notes to the consolidated financial statements.
AIC SB Holdings LLC, AIC SHD Holdings, AP Surf Investments, LLC and MFIC Epsilon SPV LLC are wholly-owned special purpose vehicles which only hold investments of the underlying portfolio companies and have no other significant assets or liabilities. AIC SB Holdings LLC holds equity investments in Gainline Galaxy Holdings LLC. AP Surf Investments, LLC holds equity investments in Surf Opco, LLC. AIC SHD Holdings LLC holds equity investments in both Carbonfree Chemicals Holdings, LLC and Carbonfree Chemicals SA, LLC. MFIC Epsilon SPV LLC holds investments in mPulse Mobile, Inc.
(32)
The Company has approximately 22.5% ownership interest in Auto Pool 2023 Trust. Auto Pool 2023 Trust holds underlying assets that consist of a pool of retail auto loans and residual interests in auto loan trusts. The Company also continues to have an interest in any residual assets from the bankruptcy proceedings related to U.S. Auto Finance.
(33)
Common shares in 1244311 B.C. Ltd. are CAD denominated equity investments. Ordinary shares in Paladone Group Holdings Limited are GBP denominated equity investments.
(34)
As of December 31, 2025, the portfolio company remains in maturity default. The respective lenders are pursuing sale-related steps in the absence of an agreement to extend or waive the default.
See notes to the consolidated financial statements.
The following shows the composition of the Company’s portfolio at fair value by control designation, investment type and industry as of December 31, 2025:
Industry
First Lien - Secured Debt
Second Lien - Secured Debt
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
% of Net Assets
Non-Controlled / Non-Affiliated Investments
Aerospace & Defense
$
17,287
$
—
$
—
$
—
$
49
$
97
$
—
$
17,433
1.33
%
Air Freight & Logistics
26,344
—
—
—
—
—
—
26,344
2.02
%
Automobile Components
17,976
—
—
—
—
219
—
18,195
1.39
%
Beverages
5,466
—
—
—
100
—
—
5,566
0.43
%
Biotechnology
26,754
—
—
—
521
194
326
27,795
2.13
%
Building Products
25,078
—
—
—
—
—
—
25,078
1.92
%
Chemicals
29,619
—
—
—
—
—
—
29,619
2.27
%
Commercial Services & Supplies
148,139
—
—
—
97
390
—
148,626
11.37
%
Communications Equipment
9,967
—
—
—
—
250
—
10,217
0.78
%
Construction & Engineering
73,033
—
—
—
8
37
—
73,078
5.59
%
Consumer Finance
30,346
—
1,842
—
1,563
398
—
34,149
2.61
%
Consumer Staples Distribution & Retail
37,810
—
—
—
—
—
—
37,810
2.89
%
Containers & Packaging
58,036
—
—
—
—
—
—
58,036
4.44
%
Diversified Consumer Services
202,833
—
—
—
—
1,315
—
204,148
15.62
%
Diversified Telecommunication Services
72
—
1,230
—
—
—
—
1,302
0.10
%
Electrical Equipment
33,151
—
—
—
—
—
—
33,151
2.54
%
Electronic Equipment, Instruments & Components
76,851
—
—
—
—
—
—
76,851
5.88
%
Energy Equipment & Services
3,527
—
—
—
—
—
—
3,527
0.27
%
Entertainment
27,098
—
—
—
—
—
—
27,098
2.07
%
Financial Services
79,662
—
—
—
501
527
—
80,690
6.17
%
Food Products
69,402
—
—
—
382
1,726
—
71,510
5.47
%
Ground Transportation
52,525
—
—
—
—
—
—
52,525
4.02
%
Health Care Equipment & Supplies
118,916
—
—
—
—
492
—
119,408
9.13
%
Health Care Providers & Services
286,275
—
—
—
120
440
—
286,835
21.94
%
See notes to the consolidated financial statements.
Percentage of Total Investments (at Fair Value) as of December 31, 2025
Software
11.4%
Health Care Providers & Services
9.1%
Media
6.7%
Diversified Consumer Services
6.4%
Commercial Services & Supplies
4.7%
Personal Care Products
4.2%
Health Care Equipment & Supplies
3.8%
Electronic Equipment, Instruments & Components
3.4%
Passenger Airlines
3.2%
Hotels, Restaurants & Leisure
3.2%
Financial Services
2.8%
Pharmaceuticals
2.6%
Trading Companies & Distributors
2.6%
Professional Services
2.6%
IT Services
2.4%
Construction & Engineering
2.3%
Ground Transportation
2.3%
Food Products
2.3%
Insurance
2.2%
Machinery
2.1%
Health Care Technology
2.0%
Chemicals
1.9%
Containers & Packaging
1.8%
Consumer Finance
1.4%
Consumer Staples Distribution & Retail
1.2%
Electrical Equipment
1.0%
Textiles, Apparel & Luxury Goods
0.9%
Biotechnology
0.9%
Entertainment
0.9%
Household Durables
0.8%
Air Freight & Logistics
0.8%
Building Products
0.8%
Transportation Infrastructure
0.6%
Life Sciences Tools & Services
0.6%
Automobile Components
0.6%
Aerospace & Defense
0.6%
Specialty Retail
0.5%
Multi-Utilities
0.5%
Paper & Forest Products
0.5%
Technology Hardware, Storage & Peripherals
0.4%
Communications Equipment
0.3%
Leisure Products
0.3%
Beverages
0.2%
Energy Equipment & Services
0.1%
Interactive Media & Services
0.1%
Diversified Telecommunication Services
0.0%
Total Investments
100.0%
Effective March 31, 2025, the Company transitioned its industry classification methodology from Moody’s to the Global Industry Classification Standard (GICS).
See notes to the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands, except share and per share data)
Note 1. Organization
MidCap Financial Investment Corporation (the “Company,” “we,” “us,” or “our”), a Maryland corporation incorporated on February 2, 2004, is a closed-end, externally managed, diversified management investment company that has elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). In addition, for tax purposes we have elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). We commenced operations on April 8, 2004 receiving net proceeds of $870,000 from our initial public offering by selling 62 million shares of common stock at a price of $15.00 per share (20.7 million shares at a price of $45.00 per share adjusted for the one-for-three reverse stock split). Since then, and through June 30, 2026, we have raised approximately $2,680,207 in net proceeds from additional offerings of common stock, including the Mergers with AFT and AIF and repurchased common stock for $375,000.
On November 7, 2023, the Company entered into (i) an Agreement and Plan of Merger (the “AFT Merger Agreement”) with Apollo Senior Floating Rate Fund Inc., a Maryland corporation (“AFT”), AFT Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of the Company (“AFT Merger Sub”), and, solely for the limited purposes set forth therein, Apollo Investment Management, L.P. (the “Investment Adviser” or “AIM”), and (ii) an Agreement and Plan of Merger (the “AIF Merger Agreement” and, together with the AFT Merger Agreement, the “Merger Agreements”) with Apollo Tactical Income Fund Inc., a Maryland corporation (“AIF”), AIF Merger Sub, Inc., a Maryland corporation and a direct wholly-owned subsidiary of the Company (“AIF Merger Sub”), and, solely for the limited purposes set forth therein, the Investment Adviser. The Merger Agreements provide that, subject to the terms and conditions set forth in the applicable Merger Agreement, at the effective time of such merger, AFT and AIF will, through a two-step merger process, merge with and into the Company, with the Company continuing as the surviving company. Each of the board of directors of the Company (the “Board”), and AFT’s and AIF’s Board of Directors, including all of the respective independent directors, in each case, on the recommendation of special committees comprised solely of certain independent directors of the Company or AFT and AIF, as applicable, approved the applicable Merger Agreement and the transactions contemplated thereby. The Company's stockholders approved the necessary proposal related to the mergers of AFT and AIF with and into the Company at a special meeting of stockholders held on May 28, 2024. AFT and AIF received stockholder approval of the necessary proposals related to their previously announced mergers with and into the Company at the AFT and AIF special meetings of stockholders reconvened on June 21, 2024. On July 22, 2024, the Company completed its acquisition of AFT and AIF.
AIM is our investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (“AGM”). The Investment Adviser, subject to the overall supervision of our Board, manages the day-to-day operations of and provides investment advisory services to the Company.
Apollo Investment Administration, LLC (the “Administrator” or “AIA”), an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. Furthermore, AIA provides on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance.
Our investment objective is to generate current income and, to a lesser extent, long-term capital appreciation. We primarily invest in directly originated and privately negotiated first lien senior secured loans to privately held U.S. middle-market companies, which the Company generally defines as companies with less than $75 million in earnings before interest, taxes, depreciation and amortization (“EBITDA”), as may be adjusted for market disruptions, mergers and acquisitions-related charges and synergies, and other items. To a lesser extent, we may invest in other types of securities including first lien unitranche, second lien senior secured, unsecured, subordinated, and mezzanine loans, and equities in both private and public middle market companies.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Note 2. Significant Accounting Policies
The following is a summary of the significant accounting and reporting policies used in preparing the consolidated financial statements.
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the requirements on Form 10-Q, ASC 946, Financial Services — Investment Companies (“ASC 946”), and Articles 6, 10 and 12 of Regulation S-X. In the opinion of management, all adjustments, which are of a normal recurring nature, considered necessary for the fair presentation of the consolidated financial statements for the periods presented, have been included.
Under the 1940 Act, ASC 946, and the regulations pursuant to Article 6 of Regulation S-X, we are precluded from consolidating any entity other than another investment company or an operating company which provides substantially all of its services to benefit us.
These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income, expenses, gains and losses during the reported periods. Changes in the economic environment, financial markets, credit worthiness of our portfolio companies, and any other parameters used in determining these estimates could cause actual results to differ materially.
Consolidation
As provided under Regulation S-X and ASC 946, the Company will not consolidate its investment in a company other than an investment company subsidiary or a controlled operating company whose business consists of providing services to the Company. Accordingly, the Company consolidated the results of the Company’s wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
As of June 30, 2026, the Company's consolidated subsidiaries were MFIC Bethesda CLO 1 LLC, MFIC Bethesda CLO 1 Depositor LLC, MFIC Bethesda CLO 2 LLC, MFIC Bethesda CLO 2 Depositor LLC, MFIC Lender LLC, MFIC WP SPV LLC, and MFIC Alpha SPV LLC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Cash and Cash Equivalents
The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and near maturity that present insignificant risk of changes in value because of changes in interest rates. Generally, only securities with a maturity of three months or less from the date of purchase would qualify, with limited exceptions. The Company deems that certain money market funds, U.S. Treasury Bills, repurchase agreements, and other high-quality, short-term debt securities would qualify as cash equivalents.
Cash and cash equivalents are carried at cost which approximates fair value. Cash and cash equivalents held as of June 30, 2026 was $43,284. Cash and cash equivalents held as of December 31, 2025 was $98,184.
Investment Transactions
Investments are recognized when we assume an obligation to acquire a financial instrument and assume the risks for gains and losses related to that instrument. Investments are derecognized when we assume an obligation to sell a financial instrument and forego the risks for gains or losses related to that instrument. Specifically, we record all security transactions on a trade date basis. Amounts for investments recognized or derecognized but not yet settled are reported as a payable for investment purchased and receivable for investment sold, respectively, in the Consolidated Statements of Assets and Liabilities.
Fair Value Measurements
The Company follows guidance in ASC 820, Fair Value Measurement (“ASC 820”), where fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are determined within a framework that establishes a three-tier hierarchy which maximizes the use of observable market data and minimizes the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the inputs for the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities may not be an indication of the risks associated with investing in those assets or liabilities.
ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable inputs for the asset or liability.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may differ materially from the values that would be received upon an actual disposition of such investments.
Investment Valuation Process
The Board has designated the Investment Adviser as its “valuation designee” pursuant to Rule 2a-5 under the 1940 Act, and in that role the Investment Adviser is responsible for performing fair value determinations relating to all of the Company's investments, including periodically assessing and managing any material valuation risks and establishing and applying fair value methodologies, in accordance with valuation policies and procedures that have been approved by the Board. Even though the Board designated the Company's Investment Adviser as “valuation designee,” the Board continues to be responsible for overseeing the processes for determining fair valuation.
Under the Company's valuation policies and procedures, the Investment Adviser values investments, including certain secured debt, unsecured debt and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value). We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker, primary market dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are unavailable or are deemed not to represent fair value, we typically utilize independent third party valuation firms to assist us in determining fair value. Accordingly, such investments go through our multi-step valuation process as described below. In each case, our independent third party valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations for such investments. Investments purchased within the quarter before the valuation date and debt investments with remaining maturities of 60 days or less may each be valued at cost with interest accrued or discount accreted/premium amortized to the date of maturity (although they are typically valued at available market quotations), unless such valuation, in the judgment of our Investment Adviser, does not represent fair value. In this case such investments shall be valued at fair value as determined in good faith by or under the direction of the Investment Adviser including using market quotations where available. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Investment Adviser. Such determination of fair values may involve subjective judgments and estimates.
With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, our Investment Adviser undertakes a multi-step valuation process each quarter, as described below:
1.
Our quarterly valuation process begins with independent valuation firms conducting independent appraisals and assessments for all the investments they have been engaged to review. If an independent valuation firm is not engaged during a particular quarter, the valuation may be conducted by the Investment Adviser;
2.
At least each quarter, the valuation will be reassessed and updated by the Investment Adviser or an independent valuation firm to reflect company specific events and latest market data;
3.
Preliminary valuation conclusions are then documented and discussed with senior management of our Investment Adviser;
4.
The Investment Adviser discusses valuations and determines in good faith the fair value of each investment in our portfolio based on the input of the applicable independent valuation firm; and
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
5.
For Level 3 investments entered into within the current quarter, the cost (purchase price adjusted for accreted original issue discount/amortized premium) or any recent comparable trade activity on the security investment shall be considered to reasonably approximate the fair value of the investment, provided that no material change has since occurred in the issuer’s business, significant inputs or the relevant environment.
Investments determined by these valuation procedures which have a fair value of less than $1 million during the prior fiscal quarter may be valued based on inputs identified by the Investment Adviser without the necessity of obtaining valuation from an independent valuation firm, if once annually an independent valuation firm using the procedures described herein provides an independent assessment of value. Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, seniority of investment in the investee company’s capital structure, 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, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When readily available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. During the three months ended June 30, 2026, there were no significant changes to the Company’s valuation techniques and related inputs considered in the valuation process.
Derivative Instruments
The Company recognizes all derivative instruments as assets or liabilities at fair value in its consolidated financial statements. Derivative contracts entered into by the Company are not designated as hedging instruments, and the Company presents changes in fair value and realized gains or losses through current period earnings.
Derivative instruments are measured in terms of the notional contract amount and derive their value based upon one or more underlying instruments. Derivative instruments are subject to various risks similar to non-derivative instruments including market, credit, liquidity, and operational risks. The Company manages these risks on an aggregate basis as part of its risk management process. The derivatives may require the Company to pay or receive an upfront fee or premium. These upfront fees or premiums are carried forward as cost or proceeds to the derivatives.
Exchange-traded derivatives which include put and call options are valued based on the last reported sales price on the date of valuation. Over-the-counter (“OTC”) derivatives, including credit default swaps, are valued by the Investment Adviser using quotations from counterparties. In instances where models are used, the value of the OTC derivative is derived from the contractual terms of, and specific risks inherent in, the instrument as well as the availability and reliability of observable inputs, such as credit spreads.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Foreign Currency Forward Contracts
The Company uses foreign currency forward contracts to reduce the Company's exposure to fluctuations in the value of foreign currencies. In a foreign currency forward contract, the Company agrees to receive or deliver a fixed quantity of one currency for another at a pre-determined price at a future date. Foreign currency forward contracts are marked-to-market at the applicable forward rate. Unrealized appreciation (depreciation) on foreign currency forward contracts are recorded within derivative assets or derivative liabilities on the Consolidated Statements of Assets and Liabilities by counterparty on a net basis, not taking into account collateral posted which is recorded separately, if applicable. Purchases and settlements of foreign currency forward contracts having the same settlement date and counterparty are generally settled net and any realized gains or losses are recognized on the settlement date. The Company does not utilize hedge accounting with respect to foreign currency forward contracts and as such, the Company recognizes its foreign currency forward contracts at fair value with changes included in the net unrealized appreciation (depreciation) on the Consolidated Statements of Operations.
Offsetting Assets and Liabilities
The Company has elected not to offset cash collateral against the fair value of derivative contracts. The fair values of these derivatives are presented on a gross basis, even when derivatives are subject to master netting agreements.
As of June 30, 2026, the Company held certain foreign currency forward contracts with a fair market value of $772. The Company did not hold any derivatives as of December 31, 2025.
Valuation of Other Financial Assets and Financial Liabilities
ASC 825, Financial Instruments, permits an entity to choose, at specified election dates, to measure certain assets and liabilities at fair value (the “Fair Value Option”). We have not elected the Fair Value Option to report selected financial assets and financial liabilities. Debt issued by the Company is reported at amortized cost (see Note 6 to the consolidated financial statements). The carrying value of all other financial assets and liabilities approximates fair value due to their short maturities or their close proximity of the originations to the measurement date.
Realized Gains or Losses
Security transactions are accounted for on a trade date basis. Realized gains or losses on investments are calculated by using the specific identification method. Securities that have been called by the issuer are recorded at the call price on the call effective date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Investment Income Recognition
The Company records interest and dividend income, adjusted for amortization of premium and accretion of discount, on an accrual basis. Some of our loans and other investments, including certain preferred equity investments, may have contractual payment-in-kind (“PIK”) interest or dividends. PIK income computed at the contractual rate is accrued into income and reflected as receivable up to the capitalization date. PIK investments offer issuers the option at each payment date of making payments in cash or in additional securities. When additional securities are received, they typically have the same terms, including maturity dates and interest rates as the original securities issued. On these payment dates, the Company capitalizes the accrued interest or dividends receivable (reflecting such amounts as the basis in the additional securities received). PIK generally becomes due at maturity of the investment or upon the investment being called by the issuer. At the point the Company believes PIK is not fully expected to be realized, the PIK investment will be placed on non-accrual status. When a PIK investment is placed on non-accrual status, the accrued, uncapitalized interest or dividends are reversed from the related receivable through interest or dividend income, respectively. The Company does not reverse previously capitalized PIK interest or dividends. Upon capitalization, PIK is subject to the fair value estimates associated with their related investments. PIK investments on non-accrual status are restored to accrual status if the Company believes that PIK is expected to be realized.
Loan origination fees, original issue discount (“OID”), and market discounts are capitalized and accreted into interest income over the respective terms of the applicable loans using the effective interest method or straight-line, as applicable. Upon the prepayment of a loan, prepayment premiums, any unamortized loan origination fees, OID, or market discounts are recorded as interest income. Other income generally includes amendment fees, bridge fees, and structuring fees which are recorded when earned.
The Company records as dividend income the accretable yield from its beneficial interests in structured products such as CLOs based upon a number of cash flow assumptions that are subject to uncertainties and contingencies. Such assumptions include the rate and timing of principal and interest receipts (which may be subject to prepayments and defaults) of the underlying pool of assets. These assumptions are updated on at least a quarterly basis to reflect changes related to a particular security, actual historical data, and market changes. A structured product investment typically has an underlying pool of assets. Payments on structured product investments are and will be payable solely from the cash flows from such assets. As such, any unforeseen event in these underlying pools of assets might impact the expected recovery of principal and future accrual of income.
Non-Accrual Income
Loans are generally placed on non-accrual status when there is reasonable doubt that principal or interest will be collected in full. Accrued interest is generally reversed when a loan is placed on non-accrual status. Additionally, any original issue discount and market discount are no longer accreted to interest income as of the date the loan is placed on non-accrual status. Interest payments received on non-accrual loans may be recognized as income or applied to principal depending upon management’s judgment regarding collectability. Non-accrual loans are restored to accrual status when past due principal and interest is paid current and, in management’s judgment, are likely to remain current. Management may make exceptions to this treatment and determine to not place a loan on non-accrual status if the loan has sufficient collateral value and is in the process of collection.
Expenses
Expenses include management fees, performance-based incentive fees, interest expense, insurance expenses, administrative service fees, legal fees, directors’ fees, audit and tax service expenses, third-party valuation fees and other general and administrative expenses. Expenses are recognized on an accrual basis.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Financing Costs
The Company records expenses related to shelf filings and applicable offering costs as deferred financing costs in the Consolidated Statements of Assets and Liabilities. To the extent such expenses relate to equity offerings, these expenses are charged as a reduction of capital upon utilization, in accordance with ASC 946-20-25, or charged to expense if no offering is completed.
The Company records origination and other expenses related to its debt obligations as deferred financing costs. The deferred financing cost for all outstanding debt is presented as a direct deduction from the carrying amount of the related debt liability, except that incurred under the Senior Secured Facility (as defined in Note 6 to the consolidated financial statements), which the Company presents as an asset on the Consolidated Statements of Assets and Liabilities. These expenses are deferred and amortized as part of interest expense using the straight-line method over the stated life of the obligation which approximates the effective yield method. In the event that we modify or extinguish our debt before maturity, the Company follows the guidance in ASC 470-50, Modification and Extinguishments (“ASC 470-50”). For modifications to or exchanges of our Senior Secured Facility (as defined in Note 6 to the consolidated financial statements), any unamortized deferred financing costs relating to lenders who are not part of the new lending group are expensed. For extinguishments of our senior secured notes and senior unsecured notes, any unamortized deferred financing costs are deducted from the carrying amount of the debt in determining the gain or loss from the extinguishments.
Foreign Currency Translations
The accounting records of the Company are maintained in U.S. dollars. All assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the foreign exchange rate on the date of valuation. The Company does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. The Company’s investments in foreign securities may involve certain risks, including without limitation: foreign exchange restrictions, expropriation, taxation or other political, social or economic risks, all of which could affect the market and/or credit risk of the investment. In addition, changes in the relationship of foreign currencies to the U.S. dollar can significantly affect the value of these investments and therefore the earnings of the Company.
Dividends and Distributions
Dividends and distributions to common stockholders are recorded as of the ex-dividend date. The amount to be paid out as a distribution is determined by the Board each quarter. Net realized capital gains, if any, are generally distributed or deemed distributed at least annually. Dividend income on common equity securities is recorded on the record date for private portfolio companies or on the ex-dividend date for publicly traded portfolio companies.
Share Repurchases
In connection with the Company’s share repurchase program, the cost of shares repurchased is charged to net assets on the trade date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Federal and State Income Taxes
We have elected to be treated as a RIC under the Code and operate in a manner so as to qualify for the tax treatment applicable to RICs. To qualify as a RIC, the Company must (among other requirements) meet certain source-of-income and asset diversification requirements and timely distribute to its stockholders at least 90% of its investment company taxable income as defined by the Code, for each year. The Company (among other requirements) has made and intends to continue to make the requisite distributions to its stockholders, which will generally relieve the Company from corporate-level income taxes. For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. The tax character of distributions paid to stockholders through June 30, 2026 may include return of capital, however, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until we file our tax return for the tax year ending December 31, 2026. The character of income and gains that we will distribute is determined in accordance with income tax regulations that may differ from GAAP. Book and tax basis differences relating to stockholder dividend and distributions and other permanent book and tax difference are reclassified to paid-in capital.
If we do not distribute (or are not deemed to have distributed) at least 98% of our annual ordinary income and 98.2% of our capital gains in the calendar year earned, we will generally be required to pay excise tax equal to 4% of the amount by which 98% of our annual ordinary income and 98.2% of our capital gains exceed the distributions from such taxable income for the year. To the extent that we determine that our estimated current year annual taxable income will be in excess of estimated current year dividend distributions from such taxable income, we accrue excise taxes, if any, on estimated undistributed taxable income.
If we fail to satisfy the annual distribution requirement or otherwise fail to qualify as a RIC in any taxable year, we would be subject to tax on all of our taxable income at regular corporate rates. Distribution would generally be taxable to our individual and other non-corporate taxable stockholders as ordinary dividend income eligible for the reduced maximum rate applicable to qualified dividend income to the extent of our current and accumulated earnings and profits provided certain holding period and other requirements are met. Subject to certain limitation under the Code, corporate distributions would be eligible for the dividend-received deduction. To qualify again to be taxed as a RIC in a subsequent year, we would be required to distribute to our stockholders our accumulated earnings and profits attributable to non RIC years. In addition, if we failed to qualify as a RIC for a period greater than two taxable years, then, in order to qualify as a RIC in a subsequent year, we would be required to elect to recognize and pay tax on any net built-in gain (the excess of aggregate gain, including items of income, over aggregate loss that would have been realized if we had been liquidated) or, alternatively, be subject to taxation on such built-in gain recognized for a period of five years.
We follow ASC 740, Income Taxes (“ASC 740”). ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented, and disclosed in the consolidated financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing our tax returns to determine whether the tax positions are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the more-likely-than-not threshold are recorded as a tax benefit or expense in the current year. Penalties or interest, if applicable, that may be assessed relating to income taxes would be classified as other operating expenses in the consolidated financial statements. As of June 30, 2026, there were nouncertain tax positions and no amounts accrued for interest or penalties. Management’s determinations regarding ASC 740 may be subject to review and adjustment at a later date based upon factors including, but not limited to, an on-going analysis of tax laws, regulations and interpretations thereof. Although we file both federal and state income tax returns, our major tax jurisdiction is federal.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Retroactive Adjustments for Common Stock Reverse Split
The Company’s Board approved a one-for-three reverse stock split of the Company’s common stock on October 30, 2018, which was effective as of close of business as of November 30, 2018 (the “Reverse Stock Split”). All common stock and common per share amounts in the consolidated financial statements and notes thereto have been retroactively adjusted for all periods presented to give effect to this reverse stock split as disclosed inNote 7.
Purchase Accounting
Pursuant to the AFT Merger Agreement, AFT Merger Sub was first merged with and into AFT, with AFT continuing as the surviving company (the “AFT First Merger”), and, following the effectiveness of the AFT First Merger, AFT was then merged with and into the Company, with the Company continuing as the surviving company (together with the AFT First Merger, the “AFT Mergers”). Pursuant to the AIF Merger Agreement, AIF Merger Sub was first merged with and into AIF, with AIF continuing as the surviving company (the “AIF First Merger”), and, following the effectiveness of the AIF First Merger, AIF was then merged with and into the Company, with the Company continuing as the surviving company (together with the AIF First Merger, the “AIF Mergers” and, together with the AFT Mergers, the “Mergers”).
The Mergers were accounted for under the asset acquisition method of accounting in accordance with ASC 805-50 — Business Combinations — Related Issues (“ASC Topic 805”), also referred to as “purchase accounting.” Under the asset acquisition method of accounting, acquiring assets in groups not only requires ascertaining the cost of the asset (or net assets), but also allocating that cost to the individual assets (or individual assets and liabilities) that make up the group. Per ASC Topic 805, assets are recognized based on their cost to the acquiring entity, which generally includes transaction costs of the asset acquisition, and no gain or loss is recognized unless the fair value of non-cash assets given as consideration differs from the assets carrying amounts on the acquiring entity’s books.
Immediately following the acquisitions of AFT and AIF, the Company recorded its assets at their respective fair values. Since the fair value of the net assets acquired exceeded the merger consideration paid by the Company, the Company recognized a deemed contribution from Investment Adviser.
Segment Reporting
The Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update 2023-07, “Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures” (“ASU 2023-07”). An operating segment is defined as a component of a public entity that engages in business activities from which it may recognize revenues and incur expenses, has operating results that are regularly reviewed by the public entity’s chief operating decision maker (“CODM”) to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information available. The Company operates under one operating segment and reporting unit, investment management. The CODM is the chief executive officer of the Company, who is responsible for determining the Company’s investment strategy, capital allocation, expense structure, and significant transactions impacting the Company. Key metrics include, but are not limited to, net investment income and net increase in net assets resulting from operations that is reported on the Consolidated Statements of Operations, fair value of investments as disclosed on the Consolidated Schedule of Investments, as well as distributions made to the Company’s stockholders.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Income Taxes
In December 2023, FASB issued Accounting Standards Update No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which enhances the income tax disclosure requirements. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, and is to be applied prospectively, with an option for retrospective application. The Company adoptedASU 2023-09 on December 31, 2025, and the adoption did not have a material impact on the Company’s consolidated financial statements.
Recent Accounting Pronouncements
Income Statement - Reporting Comprehensive Income
In November 2024, FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”). The amendments in ASU 2024-03 improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This information generally is not presented in the consolidated financial statements today. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company does not expect the adoption ASU 2024-03 to have a material impact on its year-end financial statements.
Note 3. Related Party Agreements and Transactions
Investment Advisory Agreement with AIM
The Company has an investment advisory management agreement with the Investment Adviser (the “Investment Advisory Agreement”) under which AIM receives a fee from the Company, consisting of two components — a base management fee and a performance-based incentive fee.
Base Management Fee
The base management fee is calculated at an annual rate of 1.75% (0.4375% per quarter) of the Company's net asset value as of the final business day of the prior calendar quarter; provided, however, that the base management fee shall not be greater than 1.50% (0.375% per quarter) of the lesser of (i) the average of the value of the Company's gross assets (excluding cash or cash equivalents but including other assets purchased with borrowed amounts) at the end of each of the two most recently completed calendar quarters and (ii) the average monthly value (measured as of the last day of each month) of the Company's gross assets (excluding cash or cash equivalents but including other assets purchased with borrowed amounts) during the most recently completed calendar quarter. The base management fee is payable quarterly in arrears. The value of the Company's gross assets is calculated in accordance with the Company's valuation procedures.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Performance-Based Incentive Fee
The incentive fee (the “Incentive Fee”) consists of two components that are determined independent of each other, with the result that one component may be payable even if the other is not. A portion of the Incentive Fee is based on income and a portion is based on capital gains, each as described below:
(i) Incentive Fee on Pre-Incentive Fee Net Income
The Incentive Fee on pre-incentive fee net investment income is determined and paid quarterly in arrears by calculating the amount by which (x) the aggregate amount of the pre-incentive fee net investment income with respect of the current calendar quarter and each of the eleven preceding calendar quarters (in either case, the “Trailing Twelve Quarters”) exceeds (y) the preferred return amount in respect of the Trailing Twelve Quarters; provided, however, that the pre-incentive fee net investment income in respect of the current calendar quarter exceeds the multiple of (A) 1.75% and (B) the Company's net asset value at the beginning of such calendar quarter. For the purposes of the Incentive Fee calculations, each calendar quarter comprising the relevant Trailing Twelve Quarters that commenced prior to January 1, 2023 shall be known as a “Legacy Fee Quarter” while a calendar quarter that commenced on or after January 1, 2023 shall be known as a “Current Fee Quarter.”
The preferred return amount is determined on a quarterly basis, and is calculated by summing the amounts obtained by multiplying 1.75% by the Company’s net asset value at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The preferred return amount is calculated after making appropriate adjustments to the Company’s net asset value at the beginning of each applicable calendar quarter for Company capital issuances and distributions during the applicable calendar quarter.
The amount of the Incentive Fee on Income that is paid to the Investment Adviser for a particular quarter equals the excess of the incentive fee on pre-incentive fee net investment income, so calculated less the aggregate incentive fee on pre-incentive fee net investment income that were paid to the Investment Adviser (excluding waivers, if any) in the preceding eleven calendar quarters comprising the relevant Trailing Twelve Quarters.
The Company will pay the Investment Adviser an incentive fee with respect to our pre-incentive fee net investment income in each calendar quarter as follows:
(1) no incentive fee in any calendar quarter in which our pre-incentive fee net investment income for the Trailing Twelve Quarters does not exceed the preferred return amount.
(2) 100% of our pre-incentive fee net investment income for the Trailing Twelve Quarters, if any, that exceeds the preferred return amount but is less than or equal to the catch-up amount, which shall be the sum of (i) the product of 2.1875% multiplied by the Company's net asset value at the beginning of each applicable Legacy Fee Quarter included in the relevant Trailing Twelve Quarters and (ii) the product of 2.1212% multiplied by the Company's net asset value at the beginning of each applicable Current Fee Quarter included in the relevant Trailing Twelve Quarters.
(3) for any quarter in which the Company’s pre-incentive fee net investment income for the Trailing Twelve Quarters exceeds the catch-up amount, the incentive fee shall equal 20.00% for each Legacy Fee Quarter and 17.50% otherwise of the amount of the Company’s pre-incentive fee net investment income for such Trailing Twelve Quarters, provided, however, that the incentive fee on income for any quarter shall not be greater than 20.00% or 17.50%, as applicable, of the amount of the Company's current quarter’s pre-incentive fee net investment income.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
The Incentive Fee on Income as calculated is subject to the Incentive Fee Cap. The Incentive Fee Cap in any quarter is an amount equal to (a) 20.00% of the Cumulative Pre-Incentive Fee Net Return (as defined below) during the relevant Legacy Fee Quarters included in the relevant Trailing Twelve Quarters and 17.50% of the Cumulative Pre-Incentive Fee Net Return during the relevant Current Fee Quarters included in the relevant Trailing Twelve Quarters less (b) the aggregate Incentive Fees on Income that were paid to the Investment Adviser (excluding waivers, if any) in the preceding eleven calendar quarters (or portion thereof) comprising the relevant Trailing Twelve Quarters.
For this purpose, “Cumulative Pre-Incentive Fee Net Return” during the relevant trailing twelve quarters means (x) Pre-Incentive Fee Net Investment Income in respect of the trailing twelve quarters less (y) any Net Capital Loss, since April 1, 2018, in respect of the trailing twelve quarters. If, in any quarter, the Incentive Fee Cap was zero or a negative value, the Company shall pay no Incentive Fee on Income to the Investment Adviser in that quarter. If, in any quarter, the Incentive Fee Cap is a positive value but is less than the Incentive Fee on Income calculated in accordance with the calculation described above, the Company shall pay the Investment Adviser the Incentive Fee Cap for such quarter. If, in any quarter, the Incentive Fee Cap was equal to or greater than the Incentive Fee on Income calculated in accordance with the calculation described above, the Company shall pay the Investment Adviser the Incentive Fee on Income for such quarter.
“Net Capital Loss” in respect of a particular period means the difference, if positive, between (i) aggregate capital losses, whether realized or unrealized, in such period and (ii) aggregate capital gains, whether realized or unrealized, in such period.
(ii) Incentive Fee Based on Cumulative Net Realized Gains
The incentive fee on capital gains (the "Incentive Fee on Capital Gains") is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory management agreement). This fee shall equal 17.50% of the sum of the Company’s realized capital gains on a cumulative basis, calculated as of the end of each calendar year (or upon termination of investment advisory management agreement), computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any Incentive Fees on Capital Gains previously paid to the Investment Adviser. The aggregate unrealized capital depreciation of the Company shall be calculated as the sum of the differences, if negative, between (a) the valuation of each investment in the Company’s portfolio as of the applicable calculation date and (b) the accreted or amortized cost basis of such investment.
For accounting purposes only, we are required under GAAP to accrue a theoretical capital gains incentive fee based upon net realized capital gains and unrealized capital gain and loss on investments held at the end of each period. The accrual of this theoretical capital gains incentive fee assumes all unrealized capital gain and loss is realized in order to reflect a theoretical capital gains incentive fee that would be payable to the Investment Adviser at each measurement date. There was no accrual for theoretical capital gains incentive fee for the three and six months ended June 30, 2026 and 2025. It should be noted that a fee so calculated and accrued would not be payable under the Investment Advisers Act of 1940 (the “Advisers Act”) or the investment advisory management agreement, and would not be paid based upon such computation of capital gains incentive fees in subsequent periods. Amounts actually paid to the Investment Adviser will be consistent with the Advisers Act and formula reflected in the investment advisory management agreement which specifically excludes consideration of unrealized capital gain.
For the three and six months ended June 30, 2026, the Company recognized $5,132 and $10,773, respectively, of management fees, and $— and $—, respectively, of incentive fees. For the three and six months ended June 30, 2025, the Company recognized $6,079 and $12,140, respectively, of management fees, and $3,849 and $10,282, respectively, of incentive fees.
As of June 30, 2026 management and performance-based incentive fees payable were $5,132 and $—, respectively. As of December 31, 2025, management and performance-based incentive fees payable were $6,034 and $—, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
In connection with the Mergers, the Company and the Investment Adviser agreed that, for purposes of incentive fee calculations under the Investment Advisory Agreement, any amortization or accretion of any purchase premium or purchase discount to interest income or any gains or losses resulting solely from accounting adjustments to the cost basis of the assets beneficially owned by AFT and AIF assets acquired in the Mergers as required under applicable accounting guidance under ASC 805 will be excluded.
Fee Offset
On January 16, 2019, the Company and AIM entered into a fee offset agreement (the "Fee Offset Agreement") in connection with revenue realized by AIM and its affiliates for the management of certain aircraft assets. The Company received an offsetting credit against total incentive fees otherwise due to AIM under the Investment Advisory Agreement. The amount offset was initially 20% of the management fee revenue earned and incentive fee revenue realized by AIM and its affiliates in connection with managing aircraft assets on related insurance balance sheets (“New Balance Sheet Investments”), new aircraft managed account capital (“New Managed Accounts”) and new dedicated aircraft funds (“New Aircraft Funds”). Once the aggregate capital raised by the New Aircraft Funds or New Managed Accounts and capital invested by the New Balance Sheet Investments exceeded $3 billion cumulatively, the fee offset would step down to 10% of the amount of incremental management fee revenue earned and incentive fee revenue realized by AIM and its affiliates. The fee offset was supposed to be in place for seven years, however the incentive fees realized by AIM and its affiliates after this seven-year period from applicable investments that were raised or made within the seven-year period would also be used to offset incentive fees payable to AIM by the Company. The offset would be limited to the amount of incentive fee payable by the Company to AIM and any unapplied fee offset which exceeds the incentive fees payable in a given quarter will carry forward to be credited against the incentive fees payable by the Company in subsequent quarters.
Effective February 21, 2023, as a result of the planned reduction and the pending departure of certain Merx personnel, Merx and Apollo agreed to terminate the fee offset agreement in exchange for a termination fee of $7.5 million.
Administration Agreement with AIA
The Company has also entered into an administration agreement with the Administrator (the “Administration Agreement”) under which AIA provides administrative services for the Company. For providing these services, facilities and personnel, the Company reimburses the Administrator for the allocable portion of overhead and other expenses incurred by the Administrator and requested to be reimbursed by the Administrator in performing its obligations under the Administration Agreement. The expenses include rent and the Company’s allocable portion of compensation and other related expenses for its Chief Financial Officer, Chief Legal Officer and Chief Compliance Officer and their respective staffs. For the three and six months ended June 30, 2026, the Company recognized administrative services expense under the Administration Agreement of $1,193 and $2,635, respectively. For the three and six months ended June 30, 2025, the Company recognized administrative services expense under the Administration Agreement of $1,010 and $2,026, respectively. There was no amount payable to AIA and its affiliates for expenses paid on our behalf as of June 30, 2026 and December 31, 2025.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Administrative Service Expense Reimbursement
Merx Aviation Finance, LLC (“Merx”), a wholly-owned portfolio company of the Company, has entered into an administration agreement with the Administrator, as amended (the “Merx Administration Agreement”) under which AIA provides administrative services to Merx and several Merx managed entities for an annual fee of $250, effective as of January 1, 2026.
For the three and six months ended June 30, 2026, the Company recognized administrative service expense reimbursements of $62 and $124, respectively, under the Merx Administration Agreement. For the three and six months ended June 30, 2025, the Company recognized administrative service expense reimbursements of $249 and $1,017, respectively, under the Merx Administration Agreement.
Debt Expense Reimbursements
The Company has also entered into debt expense reimbursement agreements with Merx and several other portfolio companies, which will reimburse the Company for reasonable out-of-pocket expenses incurred, including any interest, fees or other amounts incurred by the Company in connection with letters of credit issued on their behalf. For the three and six months ended June 30, 2026, the Company recognized debt expense reimbursements of $— and $—, respectively, under the debt expense reimbursement agreements. For the three and six months ended June 30, 2025, the Company recognized debt expense reimbursements of $30 and $69, respectively, under the debt expense reimbursement agreements.
Co-Investment Activity
The Company, the Investment Adviser and certain affiliates received an exemptive order from the SEC on May 14, 2025 (the “Order”), that permits us, among other things, to co-invest with other funds and accounts managed by the Investment Adviser or its affiliates, subject to certain conditions. Certain types of negotiated co-investments may be made only in accordance with the Order from the SEC permitting the Company to do so. Pursuant to the requirements of the Order, the Board, including a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Independent Directors, has approved co-investment policies and procedures describing how the Company will comply with the Order. Further, the Investment Adviser has adopted policies and procedures (the “Adviser Allocation Policy”) which is designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. Pursuant to the Adviser Allocation Policy, the Company will be given the opportunity to participate in any investments that fall within certain criteria established by the Investment Adviser. The Company may determine to participate or not to participate, depending on whether the Investment Adviser determines that the investment is appropriate for the Company (e.g., based on investment strategy). If the Investment Adviser determines that the investment is not appropriate for us, the investment will not be allocated to us.
As of June 30, 2026, the Company’s co-investment holdings were 88% of the portfolio or $2,439,075, measured at fair value. On a cost basis, 85% of the portfolio or $2,610,570 were co-investments. As of December 31, 2025, the Company’s co-investment holdings were 87% of the portfolio or $2,754,947, measured at fair value. On a cost basis, 85% of the portfolio or $2,856,364 were co-investments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Merx Aviation
Effective January 16, 2019, Merx entered into a series of service arrangements with affiliates of AGM. Under a servicing agreement with Apollo Credit Management, LLC ("ACM") (the “Servicing Agreement”), Merx serves as technical servicer to aircraft clients of ACM and its affiliates. Under a research support agreement with ACM (the “Research Support Agreement”), Merx employees assist ACM with technical due-diligence and underwriting of new aircraft-related investment opportunities. In addition, on the same date the Company and AIM entered into the Fee Offset Agreement under which the Company receives an offsetting credit against fees otherwise due to AIM under the Investment Advisory Agreement.
In 2022, we announced our plans to reduce our aviation leasing platform that is operating through Merx. Effective February 21, 2023, as a result of the planned reduction and the pending departure of certain Merx personnel, Merx and Apollo agreed to an Amended Servicing Agreement and to terminate the Research Support Agreement, the Technical Support Agreement and the Fee Offset Agreement in exchange for a termination fee of $7.5 million. Under the Amended Servicing Agreement and the subservicing agreement, as amended, with an affiliate, as part of the February 21, 2023 termination payment, Merx will continue to service certain legacy Apollo aircraft investments during its reduction.
On September 1, 2022, $110,700 of the Merx first lien secured revolver held by the Company was converted into common equity. On September 30, 2023, Merx amended its credit agreement and the commitment of the Merx first lien secured revolver decreased to $100,000. During the quarter of June 30, 2026, the Company received proceeds of $12.5 million related to an aircraft sale during the quarter. The balance of the Merx revolver as of June 30, 2026 was $— and as of December 31, 2025 was $18,575.
Sub-Servicing Agreement
On November 2, 2023, MFIC Bethesda CLO 1 LLC entered into a sub-servicing agreement with MidCap Financial Services, LLC (the “Sub-Servicing Agreement”), under which MidCap Financial Services, LLC provides management services to Bethesda CLO 1 Issuer in connection with the issuance of the Bethesda CLO 1 Notes. Under the Sub-Servicing Agreement, MFIC Bethesda CLO 1 LLC will pay MidCap Financial Services, LLC a fee in the amount of $145 on an annual basis, which began accruing on October 23, 2025. The Company paid $45 and $70 to Midcap Financial Services, LLC during the three and six months ended June 30, 2026, respectively. The Company paid $— and $— to Midcap Financial Services, LLC during the three and six months ended June 30, 2025, respectively.
On February 24, 2025, MFIC Bethesda CLO 2 LLC entered into a sub-servicing agreement with MidCap Financial Services, LLC (the “CLO2 Sub-Servicing Agreement”), under which MidCap Financial Services, LLC provides management services to Bethesda CLO 2 Issuer in connection with the issuance of the Bethesda CLO 2 Notes. Under the Sub-Servicing Agreement, MFIC Bethesda CLO 2 LLC will pay MidCap Financial Services, LLC a fee in the amount of $100 on an annual basis. The Company paid $25 and $50 to Midcap Financial Services, LLC during the three and six months ended June 30, 2026, respectively. The Company paid $— and $— to Midcap Financial Services, LLC during the three and six months ended June 30, 2025, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Note 4. Earnings Per Share
The following table sets forth the computation of earnings (loss) per share, pursuant to ASC 260-10, for the three and six months ended June 30, 2026 and 2025:
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Basic Earnings Per Share
Net increase (decrease) in net assets resulting from operations
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Note 5. Investments
Fair Value Measurement and Disclosures
The following table shows the composition of our investment portfolio as of June 30, 2026, with the fair value disaggregated into the three levels of the fair value hierarchy in accordance with ASC 820:
Fair Value Hierarchy
Cost
Fair Value
Level 1
Level 2
Level 3
First Lien Secured Debt
$
2,745,297
$
2,593,723
$
—
$
37,309
$
2,556,414
Second Lien Secured Debt
7,778
51
—
—
51
Unsecured Debt
3,387
3,031
—
1,189
1,842
Structured Products and Other
32,251
14,940
—
—
14,940
Preferred Equity
101,199
62,893
—
—
62,893
Common Equity/Interests
171,508
95,570
194
27
95,349
Warrants
389
134
—
—
134
Total Investments
$
3,061,809
$
2,770,342
$
194
$
38,525
$
2,731,623
Money Market Fund
$
185
$
185
$
185
$
—
$
—
Total Cash Equivalents
$
185
$
185
$
185
$
—
$
—
Total Investments after Cash Equivalents
$
3,061,994
$
2,770,527
$
379
$
38,525
$
2,731,623
Foreign currency forward transactions
$
—
$
772
$
—
$
772
$
—
Total Assets and Liabilities at Fair Value
$
3,061,994
$
2,771,299
$
379
$
39,297
$
2,731,623
The following table shows the composition of our investment portfolio as of December 31, 2025, with the fair value disaggregated into the three levels of the fair value hierarchy in accordance with ASC 820:
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
The following table shows changes in the fair value of our Level 3 investments during the three months ended June 30, 2026:
First Lien Secured Debt (2)
Second Lien Secured Debt (2)
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
Fair value as of March 31, 2026
$
2,782,520
$
51
$
1,842
$
16,585
$
18,612
$
108,712
$
133
$
2,928,455
Net realized gains (losses)
1,693
—
—
—
—
—
—
1,693
Net change in unrealized gains (losses)
(12,057
)
—
—
(1,393
)
(32,554
)
(859
)
1
(46,862
)
Net amortization on investments
961
—
—
—
—
—
—
961
Purchases, including capitalized PIK (3)
52,277
—
—
26
76,835
—
—
129,138
Proceeds from sales and repayments of investments(3)
(268,980
)
—
—
(278
)
—
(12,504
)
—
(281,762
)
Transfers out of Level 3 (1)
—
—
—
—
—
—
—
—
Transfers into Level 3 (1)
—
—
—
—
—
—
—
—
Fair value as of June 30, 2026
$
2,556,414
$
51
$
1,842
$
14,940
$
62,893
$
95,349
$
134
$
2,731,623
Net change in unrealized gains (losses) on Level 3 investments still held as of June 30, 2026
$
(32,289
)
$
212
$
—
$
(1,393
)
$
(32,569
)
$
(848
)
$
1
$
(66,885
)
(1)
Transfers out (if any) of Level 3 are due to an increase in the quantity and reliability of broker quotes obtained and transfers into (if any) Level 3 are due to a decrease in the quantity and reliability of broker quotes obtained as assessed by the Investment Adviser. Transfers are assumed to have occurred at the end of the period. There were no transfers between Level 1 and Level 2 fair value measurements during the period shown.
(2)
Includes unfunded commitments measured at fair value of $(9,052).
(3)
Includes reorganizations and restructuring of investments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
The following table shows changes in the fair value of our Level 3 investments during the six months ended June 30, 2026:
First Lien Secured Debt (2)
Second Lien Secured Debt (2)
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
Fair value as of December 31, 2025
$
2,951,423
$
62
$
1,842
$
18,350
$
27,104
$
115,791
$
326
$
3,114,898
Net realized gains (losses)
(75
)
—
—
—
(4,344
)
(817
)
—
(5,236
)
Net change in unrealized gains (losses)
(56,038
)
7
—
(2,239
)
(36,757
)
(2,865
)
(192
)
(98,084
)
Net amortization on investments
2,355
(18
)
—
—
—
—
—
2,337
Purchases, including capitalized PIK (3)
157,343
—
—
107
76,890
11
—
234,351
Proceeds from sales and repayments of investments(3)
(498,594
)
—
—
(1,278
)
—
(16,610
)
—
(516,482
)
Transfers out of Level 3 (1)
—
—
—
—
—
(161
)
—
(161
)
Transfers into Level 3 (1)
—
—
—
—
—
—
—
—
Fair value as of June 30, 2026
$
2,556,414
$
51
$
1,842
$
14,940
$
62,893
$
95,349
$
134
$
2,731,623
Net change in unrealized gains (losses) on Level 3 investments still held as of June 30, 2026
$
(72,762
)
$
230
$
—
$
(2,239
)
$
(41,119
)
$
(3,715
)
$
(192
)
$
(119,796
)
(1)
Transfers out (if any) of Level 3 are due to an increase in the quantity and reliability of broker quotes obtained and transfers into (if any) Level 3 are due to a decrease in the quantity and reliability of broker quotes obtained as assessed by the Investment Adviser. Transfers are assumed to have occurred at the end of the period. There were no transfers between Level 1 and Level 2 fair value measurements during the period shown.
(2)
Includes unfunded commitments measured at fair value of $(9,052).
(3)
Includes reorganizations and restructuring of investments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
The following table shows changes in the fair value of our Level 3 investments during the three months ended June 30, 2025:
First Lien Secured Debt (2)
Second Lien Secured Debt (2)
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
Fair value as of March 31, 2025
$
2,896,724
$
4,221
$
109
$
23,492
$
23,664
$
159,366
$
215
$
3,107,791
Net realized gains (losses)
(9,558
)
(2,501
)
(2,672
)
—
—
4
—
(14,727
)
Net change in unrealized gains (losses)
(3,715
)
(1,167
)
2,584
(1,025
)
(4,218
)
8,318
(53
)
724
Net amortization on investments
1,555
—
—
—
—
—
—
1,555
Purchases, including capitalized PIK (3)
288,749
3
—
152
4,449
575
—
293,928
Sales (3)
(137,670
)
(481
)
—
(1,020
)
—
(211
)
—
(139,382
)
Transfers out of Level 3 (1)
(270
)
—
—
—
—
—
—
(270
)
Transfers into Level 3 (1)
—
—
—
—
—
—
—
—
Fair value as of June 30, 2025
$
3,035,815
$
75
$
21
$
21,599
$
23,895
$
168,052
$
162
$
3,249,619
Net change in unrealized gains (losses) on Level 3 investments still held as of June 30, 2025
$
(11,672
)
$
(3,927
)
$
—
$
(1,025
)
$
(4,215
)
$
8,345
$
(54
)
$
(12,547
)
(1)
Transfers out (if any) of Level 3 are due to an increase in the quantity and reliability of broker quotes obtained and transfers into (if any) Level 3 are due to a decrease in the quantity and reliability of broker quotes obtained as assessed by the Investment Adviser. Transfers are assumed to have occurred at the end of the period. There were no transfers between Level 1 and Level 2 fair value measurements during the period shown.
(2)
Includes unfunded commitments measured at fair value of $(7,018).
(3)
Includes reorganizations and restructuring of investments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
The following table shows changes in the fair value of our Level 3 investments during the six months ended June 30, 2025:
First Lien Secured Debt (2)
Second Lien Secured Debt (2)
Unsecured Debt
Structured Products and Other
Preferred Equity
Common Equity/Interests
Warrants
Total
Fair value as of December 31, 2024
$
2,676,253
$
5,764
$
117
$
26,101
$
24,831
$
161,648
$
136
$
2,894,850
Net realized gains (losses)
(8,132
)
(2,501
)
(2,672
)
—
—
1,983
—
(11,322
)
Net change in unrealized gains (losses)
(5,813
)
(2,716
)
2,576
(1,456
)
(5,235
)
7,951
26
(4,667
)
Net amortization on investments
3,291
—
—
—
—
—
—
3,291
Purchases, including capitalized PIK (3)
679,489
9
—
152
4,549
1,271
—
685,470
Proceeds from sales and repayments of investments(3)
(302,640
)
(481
)
—
(3,198
)
(250
)
(4,801
)
—
(311,370
)
Transfers out of Level 3 (1)
(6,633
)
—
—
—
—
—
—
(6,633
)
Transfers into Level 3 (1)
—
—
—
—
—
—
—
—
Fair value as of June 30, 2025
$
3,035,815
$
75
$
21
$
21,599
$
23,895
$
168,052
$
162
$
3,249,619
Net change in unrealized gains (losses) on Level 3 investments still held as of June 30, 2025
$
(11,490
)
$
(7,705
)
$
—
$
(1,456
)
$
(5,235
)
$
11,157
$
26
$
(14,703
)
(1)
Transfers out (if any) of Level 3 are due to an increase in the quantity and reliability of broker quotes obtained and transfers into (if any) Level 3 are due to a decrease in the quantity and reliability of broker quotes obtained as assessed by the Investment Adviser. Transfers are assumed to have occurred at the end of the period. There were no transfers between Level 1 and Level 2 fair value measurements during the period shown.
(2)
Includes unfunded commitments measured at fair value of $(7,018).
(3)
Includes reorganizations and restructuring of investments.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
The following tables summarize the significant unobservable inputs the Company used to value its investments categorized within Level 3 as of June 30, 2026 and December 31, 2025. In addition to the techniques and inputs noted in the tables below, according to our valuation policy we may also use other valuation techniques and methodologies when determining our fair value measurements. The below tables are not intended to be all-inclusive, but rather provide information on the significant unobservable inputs as they relate to the Company’s determination of fair values.
The unobservable inputs used in the fair value measurement of our Level 3 investments as of June 30, 2026 were as follows:
Quantitative Information about Level 3 Fair Value Measurements
Asset Category
Fair Value
Valuation Techniques/Methodologies
Unobservable Input
Range
Weighted Average (1)
First Lien Secured Debt
$
2,424,449
Yield Analysis
Discount Rate
3.8%
29.2%
11.3%
131,965
Recovery Analysis
Recoverable Amount
N/A
N/A
N/A
—
Cost Approach
Cost Approach
N/A
N/A
N/A
Second Lien Secured Debt
51
Recovery Analysis
Recoverable Amount
N/A
N/A
N/A
Unsecured Debt
1,842
Recovery Analysis
Recoverable Amount
N/A
N/A
N/A
—
Market Comparable Technique
Comparable Multiple
N/A
N/A
N/A
Structured Products and Other
14,940
Yield Analysis
Discount Rate
14.2%
17.5%
15.9%
Preferred Equity
62,384
Market Comparable Technique
Comparable Multiple
2.0x
38.5x
11.0x
509
Yield Analysis
Discount Rate
11.5%
11.5%
11.5%
Common Equity/Interests
68,995
Yield Analysis
Discount Rate
11.5%
13.0%
11.5%
11,516
Market Comparable Technique
Comparable Multiple
0.6x
38.5x
9.5x
264
Option Pricing Model
Expected Volatility
25.0%
40.0%
31.0%
14,574
Cost Approach
Cost Approach
N/A
N/A
N/A
Warrants
134
Option Pricing Model
Expected Volatility
50.0%
50.0%
50.0%
—
Market Comparable Technique
Comparable Multiple
N/A
N/A
N/A
Total Level 3 Investments
$
2,731,623
(1)
The weighted average information is generally derived by assigning each disclosed unobservable input a proportionate weight based on the fair value of the related investment. For the commodity price unobservable input, the weighted average price is an undiscounted price based upon the estimated production level from the underlying reserves.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
The unobservable inputs used in the fair value measurement of our Level 3 investments as of December 31, 2025 were as follows:
Quantitative Information about Level 3 Fair Value Measurements
Asset Category
Fair Value
Valuation Techniques/Methodologies
Unobservable Input
Range
Weighted Average (1)
First Lien Secured Debt
$
2,706,879
Yield Analysis
Discount Rate
3.6%
43.2%
10.4%
170,489
Recovery Analysis
Recoverable Amount
N/A
N/A
N/A
66,201
Cost Approach
Cost Approach
N/A
N/A
N/A
7,854
Market Comparable Technique
Comparable Multiple
4.8x
4.8x
4.8x
Second Lien Secured Debt
62
Yield Analysis
Discount Rate
18.8%
18.8%
18.8%
Unsecured Debt
1,842
Yield Analysis
Discount Rate
58.0%
58.0%
58.0%
—
Market Comparable Technique
Comparable Multiple
30.6x
30.6x
30.6x
Structured Products and Other
18,350
Yield Analysis
Discount Rate
6.3%
13.6%
9.5%
Preferred Equity
26,455
Market Comparable Technique
Comparable Multiple
2x
16.5x
9.8x
501
Yield Analysis
Discount Rate
11.0%
11.0%
11.0%
49
Cost Approach
Cost Approach
N/A
N/A
N/A
99
Transactional Value
Transactional Value
N/A
N/A
N/A
Common Equity/Interests
84,641
Yield Analysis
Discount Rate
11.0%
13.0%
0.1%
18,332
Estimated Proceeds
Estimated Proceeds
N/A
N/A
N/A
12,259
Market Comparable Technique
Comparable Multiple
0.9x
30.6x
10.0x
1
Transactional Value
Transactional Value
N/A
N/A
N/A
197
Option Pricing Model
Expected Volatility
25.0%
85.0%
50.0%
161
Public Marked
Public Marked
N/A
N/A
N/A
201
Cost Approach
Cost Approach
N/A
N/A
N/A
Warrants
326
Option Pricing Model
Expected Volatility
50.0%
50.0%
50.0%
—
Market Comparable Technique
Comparable Multiple
5.0x
5.0x
5.0x
Total Level 3 Investments
$
3,114,898
(1)
The weighted average information is generally derived by assigning each disclosed unobservable input a proportionate weight based on the fair value of the related investment. For the commodity price unobservable input, the weighted average price is an undiscounted price based upon the estimated production level from the underlying reserves.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
The significant unobservable inputs used in the fair value measurement of the Company’s debt and equity securities are primarily EBITDA comparable multiples and market discount rates. The Company typically uses EBITDA comparable multiples on its equity securities to determine the fair value of investments. The Company uses market discount rates for debt securities to determine if the effective yield on a debt security is commensurate with the market yields for that type of debt security. If a debt security’s effective yield is significantly less than the market yield for a similar debt security with a similar credit profile, the resulting fair value of the debt security may be lower. For certain investments where fair value is derived based on a recovery analysis, the Company uses underlying commodity prices from third party market pricing services to determine the fair value and/or recoverable amount, which represents the proceeds expected to be collected through asset sales or liquidation. Further, for certain investments, the Company also considered the probability of future events which are not in management’s control. Significant increases or decreases in any of these inputs in isolation would result in a significantly lower or higher fair value measurement. The significant unobservable inputs used in the fair value measurement of the structured products include the discount rate applied in the valuation models in addition to default and recovery rates applied to projected cash flows in the valuation models. Specifically, when a discounted cash flow model is used to determine fair value, the significant input used in the valuation model is the discount rate applied to present value the projected cash flows. Increases in the discount rate can significantly lower the fair value of an investment; conversely decreases in the discount rate can significantly increase the fair value of an investment. The discount rate is determined based on the market rates an investor would expect for a similar investment with similar risks. For certain investments such as warrants, the Company may use an option pricing technique, of which the applicable method is the Black-Scholes Option Pricing Method (“BSM”), to perform valuations. The BSM is a model of price variation over time of financial instruments, such as equity, that is used to determine the price of call or put options. Various inputs are required but the primary unobservable input into the BSM model is the underlying asset volatility.
Investment Transactions
For the three and six months ended June 30, 2026, purchases of investments on a trade date basis were $47,185 and $149,642, respectively. For the three and six months ended June 30, 2025, purchases of investments on a trade date basis were $288,731 and $680,640, respectively.
For the three and six months ended June 30, 2026, sales and repayments of investments on a trade date basis were $207,413 and $451,516, respectively. For the three and six months ended June 30, 2025, sales and repayments of investments on a trade date basis were $144,779 and $366,270, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
PIK Income
The Company holds loans and other investments, including certain preferred equity investments, that have contractual PIK income. PIK income computed at the contractual rate is accrued into income and reflected as a receivable up to the capitalization date. During the three and six months ended June 30, 2026, PIK income earned was $4,247 and $8,071, respectively. During the three and six months ended June 30, 2025, PIK income earned was $5,173 and $9,926, respectively.
The following table shows the change in capitalized PIK balance for the three and six months ended June 30, 2026 and 2025:
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
PIK balance at beginning of period
$
58,980
$
39,789
$
55,607
$
36,656
PIK income capitalized
5,389
7,335
8,762
11,390
PIK capitalized exited from investment sales, repayments, and restructurings
(511
)
(8
)
(511
)
(930
)
PIK balance at end of period
$
63,858
$
47,116
$
63,858
$
47,116
Dividend Income on Collateralized Loan Obligations (“CLOs”) and Structured Finance Products
The Company holds structured finance products and other investments. The CLO equity investments and structured finance products are entitled to recurring distributions which are generally equal to the excess cash flow generated from the underlying investments after meeting contractual obligations to debt holders and paying fund expenses. The Company recognizes dividend income on its beneficial interests in structured products, such as CLOs, based on projected cash flows subject to various uncertainties and contingencies. During the three and six months ended June 30, 2026, dividend income from structured products was $201 and $454, respectively. During the three and six months ended June 30, 2025, dividend income from structured products was $200 and $440, respectively.
Investments on Non-Accrual Status
As of June 30, 2026, 4.6% of total investments at amortized cost, or 2.8% of total investments at fair value, were on non-accrual status. As of December 31, 2025, 3.9% of total investments at amortized cost, or 2.6% of total investments at fair value, were on non-accrual status.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Derivative Instruments
In the normal course of business, the Company enters into derivative financial instruments to achieve certain risk management objectives, including managing its interest rate and foreign currency risk exposures.
As of June 30, 2026, the Company held certain foreign currency forward contracts with a fair market value of $772. The Company did not hold any derivatives as of December 31, 2025.
Certain information related to the Company’s foreign currency forward contracts is presented below as of June 30, 2026:
Counterparty
Notional amount to be purchased
Notional amount to be sold
Settlement Date
Fair Value
Balance Sheet Location of Net Amounts
JP MORGAN CHASE BANK N.A
$
12,981
C$
(18,045
)
9/16/2026
228
Unrealized appreciation (depreciation) on foreign currency forward contracts
JP MORGAN CHASE BANK N.A
8,479
€
(7,285
)
9/16/2026
132
Unrealized appreciation (depreciation) on foreign currency forward contracts
JP MORGAN CHASE BANK N.A
35,974
£
(26,815
)
9/16/2026
412
Unrealized appreciation (depreciation) on foreign currency forward contracts
$
772
The Company's foreign currency forward contracts are subject to an enforceable ISDA Master Netting Agreement with JP Morgan Chase Bank N.A. As of June 30, 2026, the Company held a net derivative asset at fair value of $772 subject to such arrangement, with no offsetting derivative liability positions. No cash collateral was posted or received in connection with these contracts. If the Company had elected to offset, the net amount would be $772.
The Company’s foreign currency forward contracts are not designated in a qualifying hedge accounting relationship. Net realized and unrealized gains and losses for the three and six months ended June 30, 2026 and 2025, for the Company’s foreign currency forward contracts, are in the following locations in the Consolidated Statement of Operations:
Three Months Ended June 30,
Six Months Ended June 30,
Derivative Instrument
Financial Statement Location
2026
2025
2026
2025
Foreign currency forward contracts
Net realized gain(loss) on foreign currency forward contracts
$
334
$
(610
)
$
1,238
$
(610
)
$
334
$
(610
)
1,238
(610
)
Three Months Ended June 30,
Six Months Ended June 30,
Derivative Instrument
Financial Statement Location
2026
2025
2026
2025
Foreign currency forward contracts
Net change in unrealized appreciation (depreciation) on foreign currency forward contracts
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Note 6. Debt and Foreign Currency Transactions and Translations
On April 4, 2018, the Company’s Board, including a “required majority” (as defined in Section 57(o) of the 1940 Act, approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, effective on April 4, 2019, our asset coverage requirement applicable to senior securities was reduced from 200% to 150% (i.e., the revised regulatory leverage limitation permits BDCs to double the amount of borrowings, such that we would be able to borrow up to two dollars for every dollar we have in assets less all liabilities and indebtedness not represented by senior securities issued by us).
The Company’s outstanding debt obligations as of June 30, 2026 were as follows:
Date Issued/ Amended
Total Aggregate Principal Amount Committed
Principal Amount Outstanding
Fair Value
Final Maturity Date
Senior Secured Facility
10/1/2025
$
1,610,000
**
$
685,000
*
$
685,000
(1
)
10/1/2030
MFIC Bethesda CLO 1 LLC Notes (Class A-1, Class A-2, Class B and Class C)
10/23/2025
456,000
456,000
454,920
(2
)
10/23/2037
MFIC Bethesda CLO 2 LLC Notes (Class A-1, Class A-2, Class B and Class C)
2/24/2025
399,000
399,000
398,198
(2
)
1/23/2037
2026 Notes
7/16/2021
125,000
125,000
124,845
(2
)
7/16/2026
2028 Notes
12/13/2023
80,000
80,000
80,704
(3
)
12/15/2028
Total Debt Obligations
$
2,670,000
$
1,745,000
$
1,743,667
Deferred Financing Costs and Debt Discount
(5,396
)
Total Debt Obligations, net of Deferred Financing Cost and Debt Discount
$
1,739,604
* May include foreign currency debt obligations as outlined in Foreign Currency Transactions and Translations within this note to the consolidated financial statements.
**As of June 30, 2026, total lender commitments were $1,610,000.
(1)
The fair value of these debt obligations would be categorized as Level 3 under ASC 820 as of June 30, 2026. The valuation is based on a yield analysis and discount rate commensurate with the market yields for similar types of debt.
(2)
The fair value of these debt obligations would be categorized as Level 2 under ASC 820 as of June 30, 2026. The valuation is based on quoted prices.
(3)
The fair value of these debt obligations would be categorized as Level 1 under ASC 820 as of June 30, 2026. The valuation is arrived using the closing price on exchange as on the relevant date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
The Company’s outstanding debt obligations as of December 31, 2025 were as follows:
Date Issued/ Amended
Total Aggregate Principal Amount Committed
Principal Amount Outstanding
Fair Value
Final Maturity Date
Senior Secured Facility
10/1/2025
$
1,610,000
**
$
941,048
*
$
941,048
(1
)
10/1/2030
MFIC Bethesda CLO 1 LLC Notes (Class A-1, Class A-2, Class B and Class C)
10/23/2025
456,000
456,000
456,000
(2
)
10/23/2037
MFIC Bethesda CLO 2 LLC Notes (Class A-1, Class A-2, Class B and Class C)
2/24/2025
399,000
399,000
396,513
(2
)
1/23/2037
2026 Notes
7/16/2021
125,000
125,000
123,451
(2
)
7/16/2026
2028 Notes
12/13/2023
80,000
80,000
80,416
(3
)
12/15/2028
Total Debt Obligations
$
2,670,000
$
2,001,048
$
1,997,428
Deferred Financing Costs and Debt Discount
(5,838
)
Total Debt Obligations, net of Deferred Financing Cost and Debt Discount
$
1,995,210
* Includes foreign currency debt obligations as outlined in Foreign Currency Transactions and Translations within this note to the consolidated financial statements.
**Between January 1, 2025 and October 1, 2025, total lender commitments were $1,660,000. As of December 31, 2025, total lender commitments were $1,610,000.
(1)
The fair value of these debt obligations would be categorized as Level 3 under ASC 820 as of December 31, 2025. The valuation is based on a yield analysis and discount rate commensurate with the market yields for similar types of debt.
(2)
The fair value of these debt obligations would be categorized as Level 2 under ASC 820 as of December 31, 2025. The valuation is based on broker quoted prices.
(3)
The fair value of these debt obligations would be categorized as Level 1 under ASC 820 as of December 31, 2025. The valuation is arrived using the closing price on exchange as on the relevant date.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Senior Secured Facility
On October 1, 2025 (the "Amendment and Restatement Date"), the Company amended and restated its senior secured, multi-currency, revolving credit facility (the “Senior Secured Facility”), previously amended and restated as of October 17, 2024, April 19, 2023, December 22, 2020 and November 19, 2018. The amended and restated agreement extended the final maturity date through October 1, 2030. Lender commitments under the Senior Secured Facility decreased from $1,660,000 to $1,610,000. The Senior Secured Facility includes an “accordion” feature that allows the Company to increase the size of the Senior Secured Facility to $2,415,000. The Senior Secured Facility is guaranteed by certain subsidiaries of the Company in existence as of the Amendment and Restatement Date, and will be guaranteed by certain subsidiaries of the Company that are formed or acquired by the Company thereafter (each a “Guarantor” and collectively, the “Guarantors”). The Senior Secured Facility is secured by substantially all of the portfolio investments held by the Company and each Guarantor, subject to certain exceptions.
Commencing October 1, 2029, the Company is required to repay, the outstanding amount under the Senior Secured Facility as of October 1, 2029 out of the proceeds of certain asset sales and other recovery events and equity and debt issuances. The stated interest rates on outstanding borrowings under the Senior Secured Facility depend on the type of borrowing and the “gross borrowing base” at the time. USD borrowings accrue at (a) either Term SOFR plus 1.75% per annum or Term SOFR plus 1.875% per annum, or (b) either Alternative Base Rate plus 0.65% per annum or Alternative Base Rate plus 0.775% per annum. The Company is required to pay a commitment fee of 0.325% per annum on any unused portion of the Senior Secured Facility and fronting fees (which fronting fee is exclusive of the applicable margin) of 0.25% per annum on the letters of credit issued.
The Senior Secured Facility contains affirmative and restrictive covenants, events of default and other customary provisions for similar debt facilities, including (subject to the exceptions set forth in the Senior Secured Facility): (a) periodic financial reporting requirements, (b) maintaining minimum stockholders’ equity of $1,000,000 plus 25% of the net proceeds from the sale of equity interests in the Company after April 1, 2025, (c) maintaining a ratio of total assets, less total liabilities (and indebtedness not represented by “senior securities”) to total “senior securities” representing indebtedness, in each case of the Company and its consolidated subsidiaries, of not less than 1.5:1.0, (d) limitations on the incurrence of additional indebtedness, (e) limitations on liens, (f) limitations on investments (other than, among other exceptions, as permitted under the 1940 Act, as amended, and the Company's investment policies), (g) limitations on mergers and disposition of assets (other than, among other exceptions, in the normal course of the Company’s business activities), (h) limitations on the creation or existence of agreements that permit liens on properties of the Company’s consolidated subsidiaries and (i) limitations on the repurchase or redemption of certain unsecured debt and debt securities. In addition to the asset coverage ratio described in clause (c) of the preceding sentence, borrowings under the Senior Secured Facility (and the incurrence of certain other permitted debt) are subject to compliance with a borrowing base that applies different advance rates to different types of assets in the Company’s portfolio. The advance rate applicable to any specific type of asset in the Company’s portfolio will also depend on the relevant asset coverage ratio as of the date of determination. Borrowings under the Senior Secured Facility will also continue to be subject to the leverage restrictions contained in the 1940 Act.
The Senior Secured Facility also provides for the issuance of letters of credit up to an aggregate amount of $150,000. As of June 30, 2026 and December 31, 2025, the Company had $— and $— , respectively, in standby letters of credit issued through the Senior Secured Facility. The amount available for borrowing under the Senior Secured Facility is reduced by any standby letters of credit issued through the Senior Secured Facility. Under GAAP, these letters of credit are considered commitments because no funding has been made and as such are not considered a liability. These letters of credit are not senior securities because they are not in the form of a typical financial guarantee and the portfolio companies are obligated to refund any drawn amounts. The available remaining capacity under the Senior Secured Facility was $925,000 and $668,952 as of June 30, 2026 and December 31, 2025, respectively. Terms used in this disclosure have the meanings set forth in the Senior Secured Facility agreement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Senior Unsecured Notes
2026 Notes
On July 16, 2021, the Company issued $125,000 aggregate principal amount of general unsecured notes for net proceeds of $122,965 (the “2026 Notes”). The 2026 Notes matured on July 16, 2026 and were fully repaid. Interest on the 2026 Notes is due semi-annually on January 16 and July 16, at an annual rate of 4.50%, commencing on January 16, 2022. The 2026 Notes are general, unsecured obligations and rank equal in right of payment with all of our existing and future senior unsecured indebtedness.
2028 Notes
On December 13, 2023, the Company issued $80,000 aggregate principal amount of 8.00% Notes due 2028 (inclusive of $5,000 aggregate principal amount pursuant to the underwriters’ overallotment option to purchase additional Notes) (the “2028 Notes”). As of December 31, 2023, the principal amount outstanding was $80,000. The 2028 Notes will mature on December 15, 2028. The 2028 Notes bear interest at a rate of 8.00% per year, commencing December 13, 2023. The Company will pay interest on the 2028 Notes on March 15, June 15, September 15 and December 15 of each year, beginning on March 15, 2024. The 2028 Notes may be redeemed in whole or in part at any time or from time to time at our option on or after December 15, 2025, at a redemption price of $25 per 2028 Note plus accrued and unpaid interest payments otherwise payable for the then-current quarterly interest period accrued to, but excluding, the date fixed for redemption.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
MFIC Bethesda CLO 1 LLC Debt Securitization
On November 2, 2023, the Company completed a $402,360 term debt securitization (the “Bethesda CLO 1”). Term debt securitizations are also known as collateralized loan obligations and are a form of secured financing incurred by the Company, which is consolidated by the Company for financial reporting purposes and subject to its overall asset coverage requirement. The notes offered in the Bethesda CLO 1 (collectively, the “Bethesda CLO 1 Notes”) were issued by MFIC Bethesda CLO 1 LLC (the “Bethesda CLO 1 Issuer”), an indirectly wholly-owned and consolidated (for tax and accounting purposes) subsidiary of the Company, and are primarily secured by a diversified portfolio of middle market loans and participation interests therein.
The notes offered by Bethesda CLO 1 Issuer in connection with the CLO transaction consist of $232,000 of AAA(sf) Class A-1 Senior Secured Floating Rate due 2035, which bear interest at three-month SOFR plus 2.40%, $16,000 of AAA(sf) Class A-2 Senior Secured Floating Rate due 2035, which bear interest at three-month SOFR plus 2.90% (collectively, the "CLO 1 Secured Notes"), and $154,360 of Subordinated Notes due in 2123 (the "CLO 1 Subordinated Notes"), which do not bear interest. The Company, through a newly formed wholly owned subsidiary of the Company (the “Bethesda CLO 1 Depositor”), has retained 100% of the Class A-2 Notes and the Subordinated Notes issued in the Bethesda CLO 1, which are eliminated in consolidation.
On October 23, 2025, the Company upsized, extended the maturity, and reduced the pricing on Bethesda CLO 1 (the “Bethesda CLO 1 Upsize”). The size of Bethesda CLO 1 increased from $402,360 to $646,360. The notes offered in Bethesda CLO 1 (collectively, the “Bethesda CLO 1 Upsize Notes”) were issued by Bethesda CLO 1 Issuer, and are primarily secured by a diversified portfolio of middle market loans and participation interests therein. The notes offered by Bethesda CLO 1 Issuer in connection with Bethesda CLO 1 Upsize consisted of $348,000 of AAA(sf) Class A-1 Notes and the-R Senior Secured Floating Rate Notes due 2037, which bear interest at the three-month SOFR plus 1.49%, $24,000 of AAA(sf) Class A-2Notes are scheduled to mature in October 2035 and the -R Senior Secured Floating Rate Notes due 2037, which bear interest at the three-month SOFR plus 1.65%, $36,000 of AA(sf) Class B-R Senior Secured Floating Rate Notes due 2037, which bear interest at the three-month SOFR plus 1.85%, $48,000 of A(sf) Class C-R Secured Deferrable Floating Rate Notes due 2037, which bear interest at the three-month SOFR plus 2.30%, $36,000 of BBB-(sf) Class D-R Secured Deferrable Floating Rate Notes due 2037, which bear interest at the three-month SOFR plus 3.30% (collectively, the “CLO 1 Upsize Secured Notes”). The Company, through Bethesda CLO 1 Depositor retained the $154,360 of Subordinated Notes due in 2123, which do not bear interest. The Company, through Bethesda CLO 1 Depositor acquired 100% of the Class D Notes issued in Bethesda CLO 1 upsize. The Subordinated Notes and Class D Notes are both eliminated in consolidation.
The Bethesda CLO 1 Upsize Notes are scheduled to mature on October 23, 2037; however, the Bethesda CLO 1 Upsize Notes may be redeemed by the Bethesda CLO 1 Issuer, at the direction of CLO Retention Holder on any business day after October 23, 2027. In connection with the sale and contribution, the Company has made customary representations, warranties and covenants to the Issuer. The CLO 1 Upsize Secured Notes are the secured obligation of the Bethesda CLO 1 Issuer, the CLO 1 Upsize Subordinated Notes are the unsecured obligation of the Bethesda CLO 1 Issuer, and the indenture governing the Bethesda CLO 1 Upsize Notes include customary covenants and events of default.
The Bethesda CLO 1 Upsize Notes are not, and will not be, registered under the Securities Act, or any state securities or “blue sky” laws and may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from registration. The Company serves as collateral manager to the Bethesda CLO 1 Issuer under a collateral management agreement and has agreed to irrevocably waive all collateral management fees payable pursuant to the collateral management agreement.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
MFIC Bethesda CLO 2 LLC Debt Securitization
On February 24, 2025, the Company completed a $529,600 CLO transaction (the “Bethesda CLO 2”), a form of secured financing incurred by MFIC Bethesda CLO 2 LLC (the “Bethesda CLO 2 Issuer”), an indirect wholly owned, consolidated subsidiary of the Company. The notes offered by Bethesda CLO 2 Issuer in connection with Bethesda CLO 2 (collectively, the “Bethesda CLO 2 Notes”) consist of $304,500 of AAA(sf) Class A-1 Senior Secured Floating Rate Notes due 2037, which bear interest at the three-month SOFR plus 1.48%, $21,000 of AAA(sf) Class A-2 Senior Secured Floating Rate Notes due 2037, which bear interest at three-month SOFR plus 1.70%, $31,500 of AA(sf) Class B Senior Secured Floating Rate Notes due 2037, which bear interest at three-month SOFR plus 1.85%, $42,000 of A(sf) Class C Senior Secured Floating Rate Notes due 2037, which bear interest at three-month SOFR plus 2.30%, $31,500 of Class D Senior Secured Floating Rate Notes due 2037, which bear interest at three-month SOFR plus 3.75% and $99,100 of Subordinated notes due 2125, which do not bear interest. The CLO transaction is backed by a diversified portfolio of middle-market commercial loans, which Bethesda CLO 2 Issuer purchased from the Company pursuant to a loan sale agreement entered into on February 24, 2025, using the proceeds of the CLO transaction. The Company, through a newly formed wholly owned subsidiary of the Company (the “Bethesda CLO 2 Depositor”), has retained all of the Class D Notes and the Subordinated Notes issued in the Bethesda CLO 2, which are eliminated in consolidation. The proceeds from the CLO transaction were used to repay borrowings under the Senior Secured Facility. The Company serves as collateral manager to Bethesda CLO 2 Issuer, Citigroup Global Markets Inc. acted as initial purchaser and Apollo Global Securities, LLC acted as placement agent.
The following table summarizes the average and maximum debt outstanding, and the interest and debt issuance cost for the three and six months ended June 30, 2026 and 2025:
Three Months Ended June 30,
Six Months Ended June 30,
2026
2025
2026
2025
Average debt outstanding
$
1,796,198
$
1,925,540
$
1,852,550
$
1,866,897
Maximum amount of debt outstanding
1,894,000
2,053,954
2,004,728
2,325,684
Weighted average annualized interest cost (1)
5.66
%
6.45
%
5.64
%
6.42
%
Annualized amortized debt issuance cost
0.37
%
0.36
%
0.36
%
0.38
%
Total annualized interest cost
6.03
%
6.81
%
6.00
%
6.80
%
(1)
Includes the stated interest expense and commitment fees on the unused portion of the Senior Secured Facility. Commitment fees for the three and six months ended June 30, 2026 were $718 and $1,335, respectively. Commitment fees for the three and six months ended June 30, 2025 were $532 and $1,164, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Foreign Currency Transactions and Translations
The Company had no foreign-denominated debt outstanding on the Senior Secured Facility as of June 30, 2026.
The Company had the following foreign-denominated debt outstanding on the Senior Secured Facility as of December 31, 2025:
Original Principal Amount (Local)
Original Principal Amount (USD)
Principal Amount Outstanding
Unrealized Gain/(Loss)
Reset Date
British Pound
£
28,200
$
35,143
$
38,000
$
(2,857
)
1/30/2026
European Euro
€
6,000
6,646
7,048
(402
)
1/31/2026
Canadian Dollar
C$
14,000
10,176
10,201
(25
)
1/31/2026
Total
$
51,965
$
55,249
$
(3,284
)
As of June 30, 2026 and December 31, 2025, the Company was in compliance with all debt covenants for all outstanding debt obligations.
Note 7. Stockholders’ Equity
The Company adopted the following plans, approved by the Board, for the purpose of repurchasing its common stock in accordance with applicable rules specified in the Securities Exchange Act of 1934 (the “Repurchase Plans”):
Date of Agreement/Amendment
Maximum Cost of Shares That May Be Repurchased
Cost of Shares Repurchased
Remaining Cost of Shares That May Be Repurchased
August 5, 2015
$
50,000
$
50,000
$
—
December 14, 2015
50,000
50,000
—
September 14, 2016
50,000
50,000
—
October 30, 2018
50,000
50,000
—
February 6, 2019
50,000
50,000
—
February 3, 2022
25,000
25,000
—
February 25, 2026
100,000
100,000
—
Total as of June 30, 2026
$
375,000
$
375,000
$
—
The Repurchase Plans were designed to allow the Company to repurchase its shares both during its open window periods and at times when it otherwise might be prevented from doing so under applicable insider trading laws or because of self-imposed trading blackout periods. A broker selected by the Company will have the authority under the terms and limitations specified in an agreement with the Company to repurchase shares on the Company’s behalf in accordance with the terms of the Repurchase Plans. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the Repurchase Plans. Pursuant to the Repurchase Plans, the Company may from time to time repurchase a portion of its shares of common stock and the Company is hereby notifying stockholders of its intention as required by applicable securities laws.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Under the Repurchase Plans described above, the Company allocated the following amounts to be repurchased in accordance with SEC Rule 10b5-1 (the “10b5-1 Repurchase Plans”):
Effective Date
Termination Date
Amount Allocated to 10b5-1 Repurchase Plans
September 15, 2015
November 5, 2015
$
5,000
January 1, 2016
February 5, 2016
10,000
April 1, 2016
May 19, 2016
5,000
July 1, 2016
August 5, 2016
15,000
September 30, 2016
November 8, 2016
20,000
January 4, 2017
February 6, 2017
10,000
March 31, 2017
May 19, 2017
10,000
June 30, 2017
August 7, 2017
10,000
October 2, 2017
November 6, 2017
10,000
January 3, 2018
February 8, 2018
10,000
June 18, 2018
August 9, 2018
10,000
September 17, 2018
October 31, 2018
10,000
December 12, 2018
February 7, 2019
10,000
February 25, 2019
May 17, 2019
25,000
March 18, 2019
May 17, 2019
10,000
June 4, 2019
August 7, 2019
25,000
June 17, 2019
August 7, 2019
20,000
September 16, 2019
November 6, 2019
20,000
December 6, 2019
February 5, 2020
25,000
December 16, 2019
February 5, 2020
15,000
March 12, 2020
March 19, 2020
20,000
March 30, 2021
May 21, 2021
10,000
June 16, 2021
November 5, 2021
10,000
December 16, 2021
August 3, 2022
5,000
December 27, 2022
February 22, 2023
10,000
March 16, 2026
April 13, 2026
79,987
During the three months ended June 30, 2026, the Company repurchased 2,755,221 shares at a weighted average price per share of $11.58, inclusive of commissions, for a total cost of $31,899. This represents a discount of approximately 14.83% of the average net asset value per share for the three months ended June 30, 2026.
During the six months ended June 30, 2026, the Company repurchased 9,839,241 shares at a weighted average price per share of $10.97, inclusive of commissions, for a total cost of $107,925. This represents a discount of approximately 20.45%of the average net asset value per share for the six months ended June 30, 2026.
During the three months ended June 30, 2025, the Company did not repurchase any shares.
During the six months ended June 30, 2025, the Company repurchased 476,656 shares at a weighted average price per share of $12.75, inclusive of commissions, for a total cost of $6,079. This represents a discount of approximately 14.72% of the average net asset value per share for the six months ended June 30, 2025.
Since the inception of the Repurchase Plans through June 30, 2026, the Company repurchased 27,000,770 shares at a weighted average price per share of $13.89, inclusive of commissions, for a total cost of $375,000. Including fractional shares, the Company has repurchased 27,000,800 shares at a weighted average price per share of $13.89, inclusive of commissions for a total cost of $375,000.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
On October 30, 2018, the Board approved a one-for-three reverse stock split of the Company’s common stock which was effective as of the close of business on November 30, 2018 (the "Reverse Stock Split"). The Company's common stock began trading on a split-adjusted basis on December 3, 2018. The fractional shares that resulted from the Reverse Stock Split were approximately 29 shares and they were canceled by paying cash in lieu of the fair value.
On July 22, 2019, the Board approved Articles of Amendment which amended the Company’s charter to reduce the amount of authorized capital stock from 400,000,000 shares, par value $0.001 per share, to 130,000,000 shares, par value $0.001 per share. The Articles of Amendment were accepted for record by the Department of Assessments and Taxation of the State of Maryland on July 22, 2019 and immediately became effective.
On August 2, 2022, the Company entered into a share subscription agreement (“Purchase Agreement”) with MFIC Holdings, LP, a subsidiary of MidCap FinCo Designated Activity Company (together with its subsidiaries, “MidCap Financial”), a middle-market specialty finance firm discretionarily managed by an affiliate of the Investment Adviser, in connection with the issuance and sale of the Company's common stock, par value $0.001 per share (the “Offering”). Pursuant to the Purchase Agreement, the Company issued 1,932,641 shares of its common stock at a purchase price of $15.52 per share, the net asset value per share of the Company's common stock as of June 30, 2022. The total proceeds of the offering excluding expenses was approximately $30,000. The shares are subject to a two-year lock-up period. MidCap Financial agreed to bear any expenses that the Company incurred in connection with the Offering greater than $300.
On July 22, 2024, the Company completed the Mergers with AFT and AIF. In connection with the Mergers, the Company issued an aggregate of 28,527,003 shares of the Company's common stock valued at approximately $440,140.
On August 13, 2024, the Company entered into (i) an equity distribution agreement by and among the Company, the Investment Adviser, the Administrator and Truist Securities, Inc. (“Truist”) and (ii) an equity distribution agreement by and among the Company, the Investment Adviser, the Administrator and Jefferies LLC (“Jefferies,” and together with Truist, the “Sales Agents”). The equity distribution agreements with the Sales Agents described in the preceding sentence are collectively referred to herein as the “Equity Distribution Agreements.” The Equity Distribution Agreements provided that the Company may from time to time issue and sell shares of its common stock, par value $0.001 per share (“Shares”), having an aggregate offering price of up to $200,000, through the Sales Agents, or to them as principal for their own respective accounts. Sales of the shares, if any, may be made in transactions that are deemed to be an “at the market” (“ATM”) offering as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended, including without limitation sales made directly on or through the NASDAQ Global Select Market, sales made to or through market makers and sales made through any other existing trading market or electronic communications network, and by any other method permitted by law, including but not limited to privately negotiated transactions, which may include block trades, as the Company and the Sales Agents may agree. The Sales Agents will receive a commission from the Company up to 1.5% of the gross sales price of any Shares sold through the Sales Agents under the Equity Distribution Agreements. The Company may from time to time issue and sell shares of its common stock through public or ATM offerings. The ATM program effectively expired on April 12, 2026. For the six months ended June 30, 2026, there were no shares issued through ATM offerings.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Note 8. Commitments and Contingencies
The Company has various commitments to fund various revolving and delayed draw senior secured and subordinated loans, including commitments to issue letters of credit through a financial intermediary on behalf of certain portfolio companies. As of June 30, 2026 and December 31, 2025, the Company had the following unfunded commitments to its portfolio companies:
June 30, 2026
December 31, 2025
Unfunded revolver obligations and bridge loan commitments (1)
$
280,546
$
210,900
Standby letters of credit issued and outstanding (2)
7,212
7,036
Unfunded delayed draw loan commitments (including commitments with performance thresholds not met) (3)
61,865
214,452
Total Unfunded Commitments (4)
$
349,623
$
432,388
(1)
The unfunded revolver obligations may or may not be funded to the borrowing party in the future. The amounts relate to loans with various maturity dates, but the entire amount was eligible for funding to the borrowers as of June 30, 2026 and December 31, 2025, subject to the terms of each loan’s respective credit agreements which includes borrowing covenants that need to be met prior to funding. As of June 30, 2026 and December 31, 2025, the bridge loan commitments included in the balances were $— and $—, respectively.
(2)
For all these letters of credit issued and outstanding, the Company would be required to make payments to third parties if the portfolio companies were to default on their related payment obligations. None of the letters of credit issued and outstanding are recorded as a liability on the Company’s Consolidated Statements of Assets and Liabilities as such letters of credit are considered in the valuation of the investments in the portfolio company.
(3)
The Company’s commitment to fund delayed draw loans is triggered upon the satisfaction of certain pre-negotiated terms and conditions which can include covenants to maintain specified leverage levels and other related borrowing base covenants. For commitments to fund delayed draw loans with performance thresholds, borrowers are required to meet certain performance requirements before the Company is obligated to fulfill these commitments.
(4)
The Company also had an unfunded revolver commitment to its fully controlled affiliate Merx Aviation Finance, LLC of $100,000 and $81,425 as of June 30, 2026 and December 31, 2025, respectively. Given the Company’s controlling interest, the timing and the amount of the funding has not been determined.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Note 9. Financial Highlights
The following is a schedule of financial highlights for the six months ended June 30, 2026 and 2025:
Six Months Ended June 30,
2026
2025
Per Share Data*
Net asset value at beginning of period
$
14.18
$
14.98
Net investment income (1)
0.77
0.76
Net realized and change in unrealized gains (losses) (1)
(1.28
)
(0.24
)
Net increase in net assets resulting from operations
(0.51
)
0.52
Distribution of net investment income (2)
(0.62
)
(0.76
)
Accretion due to share repurchases
0.32
0.01
Net asset value at end of period
$
13.37
$
14.75
Per share market value at end of period
$
10.08
$
12.62
Total return (3)
(6.58
)%
(0.87
)%
Shares outstanding at end of period
82,372,628
93,303,622
Weighted average shares outstanding
86,775,778
93,489,281
Ratio/Supplemental Data
Net assets at end of period (in millions)
$
1,101.3
$
1,375.9
Annualized ratio of operating expenses to average net assets (4)(5)
2.95
%
3.80
%
Annualized ratio of interest and other debt expenses to average net assets (5)
9.37
%
9.14
%
Annualized ratio of total expenses to average net assets (4)(5)
12.32
%
12.94
%
Annualized ratio of net investment income to average net assets (5)
11.31
%
10.24
%
Average debt outstanding (in millions)
$
1,852.6
$
1,866.9
Average debt per share
$
21.35
$
19.96
Annualized portfolio turnover rate (5)
10.14
%
27.27
%
Asset coverage per unit (6)
$
1,631
$
1,669
* Totals may not foot due to rounding.
(1)
Financial highlights are based on the weighted average number of shares outstanding for the period presented.
(2)
The tax character of distributions is determined based on taxable income calculated in accordance with income tax regulations which may differ from amounts determined under GAAP. Although the tax character of distributions paid to stockholders through June 30, 2026 may include return of capital, the exact amount cannot be determined at this point. Per share amounts are based on actual rate per share.
(3)
Total return is based on the change in market price per share during the respective periods. Total return also takes into account distributions, if any, reinvested in accordance with the Company’s dividend reinvestment plan. Total return does not reflect sales load.
(4)
The ratio of operating expenses to average net assets and the ratio of total expenses to average net assets are shown inclusive of all expense reimbursements (see Note 3 to the consolidated financial statements). For the six months ended June 30, 2026, the annualized ratio of operating expenses to average net assets and the annualized ratio of total expenses to average net assets would be 2.97% and 12.34%, respectively, without the expense reimbursements. For the six months ended June 30, 2025, the annualized ratio of operating expenses to average net assets and the annualized ratio of total expenses to average net assets would be 3.95% and 13.10%, respectively, without the voluntary fee waivers.
(5)
Annualized for the six months ended June 30, 2026 and 2025.
(6)
The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our total assets, less all liabilities and indebtedness not represented by senior securities, divided by senior securities representing indebtedness. This asset coverage ratio is multiplied by one thousand to determine the asset coverage per unit. As of June 30, 2026, the Company's asset coverage was 163%.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)— Continued
(In thousands, except share and per share data)
Note 10. Subsequent Events
Management has evaluated subsequent events through the date of issuance of these financial statements and has determined that there are no subsequent events outside the ordinary scope of business that require adjustment to, or disclosure in, the consolidated financial statements other than those disclosed below.
Distribution Declarations
On August 5, 2026, the Company’s Board declared a base distribution of $0.31 per share, payable on September 24, 2026 to stockholders of record as of September 8, 2026. There can be no assurances that the Board will continue to declare a base distribution of $0.31 per share.
2026 Notes Maturity
On July 16, 2026, the Company repaid the 2026 Notes.
Report of Independent Registered Public Accounting Firm
To the stockholders and the Board of Directors of MidCap Financial Investment Corporation
Results of Review of Interim Financial Information
We have reviewed the accompanying consolidated statements of assets and liabilities, including the consolidated schedule of investments, of MidCap Financial Investment Corporation and subsidiaries (the "Company") as of June 30, 2026, the related consolidated statements of operations and changes in net assets for the three-month and six-month periods ended June 30, 2026 and 2025, the consolidated statements of cash flows and financial highlights for the six-month periods ended June 30, 2026 and 2025, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of assets and liabilities, including the consolidated schedule of investments, of the Company as of December 31, 2025, and the related consolidated statements of operations, changes in net assets, cash flows, and financial highlights for the year then ended (not presented herein); and in our report dated February 26, 2026, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments as of December 31, 2025, is fairly stated, in all material respects, in relation to the consolidated statement of assets and liabilities, including the consolidated schedule of investments, from which it has been derived.
Basis for Review Results
This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the notes thereto contained elsewhere in this report. Some of the statements in this report constitute forward-looking statements, which relate to future events or our future performance or financial condition. The forward-looking statements contained herein involve risks and uncertainties, including statements as to:
•
our future operating results;
•
our business prospects and the prospects of our portfolio companies;
•
the impact of investments that we expect to make;
•
our contractual arrangements and relationships with third parties;
•
the dependence of our future success on the general economy and its impact on the industries in which we invest;
•
political, economic or industry conditions, or conditions affecting the financial and capital markets, including the effect of trade policy;
•
the impact of geo-political conditions, including revolution, insurgency, terrorism or war, including those arising out of the ongoing conflicts in the Middle East and Eastern Europe;
•
the ability of our portfolio companies to achieve their objectives;
•
our expected financings and investments;
•
the adequacy of our cash resources and working capital; and
•
the timing of cash flows, if any, from the operations of our portfolio companies.
We generally use words such as “anticipates,” “believes,” “expects,” “intends” and similar expressions to identify forward-looking statements. Our actual results could differ materially from those projected in the forward-looking statements for any reason, including any factors set forth in “Risk Factors” and elsewhere in this report.
We have based the forward-looking statements included in this report on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, 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 Securities and Exchange Commission (“SEC”), including any annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
MidCap Financial Investment Corporation (the “Company,” “we,” “us,” or “our”) was incorporated under the Maryland General Corporation Law in February 2004. We have elected to be treated as a business development company (“BDC”) under the Investment Company Act of 1940 (the “1940 Act”). As such, we are required to comply with certain regulatory requirements. For instance, we generally have to invest at least 70% of our total assets in “qualifying assets,” including securities of private or thinly traded public U.S. companies, cash equivalents, U.S. government securities and high-quality debt investments that mature in one year or less. In addition, for federal income tax purposes we have elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). Pursuant to this election and assuming we qualify as a RIC, we generally do not have to pay corporate-level federal income taxes on any income we distribute to our stockholders. We commenced operations on April 8, 2004 upon completion of our initial public offering that raised $870 million in net proceeds from selling 62 million shares of common stock at a price of $15.00 per share (20.7 million shares at a price of $45.00 per share adjusted for the one-for-three reverse stock split). Since then, and through June 30, 2026, we have raised approximately $2.68 billion in net proceeds from additional offerings of common stock and we have repurchased common stock for $375.0 million.
Apollo Investment Management, L.P. (the “Investment Adviser” or “AIM”) is our investment adviser and an affiliate of Apollo Global Management, Inc. and its consolidated subsidiaries (“AGM”). The Investment Adviser, subject to the overall supervision of our Board of Directors (the “Board”), manages the day-to-day operations of, and provides investment advisory services to the Company. AGM and other affiliates manage other funds that may have investment mandates that are similar, in whole or in part, with ours. AIM and its affiliates may determine that an investment is appropriate both for us and for one or more of those other funds. In such event, depending on the availability of such investment and other appropriate factors, AIM may determine that we should invest on a side-by-side basis with one or more other funds. We make all such investments subject to compliance with applicable regulations and interpretations, and our allocation procedures. The Company, the Investment Adviser and certain affiliates received an exemptive order from the SEC on May 14, 2025 (the “Order”), that permits us, among other things, to co-invest with other funds and accounts managed by the Investment Adviser or its affiliates, subject to certain conditions. Certain types of negotiated co-investments may be made only in accordance with the Order from the SEC permitting the Company to do so. Pursuant to the requirements of the Order, the Board, including a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Independent Directors, has approved co-investment policies and procedures describing how the Company will comply with the Order. Further, the Investment Adviser has adopted policies and procedures (the “Adviser Allocation Policy”) which is designed to reasonably ensure that investment opportunities are allocated fairly and equitably among affiliated funds over time and in a manner that is consistent with applicable laws, rules and regulations. Pursuant to the Adviser Allocation Policy, the Company will be given the opportunity to participate in any investments that fall within certain criteria established by the Investment Adviser. The Company may determine to participate or not to participate, depending on whether the Investment Adviser determines that the investment is appropriate for the Company (e.g., based on investment strategy). If the Investment Adviser determines that the investment is not appropriate for us, the investment will not be allocated to us.
Apollo Investment Administration, LLC (the “Administrator” or “AIA”), an affiliate of AGM, provides, among other things, administrative services and facilities for the Company. In addition to furnishing us with office facilities, equipment, and clerical, bookkeeping and recordkeeping services, AIA also oversees our financial records as well as prepares our reports to stockholders and reports filed with the SEC. AIA also performs the calculation and publication of our net asset value, the payment of our expenses and oversees the performance of various third-party service providers and the preparation and filing of our tax returns. Furthermore, AIA provides on our behalf managerial assistance to those portfolio companies to which we are required to provide such assistance.
All dollar amounts in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” are in thousands, unless otherwise noted.
Our investment objective is to generate current income and, to a lesser extent, long-term capital appreciation. We primarily invest in directly originated and privately negotiated first lien senior secured loans to privately held U.S. middle-market companies, which the Company generally defines as companies with less than $75 million in EBITDA, as may be adjusted for market disruptions, mergers and acquisitions-related charges and synergies, and other items. To a lesser extent, we may invest in other types of securities including, first lien unitranche, second lien senior secured, unsecured, subordinated, and mezzanine loans, and equities in both private and public middle market companies.
Our level of investment activity can and does vary substantially from period to period depending on many factors, including the amount of debt and equity capital available to middle-market companies, the level of merger and acquisition activity for such companies, the general economic environment, and the competitive environment for the types of investments we make. As a BDC, we must not acquire any assets other than “qualifying assets” specified in the 1940 Act unless, at the time the acquisition is made, at least 70% of our total assets are qualifying assets (with certain limited exceptions). As of June 30, 2026, non-qualifying assets represented approximately 7.7% of the total assets of the Company.
Revenue
We generate revenue primarily in the form of interest and dividend income from the securities we hold and capital gains, if any, on investment securities that we may acquire in portfolio companies. Our debt investments, whether in the form of mezzanine or senior secured loans, generally have a stated term of five to ten years and bear interest at a fixed rate or a floating rate usually determined on the basis of a benchmark, such as SOFR, the federal funds rate, or the prime rate. Interest on debt securities is generally payable quarterly or semiannually and while U.S. subordinated debt and corporate notes typically accrue interest at fixed rates, some of our investments may include zero coupon and/or step-up bonds that accrue income on a constant yield to call or maturity basis. In addition, some of our investments provide for payment-in-kind (“PIK”) interest or dividends. Such amounts of accrued PIK interest or dividends are added to the cost of the investment on the respective capitalization dates and generally become due at maturity of the investment or upon the investment being called by the issuer. We may also generate revenue in the form of commitment, origination, structuring fees, fees for providing managerial assistance and, if applicable, consulting fees, etc.
Expenses
For all investment professionals of AIM and their staff, when and to the extent engaged in providing investment advisory and management services to us, the compensation and routine overhead expenses of that personnel which is allocable to those services are provided and paid for by AIM. We bear all other costs and expenses of our operations and transactions, including those relating to:
•
investment advisory and management fees;
•
expenses incurred by AIM payable to third parties, including agents, consultants or other advisors, in monitoring our financial and legal affairs and in monitoring our investments and performing due diligence on our prospective portfolio companies;
•
calculation of our net asset value (including the cost and expenses of any independent valuation firm);
•
direct costs and expenses of administration, including independent registered public accounting and legal costs;
•
costs of preparing and filing reports or other documents with the SEC;
•
interest payable on debt, if any, incurred to finance our investments;
•
offerings of our common stock and other securities;
fees payable to third parties, including agents, consultants or other advisors, relating to, or associated with, evaluating and making investments;
•
transfer agent and custodial fees;
•
taxes;
•
independent directors’ fees and expenses;
•
marketing and distribution-related expenses;
•
the costs of any reports, proxy statements or other notices to stockholders, including printing and postage costs;
•
our allocable portion of the fidelity bond, directors and officers/errors and omissions liability insurance, and any other insurance premiums;
•
organizational costs; and
•
all other expenses incurred by us or the Administrator in connection with administering our business, such as our allocable portion of overhead under the administration agreement, including rent and our allocable portion of the cost of our Chief Financial Officer, Chief Legal Officer and Chief Compliance Officer and their respective staffs.
We expect our general and administrative operating expenses related to our ongoing operations to increase moderately in dollar terms. During periods of asset growth, we generally expect our general and administrative operating expenses to decline as a percentage of our total assets and increase during periods of asset declines. Incentive fees, interest expense and costs relating to future offerings of securities, among others, may also increase or reduce overall operating expenses based on portfolio performance, interest rate benchmarks, and offerings of our securities relative to comparative periods, among other factors.
Portfolio and Investment Activity
Our portfolio and investment activity during the three and six months ended June 30, 2026 and 2025, was as follows:
Three Months Ended June 30,
Six Months Ended June 30,
(in millions)*
2026
2025
2026
2025
Investments made in portfolio companies
$
47.2
$
288.7
$
149.6
$
680.6
Investments sold
(79.1
)
(14.9
)
(103.1
)
(58.9
)
Net activity before repaid investments
(32.0
)
273.8
46.5
621.8
Investments repaid
(128.3
)
(129.9
)
(348.4
)
(307.4
)
Net investment activity
$
(160.2
)
$
144.0
$
(301.9
)
$
314.4
Portfolio companies, at beginning of period
236
240
247
233
Number of investments in new portfolio companies
0
14
2
34
Number of exited companies
(7
)
(5
)
(20
)
(18
)
Portfolio companies at end of period
229
249
229
249
Number of investments in existing portfolio companies
Our portfolio composition and weighted average yields as of June 30, 2026 and December 31, 2025 were as follows:
June 30, 2026
December 31, 2025
Portfolio composition, at fair value:
First lien secured debt
94
%
95
%
Second lien secured debt
0
%
0
%
Total secured debt
94
%
95
%
Unsecured debt
0
%
0
%
Structured products and other
1
%
0
%
Preferred equity
2
%
1
%
Common equity/interests and warrants
3
%
4
%
Weighted average yields, at amortized cost (1):
First lien secured debt (2)
9.5
%
9.7
%
Second lien secured debt (2)
0.0
%
13.0
%
Secured debt portfolio (2)
9.5
%
9.7
%
Unsecured debt portfolio (2)
11.1
%
11.1
%
Total debt portfolio (2)
9.5
%
9.7
%
Total portfolio (3)
8.1
%
8.6
%
Interest rate type, at fair value (4):
Fixed rate amount
$
0.0 billion
$
0.0 billion
Floating rate amount
$
2.5 billion
$
2.9 billion
Fixed rate, as percentage of total
0
%
0
%
Floating rate, as percentage of total
100
%
100
%
Interest rate type, at amortized cost (4):
Fixed rate amount
$
0.0 billion
$
0.0 billion
Floating rate amount
$
2.6 billion
$
2.9 billion
Fixed rate, as percentage of total
0
%
0
%
Floating rate, as percentage of total
100
%
100
%
(1)
An investor’s yield may be lower than the portfolio yield due to sales loads and other expenses.
(2)
Exclusive of investments on non-accrual status.
(3)
Inclusive of all income generating investments, non-income generating investments and investments on non-accrual status.
(4)
The interest rate type information is calculated using the Company's corporate debt portfolio and excludes aviation and investments on non-accrual status.
Since the initial public offering of the Company in April 2004 and through June 30, 2026, invested capital totaled $26.9 billion in 850 portfolio companies. Over the same period, the Company completed transactions with more than 100 different financial sponsors.
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, gains and losses. Changes in the economic environment, financial markets, credit worthiness of portfolio companies and any other parameters used in determining such estimates could cause actual results to differ materially. In addition to the discussion below, our significant accounting policies are further described in the notes to the consolidated financial statements.
Fair Value Measurements
The Company follows guidance in ASC 820, Fair Value Measurement (“ASC 820”), where fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are determined within a framework that establishes a three-tier hierarchy which maximizes the use of observable market data and minimizes the use of unobservable inputs to establish a classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk, such as the risk inherent in a particular valuation technique used to measure fair value using a pricing model and/or the risk inherent in the inputs for the valuation technique. Inputs may be observable or unobservable. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the information available. The inputs or methodology used for valuing assets or liabilities may not be an indication of the risks associated with investing in those assets or liabilities.
ASC 820 classifies the inputs used to measure these fair values into the following hierarchy:
Level 1: Quoted prices in active markets for identical assets or liabilities, accessible by us at the measurement date.
Level 2: Quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active, or other observable inputs other than quoted prices.
Level 3: Unobservable inputs for the asset or liability.
In all cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to each investment. The level assigned to the investment valuations may not be indicative of the risk or liquidity associated with investing in such investments. Because of the inherent uncertainties of valuation, the values reflected in the consolidated financial statements may differ materially from the values that would be received upon an actual disposition of such investments.
As of June 30, 2026, $2.73 billion or 98.6% of the Company’s investments were classified as Level 3. The high proportion of Level 3 investments relative to our total investments is directly related to our investment philosophy and target portfolio, which consists primarily of long-term secured debt, as well as unsecured and mezzanine positions of private middle-market companies. A fundamental difference exists between our investments and those of comparable publicly traded fixed income investments, namely high-yield bonds, and this difference affects the valuation of our private investments relative to comparable publicly traded instruments.
Senior secured loans, or senior loans, are higher in the capital structure than high-yield bonds, and are typically secured by assets of the borrowing company. This improves their recovery prospects in the event of default and affords senior loans a structural advantage over high-yield bonds. Many of the Company’s investments are also privately negotiated and contain covenant protections that limit the issuer to take actions that could harm us as a creditor. High-yield bonds typically do not contain such covenants.
Given the structural advantages of capital seniority and covenant protection, the valuation of our private debt portfolio is driven more by investment specific credit factors than movements in the broader debt capital markets. Each security is evaluated individually and as indicated below, we value our private investments based upon a multi-step valuation process, including valuation recommendations from independent valuation firms.
Investment Valuation Process
Pursuant to Rule 2a-5 under the 1940 Act, the Board has designated the Investment Adviser as its “valuation designee” to perform the fair value determinations for all investments held by the Company. The Board continues to be responsible for overseeing the processes for determining fair valuation. Under the Company's valuation policies and procedures, the Investment Adviser values investments, including certain secured debt, unsecured debt, and other debt securities with maturities greater than 60 days, for which market quotations are readily available, at such market quotations (unless they are deemed not to represent fair value). We attempt to obtain market quotations from at least two brokers or dealers (if available, otherwise from a principal market maker, primary market dealer or other independent pricing service). We utilize mid-market pricing as a practical expedient for fair value unless a different point within the range is more representative. If and when market quotations are unavailable or are deemed not to represent fair value, we typically utilize independent third party valuation firms to assist us in determining fair value. Accordingly, such investments go through our multi-step valuation process as described below. In each case, our independent third party valuation firms consider observable market inputs together with significant unobservable inputs in arriving at their valuation recommendations for such investments. Investments purchased within the quarter before the valuation date and debt investments with remaining maturities of 60 days or less may each be valued at cost with interest accrued or discount accreted/premium amortized to the date of maturity (although they are typically valued at available market quotations), unless such valuation, in the judgment of our Investment Adviser, does not represent fair value. In this case, such investments shall be valued at fair value as determined in good faith by or under the direction of the Investment Adviser, including using market quotations where available. Investments that are not publicly traded or whose market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Investment Adviser. Such determination of fair values may involve subjective judgments and estimates.
With respect to investments for which market quotations are not readily available or when such market quotations are deemed not to represent fair value, our Investment Adviser undertakes a multi-step valuation process each quarter, as described below:
1.
Our quarterly valuation process begins with each portfolio company or investment being initially valued by using certain inputs provided, among others, by the investment professionals of our Investment Adviser who are responsible for the portfolio investment;
2.
At least each quarter, the valuation will be reassessed and updated by the Investment Adviser or an independent valuation firm to reflect company specific events and latest market data;
3.
Preliminary valuation conclusions are then documented and discussed with senior management of our Investment Adviser;
4.
The Investment Adviser discusses valuations and determines in good faith the fair value of each investment in our portfolio based on the input of the applicable independent valuation firm; and
For Level 3 investments entered into within the current quarter, the cost (purchase price adjusted for accreted original issue discount/amortized premium) or any recent comparable trade activity on the security investment shall be considered to reasonably approximate the fair value of the investment, provided that no material change has since occurred in the issuer’s business, significant inputs or the relevant environment.
Investments determined by these valuation procedures which have a fair value of less than $1 million during the prior fiscal quarter may be valued based on inputs identified by the Investment Adviser without the necessity of obtaining valuation from an independent valuation firm, if once annually an independent valuation firm using the procedures described herein provides an independent assessment of value.
Investments in all asset classes are valued utilizing a market approach, an income approach, or both approaches, as appropriate. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities (including a business). The income approach uses valuation techniques to convert future amounts (for example, cash flows or earnings) to a single present amount (discounted). The measurement is based on the value indicated by current market expectations about those future amounts. In following these approaches, the types of factors that we may take into account in fair value pricing our investments include, as relevant: available current market data, including relevant and applicable market trading and transaction comparables, applicable market yields and multiples, security covenants, seniority of investment in the investee company’s capital structure, 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, M&A comparables, our principal market (as the reporting entity) and enterprise values, among other factors. When readily available, broker quotations and/or quotations provided by pricing services are considered as an input in the valuation process. During the six months ended June 30, 2026, there were no significant changes to the Company’s valuation techniques and related inputs considered in the valuation process.
Because there is not a readily available market value for most of the investments in our portfolio, substantially all of our portfolio investments are valued at fair value as determined in good faith by the Investment Adviser, as the valuation designee, as described herein. Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had an active market existed for such investments and may differ materially from the values that we may ultimately realize.
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned.
Operating results for the three and six months ended June 30, 2026 and 2025 were as follows:
Three Months Ended June 30,
Six Months Ended June 30,
(in millions)*
2026
2025
2026
2025
Investment Income
Interest income
$
63.2
$
75.7
$
130.3
$
149.0
Dividend income
0.2
0.2
0.5
0.4
PIK interest income
4.2
5.2
8.1
9.9
Other income
0.6
0.2
1.2
0.6
Total investment income
$
68.2
$
81.2
$
140.1
$
159.9
Expenses
Management and performance-based incentive fees, net of amounts waived
$
5.1
$
9.9
$
10.8
$
22.4
Interest and other debt expenses, net of reimbursements
27.1
32.3
55.6
62.0
Administrative services expense, net of reimbursements
1.2
1.0
2.5
2.0
Other general and administrative expenses
2.1
1.6
4.1
2.9
Net Expenses
$
35.5
$
44.9
$
73.0
$
89.3
Net Investment Income
$
32.8
$
36.4
$
67.0
$
70.7
Net Realized and Change in Unrealized Gains (Losses)
Net realized gains (losses)
$
(0.5
)
$
(17.2
)
$
(12.9
)
$
(14.2
)
Net change in unrealized gains (losses)
(49.8
)
(1.0
)
(98.5
)
(8.1
)
Net Realized and Change in Unrealized Gains (Losses)
$
(50.3
)
$
(18.3
)
$
(111.4
)
$
(22.2
)
Net Increase in Net Assets Resulting from Operations
$
(17.5
)
$
18.1
$
(44.4
)
$
48.4
Net Investment Income on Per Average Share Basis (1)
$
0.40
$
0.39
$
0.77
$
0.76
Earnings per share — basic (1)
$
(0.21
)
$
0.19
$
(0.51
)
$
0.52
* Totals may not foot due to rounding.
(1) Based on the weighted average number of shares outstanding for the period presented.
Total Investment Income
For the three months ended June 30, 2026 as compared to the three months ended June 30, 2025
The decrease in total investment income for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 was primarily driven by a decrease in interest income (including PIK) of $13.5 million. The decrease in interest income was due to a decrease in the average yield for the total debt portfolio, from 10.5% for the three months ended June 30, 2025 to 9.5% for the three months ended June 30, 2026 combined with a decrease in the overall income-bearing investment portfolio.
For the six months ended June 30, 2026 as compared to the six months ended June 30, 2025
The decrease in total investment income for the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was primarily driven by a decrease in interest income (including PIK) of $20.5 million. The decrease in interest income was due to a decrease in the average yield for the total debt portfolio, from 10.4% for the six months ended June 30, 2025 to 9.6% for the six months ended June 30, 2026 combined with a decrease in the overall income-bearing investment portfolio.
For the three months ended June 30, 2026 as compared to the three months ended June 30, 2025
Net expenses decreased by $9.4 million for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, due to the fact that incentive fees were not accrued in the current quarter, as the Company did not meet its total return threshold. Interest and other debt expenses also decreased, driven by lower base rates and a lower average debt outstanding during the period. This was partially offset by an increase in administrative service and other G&A expenses.
For the six months ended June 30, 2026 as compared to the six months ended June 30, 2025
Net expenses decreased by $16.3 million for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, due to the fact that incentive fees were not accrued in the current quarter, as the Company did not meet its total return threshold. Interest and other debt expenses also decreased, driven by lower base rates and a lower average debt outstanding during the period. This was partially offset by an increase in administrative service and other G&A expenses.
Net Realized Gains (Losses)
For the three months ended June 30, 2026 as compared to the three months ended June 30, 2025
During the three months ended June 30, 2026, we recognized gross realized gains of $0.7 million and gross realized losses of $1.2 million, resulting in net realized losses of $0.5 million.
During the three months ended June 30, 2025, we recognized gross realized gains of $0.1 million and gross realized losses of $17.1 million, resulting in net realized losses of $17.0 million. Net realized gains for the three months ended June 30, 2025 was primarily due to the restructure of Renovo and Mitel Networks and partial write off of Ambrosia Buyer Corp. Significant realized gains (losses) for the three months ended June 30, 2025 are summarized below:
For the six months ended June 30, 2026 as compared to the six months ended June 30, 2025
During the six months ended June 30, 2026, we recognized gross realized gains of $2.2 million and gross realized losses of $15.1 million, resulting in net realized losses of $12.9 million.
Gross realized losses on investments for the six months ended June 30, 2026 totaled $10.8 million and was primarily driven by the write off of Renovo and the sale of Carestream. Gross realized gains on investments for the six months ended June 30, 2026 totaled $1.0 million, resulting in net realized losses on investments of $9.8 million.
The Company also had a realized gain of $1.2 million on the settlement of foreign currency forward contracts during the period. This was offset by a $4.3 million realized loss on foreign currencies driven by the principal repayment of the CAD, EUR, and GBP contracts on the Senior Secured Facility.
Significant realized gains (losses) for the six months ended June 30, 2026 are summarized below:
(in millions)
Net Realized Gain (Loss)
Renovo
(9.0
)
During the six months ended June 30, 2025, we recognized gross realized gains of $4.6 million and gross realized losses of $18.1 million, resulting in net realized losses of $13.5 million. Net realized losses for the six months ended June 30, 2025 was primarily driven by the restructure of Renovo and Mitel Networks and partial write off of Ambrosia Buyer Corp, offset by the exit of Orgain, Inc. and partial exit of Heubach. Significant realized gains (losses) for the six months ended June 30, 2025 are summarized below:
For the three months ended June 30, 2026 as compared to the three months ended June 30, 2025
During the three months ended June 30, 2026, we recognized gross unrealized gains on investments of $12.0 million and gross unrealized losses on investments of $61.8 million, resulting in net unrealized losses on investments of $49.8 million.
Net change in unrealized losses for the three months ended June 30, 2026 was primarily driven by credit related weakness concentrated in a limited number of positions.
Significant unrealized gains (losses) for the three months ended June 30, 2026 are summarized below:
(in millions)
Net Change in Unrealized Gain (Loss)
ChyronHego Corporation
$
(21.5
)
Midwest Vision
(6.1
)
New Era Technology, Inc.
(6.0
)
American Restoration
(4.8
)
Thomas Scientific
(3.0
)
Banner Solutions
(2.5
)
Heniff and Superior
(2.0
)
Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC)
(1.8
)
US Auto
(1.3
)
Kauffman
(1.2
)
During the three months ended June 30, 2025, we recognized gross unrealized gains of $30.4 million and gross unrealized losses of $31.4 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized losses in investments of $1.0 million. Net change in unrealized gains (losses) for the three months ended June 30, 2025 was primarily driven by the increased fair market value of Renovo and Mitel Networks following restructures as well as increase in Merx given settlement on Russian insurance claims and certain recoveries. The net change in unrealized gains was offset by the underperformance of New Era, Securus Technologies Holdings, Inc., ChyronHego Corporation, Tasty Chick'n and Amplity. Significant changes in unrealized gains (losses) for the three months ended June 30, 2025 are summarized below:
For the six months ended June 30, 2026 as compared to the six months ended June 30, 2025
During the six months ended June 30, 2026, we recognized gross unrealized gains of $21.2 million and gross unrealized losses of $119.7 million, resulting in a net unrealized loss of $98.5 million.
Net unrealized losses on investments for the six months ended June 30, 2026 totaled $102.5 million and was primarily driven by market-wide spread widening, concentrated in software and technology during the first half of the year, coupled with credit related weakness concentrated in a limited number of positions.
The Company also had a unrealized gain of $0.7 million on open foreign currency forward contracts and a $3.3 million unrealized gain on foreign currencies.
Significant changes in unrealized gains (losses) for the six months ended June 30, 2026 are summarized below:
(in millions)
Net Change in Unrealized Gain (Loss)
Renovo
$
9.0
Amplity
1.1
Carestream Health
1.0
ChyronHego Corporation
(27.7
)
Midwest Vision
(11.1
)
New Era Technology, Inc.
(7.1
)
Banner Solutions
(4.9
)
American Restoration
(4.9
)
Kauffman
(4.6
)
Carbonfree Chemicals SPE I LLC (f/k/a Maxus Capital Carbon SPE I LLC)
During the six months ended June 30, 2025, we recognized gross unrealized gains of $35.2 million and gross unrealized losses of $43.2 million, including the impact of transferring unrealized to realized gains (losses), resulting in net change in unrealized losses of $8 million. Net change in unrealized gains for the six months ended June 30, 2025 was primarily driven by the increased fair market value of Renovo and Mitel Networks following restructures as well as increase in Merx given settlement on Russian insurance claims and certain recoveries. The net change in unrealized gains was offset by the underperformance of New Era, Securus Technologies Holdings, Inc., ChyronHego Corporation, Tasty Chick'n and Amplity. Significant changes in unrealized gains (losses) for the six months ended June 30, 2025 are summarized below:
(in millions)
Net Change in Unrealized Gain (Loss)
Merx Aviation Finance, LLC
$
9.9
Renovo
5.8
The Club Company
2.8
Ambrosia Buyer Corp.
2.6
Mitel Networks
2.5
Congruex
1.4
Sequential Brands Group, Inc.
1.2
New Era Technology, Inc.
(7.3
)
Securus Technologies Holdings, Inc.
(4.6
)
ChyronHego Corporation
(3.6
)
Tasty Chick’n
(2.8
)
Amplity
(2.0
)
Orgain, Inc.
(1.9
)
US Auto
(1.2
)
Modern Campus
(1.1
)
AVAD, LLC
(1.1
)
Compass Health
(1.0
)
Liquidity and Capital Resources
The Company’s liquidity and capital resources are generated and generally available through periodic follow-on equity and debt offerings, our Senior Secured Facility (as defined in Note 6 to the consolidated financial statements), our senior secured notes, our senior unsecured notes, investments in special purpose entities in which we hold and finance particular investments on a non-recourse basis, as well as from cash flows from operations, investment sales of liquid assets and repayments of senior and subordinated loans and income earned from investments.
We believe that our current cash and cash equivalents on hand, our short-term investments, proceeds from the sale of our 2026 Notes, 2028 Notes, Bethesda CLO 1, and Bethesda CLO 2, together with our available borrowing capacity under our Senior Secured Facility and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations for at least the next twelve months.
The Company defines cash equivalents as securities that are readily convertible into known amounts of cash and near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only securities with a maturity of three months or less from the date of purchase would qualify, with limited exceptions. The Company deems that certain money market funds, U.S. Treasury bills, repurchase agreements and other high-quality, short-term debt securities would qualify as cash equivalents (see Note 2 to the consolidated financial statements). At the end of each fiscal quarter, we consider taking proactive steps utilizing cash equivalents with the objective of enhancing our investment flexibility during the following quarter, pursuant to Section 55 of the 1940 Act. More specifically, we may purchase U.S. Treasury bills from time-to-time on the last business day of the quarter and typically close out that position on the following business day, settling the sale transaction on a net cash basis with the purchase, subsequent to quarter end. The Company may also utilize repurchase agreements or other balance sheet transactions, including drawing down on our Senior Secured Facility, as we deem appropriate.
Debt
See Note 6 to the consolidated financial statements for information on the Company’s debt.
The following table shows the contractual maturities of our debt obligations as of June 30, 2026:
Payments Due by Period
(in millions)
Total
Less than 1 Year
1 to 3 Years
3 to 5 Years
More than 5 Years
Senior Secured Facility (1)
$
685.0
$
—
$
—
$
685.0
$
—
2026 Notes
125.0
125.0
—
—
—
2028 Notes
80.0
—
80.0
—
—
MFIC Bethesda CLO 1 LLC (Class A-1, Class A-2, Class B and Class C)
456.0
—
—
—
456.0
MFIC Bethesda CLO 2 LLC (Class A-1, Class A-2, Class B and Class C)
399.0
—
—
—
399.0
Total Debt Obligations
$
1,745.0
$
125.0
$
80.0
$
685.0
$
855.0
(1)
As of June 30, 2026, aggregate lender commitments under the Senior Secured Facility totaled $1.61 billion and $0.93 billion of unused capacity. As of June 30, 2026, the Company had $— million of letters of credit issued under the Senior Secured Facility as shown as part of total commitments in Note 8 to the consolidated financial statements.
Stockholders’ Equity
See Note 7 to the consolidated financial statements for information on the Company’s public offerings and share repurchase plans.
Equity Issuances
On August 13, 2024, we entered into (i) an equity distribution agreement by and among us, the Investment Adviser, the Administrator and Truist Securities, Inc. (“Truist”) and (ii) an equity distribution agreement by and among us, the Investment Adviser, the Administrator and Jefferies LLC (“Jefferies,” and together with Truist, the “Sales Agents”). The equity distribution agreements with Sales Agents described in the preceding sentence are collectively referred to herein as the “Equity Distribution Agreements.” For further details regarding the Equity Distribution Agreements, see Note 7 "Stockholders’ Equity—Equity Issuances — At-the market (“ATM”) Offering” to our consolidated financial statements included in this report. The ATM program effectively expired on April 12, 2026.
Distributions paid to stockholders during the three and six months ended June 30, 2026 totaled $25.5 million ($0.31 per share) and $53.6 million ($0.62 per share), respectively. Distributions paid to stockholders during the three and six months ended June 30, 2025 totaled $35.5 million ($0.38 per share) and $71.1 million ($0.76 per share), respectively. For income tax purposes, distributions made to stockholders are reported as ordinary income, capital gains, non-taxable return of capital, or a combination thereof. Although the tax character of distributions paid to stockholders through June 30, 2026 may include return of capital, the exact amount cannot be determined at this point. The final determination of the tax character of distributions will not be made until we file our tax return for the tax year ended December 31, 2026. Tax characteristics of all distributions will be reported to stockholders on Form 1099 after the end of the calendar year. Our quarterly distributions, if any, will be determined by our Board.
To maintain our RIC status, we must distribute at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. Although we currently intend to distribute realized net capital gains (i.e., net long-term capital gains in excess of short-term capital losses), if any, at least annually, out of the assets legally available for such distributions, we may in the future decide to retain such capital gains for investment. Currently, we have substantial net capital loss carryforwards and consequently do not expect to generate cumulative net capital gains in the foreseeable future.
We maintain an “opt out” dividend reinvestment plan for our common stockholders. As a result, if we declare a dividend, then stockholders’ cash dividends will be automatically reinvested in additional shares of our common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash dividends.
We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. In addition, due to the asset coverage test applicable to us as a BDC, we may in the future be limited in our ability to make distributions. Also, our revolving credit facility may limit our ability to declare dividends if we default under certain provisions or fail to satisfy certain other conditions. If we do not distribute a certain percentage of our income annually, we may suffer adverse tax consequences, including possible loss of the tax benefits available to us as a RIC. In addition, in accordance with GAAP and tax regulations, we include in income certain amounts that we have not yet received in cash, such as contractual PIK, which represents contractual interest added to the loan balance that becomes due at the end of the loan term, or the accrual of original issue or market discount. Since we may recognize income before or without receiving cash representing such income, we may not be able to meet the requirement to distribute at least 90% of our investment company taxable income to obtain tax benefits as a RIC.
With respect to the distributions to stockholders, income from origination, structuring, closing, commitment and other upfront fees associated with investments in portfolio companies is treated as taxable income and accordingly, distributed to stockholders.
PIK Income
For the three and six months ended June 30, 2026, PIK income totaled $4.2 million and $8.1 million on total investment income of $68.2 million and $140.1 million, respectively. For the three and six months ended June 30, 2025, PIK income totaled $5.2 million and $9.9 million on total investment income of $81.2 million and $159.9 million, respectively. In order to maintain the Company’s status as a RIC, this non-cash source of income must be paid out to stockholders annually in the form of distributions, even though the Company has not yet collected the cash. See Note 5 to the consolidated financial statements for more information on the Company’s PIK income.
Related Party Transactions
See Note 3 to the consolidated financial statements for information on the Company’s related party transactions.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are subject to financial market risks, including changes in interest rates and the valuations of our investment portfolio.
Investment Valuation Risk
Because there is not a readily available market value for most of the investments in our portfolio, we value all of our portfolio investments at fair value as determined in good faith by our Board based on, among other things, the input of our management and audit committee and independent valuation firms that have been engaged at the direction of our Board to assist in the valuation of each portfolio investment without a readily available market quotation (with certain de minimis exceptions). Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of our investments may fluctuate from period to period. Additionally, the fair value of our investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that we may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If we were required to liquidate a portfolio investment in a forced or liquidation sale, we could realize significantly less than the value at which we have recorded it. In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than the unrealized gains or losses reflected in the valuations currently assigned. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting estimate” and “—Fair Value Measurements” as well as Notes 2 and 5 to our consolidated financial statements for the three and six months ended June 30, 2026 for more information relating to our investment valuation.
Interest Rate Risk
Interest rate sensitivity refers to the change in our earnings that may result from changes in the level of interest rates. Because we fund a portion of our investments with borrowings, our net investment income is affected by the difference between the rate at which we invest and the rate at which we borrow. As a result, there can be no assurance that a significant change in market interest rates will not have a material adverse effect on our net investment income.
As of June 30, 2026, the majority of our debt portfolio investments bore interest at variable rates, which generally are SOFR-based (or based on an equivalent applicable currency rate) and typically have durations of one to six months after which they reset to current market interest rates, and many of which are subject to certain floors. Further, our Senior Secured Facility, Class A-1 Notes under the Bethesda CLO 1 and the Notes under MFIC Bethesda CLO 2 LLC bears interest at SOFR rates with no interest rate floors, while our 2026 Notes and 2028 Notes bear interest at a fixed rate.
We regularly measure our exposure to interest rate risk. We assess interest rate risk and manage our interest rate exposure on an ongoing basis by comparing our interest rate sensitive assets to our interest rate sensitive liabilities. Based on that review, we determine whether or not any hedging transactions are necessary to mitigate exposure to changes in interest rates.
The following table shows the estimated annual impact on net investment income of base rate changes in interest rates (considering interest rate flows for variable rate instruments) to our loan portfolio and outstanding debt as of June 30, 2026, assuming no changes in our investment and borrowing structure:
(1) Net investment income presented in the sensitivity table is after applying a 17.5% performance-based incentive fee.
We may hedge against interest rate fluctuations from time-to-time by using standard hedging instruments such as futures, options and forward contracts subject to the requirements of the 1940 Act and applicable commodities laws. While hedging activities may insulate us against adverse changes in interest rates, they may also limit our ability to participate in the benefits of lower interest rates with respect to our portfolio of investments.
As of June 30, 2026 (the end of the period covered by this report), we, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed in our periodic SEC filings is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of such possible controls and procedures.
Changes in Internal Control Over Financial Reporting
Management has not identified any change in the Company’s internal control over financial reporting that occurred during the three months ended June 30, 2026 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
We are not currently subject to any material legal proceedings, nor, to our knowledge are any material legal proceedings threatened against us. From time to time, we may become involved in various investigations, claims and legal proceedings that arise in the ordinary course of our business. Furthermore, third parties may try to seek to impose liability on us in connection with the activities of our portfolio companies. While we do not expect that the resolution of these matters if they arise would materially affect our business, financial condition or results of operations, resolution will be subject to various uncertainties and could result in the expenditure of significant financial and managerial resources.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 and in Part II, “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, which could materially affect our business, financial condition and/or operating results. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
None.
Issuer Purchases of Equity Securities
The Company adopted the following plans, approved by the Board, for the purpose of repurchasing its common stock in accordance with applicable rules specified in the Securities Exchange Act of 1934 (the “Repurchase Plans”):
Date of Agreement/Amendment
Maximum Cost of Shares That May Be Repurchased
Cost of Shares Repurchased
Remaining Cost of Shares That May Be Repurchased
August 5, 2015
$
50.0 million
$
50.0 million
$
— million
December 14, 2015
50.0 million
50.0 million
— million
September 14, 2016
50.0 million
50.0 million
— million
October 30, 2018
50.0 million
50.0 million
— million
February 6, 2019
50.0 million
50.0 million
— million
February 3, 2022
25.0 million
25.0 million
— million
February 25, 2026
100.0 million
100.0 million
— million
Total as of June 30, 2026
$
375.0 million
$
375.0 million
$
— million
The Repurchase Plans were designed to allow the Company to repurchase its shares both during its open window periods and at times when it otherwise might be prevented from doing so under applicable insider trading laws or because of self-imposed trading blackout periods. A broker selected by the Company will have the authority under the terms and limitations specified in an agreement with the Company to repurchase shares on the Company’s behalf in accordance with the terms of the Repurchase Plans. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the Repurchase Plans. Pursuant to the Repurchase Plans, the Company may from time to time repurchase a portion of its shares of common stock and the Company is hereby notifying stockholders of its intention as required by applicable securities laws.
Under the Repurchase Plans described above, the Company allocated the following amounts to be repurchased in accordance with SEC Rule 10b5-1 (the “10b5-1 Repurchase Plans”):
The following table presents information with respect to the Company’s purchases of its common stock for each month in the three month period ended June 30, 2026:
Month
Total Number of Shares Purchased
Average Price Paid Per Share*
Total Number of Shares Purchased as Part of Publicly Announced Plans(1)
Maximum Dollar Value of Shares That May Yet Be Purchased Under Publicly Announced Plans(1)
April 1-April 30, 2026
2,755,221
$
11.58
2,755,221
$
0.0
May 1-May 31, 2026
—
—
—
—
June 1-June 30, 2026
—
—
—
—
Total
2,755,221
$
11.58
2,755,221
(1) On February 26, 2026, the Company announced that its Board approved the repurchase of up to $100 million of the Company’s common stock (the “Repurchase Plan”), as a supplement to the existing availability under the then current outstanding share repurchase authorization. The Repurchase Plan did not have an expiration date but as of June 30, 2026, there was no remaining authorized value of shares available to be repurchased under the Repurchase Plan. Under the Repurchase Plan, the Company was authorized but not obligated to, repurchase its outstanding common stock in the open market from time to time, at certain thresholds below net asset value per share (including in accordance with Rule 10b5-1 of the Exchange Act) provided that the Company complied with the prohibitions under its insider trading policies and the requirements of Rule 10b-18 of the Exchange Act, including certain price, market volume and timing constraints.
* The average price per share is inclusive of commissions.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
During the fiscal quarter ended June 30, 2026, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement.”
Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents
104
Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101)
_________________________
* Filed herewith.
(1)
Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed on August 12, 2022.
(2)
Incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K, filed on August 12, 2022.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 5, 2026.