FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2020

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 814-00201

MVC Capital, Inc.

(Exact name of the registrant as specified in its charter)

DELAWARE		94-3346760
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

287 Bowman Avenue
2nd Floor
Purchase, New York
(Address of principal		10577
executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (914) 701-0310

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	MVC	New York Stock Exchange
Senior Notes	MVCD	New York Stock Exchange

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. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. (Check one):

Large accelerated filer ¨ Accelerated filer þ Non-accelerated filer ¨ Smaller reporting company ¨ Emerging Growth 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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

There were 17,725,118 shares of the registrant’s common stock, $.01 par value, outstanding as of September 9, 2020.

MVC Capital, Inc.

(A Delaware Corporation)

Index

			Page

Part I. Consolidated Financial Information

	Item 1. Consolidated Financial Statements
	Consolidated Balance Sheets
	-	July 31, 2020 (Unaudited) and October 31, 2019	3
	Consolidated Statements of Operations
	-	For the Nine Month Period Ended July 31, 2020 (Unaudited) and
	-	For the Nine Month Period Ended July 31, 2019 (Unaudited)	4
	Consolidated Statements of Operations
	-	For the Quarter May 1, 2020 to July 31, 2020 (Unaudited) and
	-	For the Quarter May 1, 2019 to July 31, 2019 (Unaudited)	5
	Consolidated Statements of Cash Flows
	-	For the Nine Month Period Ended July 31, 2020 (Unaudited) and
	-	For the Nine Month Period Ended July 31, 2019 (Unaudited)	6
	Consolidated Statements of Changes in Net Assets
	-	For the Nine Month Period Ended July 31, 2020 (Unaudited)
	-	For the Nine Month Period Ended July 31, 2019 (Unaudited) and
	-	For the Year ended October 31, 2019	7
	Consolidated Selected Per Share Data and Ratios
	-	For the Nine Month Period Ended July 31, 2020 (Unaudited)
	-	For the Nine Month Period Ended July 31, 2019 (Unaudited) and
	-	For the Year ended October 31, 2019	8
	Consolidated Schedules of Investments
	-	July 31, 2020 (Unaudited)
	-	October 31, 2019	9
	Notes to Consolidated Financial Statements		13
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		45
	Item 3. Quantitative and Qualitative Disclosures about Market Risk		75
	Item 4. Controls and Procedures		92

Part II. Other Information			92

	Item 1. Legal Proceedings		92
	Item 1A. Risk Factors		92
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		93
	Item 3. Defaults Upon Senior Securities		93
	Item 4. Mine Safety Disclosures		93
	Item 5. Other Information		93
	Item 6. Exhibits		93

SIGNATURE			94

Exhibits

Part I. Consolidated Financial Information

Item 1. Consolidated Financial Statements

CONSOLIDATED FINANCIAL STATEMENTS

MVC Capital, Inc.

Consolidated Balance Sheets

	July 31,			October 31,
	2020			2019
	(Unaudited)
ASSETS

Assets
Cash	$	172,717		$	1,321,648
Restricted cash (cost $1,500,279 and $0)		1,500,279			-
Restricted cash equivalents (cost $3,545,234 and $5,009,091)		3,545,234			5,009,091
Cash equivalents (cost $46,655,085 and $5,368,190)		46,655,085			5,368,190
Investments at fair value
Non-control/Non-affiliated investments (cost $175,567,727 and $246,228,806)		146,947,497			229,322,498
Affiliate investments (cost $82,754,183 and $81,465,911)		42,903,991			61,851,896
Control investments (cost $79,378,267 and $87,972,462)		30,999,319			49,070,701
Total investments at fair value (cost $337,700,177 and $415,667,180)		220,850,807			340,245,095
Escrow receivables, net of reserves		-			1,135,000
Dividends and interest receivables, net of reserves		6,148,063			4,273,018
Deferred financing fees		391,832			614,586
Fee and other receivables		1,912,146			4,013,714
Prepaid expenses		393,452			182,298
Prepaid taxes		37			-

Total assets	$	281,569,652		$	362,162,640

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Senior notes II, net of deferred financing fees	$	93,574,104		$	112,703,490
Revolving credit facility IV		-			15,100,000
Incentive compensation payable		1,527,849			1,527,849
Professional fees payable		496,806			241,518
Management fee payable		679,829			1,038,431
Accrued expenses and liabilities		228,534			770,205
Interest payable		263,890			670,163
Management fee payable - Asset Management		17,219			395,435
Consulting fees payable		393,998			360,452
Portfolio fees payable - Asset Management		896,293			668,849
Guarantees/Letters of Credit		3,025,326			726,649
Taxes payable		-			915
Provision for incentive compensation (Note 11)		-			-

Total liabilities		101,103,848			134,203,956

Commitments and Contingencies (Note 9)

Shareholders' equity
Common stock, $0.01 par value; 150,000,000 shares authorized; 28,304,448 shares issued and 17,725,118 and 17,725,118 shares outstanding as of July 31, 2020 and October 31, 2019, respectively		283,044			283,044
Additional paid-in-capital		406,258,172			406,258,172
Accumulated overdistributed earnings		(119,562,543	)		(72,069,663	)
Treasury stock, at cost, 10,579,330 and 10,579,330 shares held, respectively		(106,512,869	)		(106,512,869	)

Total shareholders' equity		180,465,804			227,958,684

Total liabilities and shareholders' equity	$	281,569,652		$	362,162,640

Net asset value per share	$	10.18		$	12.86

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

	For the Nine Month Period			For the Nine Month Period
	November 1, 2019 to			November 1, 2018 to
	July 31, 2020			July 31, 2019
Operating Income:
Dividend income
Non-control/Non-affiliated investments	$	-		$	395,543
Affiliate investments (net of foreign taxes withheld of $0 and $154,269, respectively)		-			698,107
Control investments		-			542,693

Total dividend income		-			1,636,343

Payment-in-kind dividend income
Non-control/Non-affiliated investments		-			1,196,260

Total payment-in-kind dividend income		-			1,196,260

Interest income
Non-control/Non-affiliated investments		13,917,627			14,347,352
Affiliate investments		-			-
Control investments		369,021			325,284

Total interest income		14,286,648			14,672,636

Payment-in-kind/Deferred interest income
Non-control/Non-affiliated investments		5,573,486			3,307,666
Affiliate investments		394,836			581,846
Control investments		262,029			379,338

Total payment-in-kind/Deferred interest income		6,230,351			4,268,850

Fee income
Non-control/Non-affiliated investments		59,298			89,299

Total fee income		59,298			89,299

Fee income - Asset Management ¹
Portfolio fees		412,915			347,914
Management fees		224,074			292,243

Total fee income - Asset Management		636,989			640,157

Other income		4,580			-

Total operating income		21,217,866			22,503,545

Operating Expenses:
Interest and other borrowing costs ²		6,193,860			7,277,321
Management fee		3,561,308			4,746,192
Legal fees		1,103,800			401,400
Consulting fees		783,515			821,389
Audit & tax preparation fees		714,000			979,980
Other expenses		411,964			448,596
Loss on extinguishment of debt⁶		345,419			-
Portfolio company expense		327,004			-
Expenses associated with Settlement Agreement		325,000			-
Portfolio fees - Asset Management ¹		309,686			260,936
Directors' fees		276,914			282,448
Insurance		231,068			206,334
Management fee - Asset Management ¹		168,055			219,182
Administration		123,525			123,411
Public relations fees		113,198			105,094
Printing and postage		29,500			53,100
Net Incentive compensation (Note 11)		-			-

Total operating expenses		15,017,816			15,925,383

Less: Voluntary expense waiver by Adviser ³		(112,500	)		(112,500	)
Less: Voluntary management fee waiver by Adviser ⁴		(1,335,491	)		(1,779,822	)

Total waivers		(1,447,991	)		(1,892,322	)

Net operating income before taxes		7,648,041			8,470,484

Tax Expenses:
Current tax expense		1,452			1,447

Total tax expense		1,452			1,447

Net operating income		7,646,589			8,469,037

Net Realized and Unrealized Gain (Loss) on Investments:

Net realized gain (loss) on investments
U.S. Treasury obligations		(85,886	)		104,858
Non-control/Non-affiliated investments		(530,611	)		3,226,317
Affiliate investments		(3,790,411	)		(3,727,289	)
Control investments		2,033,217			4,965,552
Foreign currency		-			13,895

Total net realized gain (loss) on investments		(2,373,691	)		4,583,333

Net unrealized appreciation (depreciation) on investments
Non-control/Non-affiliated investments		(11,713,926	)		(1,105,525	)
Affiliate investments		(12,676,421	)		10,356,198
Control investments		(19,335,619	)		(9,043,895	)

Total unrealized appreciation (depreciation) on investments		(43,725,966	)		206,778

Net realized and unrealized gain (loss) on investments		(46,099,657	)		4,790,111

Net increase (decrease) in net assets resulting from operations	$	(38,453,068	)	$	13,259,148

Net increase (decrease) in net assets per share resulting from operations	$	(2.17	)	$	0.75

Dividends declared per share ⁵	$	0.510		$	0.450

Weighted average number of shares outstanding		17,725,118			17,810,123

¹These items are related to the management of the MVC Private Equity Fund, L.P. ("PE Fund"). Please see Note 10 "Management" for more information.

²Interest and other borrowing costs includes $0 and $262,705 of interest associated with installment sale treatment on the USG&E note. Please see Note 12 "Tax Matters" for more information.

³Reflects the nine month period portion of the TTG Advisers' voluntary waiver of $150,000 of expenses for the 2020 and 2019 fiscal years, that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the "Voluntary Waiver"). Please see Note 10 "Management" for more information.

⁴Reflects the nine month period portion of the TTG Advisers' voluntary waiver of the management fee for the 2020 and 2019 Please see Note 10 "Management" for more information.

⁵Please see Note 13 "Dividends and Distributions to Shareholders, Share Repurchase Program and Tender Offer" for more information.

⁶Reflects $345,419 in unamortized deferred financing fees related to the Senior Notes II which were expensed at the time $20.0 million of the Senior Notes were redeemed.

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc.

Consolidated Statements of Operations

(Unaudited)

	For the Quarter			For the Quarter
	May 1, 2020 to			May 1, 2019 to
	July 31, 2020			July 31, 2019
Operating Income:
Dividend income
Non-control/Non-affiliated investments	$	-		$	-
Affiliate investments (net of foreign taxes withheld of $0 and $76,866, respectively)		-			-

Total dividend income		-			-

Payment-in-kind dividend income
Non-control/Non-affiliated investments		-			-

Total payment-in-kind dividend income		-			-

Interest income
Non-control/Non-affiliated investments		2,078,707			5,924,050
Affiliate investments		-			-
Control investments		108,191			109,618

Total interest income		2,186,898			6,033,668

Payment-in-kind/Deferred interest income
Non-control/Non-affiliated investments		3,261,417			899,710
Affiliate investments		134,679			140,621
Control investments		-			132,648

Total payment-in-kind/Deferred interest income		3,396,096			1,172,979

Fee income
Non-control/Non-affiliated investments		33,100			38,101

Total fee income		33,100			38,101

Fee income - Asset Management ¹
Portfolio fees		93,420			119,248
Management fees		69,840			104,944

Total fee income - Asset Management		163,260			224,192

Other income		-			-

Total operating income		5,779,354			7,468,940

Operating Expenses:
Interest and other borrowing costs ²		1,862,800			2,510,677
Management fee		1,087,726			1,642,930
Legal fees		780,000			123,000
Portfolio company expense		327,004			-
Expenses associated with Settlement Agreement		325,000			-
Consulting fees		300,505			334,519
Other expenses		201,750			140,763
Audit & tax preparation fees		115,500			151,300
Directors' fees		86,414			94,000
Insurance		80,778			69,516
Portfolio fees - Asset Management ¹		70,065			89,436
Management fee - Asset Management ¹		52,379			78,708
Administration		41,476			41,589
Public relations fees		30,661			26,000
Printing and postage		7,100			16,800

Total operating expenses		5,369,158			5,319,238

Less: Voluntary expense waiver by Adviser ³		(37,500	)		(37,500	)
Less: Voluntary management fee waiver by Adviser ⁴		(407,898	)		(616,099	)

Total waivers		(445,398	)		(653,599	)

Net operating income before taxes		855,594			2,803,301

Tax Expenses:
Current tax expense		482			485

Total tax expense		482			485

Net operating income		855,112			2,802,816

Net Realized and Unrealized Gain (Loss) on Investments:

Net realized gain (loss) on investments
U.S. Treasury obligations		-			84,375
Non-control/Non-affiliated investments		-			2,910
Affiliate investments		(3,747,247	)		(3,795,709	)
Control investments		-			(218,992	)
Foreign currency		-			11,733

Total net realized loss on investments		(3,747,247	)		(3,915,683	)

Net unrealized appreciation (depreciation) on investments
Non-control/Non-affiliated investments		1,061,645			(461,583	)
Affiliate investments		5,596,414			3,491,912
Control investments		(6,303,042	)		(1,569,546	)

Total unrealized appreciation (depreciation) on investments		355,017			1,460,783

Net realized and unrealized gain (loss) on investments		(3,392,230	)		(2,454,900	)

Net increase (decrease) in net assets resulting from operations	$	(2,537,118	)	$	347,916

Net increase (decrease) in net assets per share resulting from operations	$	(0.14	)	$	0.02

Dividends declared per share ⁵	$	0.170		$	0.150

Weighted average number of shares outstanding		17,725,118			17,725,118

¹These items are related to the management of the MVC Private Equity Fund, L.P. ("PE Fund"). Please see Note 10 "Management" for more information.

²Interest and other borrowing costs includes $0 and $86,285 of interest associated with installment sale treatment on the USG&E note. Please see Note 12 "Tax Matters" for more information.

³Reflects the quarterly portion of the TTG Advisers' voluntary waiver of $150,000 of expenses for the 2020 and 2019 fiscal years, that the Company would otherwise be obligated to reimburse TTG Advisers under the Advisory Agreement (the "Voluntary Waiver"). Please see Note 10 "Management" for more information.

⁴Reflects the quarterly portion of the TTG Advisers' voluntary waiver of the management fee for the 2020 and 2019 Please see Note 10 "Management" for more information.

⁵Please see Note 13 "Dividends and Distributions to Shareholders, Share Repurchase Program and Tender Offer" for more information.

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Month Period			For the Nine Month Period
	November 1, 2019 to			November 1, 2018 to
	July 31, 2020			July 31, 2019
Cash flows from Operating Activities:
Net increase (decrease) in net assets resulting from operations	$	(38,453,068	)	$	13,259,148
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Net realized gain		2,373,691			(4,583,333	)
Net change in unrealized depreciation (appreciation)		43,725,966			(206,778	)
Amortization of discounts and fees		(2,507,789	)		(232,955	)
Increase in accrued payment-in-kind dividends and interest		(3,629,098	)		(5,143,943	)
Amortization of deferred financing fees		785,457			968,257
Loss on extinguishment of debt		345,419			-
Changes in operating assets and liabilities:
Dividends, interest and fees receivable		(1,875,045	)		(629,649	)
Fee and other receivables		2,101,568			16,738
Escrow receivables, net of reserves		1,135,000			(116,000	)
Prepaid expenses		(211,154	)		49,900
Prepaid taxes		(37	)		-
Other liabilities		(1,169,399	)		322,658
Purchases of equity investments		(1,870,978	)		(4,268,340	)
Purchases of debt instruments		(9,745,192	)		(36,751,624	)
Purchases of short-term investments		(24,999,410	)		(49,991,103	)
Proceeds from equity investments ⁽¹⁾		10,709,962			30,803,643
Proceeds from debt instruments		82,685,527			3,395,440
Sales/maturities of short-term investments		24,912,778			50,094,859

Net cash provided by (used in) operating activities		84,314,198			(3,013,082	)

Cash flows from Financing Activities:
Repayments from senior notes		(20,000,000	)		-
Borrowings from revolving credit facility II		25,000,000			50,000,000
Repayments from revolving credit facility II		(25,000,000	)		(50,000,000	)
Borrowings from revolving credit facility IV		-			26,100,000
Repayments from revolving credit facility IV		(15,100,000	)		(4,000,000	)
Repurchase of common stock		-			(4,069,924	)
Financing fees paid		-			(1,053,921	)
Distributions paid to shareholders		(8,847,556	)		(7,728,062	)
Repurchases of common stock under dividend reinvestment plan		(192,256	)		(269,711	)

Net cash provided by financing activities		(44,139,812	)		8,978,382

Net change in cash, cash equivalents, and restricted cash for the period		40,174,386			5,965,300

Cash, cash equivalents, and restricted cash, beginning of period	$	11,698,929		$	15,887,700

Cash, cash equivalents, and restricted cash, end of period	$	51,873,315		$	21,853,000

⁽¹⁾For the nine month period ended July 31, 2019, proceeds from equity investments includes $1,018,000 from escrow receivables, net of reserves.

During the nine month periods ended July 31, 2020 and 2019 MVC Capital, Inc. paid $5,412,656 and $6,018,487 in interest expense, respectively.

During the nine month periods ended July 31, 2020 and 2019 MVC Capital, Inc. paid $2,404 and $1,616 in income taxes, respectively.

Non-cash activity:

During the nine month periods ended July 31, 2020 and 2019, MVC Capital, Inc. recorded payment in-kind dividend and interest of $3,629,098 and $5,143,943, respectively. This amount was added to the principal balance of the investments and recorded as dividend/interest income.

During the nine month periods ended July 31, 2020 and 2019, the Plan Agent purchased 23,812 and 29,543 shares of common stock in the open market in order to satisfy the reinvestment portion of our dividends.

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc.
Consolidated Statements of Changes in Net Assets

						Accumulated
For the Nine Month Period November 1, 2018 to July 31, 2019 (Unaudited)	Common Stock			Additional Paid-In-Capital		Overdistributed Earnings			Treasury Stock			Total Net Asset Value
Balances at October 31, 2018	$	283,044		$	408,583,787	$	(79,700,440	)	$	(102,442,945	)	$	226,723,446

Net operating income		-			-		8,469,037			-			8,469,037
Accumulated net realized gain		-			-		4,583,333			-			4,583,333
Net unrealized appreciation		-			-		206,778			-			206,778
Dividends paid to stockholders		-			-		(7,997,773	)		-			(7,997,773	)
Issuance of common stock under dividend reinvestment plan		269,711			-		-			-			269,711
Repurchase of common stock under dividend reinvestment plan		(269,711	)		-		-			-			(269,711	)
Repurchase of common stock		-			-		-			(4,069,924	)		(4,069,924	)

Balances at July 31, 2019	$	283,044		$	408,583,787	$	(74,439,065	)	$	(106,512,869	)	$	227,914,897

For the Nine Month Period November 1, 2019 to July 31, 2020 (Unaudited)
Balances at October 31, 2019	$	283,044		$	406,258,172	$	(72,069,663	)	$	(106,512,869	)	$	227,958,684

Net operating income		-			-		7,646,589			-			7,646,589
Accumulated net realized loss		-			-		(2,373,691	)		-			(2,373,691	)
Net unrealized depreciation		-			-		(43,725,966	)		-			(43,725,966	)
Dividends paid to stockholders		-			-		(9,039,812	)		-			(9,039,812	)
Issuance of common stock under dividend reinvestment plan		192,256			-		-			-			192,256
Repurchase of common stock under dividend reinvestment plan		(192,256	)		-		-			-			(192,256	)

Balances at July 31, 2020	$	283,044		$	406,258,172	$	(119,562,543	)	$	(106,512,869	)	$	180,465,804

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc.
Consolidated Selected Per Share Data and Ratios

	For the Nine Month Period				For the Nine Month Period				For the
	November 1, 2019 to				November 1, 2018 to				Year Ended
	July 31, 2020				July 31, 2019				October 31, 2019
	(Unaudited)				(Unaudited)
Net asset value, beginning of period/year	$	12.86			$	12.46			$	12.46

Income from operations:
Net operating income		0.43				0.48				0.65
Net realized and unrealized gain (loss) on investments		(2.60	)			0.27				0.27

Total gain (loss) from investment operations		(2.17	)			0.75				0.92

Less distributions from:
Income		(0.51	)			(0.45	)			(0.62	)

Total distributions		(0.51	)			(0.45	)			(0.62	)

Capital share transactions
Anti-dilutive effect of share repurchase program		-				0.10				0.10

Total capital share transactions		-				0.10				0.10

Net asset value, end of period/year	$	10.18			$	12.86			$	12.86

Market value, end of period/year	$	6.46			$	9.57			$	8.77

Market discount		(36.54	)%			(25.58)	%			(31.80)	%

Total Return - At NAV ^(a)		(17.79	)%			6.91	%			8.33	%

Total Return - At Market ^(a)		(21.10	)%			10.94	%			3.64	%

Ratios and Supplemental Data:

Portfolio turnover ratio		5.55	%			10.04	%			11.48	%

Net assets, end of period/year (in thousands)	$	180,466			$	227,915			$	227,959

Ratios to average net assets:
Expenses including tax expense		8.80	%	^(c)		8.32	%	^(c)		8.39	%
Expenses excluding tax expense		8.80	%	^(c)		8.32	%	^(c)		8.39	%

Net operating income before tax expense		4.96	%	^(c)		5.02	%	^(c)		5.13	%
Net operating income after tax expense		4.96	%	^(c)		5.02	%	^(c)		5.13	%

Ratios to average net assets excluding waivers:
Expenses including tax expense		9.74	%	^(c)		9.44	%	^(c)		9.52	%
Expenses excluding tax expense		9.74	%	^(c)		9.44	%	^(c)		9.52	%

Net operating income before tax expense		4.02	%	^(c)		3.90	%	^(c)		4.00	%
Net operating income after tax expense		4.02	%	^(c)		3.90	%	^(c)		4.00	%

^(a) Total annual return is historical and assumes changes in share price, reinvestments of all dividends and distributions, and no sales charge for the period/year.

^(b)Supplemental Ratio information

Ratios to average net assets: ^(b)
Expenses excluding incentive compensation		8.80	%	^(c)		8.32	%	^(c)		8.39	%
Expenses excluding incentive compensation, interest and other borrowing costs		4.78	%	^(c)		4.00	%	^(c)		4.12	%

Net operating income before incentive compensation		4.96	%	^(c)		5.02	%	^(c)		5.13	%
Net operating income before incentive compensation, interest and other borrowing costs		8.98	%	^(c)		9.34	%	^(c)		9.40	%

Ratios to average net assets excluding waivers: ^(b)
Expenses excluding incentive compensation		9.74	%	^(c)		9.44	%	^(c)		9.52	%
Expenses excluding incentive compensation, interest and other borrowing costs		5.72	%	^(c)		5.13	%	^(c)		5.25	%

Net operating income before incentive compensation		4.02	%	^(c)		3.90	%	^(c)		4.00	%
Net operating income before incentive compensation, interest and other borrowing costs		8.04	%	^(c)		8.21	%	^(c)		8.27	%

^(c)Annualized.

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc.

Consolidated Schedule of Investments

July 31, 2020

(Unaudited)

Company	Industry	Investment	Acquistion Date	Principal		Cost		Fair Value
Non-control/Non-affiliated investments- 81.43% ^{(a, c, f, g)}
Black Diamond Equipment Rentals, LLC	Equipment Rental	Second Lien Loan 12.5000% Cash,06/27/2022 ^{(k, n)}	12/28/17	$	7,500,000	$	7,266,844	$	7,500,000
		Warrants ^{(d, n)}	12/28/17		1		400,847		933,000
							7,667,691		8,433,000
Custom Alloy Corporation	Manufacturer of Pipe Fittings and Forgings	Second Lien Loan 12.0000% Cash, 3.0000% PIK, 04/30/2022 ^{(b, k, n)}	10/31/14		33,137,484		33,137,484		26,248,833
		Second Lien Loan 12.0000% Cash, 3.0000% PIK, 04/30/2022 ^{(b, k, n)}	10/31/14		6,253,813		6,253,813		4,953,764
		Revolver 12.0000% Cash, 3.0000% PIK, 04/30/2021 ^{(b, k, n)}	07/01/19		3,745,808		3,745,808		3,381,296
							43,137,105		34,583,893
Dukane IAS,LLC	Welding Equipment Manufacturer	Second Lien Note 10.5000% Cash, 2.5000% PIK, 11/17/2020 ^{(b, k, n)}	02/17/16		4,575,144		4,566,420		4,565,295
FOLIOfn, Inc.	Technology Investment - Financial Services	Preferred Stock (5,802,259 shares) ^{(d, i, n)}	06/21/00				15,000,000		12,750,000
Global Prairie PBC, Inc.	Marketing	Second Lien Loan 10.0000% Cash, 4.0000% PIK, 04/16/2025 ^{(b, k, n)}	10/16/19		3,087,161		3,035,793		3,076,527
GTM Intermediate Holdings, Inc.	Medical Equipment/Manufacturer	Second Lien Loan 11.0000% Cash, 1.0000% PIK, 12/7/2024 ^{(b ,k, n)}	12/07/18		5,102,710		5,025,420		5,098,327
		Common Stock (2 shares) ^{(d, n, q)}	12/07/18				766,122		1,187,245
							5,791,542		6,285,572
Highpoint Global LLC	Government Services	Second Lien Note 12.0000% Cash, 2.0000% PIK, 09/30/2022 ^{(b, k, n)}	10/19/17		5,280,808		5,237,046		5,280,808
HTI Technologies and Industries, Inc.	Electronic Component Manufacturing	Second Lien Note 16.7500% PIK, 9/15/2024 ^{(b, k, n)}	06/01/16		12,101,934		12,085,650		11,574,645
Initials, Inc.	Consumer Products	Senior Subordinated Debt 8.0000% Cash, 7.0000% PIK, 10/1/2020 ^{(b, h, k, n)}	06/23/15		5,642,913		5,642,913		626,221
International Precision Components Corporation	Plastic Injection Molding	Second Lien Loan 12.0000% Cash, 2.0000% PIK, 10/3/2024 ^{(b, k, n, r)}	06/27/12		7,700,000		7,581,258		7,700,000
Jedson Engineering, Inc.	Engineering and Construction Management	First Lien Loan 12.0000% Cash, 3.0000% PIK, 06/30/2022 ^{(b, k, n)}	06/25/19		9,487,685		9,311,595		6,598,351
Legal Solutions Holdings, Inc.	Business Services	Senior Subordinated Debt 6.0000% Cash, 10.0000% PIK, 03/31/2022 ^{(b, h, k, n)}	12/30/14		10,141,212		10,141,212		9,259,159
Powers Equipment Acquisition Company, LLC	Equipment Manufacturer	First Lien Note 13.5000% PIK, 04/30/2024 ^{(b, k, n, s)}	05/01/19		6,724,345		6,626,953		5,524,748
SMA Holdings, Inc.	Consulting	First Lien Loan 11.0000% Cash, 06/26/2024 ^{(k, n)}	06/26/19		7,000,000		6,519,104		7,000,000
		Warrants ^{(d, n)}	06/26/19		2		504,555		792,120
							7,023,659		7,792,120
Trientis GmbH	Environmental Services	First Lien Note 5.0000% PIK, 10/26/2024 ^{(b, e, h, m, n, o)}	10/20/17		1,248,632		1,248,632		221,379
		Warrants ^{(d, e, n, o)}	03/19/18		1		67,715		-
							1,316,347		221,379
Tuf-Tug Inc.	Safety Equipment Manufacturer	Second Lien Loan 11.0000% Cash, 2.0000% PIK,02/24/2024 ^{(b, k, n)}	08/24/18		5,061,687		5,030,101		5,052,984
		Common Stock (24.6 shares) ^{(d, n, p)}	08/24/18				750,000		535,924
							5,780,101		5,588,908
Turf Products, LLC	Distributor - Landscaping and Irrigation Equipment	Senior Subordinated Debt 10.0000% Cash, 10/07/2023 ^{(k, n)}	11/30/05		8,697,056		8,697,056		8,124,954
U.S. Gas & Electric, Inc.	Energy Services	Second Lien Loan, 9.5000% Cash, 07/05/2025 ^{(l, n)}	07/05/17		2,285,250		2,285,250		2,285,250
		Second Lien Loan, 9.5000% Cash, 07/05/2025 ^{(h, l, n)}	07/05/17		2,485,469		2,485,469		-
							4,770,719		2,285,250
U.S. Spray Drying Holding Company	Specialty Chemicals	Class B Common Stock (784 shares) ^{(d, n)}	03/28/13				5,488,000		10,000
		Secured Loan 8.0000% Cash, 04/30/2025 ^{(k, n)}	05/02/14		1,500,000		1,500,000		1,500,000
		Senior Secured Loan 8.0000% Cash, 04/30/2025 ^{(k, n)}	11/08/17		1,500,000		1,500,000		1,500,000
							8,488,000		3,010,000
United States Technologies, Inc.	Electronics Manufacturing and Repair	Senior Lien Loan 10.5000% Cash, 07/17/2021 ^{(k, n)}	07/17/15		3,666,667		3,666,667		3,666,667

Sub Total Non-control/Non-affiliated investments						$	175,567,727	$	146,947,497

Affiliate investments - 23.77% ^{(a, c, f, g)}
Advantage Insurance, Inc.	Insurance	Preferred Stock (587,001 shares) ^{(a, d, e, n)}	09/23/13				5,870,010		5,175,776
JSC Tekers Holdings	Real Estate Management	Common Stock (3,201 shares) ^{(a, d, e, n)}	05/04/11				4,500		-
		Preferred Stock (9,159,085 shares) ^{(a, d, e, n)}	05/01/14				11,810,188		5,019,000
							11,814,688		5,019,000
Security Holdings B.V.	Electrical Engineering	Common Equity Interest ^{(a, d, e, n)}	09/03/08				51,204,270		18,844,000
		Bridge Loan 5.0000% PIK, 05/31/2022 ^{(a, b, e, k, n)}	04/03/17		5,187,508		5,187,508		5,187,508
		Senior Subordinated Loan 3.1000% PIK, 05/31/2022 ^{(a, b, e, k, n)}	05/30/18		8,677,707		8,677,707		8,677,707
							65,069,485		32,709,215

Sub Total Affiliate investments						$	82,754,183	$	42,903,991

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc.

Consolidated Schedule of Investments - (Continued)

July 31, 2020

(Unaudited)

Company	Industry	Investment	Acquistion Date	Principal		Cost		Fair Value
Control investments - 17.18% ^{(a, c, f, g)}
MVC Automotive Group GmbH	Automotive Dealerships	Common Equity Interest ^{(d, e, n)}	09/20/07			$	52,185,015	$	14,737,000
		Bridge Loan 6.0000% Cash, 12/31/2021 ^{(e, k, n)}	06/28/16	$	7,149,166		7,149,166		7,149,166
							59,334,181		21,886,166
MVC Private Equity Fund LP	Private Equity	Limited Partnership Interest ^{(d, j, k, n)}	11/21/11				7,179,036		8,885,662
		General Partnership Interest ^{(d, j, k, n)}	11/21/11				183,138		227,491
							7,362,174		9,113,153
RuMe Inc.	Consumer Products	Common Stock (5,297,548 shares) ^{(d, n)}	07/15/11				924,475		-
		Series C Preferred Stock (23,896,634 shares) ^{(d, n)}	05/07/14				3,410,694		-
		Series B-1 Preferred Stock (4,999,076 shares) ^{(d, n)}	07/15/11				999,815		-
		Subordinated Debt 10.0000% PIK, 3/31/2021 ^{(b, h, k, n)}	10/07/16		3,793,732		3,793,732		-
		Revolver 10.0000% PIK, 3/31/2021 ^{(b, h, k, n)}	08/09/18		2,231,948		2,231,948		-
		Revolver 10.0000% PIK, 3/31/2021 ^{(b, h, k, n)}	08/30/19		726,704		726,704		-
		Warrants ^{(d, n)}	12/31/13		3		594,544		-
							12,681,912		-

Sub Total Control investments						$	79,378,267	$	30,999,319

TOTAL PORTFOLIO INVESTMENTS - 122.38% ^(f)						$	337,700,177	$	220,850,807

Cash equivalents- 27.82% ^{(f, g)}
Fidelity Institutional Government Money Market Fund - Class I	Money Market Fund	Beneficial Shares (50,100,415 shares)				$	50,100,415	$	50,100,415
Morgan Stanley Institutional Liquidity Government Portfolio - Class I	Money Market Fund	Beneficial Shares (99,904 shares)					99,904		99,904
Total Cash equivalents							50,200,319		50,200,319

TOTAL INVESTMENT ASSETS - 150.20%						$	387,900,496	$	271,051,126

^(a) These securities are restricted from public sale without prior registration under the Securities Act of 1933.The Company negotiates certain aspects of the method and timing of the disposition of these investments, including registration rights and related costs.

^(b)These securities accrue a portion of their interest/dividends in "payment in kind" interest/dividends which is capitalized to the investment.

^(c)All of the Company's equity and debt investments are issued by eligible portfolio companies, as defined in the Investment Company Act of 1940, except MVC Automotive Group GmbH, Security Holdings B.V., Trientis GmbH, JSC Tekers Holdings, and MVC Private Equity Fund L.P.

The Company makes available significant managerial assistance to all of the portfolio companies in which it has invested.

^(d)Non-income producing assets.

^(e) The principal operations of these portfolio companies are located in Europe and Puerto Rico which represents approximately 23% of the total assets.The remaining portfolio companies are located in United States which represents approximately 55% of the total assets.

^(f)Percentages are based on net assets of $180,465,804 as of July 31, 2020.

^(g)See Note 3 for further information regarding “Investment Classification.”

^(h)All or a portion of the accrued interest on these securities have been reserved for.

⁽ⁱ⁾Legacy Investments.

^(j) MVC Private Equity Fund, LP is a private equity fund focused on control equity investments in the lower middle market.The fund currently holds two investments, one located in the United States and one in Gibraltar, the investments are in the energy services and industrial sectors.The Company owns 18.9% of the fund through its limited partnership interest and owns .5% of the fund through its general partnership interest.The Company's proportional share of Gibdock Limited equity interest and loan and Advanced Oil Field Services, LLC common stock, preferred stock, and loan is $6,704,992 and $2,064,571, respectively.The Company's partnership interests in the MVC Private Equity Fund, LP are not redeemable.

^(k)All or a portion of these securities may serve as collateral for the People's United credit facility.

^(l) U.S. Gas & Electric, Inc. is an indirect subsidiary of Vistra Energy (NYSE: VST). On October 18, 2019 and July 6, 2020, Vistra Energy notified the Company that it was asserting offsets of Company's loan assets totaling approximately $2.5 million relating to an indemnification claim obligations attributable to U.S. Gas.The offset is reflected in the fair value of the loan asset as the Company is considering its response to the claim.

^(m)Cash/PIK toggle at borrower's option

⁽ⁿ⁾These securities are valued using unobservable inputs.

^(o)During the fiscal year ended October 31, 2018, all assets and liabilities of SGDA Europe were transferred to a new Austrian holding company, Trientis GmbH, to achieve operating efficiencies.

^(p)Shares of Tuf-Tug, Inc. are held via Alitus T-T, LP.

^(q)Shares of GTM Intermediate Holdings, Inc. are held via GTM Ultimate Holdings, LLC.

^(r)Variable PIK rate between 2.0000% and 3.5000%.

^(s)Variable cash rate between 10.5000% and 13.5000%.

PIK - Payment-in-kind

- Denotes zero cost or fair value.

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc.

Consolidated Schedule of Investments

October 31, 2019

Company	Industry	Investment	Acquistion Date	Principal		Cost		Fair Value/ Market Value
Non-control/Non-affiliated investments- 100.60% ^{(a, c, f, g)}
Apex Industrial Technologies, LLC	Supply Chain Equipment Manufacturer	First Lien Loan 12.0000% Cash, 12/31/2019 ^{(k, n)}	03/09/18	$	15,000,000	$	14,899,274	$	15,000,000
Array Information Technology, Inc.	Information Technology Products and Services	Second Lien Loan 12.0000% Cash, 4.0000% PIK, 10/03/2023 ^{(b, k, n, p)}	04/03/18		6,259,648		6,175,991		6,322,216
		Warrants ^{(d, n)}	04/03/18		1		-		-
							6,175,991		6,322,216
Black Diamond Equipment Rentals, LLC	Equipment Rental	Second Lien Loan 12.5000% Cash, 06/27/2022 ^{(k, n)}	12/28/17		7,500,000		7,174,926		7,575,000
		Warrants ^{(d, n)}	12/28/17		1		400,847		960,000
							7,575,773		8,535,000
Custom Alloy Corporation	Manufacturer of Pipe Fittings and Forgings	Second Lien Loan 12.0000% Cash, 3.0000% PIK, 04/30/2022 ^{(b, k, n)}	10/31/14		32,471,814		32,471,814		32,061,135
		Second Lien Loan 12.0000% Cash, 3.0000% PIK, 04/30/2022 ^{(b, k, n)}	10/31/14		6,128,186		6,128,186		6,050,681
		Revolver 12.0000% Cash, 3.0000% PIK, 04/30/2020 ^{(b, k, n)}	07/01/19		2,050,000		2,050,000		2,050,000
							40,650,000		40,161,816
Dukane IAS,LLC	Welding Equipment Manufacturer	Second Lien Note 10.5000% Cash, 2.5000% PIK, 11/17/2020 ^{(b, k, n)}	02/17/16		4,489,182		4,458,353		4,534,074
Essner Manufacturing, LP	Defense/Aerospace Parts Manufacturing	First Lien Loan 11.5000% Cash, 12/20/2022 ^{(k, n, o)}	12/20/17		3,588,606		3,543,739		3,588,606
FOLIOfn, Inc.	Technology Investment - Financial Services	Preferred Stock (5,802,259 shares) ^{(d, i, n)}	06/21/00				15,000,000		6,352,000
Global Prairie PBC, Inc.	Marketing	Second Lien Loan 10.0000% Cash, 4.0000% PIK, 04/16/2025 ^{(b, k, n)}	10/16/19		3,000,000		2,940,448		3,000,000
GTM Intermediate Holdings, Inc.	Medical Equipment/Manufacturer	Second Lien Loan 11.0000% Cash, 1.0000% PIK, 12/7/2024 ^{(b ,k, n)}	12/07/18		5,064,069		4,973,443		5,064,069
		Common Stock (2 shares) ^{(d, n, t)}	12/07/18				766,122		766,122
							5,739,565		5,830,191
Highpoint Global LLC	Government Services	Second Lien Note 12.0000% Cash, 2.0000% PIK, 09/30/2022 ^{(b, k, n)}	10/19/17		5,201,232		5,142,323		5,201,232
HTI Technologies and Industries, Inc.	Electronic Component Manufacturing	Second Lien Note 12.0000% Cash, 3.7500% PIK, 9/15/2024 ^{(b, k, n)}	06/01/16		11,419,845		11,400,660		11,419,845
Initials, Inc.	Consumer Products	Senior Subordinated Debt 8.0000% Cash, 7.0000% PIK, 06/23/2020 ^{(b, h, k, n)}	06/23/15		5,642,913		5,642,913		1,272,188
International Precision Components Corporation	Plastic Injection Molding	Second Lien Loan 12.0000% Cash, 3.5000% PIK, 10/3/2024 ^{(b, k, n, u)}	06/27/12		8,000,000		7,854,192		8,000,000
Jedson Engineering, Inc.	Engineering and Construction Management	First Lien Loan 12.0000% Cash, 3.0000% PIK, 06/21/2024 ^{(b, k, n)}	06/25/19		6,041,262		5,928,722		6,041,262
Legal Solutions Holdings, Inc.	Business Services	Senior Subordinated Debt 12.0000% Cash, 3.0000% PIK, 03/18/2020 ^{(b, k, n)}	12/30/14		12,182,950		12,182,950		12,182,950
Morey's Seafood International, LLC	Food Services	Second Lien Loan 10.0000% Cash, 3.0000% PIK, 08/12/2022 ^{(b, k, n, q)}	08/13/13		16,485,324		16,485,324		16,485,324
Powers Equipment Acquisition Company, LLC	Equipment Manufacturer	First Lien Note 13.5000% Cash, 04/30/2024 ^{(k, n, v)}	05/01/19		6,500,000		6,383,100		6,500,000
SMA Holdings, Inc.	Consulting	First Lien Loan 11.0000% Cash, 06/26/2024 ^{(k, n)}	06/26/19		7,000,000		6,426,640		6,530,794
		Warrants ^{(d, n)}	06/26/19		2		504,555		504,555
							6,931,195		7,035,349
Trientis GmbH	Environmental Services	First Lien Note 5.0000% PIK, 10/26/2024 ^{(b, e, h, m, n, r)}	10/20/17		1,248,632		1,248,632		176,906
		Warrants ^{(d, e, r, n)}	03/19/18		1		67,715		-
							1,316,347		176,906
Tuf-Tug Inc.	Safety Equipment Manufacturer	Second Lien Loan 11.0000% Cash, 2.0000% PIK, 02/24/2024 ^{(b, k, n)}	08/24/18		4,985,284		4,947,047		5,035,136
		Common Stock (24.6 shares) ^{(d, n, s)}	08/24/18				750,000		778,210
							5,697,047		5,813,346
Turf Products, LLC	Distributor - Landscaping and Irrigation Equipment	Senior Subordinated Debt 10.0000% Cash, 08/07/2020 ^{(k, n)}	11/30/05		7,717,056		7,717,056		7,563,104
		Third Lien Loan 10.0000% Cash, 08/07/2020 ^{(k, n)}	12/22/17		1,050,000		1,050,000		1,032,473
							8,767,056		8,595,577
U.S. Gas & Electric, Inc.	Energy Services	Second Lien Loan, 9.5000% Cash, 07/05/2025 ^{(l, n)}	07/05/17		37,527,881		37,527,881		36,974,616
U.S. Spray Drying Holding Company	Specialty Chemicals	Class B Common Stock (784 shares) ^{(d, n)}	03/28/13				5,488,000		1,800,000
		Secured Loan 12.0000% Cash, 04/30/2021 ^{(k, n)}	05/02/14		1,500,000		1,500,000		1,500,000
		Senior Secured Loan 12.0000% Cash, 04/30/2021 ^{(k, n)}	11/08/17		1,500,000		1,500,000		1,500,000
							8,488,000		4,800,000
United States Technologies, Inc.	Electronics Manufacturing and Repair	Senior Lien Loan 10.5000% Cash, 07/17/2020 ^{(k, n)}	07/17/15		5,500,000		5,497,954		5,500,000

Sub Total Non-control/Non-affiliated investments						$	246,228,807	$	229,322,498

Affiliate investments - 27.13% ^{(a, c, f, g)}
Advantage Insurance, Inc.	Insurance	Preferred Stock (750,000 shares) ^{(d, e, n)}	09/23/13				7,500,000		7,513,627
Equus Total Return, Inc.	Registered Investment Company	Common Stock (3,228,024 shares) ^{(d, k)}	05/14/14				7,524,035		4,874,316
JSC Tekers Holdings	Real Estate Management	Common Stock (3,201 shares) ^{(d, e, n)}	05/04/11				4,500		-
		Preferred Stock (9,159,085 shares) ^{(d, e, n)}	05/01/14				11,810,188		4,910,000
							11,814,688		4,910,000
Security Holdings B.V.	Electrical Engineering	Common Equity Interest ^{(d, e, n)}	09/03/08				51,204,270		33,607,000
		Bridge Loan 5.0000% PIK, 12/31/2019 ^{(b, e, k, n)}	04/03/17		4,937,218		4,937,218		4,937,218
		Senior Subordinated Loan 3.1000% PIK, 05/31/2020 ^{(b, e, k, n)}	05/30/18		6,009,735		6,009,735		6,009,735
							62,151,223		44,553,953

Sub Total Affiliate investments						$	88,989,946	$	61,851,896

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc.

Consolidated Schedule of Investments - (Continued)

October 31, 2019

Company	Industry	Investment	Acquistion Date	Principal		Cost		Fair Value/ Market Value
Control investments - 21.53% ^{(c, f, g)}
MVC Automotive Group GmbH	Automotive Dealerships	Common Equity Interest ^{(a, d, e, n)}	09/20/07			$	52,185,015	$	20,602,000
		Bridge Loan 6.0000% Cash, 12/31/2020 ^{(a, e, k, n)}	06/28/16	$	7,149,166		7,149,166		7,149,166
							59,334,181		27,751,166
MVC Private Equity Fund LP	Private Equity	Limited Partnership Interest ^{(a, d, j, k, n)}	11/21/11				9,034,881		12,252,382
		General Partnership Interest ^{(a, d, j, k, n)}	11/21/11				230,481		312,561
							9,265,362		12,564,943
RuMe Inc.	Consumer Products	Common Stock (5,297,548 shares) ^{(a, d, n)}	07/15/11				924,475		-
		Series C Preferred Stock (23,896,634 shares) ^{(a, d, n)}	05/07/14				3,410,694		1,462,857
		Series B-1 Preferred Stock (4,999,076 shares) ^{(a, d, n)}	07/15/11				999,815		-
		Subordinated Debt 10.0000% PIK, 3/31/2020 ^{(a, b, k, n)}	10/07/16		3,610,446		3,610,446		3,610,446
		Revolver 10.0000% PIK, 3/31/2021 ^{(a, b, k, n)}	08/09/18		2,075,613		2,075,613		2,075,613
		Revolver 10.0000% PIK, 2/28/2020 ^{(a, b, k, n)}	08/30/19		403,507		233,297		233,297
		Warrants ^{(a, d, n)}	12/31/13		3		594,544		1,372,379
							11,848,884		8,754,592

Sub Total Control investments						$	80,448,427	$	49,070,701

TOTAL PORTFOLIO INVESTMENTS - 149.26% ^(f)						$	415,667,180	$	340,245,095

Cash equivalents and restricted cash equivalents - 4.55% ^{(f, g)}
Fidelity Institutional Government Money Market Fund - Class I	Money Market Fund	Beneficial Shares (10,278,123 shares)				$	10,278,123	$	10,278,123
Morgan Stanley Institutional Liquidity Government Portfolio - Class I	Money Market Fund	Beneficial Shares (99,158 shares)					99,158		99,158
Total Cash equivalents							10,377,281		10,377,281

TOTAL INVESTMENT ASSETS - 153.81%						$	426,044,461	$	350,622,376

^(a) These securities are restricted from public sale without prior registration under the Securities Act of 1933. The Company negotiates certain aspects of the method and timing of the disposition of these investments, including registration rights and related costs.

^(b) These securities accrue a portion of their interest/dividends in "payment in kind" interest/dividends which is capitalized to the investment.

The Company makes available significant managerial assistance to all of the portfolio companies in which it has invested.

^(d)Non-income producing assets.

^(e)The principal operations of these portfolio companies are located in Europe and Puerto Rico which represents approximately 23% of the total assets. The remaining portfolio companies are located in United States which represents approximately 71% of the total assets.

^(f)Percentages are based on net assets of $227,958,684 as of October 31, 2019.

^(g)See Note 3 for further information regarding "Investment Classification."

^(h)All or a portion of the accrued interest on these securities have been reserved for.

⁽ⁱ⁾Legacy Investments.

^(j)MVC Private Equity Fund, LP is a private equity fund focused on control equity investments in the lower middle market. The fund currently holds two investments, one located in the United States and one in Gibraltar, the investments are in the energy services and industrial sectors. The Company owns 18.9% of the fund through its limited partnership interest and owns .5% of the fund through its general partnership interest. The Company's proportional share of Gibdock Limited equity interest and loan and Advanced Oil Field Services, LLC common stock, preferred stock, and loan is $5,230,958 and $3,433,612, respectively. The Company's partnership interests in the MVC Private Equity Fund, LP are not redeemable.

^(k)All or a portion of these securities may serve as collateral for the People's United credit facility.

^(l)U.S. Gas & Electric, Inc. is an indirect subsidiary of Vistra Energy (NYSE: VST)

^(m)Cash/PIK toggle at borrower's option

⁽ⁿ⁾These securities are valued using unobservable inputs.

^(o)Variable rate between 10.5000% and 11.5000% cash.

^(p)12% Cash and 0-4% PIK based on Funded Debt to EBITDA. 4% PIK initially.

^(q)10% Cash and 3% PIK beginning July 1, 2019.

^(r)During the fiscal year ended October 31, 2018, all assets and liabilities of SGDA Europe were transferred to a new Austrian holding company, Trientis GmbH, to achieve operating efficiencies.

^(s)Shares of Tuf-Tug, Inc. are held via Alitus T-T, LP.

^(t)Shares of GTM Intermediate Holdings, Inc. are held via GTM Ultimate Holdings, LLC.

^(u)Variable PIK rate between 2.0000% and 3.5000%.

^(v)Variable cash rate between 10.5000% and 13.5000%.

PIK - Payment-in-kind

- Denotes zero cost or fair value.

The accompanying notes are an integral part of these consolidated financial statements.

MVC Capital, Inc. (the “Company”)

Notes to Consolidated Financial Statements

July 31, 2020

(Unaudited)

1. Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete consolidated financial statements. Certain amounts, when applicable, have been reclassified to adjust to current period presentations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included as required by Regulation S-X, Rule 10-01. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2019, filed with the U.S. Securities and Exchange Commission (the “SEC”). As the Company is an investment company, (as defined by the Investment Company Act of 1940 (the “1940 Act”)), management follows investment company accounting and reporting guidance of Financial Accounting Standards Board (“FASB”) 946-Investment Companies, which is accounting principles generally accepted in the United States of America (“GAAP”).

2. Consolidation

On July 16, 2004, the Company formed a wholly-owned subsidiary, MVC Financial Services, Inc. (“MVCFS”). MVCFS is incorporated in Delaware and its principal purpose is to provide advisory, administrative and other services to the Company, the Company’s portfolio companies and other entities. MVCFS had opening equity of $1 (100 shares at $0.01 per share). The Company does not hold MVCFS for investment purposes and does not intend to sell MVCFS.

On October 14, 2011, the Company formed a wholly-owned subsidiary, MVC Cayman, an exempted company incorporated in the Cayman Islands, to hold certain of its investments and to make certain future investments. The results of MVCFS and MVC Cayman are consolidated into the Company’s financial statements and all inter-company accounts have been eliminated in consolidation. Of the $51.9 million in cash and cash equivalents on the Company’s Consolidated Balance Sheets as of July 31, 2020, approximately $1.1 million was held by MVC Cayman.

During fiscal year ended October 31, 2012 and thereafter, MVC Partners, LLC (“MVC Partners”) was consolidated with the operations of the Company as MVC Partners’ limited partnership interest in the MVC Private Equity Fund, L.P. (“PE Fund”) is a substantial portion of MVC Partners operations. Previously, MVC Partners was presented as a portfolio company on the Consolidated Schedule of Investments. The consolidation of MVC Partners has not had any material effect on the financial position or net results of operations of the Company. There are additional disclosures resulting from this consolidation.

MVC GP II, LLC (“MVC GP II”), an indirect wholly-owned subsidiary of the Company, serves as the general partner of the PE Fund. MVC GP II is wholly-owned by MVCFS, a subsidiary of the Company. The results of MVC GP II are consolidated into MVCFS and ultimately the Company. All inter-company accounts have been eliminated in consolidation.

3. Investment Classification

As required by the 1940 Act, we classify our investments by level of control. As defined in the 1940 Act, “Control Investments” are investments in those companies that we are deemed to “Control.” “Affiliate Investments” are investments in those companies that are “Affiliated Companies” of us, as defined in the 1940 Act, other than Control Investments. “Non-Control/Non-Affiliate Investments” are those that are neither Control Investments nor Affiliate Investments. Generally, under that 1940 Act, we are deemed to control a company in which we have invested if we own 25% or more of the voting securities of such company. We are deemed to be an affiliate of a company in which we have invested if we own 5% or more and less than 25% of the voting securities of such company.

Investment Transactions and Related Operating Income – Investment transactions and related revenues and expenses are accounted for on the trade date. The cost of securities sold is determined on a first-in, first-out basis, unless otherwise specified. Dividend income and distributions on investment securities is recorded on the ex-dividend date. The tax characteristics of such distributions received from our Portfolio Companies will be determined by whether or not the distribution was made from the investment's current taxable earnings and profits or accumulated taxable earnings and profits from prior years. Interest income, which includes accretion of discount and amortization of premium, if applicable, is recorded on the accrual basis to the extent that such amounts are expected to be collected. Fee income includes fees for guarantees and services rendered by the Company or its wholly-owned subsidiary to Portfolio Companies and other third parties such as due diligence, structuring, transaction services, monitoring services, and investment advisory services. Guaranty fees are recognized as income over the related period of the guaranty. Due diligence, structuring, and transaction services fees are generally recognized as income when services are rendered or when the related transactions are completed. Monitoring and investment advisory services fees are generally recognized as income as the services are rendered. Any fee income determined to be loan origination fees is accreted into income over the respective terms of the applicable loans and any original issue discount and market discount are capitalized and then amortized into income using the effective interest method. Upon the prepayment of a loan or debt security, any unamortized original issue discount or market discount is recorded as interest income. For investments with PIK interest and dividends, we base income and dividend accrual on the valuation of the PIK notes or securities received from the borrower. If the value of the PIK notes or securities of a portfolio company is not sufficient to cover the contractual interest or dividend, the Company does not accrue interest or dividend income on the notes or securities.

The functional currency of the Company is the U.S. Dollar. Assets and liabilities denominated in a currency other than the U.S. Dollar are translated into U.S. Dollars at the closing rates of exchange on the date of determination. Purchases and sales of investments and income and expenses denominated in currencies other than U.S. Dollars are translated at the rates of exchange on the respective dates of the transactions. The resulting gains and losses from such currency translation are included in the Consolidated Statement of Operations. The Company does not isolate the portion of the results of operations resulting from the changes in foreign exchange rates on investments from the fluctuation arising from changes in fair values of securities held. Such fluctuations are included with the Net Realized and Unrealized Gain (Loss) on Investments and foreign currency in the Consolidated Statement of Operations.

4. Cash and Cash Equivalents

For the purpose of the Consolidated Balance Sheets and Consolidated Statements of Cash Flows, the Company considers all money market and all highly liquid temporary cash investments purchased with an original maturity of less than three months to be cash equivalents. The Company places its cash and cash equivalents with financial institutions and cash held in bank accounts may exceed the Federal Deposit Insurance Corporation ("FDIC") insured limit. As of July 31, 2020, the Company had approximately $46.7 million in cash equivalents, approximately $3.5 million in restricted cash equivalents, approximately $1.5 million in restricted cash and approximately $173,000 in cash totaling approximately $51.9 million. Of the approximately $46.7 million in cash equivalents, approximately $1.1 million was held by MVC Cayman. As of October 31, 2019, the Company had approximately $5.4 million in cash equivalents, approximately $5.0 million in restricted cash equivalents and approximately $1.3 million in cash totaling approximately $11.7 million. Of the approximately $1.3 million in cash and the approximately $5.4 million in cash equivalents, approximately $1.0 million and $99,000, respectively, was held by MVC Cayman.

Restricted Cash and Cash Equivalents

Cash and cash equivalent accounts that are not available to the Company for day–to-day use and are legally restricted are classified as restricted cash and cash equivalents. Restricted cash and cash equivalents are carried at cost, which approximates fair value. As of July 31, 2020 and October 31, 2019, the Company had restricted cash or cash equivalents of approximately $5.0 million related to the compensating balance requirement for Credit Facility IV (defined below).

5. Recent Accounting Pronouncements

In June 2016, FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. In addition, ASU 2016-13 requires credit losses relating to available-for-sale debt securities to be recorded through an allowance for credit losses. The amendments in ASU 2016-13 broaden the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The new standard is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2019. The Company does not expect the adoption of ASU 2016-13 to have a material impact on our financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurements. The amendments require new disclosures of changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value of instruments held at balance sheet date and the range and weighted average of significant unobservable inputs for recurring and nonrecurring Level 3 fair values. Certain disclosures are being eliminated such as the valuation process required for Level 3 fair value measurements, the policy for timing of transfers between levels and amounts of and reason for transfers between Levels 1 and 2. The ASU is effective for public business entities for fiscal years and interim periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2018-13 to have a material impact on our financial statements.

In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to related Party Guidance for Variable Interest Entities. The guidance supersedes the private company alternative for common control leasing arrangements issued in 2014 and expands it to all qualifying common control arrangements. Also under the guidance, a private company could make an accounting policy election to not apply VIE guidance to legal entities under common control (including common control leasing arrangements) when certain criteria are met. Additionally, a private company electing the alternative is required to provide detailed disclosures about its involvement with, and exposure to, the legal entity under common control. The ASU also amends the guidance for determining whether a decision-making fee is a variable interest. The amendments require organizations to consider indirect interests held through related parties under common control on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in GAAP). The ASU is effective for public business entities for fiscal years and interim periods beginning after December 15, 2019. The Company does not expect the adoption of ASU 2018-17 to have a material impact on our financial statements.

6. Investment Valuation Policy

Our investments are carried at fair value in accordance with the Accounting Standards Codification, Fair Value Measurement (“ASC 820”). In accordance with the 1940 Act, unrestricted minority-owned publicly traded securities for which market quotations are readily available are valued at the closing market quote on the valuation date and majority-owned publicly traded securities and other privately held securities are valued as determined in good faith by the Valuation Committee of our Board of Directors. For legally or contractually restricted securities of companies that are publicly traded, the value is based on the closing market quote on the valuation date minus a discount for the restriction. At July 31, 2020, we did not own restricted or unrestricted securities of any publicly traded company in which we have a majority-owned interest or a minority-owned interest.

ASC 820 provides a framework for measuring the fair value of assets and liabilities and provides guidance regarding a fair value hierarchy that prioritizes information used to measure value. In determining fair value, the Valuation Committee primarily uses the level 3 inputs referenced in ASC 820.

ASC 820 defines fair value in terms of the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The price used to measure the fair value is not adjusted for transaction costs while the cost basis of our investments may include initial transaction costs. Under ASC 820, the fair value measurement also assumes that the transaction to sell an asset occurs in the principal market for the asset or, in the absence of a principal market, the most advantageous market for the asset. The principal market is the market in which the reporting entity would sell or transfer the asset with the greatest volume and level of activity for the asset to which the reporting entity has access to as of the measurement date. If no market for the asset exists or if the reporting entity does not have access to the principal market, the reporting entity should use a hypothetical market.

Valuation Methodology

Pursuant to the requirements of the 1940 Act and in accordance with ASC 820, we value our portfolio securities at their current market values or, if market quotations are not readily available, at their estimates of fair values. Because our portfolio investments generally do not have readily ascertainable market values, we record these investments at fair value in accordance with our Valuation Procedures adopted by the Board of Directors, which are consistent with ASC 820. As permitted by the SEC, the Board of Directors has delegated the responsibility of making fair value determinations to the Valuation Committee, subject to the Board of Directors' supervision and pursuant to our Valuation Procedures. Our Board of Directors may also hire independent consultants to review our Valuation Procedures or to conduct an independent valuation of one or more of our portfolio investments.

Pursuant to our Valuation Procedures, the Valuation Committee (which is comprised of three Independent Directors) determines fair values of portfolio company investments on a quarterly basis (or more frequently, if deemed appropriate under the circumstances). In doing so, the Committee considers the recommendations of The Tokarz Group Advisers LLC (“TTG Advisers”). The Committee also takes into account input and reviews by third party consultants retained to support the Company’s valuation process. The Company has also adopted several other enhanced processes related to valuations of controlled/affiliated portfolio companies. Any changes in valuation are recorded in the consolidated statements of operations as "Net unrealized appreciation (depreciation) on investments."

Currently, our NAV per share is calculated and published on a quarterly basis. The Company calculates our NAV per share by subtracting all liabilities from the total value of our portfolio securities and other assets and dividing the result by the total number of outstanding shares of our common stock on the date of valuation. Fair values of foreign investments reflect exchange rates, as applicable, in effect on the last business day of the quarter end. Exchange rates fluctuate on a daily basis, sometimes significantly. Exchange rate fluctuations following the most recent quarter end are not reflected in the valuations reported in this Quarterly Report. See Item 1A Risk Factor, "Investments in foreign debt or equity may involve significant risks in addition to the risks inherent in U.S. investments."

At July 31, 2020 and October 31, 2019, approximately 78.4% and 92.6%, respectively, of total assets represented investments in portfolio companies recorded at fair value ("Fair Value Investments").

Under most circumstances, at the time of acquisition, Fair Value Investments are carried at cost (absent the existence of conditions warranting, in management's and the Valuation Committee's view, a different initial value). During the period that an investment is held by the Company, its original cost may cease to approximate fair value as the result of market and investment specific factors. No pre-determined formula can be applied to determine fair value. Rather, the Valuation Committee analyzes fair value measurements based on the value at which the securities of the portfolio company could be sold in an orderly disposition over a reasonable period of time between willing parties, other than in a forced or liquidation sale. The liquidity event whereby the Company ultimately exits an investment is generally the sale, the merger, the recapitalization of a portfolio company or by a public offering of its securities.

There is no one methodology to determine fair value and, in fact, for any portfolio security, fair value may be expressed as a range of values, from which the Company derives a single estimate of fair value. To determine the fair value of a portfolio security, the Valuation Committee analyzes the portfolio company's financial results and projections, publicly traded comparable companies when available, comparable private transactions when available, precedent transactions in the market when available, third-party real estate and asset appraisals if appropriate and available, discounted cash flow analysis, if appropriate, as well as other factors. The Company generally requires, where practicable, portfolio companies to provide annual audited and more regular unaudited financial statements, and/or annual projections for the upcoming fiscal year.

The fair value of our portfolio securities is inherently subjective. Because of the inherent uncertainty of fair valuation of portfolio securities and escrow receivables that do not have readily ascertainable market values, our estimate of fair value may significantly differ from the fair value that would have been used had a ready market existed for the securities. Such values also do not reflect brokers' fees or other selling costs, which might become payable on disposition of such investments.

If a security is publicly traded, the fair value is generally equal to market value based on the closing price on the principal exchange on which the security is primarily traded unless restricted and a restricted discount is applied.

For equity securities of portfolio companies, whose securities are not publicly traded, the Valuation Committee estimates the fair value based on market and/or income approach with value then attributed to equity or equity like securities using the enterprise value waterfall ("Enterprise Value Waterfall") valuation methodology. Under the Enterprise Value Waterfall valuation methodology, the Valuation Committee estimates the enterprise fair value of the portfolio company and then waterfalls the enterprise value over the portfolio company's securities in order of their preference relative to one another. To assess the enterprise value of the portfolio company, the Valuation Committee weighs some or all of the traditional market valuation methods and factors based on the individual circumstances of the portfolio company in order to estimate the enterprise value. The methodologies for performing assets may be based on, among other things: valuations of comparable public companies, recent sales of private and public comparable companies, discounting the forecasted cash flows of the portfolio company, third party valuations of the portfolio company, considering offers from third parties to buy the company, estimating the value to potential strategic buyers and considering the value of recent investments in the equity securities of the portfolio company, and third-party asset and real estate appraisals. For non-performing assets, the Valuation Committee may estimate the liquidation or collateral value of the portfolio company's assets. The Valuation Committee also takes into account historical and anticipated financial results.

The Company does not utilize hedge accounting and instead, when applicable, marks its derivatives to market on the Company’s consolidated statement of operations.

In assessing enterprise value, the Valuation Committee considers the mergers and acquisitions ("M&A") market as the principal market in which the Company would sell its investments in portfolio companies under circumstances where the Company has the ability to control or gain control of the board of directors of the portfolio company ("Control Companies"). This approach is consistent with the principal market that the Company would use for its portfolio companies if the Company has the ability to initiate a sale of the portfolio company as of the measurement date, i.e., if it has the ability to control or gain control of the board of directors of the portfolio company as of the measurement date. In evaluating if the Company can control or gain control of a portfolio company as of the measurement date, the Company takes into account its equity securities on a fully diluted basis, as well as other factors.

For Non-Control Companies, consistent with ASC 820, the Valuation Committee considers a hypothetical secondary market as the principal market in which it would sell investments in those companies. The Company also considers other valuation methodologies such as the Option Pricing Method and liquidity preferences when valuing minority equity positions of a portfolio company.

For loans and debt securities of Non-Control Companies (for which the Valuation Committee has identified the hypothetical secondary market as the principal market), the Valuation Committee determines fair value based on the assumptions that a hypothetical market participant would use to value the security in a current hypothetical sale using a market yield ("Market Yield") valuation methodology. In applying the Market Yield valuation methodology, the Valuation Committee determines the fair value based on such factors as third party broker quotes (if available) and market participant assumptions, including synthetic credit ratings, estimated remaining life, current market yield and interest rate spreads of similar securities as of the measurement date.

Estimates of average life are generally based on market data of the average life of similar debt securities. However, if the Valuation Committee has information available to it that the debt security is expected to be repaid in the near term, the Valuation Committee would use an estimated life based on the expected repayment date.

The Valuation Committee determines fair value of loan and debt securities of Control Companies based on the estimate of the enterprise value of the portfolio company. To the extent the enterprise value exceeds the remaining principal amount of the loan and all other debt securities of the company, the fair value of such securities is generally estimated to be their cost. However, where the enterprise value is less than the remaining principal amount of the loan and all other debt securities, the Valuation Committee may discount the value of such securities to reflect an impairment.

For the Company's or its subsidiary's investment in the PE Fund, for which an indirect wholly-owned subsidiary of the Company serves as the general partner (the "GP") of the PE Fund, the Valuation Committee relies on the GP's determination of the fair value of the PE Fund which will be generally valued, as a practical expedient, utilizing the net asset valuations provided by the GP, which will be made: (i) no less frequently than quarterly as of the Company's fiscal quarter end and (ii) with respect to the valuation of PE Fund investments in portfolio companies, will be based on methodologies consistent with those set forth in the Company’s Valuation Procedures. In making its determinations, the GP considers and generally relies on TTG Advisers’ recommendations. The determination of the net asset value of the Company’s or its subsidiary’s investment in the PE Fund will follow the methodologies described for valuing interests in private investment funds (“Investment Vehicles”) described below. Additionally, when both the Company and the PE Fund hold investments in the same portfolio company, the GP's Fair Value determination shall be based on the Valuation Committee's determination of the Fair Value of the Company's portfolio security in that portfolio company.

As permitted under GAAP, the Company’s interests in private investment funds are generally valued, as a practical expedient, utilizing the net asset valuations provided by management of the underlying Investment Vehicles, without adjustment, unless TTG Advisers is aware of information indicating that a value reported does not accurately reflect the value of the Investment Vehicle, including any information showing that the valuation has not been calculated in a manner consistent with GAAP. Net unrealized appreciation (depreciation) of such investments is recorded based on the Company’s proportionate share of the aggregate amount of appreciation (depreciation) recorded by each underlying Investment Vehicle. The Company’s proportionate investment interest includes its share of interest and dividend income and expense, and realized and unrealized gains and losses on securities held by the underlying Investment Vehicles, net of operating expenses and fees. Realized gains and losses on distributions from Investment Vehicles are generally recognized on a first in, first out basis.

The Company applies the practical expedient to interests in Investment Vehicles on an investment by investment basis, and consistently with respect to the Company’s entire interest in an investment. The Company may adjust the valuation obtained from an Investment Vehicle with a premium, discount or reserve if it determines that the net asset value is not representative of fair value.

If the Company intends to sell all or a portion of its interest in an Investment Vehicle to a third-party in a privately negotiated transaction near the valuation date, the Company will consider offers from third parties to buy the interest in an Investment Vehicle in valuations, which may be discounted for both probability of close and time.

When the Company receives nominal cost warrants or free equity securities ("nominal cost equity") with a debt security, the Company typically allocates its cost basis in the investment between debt securities and nominal cost equity at the time of origination. If the Company is not reimbursed for investment or transaction related costs at the time an investment is made, the Company typically capitalizes those costs to the cost basis of the investment.

Interest income, adjusted for amortization of premium and accretion of discount on a yield to maturity methodology, is recorded on an accrual basis to the extent that such amounts are expected to be collected. Origination and/or closing fees associated with investments in portfolio companies are accreted into income over the respective terms of the applicable loans. Upon the prepayment of a loan or debt security, any unamortized original issue discount or market discount is recorded as interest income. Prepayment premiums are recorded on loans when received as interest income. Dividend income, if any, is recognized on an accrual basis on the ex-dividend date to the extent that the Company expects to collect such amounts.

For loans, debt securities, and preferred securities with contractual payment-in-kind interest or dividends, which represent contractual interest/dividends accrued and added to the loan balance or liquidation preference that generally becomes due at maturity, the Company will not ascribe value to payment-in-kind interest/dividends, if the portfolio company valuation indicates that the payment-in-kind interest is not collectible. However, the Company may ascribe value to payment-in-kind interest if the health of the portfolio company and the underlying securities are not in question. All payment-in-kind interest that has been added to the principal balance or capitalized is subject to ratification by the Valuation Committee. For interest or deferred interest receivables purchased by the Company at a discount to their outstanding amount, the Company amortizes the discount using the effective yield method and records it as interest income over the life of the loan. The Company will not ascribe value to the interest or deferred interest, if the Company has determined that the interest is not collectible.

Escrows from the sale of a portfolio company are generally valued at an amount, which may be expected to be received from the buyer under the escrow's various conditions and discounted for both risk and time.

ASC 460, Guarantees, requires the Company to estimate the fair value of the guarantee obligation at its inception and requires the Company to assess whether a probable loss contingency exists in accordance with the requirements of ASC 450, Contingencies. The Valuation Committee typically will look at the pricing of the security in which the guarantee provided support for the security and compare it to the price of a similar or hypothetical security without guarantee support. The difference in pricing will be discounted for time and risk over the period in which the guarantee is expected to remain outstanding.

Reclassifications – Certain amounts from prior years have been reclassified to conform to the current year presentation.

7. Concentration of Market Risk

Financial instruments that subjected the Company to concentrations of market risk consisted principally of equity investments, subordinated notes, debt instruments and escrow receivables (other than cash equivalents), which collectively represented approximately 78.4% and 94.3% of the Company's total assets at July 31, 2020 and October 31, 2019, respectively. As discussed in Note 8, these investments consist of securities in companies with no readily determinable market values and as such are valued in accordance with the Company's fair value policies and procedures. The Company's investment strategy represents a high degree of business and financial risk due to the fact that the Company’s portfolio investments (other than cash equivalents) are generally illiquid, in small and middle market companies, and include foreign investments (which subject the Company to additional risks such as currency, geographic, demographic and operational risks), entities with little operating history or entities that possess operations in new or developing industries. These investments, should they become publicly traded, would generally be (i) subject to restrictions on resale, if they were acquired from the issuer in private placement transactions; and (ii) susceptible to market risk. Additionally, we are classified as a non-diversified investment company within the meaning of the 1940 Act, and therefore may invest a significant portion of our assets in a relatively small number of portfolio companies, which gives rise to a risk of significant loss should the performance or financial condition of one or more portfolio companies deteriorate. Please also see the risk factor titled “Any failure on our part to maintain our status as a business development company would reduce our operating flexibility.” in Item 3 – “Quantitative and Qualitative Disclosures About Market Risk” for information about certain regulatory limitations on our investment activity as a BDC. As of July 31, 2020, the fair value of our largest investment, Custom Alloy Corporation (“Custom Alloy”), comprised 12.3% of our total assets and 19.2% of our net assets. The Company's investments in short-term securities are generally in U.S. government securities, with a maturity of greater than three months but generally less than one year or other high quality and highly liquid investments. The Company considers all money market and other cash investments purchased with an original maturity of less than three months to be cash equivalents.

The following table shows the portfolio composition by industry grouping at fair value as a percentage of net assets as of July 31, 2020 and October 31, 2019.

	July 31, 2020			October 31, 2019
Manufacturer of Pipe Fittings		19.16	%		17.62	%
Electrical Engineering		18.12	%		19.55	%
Automotive Dealerships		12.13	%		12.17	%
Technology Investment - Financial Services		7.06	%		2.79	%
Electronics Component Manufacturing		6.41	%		5.01	%
Business Services		5.13	%		5.34	%
Private Equity		5.05	%		5.51	%
Equipment Rental		4.67	%		3.74	%
Distributor - Landscaping and Irrigation Equipment		4.50	%		3.77	%
Consulting		4.32	%		3.09	%
Plastic Injection Molding		4.27	%		3.51	%
Engineering and Construction Management		3.66	%		2.65	%
Medical Equipment Manufacturer		3.48	%		2.56	%
Safety Equipment Manufacturer		3.10	%		2.55	%
Equipment Manufacturer		3.06	%		2.85	%
Government Services		2.93	%		2.28	%
Insurance		2.87	%		3.30	%
Real Estate Management		2.78	%		2.15	%
Welding Equipment Manufacturer		2.53	%		1.99	%
Electronics Manufacturing and Repair		2.03	%		2.41	%
Marketing		1.71	%		1.32	%
Specialty Chemicals		1.67	%		2.11	%
Energy Services		1.27	%		16.22	%
Consumer Products		0.35	%		4.40	%
Environmental Services		0.12	%		0.08	%
Regulated Investment Company		0.00	%		2.14	%
Supply Chain Equipment Manufacturer		0.00	%		6.58	%
Information Technology Products and Services		0.00	%		2.77	%
Food Services		0.00	%		7.23	%
Defense/Aerospace Parts Manufacturing		0.00	%		1.57	%
		122.38	%		149.26	%

The following table shows the portfolio composition by geographic region at fair value as a percentage of total assets as of July 31, 2020 and October 31, 2019.

	July 31, 2020			October 31, 2019
Northeast		22.74	%		21.57	%
Europe		21.25	%		21.37	%
Southeast		14.90	%		21.18	%
Midwest		11.65	%		17.69	%
West		6.06	%		7.72	%
Puerto Rico		1.84	%		2.07	%
Southwest		0.00	%		2.34	%
		78.44	%		93.94	%

8. Portfolio Investments

Pursuant to the requirements of the 1940 Act and ASC 820, we value our portfolio securities at their current market values or, if market quotations are not readily available, at their estimated fair values. Because our portfolio company investments generally do not have readily ascertainable market values, we record these investments at fair value in accordance with Valuation Procedures adopted by our Board of Directors. As permitted by the SEC, the Board of Directors has delegated the responsibility of making fair value determinations to the Valuation Committee, subject to the Board of Directors' supervision and pursuant to our Valuation Procedures.

The levels of fair value inputs used to measure our investments are characterized in accordance with the fair value hierarchy established by ASC 820. Where inputs for an asset or liability fall in more than one level in the fair value hierarchy, the investment is classified in its entirety based on the lowest level input that is significant to that investment's fair value measurement. We use judgment and consider factors specific to the investment in determining the significance of an input to a fair value measurement. The three levels of the fair value hierarchy and investments that fall into each of the levels are described below:

	•	*Level 1:* Level 1 inputs are unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. We use Level 1 inputs for investments in publicly traded unrestricted securities for which we do not have a controlling interest. Such investments are valued at the closing price on the measurement date.

	•	*Level 2:* Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly or other inputs that are observable or can be corroborated by observable market data.

	•	*Level 3:* Level 3 inputs are unobservable and cannot be corroborated by observable market data. We use Level 3 inputs for measuring the fair value of the vast majority of our investments. See Note 6 “Investment Valuation Policy” for the investment valuation policies used to determine the fair value of these investments.

In determining the appropriate level, the Company considers the length of time until the investment is redeemable, including notice and lock-up periods and any other restriction on the disposition of the investment. The Company also considers the nature of the portfolios of the underlying Investment Vehicles and such vehicles’ ability to liquidate their investment.

The following fair value hierarchy tables set forth our investment related assets and (liabilities) by level as of July 31, 2020 and October 31, 2019 (in thousands):

	July 31, 2020
	Level 1		Level 2		Level 3			Investment measured at NAV		Total
Senior/Subordinated Loans and credit facilities	$	-	$	-	$	151,754		$	-	$	151,754
Common Stock		-		-		1,733			-		1,733
Preferred Stock		-		-		22,945			-		22,945
Warrants		-		-		1,725			-		1,725
Common Equity Interest		-		-		33,581			-		33,581
LP Interest of the PE Fund		-		-		-			8,887		8,887
GP Interest of the PE Fund		-		-		-			227		227
Guarantees and letters of credit		-		-		(3,025	)		-		(3,025	)
Escrow Receivable		-		-		-			-		-
Short-term investments		-		-		-			-		-
Total	$	-	$	-	$	208,713		$	9,114	$	217,827

	October 31, 2019
	Level 1		Level 2		Level 3			Investment measured at NAV		Total
Senior/Subordinated Loans and credit facilities	$	-	$	-	$	242,177		$	-	$	242,177
Common Stock		4,874		-		3,344			-		8,218
Preferred Stock		-		-		20,238			-		20,238
Warrants		-		-		2,837			-		2,837
Common Equity Interest		-		-		54,209			-		54,209
LP Interest of the PE Fund		-		-		-			12,253		12,253
GP Interest of the PE Fund		-		-		-			313		313
Guarantees and letters of credit		-		-		(727	)		-		(727	)
Escrow Receivable		-		-		1,135			-		1,135
Short-term investments		-		-		-			-		-
Total	$	4,874	$	-	$	323,213		$	12,566	$	340,653

A review of fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting Level 3 of the fair value hierarchy are reported as transfers in/out of the Level 3 category as of the beginning of the period in which the reclassifications occur. During the nine month period ended July 31, 2020 and the year ended October 31, 2019, there were no transfers in or out of Level 1 or 2.

The following tables set forth a summary of changes in the fair value of investment related assets and liabilities measured using Level 3 inputs for the nine month period ended July 31, 2020, and July 31, 2019 (in thousands):

	Balances, November 1, 2019			Realized Gains (Losses) ⁽¹⁾			Reversal of Prior Year (Appreciation) Depreciation on Realization ⁽²⁾			Unrealized Appreciation (Depreciation) ⁽³⁾			Purchases ⁽⁴⁾		Sales ⁽⁵⁾			Transfers In & Out of Level 3		Balances, July 31, 2020			Total Loss for the year Included in Earnings Attibutable to the Change in Unrealized Appreciation (Depreciation) on Investments held as of July 31, 2020
Senior/Subordinated Loans and credit facilities	$	242,177		$	-		$	(291	)	$	(23,126	)	$	13,863	$	(80,869	)	$	-	$	151,754		$	(24,651	)
Common Stock		3,344			-			-			(1,611	)		-		-			-		1,733			(1,611	)
Preferred Stock		20,238			(33	)		(3	)		4,340			-		(1,597	)		-		22,945			4,340
Warrants		2,837			(530	)		-			(1,113	)		1,871		(1,340	)		-		1,725			(1,113	)
Common Equity Interest		54,209			-			-			(20,628	)		-		-			-		33,581			(20,628	)
Guarantees and letters of credit		(727	)		-			-			(2,298	)		-		-			-		(3,025	)		(2,298	)
Escrow Receivable		1,135			(10	)		-			-			-		(1,125	)		-		-			-
Total	$	323,213		$	(573	)	$	(294	)	$	(44,436	)	$	15,734	$	(84,931	)	$	-	$	208,713		$	(45,961	)

	Balances, November 1, 2018			Realized Gains (Losses) ⁽¹⁾		Reversal of Prior Year (Appreciation) Depreciation on Realization ⁽²⁾		Unrealized Appreciation (Depreciation) ⁽³⁾			Purchases ⁽⁴⁾		Sales ⁽⁵⁾			Transfers In & Out of Level 3		Balances, July 31, 2019			Total Loss for the year Included in Earnings Attibutable to the Change in Unrealized Appreciation (Depreciation) on Investments held as of July 31, 2019
Senior/Subordinated Loans and credit facilities	$	175,781		$	-	$	-	$	(3,001	)	$	77,792	$	(8,906	)	$	-	$	241,666		$	(3,001	)
Common Stock		6,150			-		-		(3,100	)		766		-			-		3,816			(3,100	)
Preferred Stock		47,060			3,223		276		638			2,591		(32,472	)		-		21,316			638
Warrants		401			-		-		551			505		-			-		1,457			551
Common Equity Interest		50,186			-		-		3,019			-		-			-		53,205			3,019
Guarantees and letters of credit		(2,867	)		-		2,399		(381	)		-		-			-		(849	)		(381	)
Escrow Receivable		969			116		-		-			-		-			-		1,085			-
Total	$	277,680		$	3,339	$	2,675	$	(2,274	)	$	81,654	$	(41,378	)	$	-	$	321,696		$	(2,274	)

⁽¹⁾	Included in net realized gain (loss) on investments in the Consolidated Statements of Operations.
⁽²⁾	Included in net unrealized appreciation (depreciation) of investments in the Consolidated Statements of Operations related to securities disposed of during the nine month period ended July 31, 2020 and July 31, 2019, respectively.
⁽³⁾	Included in net unrealized appreciation (depreciation) of investments in the Consolidated Statements of Operations related to securities held during the nine month period ended July 31, 2020 and July 31, 2019, respectively.
⁽⁴⁾	Includes increases in the cost basis of investments resulting from new portfolio investments, PIK interest or dividends, the amortization of discounts, premiums and closing fees and the exchange of one or more existing securities for new securities. For the nine month period ended July 31, 2020 and July 31, 2019, a total of approximately $6.1 million and $5.4 million, respectively, of PIK interest and dividends and amortization of discounts and fees are included.
⁽⁵⁾	Includes decreases in the cost basis of investments resulting from principal repayments or sales.

In accordance with ASU 2011-04, the following tables summarize information about the Company’s Level 3 fair value measurements as of July 31, 2020 and October 31, 2019 (in thousands):

Quantitative Information about Level 3 Fair Value Measurements*

	Fair value as of					Range						Weighted
	7/31/2020			Valuation technique	Unobservable input	Low			High			average ^(a)
Common Stock ^{(c) (d)}	$	1,733		Adjusted Net Asset Approach	Real Estate Appraisals		N/A			N/A			N/A

				Market Approach	EBITDA Multiple		5.0	x		8.0	x		7.4	x

				Income Approach	Discount Rate		9.8	%		13.0	%		10.8	%
					Perpetual Growth Rate of Free Cash Flow		2.0	%		2.0	%		2.0	%

Senior/Subordinated loans	$	151,754		Market Approach	EBITDA Multiple		4.0	x		6.5	x		4.4	x
and credit facilities ^{(b) (d)}					Forward EBITDA Multiple		5.5	x		5.5	x		5.5	x
					Uncertainty Discount		40	%		40	%		40	%
					Illiquidity Discount		25	%		25	%		25	%

				Income Approach	Required Rate of Return		7.3	%		25.5	%		18.1	%

				Adjusted Net Asset Approach	Real Estate Appraisals		N/A			N/A			N/A
					Discount to Net Asset Value		5.0	%		5.0	%		5.0	%
					Discount on Liquidation of Assets		17.5	%		25.0	%		24.8	%

Common Equity Interest	$	33,581		Market Approach	Forward EBITDA Multiple		5.5	x		5.5	x		5.5	x
					EBITDA Multiple		4.0	x		4.0	x		4.0	x
					Uncertainty Discount		40	%		40	%		40	%

				Adjusted Net Asset Approach	Real Estate Appraisals		N/A			N/A			N/A
					Discount to Net Asset Value		5.0	%		5.0	%		5.0	%

Preferred Stock ^(c)	$	22,945		Adjusted Net Asset Approach	Discount to Net Asset Value		0.0	%		15.0	%		7.4	%
					Real Estate Appraisals		N/A			N/A			N/A

				Market Approach	Multiple of Book Value		1.0	x		1.0	x		1.0	x
					Discount to Signed Merger Agreement		15.0	%		15.0	%		15.0	%


Warrants	$	1,725		Market Approach	EBITDA Multiple		6.0	x		6.0	x		6.0	x

Guarantees / Letters of Credit	$	(3,025	)	Income Approach	Discount Rate		6.0	%		6.0	%		6.0	%

				Adjusted Net Asset Approach	Discount on Liquidation of Assets		35.0	%		35.0	%		35.0	%

Total	$	208,713

Notes:

^(a)Calculated based on fair values.

^(b)Certain investments are priced using non-binding broker or dealer quotes.

^(c)Certain common and preferred stock investments are fair valued based on liquidation-out preferential rights held by the Company.

^(d)Real estate appraisals are performed by independent third parties and the Company does not have reasonable access to the underlying unobservable inputs.

^*The above table excludes certain investments whose fair value is zero due to certain specific situations at the portfolio company level.

Quantitative Information about Level 3 Fair Value Measurements*

	Fair value as of					Range						Weighted
	10/31/2019			Valuation technique	Unobservable input	Low			High			average ^(a)
Common Stock ^{(c) (d)}	$	3,344		Adjusted Net Asset Approach	Real Estate Appraisals		N/A			N/A			N/A

				Market Approach	EBITDA Multiple		6.0	x		7.5	x		6.6	x

				Income Approach	Discount Rate		12.7	%		12.7	%		12.7	%
					Perpetual Growth Rate of Free Cash Flow		2.0	%		2.0	%		2.0	%

Senior/Subordinated loans	$	242,177		Market Approach	EBITDA Multiple		6.0	x		8.0	x		7.5	x
and credit facilities ^{(b) (d)}					Forward EBITDA Multiple		8.5	x		8.5	x		8.5	x
					Revenue Multiple		0.5	x		1.4	x		1.2	x

				Income Approach	Required Rate of Return		8.6	%		17.4	%		14.1	%
					Discount Rate		14.1	%		15.6	%		15.1	%
					Perpetual Growth Rate of Free Cash Flow		2.0	%		2.5	%		2.3	%

				Adjusted Net Asset Approach	Real Estate Appraisals		N/A			N/A			N/A
					Discount on Liquidation of Assets		17.5	%		25.0	%		24.1	%

Common Equity Interest	$	54,209		Market Approach	Forward EBITDA Multiple		8.5	x		8.5	x		8.5	x
					EBITDA Multiple		7.0	x		7.0	x		7.0	x

				Adjusted Net Asset Approach	Real Estate Appraisals		N/A			N/A			N/A

				Income Approach	Discount Rate		15.6	%		15.6	%		15.6	%
					Perpetual Growth Rate of Free Cash Flow		2.5	%		2.5	%		2.5	%

Preferred Stock ^(c)	$	20,238		Adjusted Net Asset Approach	Discount to Net Asset Value		0.0	%		10.0	%		4.0	%
					Real Estate Appraisals		N/A			N/A			N/A

				Market Approach	Revenue Multiple		1.4	x		1.4	x		1.4	x
					% of AUM		0.72	%		0.72	%		0.72	%
					Illiquidity Discount		35.0	%		35.0	%		35.0	%
					Multiple of Book Value		1.0	x		1.0	x		1.0	x
					EBT Multiple		19.5	x		19.5	x		19.5	x

				Income Approach	Discount Rate		12.9	%		14.1	%		13.1	%
					Perpetual Growth Rate of Free Cash Flow		2.0	%		2.5	%		2.4	%

Warrants	$	2,837		Market Approach	EBITDA Multiple		6.0	x		6.0	x		6.0	x

Guarantees / Letters of Credit	$	(727	)	Income Approach	Discount Rate		6.5	%		20.0	%		17.0	%

Escrows	$	1,135		Adjusted Net Asset Approach	Discount to Net Asset Value		0.0	%		0.0	%		0.0	%

Total	$	323,213

Notes:

^(a) Calculated based on fair values.

^(b) Certain investments are priced using non-binding broker or dealer quotes.

^(c) Certain common and preferred stock investments are fair valued based on liquidation-out preferential rights held by the Company.

^(d) Real estate appraisals are performed by independent third parties and the Company does not have reasonable access to the underlying unobservable inputs.

^* The above table excludes certain investments whose fair value is zero due to certain specific situations at the portfolio company level.

ASU 2011-04 clarifies the application of existing fair value measurement and disclosure requirements related to the application of the highest and best use and valuation premise concepts for financial and nonfinancial instruments, measuring the fair value of an instrument classified in equity, and disclosures about fair value measurements. ASU 2011-04 requires additional disclosures about fair value measurements categorized within Level 3 of the fair value hierarchy, including the valuation processes used by the reporting entity, the sensitivity of the fair value to changes in unobservable inputs and the interrelationships between those unobservable inputs, if any.

Following are descriptions of the sensitivity of the Level 3 recurring fair value measurements to changes in the significant unobservable inputs presented in the above table. For securities utilizing the income approach valuation technique, a significant increase (decrease) in the discount rate, risk premium or discount for lack of marketability would result in a significantly lower (higher) fair value measurement. The discount for lack of marketability used to determine fair value may include other factors such as liquidity or credit risk. Generally, a change in the discount rate is accompanied by a directionally similar change in the risk premium and discount for lack of marketability. For securities utilizing the market approach valuation technique, a significant increase (decrease) in the EBITDA, revenue multiple or other key unobservable inputs listed in the above table would result in a significantly higher (lower) fair value measurement. A significant increase (decrease) in the discount for lack of marketability would result in a significantly lower (higher) fair value measurement. The discount for lack of marketability used to determine fair value may include other factors such as liquidity or credit risk. For securities utilizing an adjusted net asset approach valuation technique, a significant increase (decrease) in the price to book value ratio, discount rate or other key unobservable inputs listed in the above table would result in a significantly higher (lower) fair value measurement.

For the Nine Month Period Ended July 31, 2020

During the nine month period ended July 31, 2020, the Company made follow-on investments in five portfolio companies that totaled approximately $11.5 million. Specifically, on November 14, 2019 and February 28, 2020, the Company loaned $50,000 and $300,000, respectively, to RuMe Inc. (“RuMe”) on its lines of credit, increasing the balances to approximately $2.2 million and approximately $727,000, respectively. On December 13, 2019 and February 3, 2020, the Company loaned approximately $1.6 million and $1.7 million, respectively, to Jedson Engineering, Inc. (“Jedson”), increasing the first lien loan to approximately $9.4 million. On January 10, 2020, the Company loaned approximately $3.8 million to Apex Industrials Technologies, LLC (“Apex”), increasing the first lien loan to approximately $18.8 million at that time. The maturity date of the loan was extended to May 15, 2020. The Company also received a warrant as part of this investment. During the nine month period ended July 31, 2020, Custom Alloy Corporation (“Custom Alloy”) borrowed approximately $1.7 million on its revolving credit facility, increasing the balance outstanding to approximately $3.7 million. During the nine month period ended July 31, 2020, the Company loaned approximately $2.5 million to Security Holdings B.V. (“Security Holdings”), increasing its senior subordinated loan outstanding amount to approximately $8.6 million.

On November 1, 2019, U.S. Gas & Electric, Inc. (“U.S. Gas”) made a principal payment of approximately $32.8 million on its second lien loan.

On November 4, 2019, the Company received net proceeds of approximately $1.0 million related to the G3K Displays, Inc. settlement.

On November 5, 2019, the Company received proceeds of approximately $1.0 million related to the Centile Holding B.V. (“Centile”) escrow.

On November 8, 2019, the Company received proceeds of approximately $2.7 million from the PE Fund related to the sale of Focus Pointe Holdings, Inc. (“Focus Pointe”), a portfolio company of the PE Fund. The Company’s pro-rata share of the PE Fund’s cost basis in the Focus Pointe investment totaled approximately $1.9 million, resulting in a realized gain of approximately $773,000. The Company also received a carried interest payment from the PE Fund of approximately $48,000 related to the sale, which was recorded as additional realized gains.

On November 8, 2019, the Company received proceeds of approximately $291,000 from the PE Fund related to tax refunds received by the PE Fund related to Plymouth Rock Energy, LLC. The additional proceeds were recorded as realized gains. The Company also received a carried interest payment from the PE Fund of approximately $11,000 related to these proceeds, which was recorded as additional realized gains.

On December 5, 2019, the Company sold 162,999 preferred shares of Advantage Insurance, Inc. (“Advantage”) for approximately $1.6 million, resulting in a realized loss of approximately $33,000.

On January 1, 2020, Array Information Technology, Inc. (“Array”) repaid its second lien loan in full, including all accrued interest totaling approximately $6.4 million. The Company also received approximately $28,000 for the sale of the warrant which was recorded as a realized gain.

On January 10, 2020, Essner Manufacturing, LP (“Essner”) repaid its first lien loan in full, including all accrued interest totaling approximately $3.6 million.

On January 31, 2020, Morey’s Seafood International, LLC (“Morey’s”) repaid its second lien loan in full, including all accrued interest totaling approximately $16.8 million.

On February, 21, 2020, the Company received proceeds of approximately $878,000 from the PE Fund related to the release of escrow funds related to former PE Fund portfolio companies AccuMed Corp., Focus Pointe Global and Plymouth Rock Energy, LLC. The Company also received an approximately $32,000 carried interest payment.

On March 30, 2020, Apex repaid its first lien loan in full including all accrued interest, totaling approximately $18.9 million. The Company received a free warrant as part of the approximately $3.9 million follow-on investment on January 10, 2020 in which approximately $1.9 million of the approximately $3.9 million cost basis of the loan was allocated to the cost of the warrant. On March 30, 2020, the Company also received approximately $1.3 million for the sale of the warrant, which resulted in a realized loss of approximately $558,000 based on the allocated cost of the warrant. The net impact of the warrant increased net assets by approximately $1.3 million.

On April 6, 2020, Turf Products, LLC’s (“Turf”) senior subordinated loan and third lien loan were combined into a non-amortizing senior subordinated loan in the amount of $8,697,056 with a 10% cash interest rate and a maturity of October 7, 2023.

On May 14, 2020, Foliofn, Inc. (“Foliofn”) announced it entered into an agreement to be acquired by The Goldman Sachs Group, Inc.. The acquisition, while subject to regulatory approval, is expected to close in the third calendar quarter of 2020. If the transaction closes, the Company expects to receive approximately $15 million in proceeds.

On July 16, 2020, the Company sold the remaining 3,228,024 common shares of Equus Total Return, Inc. (“Equus”) for approximately $3.8 million, resulting in a realized loss of approximately $3.7 million.

During the nine month period ended July 31, 2020, Turf made a principal payment of $70,000 on its third lien loan.

During the nine month period ended July 31, 2020, United States Technologies, Inc. (“U.S. Tech”) made principal payments on its loan totaling approximately $1.8 million.

During the nine month period ended July 31, 2020, International Precision Components Corporation (“IPCC”) made principal payments on its loan totaling $300,000.

During the nine month period ended July 31, 2020, Legal Solutions Holdings, Inc. (“Legal Solutions”) made $2.4 million in principal payments on its loan.

During the quarter ended January 31, 2020, the Valuation Committee increased the fair value of the Company’s investments in: Black Diamond Equipment Rental, LLC (“Black Diamond”) by approximately $256,000, Foliofn by approximately $5.7 million, JSC Tekers Holdings (“JSC Tekers”) by $350,000, Trientis GmbH (“Trientis”) by approximately $72,000, Turf by approximately $60,000, MVC Private Equity Fund L.P. by approximately $2.0 million, GTM Intermediate Holdings, Inc. (“GTM”) by approximately $817,000, MVC Automotive Group GmbH (“MVC Automotive”) equity by approximately $486,000 and Apex by approximately $1.5 million. In addition, increases in the cost basis of the loans to Apex, Black Diamond, Custom Alloy, Dukane IAS, LLC (“Dukane”), Global Prairie PBC, Inc. (“Global Prairie”), GTM, Highpoint, HTI Technologies and Industries, Inc. (“HTI”), Jedson, Legal Solutions, Morey’s, RuMe, Security Holdings, SMA Holdings, Inc. (“SMA”) and Tuf-Tug Inc. (“Tuf-Tug”) due to the capitalization of PIK interest totaling approximately $1.8 million. The Valuation Committee also decreased the fair value of the Company's investments in: Advantage by approximately $129,000, Custom Alloy by approximately $387,000, Dukane by approximately $45,000, Initials, Inc. (“Initials”) by approximately $103,000, RuMe by approximately $1.6 million, Security Holdings by approximately $7.1 million, Tuf-Tug by approximately $62,000, U.S. Gas by approximately $1.0 million and U.S. Spray Drying Holding Company (“U. S. Spray”) by approximately $260,000.

During the quarter ended April 30, 2020, the Valuation Committee decreased the fair value of the Company’s investments in: Advantage by approximately $835,000, Black Diamond by approximately $628,000, Custom Alloy by approximately $7.2 million, Foliofn, by approximately $632,000, Global Prairie by approximately $83,000, GTM by approximately $430,000, Highpoint Global LLC (“Highpoint”) by approximately $254,000, HTI by approximately $1.2 million, Initials by approximately $519,000, IPCC by approximately $160,000, Jedson by approximately $2.5 million, JSC Tekers by approximately $733,000, Legal Solutions by approximately $386,000, MVC Automotive by approximately $6.9 million, MVC Private Equity Fund L.P. by approximately $2.8 million, Powers Equipment Acquisition Company (“Powers”) by approximately $1.5 million, RuMe by approximately $3.1 million, Security Holdings by approximately $8.6 million, SMA by approximately $28,000, Trientis by approximately $54,000, Tuf-Tug by approximately $161,000, Turf by approximately $1.1 million and U.S. Spray by approximately $570,000. There were also increases in the cost basis of the loans to Black Diamond, Dukane, Global Prairie, GTM, Highpoint, HTI, Jedson, Legal Solutions, RuMe, Security Holdings, SMA and Tuf-Tug due to the capitalization of PIK interest totaling approximately $600,000.

During the quarter ended July 31, 2020, the Valuation Committee increased the fair value of the Company’s investments in: Advantage by approximately $259,000, Black Diamond by approximately $203,000, Foliofn, by approximately $1.4 million, Global Prairie by approximately $72,000, GTM by approximately $30,000, Highpoint by approximately $254,000, HTI by approximately $627,000, IPCC by approximately $160,000, JSC Tekers by approximately $492,000, MVC Automotive by approximately $528,000, MVC Private Equity Fund L.P. by approximately $381,000, Powers by approximately $345,000, Security Holdings by approximately $1.0 million, SMA by approximately $709,000, Trientis by approximately $26,000 and Turf by approximately $654,000. In addition, there were increases in the cost basis of the loans to Black Diamond, Dukane, Global Prairie, GTM, Highpoint, HTI, Jedson, Legal Solutions, Powers, Security Holdings, SMA and Tuf-Tug due to the capitalization of PIK interest totaling approximately $1.2 million. The Valuation Committee also decreased the fair value of the Company's investments in: Custom Alloy by approximately $491,000, Dukane by approximately $10,000, Initials by approximately $24,000, Jedson by approximately $356,000, Legal Solutions by approximately $496,000, RuMe by approximately $7.2 million, Tuf-Tug by approximately $78,000, U.S. Spray by approximately $1.0 million and U.S. Gas by approximately $900,000.

During the nine month period ended July 31, 2020, the Valuation Committee decreased the fair value of the Company’s investments in: Advantage by approximately $705,000, Black Diamond by approximately $169,000, Custom Alloy by approximately $8.1 million, Dukane by approximately $55,000, Global Prairie by approximately $11,000, HTI by approximately $527,000, Initials by approximately $646,000, Jedson by approximately $2.9 million, Legal Solutions by approximately $882,000, MVC Automotive by approximately $5.9 million, MVC Private Equity Fund L.P. by approximately $419,000, Powers by approximately $1.2 million, RuMe by approximately $11.9 million, Security Holdings by approximately $14.7 million, Tuf-Tug by approximately $301,000, Turf by approximately $401,000, U.S. Gas by approximately $1.9 million and U. S. Spray by approximately $1.8 million. The Valuation Committee also increased the fair value of the Company's investments in: Apex by approximately $1.5 million, Foliofn by approximately $6.4 million, GTM by approximately $417,000, JSC Tekers by approximately $109,000, SMA by approximately $681,000 and Trientis by approximately $44,000. In addition, there were increases in the cost basis of the loans to Apex, Black Diamond, Custom Alloy, Dukane, Global Prairie, GTM, Highpoint, HTI, Jedson, Legal Solutions, Morey’s, RuMe, Security Holdings, SMA and Tuf-Tug due to the capitalization of PIK interest totaling approximately $3.6 million.

At July 31, 2020, the fair value of all portfolio investments was $220.9 million with a cost basis of $337.7 million. At July 31, 2020, the fair value and cost basis of investments made by the Company’s former management team pursuant to the prior investment objective (“Legacy Investments”) were $12.8 million and $15.0 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team were $208.1 million and $322.7 million, respectively. At October 31, 2019, the fair value of all portfolio investments, exclusive of escrow receivables, was $340.2 million with a cost basis of $415.7 million. At October 31, 2019, the fair value and cost basis of the Legacy Investments were $6.4 million and $15.0 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team were $333.8 million and $400.7 million, respectively.

For the Fiscal Year Ended October 31, 2019

During the fiscal year ended October 31, 2019, the Company made six new investments, committing capital that totaled approximately $32.4 million. Pursuant to an exemptive order received by the Company from the SEC (the “Order”), that allows the Company to co-invest, subject to certain conditions, with certain affiliated private funds as described in the Order, each of the Company and the Private Fund co-invested in GTM ($1.9 million investment for the Company). The Company also invested in Powers ($6.5 million), IPCC ($8.0 million), Jedson ($6.0 million), SMA ($7.0 million) and Global Prairie ($3.0 million).

During the fiscal year ended October 31, 2019, the Company made follow-on investments in six portfolio companies that totaled approximately $12.5 million. Specifically, on December 21, 2018, the Company loaned an additional $2.0 million to Custom Alloy in the form of a second lien loan with an interest rate of 11% and a maturity date of December 23, 2019. During the fiscal year ended October 31, 2019, the Company loaned approximately $1.4 million to RuMe and received a new warrant. On June 7, 2019, the Company invested approximately $3.9 million in GTM increasing the second lien loan by $3.5 million and investing approximately $420,000 for additional common shares. During the fiscal year ended October 31, 2019, Custom Alloy borrowed approximately $2.1 million on its revolving credit facility which has a 15% interest rate and a maturity date of April 30, 2020. On July 15, 2019, the Company loaned an additional $1.0 million to HTI increasing its second lien loan to approximately $11.4 million as of October 31, 2019. On September 10, 2019, the Company invested $1.0 million in additional common equity of MVC Automotive. On September 26, 2019, the Company loaned approximately $552,000 to Security Holdings, increasing its senior subordinated loan to approximately $6.0 million as of October 31, 2019.

On November 9, 2018, Custom Alloy repaid its first lien loan in full, including all accrued interest.

On November 13, 2018, Custom Alloy repaid its $1.4 million second lien loan in full, including all accrued interest.

On November 27, 2018, the Company funded approximately $3.0 million related to the MVC Environmental letter of credit, which was called by the beneficiary.

On December 27, 2018, the Company received proceeds of approximately $7.5 million from the PE Fund related to the sale of Plymouth Rock Energy, LLC, a portfolio company of the PE Fund. The Company’s pro-rata share of the PE Fund’s cost basis in the Plymouth Rock Energy, LLC investment totaled approximately $2.5 million, resulting in a realized gain of approximately $5.0 million. The Company also received a carried interest payment from the PE Fund of approximately $173,000 related to the sale, which was recorded as additional realized gains.

On December 27, 2018, the Company received a dividend of approximately $543,000 from the PE Fund related to Focus Pointe Global.

On February 7, 2019, Vistra Energy and Crius Energy Trust (“Crius”) announced that they entered into a definitive agreement pursuant to which Vistra Energy will acquire Crius for cash consideration of CAN$7.57 per trust unit. On February 20, 2019, Vistra Energy agreed to increase its acquisition price for Crius to CAN$8.80 per trust unit, an increase of CAN$1.23 per trust unit.

On April 26, 2019, RuMe made a principal payment on the revolver of $500,000 and Morey’s made a principal payment of approximately $591,000 on its second lien loan.

On April 30, 2019, Custom Alloy redeemed its series A, B and C preferred shares and consolidated its second lien loans in exchange for two second lien loans of approximately $32.5 million and $6.1 million with interest rates of 15% and maturity dates of April 30, 2022. The Company also funded approximately $595,000 as part of the transaction related to the $6.1 million second lien loan. The Company realized a gain of approximately $3.2 million and approximately $2.3 million of PIK interest and dividends associated with the transaction. Also on April 30, 2019, the Company provided Custom Alloy a $3.0 million line of credit with a 15% interest rate and a maturity date of April 30, 2020 with no amount outstanding as of that date.

On June 14, 2019, Array Information Technology, Inc. (“Array”) made a principal payment of approximately $114,000 on its second lien loan.

On June 19, 2019, Essner Manufacturing, LP (“Essner”) made a principal payment of approximately $78,000 on its first lien loan.

On July 1, 2019, Turf Products, LLC (“Turf”) made a principal payment of $70,000 on its third lien loan.

On July 15, 2019, the Company’s Crius trust units were sold for $6.71 per share resulting in total proceeds of approximately $22.0 million. The Company realized a loss of approximately $3.8 million as a result of this transaction.

On July 29, 2019, the Company sold 608,310 shares of Equus common stock for approximately $1.0 million, resulting in a realized loss of approximately $219,000.

On August 12, 2019, the Company sold 608,310 common shares of Equus totaling approximately $985,000 in proceeds and resulting in a realized loss of approximately $268,000.

On August 12, 2019, the Company converted the MVC Environmental loan, unpaid expenses and accrued interest to additional cost basis in the common stock of MVC Environmental, resulting in a realized gain of approximately $1.4 million.

On September 13, 2019, the Company sold the common stock of MVC Environmental, receiving proceeds of $45,000 which resulted in a realized loss of approximately $14.4 million.

On October 1, 2019, Tin Roof repaid its $3.8 million loan in full, including all accrued interest. Also during the fiscal year ended October 31, 2019, Tin Roof made principal payments totaling approximately $99,000.

On October 17, 2019, the Company recorded a $1.6 million realized gain associated with a settlement, which is expected to be paid in November 2019, related to a former portfolio company, G3K Display, Inc. The Company incurred costs of approximately $543,000 related to the settlement.

During the quarter ended January 31, 2019, the Valuation Committee increased the fair value of the Company’s investments in: Black Diamond loan and warrant by approximately $767,000, Custom Alloy second lien loans, series A preferred stock, series B preferred stock and series C preferred stock by a net total of approximately $2.3 million, Dukane loan by $286, Foliofn preferred stock by $32,000, Highpoint loan by approximately $252, HTI loan by approximately $80,000, JSC Tekers preferred stock by approximately $82,000, Security Holdings equity and letter of credit by a net total of $25,000, Turf loan by approximately $15,000 and the Centile escrow by $49,000. In addition, increases in the cost basis of the loans to HTI, Legal Solutions, RuMe, Dukane, Morey’s, Highpoint, Array, GTM, Tin Roof, Tuf-Tug and Security Holdings were due to the capitalization of PIK interest totaling approximately $964,000. The Valuation Committee also decreased the fair value of the Company's investments in: Advantage preferred stock by approximately $244,000, Essner loan by approximately $21,000, Initials loan by approximately $412,000, Legal Solutions loan by approximately $118,000, MVC Automotive equity by approximately $117,000, MVC Environmental loan by approximately $875,000 and common stock by approximately $3.0 million, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $1.1 million, RuMe series B-1 preferred stock, guarantee and letter of credit by a net total of approximately $308,000, Trientis loan by approximately $77,000, U.S. Tech loan by approximately $23,000 and the U.S. Gas loan by approximately $797,000.

During the quarter ended April 30, 2019, the Valuation Committee increased the fair value of the Company’s investments in: Array loan by approximately $62,000, Black Diamond loan and warrant by a net total of approximately $126,000, Dukane loan by approximately $10,000, Essner loan by approximately $21,000, Foliofn preferred stock by $369,000, Highpoint loan by approximately $264, HTI loan by approximately $65,000, Initials loan by approximately $5,000, MVC Automotive equity by approximately $747,000, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $833,000, Security Holdings equity and letter of credit by a net total of approximately $3.7 million, Trientis loan by approximately $40,000, Turf loans by approximately $94,000, U.S. Tech loan by approximately $23,000, U.S. Gas loan by approximately $357,000 and the Centile escrow by approximately $29,000. In addition, increases in the cost basis of the loans to HTI, Legal Solutions, RuMe, Dukane, Morey’s, Highpoint, Array, GTM, Tin Roof, Tuf-Tug, Security Holdings and the Custom Alloy preferred stock were due to the capitalization of PIK interest/dividends totaling approximately $3.4 million. The Valuation Committee also decreased the fair value of the Company's investments in: Advantage preferred stock by approximately $674,000, Custom Alloy loans by a total of approximately $504,000, JSC Tekers preferred stock by approximately $48,000, RuMe series B-1 preferred stock and letter of credit by a total of approximately $1.8 million and the U.S. Spray common stock by $3.1 million.

During the quarter ended July 31, 2019, the Valuation Committee increased the fair value of the Company’s investments in: Centile escrow by approximately $38,000, Custom Alloy loans by a total of approximately $115,000, Dukane loan by approximately $1,000, Foliofn preferred stock by $389,000, HTI loan by approximately $47,000, JSC Tekers preferred stock by approximately $60,000 and Turf loans by approximately $124,000. In addition, increases in the cost basis of the loans to HTI, Legal Solutions, RuMe, Dukane, Morey’s, Highpoint, Array, GTM, Tin Roof, Tuf-Tug, Security Holdings, Jedson and Custom Alloy were due to the capitalization of PIK interest/dividends totaling approximately $780,000. The Valuation Committee also decreased the fair value of the Company's investments in: Array loan by approximately $1,000, Black Diamond loan and warrant by a net total of approximately $8,000, Highpoint loan by approximately $51,000, Initials loan by approximately $281,000, MVC Automotive equity by approximately $256,000, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $399,000, RuMe series B-1 preferred stock and letter of credit by a total of approximately $113,000, Security Holdings equity and letter of credit by a net total of approximately $1.2 million, Trientis loan by approximately $84,000 and U.S. Gas loan by approximately $1.2 million.

During the quarter ended October 31, 2019, the Valuation Committee increased the fair value of the Company’s investments in: Array loan by $622, Centile escrow by approximately $50,000, Foliofn preferred stock by $569,000, JSC Tekers preferred stock by $737,000, MVC Automotive equity by approximately $327,000, MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $566,000, Tuf-Tug loan and common stock by a total of approximately $78,000 and Turf loans by approximately $69,000. In addition, increases in the cost basis of the loans to HTI, Legal Solutions, RuMe, Dukane, Morey’s, Highpoint, Array, GTM, Tuf-Tug, Security Holdings, Jedson, SMA and Black Diamond were due to the capitalization of PIK interest/dividends totaling approximately $747,000. The Valuation Committee also decreased the fair value of the Company's investments in: Advantage preferred stock by approximately $403,000, Black Diamond loan and warrant by a net total of approximately $14,000, Custom Alloy loans by a total of approximately $98,000, Dukane loan by approximately $9,000, Initials loan by approximately $715,000, RuMe preferred stocks, warrants and letter of credit by a net total of approximately $839,000, Security Holdings equity and letter of credit by a net total of $227,000, Trientis loan by approximately $86,000, U.S. Gas loan by approximately $857,000 and U.S. Spray common stock by $500,000.

During the fiscal year ended October 31, 2019, the Valuation Committee increased the fair value of the Company’s investments in: Array loan by approximately $63,000, Black Diamond loan and warrant by a net total of approximately $871,000, Custom Alloy second lien loans, series A preferred stock, series B preferred stock and series C preferred stock by a net total of approximately $1.8 million, Dukane loan by approximately $1,000, Foliofn preferred stock by $1.4 million, HTI loan by approximately $192,000, JSC Tekers preferred stock by approximately $831,000, Security Holdings equity and letter of credit by a net total of approximately $2.2 million, Tuf-Tug loan and common stock by approximately $78,000, Turf loans by approximately $302,000, MVC Automotive equity by approximately $701,000 and the Centile escrow by $166,000. In addition, increases in the cost basis of the loans to HTI, Legal Solutions, RuMe, Dukane, Morey’s, Highpoint, Array, GTM, Tin Roof, Tuf-Tug, Security Holdings, Jedson, SMA and the Custom Alloy preferred stock were due to the capitalization of PIK interest/dividends totaling approximately $5.9 million. The Valuation Committee also decreased the fair value of the Company's investments in: Advantage preferred stock by approximately $1.3 million, Highpoint loan by approximately $51,000, Initials loan by approximately $1.4 million, Legal Solutions loan by approximately $118,000, MVC Environmental loan and common stock by a total of approximately $3.9 million, RuMe series B-1 preferred stock, guarantee and letter of credit by a net total of approximately $3.0 million, Trientis loan by approximately $208,000, U.S. Spray common stock by $3.6 million, U.S. Gas loan by approximately $2.4 million and the MVC Private Equity Fund L.P. general partnership interest and limited partnership interest in the PE Fund by a total of approximately $140,000.

At October 31, 2019, the fair value of all portfolio investments, exclusive of escrow receivables, was $340.2 million with a cost basis of $415.7 million. At October 31, 2019, the fair value and cost basis of the Legacy Investments were $6.4 million and $15.0 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team was $333.8 million and $400.7 million, respectively. At October 31, 2018, the fair value of all portfolio investments, exclusive of escrow receivables, was $324.5 million with a cost basis of $409.6 million. At October 31, 2018, the fair value and cost basis of the Legacy Investments was $5.0 million and $15.0 million, respectively, and the fair value and cost basis of portfolio investments made by the Company’s current management team was $319.5 million and $394.6 million, respectively.

9. Commitments and Contingencies

Commitments to Portfolio Companies:

At July 31, 2020 and October 31, 2019, the Company’s existing commitments to portfolio companies consisted of the following:

Portfolio Company	Amount Committed	Amount Funded as of July 31, 2020
MVC Private Equity Fund LP	$20.1 million	$14.6 million
RuMe	$2.2 million	$2.3 million
RuMe	$700,000	$745,000
Custom Alloy	$3.8 million	$3.7 million
Total	$26.8 million	$21.3 million

Portfolio Company	Amount Committed	Amount Funded as of October 31, 2019
MVC Private Equity Fund LP	$20.1 million	$14.6 million
RuMe	$2.2 million	$2.1 million
RuMe	$400,000	$400,000
Custom Alloy	$3.0 million	$2.1 million
Total	$25.7 million	$19.2 million

Guarantees:

At July 31, 2020 and October 31, 2019, the Company had the following commitments to guarantee various loans and mortgages:

Guarantee	Amount Committed	Amount Funded as of July 31, 2020
MVC Automotive	$4.7 million	-
Total	$4.7 million	-

Guarantee	Amount Committed	Amount Funded as of October 31, 2019
MVC Automotive	$4.5 million	-
Total	$4.5 million	-

These guarantees are further described below, together with the Company's other commitments.

On January 16, 2008, the Company agreed to support a 4.0 million Euro mortgage for a Ford dealership owned and operated by MVC Automotive through making financing available to the dealership and agreeing under certain circumstances not to reduce its equity stake in MVC Automotive. Over time, Erste Bank, the bank extending the mortgage to MVC Automotive, increased the amount of the mortgage. The balance of the guarantee as of July 31, 2020 is approximately 4.1 million Euro (equivalent to approximately $4.7 million).

The Company agreed to cash collateralize a $300,000 third party letter of credit for RuMe, which is now collateralized with Credit Facility IV (defined below) and still a commitment of the Company as of July 31, 2020. Previously, the Company guaranteed $1.0 million of RuMe’s indebtedness to Colorado Business Bank and also provided RuMe an additional $2.0 million letter of credit. On April 25, 2019, the $1.0 million guarantee and the $2.0 million letter of credit were refinanced and replaced with a new $3.0 million letter of credit. The letter of credit had a fair value of approximately -$2.9 million or a liability of $2.9 million as of July 31, 2020. The $3.0 million letter of credit is collateralized with Credit Facility IV (defined below).

On October 29, 2010, through MVC Partners and MVCFS, the Company committed to invest approximately $20.1 million in the PE Fund, for which an indirect wholly-owned subsidiary of the Company serves as GP. The PE Fund closed on approximately $104 million of capital commitments. During the fiscal year ended October 31, 2012 and thereafter, MVC Partners was consolidated with the operations of the Company as MVC Partners’ limited partnership interest in the PE Fund is a substantial portion of MVC Partners operations. The investment period related to the PE Fund has ended. Additional capital may be called for follow-on investments in existing portfolio companies of the PE Fund or to pay operating expenses of the PE Fund until the partnership is terminated. On December 27, 2018, the Company received proceeds of approximately $7.5 million from the PE Fund related to the sale of Plymouth Rock Energy, LLC, a portfolio company of the PE Fund. The Company’s pro-rata share of the PE Fund’s cost basis in the Plymouth Rock Energy, LLC investment totaled approximately $2.5 million, resulting in a realized gain of approximately $5.0 million. On October 25, 2019, the PE Fund sold Focus Pointe, a portfolio company of the PE Fund. The Company received proceeds of approximately $2.7 million related to the sale. The Company’s pro-rata share of the PE Fund’s cost basis in the Focus Pointe investment totaled approximately $1.9 million, resulting in a realized gain of approximately $800,000. As of July 31, 2020, $14.6 million of the Company’s commitment was funded.

As of October 31, 2019, RuMe had a $2.2 million line of credit provided by the Company with a 10% interest rate and a maturity date of March 31, 2021. The outstanding balance as of October 31, 2019 and July 31, 2020 was approximately $2.1 million and $2.3 million, respectively, including capitalized PIK interest. Also, during the fiscal year ended October 31, 2019, the Company provided RuMe a $400,000 revolver with a 10% interest rate and a maturity date of February 28, 2020. The outstanding balance of the revolver as of October 31, 2019 was approximately $404,000, including capitalized PIK interest. During the nine month period ended July 31, 2020, the revolver was increased to $700,000 and the maturity date was extended to March 31, 2021. The outstanding balance of the revolver as of July 31, 2020 was approximately $745,000, including capitalized PIK interest.

As of October 31, 2019, Security Holdings had a 4.8 million Euro letter of credit. During the nine month period ended July 31, 2020, the letter of credit was reduced to 3.3 million Euro. The letter of credit had a fair value of approximately -$125,000 or a liability of $125,000 as of July 31, 2020. The letter of credit is collateralized with Credit Facility IV (defined below).

As of October 31, 2019, Custom Alloy had a $3.0 million line of credit provided by the Company with a 15% interest rate and a maturity date of April 30, 2020. The balance outstanding as of October 31, 2019 was approximately $2.1 million. During the nine month period ended July 31, 2020, the Company increased the commitment to approximately $3.8 million and funded approximately $1.7 million, resulting in a balance outstanding as of July 31, 2020 of approximately $3.7 million. The maturity date was also extended to April 30, 2021.

As of July 31, 2020, the total fair value associated with potential obligations related to guarantees and letters of credit was approximately -$3.0 million or a liability of $3.0 million.

Commitments of the Company

On July 31, 2013, the Company entered into a one-year, $50 million revolving credit facility (“Credit Facility II”) with Branch Banking and Trust Company (“BB&T”). On January 31, 2014, Credit Facility II was increased to a $100 million revolving credit facility. On December 1, 2015, Credit Facility II was renewed and expired on May 31, 2016, at which time all outstanding amounts under it were due and repaid. On June 30, 2016, Credit Facility II was renewed and reduced to a $50 million revolving credit facility, which expired on February 28, 2017, as of which time all outstanding amounts under it were due and repaid. On February 28, 2017, Credit Facility II was renewed and increased to a $100 million revolving credit facility and expired on August 31, 2017. On August 31, 2017, Credit Facility II was renewed and decreased to a $25 million revolving credit facility, which was to expire on August 31, 2018. There was no change to the interest rate or unused fee on the revolving credit facility. The Company incurred closing costs associated with this transaction of $62,500. On August 10, 2018, Credit Facility II was renewed to August 30, 2019 and on August 30, 2019, Credit Facility II was extended to August 31, 2020. The Company incurred closing costs associated with each of these transactions of $50,000 with no change in terms other than the expiration date. At October 31, 2019 and July 31, 2020, there was no amount outstanding on Credit Facility II. Credit Facility II is used to provide the Company with better overall financial flexibility in managing its investment portfolio. Borrowings under Credit Facility II bear interest at LIBOR plus 125 basis points. In addition, the Company is also subject to a 25 basis point commitment fee for the average amount of Credit Facility II that is unused during each fiscal quarter. The Company paid closing fees, legal and other costs associated with these transactions. These costs are amortized over the life of the facility. Borrowings under Credit Facility II will be secured by cash, short-term and long-term U.S. Treasury securities and other governmental agency securities. As of July 31, 2020, the Company was in compliance with the covenants related to Credit Facility II.

On November 15, 2017, the Company completed a public offering of $100,000,000 aggregate principal amount of its 6.25% senior notes due November 30, 2022 (“Senior Notes II”). In addition, on November 20, 2017, the underwriters exercised an over-allotment option to purchase an additional $15 million in aggregate principal amount of Senior Notes II (together with the offering on November 15, the “Offering”). The Senior Notes II have an interest rate of 6.25% per year payable quarterly on January 15, April 15, July 15, and October 15 of each year. After deducting underwriting fees and discounts and expenses, the Offering resulted in net proceeds to the Company of approximately $111.4 million. The Offering expenses incurred are amortized over the term of the Senior Notes II. Proceeds from the offering were used to repay the Senior Notes in full, including all accrued interest. On February 25, 2020, the Company notified U.S. Bank National Association, the trustee for the Senior Notes II, of the Company’s election to redeem $20.0 million aggregate principal amount of the Senior Notes II outstanding at a price equal to 100% of the principal amount of the Senior Notes II, plus accrued and unpaid interest on the Senior Notes II to, but excluding, the date of redemption. The Company funded the redemption with cash on hand. As of July 31, 2020, the Senior Notes II had a total outstanding amount of $95.0 million, net of deferred financing fees the balance was approximately $93.6 million, with a market value of approximately $91.2 million.

On January 29, 2019, the Company entered into a three year, $35 million revolving credit facility ("Credit Facility IV") with People’s United Bank, National Association as lender and lead agent. Credit Facility IV can, under certain conditions, be increased up to $85 million. Credit Facility IV will expire on January 29, 2022, at which time all outstanding amounts under Credit Facility IV will be due and payable. Borrowings under the Credit Facility bear interest at a rate of LIBOR plus 2.85%, or the prime rate plus 0.5% at the Company’s discretion. In addition, the Company was subject to (i) a closing fee of 1% of the commitment amount paid at closing, (ii) a one-time structuring fee in the amount of $100,000 paid at closing, (iii) an unused line fee, which is payable monthly, of 0.75% if the Company draws less than $25 million on Credit Facility IV or 0.60% if the Company draws more than $25 million on Credit Facility IV, and (iv) an annual administrative agent fee in the amount of $100,000 in 2019 and $200,000 in each year thereafter. The compensating balance for the revolving credit facility is $5.0 million, which is reflected as restricted cash equivalents on the Company’s Consolidated Balance Sheets. On June 19, 2019, in order to increase the size of the Credit Facility IV, the credit facility was amended to add Bank Leumi USA as an additional lender. The amendment increased the size of Credit Facility IV by $15.0 million to $50.0 million. All other material terms of the Credit Facility remain unchanged. In addition, the Company was subject to a closing fee of 1% of the additional commitment amount of $15.0 million to be paid at closing. As of July 31, 2020, there was no amount outstanding on Credit Facility IV and the Company was in compliance with the maximum balance sheet leverage covenant related to Credit Facility IV.

The Company enters into contracts with portfolio companies and other parties that contain a variety of indemnifications. The Company's maximum exposure under these arrangements is unknown. However, the Company has not experienced claims or losses pursuant to these contracts and believes the risk of loss related to indemnifications to be remote.

10. Management

On November 6, 2003, Michael Tokarz assumed his positions as Chairman, Portfolio Manager and Director of the Company. From November 6, 2003 to October 31, 2006, the Company was internally managed. Effective November 1, 2006, Mr. Tokarz's employment agreement with the Company terminated and the obligations under that agreement were superseded by those under the Advisory Agreement entered into with TTG Advisers. Under the terms of the Advisory Agreement, the Company pays TTG Advisers a base management fee and an incentive fee for its provision of investment advisory and management services.

Our Board of Directors, including all of the Independent Directors, last approved a renewal of the Advisory Agreement at their in-person meeting held on October 31, 2019.

Under the terms of the Advisory Agreement, TTG Advisers determines, consistent with the Company's investment strategy, the composition of the Company's portfolio, the nature and timing of the changes to the Company's portfolio and the manner of implementing such changes. TTG Advisers also identifies and negotiates the structure of the Company's investments (including performing due diligence on prospective Portfolio Companies), closes and monitors the Company's investments, determines the securities and other assets purchased, retains or sells and oversees the administration, recordkeeping and compliance functions of the Company and/or third parties performing such functions for the Company. TTG Advisers' services under the Advisory Agreement are not exclusive, and it may furnish similar services to other entities. Pursuant to the Advisory Agreement, the Company is required to pay TTG Advisers a fee for investment advisory and management services consisting of two components—a base management fee and an incentive fee. The base management fee is calculated at 2.0% per annum of the Company's total assets excluding cash, the value of any investment in a Third-Party Vehicle covered by a Separate Agreement (as defined in the Advisory Agreement) and the value of any investment by the Company not made in portfolio companies ("Non-Eligible Assets") but including assets purchased with borrowed funds that are not Non-Eligible Assets. The incentive fee consists of two parts: (i) one part is based on our pre-incentive fee net operating income; and (ii) the other part is based on the capital gains realized on our portfolio of securities acquired after November 1, 2003.

The Advisory Agreement provides for an expense cap pursuant to which TTG Advisers will absorb or reimburse operating expenses of the Company, to the extent necessary to limit the Company's expense ratio (the consolidated expenses of the Company, including any amounts payable to TTG Advisers under the base management fee, but excluding the amount of any interest and other direct borrowing costs, taxes, incentive compensation and extraordinary expenses taken as a percentage of the Company's average net assets) to 3.5% in each of the 2009 and 2010 fiscal years.

On various dates, TTG Advisers and the Company entered into annual agreements to extend the expense cap of 3.5% to the 2011, 2012, 2013 and 2014 fiscal years (“Expense Limitation Agreement”). The Company and the Adviser agreed to continue the expense cap into fiscal year 2015 and fiscal year 2016, though they lowered the expense cap to 3.25% and modified the methodology so that the cap is applied to limit the Company’s ratio of expenses to total assets less cash (the “Modified Methodology”), consistent with the asset level used to calculate the base management fee. (The expenses covered by the cap remain unchanged.) On October 28, 2016, the Board of Directors, including all of the Independent Directors, approved the renewal of the Advisory Agreement for the 2017 fiscal year. Further, the Adviser agreed to continue to waive a portion of the base management fee so that it is reduced to 1.50% for fiscal year 2017. In March 2016, the Adviser agreed to modify its prior agreement to waive, effective November 1, 2015, the first $1.0 million of capital gains incentive fee due under the Advisory Agreement, such that the $1.0 million waiver of incentive fee would be applied to any incentive fee due under the agreement, whether it is a capital gains incentive fee or net operating income incentive fee. Furthermore, the Company and the Adviser, similar to fiscal year 2016, agreed on an expense cap for fiscal years 2017 through 2020 of 3.25% under the Modified Methodology. The amount of any payments made by the GP of the PE Fund to TTG Advisers pursuant to the Portfolio Management Agreement between the GP and TTG Advisers respecting the PE Fund continues to be excluded from the calculation of the Company's expense ratio under the Expense Limitation Agreement. In addition, for fiscal years 2010 through 2020, TTG Advisers voluntarily agreed to waive $150,000 of expenses that the Company is obligated to reimburse to TTG Advisers under the Advisory Agreement for its allocable portion of the compensation payable to certain officers of the Company, which may not exceed $200,000 per year in the aggregate (the “Voluntary Waiver”). TTG Advisers also voluntarily agreed that any assets of the Company that are invested in exchange-traded funds would not be taken into account in the calculation of the base management fee due to TTG Advisers under the Advisory Agreement. As of July 31, 2020, the Company did not have an investment in an exchange traded fund. In addition, the Adviser has agreed, effective November 1, 2017, to a revised management fee structure that ties management fees to the NAV discount¹ as follows: (A) If the Company’s NAV discount is greater than 20%, the management fee for the current quarter is reduced to 1.25%; (B) If the NAV discount is between 10% and 20%, the management fee will be 1.50%; and (C) If the NAV discount is less than 10% or eliminated, the 1.50% management fee would be re-examined, but in no event would it exceed 1.75%. For the quarter ended July 31, 2020, the effective management fee was 1.25%.

On October 29, 2010, through MVC Partners and MVCFS, the Company committed to invest approximately $20.1 million in the PE Fund. The PE Fund has closed on approximately $104 million of capital commitments. The Company's Board of Directors authorized the establishment of, and investment in, the PE Fund for a variety of reasons, including the Company's ability to make additional investments that represent more than 5% of its total assets or more than 10% of the outstanding voting securities of the issuer ("Non-Diversified Investments") through the PE Fund. As previously disclosed, the Company may be restricted in its ability to make Non-Diversified Investments. For services provided to the PE Fund, the GP and MVC Partners are together entitled to receive 25% of all management fees and other fees paid by the PE Fund and its portfolio companies and up to 30% of the carried interest generated by the PE Fund. Further, at the direction of the Board of Directors, the GP retained TTG Advisers to serve as the portfolio manager of the PE Fund. In exchange for providing those services, and pursuant to the Board of Directors' authorization and direction, TTG Advisers is entitled to receive the balance of the fees generated by the PE Fund and its portfolio companies and a portion of any carried interest generated by the PE Fund. Given this separate arrangement with the GP and the PE Fund (the "PM Agreement"), under the terms of the Company's Advisory Agreement with TTG Advisers, TTG Advisers is not entitled to receive from the Company a management fee or an incentive fee on assets of the Company that are invested in the PE Fund. However, the Company’s limited partnership interest and GP interest in the PE Fund are subject to the PE Fund’s annual management fee, a portion of which, as described above, is retained by the Company and not paid out to TTG Advisers as portfolio manager of the PE Fund. During the fiscal year ended October 31, 2012 and thereafter, MVC Partners was consolidated with the operations of the Company as MVC Partners’ limited partnership interest in the PE Fund is a substantial portion of MVC Partners operations. Previously, MVC Partners was presented as a Portfolio Company on the Consolidated Schedules of Investments. The consolidation of MVC Partners has not had any material effect on the financial position or net results of operations of the Company. There are additional disclosures resulting from this consolidation.

¹ The NAV discount referred to herein is the average daily discount to NAV for a quarter. The discount is determined using the most recently determined NAV per share, which is typically the prior quarter end’s NAV per share and the Company stock closing price on any given day for the quarter.

Management and portfolio fees (e.g., closing or monitoring fees) generated by the PE Fund (including its portfolio companies) that are paid to the GP are classified on the Consolidated Statements of Operations as Management fee income - Asset Management and Portfolio fee income - Asset Management, respectively. The portion of such fees that the GP pays to TTG Advisers (in accordance with its PM Agreement described above) are classified on the Consolidated Statements of Operations as Management fee - Asset Management and Portfolio fees - Asset Management. Under the PE Fund's agreements, a significant portion of the portfolio fees that are paid by the PE Fund’s portfolio companies to the GP and TTG Advisers is subject to recoupment by the PE Fund in the form of an offset to future management fees paid by the PE Fund.

On May 27, 2020, the Company and Wynnefield Capital announced an agreement under which six of the Company’s current directors and three independent director candidates proposed by Wynnefield Capital were nominated by the Company’s Board of Directors for election at the 2020 annual meeting of stockholders, on July 15, 2020. The Board of Directors remained at its current size of nine directors pursuant to the terms of the agreement. A committee comprised of Chairman Tokarz and two independent Board members was formed to continue to explore strategic alternatives and other value enhancing opportunities and there were no changes to the Company’s current management agreement with The Tokarz Group Advisers LLC prior to the annual meeting. Under the agreement, the Company agreed to pay the fees and expenses of Wynnefield Capital in the amount of approximately $290,000. The Company reimbursed TTG Advisers, in the amount of $35,000, for certain out-of-pocket expenses in connection with the negotiation of the settlement with Wynnefield Capital.

11. Incentive Compensation

Effective November 1, 2006, Mr. Tokarz's employment agreement with the Company terminated and the obligations under Mr. Tokarz's agreement were superseded by those under the Advisory Agreement entered into with TTG Advisers. Pursuant to the Advisory Agreement, the Company pays an incentive fee to TTG Advisers which is generally: (i) 20% of pre-incentive fee net operating income and (ii) 20% of cumulative aggregate net realized capital gains less aggregate unrealized depreciation (on our portfolio securities acquired after November 1, 2003). TTG Advisers is entitled to an incentive fee with respect to our pre-incentive fee net operating income in each fiscal quarter as follows: no incentive fee in any fiscal quarter in which our pre-incentive fee net operating income does not exceed the lower hurdle rate of 1.75% of net assets, 100% of our pre-incentive fee net operating income with respect to that portion of such pre-incentive fee net operating income, if any, that exceeds the lower hurdle amount but is less than 2.1875% of net assets in any fiscal quarter and 20% of the amount of our pre-incentive fee net operating income, if any, that exceeds 2.1875% of net assets in any fiscal quarter. Under the Advisory Agreement, the accrual of the provision for incentive compensation for net realized capital gains is consistent with the accrual that was required under the employment agreement with Mr. Tokarz.

On October 31, 2019, per the Current Incentive Fee Modification, the Adviser indicated its voluntary agreement to modify the calculation of the Income Incentive Fee for the fiscal year ended October 31, 2020, so that the fee accrued shall be subject to the following additional provisions: (A) in lieu of the “Lower Hurdle Amount” and the “Higher Hurdle Amount” set forth in the Advisory Agreement and in lieu of the Income Incentive Fee calculations applied on a quarterly basis under such agreement, the Income Incentive Fee will be computed pursuant to the calculations hereunder on an annual basis and shall be subject to a single 8 percent hurdle rate such that no Income Incentive Fee will be paid unless the pre-Incentive Fee net operating income for the fiscal year in which it is calculated exceeds 8 percent of the Fund’s aggregate NAV calculated as of the end of the fiscal year in which such fee is being calculated (the “New Hurdle Amount”) and the Income Incentive Fee shall be equal to the following: (i) 50% of the amount by which such pre-Incentive Fee net operating income for the fiscal year exceeds the New Hurdle Amount but is less than 8.75% (the “Catch-Up Hurdle”); and (ii) 20% of the amount by which such pre-Incentive Fee net operating income for the fiscal year equals or exceeds the Catch-Up Hurdle, subject to the qualifications/limitations below; (B) the Income Incentive Fee will be accrued only to the extent 20.0% of the cumulative net increase in net assets resulting from operations over the fiscal year for which such fees are being calculated and the 2 preceding fiscal years (but no earlier than the year ended October 31, 2020) exceeds the cumulative Income Incentive Fees accrued and/or paid for such 2 fiscal years (but no earlier than the year ended October 31, 2020). For the foregoing purposes, the “cumulative net increases in net assets resulting from operations” is the amount for the fiscal year of: the sum of pre-Incentive Fee net investment income (loss), realized gains and realized appreciation resulting from the “Yield Portfolio” (as defined by mutual agreement between the Company and the Adviser), less any realized losses and unrealized depreciation attributable to the Yield Portfolio, provided that such reductions (for losses/depreciation) shall be reduced by the amount of any carried-interest gains generated from the MVC PE Fund over the year for which such fees are being calculated and the 2 preceding fiscal years (but no earlier than the year ended October 31, 2020), but only to the extent such carried-interest gains have not previously been applied to reduce losses/depreciation under this Clause (B); and (C) the amounts of any actual Income Incentive Fee payment reductions caused by application of clause (A) above (in lieu of applying the hurdle rates and catch up formula set forth in the Advisory Agreement) shall be credited against any unrealized depreciation or realized losses applied with respect to the application of Clause (B) above (on a one-time basis). Further, absent advance notice by the Adviser to the Board (at least 60 days’ prior to the fiscal year end), the Current Incentive Fee Modification shall continue automatically for each subsequent fiscal year.

At October 31, 2019, the provision for estimated incentive compensation was $0. During the nine month period ended July 31, 2020, there was no change in the provision for incentive compensation as 20% of the cumulative aggregate net realized capital gains less aggregate unrealized depreciation was less than $0. The provision for incentive compensation includes the Valuation Committee’s determination to increase the fair values of five of the Company’s portfolio investments (Apex, GTM, JSC Tekers, SMA and Trientis) by a total of approximately $2.8 million. The provision also includes the Valuation Committee’s determination to decrease the fair values of eighteen of the Company’s portfolio investments (Advantage, Black Diamond, Custom Alloy, Dukane, Equus, Global Prairie, HTI, Initials, Jedson, Legal Solutions, MVC Automotive, Powers, RuMe, Security Holdings, Tuf-Tug, Turf, U.S. Spray and U.S. Gas) by a total of approximately $53.3 million. Also, for the quarter ended July 31, 2020, no provision was recorded for the net operating income portion of the incentive fee as pre-incentive fee net operating income for the quarter did not exceed the hurdle rate. For fiscal years ending on October 31, 2019 and October 31, 2020, the Adviser agreed to voluntarily modify the calculation of the Income Incentive Fee so that the fee accrued shall equal the lesser of: (i) the amount of the Income Incentive Fee computed and determined quarterly as currently set forth in the Advisory Agreement; and (ii) the amount of the Income Incentive Fee computed and determined on an annual basis (in lieu of quarterly). Further, regardless of the amount of Income Incentive Fee computed or accrued, the Adviser agreed to defer collection of any Income Incentive Fee due and payable for the fiscal year until after the completion of the annual audit for such fiscal year.

At October 31, 2018, the provision for estimated incentive compensation was $0. During the fiscal year ended October 31, 2019, there was no change in the provision for incentive compensation as 20% of the cumulative aggregate net realized capital gains less aggregate unrealized depreciation was less than $0. The provision for incentive compensation includes the Valuation Committee’s determination to decrease the fair values of ten of the Company’s portfolio investments (Advantage, Highpoint, Initials, Legal Solutions, MVC Environmental, RuMe, Trientis, U.S. Spray, U.S. Gas and Equus) by a total of approximately $17.9 million. The provision also includes the Valuation Committee’s determination to increase the fair values of twelve of the Company’s portfolio investments (Array, Black Diamond, Custom Alloy, Dukane, HTI, JSC Tekers, Security Holdings, Tuf-Tug, Turf, Crius, Centile escrow and MVC Automotive) by a total of approximately $12.8 million. Also, for the quarter ended October 31, 2019, no payable was recorded for the net operating income portion of the incentive fee as pre-incentive fee net operating income for the quarter did not exceed the hurdle rate. As of October 31, 2018, the balance of the Deferred Portion of the incentive compensation payable was approximately $2.5 million. During the fiscal year ended October 31, 2019, the Company made an approximately $975,000 incentive compensation payment to TTG Advisers related to the sale of the Crius equity units, resulting in a balance of approximately $1.5 million as of October 31, 2019.

12. Tax Matters

On October 31, 2019, the Company had a net capital loss carryforward of approximately $9.3 million and had net unrealized losses of approximately $75.4 million. The Company had approximately $116.8 million in net unrealized losses as of July 31, 2020.

ASC 740, Income Taxes, provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740 requires the evaluation of tax positions taken or expected to be taken in the course of preparing the Company's 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 a "more-likely-than-not" threshold would be recorded as a tax benefit or expense in the current period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the consolidated statement of operations. During the nine month period ended July 31, 2020, the Company did not incur any interest or penalties related to unrecognized tax benefits. Although we file federal and state tax returns, our major tax jurisdiction is federal for the Company and MVCFS. The fiscal years 2014 through 2018 for the Company and MVCFS remain subject to examination by the IRS.

On December 22, 2010, the Regulated Investment Company Modernization Act of 2010 (the “Act”) was enacted, which changed various technical rules governing the tax treatment of regulated investment companies. The changes are generally effective for taxable years beginning after the date of enactment. One of the more prominent changes addresses capital loss carryforwards. Under the Act, each fund will be permitted to carry forward capital losses incurred in taxable years beginning after the date of enactment for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years, which carry an expiration date. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital loss carryforwards will retain their character as either short-term or long-term capital losses rather than being considered all short-term as permitted under previous regulation.

13. Dividends and Distributions to Shareholders, Share Repurchase Program and Tender Offer

As a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), the Company is required to distribute to its shareholders, in a timely manner, at least 90% of its investment company taxable and tax-exempt income each year. If the Company distributes, in a calendar year, at least 98% of its ordinary income for such calendar year and 98.2% of its capital gain net income for the 12-month period ending on October 31 of such calendar year (as well as any portion of the respective 2% balances not distributed in the previous year), it will not be subject to the 4% non-deductible federal excise tax on certain undistributed income of RICs.

Dividends and capital gain distributions, if any, are recorded on the ex-dividend date. Dividends and capital gain distributions are generally declared and paid quarterly according to the Company's policy established on July 11, 2005. An additional distribution may be paid by the Company to avoid imposition of federal income tax on any remaining undistributed net investment income and capital gains. Distributions can be made payable by the Company either in the form of a cash distribution or a stock dividend. The amount and character of income and capital gain distributions are determined in accordance with income tax regulations that may differ from U.S. generally accepted accounting principles. These differences are due primarily to differing treatments of income and gain on various investment securities held by the Company, differing treatments of expenses paid by the Company, timing differences and differing characterizations of distributions made by the Company. Key examples of the primary differences in expenses paid are the accounting treatment of MVCFS (which is consolidated for GAAP purposes, but not income tax purposes) and the variation in treatment of incentive compensation expense. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications and may affect the allocation between net operating income, net realized gain (loss) and paid-in capital. Additionally, the characterization of the distribution is based upon current results, and such characterization may change based upon results for the year.

All of our shareholders who hold shares of common stock in their own name will automatically be enrolled in our dividend reinvestment plan (the "Plan"). All such shareholders will have any cash dividends and distributions automatically reinvested by Computershare Ltd. (“the Plan Agent”) in shares of our common stock. Of course, any shareholder may elect to receive his or her dividends and distributions in cash. Currently, the Company has a policy of paying quarterly dividends to shareholders. For any of our shares that are held by banks, brokers or other entities that hold our shares as nominees for individual shareholders, the Plan Agent will administer the Plan on the basis of the number of shares certified by any nominee as being registered for shareholders that have not elected to receive dividends and distributions in cash. To receive your dividends and distributions in cash, you must notify the Plan Agent, broker or other entity that holds the shares.

For the Quarter Ended January 31, 2020

On December 23, 2019, the Company's Board of Directors declared a dividend of $0.17 per share. The dividend was paid on January 10, 2020 to shareholders of record on January 3, 2020 and totaled approximately $3.0 million.

During the quarter ended January 31, 2020, as part of the Company's dividend reinvestment plan for our common stockholders, the Plan Agent purchased 11,467 shares of our common stock at an average price of $9.35, including commission, in the open market in order to satisfy the reinvestment portion of our dividends under the Plan.

For the Quarter Ended April 30, 2020

On April 14, 2020, the Company's Board of Directors declared a dividend of $0.17 per share. The dividend was paid on April 30, 2020 to shareholders of record on April 24, 2020 and totaled approximately $3.0 million.

During the quarter ended April 30, 2020, as part of the Company's dividend reinvestment plan for our common stockholders, the Plan Agent purchased 6,159 shares of our common stock at an average price of $6.81, including commission, in the open market in order to satisfy the reinvestment portion of our dividends under the Plan.

For the Quarter Ended July 31, 2020

On July 14, 2020, the Company's Board of Directors declared a dividend of $0.17 per share. The dividend was paid on July 31, 2020 to shareholders of record on July 24, 2020 and totaled approximately $3.0 million.

During the quarter ended July 31, 2020, as part of the Company's dividend reinvestment plan for our common stockholders, the Plan Agent purchased 6,186 shares of our common stock at an average price of $6.96, including commission, in the open market in order to satisfy the reinvestment portion of our dividends under the Plan.

Share Repurchase Program

On April 3, 2013, the Company’s Board of Directors authorized an expanded share repurchase program to opportunistically buy back shares in the market in an effort to narrow the market discount of its shares. The previously authorized $5 million limit has been eliminated. Under the repurchase program, shares may be repurchased from time to time at prevailing market prices. The repurchase program does not obligate the Company to acquire any specific number of shares and may be discontinued at any time.

On September 18, 2018, the Company’s Board of Directors approved the Company’s implementation of a $10 million stock repurchase program. The program, which was to be completed by the end of the 2018 calendar year, was to consist of an issuer tender offer and/or open market repurchases. In addition, the Company’s Board of Directors directed the Company to pursue an additional $5 million in stock repurchases in the open market in 2019, using a portion of the proceeds of equity monetizations and subject to MVC’s common stock continuing to trade at a significant discount to NAV. Open market repurchases would be made pursuant to the Company’s unlimited stock repurchase program adopted in 2013. On October 11, 2018, pursuant to the repurchase program, the Company entered into the Rule 10b5-1 Plan that qualifies for the safe harbors provided by Rules 10b5-1 and 10b-18 under the Exchange Act. See the Company’s current report on Form 8-K, filed on October 12, 2018, for further details regarding the 10b5-1 Plan.

On November 28, 2018, the Company announced its determination to extend the repurchase program beyond December 31, 2018 until the full $10 million of shares are repurchased pursuant to the repurchase program. During the fiscal year ended October 31, 2019, the Company completed the repurchase program.

The following table represents open-market purchases made under our stock repurchase program for the fiscal years ended October 31, 2013 through October 31, 2019. There were no share repurchases made during the nine month period ended July 31, 2020.

Period *	Total Number of Shares Purchased		Average Price Paid per Share including commission		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares Purchased Under the Program
For the Year Ended October 31, 2013		1,299,294	$	12.83		1,299,294	$	16,673,207
For the Year Ended October 31, 2014		310,706	$	13.24		1,610,000	$	4,114,967
For the Year Ended October 31, 2015		-		-		1,610,000		-
For the Year Ended October 31, 2016		146,409	$	8.31		1,756,409	$	1,216,746
For the Year Ended October 31, 2017		-		-		1,756,409		-
For the Year Ended October 31, 2018		627,724	$	9.45		2,384,133		5,930,011
For the Year Ended October 31, 2019		467,686	$	8.70		2,851,819		4,069,924
For the Nine Month Period Ended July 31, 2020		-		-		2,851,819		-
Total		2,851,819	$	11.22		2,851,819	$	32,004,855

*Disclosure covering repurchases will be made through quarterly and annual reports filed with the SEC going forward. MVC Capital’s website no longer contains the monthly repurchase information.

14. Segment Data

The Company's reportable segments are its investing operations as a business development company, MVC Capital, which includes MVC Cayman. MVCFS, a wholly-owned subsidiary that provides advisory, administrative and other services to the Company and its portfolio companies, is also included.

The following table presents book basis segment data for the nine month period ended July 31, 2020:

	MVC			MVCFS			Consolidated
Interest and dividend income	$	20,513,642		$	3,357		$	20,516,999
Fee income		20,000			39,298			59,298
Fee income - asset management		-			636,989			636,989
Other Income		-			4,580			4,580
Total operating income		20,533,642			684,224			21,217,866

Total operating expenses		14,241,345			776,471			15,017,816
Less: Waivers by Adviser		(1,354,292	)		(93,699	)		(1,447,991	)
Total net operating expenses		12,887,053			682,772			13,569,825

Net operating income before taxes		7,646,589			1,452			7,648,041

Tax expense		-			1,452			1,452
Net operating income		7,646,589			-			7,646,589

Net realized (loss) gain on investments		(2,422,005	)		48,314			(2,373,691	)
Net unrealized depreciation on investments		(43,688,239	)		(37,727	)		(43,725,966	)

Net (decrease) increase in net assets resulting from operations	$	(38,463,655	)	$	10,587		$	(38,453,068	)

15. Significant Subsidiaries

We have determined that for the nine month period ended July 31, 2020, MVC Automotive and RuMe, unconsolidated portfolio companies, have met the conditions of a significant subsidiary. For the nine month period ended July 31, 2019, there were no portfolio companies that met the conditions of a significant subsidiary. The financial information presented below includes summarized balance sheets as of June 30, 2020 (the last fiscal quarter-end of these companies prior to July 31, 2020) and June 30, 2019 and summarized income statements for the periods October 1, 2019 to June 30, 2020 and October 1, 2018 to June 30, 2019. The financial information below is based on unaudited financial statements and has been prepared and furnished by the portfolio company and not prepared by the Company.

Balance Sheet

MVC Automotive

RuMe

MVC Automotive

RuMe

As of June 30,

All numbers in thousands

2020

2019

Assets:

MVC CAPITAL, INC. 10-Q