UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ~~September~~March 3031, ~~2020~~2021


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

COMMISSION FILE NUMBER: 1-35906

HARVEST CAPITAL CREDIT CORPORATION

(Exact name of registrant as specified in its charter)

Delaware(State or other Jurisdiction of Incorporation or Organization)			46-1396995(I.R.S. EmployerIdentification Number)
767 Third Avenue, 29th Floor New York, NY 10017(Address of principal executive offices) (Zip Code)
450 Park Avenue, 5th FloorNew York, NY 10022(Address of principal executive offices) (Zip Code)
(212) 906-3589
(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value of $0.001 per share	HCAP	NASDAQ Global Market
6.125% Notes due 2022	HCAPZ	NASDAQ Global Market

Indicate by check mark whether the ~~Registrant~~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 ☐ 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.

Large accelerated filer

Accelerated filer

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. ¨

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

There were 5,~~958~~968,~~479~~296 shares of the registrant’s common stock outstanding as of ~~November~~May 57, ~~2020~~2021.

HARVEST CAPITAL CREDIT CORPORATION

QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER

ENDED ~~SEPTEMBER~~MARCH 3031, ~~2020~~2021

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Statements of Assets and Liabilities as of September 30, 2020 (unaudited) and December 31, 2019	1
	Consolidated Statements of Assets and Liabilities as of March 31, 2021 (unaudited) and December 31, 2020	1
	Consolidated Statements of Operations for the three and nine months ended September 30, 2020 (unaudited) and September 30, 2019 (unaudited)	2
	Consolidated Statements of Operations for the three months ended March 31, 2021 (unaudited) and March 31, 2020 (unaudited)	2
	Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2020 (unaudited) and September 30, 2019 (unaudited)	3
	Consolidated Statements of Changes in Net Assets for the three months ended March 31, 2021 (unaudited) and March 31, 2020 (unaudited)	3
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 (unaudited) and September 30, 2019 (unaudited)	5
	Consolidated Statements of Cash Flows for the three months ended March 31, 2021 (unaudited) and March 31, 2020 (unaudited)	4
	Consolidated Schedule of Investments as of September 30, 2020 (unaudited)	7
	Consolidated Schedule of Investments as of March 31, 2021 (unaudited)	6
	Consolidated Schedule of Investments as of December 31, 2019	12
	Consolidated Schedule of Investments as of December 31, 2020	10
	Notes to Consolidated Financial Statements (unaudited)	1814
	Consolidated Schedule of Investments in and Advances to Affiliates for the nine months ended September 30, 2020 (unaudited)	39
	Consolidated Schedule of Investments in and Advances to Affiliates for the three months ended March 31, 2021 (unaudited)	36
	Consolidated Schedule of Investments in and Advances to Affiliates for the year ended December 31, 2019	44
	Consolidated Schedule of Investments in and Advances to Affiliates for the year ended December 31, 2020	40
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4945
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6458
Item 4.	Controls and Procedures	6660
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	6660
Item 1A.	Risk Factors	6661
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6761
Item 3.	Defaults Upon Senior Securities	6761
Item 4.	Mine Safety Disclosures	6761
Item 5.	Other Information	6762
Item 6.	Exhibits	6862
SIGNATURES		6963

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Harvest Capital Credit Corporation

Consolidated Statements of Assets and Liabilities

	September 30, 2020		December 31, 2019
	March 31, 2021		December 31, 2020
	(unaudited)
ASSETS:
Non-affiliated/non-control investments, at fair value (cost of $51,191,614 at 9/30/20 and $61,379,670 at 12/31/19)	$	46,162,570	$	60,973,556
Non-affiliated/non-control investments, at fair value (cost of $44,009,529 at 3/31/21 and $45,081,806 at 12/31/20)	$	43,076,198	$	43,075,802
Affiliated investments, at fair value (cost of $42,260,687 at 9/30/20 and $48,111,833 at 12/31/19)	41,006,699		47,431,234
Affiliated investments, at fair value (cost of $26,576,003 at 3/31/21 and $34,972,335 at 12/31/20)	24,090,925		35,563,428
Control investments, at fair value (cost of $14,021,701 at 9/30/20 and $13,958,202 at 12/31/19)	8,811,999		8,404,600
Control investments, at fair value (cost of $14,078,735 at 3/31/21 and $13,980,200 at 12/31/20)	9,970,427		10,915,343
Cash	817,~~406~~512,~~656~~542		117,~~199~~905,~~083~~299
Restricted cash	2911,~~338~~250,~~582~~378		1031,~~648~~478,~~199~~661
Interest receivable	~~652~~501,~~593~~995		~~663~~545,~~191~~330
Accounts receivable – other	~~478~~331,~~499~~698		~~184~~106,~~804~~415
Deferred financing costs	~~262~~144,~~742~~943		~~425~~205,~~379~~630
Other assets	~~204~~113,~~695~~242		~~129~~148,~~690~~605
Total assets	$	~~135~~106,~~325~~992,~~035~~348	$	~~140~~129,~~059~~944,~~736~~513
LIABILITIES:
Revolving line of credit	$	4510,000,000	$	4335,~~700~~591,~~000~~406
2022 Notes (net of deferred offering costs and unamortized discount of $464,967 at 9/30/20 and $623,276 at 12/31/19)	28,285,033		28,126,724
2022 Notes (net of deferred offering costs and unamortized discount of $354,732 at 3/31/21 and $410,330 at 12/31/20)	28,395,268		28,339,670
Accrued interest payable	9698,~~276~~976		~~152~~114,~~544~~367
Accounts payable - base management fees	~~512~~416,~~047~~194		~~593~~474,~~266~~217
Accounts payable - administrative services expense	350,000		350,000
Accounts payable and accrued expenses	~~462~~759,~~605~~919		~~355~~1,~~720~~622,003
Total liabilities	74,705,961		73,278,254
Deferred tax liability	302,587		1,236,329
Total liabilities	40,322,944		67,727,992
Commitments and Contingencies (Note 8)
NET ASSETS:
Common stock, $0.001 par value, 100,000,000 shares authorized, 6,600,444 issued and 5,958,479 outstanding at 9/30/20 and 6,587,819 issued and 5,945,854 outstanding at 12/31/19	6,601		6,588
Common stock, $0.001 par value, 100,000,000 shares authorized, 6,610,261 issued and 5,968,296 outstanding at each of 3/31/21 and 12/31/20	6,610		6,610
Capital in excess of common stock	9089,~~962~~578,~~284~~243		9089,~~876~~578,~~759~~243
Treasury shares, at cost, 641,965 shares at each of 9/30/20 and 12/31/19	(6,723,505)		(6,723,505)
Treasury shares, at cost, 641,965 shares at each of 3/31/21 and 12/31/20	(6,723,505)		(6,723,505)
Accumulated overdistributed earnings	(2316,~~626~~191,~~306~~944)		(1720,~~378~~644,~~360~~827)
Total net assets	6066,~~619~~669,~~074~~404		6662,~~781~~216,~~482~~521
Total liabilities and net assets	$	~~135~~106,~~325~~992,~~035~~348	$	~~140~~129,~~059~~944,~~736~~513
Common stock outstanding	5,~~958~~968,~~479~~296		5,~~945~~968,~~854~~296
Net asset value per common share	$	1011.17	$	1110.2342

See accompanying notes to unaudited consolidated financial statements.

Harvest Capital Credit Corporation

Consolidated Statements of Operations (Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2020		2019		2020		2019
	2021		2020
Investment Income:
Interest:
Cash - non-affiliated/non-control investments	$	~~967~~881,~~288~~146	$	1,~~416~~564,~~656~~087	$	~~3,598,978~~	$	~~4,247,511~~
Cash - affiliated investments	1570,~~083,399~~151		1,~~432~~301,~~203~~790		~~3,490,270~~		~~3,493,857~~
PIK - non-affiliated/non-control investments	156,105		18,471		376,321		49,236
Cash - control investments	98,535		—
PIK - affiliated investments	136,526		187,334		436,381		569,447
PIK - non-affiliated/non-control investments	130,654		109,634
Amortization of fees and discounts:
PIK - affiliated investments	138,064		155,328
Non-affiliated/non-control investments	54,822		121,156		248,464		548,217
PIK - control investments	98,535		—
Affiliated investments	476,421		60,970		591,965		118,125
Amortization of fees and discounts:
Total interest income	2,874,561		3,236,790		8,742,379		9,026,393
Non-affiliated/non-control investments	55,712		89,995
Other income	152,526		45,508		162,317		288,454
Affiliated investments	97,633		59,747
Total investment income	3,027,087		3,282,298		8,904,696		9,314,847
Total interest income	2,070,430		3,280,581
Expenses:
Other income	126,210		6,180
Interest expense - revolving line of credit	351,436		224,712		1,012,455		327,493
Total investment income	2,196,640		3,286,761
Interest expense - unused line of credit	25,551		74,586		115,052		268,470
Expenses:
Interest expense - deferred financing costs	58,085		58,258		240,245		168,898
Interest expense - revolving line of credit	59,392		321,119
Interest expense - 2022 Notes	440,235		440,235		1,320,705		1,320,705
Interest expense - unused line of credit	50,851		55,396
Interest expense - deferred offering costs and discount	53,693		50,076		158,311		147,646
Interest expense - deferred financing costs	61,935		58,005
Total interest expense	929,000		847,867		2,846,768		2,233,212
Interest expense - 2022 Notes	440,235		440,235
Professional fees	151,246		198,360		608,570		1,016,240
Interest expense - deferred offering costs and discount	55,597		51,853
General and administrative	229,934		235,277		709,622		726,849
Total interest expense	668,010		926,608
Base management fees	512,046		578,466		1,643,020		1,613,040
Professional fees	451,533		209,045
Administrative services expense	350,000		350,000		1,050,000		1,050,000
General and administrative	190,337		231,272
Total expenses	2,172,226		2,209,970		6,857,980		6,639,341
Base management fees	416,194		581,166
Net Investment Income	854,861		1,072,328		2,046,716		2,675,506
Administrative services expense	350,000		350,000
Net realized gains (losses):
Total expenses	2,076,074		2,298,091
Non-affiliated / Non-control investments	—		—		(2,176,202)		52,451
Net Investment Income	120,566		988,670
Affiliated investments	248,294		—		248,294		20,750
Net realized gains (losses):
Control investments	(21,950)		(92,615)		(86,501)		(103,505)
Non-affiliated / Non-control investments	—		(86,427)
Net realized gains (losses)	226,344		(92,615)		(2,014,409)		(30,304)
Affiliated investments	6,445,524		—
Net change in unrealized appreciation (depreciation) on investments:
Net realized gains (losses)	6,445,524		(86,427)
Non-affiliated / Non-control investments	(858,707)		(2,759,004)		(4,622,927)		(3,448,583)
Net change in unrealized appreciation (depreciation) on investments:
Affiliated investments	(1,191,301)		658,765		(573,390)		665,351
Non-affiliated / Non-control investments	1,072,674		(3,242,104)
Control investments	586,000		77,364		343,900		(758,030)
Affiliated investments	(3,076,171)		(1,727,883)
Net change in unrealized depreciation on investments	(1,464,008)		(2,022,875)		(4,852,417)		(3,541,262)
Control investments	(1,043,452)		390,450
Total net unrealized and realized losses on investments	(1,237,664)		(2,115,490)		(6,866,826)		(3,571,566)
Net change in unrealized depreciation on investments	(3,046,949)		(4,579,537)
Net decrease in net assets resulting from operations	$	(382,803)	$	(1,043,162)	$	(4,820,110)	$	(896,060)
Total net unrealized and realized gains (losses) on investments	3,398,575		(4,665,964)
Net investment income per share	$	0.14	$	0.18	$	0.34	$	0.43
Benefit for taxes on unrealized losses on investments	933,742		—
Net decrease in net assets resulting from operations per share	$	(0.06)	$	(0.17)	$	(0.81)	$	(0.15)
Net increase (decrease) in net assets resulting from operations	$	4,452,883	$	(3,677,294)
Weighted average shares outstanding, basic and diluted	5,958,479		6,053,807		5,955,513		6,171,616
Net investment income per share	$	0.02	$	0.17
Net increase (decrease) in net assets resulting from operations per share	$	0.75	$	(0.62)
Weighted average shares outstanding, basic and diluted	5,968,296		5,949,548

See accompanying notes to unaudited consolidated financial statements.

Harvest Capital Credit Corporation

Consolidated Statements of Changes in Net Assets (Unaudited)

	Common Stock
Three Months Ended September 30, 2020	Shares	Par		Capital in Excess of Common Stock		Treasury Shares		Accumulated Over Distributed Earnings		Total Net Assets
Three Months Ended March 31, 2021	Shares	Par		Capital in Excess of Common Stock		Treasury Shares		Accumulated Over Distributed Earnings		Total Net Assets
Balance as of June 30, 2020	5,958,479	$	6,601	$	90,962,284	$	(6,723,505)	$	(23,243,503)	$	61,001,877
Balance as of December 31, 2020	5,968,296	$	6,610	$	89,578,243	$	(6,723,505)	$	(20,644,827)	$	62,216,521
Net decrease in net assets resulting from operations:
Net investment income	—	—		—		—		~~854~~120,~~861~~566		~~854~~120,~~861~~566
Net realized gains	—	—		—		—		~~226~~6,~~344~~445,524		~~226~~6,~~344~~445,524
Net change in unrealized depreciation on investments	—	—		—		—		(1,464,008)		(1,464,008)
Net change in unrealized depreciation on investments and benefit for taxes on unrealized losses on investments	—	—		—		—		(2,113,207)		(2,113,207)
Total decrease for the three months ended September 30, 2020	—	—		—		—		(382,803)		(382,803)
Total decrease for the three months ended March 31, 2021	—	—		—		—		4,452,883		4,452,883
Balance as of September 30, 2020	5,958,479	$	6,601	$	90,962,284	$	(6,723,505)	$	(23,626,306)	$	60,619,074
Balance as of March 31, 2021	5,968,296	$	6,610	$	89,578,243	$	(6,723,505)	$	(16,191,944)	$	66,669,404

	Common Stock
Three Months Ended September 30, 2019	Shares	Par		Capital in Excess of Common Stock		Treasury Shares		Accumulated Over Distributed Earnings		Total Net Assets
Three Months Ended March 31, 2020	Shares	Par		Capital in Excess of Common Stock		Treasury Shares		Accumulated Over Distributed Earnings		Total Net Assets
Balance as of June 30, 2019	6,126,724	$	6,570	$	92,426,143	$	(4,702,931)	$	(14,861,022)	$	72,868,760
Balance as of December 31, 2019	5,945,854	$	6,588	$	90,876,759	$	(6,723,505)	$	(17,378,360)	$	66,781,482
Net increase in net assets resulting from operations:
Net investment income	—	—		—		—		1988,~~072,328~~670		1988,~~072,328~~670
Net realized losses	—	—		—		—		(9286,~~615~~427)		(9286,~~615~~427)
Net change in unrealized depreciation on investments	—	—		—		—		(24,~~022~~579,~~875~~537)		(24,~~022~~579,~~875~~537)
Distributions to stockholders (1):
Distributions	—	—		—		—		(1,~~452~~427,~~013~~836)		(1,~~452~~427,~~013~~836)
Capital share transactions
Reinvestment of dividends	812,~~514~~625	813		8185,~~363~~525		—		—		8185,~~371~~538
Share repurchases	(159,561)	—		—		(1,626,331)		—		(1,626,331)
Total increase (decrease) for the three months ended March 31, 2020	12,625	13		85,525		—		(5,105,130)		(5,019,592)
Total increase (decrease) for the three months ended September 30, 2019	(151,047)	8		81,363		(1,626,331)		(2,495,175)		(4,040,135)
Balance as of March 31, 2020	5,958,479	$	6,601	$	90,962,284	$	(6,723,505)	$	(22,483,490)	$	61,761,890
Balance as of September 30, 2019	5,975,677	$	6,578	$	92,507,506	$	(6,329,262)	$	(17,356,197)	$	68,828,625

3(1) The Company did not make any distributions during the three months ended March 31, 2021. Distributions exceeded net investment income for the three months ended March 31, 2020 by an amount of $439,166. See "Dividends and Distributions" in Note 2.

	Common Stock
Nine Months Ended September 30, 2020	Shares	Par		Capital in Excess of Common Stock		Treasury Shares		Accumulated Over Distributed Earnings		Total Net Assets
Balance as of December 31, 2019	5,945,854	$	6,588	$	90,876,759	$	(6,723,505)	$	(17,378,360)	$	66,781,482
Net decrease in net assets resulting from operations:
Net investment income	—	—		—		—		2,046,716		2,046,716
Net realized losses	—	—		—		—		(2,014,409)		(2,014,409)
Net change in unrealized depreciation on investments	—	—		—		—		(4,852,417)		(4,852,417)
Distributions to shareholders (1):
Distributions	—	—		—		—		(1,427,836)		(1,427,836)
Capital share transactions
Reinvestment of dividends	12,625	13		85,525		—		—		85,538
Total increase (decrease) for the nine months ended September 30, 2020	12,625	13		85,525		—		(6,247,946)		(6,162,408)
Balance as of September 30, 2020	5,958,479	$	6,601	$	90,962,284	$	(6,723,505)	$	(23,626,306)	$	60,619,074

	Common Stock
Nine Months Ended September 30, 2019	Shares	Par		Capital in Excess of Common Stock		Treasury Shares		Accumulated Over Distributed Earnings		Total Net Assets
Balance as of December 31, 2018	6,372,581	$	6,554	$	92,270,273	$	(1,956,055)	$	(11,924,808)	$	78,395,964
Net increase in net assets resulting from operations:
Net investment income	—	—		—		—		2,675,506		2,675,506
Net realized losses	—	—		—		—		(30,304)		(30,304)
Net change in unrealized depreciation on investments	—	—		—		—		(3,541,262)		(3,541,262)
Distributions to shareholders (1):
Distributions	—	—		—		—		(4,535,329)		(4,535,329)
Capital share transactions
Reinvestment of dividends	24,165	24		237,233		—		—		237,257
Share repurchases	(421,069)	—		—		(4,373,207)		—		(4,373,207)
Total increase (decrease) for the nine months ended September 30, 2019	(396,904)	24		237,233		(4,373,207)		(5,431,389)		(9,567,339)
Balance as of September 30, 2019	5,975,677	$	6,578	$	92,507,506	$	(6,329,262)	$	(17,356,197)	$	68,828,625

(1) The Company did not make any distributions during the three months ended September 30, 2020. Distributions exceeded net investment income for the three months ended September 30, 2019 by an amount of $379,685. Net investment income exceeded distributions for the nine months ended September 30, 2020 by $618,880 and distributions exceeded net investment income for the nine months ended September 30, 2019 by $1,859,823. See "Dividends and Distributions" in Note 2.

See accompanying notes to unaudited consolidated financial statements.

Harvest Capital Credit Corporation

Consolidated Statements of Cash Flows (Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2020		2019
	2021		2020
Cash flows from operating activities:
Net decrease in net assets resulting from operations	$	(4,820,110)	$	(896,060)
Net increase (decrease) in net assets resulting from operations	$	4,452,883	$	(3,677,294)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by (used in) operating activities:
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by (used in) operating activities:
Payment-in-kind income	(~~812~~367,~~702~~253)		(~~618~~264,~~683~~962)
Payment-in-kind income collected	~~140~~85,~~920~~470		~~124~~17,~~184~~958
Net realized losses on investments	2,014,409		30,304
Net realized (gains) losses on investments	(6,445,524)		86,427
Net change in unrealized depreciation of investments	43,~~852~~046,~~417~~949		34,~~541~~579,~~262~~537
Amortization of fees and discounts on investments	(840,429)		(666,342)
Provision for taxes on unrealized gains on investments	(933,742)		—
Amortization of deferred financing costs	240,245		168,898
Amortization of fees and discounts on investments	(153,345)		(149,742)
Amortization of deferred offering costs and discount	158,311		147,646
Amortization of deferred financing costs	61,935		58,005
Proceeds from sales of investments	1,728,081		6,078,795
Amortization of deferred offering costs and discount	55,597		51,853
Purchase of investments (net of loan origination and other fees)	(2,463,420)		(50,952,846)
Proceeds from sales of investments	9,001,436		15,994
Proceeds from principal payments	15,995,741		21,668,998
Purchase of investments (net of loan origination and other fees)	13,750		(1,570,400)
Proceeds from principal payments	7,000,214		953,284
Changes in operating assets and liabilities:
(Increase) decrease in interest receivable	1043,~~598~~335		(33168,~~408~~634)
(Increase) decrease in accounts receivable - other and other assets	(155,589)		67,373
Increase in accounts receivable - other and other assets	45,407		(237,517)
Increase (decrease) in accrued interest payable	(5615,~~268~~391)		1611,~~576~~307
Increase (decrease) in accounts payable and other liabilities	21(917,~~698~~955)		~~(295~~239,~~946)~~790
Net cash provided by (used in) operating activities	1614,~~013~~973,~~902~~766		(2154,~~619,249~~394)
Cash flows from financing activities:
Borrowings on revolving credit facility	9210,~~713~~000,~~837~~000		7640,~~300~~900,000
Repayment of borrowings on revolving credit facility	(9135,~~413~~591,~~837~~406)		(5740,~~000~~600,000)
Financing costs	(733,~~642~~400)		~~(23,210)~~—
Repurchased shares (held in Treasury Stock)	—		(4,373,207)
Distributions to stockholders (net of stock issued under dividend reinvestment plan of $85,538 for the three months ended March 31, 2020)	—		(1,342,298)
Distributions to stockholders (net of stock issued under dividend reinvestment plan of $85,538 and $237,257, respectively)	(1,342,304)		(4,298,072)
Net cash used in financing activities	(25,594,806)		(1,042,298)
Net cash provided by (used in) provided by financing activities	(115,946)		10,605,511
Net decrease in cash during the period	(10,621,040)		(1,096,692)
Net increase (decrease) in cash during the period	15,897,956		(11,013,738)
Cash at beginning of period	39,383,960		21,847,282
Cash at beginning of period	21,847,282		28,775,548
Cash at end of period (1)	$	28,762,920	$	20,750,590
Cash at end of period (1)	$	37,745,238	$	17,761,810
Non-cash operating activities:
Fair value of warrants received from Kleen-Tech Acquisition, LLC	$	—	$	186,970
Regional Engine Leasing, LLC payoff received subsequent to March 31, 2020	$	—	$	2,196,600
Fair value of warrants received from Surge Hippodrome Holdings LLC	$	—	$	237,579
Non-cash financing activities:
Conversion of Northeast Metal Works, LLC Revolving Credit Facility to Junior Secured Term Loan	$	—	$	446,494
Value of shares issued in connection with dividend reinvestment plan	$	—	$	85,538
Conversion of Coastal Screen & Rail, LLC Revolving Credit Facility to Senior Secured Term Loan	$	—	$	950,000
Supplemental disclosures of cash flow information:
Conversion of General Nutrition Centers, Inc. Senior Secured Term Loan to Senior Secured Roll-up Term Loan	$	964,812	$	—
Cash paid during the period for interest	$	565,869	$	805,441
Cash paid during the period for taxes	$	11,890	$	13,610

	Nine Months Ended September 30,
	2020		2019
Non-cash financing activities:
Value of shares issued in connection with dividend reinvestment plan	$	85,538	$	237,257
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	2,504,479	$	1,900,092
Cash paid during the period for taxes	$	45,061	$	46,591


			(1) Consists of cash and restricted cash of $17,512,542 and $11,250,378, respectively, at March 31, 2021, and $285,647 and $20,464,943, respectively, at March 31, 2020.

(1) Consists of cash and restricted cash of $8,406,656 and $29,338,582, respectively, at September 30, 2020, and $16,344,322 and $1,417,488, respectively, at September 30, 2019.

See accompanying notes to unaudited consolidated financial statements.

Harvest Capital Credit Corporation

Consolidated Schedule of Investments (Unaudited)

As of ~~September~~March 3031, ~~2020~~2021

Portfolio Company	Date**	Industry	Investment (1) (2) (10) (11) (12)		Principal		Cost		Fair Value
Non-Control / Non-Affiliate Investments
Back Porch International, Inc. (11.4%)*	09/2019	High Tech Industries	Senior Secured Term Loan, due 03/2024 (13.50%; 1M LIBOR + 10.25% with a 2.25% LIBOR floor + 1.00% PIK)	(4)	$	6,895,770	$	6,797,583	$	6,895,770
Back Porch International, Inc. (10.1%)*	09/2019	High Tech Industries	Senior Secured Term Loan, due 03/2024 (13.50%; 1M LIBOR + 10.25% with a 2.25% LIBOR floor + 1.00% PIK)	(4)	$	6,705,445	$	6,620,503	$	6,705,445
					6,895,770		6,797,583		6,895,770
					6,705,445		6,620,503		6,705,445
Brite Media LLC (0.2%)*	04/2014	Media: Advertising, Printing & Publishing	Class A Interest (0.86% fully diluted common equity)				125,000		~~142~~160,~~767~~645
							125,000		~~142~~160,~~767~~645
Coastal Screen and Rail, LLC (12.7%)*	01/2018	Construction & Building	Senior Secured Term Loan, due 01/2023 (14.00%; 10.50% Cash + 3.50% PIK)	(4)	7,370,206		7,286,568		7,286,468
Coastal Screen and Rail, LLC (12.0%)*	01/2018	Construction & Building	Senior Secured Term Loan, due 01/2023 (13.00%; 10.50% Cash + 2.50% PIK)	(4)	7,182,706		7,117,044		7,182,706
			Senior Secured Revolving Line of Credit, due 07/2022 (8.23%; 3M LIBOR + 8.00%)	(3)	100,000		100,000		100,000
			Senior Secured Revolving Line of Credit, due 07/2022 (8.21%; 3M LIBOR + 8.00%)	(3)	100,000		100,000		100,000
			Preferred Equity Class B Interest 10.34% / (3.90% fully diluted common equity)	(5)			150,000		~~282~~724,~~000~~863
					7,470,206		7,536,568		7,668,468
					7,282,706		7,367,044		8,007,569
Deluxe Entertainment Services Group Inc.(1.7%)*	01/2019	Media: Diversified & Production	Junior Secured Term Loan, due 9/2024 (9.50%, LIBOR + 6.00% with a 1.00% LIBOR floor + 2.50% PIK)		522,923		522,923		522,923
GK Holdings, Inc. (2.5%)	01/2015	High Tech Industries	Junior Secured Term Loan, due 01/2022 (13.25%; 3M LIBOR + 10.25% with a 1.00% LIBOR floor + 2.00% default rate)	(4) (9)	3,000,000		2,972,406		1,635,000
			Common Equity (0.63% fully diluted common equity)				2,056,418		487,679
					3,000,000		2,972,406		1,635,000
					522,923		2,579,341		1,010,602
GNC Holdings, LLC (2.0%)	10/2020	Beverage, Food, & Tobacco	Junior Secured Term Loan, due 10/2026 (9.23%; LIBOR + 6.00% + 3.00% fee)		1,833,233		1,489,310		1,315,161
General Nutrition Centers, Inc. (7.6%)*	02/2019	Beverage, Food, & Tobacco	Senior Secured Term Loan, due 08/2020 (11.00%; LIBOR + 8.75% with a 0.75% LIBOR floor; ABR + 7.75%)	(9) (13)	2,998,961		2,910,829		2,685,000
					1,833,233		1,489,310		1,315,161
			DIP New Money Term Loan, due upon restructuring (15.25%; Prime + 13.25%)	(9) (13)	964,812		941,502		964,812
KC Engineering & Construction Services, LLC (5.8%)*	10/2017	Environmental Industries	Class A Membership Interest (2.50% fully diluted common equity)	(5)			906,761		3,859,096
			DIP Roll-up Term Loan, due upon restructuring (13.50%; Prime + 10.25%)	(9) (13)	964,812		901,081		964,812
							906,761		3,859,096
					4,928,585		4,753,412		4,614,624
Peerless Media, LLC (4.3%)*	02/2019	Media: Advertising, Printing & Publishing	Senior Secured Term Loan, due 02/2024 (11.40%; 1M LIBOR + 8.50% with a 2.40% LIBOR floor + 0.50% PIK)		2,887,692		2,867,647		2,887,692
GK Holdings, Inc. (2.4%)*	01/2015	High Tech Industries	Junior Secured Term Loan, due 01/2022 (13.25%; 3M LIBOR + 10.25% + 2.00% default interest with a 1.00% LIBOR floor)	(4) (9)	3,000,000		2,972,406		1,450,000
					2,887,692		2,867,647		2,887,692
					3,000,000		2,972,406		1,450,000
ProAir Holdings Corporation (6.9%)*	09/2017	Capital Equipment	Junior Secured Term Loan, due 12/2022 (15.50%; 13.50% + 2.0% PIK default interest)	(4) (9)	7,737,088		7,424,544		4,577,000
KC Engineering & Construction Services, LLC (4.8%)*	10/2017	Environmental Industries	Class A Membership Interest (2.5% fully diluted common equity)	(5)			906,761		2,905,978
					7,737,088		7,424,544		4,577,000
							906,761		2,905,978
Safety Services Acquisition Corp. (6.7%)*	03/2017	Services: Business	Senior Secured Term Loan, due 08/2021 (9.75%; 3M LIBOR + 8.75% with a 1.00% LIBOR floor)	(4)	4,371,181		4,370,190		4,371,181
Peerless Media, LLC (6.0%)*	02/2019	Media: Advertising, Printing & Publishing	Senior Secured Term Loan, due 02/2024 (11.40%; 1M LIBOR + 8.50% with a 2.40% LIBOR floor + 0.50% PIK)		3,639,914		3,612,977		3,639,914
	04/2012		Series A Preferred Stock (0.57% fully diluted common equity)				100,000		67,409
					3,639,914		3,612,977		3,639,914
					4,371,181		4,470,190		4,438,590
ProAir Holdings Corporation (6.6%)*	09/2017	Capital Equipment	Junior Secured Term Loan, due 12/2022 (17.50%; 13.50% + 4.0% PIK default interest)	(4) (9)	7,644,474		7,424,544		4,019,000
Surge Busy Bee Holdings, LLC (10.4%)*	11/2017	Services: Business	Senior Secured Term Loan, due 11/2022 (10.11%; 1M LIBOR + 10.00%)	(4)	3,612,500		3,537,328		3,499,500
					7,644,474		7,424,544		4,019,000
			Senior Secured Term Loan, due 11/2022 (14.00%; 12.00% cash + 2.00% PIK)	(4)	3,540,127		3,478,739		3,465,500
Safety Services Acquisition Corp. (7.3%)*	03/2017	Services: Business	Senior Secured Term Loan, due 08/2021 (13.75%; 3M LIBOR + 8.75% with a 1.00% LIBOR floor + 4.0% PIK)	(4)	4,420,208		4,418,045		4,340,579
			Senior Secured Revolving Line of Credit, due 11/2021 (1M LIBOR + 8.00%)	(3)	—		—		—
	04/2012		Series A Preferred Stock (0.57% fully diluted common equity)				100,000		63,148
			Class B Equity Warrants (4.75% fully diluted common equity)				76,475		—
					4,420,208		4,518,045		4,403,727
					7,152,627		7,092,542		6,965,000
Surge Busy Bee Holdings, LLC (11.5%)*	11/2017	Services: Business	Senior Secured Term Loan, due 11/2022 (11.15%; 1M LIBOR + 11.00%)	(4)	3,800,000		3,703,801		3,732,000
Water-Land Manufacturing & Supply, LLC (3.8%)*	08/2018	Consumer Goods - Durable	Junior Secured Term Loan, due 05/2023 (12.75%; 3M LIBOR + 10.50% with a 2.25% LIBOR floor)		2,500,000		2,473,582		2,525,000
					2,500,000		2,473,582		2,525,000

Portfolio Company	Date**	Industry	Investment (1) (2) (10) (11) (12)		Principal		Cost		Fair Value
			Senior Secured Term Loan, due 11/2022 (15.00%; 13.00% cash + 2.00% PIK)	(4)	3,591,483		3,516,203		3,261,880
World Business Lenders, LLC (-%)*	12/2013	Banking, Finance, Insurance & Real Estate	Class B Equity Interest (0.27% fully diluted common equity)	(7)			200,000		—
			Senior Secured Revolving Line of Credit, due 11/2021 (1M LIBOR + 8.00%)	(3)	—		—		—
			Class B Equity Warrants (4.75% fully diluted common equity)				76,475		2,106
					7,391,483		7,296,479		6,995,986
Water-Land Manufacturing & Supply, LLC (4.0%)*	08/2018	Consumer Goods - Durable	Junior Secured Term Loan, due 05/2023 (12.75%; 3M LIBOR + 10.50% with a 2.25% LIBOR floor)		2,500,000		2,468,498		2,415,734
					2,500,000		2,468,498		2,415,734
World Business Lenders, LLC (-%)*	12/2013	Banking, Finance, Insurance & Real Estate	Class B Equity Interest (0.28% fully diluted common equity)	(7)			200,000		—
							200,000		—
Subtotal Non-Control / Non-Affiliate Investments					$	4843,~~413~~469,~~563~~972	$	5144,~~191~~009,~~614~~529	$	4643,~~162~~076,~~570~~198
Affiliate Investments
Flight Lease XII, LLC (0.3%)*	03/2017	Aerospace & Defense	Common Equity Interest (19.23% fully diluted common equity)	(5)			197,933		197,933
Flight Lease XII, LLC (0.8%)*	03/2017	Aerospace & Defense	Common Equity Interest (19.23% fully diluted common equity)	(5)			158,346		528,825
							197,933		197,933
							158,346		528,825
Kleen-Tech Acquisition, LLC (0.4%)*	05/2019	Services: Business	Common Equity Units (7.35% fully diluted common equity)	(5)			250,000		266,092
Kleen-Tech Acquisition, LLC (2.0%)*	05/2019	Services: Business	Common Equity Units (6.89% fully diluted common equity)	(5)			250,000		1,334,913
							250,000		~~266~~1,~~092~~334,913
National Program Management & Project Controls, LLC (21.2%)*	06/2018	Construction & Building	Senior Secured Term Loan, due 06/2023 (9.75%; 1M LIBOR + 8.25% with a 1.50% LIBOR floor)		5,462,388		5,398,434		5,451,888
Northeast Metal Works, LLC (17.5%)*	09/2014	Metals & Mining	Senior Secured Term Loan, due 12/2021 (10.00%; 6.00% Cash + 4.00% PIK)		13,860,356		13,859,103		11,663,948
	05/2020		Delayed Draw Term Loan, due 06/2023 (9.75%; 1M LIBOR + 8.25% with a 1.50% LIBOR floor)	(3)	63,595		63,312		63,473
			Class A Membership Interest (5.10% fully diluted common equity)	(5)			2,791,241		7,337,701
					5,525,983		8,252,987		12,853,062
Northeast Metal Works, LLC (17.5%)*	09/2014	Metals & Mining	Senior Secured Term Loan, due 06/2020 (10.00%; 7.00% Cash + 3.00% PIK)		13,515,098		13,513,370		10,553,135
	05/2017		Preferred Equity Interest (22.79% fully diluted common equity; 12.0% cumulative preferred return)	(5)			1,515,520		—
					13,515,098		15,028,890		10,553,135
					13,860,356		15,374,623		11,663,948
Slappey Communications, LLC (13.4%)*	05/2019	Telecommunications	Senior Secured Term Loan, due 05/2024 (13.00%; 3M LIBOR + 10.00% with a 2.50% LIBOR floor + 0.50% PIK)		7,781,908		7,657,050		7,781,908
Slappey Communications, LLC (0.6%)*	05/2019	Telecommunications	Common Equity Units (11.33% preferred equity / 7.14% fully diluted common equity)	(5)			288,946		420,514
			Senior Secured Revolving Line of Credit, due 05/2023 (3M LIBOR + 10.00% with a 2.50% LIBOR floor)	(3)	—		—		—
					—		288,946		420,514
			Common Equity Units (12.90% preferred equity / 7.59% fully diluted common equity)	(5)			200,000		357,000
Surge Hippodrome Holdings LLC (8.8%)*	08/2019	Services: Business	Senior Secured Term Loan (Last Out), due 08/2024 (13.50%; 3M LIBOR + 11.50% with a 2.00% LIBOR floor)		5,460,000		5,199,204		5,218,500
					7,781,908		7,857,050		8,138,908
			Common Equity Interest (10.69% fully diluted common equity)	(5)			464,421		445,447
Surge Hippodrome Holdings LLC (8.1%)*	08/2019	Services: Business	Senior Secured Term Loan (Last Out), due 08/2024 (13.50%; 3M LIBOR + 11.50% with a 2.00% LIBOR floor)		5,460,000		5,170,452		4,804,158
			Common Equity Warrants (6.38% fully diluted common equity)	(5)			237,579		198,778
			Common Equity Interest (10.08% fully diluted common equity)	(5)			360,000		72,525
					5,460,000		5,901,204		5,862,725
			Common Equity Warrants (9.50% fully diluted common equity)	(5)			237,579		52,886
V-Tek, Inc. (6.4%) *	03/2017	Capital Equipment	Senior Secured Term Loan, due 03/2022 (8.25%; 3M LIBOR + 8.00%)		2,887,500		2,916,787		2,611,000
					5,460,000		5,768,031		4,929,569
			Senior Secured Revolving Line of Credit, due 12/2021 (6.75%; 3M LIBOR + 6.50%)	(3)	1,536,097		1,536,097		1,515,500
			Common Stock (8.98% fully diluted common equity)	(5)			150,000		153,500
					4,423,597		4,602,884		4,280,000
Subtotal Affiliate Investments					$	23,743,953	$	26,576,003	$	24,090,925
Control Investments
Flight Lease VII, LLC (0.4%) *	03/2016	Aerospace & Defense	Common Equity Interest (46.14% fully diluted common equity)	(8)			$	300,000	$	300,000
							300,000		300,000
Infinite Care, LLC (14.5%) *	02/2016	Healthcare & Pharmaceuticals	Senior Secured Term Loan, due 01/2022 (8.00%; 4.00% cash + 4.00% PIK)	(6)	5,093,957		3,364,821		4,845,091
			Senior Secured Revolving Line of Credit, due 01/2022 (8.00%; 4.00% cash + 4.00% PIK)	(6)	4,825,336		4,464,914		4,825,336
			Membership Interest (100% membership interests)	(5) (6)			5,949,000		—
					9,919,293		13,778,735		9,670,427
Subtotal Control Investments					$	9,919,293	$	14,078,735	$	9,970,427
Total Investments at 3/31/21 (115.7%) *					$	77,133,218	$	84,664,267	$	77,137,550

Portfolio Company	Date**	Industry	Investment (1) (2) (10) (11) (12)		Principal		Cost		Fair Value
V-Tek, Inc. (6.7%) *	03/2017	Capital Equipment	Senior Secured Term Loan, due 03/2022 (6.00%)		3,237,500		3,219,699		2,610,000
			Senior Secured Revolving Line of Credit, due 03/2021 (6.75%; 3M LIBOR + 6.50%)	(3)	1,536,097		1,536,097		1,458,000
			Common Stock (8.98% fully diluted common equity)	(5)			150,000		—
					4,773,597		4,905,796		4,068,000
Subtotal Affiliate Investments					$	37,056,586	$	42,260,687	$	41,006,699
Control Investments
Flight Lease VII, LLC (0.5%) *	03/2016	Aerospace & Defense	Common Equity Interest (46.14% fully diluted common equity)	(8)			$	325,999	$	325,999
							325,999		325,999
Infinite Care, LLC (14.0%) *	02/2016	Healthcare & Pharmaceuticals	Senior Secured Term Loan, due 01/2021 (3.00%)	(6) (9)	4,740,284		3,377,702		4,031,000
			Senior Secured Revolving Line of Credit, due 01/2021 (3.00%)	(6) (9)	4,506,271		4,369,000		4,455,000
			Membership Interest (100% membership interests)	(5) (6)			5,949,000		—
					9,246,555		13,695,702		8,486,000
Subtotal Control Investments					$	9,246,555	$	14,021,701	$	8,811,999
Total Investments at 9/30/20 (158.3%) *					$	94,716,704	$	107,474,002	$	95,981,268

* Fair value as a percentage of net assets

** Date refers to the origination date of the investment

(1)			Debt investments are income-producing investments unless an investment is on non-accrual. Common equity, preferred equity, residual values and warrants are non-income-producing.
(2)			For each loan, the Company has provided the interest rate in effect on the date presented, as well as the contractual components of that interest rate. In the case of the Company's variable or floating rate loans, the interest rate in effect takes into account the applicable LIBOR in effect on ~~September~~March 3031, ~~2020~~2021 or, if higher, the applicable LIBOR floor.
(3)			Line of credit has an unfunded commitment in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 8 in the accompanying Notes to the Consolidated Financial Statements for further discussion on unfunded commitments.
(4)			The cash coupon and/or PIK coupon on the loan is subject to a pricing grid based on certain leverage ratios of the portfolio company.
(5)			This investment is owned by HCAP Equity Holdings, LLC, one of the Company's taxable blocker subsidiaries.
(6)			Infinite Care, LLC ("ICC") iswas previously in default under the terms of its credit agreement and was on non-accrual status asthrough of September 30, 2020. ~~ICC~~During ~~was current on its interest payments to~~ the ~~Company through December 31, 2017; however, it failed to repay the Company’s protective loan advances at various dates in the~~ fourth quarter of ~~2017 as well as throughout 2018~~2020, ~~2019,~~due ~~and~~to ~~through~~operational ~~September 30~~improvements, ~~2020.~~ ICC ~~was~~began ~~previously~~to inservice ~~breach of~~ its ~~minimum~~current ~~EBITDA,~~debt ~~minimum~~obligations ~~fixed~~to ~~charge and total leverage covenants, but these breaches were waived by~~ the Company ~~through December 31, 2017 in connection with its entry into an agreement, dated as of January 13, 2017, with ICC relating thereto~~. In October 2017, the Company exercised its rights under a stock pledge of ICC. The Company formed a wholly owned subsidiary, HCAP ICC, LLC, to exercise its proxy right under the pledge agreement and take control of ICC’s board of directors. In January 2018, the Company took control of ICC's equity after accelerating the debt and auctioning ICC’s equity in a public sale. The Company bid a portion of its outstanding debt to gain control of ICC in connection with the public sale process. Upon the completion of the sale process in January 2018, the Company converted $2.0 million of its debt investment in ICC into shares of ICC’s membership interests.Refer to Note 12 in the accompanying Notes to the Consolidated Financial Statements for summarized financial information for ICC for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020.
(7)			Investment is not a qualifying asset as defined under Section 55(a) of the Investment Company Act of1940, as amended (the "1940 Act"). Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets The Company's non-qualifying assets, on a fair value basis, totaled approximately 1.20% of the Company's total assets as of ~~September~~March 3031, ~~2020~~2021.
(8)			This is an equity investment that receives a cash flow stream based on lease payments received by Flight Lease VII, LLC. Flight Lease VII, LLC owns an aircraft that was leased to one lessee. The lessee had been in arrears on its lease payments and in June of 2018, Flight Lease VII, LLC terminated the lease. As a result of the cessation of cash flows, future payments on this equity investment will resume only if Flight Lease VII, LLC is successful in obtaining a new lessee or sells the aircraft.
(9)			This debt investment is on non-accrual status as of ~~September~~March 3031, ~~2020~~2021.
(10)			The Company's Credit Facility is secured by all of the Company's assets. Refer to Note 3 in the accompanying Notes to the Consolidated Financial Statements for more information.
(11)			All of the Company's portfolio investments are generally subject to restrictions on sale as "restricted securities", unless otherwise noted.
(12)			Unless otherwise indicated, all portfolio company investments are Level 3 assets whose values were determined using significant unobservable inputs.

9As of March 31, 2021, investments consisted of the following:

(11)	All of the Company's portfolio investments are generally subject to restrictions on sale as "restricted securities", unless otherwise noted.
Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
(12)	Unless otherwise indicated, all portfolio company investments are Level 3 assets whose values were determined using significant unobservable inputs.
Senior Secured Debt	$	59,432,377	$	58,891,399	76.4	%	88.3	%
(13)	In October 2020, General Nutrition, Inc. ("GNC") was restructured upon its sale. The Company received approximately $1.9 million representing a full payoff at par of each of its New Money DIP Term Loan and its Roll-up DIP Term Loan. The Company also received an additional $1.2 million, representing a discounted payoff of its $3.0 million original tranche B-2 Term Loan and received its pro rata share of a new Second Lien Term Loan with a par value of $1.8 million in the restructured GNC.
Junior Secured Debt	14,359,842		10,052,161		13.0	%	15.1	%
Equity	10,872,048		8,193,990		10.6	%	12.3	%
Total	$	84,664,267	$	77,137,550	100.0	%	115.7	%

AsThe ofrate ~~September 30,~~types ~~2020,~~of debt investments ~~consisted~~at fair value as of ~~the~~March 31, ~~following~~2021 were as follows:

Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Rate Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Senior Secured Debt	$	78,493,705	$	75,079,797	78.3	%	123.8	%
Fixed Rate	$	39,709,165	$	36,559,581	53.0	%	54.8	%
Junior Secured Debt	13,388,371		8,407,657		8.7	%	13.9	%
Floating Rate	34,083,054		32,383,979		47.0	%	48.6	%
Equity	15,591,926		12,493,814		13.0	%	20.6	%
Total	$	73,792,219	$	68,943,560	100.0	%	103.4	%
Total	$	107,474,002	$	95,981,268	100.0	%	158.3	%

The ~~rate~~industry ~~types~~composition of ~~debt~~ investments at fair value as of ~~September~~March 3031, ~~2020~~2021 ~~were~~was as follows:

Rate Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Fixed Rate	$	42,707,086	$	36,216,483	43.4	%	59.7	%
Floating Rate	49,174,990		47,270,971		56.6	%	78.0	%
Total	$	91,882,076	$	83,487,454	100.0	%	137.7	%

The industry composition of investments at fair value as of September 30, 2020 was as follows:


Industry	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Aerospace & Defense	$	458,346	$	828,825	1.1	%	1.2	%
Banking, Finance, Insurance & Real Estate	200,000		—		—	%	—	%
Beverage, Food & Tobacco	1,489,310		1,315,161		1.7	%	2.0	%
Capital Equipment	12,027,429		8,857,000		11.5	%	13.3	%
Construction & Building	7,367,044		8,007,569		10.4	%	12.0	%
Consumer Goods - Durable	2,473,582		2,525,000		3.3	%	3.8	%
Environmental Industries	906,761		3,859,096		5.0	%	5.8	%
Healthcare & Pharmaceuticals	13,778,735		9,670,427		12.5	%	14.5	%
High Tech Industries	9,592,909		8,340,445		10.8	%	12.5	%
Media: Advertising, Printing & Publishing	2,992,647		3,048,337		4.0	%	4.6	%
Metals & Mining	15,374,623		11,663,948		15.1	%	17.5	%
Services: Business	17,713,935		18,601,228		24.1	%	27.9	%
Telecommunications	288,946		420,514		0.5	%	0.6	%
Total	$	84,664,267	$	77,137,550	100.0	%	115.7	%

Industry	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Aerospace & Defense	$	523,932	$	523,932	0.6	%	0.8	%
Banking, Finance, Insurance & Real Estate	200,000		—		—	%	—	%
Beverage, Food & Tobacco	4,753,412		4,614,624		4.8	%	7.6	%
Capital Equipment	12,330,341		8,087,000		8.4	%	13.3	%
Construction & Building	15,789,555		20,521,530		21.4	%	33.9	%
Consumer Goods - Durable	2,468,498		2,415,734		2.5	%	4.0	%
Environmental Industries	906,761		2,905,978		3.0	%	4.8	%
Healthcare & Pharmaceuticals	13,695,702		8,486,000		8.8	%	14.0	%
High Tech Industries	9,769,989		8,345,770		8.7	%	13.8	%
Media: Advertising, Printing & Publishing	3,737,977		3,782,681		3.9	%	6.2	%
Media: Diversified & Production	2,579,341		1,010,602		1.1	%	1.7	%
Metals & Mining	15,028,890		10,553,135		11.0	%	17.4	%
Services: Business	17,832,554		16,595,374		17.3	%	27.4	%
Telecommunications	7,857,050		8,138,908		8.5	%	13.4	%
Total	$	107,474,002	$	95,981,268	100.0	%	158.3	%

The geographic concentrations at fair value as of March 31, 2021 were as follows:

The geographic concentrations at fair value as of September 30, 2020 were as follows:


United States Region	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Northeast	$	32,925,326	$	28,694,527	37.2	%	43.1	%
West	29,847,312		26,590,019		34.5	%	39.9	%
South	14,467,085		17,276,004		22.4	%	25.9	%
Midwest	7,424,544		4,577,000		5.9	%	6.8	%
Total	$	84,664,267	$	77,137,550	100.0	%	115.7	%

United States Region	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
West	$	41,124,454	$	38,126,020	39.7	%	62.9	%
Northeast	36,659,788		30,733,228		32.0	%	50.7	%
South	22,265,216		23,103,020		24.1	%	38.1	%
Midwest	7,424,544		4,019,000		4.2	%	6.6	%
	$	107,474,002	$	95,981,268	100.0	%	158.3	%

See accompanying notes to unaudited consolidated financial statements.

119

Harvest Capital Credit Corporation

Consolidated Schedule of Investments

As of December 31, ~~2019~~2020

Portfolio Company	Date**	Industry	Investment (1) (2) (1210) (1311) (1412)		Principal		Cost		Fair Value
Non-Control / Non-Affiliate Investments
Back Porch International, Inc. (10.3%)*	09/2019	High Tech Industries	Senior Secured Term Loan, due 03/2024 (13.50%; 1M LIBOR + 10.25% + 1.00% PIK)		$	6,974,139	$	6,850,952	$	6,850,952
Back Porch International, Inc. (11.0%)*	09/2019	High Tech Industries	Senior Secured Term Loan, due 03/2024 (13.50%; 1M LIBOR + 10.25% + 1.00% PIK)	(4)	$	6,825,893	$	6,734,136	$	6,825,893
			Senior Secured Revolving Line of Credit, due 09/2020 (1M LIBOR + 8.00%)	(4)	—		—		—
					6,825,893		6,734,136		6,825,893
					6,974,139		6,850,952		6,850,952
Brite Media LLC (0.3%)*	04/2014	Media: Advertising, Printing & Publishing	Class A Interest (0.86% fully diluted common equity)				125,000		167,554
Brite Media LLC (0.3%)*	04/2014	Media: Advertising, Printing & Publishing	Class A Interest (0.86% fully diluted common equity)				125,000		183,800
							125,000		167,554
							125,000		183,800
Coastal Screen and Rail, LLC (12.7%)*	01/2018	Construction & Building	Senior Secured Term Loan, due 01/2023 (14.00%; 10.50% Cash plus 3.50% PIK)	(4)	7,295,206		7,220,501		7,295,206
Coastal Screen and Rail, LLC (11.4%)*	01/2018	Construction & Building	Senior Secured Term Loan, due 01/2023 (14.00%; 10.50% Cash plus 3.50% PIK)		7,225,434		7,116,020		7,143,830
			Senior Secured Revolving Line of Credit, due 07/2022 (8.26%; 3M LIBOR + 8.00%)	(3)	100,000		100,000		100,000
			Senior Secured Revolving Line of Credit, due 07/2022 (9.95%; 3M LIBOR + 8.00%)	(4)	100,000		100,000		100,000
			Preferred Equity Interest (3.90% fully diluted Common Equity)	(5)			150,000		491,712
			Preferred Equity Interest (3.90% fully diluted common equity)	(6)			150,000		367,000
					7,395,206		7,470,501		7,886,918
					7,325,434		7,366,020		7,610,830
GNC Holdings, LLC (2.2%)*	10/2020	Beverage, Food, & Tobacco	Junior Secured Term Loan, due 10/2026 (9.23%; LIBOR + 6.00% + 3.00% fee)	(13)	1,805,102		1,461,179		1,344,801
CP Holding Co., Inc. (Choice Pet) (3.3%)*	05/2013	Retailer	Junior Secured Term Loan, due 06/2020 (12.00%; 7.00% current and 5.00% deferred)	(10)	2,899,852		3,098,300		2,233,000
					1,805,102		1,461,179		1,344,801
					2,899,852		3,098,300		2,233,000
GK Holdings, Inc. (2.5%)*	01/2015	High Tech Industries	Junior Secured Term Loan, due 01/2022 (13.25%; 3M LIBOR +10.25% with a 1.00% LIBOR floor + 2.00% default rate)	(4) (9)	3,000,000		2,972,406		1,575,000
Deluxe Entertainment Services Group Inc. (2.9%)*	01/2019	Media: Diversified & Production	Junior Secured Term Loan, due 09/2024 (10.44%; LIBOR + 6.00% plus 2.50% PIK)	(15)	513,098		513,098		513,098
					3,000,000		2,972,406		1,575,000
			Common Equity (0.63% fully diluted common equity)	(15)			2,056,418		1,440,739
KC Engineering & Construction Services, LLC (5.9%)*	10/2017	Environmental Industries	Class A Membership Interest (2.5% fully diluted common equity)	(5)			906,761		3,699,198
					513,098		2,569,516		1,953,837
							906,761		3,699,198
Flavors Holdings, Inc. (5.7%)*	10/2014	Beverage, Food & Tobacco	Junior Secured Term Loan, due 10/2021 (11.94%; 3M LIBOR +10.00% with a 1.00% LIBOR floor)		4,000,000		3,946,828		3,775,000
Peerless Media, LLC (5.8%)*	02/2019	Media: Advertising, Printing & Publishing	Senior Secured Term Loan, due 02/2024 (11.40%; 1M LIBOR + 8.50% with a 2.40% LIBOR floor + 0.50% PIK)		3,609,615		3,584,585		3,609,615
					4,000,000		3,946,828		3,775,000
					3,609,615		3,584,585		3,609,615
General Nutrition Centers, Inc. (6.2%)*	02/2019	Beverage, Food, & Tobacco	Senior Secured Term Loan, due 03/2021 (10.58%; LIBOR + 8.75%; ABR + 7.75%)		4,326,812		4,216,840		4,137,514
ProAir Holdings Corporation (6.4%)*	09/2017	Capital Equipment	Junior Secured Term Loan, due 12/2022 (15.50%; 13.50% + 2.0% default PIK)	(4) (9)	7,698,531		7,424,544		3,998,000
					4,326,812		4,216,840		4,137,514
					7,698,531		7,424,544		3,998,000
GK Holdings, Inc. (3.4%)*	01/2015	High Tech Industries	Junior Secured Term Loan, due 01/2022 (12.19%; 3M LIBOR +10.25% with a 1.00% LIBOR floor)	(5)	3,000,000		2,968,933		2,246,250
Safety Services Acquisition Corp. (7.2%)*	03/2017	Services: Business	Senior Secured Term Loan, due 08/2021 (13.75%; 3M LIBOR + 8.75% with a 1.00% floor + 4.00% PIK)	(4)	4,464,931		4,463,347		4,464,931
					3,000,000		2,968,933		2,246,250
	04/2012		Series A Preferred Equity (0.57% fully diluted common equity)				100,000		41,892
KC Engineering & Construction Services, LLC (3.6%)*	10/2017	Environmental Industries	Class A Membership Interest (3.0% fully diluted common equity)	(6)			675,030		2,373,686
					4,464,931		4,563,347		4,506,823
							675,030		2,373,686
Surge Busy Bee Holdings, LLC (11.2%)*	11/2017	Services: Business	Senior Secured Term Loan, due 11/2022 (10.15%; 1M LIBOR + 10.00%)	(4)	3,706,250		3,620,193		3,550,000
Peerless Media, LLC (6.8%)*	02/2019	Media: Advertising, Printing & Publishing	Senior Secured Term Loan, due 02/2024 (11.40%; 1M LIBOR + 8.50% with a 2.40% LIBOR floor plus 0.50% PIK)		4,552,922		4,517,569		4,552,922
			Senior Secured Term Loan, due 11/2022 (14.00%; 12.00% cash + 2.00% PIK)	(4)	3,540,127		3,471,682		3,412,000
					4,552,922		4,517,569		4,552,922
			Senior Secured Revolving Line of Credit, due 11/2021	(3)	—		—		—
ProAir Holdings Corporation (11.2%)*	09/2017	Capital Equipment	Junior Secured Term Loan, due 12/2022 (13.50%)		7,500,000		7,424,544		7,500,000
			Class B Equity Warrants (4.75% fully diluted common equity)				76,475		—
					7,500,000		7,424,544		7,500,000
					7,246,377		7,168,350		6,962,000
Water-Land Manufacturing & Supply, LLC (4.0%)*	08/2018	Consumer Goods - Durable	Junior Secured Term Loan, due 05/2023 (12.75%; 3M LIBOR + 10.50% with a 2.25% LIBOR floor)		2,500,000		2,470,997		2,500,000

1210

Portfolio Company	Date**	Industry	Investment (1) (2) (1210) (1311) (1412)		Principal		Cost		Fair Value
Regional Engine Leasing, LLC (3.5%)*	03/2015	Aerospace & Defense	Senior Secured Term Loan, due 03/2020 (11.00%; the greater of 11.00% or LIBOR + 4.50%)		2,352,247		2,346,042		2,352,247
					2,500,000		2,470,997		2,500,000
			Residual Value	(3)			102,421		—
World Business Lenders, LLC (-%)*	12/2013	Banking, Finance, Insurance & Real Estate	Class B Equity Interest (0.27% fully diluted common equity)	(7)			200,000		—
					2,352,247		2,448,463		2,352,247
Safety Services Acquisition Corp. (7.0%)*	03/2017	Services: Business	Senior Secured Term Loan, due 12/2020 (10.00%; 3M LIBOR + 8.00% with a 1.00% floor)	(5)	4,468,750		4,463,773		4,468,750
	04/2012		Series A Preferred Equity (0.57% fully diluted common equity)				100,000		185,768
					4,468,750		4,563,773		4,654,518
Surge Busy Bee Holdings, LLC (12.1%)*	11/2017	Services: Business	Senior Secured Term Loan, due 11/2022 (12.80%; 1M LIBOR + 11.00%)		4,081,250		3,953,009		3,940,500
			Senior Secured Term Loan, due 11/2022 (15.00%; 13.00% cash plus 2.00% PIK)		3,774,563		3,690,463		3,611,000
			Senior Secured Revolving Line of Credit, due 11/2021 (9.80%; 1M LIBOR+8.00%)	(4)	150,000		150,000		150,000
			Class B Equity Warrants (9.50% fully diluted common equity)				152,950		357,500
					8,005,813		7,946,422		8,059,000
Water-Land Manufacturing & Supply, LLC (3.7%)*	08/2018	Consumer Goods - Durable	Junior Secured Term Loan, due 05/2023 (12.75%; 3M LIBOR + 10.50% with a 2.25% LIBOR floor)		2,500,000		2,461,480		2,490,000
					2,500,000		2,461,480		2,490,000
World Business Lenders, LLC (-%)*	12/2013	Banking, Finance, Insurance & Real Estate	Class B Equity Interest (0.28% fully diluted common equity)	(8)			200,000		—
							200,000		—
Subtotal Non-Control / Non-Affiliate Investments					$	5844,~~419~~545,~~067~~655	$	6145,~~379~~081,~~670~~806	$	6043,~~973~~075,~~556~~802
Affiliate Investments
Flight Lease XII, LLC (0.5%)*	03/2017	Aerospace & Defense	Common Equity Interest (19.23% fully diluted common equity)	(6)			389,757		345,980
Flight Lease XII, LLC (0.3%)*	03/2017	Aerospace & Defense	Common Equity Interest (19.23% fully diluted common equity)	(5)			158,346		158,346
					—		~~389~~158,~~757~~346		~~345~~158,~~980~~346
Kleen-Tech Acquisition, LLC (11.0%)*	05/2019	Services: Business	Senior Secured Term Loan, due 05/2024 (15.00%; 13.00% Cash plus 2.00% PIK)		7,131,721		6,850,998		6,819,708
Kleen-Tech Acquisition, LLC (0.5%)*	05/2019	Services: Business	Common Equity Units (6.89% fully diluted common equity)	(5)			250,000		325,000
			Senior Secured Revolving line of Credit, due 05/2022 (15.00%; 13.00% Cash plus 2.00% PIK)	(4)	—		—		—
					—		250,000		325,000
			Common Equity Units (7.96% fully diluted common equity)	(6)			250,000		274,136
National Program Management & Project Controls, LLC (23.7%)*	06/2018	Construction & Building	Senior Secured Term Loan, due 06/2023 (9.75%; 1M LIBOR + 8.25% with a 1.50% LIBOR floor)		5,427,595		5,368,931		5,536,147
			Common Equity Warrants (8.50% fully diluted common equity)	(6)			186,970		275,104
			Senior Secured Delayed Draw Term Loan, due 06/2023 (9.75%; 1M LIBOR + 8.25% with a 1.50% LIBOR floor)	(3)	63,193		62,933		64,456
					7,131,721		7,287,968		7,368,948
			Class A Membership Interest (5.10% fully diluted common equity)	(5)			2,791,241		9,236,765
National Program Management & Project Controls, LLC (15.5%)*	06/2018	Construction & Building	Senior Secured Term Loan, due 06/2023 (10.05%; 1M LIBOR + 8.25%)	(4)	5,566,764		5,487,512		5,566,763
					5,490,788		8,223,105		14,837,368
			Class A Membership Interest (5.10% fully diluted common equity)	(6)			2,791,241		4,799,331
Northeast Metal Works, LLC (17.4%)*	09/2014	Metals & Mining	Senior Secured Term Loan, due 12/2021 (10.00%; 5.00% Cash + 5.00% PIK)		13,722,292		13,720,633		10,813,299
					5,566,764		8,278,753		10,366,094
	05/2017		Preferred Equity Interest (22.79% fully diluted common equity; 12.0% cumulative preferred return)	(5)			1,515,520		—
Northeast Metal Works, LLC (17.3%)*	09/2014	Metals & Mining	Senior Secured Term Loan, due 06/2020 (15.00%; 11.00% Cash plus 4.00% PIK)	(11)	13,121,048		13,115,448		11,596,969
					13,722,292		15,236,153		10,813,299
	05/2017		Preferred Equity Interest (22.79% fully diluted common equity; 12.0% cumulative preferred return)	(6) (11)			1,515,520		—
Slappey Communications, LLC (0.5%)*	05/2019	Telecommunications	Common Equity Units (11.33% preferred equity / 7.05% fully diluted common equity)	(5)			288,946		281,648
					13,121,048		14,630,968		11,596,969
					—		288,946		281,648
Slappey Communications, LLC (10.6%)*	05/2019	Telecommunications	Senior Secured Term Loan, due 05/2024 (13.00%; 3M LIBOR + 10.00% with a 2.50% LIBOR floor plus 0.50% PIK)		6,845,352		6,718,056		6,828,238
Surge Hippodrome Holdings, LLC (7.6%)*	08/2019	Services: Business	Senior Secured Term Loan (Last Out), due 08/2024 (13.50%; 3M LIBOR + 11.50%)		5,460,000		5,184,550		4,746,273
			Common Equity Interest (10.69% fully diluted common equity)	(5)			464,421		6,205
			Common Equity Warrants (6.38% fully diluted common equity)	(5)			237,579		3,993
					5,460,000		5,886,550		4,756,471
V-Tek, Inc. (7.1%)*	03/2017	Capital Equipment	Senior Secured Term Loan, due 03/2022 (6.0%)		3,237,500		3,243,138		2,866,296
			Senior Secured Revolving Line of Credit, due 03/2021 (6.75%; 3M LIBOR + 6.50%)	(3)	1,536,097		1,536,097		1,525,000
			Common Equity Interest (8.98% fully diluted common equity)	(5)			150,000		—
					4,773,597		4,929,235		4,391,296
Subtotal Affiliate Investments					$	29,446,677	$	34,972,335	$	35,563,428
Control Investments
Flight Lease VII, LLC (0.5%)*	03/2016	Aerospace & Defense	Common Equity Interest (46.14% fully diluted interest)	(8)			$	300,000	$	300,000
					—		300,000		300,000
Infinite Care, LLC (17.1%)*	02/2016	Healthcare & Pharmaceuticals	Senior Secured Term Loan, due 01/2022 (8.0% with a borrower PIK option)	(6)	5,043,356		3,314,219		5,043,356
			Senior Secured Revolving Line of Credit, due 01/2022 (8.0% with a borrower PIK option)	(6)	4,777,403		4,416,981		4,777,403

1311

Portfolio Company	Date**	Industry	Investment (1) (2) (1210) (1311) (1412)		Principal		Cost		Fair Value
			Senior Secured Revolving Line of Credit, due 05/2023 (3M LIBOR + 10.00% with a 2.50% LIBOR floor plus 0.50% PIK)	(4)	—		—		—
			Membership Interest (100% membership interests)	(5) (6)			5,949,000		794,584
			Common Equity Units (12.90% preferred equity / 7.59% fully diluted common equity)	(6)			200,000		227,035
					9,820,759		13,680,200		10,615,343
					6,845,352		6,918,056		7,055,273
Subtotal Control Investments					$	9,820,759	$	13,980,200	$	10,915,343
Surge Hippodrome Holdings, LLC (8.6%)*	08/2019	Services: Business	Senior Secured Term Loan (Last Out), due 08/2024 (13.50%; 3M LIBOR + 11.50%)		5,460,000		5,131,294		5,131,294
Total Investments at 12/31/20 (143.9%) *					$	83,813,091	$	94,034,341	$	89,554,573
			Common Equity Interest (10.10% fully diluted common equity)	(6)			360,000		360,000
			Common Equity Interest (9.50% fully diluted common equity)	(6)			237,579		237,579
					5,460,000		5,728,873		5,728,873
V-Tek, Inc. (7.4%)*	03/2017	Capital Equipment	Senior Secured Term Loan, due 03/2022 (13.00%; 3M LIBOR + 11.00%)		3,237,500		3,191,361		3,175,500
			Senior Secured Revolving Line of Credit, due 03/2021 (8.50%; 3M LIBOR + 6.50%)	(4)	1,536,097		1,536,097		1,536,097
			Common Stock (8.98% fully diluted common equity)	(6)			150,000		257,500
					4,773,597		4,877,458		4,969,097
Subtotal Affiliate Investments					$	42,898,482	$	48,111,833	$	47,431,234
Control Investments
Flight Lease VII, LLC (0.6%)*	03/2016	Aerospace & Defense	Common Equity Interest (46.14% fully diluted interest)	(9)			$	412,500	$	412,500
					—		412,500		412,500
Infinite Care, LLC (12.0%)*	02/2016	Healthcare & Pharmaceuticals	Senior Secured Term Loan, due 01/2021 (3.0%)	(7)	4,740,284		3,377,702		3,783,600
			Senior Secured Revolving Line of Credit, due 01/2021 (3.0%)	(7)	4,356,271		4,219,000		4,208,500
			Membership Interest (100% membership interests)	(6) (7)			5,949,000		—
					9,096,555		13,545,702		7,992,100
Subtotal Control Investments					$	9,096,555	$	13,958,202	$	8,404,600
Total Investments at 12/31/19 (174.9%) *					$	110,414,104	$	123,449,705	$	116,809,390

* Fair value as a percentage of net assets

** Date refers to the origination date of the investment

(1)			Debt investments are income-producing investments unless an investment is on non-accrual. Common equity, preferred equity, residual values and warrants are non-income-producing.
(2)			For each loan, the Company has provided the interest rate in effect on the date presented, as well as the contractual components of that interest rate. In the case of the Company's variable or floating rate loans, the interest rate in effect takes into account the applicable LIBOR rate in effect on December 31, ~~2019~~2020 or, if higher, the applicable LIBOR floor.
(3)			~~"Residual~~Line ~~value"~~of ~~represents~~credit has an unfunded commitment in addition to the ~~value~~amounts shown in the Consolidated Schedule of Investments. See Note 8 in the notes to the audited Consolidated Financial Statements included in the Company's ~~share~~annual inreport ~~the~~on ~~collateral~~Form ~~securing~~10-K for the ~~loan~~fiscal year ended December 31, 2020 for further discussion on unfunded commitments.
(4)			~~Line~~The ofcash ~~credit~~coupon ~~has~~and/or anPIK ~~unfunded~~coupon ~~commitment~~on ~~in addition to~~ the ~~amounts~~loan ~~shown~~is insubject ~~the Consolidated Schedule of Investments. See Note 8 in the Notes~~ to ~~the~~a ~~audited~~pricing ~~Consolidated~~grid ~~Financial~~based ~~Statements included in the Company's annual report~~ on ~~Form~~certain ~~10-K~~leverage ~~for~~ratios of the ~~fiscal~~portfolio ~~year ended December 31, 2019 for further discussion on unfunded commitments~~company.
(5)			~~The~~This ~~coupon~~investment ~~on the loan~~ is ~~subject~~owned toby aHCAP ~~pricing~~Equity ~~grid~~Holdings, ~~based~~LLC, onone ~~certain leverage ratios~~ of the ~~portfolio~~Company's ~~company~~taxable blocker subsidiaries.
(6)			~~This~~ICC ~~investment~~was ispreviously in default under the terms of its credit agreement and was on non-accrual status through September 30, 2020. During the fourth quarter of 2020, due to operational improvements, ICC began to service its current debt obligations to the Company. In October 2017, the Company exercised its rights under a stock pledge of ICC. The Company formed a wholly owned bysubsidiary, HCAP ~~Equity Holdings~~ICC, LLC, ~~one~~to exercise its proxy right under the pledge agreement and take control of ICC’s board of directors. In January 2018, the Company took control of ICC's ~~taxable~~equity ~~blocker~~after ~~subsidiaries~~accelerating the debt and auctioning ICC’s equity in a public sale. The Company bid a portion of its outstanding debt to gain control of ICC in connection with the public sale process. Upon the completion of the sale process in January 2018, the Company converted $2.0 million of its debt investment in ICC into shares of ICC’s membership interests.Refer to Note 13 in the notes to the audited Consolidated Financial Statements included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2020 for summarized balance sheets for ICC as of December 31, 2020 and December 31, 2019 and summarized income statements for the years ending December 31, 2020, December 31, 2019, and December 31, 2018.
(7)			Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets The Company's non-qualifying assets, on a fair value basis, totaled approximately 0.8% of the Company's total assets as of December 31, 2020.
(8)			This is an equity investment that receives a cash flow stream based on lease payments received by Flight Lease VII, LLC. Flight Lease VII, LLC owns an aircraft that was leased to one lessee. The lessee had been in arrears on its lease payments and in June of 2018, Flight Lease VII, LLC terminated the lease. As a result of the cessation of cash flows, future payments on this equity investment will resume only if Flight Lease VII, LLC is successful in obtaining a new lessee or sells the aircraft. For the year ended December 31, 2020, the Company recognized an impairment charge of $0.1 million, which is presented in the "net realized gains (losses) - control investments" line item on the Consolidated Statement of Operations.
(9)			This debt investment is on non-accrual status as of December 31, 2020.
(10)			The Company's Credit Facility is secured by all of the Company's assets. Refer to Note 3 in the notes to the audited Consolidated Financial Statements included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2020 for more information.
(11)			All of the Company's portfolio investments are generally subject to restrictions on sale as "restricted securities", unless otherwise noted.
(12)			Unless otherwise indicated, all portfolio company investments are Level 3 assets whose values were determined using significant unobservable inputs.
(13)			In October 2020, General Nutrition, Inc. ("GNC") was restructured upon its sale. The Company received approximately $1.9 million, representing a full payoff at par of each of its New Money DIP Term Loan and its Roll-up DIP Term Loan. The Company also received an additional $1.2 million, representing a discounted payoff of its $3.0 million original tranche B-2 Term Loan and received its pro rata share of a new Second Lien Term Loan with a par value of $1.8 million in GNC Holdings, LLC. The Company recognized a realized loss of $0.3 million relating to this transaction, which is presented in the "net realized gains (losses) - non-affiliated/non-control investments" line item on the Consolidated Statement of Operations.

14As of December 31, 2020, investments consisted of the following:

(7)			ICC is in default under the terms of its credit agreement and was on non-accrual status as of December 31, 2019. ICC was current on its interest payments to the Company through December 31, 2017; however, it failed to repay the Company’s protective loan advances at various dates in the fourth quarter of 2017 as well as throughout 2018 and 2019. ICC was previously in breach of its minimum EBITDA, minimum fixed charge and total leverage covenants, but these breaches were waived by the Company through December 31, 2017 in connection with its entry into an agreement, dated as of January 13, 2017, with ICC relating thereto. In October 2017, the Company exercised its rights under a stock pledge of ICC. The Company formed a wholly owned subsidiary, HCAP ICC, LLC, to exercise its proxy right under the pledge agreement and take control of ICC’s board of directors. In January 2018, the Company took control of ICC's equity after accelerating the debt and auctioning ICC’s equity in a public sale. The Company bid a portion of its outstanding debt to gain control of ICC in connection with the public sale process. Upon the completion of the sale process in January 2018, the Company converted $2.0 million of its debt investment in ICC into shares of ICC’s membership interests.Refer to Note 13 in the Notes to the audited Consolidated Financial Statements included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2019 for summarized balance sheets for ICC as of December 31, 2019 and December 31, 2018 and summarized income statements for the years ending December 31, 2019, December 31, 2018, and December 31, 2017.
(8)			Investment is not a qualifying asset as defined under Section 55(a) of the 1940 Act. Qualifying assets must represent at least 70% of total assets at the time of acquisition of any additional non-qualifying assets The Company's non-qualifying assets, on a fair value basis, totaled approximately 1.0% of the Company's total assets as of December 31, 2019.
(9)			This is an equity investment that receives a cash flow stream based on lease payments received by Flight Lease VII, LLC. Flight Lease VII, LLC owns an aircraft that was leased to one lessee. The lessee had been in arrears on its lease payments and in June of 2018, Flight Lease VII, LLC terminated the lease. As a result of the cessation of cash flows, future payments on this equity investment will resume only if Flight Lease VII, LLC is successful in obtaining a new lessee or sells the aircraft. For the year ended December 31, 2019, the Company recognized an impairment charge of $0.3 million, which is presented in the net realized gains (losses) - control investments balance on the Consolidated Statement of Operations.
(10)			This portfolio company failed to make its contractual deferred interest payment on July 23, 2018, partially paid its December 31, 2018 contractual current interest payment and failed to make any contractual interest payments throughout 2019. As such, this loan is on non-accrual status as of December 31, 2019. In addition, the Company's management determined that the contractual interest payments, including the deferred interest, were no longer collectible and, as a result, reversed the interest payment that had previously been viewed as collectible under the circumstances and had been accrued during the year ended December 31, 2019.
(11)			On May 22, 2019, Northeast Metal Works, LLC ("Northeast Metal Works") entered into a new financing agreement with a senior lender. In conjunction with this, Northeast Metal Works and the Company entered into a subordination and inter-creditor agreement where the Company thereby agreed to subordinate its indebtedness to the senior lender through the earlier of the due date of the new financing agreement, which expires on May 31, 2020, or the date on which Northeast Metal Works has fully satisfied the indebtedness to the new senior lender. In addition, the new senior lender obtained a first priority interest in certain assets of Northeast Metal Works. As a result, the Company reclassified its term loan investment in Northeast Metal Works from senior secured to junior secured. In connection with the new financing agreement, Northeast Metal Works paid down the existing $1.5 million revolving line of credit by approximately $1.1 million. The remaining $0.4 million commitment under the revolving line of credit was transferred to the junior secured term loan as an increase in the outstanding principal amount. Finally, as part of the refinancing transaction, the Company sold 125 units of its preferred equity interest in Northeast Metal Works to a third party and recognized a realized gain of $20,750.On September 27, 2019, the senior lender issued a Notice of Default to Northeast Metal Works. The Notice of Default prohibited Northeast Metal Works from making any further interest payments to the Company, despite having the cash on hand to do so. On October 31, 2019, the Company extended $1.7 million in additional credit to Northeast Metal Works by increasing the commitment on its junior secured term loan. Northeast Metal Works used the proceeds to pay off the existing senior secured debt and the senior secured debt was subsequently terminated. As a result of this transaction, the Company's junior secured term loan converted into a senior secured term loan.
(12)			The Company's Credit Facility is secured by all of the Company's assets. Refer to Note 3 in the Notes to the audited Consolidated Financial Statements included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2019 for more information.
(13)			All of the Company's portfolio investments are generally subject to restrictions on sale as "restricted securities", unless otherwise noted.
(14)			Unless otherwise indicated, all portfolio company investments are Level 3 assets whose values were determined using significant unobservable inputs.


Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Senior Secured Debt	$	66,041,926	$	64,629,875	71.1	%	103.9	%
Junior Secured Debt	14,329,126		9,417,801		10.5	%	15.1	%
Equity	13,663,289		15,506,897		18.4	%	24.9	%
Total	$	94,034,341	$	89,554,573	100.0	%	143.9	%

~~(15)~~The Onrate ~~November~~types ~~6, 2019, the Company's investment in Deluxe Entertainment Services Group Inc. ("Deluxe") was restructured whereby the Company's $5.4 million~~ of debt investments at ~~par~~fair value ~~was~~as ~~deemed extinguished and in return the Company received its pro-rata share~~ of ~~a new second lien term loan with a par value of $0.5 million and 0.63% ownership in the common equity of a newly formed holding company~~December 31, ~~DESG~~2020 ~~Intermediate~~were IIas Inc. ("DESG"). As a result of this transaction, the Company recorded a realized loss of $2.4 million, which is presented in the net realized gains (losses) - non-affiliated/non-control investments balance on the Consolidated Statement of Operations included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2019.follows:

As of December 31, 2019, investments consisted of the following:


Rate Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Fixed Rate	$	42,811,698	$	38,205,560	51.6	%	61.4	%
Floating Rate	37,559,354		35,842,116		48.4	%	57.6	%
Total	$	80,371,052	$	74,047,676	100.0	%	119.0	%

Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Senior Secured Debt	$	87,032,136	$	85,954,384	73.6	%	128.7	%
Junior Secured Debt	20,413,183		18,757,348		16.0	%	28.1	%
Equity	16,004,386		12,097,658		10.4	%	18.1	%
Total	$	123,449,705	$	116,809,390	100.0	%	174.9	%

The industry composition of investments at fair value as of December 31, 2020 was as follows:

The rate types of debt investments at fair value as of December 31, 2019 were as follows:


Industry	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Aerospace & Defense	$	458,346	$	458,346	0.5	%	0.7	%
Banking, Finance, Insurance & Real Estate	200,000		—		—	%	—	%
Beverage, Food & Tobacco	1,461,179		1,344,801		1.5	%	2.2	%
Capital Equipment	12,353,779		8,389,296		9.4	%	13.5	%
Construction & Building	15,693,606		22,724,287		25.4	%	36.5	%
Consumer Goods - Durable	2,470,997		2,500,000		2.8	%	4.0	%
Environmental Industries	906,761		3,699,198		4.1	%	5.9	%
Healthcare & Pharmaceuticals	13,680,200		10,615,343		11.8	%	17.1	%
High Tech Industries	9,706,542		8,400,893		9.4	%	13.5	%
Media: Advertising, Printing & Publishing	3,709,585		3,777,168		4.2	%	6.1	%
Metals & Mining	15,236,153		10,813,299		12.1	%	17.4	%
Services: Business	17,868,247		16,550,294		18.5	%	26.6	%
Telecommunications	288,946		281,648		0.3	%	0.4	%
Total	$	94,034,341	$	89,554,573	100.0	%	143.9	%

Rate Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Fixed Rate	$	51,238,518	$	49,248,854	47.0	%	73.7	%
Floating Rate	56,206,802		55,462,878		53.0	%	83.1	%
Total	$	107,445,320	$	104,711,732	100.0	%	156.8	%

The geographic concentrations at fair value as of December 31, 2020 were as follows:

The industry composition of investments at fair value as of December 31, 2019 was as follows:


United States Region	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
West	$	38,505,022	$	41,669,277	46.5	%	67.0	%
Northeast	33,536,817		27,486,186		30.7	%	44.2	%
South	14,567,958		16,401,110		18.3	%	26.3	%
Midwest	7,424,544		3,998,000		4.5	%	6.4	%
Total	$	94,034,341	$	89,554,573	100.0	%	143.9	%

Industry	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Aerospace & Defense	$	3,250,719	$	3,110,727	2.7	%	4.7	%
Banking, Finance, Insurance & Real Estate	200,000		—		—	%	—	%
Beverage, Food & Tobacco	8,163,668		7,912,514		6.8	%	11.9	%
Capital Equipment	12,302,002		12,469,097		10.7	%	18.7	%
Construction & Building	15,644,773		17,976,924		15.4	%	26.9	%
Consumer Goods - Durable	2,461,480		2,490,000		2.1	%	3.7	%
Environmental Industries	675,030		2,373,686		2.0	%	3.6	%
Healthcare & Pharmaceuticals	13,545,702		7,992,100		6.8	%	12.0	%
High Tech Industries	9,819,886		9,097,202		7.8	%	13.6	%
Media: Advertising, Printing & Publishing	4,642,569		4,736,722		4.1	%	7.1	%
Media: Diversified & Production	2,569,516		1,953,837		1.7	%	2.9	%
Metals & Mining	14,630,968		11,596,969		9.9	%	17.4	%
Retailer	3,098,300		2,233,000		1.9	%	3.3	%
Services: Business	25,527,036		25,811,339		22.1	%	38.6	%
Telecommunications	6,918,056		7,055,273		6.0	%	10.5	%
Total	$	123,449,705	$	116,809,390	100.0	%	174.9	%

The geographic concentrations at fair value as of December 31, 2019 were as follows:

United States Region	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
West	$	48,099,122	$	44,339,347	38.0	%	66.4	%
Northeast	44,285,800		40,083,277		34.3	%	60.0	%
South	23,640,239		24,886,766		21.3	%	37.3	%
Midwest	7,424,544		7,500,000		6.4	%	11.2	%
	$	123,449,705	$	116,809,390	100.0	%	174.9	%

See accompanying notes to unaudited consolidated financial statements.

1713

Harvest Capital Credit Corporation

Notes to Unaudited Consolidated Financial Statements

Note 1. Organization

Harvest Capital Credit Corporation ("HCAP" or the "Company") was incorporated as a Delaware corporation on November 14, 2012, for the purpose of, among other things, acquiring Harvest Capital Credit LLC (“HCC LLC”). HCAP acquired HCC LLC in May 2013, in connection with HCAP's initial public offering. HCAP is an externally managed, closed-end, non-diversified management investment company that has filed an election to be regulated as a business development company (“BDC”) under the ~~Investment Company Act of~~ 1940, ~~as amended (the “1940~~ Act”). In addition, for tax purposes, HCAP has elected to be treated as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended (the “Code”). As an investment company, the Company follows accounting and reporting guidance as set forth in Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 946, Financial Services- Investment Companies.

On July 1, 2016, the Company formed HCAP Equity Holdings, LLC, a Delaware limited liability company, as a wholly-owned subsidiary of the Company to hold certain equity investments made by the Company in limited liability companies or other forms of pass-through entities. By investing through HCAP Equity Holdings, LLC, the Company is able to benefit from the tax treatment of this entity and create a tax structure that is advantageous with respect to the Company's status as a RIC. The Company also formed a wholly-owned subsidiary, HCAP ICC, LLC, a Delaware limited liability company, to exercise certain rights in connection with its investment in Infinite Care, LLC.

HCAP Equity Holdings, LLC and HCAP ICC, LLC are consolidated for financial reporting purposes, and the portfolio investments held by HCAP Equity Holdings, LLC are included in the Company's consolidated financial statements and recorded at fair value in conjunction with the Company's valuation policy. However, HCAP Equity Holdings, LLC and HCAP ICC, LLC are not consolidated for income tax purposes and may generate tax expense as a result of any ownership of portfolio companies.

The Proposed Merger With Portman Ridge Finance Corporation

On December 23, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Portman Ridge Finance Corporation, a Delaware corporation (“PTMN”), Rye Acquisition Sub Inc., a Delaware corporation and a direct wholly-owned subsidiary of PTMN (“Acquisition Sub”), and Sierra Crest Investment Management LLC, a Delaware limited liability company and the external investment adviser to PTMN (“Sierra Crest”). The Merger Agreement provides that (i) Acquisition Sub will merge with and into the Company (the “First Merger”), with the Company continuing as the surviving corporation and as a wholly-owned subsidiary of PTMN, and (ii) immediately after the effectiveness of the First Merger, the Company will merge with and into PTMN (the “Second Merger” and, together with the First Merger, the “Mergers”), with PTMN continuing as the surviving corporation. Sierra Crest is expected to manage the combined company following the Mergers.

The transaction is the result of a review of strategic alternatives by the Company's board of directors and a special committee thereof (the “HCAP Special Committee”) comprised solely of the independent directors of the Company's board of directors. The Company's board of directors (other than directors affiliated with HCAP Advisors LLC, or “HCAP Advisors,” the Company’s investment adviser and administrator, who abstained from voting), on the unanimous recommendation of the HCAP Special Committee, has approved the Merger Agreement and the transactions contemplated thereby. The boards of directors of each of PTMN and Acquisition Sub, and the managing member of Sierra Crest, have also each unanimously approved the Merger Agreement and the transactions contemplated thereby.

Under the terms of the proposed transaction, at the closing of the First Merger (the “Closing”), PTMN will issue, in respect of all of the issued and outstanding shares of the Company's common stock (excluding shares held by the Company's subsidiaries or held, directly or indirectly, by PTMN or Acquisition Sub and all treasury shares (“Canceled Shares”)), in the aggregate, a number of shares of common stock, par value $0.01 per share, of PTMN (“PTMN Common Stock”) equal to 19.9% of the number of shares of PTMN Common Stock issued and outstanding immediately prior to the Closing (the “Total Stock Consideration”). In addition, subject to the terms and conditions of the Merger Agreement, at the Closing, PTMN will pay, in respect of all the issued and outstanding shares of the Company's common stock (excluding Canceled Shares) in the aggregate, an amount of cash equal to the amount by which (i) the Company's net asset value at Closing exceeds (ii) the product of (A) the Total Stock Consideration multiplied by (B) the quotient of (i) PTMN’s net asset value at closing divided by (ii) the

number of shares of PTMN Common Stock issued and outstanding as of the determination date (the “Determination Date”) which is two days prior to the Closing (the “Aggregate Cash Consideration”). In addition, as additional consideration to the holders of shares of the Company's common stock that are issued and outstanding immediately prior to the Closing (excluding any Canceled Shares), Sierra Crest will pay or cause to be paid to such holders an aggregate amount in cash equal to $2.15 million.

Each person who as of the effective time of the First Merger is a record holder of shares of the Company's common stock will be entitled, with respect to all or any portion of such shares, to make an election (an “Election”) to receive payment for their shares of the Company's common stock in cash, subject to the conditions and limitations set forth in the Merger Agreement. Any record holder of shares of the Company's common stock at the record date who does not make an Election will be deemed to have elected to receive payment for their shares of the Company's common stock in the form of PTMN Common Stock. Each share of the Company's common stock (other than a Canceled Share) with respect to which an Election has been made will be converted into the right to receive an amount in cash equal to the Per Share Cash Price (as defined below), subject to adjustment under the terms of the Merger Agreement.

The “Per Share Cash Price” means the quotient of (i) the sum of (A) the product of Total Stock Consideration multiplied by the PTMN Per Share Price (as defined below) plus (B) the Aggregate Cash Consideration, divided by (ii) the number of shares of the Company's common stock issued and outstanding immediately prior to the Closing. The “PTMN Per Share Price” is defined as the average of the volume weighted average price per share of PTMN Common Stock on Nasdaq on each of the ten consecutive trading days ending with the Determination Date.

Each share of the Company's common stock (other than a Canceled Share) with respect to which an Election has not been made will be converted into the right to receive a number of validly issued, fully paid and non-assessable shares of PTMN Common Stock, equal to the number of shares of PTMN Common Stock with a value equal to the Per Share Cash Price based on the PTMN Per Share Price, subject to adjustment under the terms of the Merger Agreement.

While each holder of the Company’s common stock will be entitled to make an Election, the maximum aggregate number of shares of PTMN Common Stock available for all of the Company’s stockholders will be fixed to equal the Total Stock Consideration and, accordingly, the aggregate amount of cash available to the Company’s stockholders will be fixed. As a result, depending on the Elections made by other stockholders, if a holder of the Company’s common stock elects to receive cash in connection with the Mergers, such holder will likely receive a portion of its merger consideration in PTMN Common Stock, and if a holder of the Company’s common stock elects to receive PTMN Common Stock in connection with the Mergers, such holder will likely receive a portion of the merger consideration in cash.

The Merger Agreement contains customary representations, warranties and covenants, including, among others, covenants relating to the operation of each of PTMN’s and the Company's businesses during the period prior to the Closing. The Company has agreed to convene and hold a stockholder meeting for the purpose of seeking the adoption of the Merger Agreement by the holders of at least a majority of the outstanding shares of the Company's common stock entitled to vote thereon.

The Merger Agreement contains “no-shop” provisions that restrict the Company's ability to solicit or initiate discussions or negotiations with third parties regarding other proposals to acquire the Company, and the Company is restricted in its ability to respond to such proposals. The Merger Agreement also contains customary termination rights. In particular, at any time prior to receipt of the requisite Company stockholder approval, the Company may terminate the Merger Agreement in order to substantially concurrently enter into a binding definitive agreement providing for the consummation of a Superior Proposal (as defined in the Merger Agreement), subject to the Company's compliance with notice and other specified conditions contained in the non-solicitation covenants, including giving PTMN the opportunity to propose revisions to the terms of the transactions contemplated by the Merger Agreement during a period following notice, and provided that the Company has not otherwise materially breached any provision of the non-solicitation covenants. If the Company terminates the Merger Agreement as provided in the foregoing sentence or the Merger Agreement is terminated under certain other circumstances, upon notice by PTMN, the Company must pay PTMN a termination fee equal to approximately $2.1 million, minus any amounts that the Company previously paid to PTMN in the form of expense reimbursement. Similarly, if the Merger Agreement is terminated under certain other circumstances by PTMN, upon notice by the Company, PTMN must pay the Company a termination fee equal to approximately $2.1 million.

consummate the Mergers is also conditioned upon the other party’s representations and warranties being true and correct (subject to certain materiality exceptions) and the other party having performed in all material respects its obligations under the Merger Agreement.

Concurrently with the Company’s and PTMN’s entry into the Merger Agreement, the Company also entered into a letter agreement (the “Jolson Letter Agreement”) with Joseph Jolson, its Chairman and Chief Executive Officer. Pursuant to the Jolson Letter Agreement, Mr. Jolson has agreed (i) to elect to receive shares of PTMN Common Stock as consideration in connection with the Mergers for all of the 894,273 shares of the Company’s common stock then beneficially owned directly by Mr. Jolson and indirectly by Mr. Jolson through the Joseph A. Jolson 1991 Trust (the “Jolson Shares”), (ii) to not, directly or indirectly, transfer, sell, offer, exchange, assign, pledge, convey any legal or beneficial ownership interest in or otherwise dispose of, or encumber any of the Jolson Shares or enter into any contract, option, or other agreement with respect to, or consent to, a transfer of, any of the Jolson Shares or his voting or economic interest therein other than pursuant to the Merger Agreement and in connection with the Mergers during the period commencing on the date of the Jolson Letter Agreement and ending on the closing date of the Mergers and (iii) to not transfer any shares of PTMN Common Stock received in exchange for the Jolson Shares in the First Merger (the “Locked Up Securities”) or enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Locked Up Securities for 90 days following the Closing.

In connection with the Mergers, Sierra Crest and HCAP Advisors have agreed to a transition services agreement pursuant to which HCAP Advisors will provide certain consulting services to Sierra Crest relating to the Company's existing investment portfolio subsequent to, and contingent upon, the Closing.

Note 2. Summary of Significant Accounting Policies

Basis of Financial Statement Presentation

The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the requirements for reporting on Form 10-Q and Articles 6, 10 and 12 of Regulation S-X. In the opinion of management, all adjustments of a normal recurring nature considered necessary for the fair statement of the Company's consolidated interim financial statements have been made.

In preparing the consolidated interim financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the Consolidated Statements of Assets and Liabilities and the Consolidated Statements of Operations for the relevant period. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of Harvest Capital Credit Corporation and its wholly-owned subsidiaries, HCAP Equity Holdings, LLC and HCAP ICC, LLC. The effects of all intercompany transactions between the Company and its subsidiaries have been eliminated in consolidation. Under ASC 946, Financial Services - Investment Companies, the Company is precluded from consolidating any entity other than another investment company, except that ASC 946 provides for the consolidation of a controlled operating company that provides substantially all of its services to the investment company or its consolidated subsidiaries.

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 has adopted these amendments as currently required and the adoption did not have a material impact on its consolidated financial statements.

1816

~~amortized~~In ~~cost~~August ~~basis~~2018, tothe beFASB ~~presented~~issued atASU ~~the~~2018-13, ~~net~~Fair ~~amount~~Value ~~expected~~Measurement (Topic 820): Disclosure Framework - Changes to bethe ~~collected.~~Disclosure ~~The~~Requirements ~~amendments~~for inFair Value Measurement. ASU ~~2016~~2018-13 ~~broaden~~modifies the ~~information~~disclosure ~~that~~requirements anin ~~entity~~Topic ~~must~~820, ~~consider~~Fair inValue ~~developing~~Measurement, ~~its~~by ~~expected~~removing ~~credit~~certain ~~loss~~disclosure ~~estimate~~requirements ~~for~~related ~~assets~~to ~~measured~~the ~~either~~fair ~~collectively~~value orhierarchy, ~~individually.~~modifying ~~The~~existing disclosure requirements related to measurement uncertainty and adding new ~~standard~~disclosure requirements. ASU 2018-13 is effective for ~~fiscal~~public ~~years,~~companies ~~and~~ for annual reporting periods and interim periods within those ~~fiscal~~annual ~~years,~~periods beginning after December 15, 2019. The Company has adopted these amendments as currently required and the adoption did not have a material impact on its consolidated financial statements.

InUse ~~August~~of 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements in Topic 820, Fair Value Measurement, by removing certain disclosure requirements related to the fair value hierarchy, modifying existing disclosure requirements related to measurement uncertainty and adding new disclosure requirements. ASU 2018-13 is effective for public companies for annual reporting periods and interim periods within those annual periods beginning after December 15, 2019. The Company has adopted these amendments as currently required and these are reflected in its consolidated financial statements and related disclosures.Estimates

In preparing the consolidated financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, as of the date of the Consolidated Statement of Assets and Liabilities and the Consolidated Statements of Operations for the period. Actual results could differ from those estimates.

Cash

Cash as presented in the Consolidated Statements of Assets and Liabilities and the Consolidated Statements of Cash Flows includes bank clearing accounts with financial institutions and cash held in these accounts may exceed the Federal Deposit Insurance Corporation insured limit.

Restricted Cash

Restricted cash of $2911.3 million and $1031.65 million as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, respectively, was held at financial institutions in conjunction with the Company's senior secured revolving credit facility (as modified, amended and restated from time to time, the "Credit Facility") (see Note 3. Borrowings). The Company is restricted from accessing this cash until the monthly settlement date when, after delivering a covenant compliance certificate, the net restricted cash is released to the Company after paying interest, fees, expenses, and borrowings outstanding owed under the Credit Facility.

Investments and Related Investment Revenue and Expense

All investment related revenue and expenses are reflected on the Consolidated Statement of Operations, generally commencing on the trade date unless otherwise specified by the transaction documents.

The Company accrues interest income if it expects that ultimately it will be able to collect it. Generally, when an interest payment default occurs on a loan in the portfolio, when interest has not been paid for greater than 90 days, or when management otherwise believes that the issuer of the loan will not be able to service the loan and other obligations, the Company will place the loan on non-accrual status and will cease accruing interest income on that loan until all principal and interest is current through payment or until a restructuring occurs, such that the interest income is deemed collectible. However, the Company remains contractually entitled to this interest, and any collections actually received on these non-accrual loans may be recognized as interest income on a cash basis or applied to the principal depending upon management's judgment regarding collectability. The Company may make exceptions to this policy if the loan has sufficient collateral value and is in the process of collection and the amount of collectible interest can be reasonably estimated. As of ~~September~~March 3031, ~~2020~~2021, the Company had debt investments in ~~four~~two portfolio companies, with a combined fair value of $~~18.~~6.2 million, on non-accrual status. As of December 31, ~~2019~~2020, the Company had debt investments in two portfolio companies, with a combined fair value of $105.26 million, on non-accrual status.

For loans with contractual PIK (payment-in-kind) interest income, which represents contractual interest accrued and added to the loan balance that generally becomes due at maturity, the Company will not accrue PIK interest if the Company believes that the PIK interest is no longer collectible, including if the portfolio company valuation indicates that such PIK interest is not collectible. Loan origination fees - net of direct loan origination costs, original issue discounts that initially represent the value of detachable equity warrants obtained in conjunction with the acquisition of debt securities and market discounts or premiums - are accreted or amortized using the effective interest method as interest income over the contractual life of the loan. Upon the prepayment of a loan or debt security, any unamortized net loan origination fee will be recorded as interest income. Loan exit fees that are contractually required to be paid at the termination or maturity of the loan will be accreted to interest income over the contractual term of the loan. The Company suspends the accretion of interest income for ~~any loans or debt securities placed on non-accrual status. The Company may also collect other prepayment premiums on loans. These prepayment premiums are recorded as other income as earned.~~

1917

any loans or debt securities placed on non-accrual status. The Company may also collect other prepayment premiums on loans. These prepayment premiums are recorded as other income as earned.

For equity investments with contractual dividends, the Company accrues dividend income based on the contractual obligation. The Company will not accrue dividend income if the Company believes that the dividend income is no longer collectible, including if the portfolio company valuation indicates that such dividend income is not collectible. For equity investments without contractual dividends, dividend income will be recognized on the ex-dividend date.

Income from certain of the Company's equity investments is recorded based upon an estimation of an effective yield to expected maturity utilizing projected cash flows in accordance with ASC 325-40, Beneficial Interests in Securitized Financial Assets. The Company monitors the expected cash flows from these equity investments and the effective yield is determined and updated at each reporting date.

Certain expenses related to legal and tax consultation, due diligence, valuation expenses and independent collateral appraisals may arise when the Company makes certain investments. To the extent that such costs are not classified as direct loan origination costs, these expenses are recognized in the Consolidated Statements of Operations as they are incurred.

Investment Date

The Company records investment purchases and sales based on the trade date. For instances when the trade date and funding date differ, the Company captures the open trades in the receivable for securities sold or payable for securities purchased on the Consolidated Statements of Assets and Liabilities.

Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

Realized gains and losses on investments are calculated using the specific identification method. The Company measures realized gains or losses on equity investments as the difference between the net proceeds from the sale and the cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. The Company measures realized gains or losses on debt investments as the difference between the net proceeds from the repayment or sale and the contractual amount owed to the Company on the investment, without regard to unrealized appreciation or depreciation previously recognized or unamortized deferred fees. The acceleration of unamortized deferred fees is recognized as interest income and the collection of prepayment and other fees is recognized as other income. The Company recognized $06.24 million in net realized gains on its investments and $0.1 million in net realized losses on its investments during the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019, respectively. The Company recognized $2.0 million and $30,304 in net realized losses on its investments during the nine months ended September 30,~~ 2020 ~~and September 30~~, ~~2019,~~ respectively.

Net changes in unrealized appreciation or depreciation measure changes in the fair value of the Company's investments relative to changes in their amortized cost. The Company recognized $13.50 million and $24.06 million in net change in unrealized depreciation during the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019, respectively. The Company recognized $4.9 million and $3.5 million in net change in unrealized depreciation during the nine months ended September 30,~~ 2020 ~~and September 30~~, ~~2019,~~ respectively.

Classification of Portfolio Companies

The Company classifies its investments by level of control. As defined in the 1940 Act, control investments are those where there is the ability or power to exercise a controlling influence over the management or policies of a company. Control is generally deemed to exist when a company or individual owns beneficially more than 25% of the voting securities of another entity. Affiliated investments and affiliated companies are defined by a lesser degree of influence and are deemed to exist through beneficial ownership of at least 5% but not more than 25%, of the outstanding voting securities of another entity. See the table below for a breakdown of the Company's portfolio companies by classification at ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, respectively.


	Number of portfolio company investments by classification
	March 31, 2021	December 31, 2020
Non-Control/Non-Affiliated	12	12
Affiliated	6	7
Control	2	2
Total	20	21

	Number of portfolio company investments by classification
	September 30, 2020	December 31, 2019
Non-Control/Non-Affiliated	13	16
Affiliated	7	7
Control	2	2
Total	22	25

Valuation of Investments

Valuation analyses of the Company’s investments are generally performed on a quarterly basis pursuant to ASC 820, Fair Value Measurement. ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with applicable accounting guidance and expands disclosure of fair value measurements.

Pursuant to ASC 820, the valuation standard used to measure the value of each investment is fair value defined as, “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” Investments are recorded at their fair value at each quarter end (the measurement date).

Fair Value Investment Hierarchy

Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:


Level 1			Quoted prices (unadjusted) for identical assets or liabilities in active public markets that the entity has the ability to access as of the measurement date.
Level 2			Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3			Significant unobservable inputs that reflect a reporting entity’s own assumptions about what market participants would use in pricing an asset or liability.

Valuation Process

Investments are measured at fair value as determined in good faith by the Company's management team and investment professionals of HCAP Advisors, ~~LLC,~~ the Company's external investment adviser ~~("HCAP Advisors")~~, reviewed by the audit committee (which consists entirely of directors who are not "interested persons," as such term is defined in Section 2(a)(19) of the 1940 Act, of the Company) of the board of directors, and ultimately approved by the Company's board of directors, based on, among other factors, consistently applied valuation procedures on each measurement date.

The board of directors undertakes a multi-step valuation process at each measurement date.

•The valuation process generally begins with each investment initially being valued by the Company's management and the investment professionals of HCAP Advisors and/or, if applicable, by an independent third-party valuation firm.

•Preliminary valuation conclusions are documented and discussed with the Company's senior management.

•The audit committee of the Company's board of directors reviews and discusses the preliminary valuations and recommends valuations to the board of directors for approval.

•The board of directors discusses valuations and determines the fair value of each investment in the Company's portfolio in good faith, based upon input of the Company's senior management, HCAP Advisors' investment professionals, and an independent third-party valuation firm (to the extent any such firm reviewed the investment during the applicable quarter), and the recommendation of the board of director's audit committee.

The nature of the materials and input that the Company’s board of directors receives in the valuation process varies depending on the nature of the investment and the other facts and circumstances. For example, in the case of investments that are Level 1 or 2 assets, a formal report by the Company’s management or HCAP Advisors' investment professionals, called a portfolio monitoring report, or “PMR,” is not generally prepared, and no independent third-party valuation firm is engaged due to the availability of quotes in markets for such investments or similar assets.

In the case of investments that are Level 3 assets, however, the Company’s board of directors generally receives a report on material Level 3 investments on a quarterly basis (i) from the Company’s management or HCAP Advisors' investment professionals in the form of a PMR, (ii) from an independent third-party valuation firm, or (iii) in some cases, both. In the case of investments that are Level 3 assets and have an investment rating of 1 (performing above expectations), the Company generally engages an independent third-party valuation firm to review all such material investments at least annually. In quarters where an external valuation is not prepared for such investments, the Company’s management or HCAP Advisors' investment professionals generally prepare a PMR. In the case of investments that are Level 3 assets and have an investment rating of 2 through 5 (with performance ranging from within expectations to substantially below expectations), the Company generally engages an independent third-party valuation firm to review such material investments quarterly (and may receive a PMR in addition to the review of the independent external valuation firm where the Level 3 assets have an investment rating of 3 through 5). However, in certain cases for Level 3 assets, the Company may determine that it is more appropriate for HCAP Advisors' investment professionals to prepare a PMR instead of engaging an independent third-party valuation firm on a quarterly basis, because a third-party valuation is not cost effective or the nature of the investment does not warrant a quarterly third-party valuation. In addition, under certain unique circumstances, the Company may determine that a formal valuation report is not likely to be informative, and neither a third-party valuation report nor a report from the Company’s management or HCAP Advisors' investment professionals is prepared. Such circumstances might include, for example, an instance in which the investment has paid off after the period end date but before the board of directors meets to discuss the valuations.

professionals in the form of a PMR, (ii) from an independent third-party valuation firm, or (iii) in some cases, both. In the case of investments that are Level 3 assets and have an investment rating of 1 (performing above expectations), the Company generally engages an independent third-party valuation firm to review all such material investments at least annually. In quarters where an external valuation is not prepared for such investments, the Company’s management or HCAP Advisors' investment professionals generally prepare a PMR. In the case of investments that are Level 3 assets and have an investment rating of 2 through 5 (with performance ranging from within expectations to substantially below expectations), the Company generally engages an independent third-party valuation firm to review such material investments quarterly (and may receive a PMR in addition to the review of the independent external valuation firm where the Level 3 assets have an investment rating of 3 through 5). However, in certain cases for Level 3 assets, the Company may determine that it is more appropriate for HCAP Advisors' investment professionals to prepare a PMR instead of engaging an independent third-party valuation firm on a quarterly basis, because a third-party valuation is not cost effective or the nature of the investment does not warrant a quarterly third-party valuation. In addition, under certain unique circumstances, the Company may determine that a formal valuation report is not likely to be informative, and neither a third-party valuation report nor a report from the Company’s management or HCAP Advisor's investment professionals is prepared. Such circumstances might include, for example, an instance in which the investment has paid off after the period end date but before the board of directors meets to discuss the valuations.

Further, Level 3 debt investments that have closed within six months of the measurement date are valued at cost unless unique circumstances dictate otherwise.

Valuation Methodology

The following section describes the valuation methods and techniques used to measure the fair value of the investments.

Fair value for each investment may be derived using a combination of valuation methodologies that, in the judgment of the Company's management, are most relevant to such investment, including, without limitation, being based on one or more of the following: (i) market prices obtained from market makers for which management has deemed there to be enough breadth (number of quotes) and depth to be indicative of fair value, (ii) the price paid or realized in a completed transaction or binding offer received in an arms-length transaction, (iii) the market approach (enterprise value), (iv) the income approach (discounted cash flow analysis), or (v) the bond yield approach.

The valuation methods selected for a particular investment are based on the circumstances and on the level of sufficient data available to measure fair value. If more than one valuation method is used to measure fair value, the results are evaluated and weighted, as appropriate, considering the reasonableness of the range indicated by those results. A fair value measurement is the point within that range that is most representative of fair value given the circumstances.

The determination of fair value using the selected methodologies takes into consideration a range of factors including, but not limited to, the price at which the investment was acquired, the nature of the investment, local market conditions, trading values on public and private exchanges for comparable securities, current and projected operating performance and financing transactions subsequent to the acquisition of the investment, compliance with agreed upon terms and covenants, and assessment of credit ratings of an underlying borrower.

In most cases the Company uses the income approach or bond yield approach for valuing its Level 3 debt investments, as long as the Company deems this method appropriate. This approach entails analyzing the interest rate spreads for recently completed financing transactions which are similar in nature to the Company's, in order to assess what the range of effective market interest rates would be for the investment if it were being made on or near the valuation date. Then all of the remaining expected cash flows of the investment are discounted using this range of interest rates to determine a range of fair values for the debt investment. If, in the Company's judgment, the bond yield approach is not appropriate, the Company may use the market approach, or, in certain cases, an alternative methodology potentially including an asset liquidation or expected recovery model.

22The fair value of equity securities, including warrants, in portfolio companies oftentimes considers the market approach, which applies market valuation multiples of publicly-traded firms or recently acquired private firms engaged in businesses similar to those of the portfolio companies. This approach to determining the fair value of a portfolio company’s equity security will typically involve: (1) applying to the portfolio company’s trailing-twelve-month EBITDA (earnings before interest, taxes, depreciation and amortization) a range of enterprise value to EBITDA multiples that are derived from an analysis of comparable companies, in order to arrive at a range of enterprise values for the portfolio company; then (2) subtracting from the range of enterprise values balances of any debt or equity securities that rank senior to the Company's equity securities; and (3)

The fair value of equity securities, including warrants, in portfolio companies oftentimes considers the market approach, which applies market valuation multiples of publicly-traded firms or recently acquired private firms engaged in businesses similar to those of the portfolio companies. This approach to determining the fair value of a portfolio company’s equity security will typically involve: (1) applying to the portfolio company’s trailing-twelve-month EBITDA (earnings before interest, taxes, depreciation and amortization) a range of enterprise value to EBITDA multiples that are derived from an analysis of comparable companies, in order to arrive at a range of enterprise values for the portfolio company; then (2) subtracting from the range of enterprise values balances of any debt or equity securities that rank senior to the Company's equity securities; and (3) multiplying the range of equity values by the Company’s ownership share of such equity to determine a range of fair values for the Company’s equity investment.20

multiplying the range of equity values by the Company’s ownership share of such equity to determine a range of fair values for the Company’s equity investment.

The Company also uses the income approach, which discounts a portfolio company’s expected future cash flows to determine its net present enterprise value. The discount rate used is based upon the company’s weighted average cost of capital, which is determined by blending the cost of the portfolio company’s various debt instruments and its estimated cost of equity capital. The cost of equity capital is estimated based upon the Company's market knowledge and discussions with private equity sponsors.

These valuation methodologies involve a significant degree of judgment, including in discerning whether the impact of the COVID-19 pandemic on the Company's portfolio companies and their earnings is temporary or permanent in nature and the resulting significance thereof on the valuation of the Company's portfolio investments. As it relates to investments that do not have an active public market, there is no single standard for determining the estimated fair value. Valuations of privately held investments are inherently uncertain, and they may fluctuate over short periods of time and are based on estimates and other information provided to the Company by its portfolio companies, including with respect to the evolving nature of the impact of the COVID-19 pandemic on their businesses and earnings. The determination of fair value may differ materially from the values that would have been used if a ready market for these investments existed. In some cases, fair value of such investments is best expressed as a range of values derived utilizing different methodologies from which a single fair value may then be determined.

Consequently, fair value for each investment may be derived using a combination of valuation methodologies that, in the judgment of the Company's management, are most relevant to such investment. The selected valuation methodologies for a particular investment are consistently applied on each measurement date. However, a change from one measurement date to another in a valuation methodology, its application or the related inputs, such as earnings and adjustments relating thereto to account for the estimated impact of the COVID-19 pandemic on a portfolio company, is possible if the change results in a measurement that is deemed to be equally or more representative of fair value in the circumstances.

Capital Gains Incentive Fee

Under GAAP, the Company calculates the capital gains incentive fee as if the Company had realized all investments at their fair values as of the reporting date. Accordingly, the Company accrues a provisional capital gains incentive fee taking into account any unrealized gains or losses. As the provisional incentive fee is subject to the performance of investments until there is a realization event, the amount of provisional capital gains incentive fee accrued at a reporting date may vary from the capital gains incentive fee that is ultimately paid and the differences could be material.

Deferred Financing Costs

Deferred financing costs consist of debt issuance costs associated with the Company's Credit Facility. The deferred financing costs consist of fees and other direct costs incurred by the Company in obtaining debt financing from its lenders and are recognized as assets and are amortized as interest expense over the term of the applicable credit facility. The balance of deferred financing costs as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020 was $0.31 million and $0.42 million, respectively. Amortization expense relating to deferred debt financing costs during the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020 was $0.1 million and $0.1 million, respectively. ~~Amortization expense relating to deferred debt financing costs during the nine months ended September 30, 2020 and September 30, 2019 was $0.2 million and $0.2 million, respectively.~~

Deferred Offering Costs

Deferred offering costs consist of expenses related to the Company's $28.8 million in aggregate principal amount of its 2022 Notes (defined below in Note 3), including underwriting fees, legal fees, and other direct costs incurred. The deferred offering costs are recognized as a reduction to the 2022 Notes on the Company's consolidated statement of assets and liabilities and are amortized as interest expense through the maturity of the 2022 Notes. The balance of deferred offering costs as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020 was $0.54 million and $0.64 million, respectively. Amortization expense of the deferred offering costs was $~~53,693~~0.1 million and $~~50,076~~0.1 million for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019, respectively. Amortization expense of the deferred offering costs during the nine months ended September 30,~~ 2020 ~~and September 30~~, ~~2019 was $0.2 million and $0.1 million,~~ respectively.

Dividends and Distributions

Dividends and distributions to common stockholders are recorded on the ex-dividend date. Distributions to stockholders which exceed tax distributable income (tax net investment income and realized gains, if any) are reported as distributions of paid-in capital (i.e., return of capital). The determination of the tax attributes of the Company's distributions is made at the end of the year based upon the Company's taxable income for the full year and the distributions paid during the full year. Net realized capital gains, if any, are distributed at least annually, although the Company may decide to retain such capital gains for investment. The Company adopted a dividend reinvestment plan that provides for reinvestment of its dividends and other distributions on behalf of the Company's stockholders, unless a stockholder elects to receive cash. As a result, if the board of directors authorizes, and the Company declares, a cash dividend or other distribution, then stockholders who have not “opted out” of the dividend reinvestment plan will have their cash distribution automatically reinvested in additional shares of the Company's common stock, rather than receiving the cash distribution.

During the three months ended September 30, 2020, the Company did not pay any distributions. During the three months ended September 30, 2019, the Company paid distributions totaling $0.24 per share. During the nine months ended September 30, 2020 and September 30, 2019, the Company paid distributions totaling $0.24 and $0.74 per share, respectively.21

Onpaid-in ~~March~~capital 12(i.e., ~~2020,~~return ~~the~~of ~~Company~~capital). ~~announced~~The ~~monthly~~determination ~~distributions~~of the tax attributes of ~~$0.08~~the ~~per~~Company's ~~share~~distributions ~~payable~~is onmade ~~each~~at the end of ~~April~~the ~~30,~~year ~~2020~~based (upon the ~~"March~~Company's ~~2020~~taxable ~~Dividend")~~income ~~and~~for ~~May~~the ~~28,~~full ~~2020~~year (and the ~~"April~~distributions ~~2020~~paid ~~Dividend")~~during tothe ~~record~~full ~~holders~~year. asNet ofrealized ~~April~~capital 23gains, ~~2020~~if ~~and~~any, ~~May~~are ~~21,~~distributed ~~2020,~~at ~~respectively.~~least ~~However~~annually, although the ~~board~~Company ofmay ~~directors~~decide ~~has~~to ~~decided~~retain tosuch ~~defer~~capital ~~the~~gains ~~record~~for ~~date~~investment. ~~and~~The ~~payment~~Company ofadopted ~~each~~a ofdividend ~~the~~reinvestment ~~March~~plan ~~2020~~that ~~Dividend~~provides ~~and~~for ~~the~~reinvestment ~~April~~of ~~2020~~its ~~Dividend~~dividends and ~~has~~other ~~determined~~distributions toon ~~suspend~~behalf of the ~~declaration~~Company's ofstockholders, ~~any~~unless ~~future~~a ~~dividends~~stockholder ~~until~~elects ~~such~~to ~~later~~receive ~~time~~cash. asAs ~~the~~a result, if the board of directors authorizes, ~~determines~~and isthe ~~prudent~~Company indeclares, ~~light~~a cash dividend or other distribution, then stockholders who have not “opted out” of the ~~Company's~~dividend ~~capital~~reinvestment ~~needs~~plan ~~and~~will ~~contractual~~have ~~obligations,~~their ~~and~~cash distribution automatically reinvested in additional shares of the Company's ~~stockholders'~~common ~~best~~stock, ~~interests~~rather than receiving the cash distribution.

During the three months ended March 31, 2021, the Company did not pay any distributions. During the three months ended March 31, 2020, the Company paid distributions totaling $0.24 per share.

Income Taxes

The Company has elected to be treated, and intends to qualify annually, as a RIC under Subchapter M of the Code. To qualify for tax treatment as a RIC, the Company is required to meet certain income and asset diversification tests in addition to distributing at least 90% of ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any, out of the assets legally available for distribution. As a RIC, the Company will be subject to a 4% nondeductible federal excise tax on certain undistributed income unless the Company distributes in a timely manner an amount at least equal to the sum of (1) 98% of its ordinary income for each calendar year, (2) 98.2% of its capital gain net income for the 1-year period ending October 31 in that calendar year and (3) any ordinary income and net capital gains for preceding years that were not distributed during such years and on which the Company paid no U.S. federal income tax. To the extent the Company receives taxable income information from portfolio companies subsequent to the filing of the Form 10-K which alters taxable income estimates and book/tax differences as reported in the filing, the Company’s tax return will be trued-up.

One of the Company's wholly-owned taxable subsidiaries, HCAP Equity Holdings LLC, holds certain portfolio investments that are listed on the Consolidated Schedule of Investments. HCAP Equity Holdings LLC is consolidated for financial reporting purposes, such that the company’s consolidated financial statements reflect the Company’s investments in the portfolio companies owned by it. The purpose of HCAP Equity Holdings LLC is to permit the Company to hold certain portfolio companies that are organized as limited liability companies (“LLCs”) (or other forms of pass-through entities) and still satisfy the RIC tax requirement that at least 90% of the RIC’s gross revenue for income tax purposes must consist of qualifying investment income. Absent such a taxable subsidiary, a proportionate amount of any gross income of an LLC (or other pass-through entity) portfolio investment would flow through directly to the RIC. To the extent that such income did not consist of qualifying investment income, it could jeopardize the Company’s ability to qualify as a RIC and therefore cause the Company to incur significant amounts of federal income taxes. When LLCs (or other pass-through entities) are owned by a taxable subsidiary, their income is taxed to the taxable subsidiary and does not flow through to the RIC, thereby helping the Company preserve its RIC status and resultant tax advantages. HCAP Equity Holdings LLC is not consolidated for income tax purposes and may generate income tax expense as a result of its ownership of interests in portfolio companies. This income tax expense is reflected in the Company’s Consolidated Statements of Operations.

24HCAP Equity Holdings, LLC is subject to U.S. federal and state income taxes and may generate income tax liabilities or assets from permanent and temporary differences in the recognition of items for financial reporting and income tax purposes at HCAP Equity Holdings, LLC. During the three months ended March 31, 2021 the Company accrued a deferred tax benefit of $0.9 million for such temporary differences. During the three months ended March 31, 2020, the Company did not accrue any deferred tax expense for such temporary differences. The Company did not recognize a current income tax expense during either of the three months ended March 31, 2021 or 2020.

toThe ~~incur~~Company’s ~~significant~~tax ~~amounts~~returns ofare subject to examination by federal, ~~income~~state ~~taxes.~~and ~~When~~local ~~LLCs~~taxing ~~(or~~authorities. ~~other~~Because ~~pass-through~~many ~~entities)~~types of transactions are ~~owned~~susceptible byto avarying ~~taxable~~interpretations ~~subsidiary,~~under ~~their~~federal and state income istax ~~taxed~~laws toand regulations, the ~~taxable~~amounts ~~subsidiary~~reported ~~and~~in ~~does~~the ~~not~~accompanying ~~flow~~financial ~~through~~statements may be subject to change at a later date by the ~~RIC~~respective taxing authorities. For tax positions meeting the more-likely-than-not threshold, ~~thereby~~the ~~helping~~amount recognized in the ~~Company~~financial ~~preserve~~statements ~~its~~is ~~RIC~~the ~~status~~largest ~~and~~benefit ~~resultant~~that ~~tax~~has ~~advantages.~~a ~~HCAP~~greater ~~Equity~~than ~~Holdings~~50% ~~LLC~~likelihood isof ~~not~~being ~~consolidated~~realized ~~for~~upon ~~income~~ultimate settlement with the relevant tax ~~purposes~~authority. ~~and~~Penalties or interest that may ~~generate~~be assessed related to any income ~~tax~~taxes ~~expense~~would be classified as aother ~~result~~operating ofexpenses ~~its~~in ~~ownership~~the financial statements. Based on an analysis of ~~interests~~the inCompany's ~~portfolio~~tax ~~companies.~~position, ~~This~~there ~~income~~are no uncertain tax ~~expense~~positions isthat ~~reflected~~met inthe recognition or measurement criteria and the Company’s ~~Consolidated~~has ~~Statements~~no amounts accrued for interest or penalties as of ~~Operations~~March 31, 2021. The Company is not currently undergoing any tax examinations. The Company does not anticipate any significant increase or decrease in unrecognized tax benefits for the next twelve months. The federal tax years 2017-2019 for the Company remain

HCAP Equity Holdings, LLC is subject to U.S. federal and state income taxes and may generate income tax liabilities or assets from permanent and temporary differences in the recognition of items for financial reporting and income tax purposes at HCAP Equity Holdings, LLC. During the three and nine months ended September 30, 2020 and September 30, 2019, the Company did not incur any deferred tax expense for such temporary differences. The Company did not recognize a current income tax expense during the three or nine months ended September 30, 2020 and 2019.22

~~The Company’s tax returns are~~ subject to examination by ~~federal, state and local taxing authorities. Because many types of transactions are susceptible to varying interpretations under federal and state income tax laws and regulations,~~ the amounts reported in the accompanying financial statements may be subject to change at a later date by the respective taxing authorities. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. Penalties or interest that may be assessed related to any income taxes would be classified as other operating expenses in the financial statements. Based on an analysis of the Company's tax position, there are no uncertain tax positions that met the recognition or measurement criteria and the Company has no amounts accrued for interest or penalties as of September 30, 2020. The Company is not currently undergoing any tax examinations. The Company does not anticipate any significant increase or decrease in unrecognized tax benefits for the next twelve months. The federal tax years 2016-2019 for the Company remain subject to examination by the IRS. The state tax years ~~2014~~2015 - 2019 for the Company remain subject to examination by the state taxing authorities.

Excise Tax

The Company estimates excise tax based on timely information available. The Company ~~does~~estimates ~~not estimate~~ that it will not incur an excise tax for the fiscal year ~~ended~~ending December 31, ~~2020~~2021. The Company did not incur an excise tax expense for the year ended December 31, ~~2019~~2020.

Note 3. Borrowings

The Company's principal balance of its debt obligations consist of the following:

	As of
	September 30, 2020		December 31, 2019
	March 31, 2021		December 31, 2020
Revolving line of credit	$	4510,000,000	$	4335,~~700~~591,~~000~~406
2022 Notes	28,750,000		28,750,000
Total debt obligations	$	7338,750,000	$	7264,~~450~~341,~~000~~406

The weighted average stated interest rate and weighted average maturity on all of the Company's debt obligations outstanding as of ~~September~~March 3031, ~~2020~~2021 were 56.70% and 1.42 years, respectively. The weighted average stated interest rate and weighted average maturity on all of the Company's debt obligations outstanding as of December 31, ~~2019~~2020 were 5.48% and 21.2 years, respectively.

Revolving Line of Credit

On October 29, 2013, the Company entered into a Loan and Security Agreement (as amended, restated and modified from time to time, the "Loan and Security Agreement") with CapitalSource Bank (now Pacific Western Bank following a merger), as agent and a lender, and each of the lenders from time to time party thereto, including City National Bank, to provide the Company with its $45.0 million Credit Facility. The Credit Facility is secured by all of the Company’s assets, including the Company's equity interest in HCAP Equity Holdings, LLC and HCAP ICC, LLC.

As of ~~September~~March 3031, ~~2020~~2021, advances under the Credit Facility bear interest at a rate per annum equal to the lesser of (i) the applicable LIBOR plus 4.50% (with a 1.00% LIBOR floor) and (ii) the maximum rate permitted under applicable law. During the revolving period, availability under the Credit Facility is determined by advance rates against eligible loans in the borrowing base up to a maximum aggregate availability of $44.3 million. Advance rates against individual investments range from 40% to 65% depending on the seniority of the investment in the borrowing base.

In addition, as of March 31, 2021, the Credit Facility included the following terms, among other things: (i) a revolving period scheduled to expire on June 30, 2021, until which date the Company may receive additional advances at the discretion of the lenders; (ii) provides for a senior leverage ratio (the ratio of total borrowed money other than subordinated debt and unsecured longer-term indebtedness to equity) of 1-to-1; (iii) provides for a total leverage ratio (the ratio of total debt to equity) of 1.4-to-1 and a limit on the Company’s debt service coverage ratio of 1.25-to-1.00 as of the end of any quarter in the period beginning as of August 1, 2020 (which ratio was 1.40-to-1.00 as of the end of any quarter prior to August 1, 2020); (iv) additional advances requested under the Credit Facility will be made only at the discretion of the lenders; (v) aggregate commitments under the Loan and Security Agreement are $45.0 million; (vi) a tangible net worth covenant for the Company that reflects a minimum amount equal to $58.0 million; (vii) an effective limitation on the aggregate value of eligible loans in the borrowing base to maximum of approximately $44.3 million; (viii) requires the Company to pay a monthly fee for unused amounts during the revolving period in an amount equal to 0.50% per annum multiplied by the difference between (a) the maximum loan amount under the Loan and Security Agreement and (b) the average daily principal balance of the obligations outstanding during the prior calendar month; (ix) prohibits the Company from repurchasing shares of its common stock and declaring and paying any distribution or dividend until the termination of the Loan and Security Agreement, except, in the case of distributions and dividends, to the extent necessary for the Company to maintain its eligibility to qualify as a RIC under Subchapter M of the Code; (x) includes a minimum liquidity covenant threshold for the Company of least $2.2 million through termination of the Loan and Security Agreement; and (xi) permits the use of an Alternative Rate (as defined in the Loan and Security Agreement) in place of LIBOR if certain conditions are satisfied.

During the revolving period, availability under the Credit Facility is determined by advance rates against eligible loans in the borrowing base up to a maximum aggregate availability of $44.3 million. Advance rates against individual investments range from 40% to 65% depending on the seniority of the investment in the borrowing base. 23

In addition, as of September 30, 2020, the Credit Facility included the following terms, among other things: (i) a revolving period scheduled to expire on October 31, 2020 (please see "Note 13. Subsequent Events" for more information regarding the extension of the revolving period to January 31, 2021); (ii) provides for a senior leverage ratio (the ratio of total borrowed money other than subordinated debt and unsecured longer-term indebtedness to equity) of 1-to-1; (iii) provides for a total leverage ratio (the ratio of total debt to equity) of 1.4-to-1 and a limit on the Company’s debt service coverage ratio of 1.25-to-1.00 as of the end of any quarter in the period beginning as of August 1, 2020 (which ratio was 1.40-to-1.00 as of the end of any quarter prior to August 1, 2020); (iv) additional advances requested under the Credit Facility will be made only at the discretion of the lenders; (v) aggregate commitments under the Loan and Security Agreement are $45.0 million; (vi) a tangible net worth covenant for the Company that reflects a minimum amount equal to $58.0 million; (vii) an effective limitation on the aggregate value of eligible loans in the borrowing base to maximum of approximately $44.3 million; (viii) requires the Company to pay a monthly fee of 0.50% per annum for unused amounts during the revolving period, calculated based on the difference between (a) the maximum loan amount under the Loan and Security Agreement and (b) the average daily principal balance of the obligations outstanding during the prior calendar month; (iv) prohibits the Company from repurchasing shares of its common stock and declaring and paying any distribution or dividend until the termination of the Loan and Security Agreement, except, in the case of distributions and dividends, to the extent necessary for the Company to maintain its eligibility to qualify as a RIC under Subchapter M of the Code; (x) includes a minimum liquidity covenant threshold for the Company of least $2.2 million through termination of the Loan and Security Agreement; and (xi) permits the use of an Alternative Rate (as defined in the Loan and Security Agreement) in place of LIBOR if certain conditions are satisfied.

Beginning as of August 1, 2020, during the amortization period, the Company is required to pay down the principal amount outstanding under the Credit Facility on a monthly basis in equal installments during the relevant calendar quarter so that such outstanding amounts will be reduced by an amount equal to or greater than (i) $2.2 million for each of the first two full calendar quarters following July 31, 2020, (ii) $3.3 million for each of the succeeding two full calendar quarters and (iii) $4.3 million for each succeeding calendar quarter until termination of the Credit Facility, which is scheduled to mature on October 30, 2021. During the amortization period, 90% of all principal collections the Company receives from its portfolio companies must generally be paid to the lenders to pay down the Company's obligations and other amounts outstanding under the Credit Facility. In addition, any proceeds the Company receives from the sale or issuance of its equity or debt securities during the amortization period must generally be applied to the prepayment of the Company's obligations under the Credit Facility.

The Credit Facility contains additional customary terms and conditions, including, without limitation, affirmative and negative covenants, including, without limitation, information reporting requirements, a minimum debt-service coverage ratio and maintenance of RIC and BDC status. The Credit Facility also contains customary events of default, including, without limitation, nonpayment, misrepresentation of representations and warranties in a material respect, breach of covenant, cross-default to other indebtedness, bankruptcy, change of control, and the occurrence of a material adverse effect. In addition, the Credit Facility provides that, upon the occurrence and during the continuation of any event of default, the Company’s administration agreement could be terminated and a backup administrator could be substituted by the agent.

The maturity date under the Credit Facility is the earlier of (x) October 30, 2021, or (y) the date that is six months prior to the maturity of any of the Company's outstanding unsecured long-term indebtedness. Based on the Company's outstanding 2022 Notes (defined below) that mature on September 15, 2022, the maturity date under the Credit Facility is October 30, 2021. HCAP Equity Holdings, LLC became a co-borrower under the Credit Facility in August 2016, and HCAP ICC, LLC, became a borrower under the Credit Facility in November 2017.

As of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020 the outstanding balance on the Credit Facility was $4510.0 million and $4335.76 million, respectively. As of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, the Company was in compliance with the covenants under the Credit Facility.

See "Note 13. Subsequent Events" for more information regarding the Credit Facility.

2022 Notes

On August 24, 2017, the Company closed the public offering of $25.0 million in aggregate principal amount of its 6.125% Notes due 2022 (the "2022 Notes"). On September 1, 2017, the Company closed on an additional $3.75 million in aggregate principal amount of 2022 Notes to cover the over-allotment option exercised by the underwriters. In total, the Company issued 1,150,000 of the 2022 Notes at a price of $25.00 per Note. The total net proceeds to the Company from the 2022 Notes, after deducting underwriting discounts of $0.9 million and offering costs of $0.2 million, were $27.7 million. As of ~~September~~March 3031, ~~2020~~2021, the outstanding principal balance of the 2022 Notes was $28.8 million and the debt issuance costs balance was $0.54 million. As of December 31, ~~2019~~2020, the outstanding principal balance of the 2022 Notes was $28.8 million and the debt issuance costs balance was $0.64 million. ~~The Company used the proceeds of the 2022 Notes to redeem its 7.00% Notes due 2020 in full on September 23, 2017.~~

The 2022 Notes mature on September 15, 2022 and bear interest at a rate of 6.125%. They are redeemable in whole or in part at any time at the Company's option at a price equal to 100% of the outstanding principal amount of the 2022 Notes plus accrued and unpaid interest. The 2022 Notes are unsecured obligations of the Company and rank pari passu with any existing and future unsecured unsubordinated indebtedness; senior to any of the Company’s future indebtedness that expressly provides it is subordinated to the 2022 Notes; effectively subordinated to all of the existing and future secured indebtedness of the Company, to the extent of the value of the assets securing such indebtedness, including borrowings under the Credit Facility; and structurally subordinated to all existing and future indebtedness and other obligations of any subsidiaries, financing vehicles, or similar facilities the Company may form in the future, with respect to claims on the assets of any such subsidiaries, financing vehicles, or similar facilities. Interest on the 2022 Notes is payable quarterly on March 15, June 15, September 15, and December 15 of each year. The 2022 Notes are listed on the Nasdaq Global Market under the trading symbol “HCAPZ.” The Company may from time to time repurchase 2022 Notes in accordance with the 1940 Act and the rules promulgated thereunder.

The indenture governing the 2022 Notes (the “2022 Notes Indenture”) contains certain covenants, including covenants (i) prohibiting the Company’s issuance of any senior securities unless, immediately after such issuance, the Company is in compliance with the 1940 Act asset coverage requirements (after giving effect to any exemptive relief granted to the Company by the Securities and Exchange Commission (the “SEC”)); (ii) if the Company’s asset coverage has been below the 1940 Act minimum asset coverage requirements (after giving effect to any exemptive relief granted to the Company by the SEC) for more than six consecutive months, prohibiting the declaration of any cash dividend or distribution on the Company’s common stock (except to the extent necessary for the Company to maintain its treatment as a RIC under Subchapter M of the Code), or purchasing any of its common stock, unless, at the time of the declaration of the dividend or distribution or the purchase, and after deducting the amount of such dividend, distribution, or purchase, the Company is in compliance with the 1940 Act asset coverage requirements (after giving effect to any exemptive relief granted to the Company by the SEC); and (iii) requiring the Company to provide financial information to the holders of the 2022 Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These covenants are subject to limitations and exceptions that are described in the 2022 Notes Indenture. As of September 30, 2020 and December 31, 2019, the Company was in compliance with the covenants under the 2022 Notes Indenture.

by the Securities and Exchange Commission (the “SEC”)); (ii) if the Company’s asset coverage has been below the 1940 Act minimum asset coverage requirements (after giving effect to any exemptive relief granted to the Company by the SEC) for more than six consecutive months, prohibiting the declaration of any cash dividend or distribution on the Company’s common stock (except to the extent necessary for the Company to maintain its treatment as a RIC under Subchapter M of the Code), or purchasing any of its common stock, unless, at the time of the declaration of the dividend or distribution or the purchase, and after deducting the amount of such dividend, distribution, or purchase, the Company is in compliance with the 1940 Act asset coverage requirements (after giving effect to any exemptive relief granted to the Company by the SEC); and (iii) requiring the Company to provide financial information to the holders of the 2022 Notes and the Trustee if the Company ceases to be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These covenants are subject to limitations and exceptions that are described in the 2022 Notes Indenture. As of March 31, 2021 and December 31, 2020, the Company was in compliance with the covenants under the 2022 Notes Indenture.

Regulatory Requirements

As a BDC, the Company is generally required, upon issuing any senior securities, to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which include all of the Company's borrowings, of at least 200%. However, the Small Business Credit Availability Act (the "SBCAA"), which was signed into law in March 2018, modified this requirement to permit a BDC to reduce the required minimum asset coverage ratio to 150% from 200%, if certain requirements are met. On May 4, 2018, the Company's board of directors unanimously approved the application of the modified asset coverage requirements set forth in Section 61(a) of the 1940 Act. As a result, the asset coverage ratio applicable to the Company under the 1940 Act changed to 150% from 200%, effective May 4, 2019.

As of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, the Company's aggregate indebtedness, including outstanding borrowings under the Credit Facility and the aggregate principal amount outstanding on the 2022 Notes, was $7338.8 million and $7264.53 million, respectively, and as of ~~September~~March 3031, ~~2020~~2021, and December 31, ~~2019~~2020, the Company's asset coverage, as defined in the 1940 Act, was ~~182~~272% and ~~192~~197%, respectively.

Note 4. Concentrations of Credit Risk

The Company’s investment portfolio consists primarily of loans to privately-held small to mid-size companies. Many of these companies may experience variation in operating results. Many of these companies do business in regulated industries and could be affected by changes in government regulations.

The largest debt investments may vary from year to year as new debt investments are recorded and repaid. The Company’s five largest debt investments represented approximately 4859.26% and 4054.87% of total principal balance of debt investments outstanding as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, respectively. Investment income, consisting of interest and fees, can fluctuate significantly upon repayment of large loans. Investment income from the five largest debt investments accounted for approximately 2948.31% and 2937.68% of total investment income for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019, respectively. Investment income from the five largest debt investments accounted for approximately 33.3% and 26.6% of total investment income for the nine months ended September 30,~~ 2020 ~~and September 30~~, ~~2019,~~ respectively.

Note 5. Stockholders' Equity

The following table summarizes the Company's common stock activity for each of the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020.

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2020			2019			2020			2019
	2021			2020
	Shares	Amount		Shares	Amount		~~Shares~~	~~Amount~~		~~Shares~~	~~Amount~~
Shares repurchased	—	$	—	(159,561)	$	(1,626,331)	—	$	—	(421,069)	$	(4,373,207)
Dividends reinvested	—	$	—	12,625	$	85,538
Dividends reinvested	—	—		8,514	81,371		12,625	85,538		24,165	237,257
Total	—	$	—	12,625	$	85,538
Total	—	$	—	(151,047)	$	(1,544,960)	12,625	$	85,538	(396,904)	$	(4,135,950)

As of ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020, the Company had no dilutive securities outstanding.

OnThe ~~November~~Company 1,has ~~2018,~~adopted ~~the board of directors authorized~~ an ~~open~~“opt ~~market~~out” ~~stock~~dividend ~~repurchase~~reinvestment ~~program.~~plan, ~~Pursuant~~or ~~to the program~~“DRIP,” ~~the~~for ~~Company~~its ~~was~~common ~~authorized~~stockholders. toAs ~~repurchase~~a ~~up to 250~~result,~~000~~ ~~shares~~if in the ~~aggregate of the~~ Company's ~~outstanding~~makes ~~common~~cash ~~stock in the open market. The repurchase program expired on April 4~~distributions, ~~2019,~~then onstockholders’ ~~which~~cash ~~date~~distributions ~~the~~will ~~Company~~be ~~met~~automatically ~~the~~reinvested ~~250,000~~in ~~shares limit.~~

On May 2, 2019, the board of directors authorized another open market stock repurchase program. Pursuant to the program, the Company was authorized to repurchase up to 250,000 shares in the aggregate of the Company's outstanding common stock in the open market. The repurchase program expired on October 24, 2019, on which date the Company met the 250,000 shares limit. 25

~~During~~additional ~~the three months ended September 30, 2020 the Company did not repurchase any~~ shares of ~~its common stock. During~~ the ~~three months ended September 30, 2019, the~~ Company's ~~repurchased 159,561 shares of its~~ common stock ~~at an average price of $10.19 per share~~, ~~for~~unless anthey ~~aggregate~~specifically ~~purchase~~“opt ~~price~~out” of ~~$1.6 million. During~~ the ~~nine~~dividend ~~months~~reinvestment ~~ended~~plan ~~September 30,~~so ~~2020,~~as ~~the~~to ~~Company~~receive ~~did~~cash ~~not repurchase any shares of its common stock~~distributions. ~~During~~ ~~the nine months ended September 30, 2019, the repurchased 421,069 shares of its common stock at an average price of $10.39 per share for an aggregate purchase price of $4.4 million.~~

The Company has adopted an “opt out” dividend reinvestment plan, or “DRIP,” for its common stockholders. As a result, if the Company makes cash distributions, then stockholders’ cash distributions will be automatically reinvested in additional shares of the Company's common stock, unless they specifically “opt out” of the dividend reinvestment plan so as to receive cash distributions.

Note 6. Fair Value Measurements

As described in Note 2, the Company uses fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. A description of the valuation methodologies used for assets and liabilities recorded at fair value, and for estimating fair value for financial and non-financial instruments not recorded at fair value, is set forth below. The information presented should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only required for a portion of the Company’s assets and liabilities.

2022 Notes: The 2022 Notes are a Level 2 financial instrument with readily observable market inputs from other comparable unsecured notes in the marketplace. The 2022 Notes trade under the ticker "HCAPZ". As of March 31, 2021 and December 31, 2020, the fair value of the 2022 Notes was $29.2 million and $28.8 million, respectively, which was based on the closing price of the 2022 Notes on the respective dates.

~~forth~~Revolving ~~below.~~line ~~The~~of ~~information~~credit: ~~presented~~Borrowings ~~should~~under ~~not~~the beCredit ~~interpreted~~Facility asare ancarried ~~estimate~~at ofcost. ~~the~~The fair value of the ~~entire~~Credit ~~Company~~Facility ~~since~~as aof March 31, ~~fair~~2021 ~~value~~and ~~calculation~~December 31, is2020 ~~only~~was ~~required~~$10.0 ~~for~~million aand ~~portion~~$35.6 ofmillion, ~~the~~respectively, ~~Company’s~~which ~~assets~~approximates cost due to its short-term maturity and ~~liabilities~~floating rate coupon.

2022 Notes: The 2022 Notes are a Level 2 financial instrument with readily observable market inputs from other comparable unsecured notes in the marketplace. The 2022 Notes trade under the ticker "HCAPZ". As of September 30, 2020 and December 31, 2019, the fair value of the 2022 Notes was $27.9 million and $29.8 million, respectively, which was based on the closing price of the 2022 Notes on the respective dates.

Revolving line of credit: Borrowings under the Credit Facility are carried at cost. The fair value of the Credit Facility as of September 30, 2020 and December 31, 2019 was $45.0 million and $43.7 million, respectively, which approximates cost due to its short-term maturity and floating rate coupon.

Off-balance sheet financial instruments: The fair value of unfunded commitments is estimated based on the fair value of the funded portion of the corresponding debt investment.

As of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, unfunded commitments totaled $21.3 million and $3.1.8 million, respectively, and if funded, their estimated fair values on such dates were $21.3 million and $3.1.8 million, respectively.

There were no assets or liabilities measured at fair value on a nonrecurring basis as of ~~September~~March 3031, ~~2020~~2021 or December 31, ~~2019~~2020.

The following table details the financial instruments that are carried at fair value and measured at fair value on a recurring basis as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, respectively:

	Fair Values as of September 30, 2020
	Fair Values as of March 31, 2021
	Level 1		Level 2		Level 3		Total
Financial assets:
Senior Secured (1)	$	—	$	—	$	7558,~~079~~891,~~797~~399	$	7558,~~079~~891,~~797~~399
Junior Secured	—		—		810,~~407~~052,~~657~~161		810,~~407~~052,~~657~~161
Equity and Equity Related Securities	—		—		128,~~493~~193,~~814~~990		128,~~493~~193,~~814~~990
	$	—	$	—	$	95,981,268	$	95,981,268
Total	$	—	$	—	$	77,137,550	$	77,137,550

	Fair Values as of December 31, 2019
	Fair Values as of December 31, 2020
	Level 1		Level 2		Level 3		Total
Financial assets:
Senior Secured (1)	$	—	$	—	$	8564,~~954~~629,~~384~~875	$	8564,~~954~~629,~~384~~875
Junior Secured	—		—		189,~~757~~417,~~348~~801		189,~~757~~417,~~348~~801
Equity and Equity Related Securities	—		—		1215,~~097~~506,~~658~~897		1215,~~097~~506,~~658~~897
	$	—	$	—	$	116,809,390	$	116,809,390
Total	$	—	$	—	$	89,554,573	$	89,554,573


(1)			Senior secured category includes both first out and last out term loans. The Company's last out senior secured loans are identified on the Consolidated Schedule of Investments.

The following table provides quantitative information related to the significant unobservable inputs used to fair value the Company's Level 3 investments as of September 30, 2020 and December 31, 2019, respectively, and indicates the valuation techniques utilized by the Company to determine the fair value:26

29The following table provides quantitative information related to the significant unobservable inputs used to fair value the Company's Level 3 investments as of March 31, 2021 and December 31, 2020, respectively, and indicates the valuation techniques utilized by the Company to determine the fair value:

Type of Investment

Fair Value at ~~September~~March 3031, ~~2020~~2021

Valuation Technique (1)

Significant Unobservable Input

Range

Weighted Average (2)

Senior Secured (3)

7558,~~079~~891,~~797~~399

Bond Yield

Risk adjusted discount factor

5.8.0% - 1518.02%

1015.90%

Income

Weighted average cost of capital

8.0% - 24.3%

13.7%

Market

EBITDA multiple

4.3x -8.6x

6.0x

Junior Secured

8,407,657

Market

Risk adjusted discount factor

45.0% - 45.0%

45%

Income

Weighted average cost of capital

8.3% - 22.3%

12.1%

Market

EBITDA multiple

5.5x - 5.5x

5.5x

Junior Secured

10,052,161

Market

Risk adjusted discount factor

13.8% - 13.8%

13.8%

Income

Weighted average cost of capital

17.5% - 17.5%

17.5%

Market

EBITDA multiple

5.0x - 8.5x

6.8x

Equity and Equity Related Securities

12,493,814

Market

EBITDA multiple

5.0x - 9.5x

9.0x

Income

Weighted average cost of capital

12.1% - 44.0%

32.7%

Equity and Equity Related Securities

8,193,990

Market

EBITDA multiple

4.9x - 11.5x

9.4x

Market

Book value multiple

1.0x - 1.0x

1.0x

Type of Investment

Fair Value at December 31, ~~2019~~2020

Valuation Technique (1)

Significant Unobservable Input

Range

Weighted Average (2)

Senior Secured (3)

8564,~~954~~629,~~384~~875

Bond Yield

Risk adjusted discount factor

8.0% - 3118.84%

1714.67%

Market

EBITDA multiple

3.8x5x - 12.0x4x

106.1x2x

Market

Revenue multiple

3.3x - 3.3x

3.3x

Income

Weighted average cost of capital

8.0% - 22.8%

12.3%

Income

Weighted average cost of capital

3.5% - 30.0%

13.2%

Junior Secured

9,417,801

Bond Yield

Risk adjusted discount factor

13.8% - 13.8%

13.8%

Junior Secured

18,757,348

Bond Yield

Risk adjusted discount factor

27.5% - 27.5%

27.5%

Market

EBITDA multiple

4.8x - 8.9x

6.8x

Market

EBITDA multiple

5.0x - 7.8x

6.9x

Income

Weighted average cost of capital

14.3% - 42.0%

31.4%

Market

Revenue multiple

0.7x - 0.7x

0.7x

Equity and Equity Related Securities

15,506,897

Market

EBITDA multiple

3.5x - 12.4x

10.8x

Income

Weighted average cost of capital

13.0% - 32.5%

16.7%

Equity and Equity Related Securities

12,097,658

Market

EBITDA multiple

5.0x - 12.0x

7.4x

Market

Book value multiple

1.0x - 1.0x

1.0x

Income

Weighted average cost of capital

12.0% - 12.0%

12.0%

3027


(1)			When estimating the fair value of its debt investments, the Company typically utilizes the bond yield technique. The significant unobservable inputs used in the fair value measurement under this technique are risk adjusted discount factors. However, the Company also takes into consideration the market technique and income technique in order to determine whether the fair value of the debt investment is within the estimated enterprise value of the portfolio company. The significant unobservable inputs used under these techniques are EBITDA multiples and weighted average cost of capital. Under the bond yield technique, significant increases (decreases) in the risk adjusted discount factors would result in a significantly lower (higher) fair value measurement. When estimating the fair value of its equity investments, the Company utilizes the (i) market technique and (ii) income technique. The significant unobservable inputs used in the fair value measurement of the Company’s equity investments are EBITDA multiples and weighted average cost of capital (“WACC”). Significant increases (decreases) in EBITDA multiple inputs in isolation would result in a significantly higher (lower) fair value measurement. Significant increases (decreases) in WACC inputs in isolation would result in a significantly lower (higher) fair value measurement.
(2)			The weighted average is calculated in two parts. First, the Company calculates each portfolio company's unobservable input weight by multiplying an individual portfolio company's unobservable input by its fair value and dividing by the total fair value of each portfolio company that utilizes that unobservable input. Then, the Company totals each portfolio company's weight that utilizes that specific unobservable input to calculate the weighted average.
(3)			Senior secured category includes both first out and last out term loans. The Company's last out senior secured loans are identified on the Consolidated Schedule of Investments.

The following ~~table~~tables ~~shows~~show a reconciliation of the beginning and ending balances for Level 3 assets for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020. Transfers between investment type and level, if any, are recognized at fair value at the beginning of the period in which the transfers occur:

	Nine Months Ended September 30, 2020
	Three Months Ended March 31, 2021
	Senior Secured (1)		Junior Secured		Equity and Equity Related Securities		Total Investments as of ~~September~~March 3031, ~~2020~~2021
Fair value of portfolio, beginning of period	$	8564,~~954~~629,~~384~~875	$	189,~~757~~417,~~348~~801	$	1215,~~097~~506,~~658~~897	$	~~116~~89,~~809~~554,~~390~~573
New/Add-on investments/principal increases	~~3,499,023~~—		—		~~231,731~~—		~~3,730,754~~—
Principal payments received/principal reductions	(137,~~314~~085,~~587~~681)		~~(4,000,000)~~—		—		(177,~~314~~085,~~587~~681)
Sales of investments	—		~~(1,060,000)~~—		(~~652~~9,~~087~~236,765)		(19,~~712~~236,~~087~~765)
Loan origination and other fees received	(~~298~~13,~~514~~750)		~~(4,000)~~—		—		(~~302~~13,~~514~~750)
Payment-in-kind interest earned	~~802~~339,~~877~~122		928,~~825~~131		—		~~812~~367,~~702~~253
Accretion of deferred loan origination fees/discounts	~~772~~150,~~768~~760		672,~~662~~585		—		~~840~~153,~~430~~345
Transfers to (from) level 3	—		—		—		—
Transfer (to) from investment type	—		—		—		—
Net realized losses on investments	—		(2,038,300)		7,897		(2,030,403)
Net realized gains on investments	—		—		6,445,524		6,445,524
Change in unrealized appreciation (depreciation) on investments	(2871,~~336,154)~~073		(3603,~~324,878)~~644		~~808~~(4,~~615~~521,666)		(43,~~852~~046,~~417~~949)
Fair value of portfolio, end of period	$	7558,~~079~~891,~~797~~399	$	810,~~407~~052,~~657~~161	$	128,~~493~~193,~~814~~990	$	9577,~~981~~137,~~268~~550
Net change in unrealized appreciation (depreciation) relating to Level 3 assets still held at September 30, 2020	$	(2,361,239)	$	(4,362,006)	$	794,329	$	(5,928,916)
Net change in unrealized appreciation relating to Level 3 assets still held at March 31, 2021	$	1,039,813	$	603,644	$	1,923,857	$	3,567,314

3128

	Nine Months Ended September 30, 2019
	Three Months Ended March 31, 2020
	Senior Secured (1)		Junior Secured		Equity and Equity Related Securities		Total Investments as of ~~September~~March 3031, ~~2019~~2020
Fair value of portfolio, beginning of period	$	5485,~~609~~954,~~097~~384	$	3318,~~231~~757,~~424~~348	$	712,~~073~~097,~~341~~658	$	94116,~~913~~809,~~862~~390
New/Add-on investments/principal increases	441,~~041~~405,~~031~~000		~~446,494~~—		3200,~~737,138~~000		481,~~224~~605,~~663~~000
Principal payments received/principal reductions	(73,~~700~~042,~~773~~841)		~~(15,312,804)~~—		~~(230,115)~~—		(233,~~243~~042,~~692~~841)
Sales of investments	—		—		~~(100,750)~~—		~~(100,750)~~—
Loan origination and other fees received	(134,~~852,715~~600)		—		—		(134,~~852,715~~600)
Payment-in-kind interest earned	~~355~~261,~~541~~719		~~263~~3,~~142~~243		—		~~618~~264,~~683~~962
Accretion of deferred loan origination fees/discounts	~~477~~137,~~777~~414		~~187~~12,~~169~~328		—		~~664~~149,~~946~~742
Transfers to (from) level 3	—		—		—		—
Transfer (to) from investment type	~~(10,314,500)~~—		~~10,314,500~~—		—		—
Net realized losses on investments	—		—		(~~106~~102,~~435~~420)		(~~106~~102,~~435~~420)
Change in unrealized appreciation (depreciation) on investments	(2,972,046)		(2,132,300)		1,563,084		(3,541,262)
Change in unrealized depreciation on investments	(2,481,635)		(989,767)		(1,108,135)		(4,579,537)
Fair value of portfolio, end of period	$	7682,~~643~~199,~~412~~441	$	2617,~~997~~783,~~625~~152	$	11,~~936~~087,~~263~~103	$	~~115~~111,~~577~~069,~~300~~696
Net change in unrealized appreciation (depreciation) relating to Level 3 assets still held at September 30, 2019	$	(2,890,453)	$	(2,453,502)	$	1,605,089	$	(3,738,866)
Net change in unrealized depreciation relating to Level 3 assets still held at March 31, 2020	$	(2,475,431)	$	(989,767)	$	(1,210,556)	$	(4,675,754)


(1)			Senior secured category includes both first out and last out term loans. The Company's last out senior secured loans are identified on the Consolidated Schedule of Investments.

There were no transfers between levels of the fair value hierarchy during the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020.

Note 7. Related Party Transactions

The Company's predecessor, Harvest Capital Credit LLC, was founded in 2011 by certain members of HCAP Advisors and JMP Group Inc. (now JMP Group LLC) ("JMP Group"), a full-service investment banking and asset management firm and affiliate of the Company. JMP Group currently holds an equity interest in us and a majority equity interest in HCAP Advisors. JMP Group conducts its primary business activities through two wholly-owned subsidiaries: (i) Harvest Capital Strategies, LLC ("HCS"), an SEC-registered investment adviser that focuses on long-short equity hedge funds, middle-market lending and private equity, and (ii) JMP Securities LLC, a full-service investment bank that provides equity research, institutional brokerage and investment banking services to growth companies and their investors.

Management Fees and Incentive Fees

In conjunction with the Company's initial public offering in May 2013, HCAP entered into an investment advisory and management agreement with HCAP Advisors. Under the investment advisory and management agreement, the base management fee is calculated based on the Company's gross assets (which includes assets acquired with the use of leverage and excludes cash and cash equivalents) at an annual rate of (i) 2.0% of gross assets up to and including $350 million, (ii) 1.75% of gross assets above $350 million and up to and including $1 billion, and (iii) 1.5% of gross assets above $1 billion.

Management fee expense for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020 totaled $0.54 million and $0.6 million, respectively. ~~Management fee expense for the nine months ended September 30, 2020 and September 30, 2019 totaled $1.6 million and $1.6 million, respectively.~~

32 The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears based on the pre-incentive fee net investment income for the immediately preceding calendar quarter and is 20% of the amount, if any, by which

The incentive fee consists of two parts. The first part is calculated and payable quarterly in arrears based on the pre-incentive fee net investment income for the immediately preceding calendar quarter and is 20% of the amount, if any, by which the pre-incentive fee net investment income for the immediately preceding calendar quarter exceeds a 2.0% (which is 8.0% annualized) hurdle rate and a “catch-up” provision, pursuant to which HCAP Advisors receives 100% of the pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5% (10.0% annualized). The effect of this "catch-up" provision is that, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, HCAP Advisors will receive 20% of the pre-incentive fee net investment income as if a hurdle rate did not apply. The income-based incentive fee is subject to a total return requirement, which provides that no incentive fee in respect of the pre-incentive fee net investment income is payable except to the extent 20% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative income and capital gains incentive fees accrued and/or paid for the 11 preceding quarters. As a result, even in the event that the pre-incentive fee net investment income exceeds the hurdle rate, no incentive fee will be payable to the extent that the Company has generated cumulative net decreases in assets resulting from operations over the trailing 12 quarters due to unrealized or realized net losses on its investments.29

the pre-incentive fee net investment income for the immediately preceding calendar quarter exceeds a 2.0% (which is 8.0% annualized) hurdle rate and a “catch-up” provision, pursuant to which HCAP Advisors receives 100% of the pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.5% (10.0% annualized). The ~~Company~~effect of this "catch-up" provision is that, if pre-incentive fee net investment income exceeds 2.5% in any calendar quarter, HCAP Advisors will receive 20% of the pre-incentive fee net investment income as if a hurdle rate did not ~~incur~~apply. anThe income-based incentive fee ~~for~~is ~~any~~subject to a total return requirement, which provides that no incentive fee in respect of the ~~three~~pre-incentive fee net investment income is payable except to the extent 20% of the cumulative net increase in net assets resulting from operations over the then current and 11 preceding calendar quarters exceeds the cumulative income and capital gains incentive fees accrued and/or ~~nine~~paid ~~months~~for ~~ended~~the ~~September 30~~11 preceding quarters. As a result, ~~2020~~even orin ~~September 30~~the event that the pre-incentive fee net investment income exceeds the hurdle rate, ~~2019~~no incentive fee will be payable to the extent that the Company has generated cumulative net decreases in assets resulting from operations over the trailing 12 quarters due to unrealized or realized net losses on its investments.

The Company did not incur an income-based incentive fee for either of the three months ended March 31, 2021 or March 31, 2020.

The second part of the incentive fee is calculated and payable in arrears as of the end of each calendar year (or upon termination of the investment advisory and management agreement, as of the termination date) and equals 20% of the aggregate realized capital gains on a cumulative basis from inception through the end of each calendar year, computed net of all realized capital losses and unrealized capital depreciation on a cumulative basis, less the aggregate amount of any previously paid capital gains incentive fees.

The capital gains incentive fee is determined and paid annually with respect to cumulative realized capital gains (but not unrealized capital gains) to the extent such cumulative realized capital gains exceed cumulative realized and unrealized capital losses through the end of such fiscal year (less the aggregate amount of any previously paid capital gains incentive fee). The Company also records an expense accrual relating to the capital gains incentive fee payable by the Company to HCAP Advisors when (i) the cumulative realized and unrealized gains on its investments exceed all cumulative realized and unrealized capital losses on its investments and (ii) the capital gains incentive fee that would be payable exceeds the aggregate amount of any previously paid capital gains incentive fee given the fact that a capital gains incentive fee would be owed to HCAP Advisors if the Company were to liquidate its investment portfolio at such time. Any decrease in unrealized appreciation in subsequent periods will result in the reversal of some or all of such previously recorded expense accrual. The Company recorded a net change in unrealized depreciation of $13.50 million and $24.06 million for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019, respectively. The Company recorded a net change in unrealized depreciation of $4.9 million and $3.5 million for the nine months ended September 30,~~ 2020 ~~and September 30~~, ~~2019,~~ respectively. The Company recorded net realized gains of $06.24 million for the three months ended ~~September~~March 3031, ~~2020~~2021 and net realized losses of $0.1 million for the three months ended ~~September~~March 3031, ~~2019. The Company recorded net realized losses of $2.0 million and $30,304 for the nine months ended September 30,~~ 2020 ~~and September 30, 2019, respectively~~. The Company did not incur a capital gains incentive fee for ~~any~~either of the three ~~or nine~~ months ended ~~September~~March 3031, ~~2020~~2021 or ~~September~~March 3031, ~~2019~~2020.

Total base management fees and incentive fees expense was $0.54 million and $0.6 million for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019, respectively. Total base management fees and incentive fees expense was $1.6 million and $1.6 million for the nine months ended September 30,~~ 2020 ~~and September 30~~, ~~2019,~~ respectively. Total accrued base management fees and incentive ~~management~~ fees payable were $0.54 million and $0.65 million as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, respectively.

Administrative Services Expense

HCAP Advisors also serves as the Company's administrator pursuant to an administration agreement. Under the administration agreement, HCAP Advisors provides administrative services to the Company and furnishes the Company with office facilities, equipment, and clerical, bookkeeping, and recordkeeping services. In full consideration of the provision of the services of HCAP Advisors, the Company reimburses HCAP Advisors for the costs and expenses incurred by HCAP Advisors in performing its obligations and providing personnel and facilities under the administration agreement. Payments under the administration agreement are equal to an amount based upon the Company's allocable portion of the administrator's overhead in performing its obligations under the administration agreement, including rent and the Company's allocable portion of the cost of its executive officers and their respective staffs and administrative services provided to the Company by its executive officers. HCAP Advisors agreed to cap the amounts payable by the Company under the administration agreement to $350,000 per quarter for each quarter in the 2021 fiscal year and $1.4 million during the 2020 fiscal year.

33Total administrative services expense was $0.4 million and $0.4 million for the three months ended March 31, 2021 and March 31, 2020, respectively. Accrued administrative services fees payable were $0.4 million and $0.4 million as of March 31, 2021 and December 31, 2020, respectively.

HCAP Advisors agreed to cap the amounts payable by the Company under the administration agreement to $1.4 million during each of the 2020 and 2019 fiscal years. In addition, if requested to provide significant managerial assistance to the Company’s portfolio companies, HCAP Advisors is paid an additional amount based on the services provided, which shall not exceed the amount the Company receives from such companies for providing this assistance and will not count against the $1.4 million cap on amounts payable by the Company under the administration agreement.30

Total administrative services expense was $0.4 million and $0.4 million for the three months ended September 30, 2020 and September 30, 2019, respectively. Total administrative services expense was $1.1 million and $1.1 million for the nine months ended September 30, 2020 and September 30, 2019, respectively. Accrued administrative services fees payable were $0.4 million and $0.4 million as of September 30, 2020 and December 31, 2019, respectively.

Co-investment Transactions with Affiliates

On December 10, 2015, the Company received co-investment exemptive relief under the 1940 Act from the SEC (the "Exemptive Relief") permitting the Company greater flexibility to negotiate the terms of co-investments with certain accounts managed or held by JMP Group and certain of its subsidiaries, in each case in a manner consistent with the Company's investment objectives and strategies as well as regulatory requirements and other pertinent factors (including the terms and conditions of the Exemptive Relief). Under the terms of the relief, a “required majority” (as defined in Section 57(o) of the 1940 Act) of the Company's independent directors must make certain conclusions in connection with a co-investment transaction, including (1) the terms of the proposed transaction, including the consideration to be paid, are reasonable and fair to the Company and its stockholders and do not involve overreaching in respect of the Company or its stockholders on the part of any person concerned and (2) the proposed transaction is consistent with the interests of the Company's stockholders and is consistent with the Company's investment objectives and strategies.

InManagerial ~~February~~Assistance 2019, in accordance with the Exemptive Relief, the Company executed a co-investment transaction whereby the Company invested alongside affiliate funds of JMP Group in a $4.8 million senior secured term loan and $0.5 million revolving line of credit of Peerless Media, LLC. The revolving line of credit was subsequently cancelled. As of September 30, 2020, the Company's total investment, at fair value, in Peerless Media, LLC consisted of a $3.6 million senior secured term loan. As of December 31, 2019, the Company's total investment, at fair value, in Peerless Media, LLC consisted of a $4.6 million senior secured term loan.Fees

The Company may be requested by its portfolio companies to provide significant managerial assistance and may receive fees from the applicable portfolio company in exchange for such services. The Company may then reimburse HCAP Advisors at cost for its expenses related to providing such services on the Company’s behalf, which amount will not exceed the amount the Company receives from such companies for providing this assistance. In addition, the amounts reimbursed to HCAP Advisors will not count against the $1.4 million cap on amounts payable by the Company under the administration agreement.

The Company incurred $0.1 million in managerial assistance costs associated with work performed by HCAP Advisors for managing Infinite Care, LLC during the three months ended March 31, 2021. For the three months ended March 31, 2021, the Company billed Infinite Care, LLC $0.1 million in managerial assistance fees. Managerial assistance fees earned during the three months ended March 31, 2021 of $0.1 million are presented net against the aforementioned managerial assistance costs incurred in the consolidated statement of operations. The Company received $0.1 million from Infinite Care, LLC during the three months ended March 31, 2021, and paid $0.5 million (which the Company had previously received from Infinite Care, LLC during the year ended December 31, 2020) to HCAP Advisors during the three months ended March 31, 2021 and $0.1 million was payable to HCAP Advisors as of March 31, 2021. The $0.1 million payable to HCAP Advisors is included in accounts payable and accrued expenses in the consolidated statement of assets and liabilities as of March 31, 2021.

Strategic Alternatives

In October 2020, the HCAP Special Committee, on behalf of the Company, entered into an agreement with JMP Securities LLC at the direction of HCAP Advisors in connection with the Company's strategic alternatives review process, which had benefited the Company (the "JMP Securities Agreement"). In consideration for the services covered by the JMP Securities Agreement, the Company paid JMP Securities LLC $100,000 under the terms of the JMP Securities Agreement and, upon the consummation of the Mergers, will be required under the JMP Securities Agreement to pay JMP Securities an additional $250,000 in fulfillment of the remainder of the fee payable under the terms of the JMP Securities Agreement.

Note 8. Commitments and Contingencies

At ~~September~~March 3031, ~~2020~~2021, the Company had a total of $21.3 million in unfunded commitments comprised entirely of unfunded revolving lines of credit and delayed draw term loans for ~~five~~two of the Company’s debt investments. As of December 31, ~~2019~~2020, the Company had a total of $3.1.8 million in unfunded commitments comprised entirely of unfunded revolving lines of credit and delayed draw term loans onfor ~~seven~~four of the Company’s debt investments. The following table summarizes the Company's unfunded commitments and extended fair value if the unfunded commitments were fully funded as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020:

	As of September 30, 2020				As of December 31, 2019
	Unfunded commitment		Extended fair value of unfunded commitment if fully funded		Unfunded commitment		Extended fair value of unfunded commitment if fully funded
Back Porch International, Inc.	$	—	$	—	$	500,000	$	491,168
Coastal Screen and Rail, LLC	850,000		850,000		850,000		850,000
Kleen-Tech Acquisition, LLC	—		—		400,000		382,500
National Program Management & Project Controls, LLC	35,600		35,532		100,000		100,000
Slappey Communications, LLC	500,000		500,000		500,000		498,750
Surge Busy Bee Holdings, LLC	450,000		425,794		300,000		300,000
V-Tek, Inc.	463,903		440,317		463,903		463,903
Total	$	2,299,503	$	2,251,643	$	3,113,903	$	3,086,321


	As of March 31, 2021				As of December 31, 2020
	Unfunded commitment		Extended fair value of unfunded commitment if fully funded		Unfunded commitment		Extended fair value of unfunded commitment if fully funded
Coastal Screen and Rail, LLC	$	850,000	$	850,000	$	850,000	$	850,000
National Program Management & Project Controls, LLC	—		—		35,600		36,312
Surge Busy Bee Holdings, LLC	450,000		438,196		450,000		432,340
V-Tek, Inc.	—		—		463,903		460,551
Total	$	1,300,000	$	1,288,196	$	1,799,503	$	1,779,203

Legal Proceedings

Neither the Company nor its subsidiaries are currently subject to any material pending legal proceedings, other than ordinary routine litigation incidental to their respective businesses, and no such material proceedings are known to be contemplated. The Company and its subsidiaries may from time to time, ~~however,~~ be involved in litigation arising out of their operations in the normal course of business or otherwise, including the enforcement of rights under the contracts with the Company's portfolio companies. Third parties may also seek to impose liability on the Company in connection with the activities of its portfolio companies. Except as discussed below, neither the Company nor its subsidiaries are currently subject to any material pending legal proceedings, other than ordinary routine litigation incidental to their respective businesses, and no such material proceedings are known to be contemplated.

~~Distributions~~The Company and certain of its officer and directors as well as JMP Group have been named as defendants in two putative stockholder class action lawsuits, both filed in the Court of Chancery in the State of Delaware, captioned Stewart Thompson v. Joseph Jolson, et al., Case No. 2021-0164 and Ronald Tornese v. Joseph Jolson, et al., Case No. 2021-0167 (the “Delaware Actions”). In addition, the Company and certain of its officer and directors, among others, have been named as defendants in stockholder actions, filed in the Supreme Court of the State of New York, captioned Greg Ramanauskas v. Harvest Capital Credit Corp, et al., Case No. 651524/2021 (the “New York State Action”) and in the Eastern District of New York, captioned Kyle Kruchok v. Harvest Capital Credit Corp., et al., Case No. 1:21-cv-01573 (the “New York Federal Action”) (collectively with the Delaware Actions, the “Litigations”).

On ~~March~~February 1225, ~~2020~~2021, two putative stockholders, each purporting to act on behalf of himself and the Company’s ~~announced~~common ~~the~~stockholders, ~~$0.08~~filed ~~per~~substantially ~~share~~identical ~~March~~verified ~~2020~~class ~~Dividend~~action ~~and~~complaints in the $0Court of Chancery in the State of Delaware.08 ~~per~~The ~~share~~complaints ~~April~~in ~~2020~~the ~~Dividend payable~~Delaware onActions ~~April~~allege ~~30,~~certain ~~2020~~breaches ~~and~~of ~~May~~fiduciary ~~28,~~duties ~~2020,~~against ~~respectively,~~the todefendants ~~record~~as ~~holders~~well as ofaiding ~~April~~and ~~23,~~abetting ~~2020~~claims against JMP Group and ~~May~~the ~~21,~~Company’s ~~2020,~~Chief ~~respectively~~Executive Officer concerning the Company’s proposed merger with PTMN and Acquisition Sub. ~~However~~On March 5, ~~the~~2021, ~~board~~a ofputative ~~directors~~stockholder ~~has~~filed ~~decided~~a tosimilar ~~defer~~complaint in the ~~record~~Supreme ~~date~~Court ~~and~~of ~~payment~~the State of ~~each~~New York, alleging certain breaches of ~~the~~fiduciary ~~March~~duties ~~2020~~against ~~Dividend~~individual defendants and aiding and abetting claims against the ~~April~~Company, ~~2020~~PTMN, ~~Dividend~~Acquisition Sub, and ~~has~~Sierra ~~determined~~Crest. toLater, ~~suspend~~on ~~the~~March ~~declaration~~24, of2021, ~~any~~a ~~future~~putative ~~dividends~~stockholder ~~until~~filed ~~such~~another ~~later~~similar ~~time~~complaint asin the ~~board~~Eastern District of ~~directors~~New ~~determines~~York, isalleging ~~prudent~~violations inof ~~light~~Section 14(a) of the ~~Company's~~Exchange ~~capital~~Act ~~needs~~against the Company and ~~contractual~~certain ~~obligations~~officers and directors, and inSection 20(a) of the ~~Company's~~Exchange ~~stockholders'~~Act ~~best~~against ~~interests~~individual defendants.

The complaints in the Delaware Actions and the New York State Action generally allege that the defendants breached their fiduciary duties in connection with the proposed merger and caused to be filed with the SEC an allegedly materially incomplete and misleading registration statement on Form N-14 relating to the proposed merger. The complaint in the New York Federal Action generally alleges that the defendants made material false and misleading statements and/or omissions in the registration statement on Form N-14 relating to the proposed merger. The plaintiffs in the Litigations ask the court to enjoin the proposed merger, and award attorneys’ fees and costs, among other relief. Further, the plaintiffs in the Delaware Actions ask the court to direct the defendants to account to plaintiffs and the putative class for all damages suffered as a result of the alleged wrongdoing. The plaintiffs in the New York Federal Action also ask for rescissory damages. The Litigations remain at an early stage.

The Company intends to defend itself vigorously against the allegations in the aforementioned actions. Neither the outcome of the lawsuits nor an estimate of any reasonably possible losses is determinable at this time. An adverse judgment for monetary damages could have a material adverse effect on the Company’s operations and liquidity or that of any combined company. There can be no assurances that additional complaints or demands will not be filed or made with respect to the

proposed Mergers. If additional similar complaints or demands are filed or made, absent new or different allegations that are material, the Company may not necessarily announce them.

Note 9. Net Increase (Decrease) in Net Assets Resulting from Operations per Common Share

In accordance with the provision of ASC 260, “Earnings per Share,” basic earnings per share is computed by dividing earnings available to common stockholders by the weighted average number of shares outstanding during the period. Other potentially dilutive common shares, and the related impact to earnings, are considered when calculating earnings per share on a diluted basis. There were no potentially dilutive common shares outstanding as of ~~September~~March 3031, ~~2020~~2021 or ~~September~~March 3031, ~~2019~~2020.

The following information sets forth the computation of the weighted average basic and diluted net increase in net assets per share from operations for each period:

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2020		2019		2020		2019
	2021		2020
Net increase decrease in net assets resulting from operations	$	(382,803)	$	(1,043,162)	$	(4,820,110)	$	(896,060)
Net increase (decrease) in net assets resulting from operations	$	4,452,883	$	(3,677,294)
Weighted average shares outstanding (basic and diluted)	5,~~958~~968,~~479~~296		65,~~053~~949,~~807~~548		~~5,955,513~~		~~6,171,616~~
Net decrease in net assets resulting from operations per share	$	(0.06)	$	(0.17)	$	(0.81)	$	(0.15)
Net increase (decrease) in net assets resulting from operations per share	$	0.75	$	(0.62)

Note 10. Income Tax

To receive RIC tax treatment, the Company must, among other things, distribute annually at least 90% of its net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. Depending on the level of taxable income earned in a tax year, the Company may choose to carry forward taxable income in excess of current year distributions into the next tax year and pay a 4% excise tax on such income. Any such carryover taxable income must be distributed through a dividend declared prior to filing the final tax return related to the year which generated such taxable income. The Company may, in the future, make actual distributions to its stockholders of its net capital gains. The Company can offer no assurance that it will achieve results that will permit the payment of any cash distributions and, if the Company issues senior securities, the Company may be prohibited from making distributions if doing so causes the Company to fail to maintain the asset coverage ratios stipulated by the 1940 Act or if distributions are limited by the terms of any of the Company's borrowings. The Company did not incur an excise tax for calendar year ~~2019~~2020.

The Company's wholly-owned subsidiaries, HCAP Equity Holdings, LLC and HCAP ICC, LLC, have each elected to be taxed as a C-Corporation. As such, income taxes are accrued for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of certain assets and liabilities for financial and tax reporting. The deferred taxes represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are limited to amounts considered to be realizable in future periods. The Company accounts for any interest and penalties related to unrecognized tax benefits as part of the income tax provision.

35During the three months ended March 31, 2021, the Company recognized a $0.9 million benefit for deferred taxes on unrealized losses on investments. As of March 31, 2021, the Company has a deferred tax liability of $0.3 million. As of December 31, 2020, the Company had a deferred tax liability of $1.2 million.

HCAP Equity Holdings, LLC has a net operating loss carryforward for federal and state income taxes of approximately $0.3 million and $0.5 million as of September 30, 2020 and December 31, 2019, respectively. As HCAP Equity Holdings, LLC has historically generated taxable losses, the Company cannot assume as of September 30, 2020 that it will be able to utilize this net operating loss to offset future taxable income. As a result, any deferred income tax assets, resulting from a net operating loss carry forward and deferred taxes on net unrealized losses, include certain future tax benefits that management believes will not be utilized, and as such, the Company has recorded a full valuation allowance. The loss carryforward does not expire.

Note 11. Financial Highlights

The following is a schedule of financial highlights for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020, respectively:

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2020			2019
	2021			2020
Per share data:
Net asset value at beginning of period	$	1110.2342		$	1211.3023
Net investment income (1)	0.3402			0.4317
Realized losses on investments (1)	(0.34)			—			(5)
Net change in unrealized depreciation on investments (1)	(0.81)			(0.58)
Net decrease in net assets from operations (1)	(0.81)			(0.15)
Distributions (2)	(0.24)			(0.74)
Total distributions	(0.24)			(0.74)
Effect of shares repurchased / issued	(0.01)			0.11
Net asset value at end of period	$	10.17		$	11.52
Net assets at end of period	60,619,074			68,828,625
Shares outstanding at end of period	5,958,479			5,975,677
Weighted average shares outstanding (basic and diluted)	5,955,513			6,171,616
Per share closing price at end of period	$	3.45		$	9.95
Ratios and Supplemental data:
Total return based on change in NAV (not annualized) (3)	(6.20)		%	0.90		%
Total investment return (not annualized) (4)	(59.25)		%	6.66		%
Average Net Assets	$	62,541,081		$	73,754,722
Ratio of expenses to average net assets (annualized)	14.62		%	12.00		%
Ratio of net investment income to average net assets (annualized)	4.36		%	4.84		%
Portfolio Turnover Ratio	3.13		%	28.00		%
Asset Coverage Ratio	182		%	206		%

(1)			Based on weighted average number of common shares outstanding for the period.
(2)			Net investment income for the nine months ended September 30, 2020 exceeded distributions by $618,880 and distributions exceeded net investment income for the nine months ended September 30, 2019 by $1,859,823. See "Dividends and Distributions" in Note 2.
(3)			This measure of total investment return measures the changes in net asset value over the period indicated, taking into account dividends as reinvested. The return is calculated by taking the difference between the net asset value per share at the end of the period (plus assumed reinvestment of dividends and distributions at prices obtained under the Company's dividend reinvestment plan) and the net asset value per share at the beginning of the period, and dividing that difference by the net asset value per share at the beginning of the period. This return primarily differs from the total investment return in that it does not take into account changes in the market price of the Company's stock.
(4)			This measure of total investment return measures the changes in market value over the period indicated, taking into account dividends as reinvested. The return is calculated based on an assumed purchase of stock at the market price on the first day of the period (plus assumed reinvestment of dividends and distributions at prices obtained under the Company’s dividend reinvestment plan) and an assumed sale at the market price on the last day of the period. The difference between the sale and purchases is then divided by the purchase prices. The total investment return does not reflect any sales load that may be paid by investors.


	Three Months Ended March 31,
	2021			2020
Net realized gains (losses) on investments (1)	1.08			(0.01)
Net change in unrealized depreciation on investments, net of deferred income taxes (1)	(0.35)			(0.78)
Net decrease in net assets from operations (1)	0.75			(0.62)
Distributions (2)	—			(0.24)
Total distributions	—			(0.24)
Net asset value at end of period	$	11.17		$	10.37
Net assets at end of period	66,669,404			61,761,890
Shares outstanding at end of period	5,968,296			5,958,479
Weighted average shares outstanding (basic and diluted)	5,968,296			5,949,548
Per share closing price at end of period	$	8.65		$	4.97
Ratios and Supplemental data:
Total return based on change in NAV (not annualized) (3)	7.20		%	(4.35)		%
Total investment return (not annualized) (4)	14.42		%	(41.3)		%
Average Net Assets	$	64,442,963		$	64,271,686
Ratio of expenses to average net assets (annualized)	12.89		%	14.30		%
Ratio of net investment income to average net assets (annualized)	0.75		%	6.15		%
Portfolio Turnover Ratio	—		%	1.35		%
Asset Coverage Ratio	272		%	185		%

(5) Rounds to less than $0.01 per share.


(1)			Based on weighted average number of common shares outstanding for the period.
(2)			The Company did not make any distributions during the three months ended March 31, 2021. Distributions for the three months ended March 31, 2020 exceeded net investment income in the amount of $439,166. See "Dividends and Distributions" in Note 2.
(3)			This measure of total investment return measures the changes in net asset value over the period indicated, taking into account dividends as reinvested. The return is calculated by taking the difference between the net asset value per share at the end of the period (plus assumed reinvestment of dividends and distributions at prices obtained under the Company's dividend reinvestment plan) and the net asset value per share at the beginning of the period, and dividing that difference by the net asset value per share at the beginning of the period. This return primarily differs from the total investment return in that it does not take into account changes in the market price of the Company's stock.
(4)			This measure of total investment return measures the changes in market value over the period indicated, taking into account dividends as reinvested. The return is calculated based on an assumed purchase of stock at the market price on the first day of the period (plus assumed reinvestment of dividends and distributions at prices obtained under the Company’s dividend reinvestment plan) and an assumed sale at the market price on the last day of the period. The difference between the sale and purchases is then divided by the purchase prices. The total investment return does not reflect any sales load that may be paid by investors.

Note 12. Significant Subsidiary

The Company has determined that Infinite Care, LLC, an unconsolidated portfolio company of the Company, has met the conditions of a significant subsidiary under Regulation S-X Rule 10-01(b)(1) for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021. The financial information presented below includes a summarized income statement for Infinite Care, LLC, for each of the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020.

Income Statement - Infinite Care, LLC	For the Three Months Ended September 30, 2020		For the Three Months Ended September 30, 2019		For the Nine Months Ended September 30, 2020		For the Nine Months Ended September 30, 2019
Net sales	$	4,660,937	$	4,298,601	$	12,145,860	$	12,793,602
Cost of services	3,128,551		3,221,744		9,213,606		9,437,176
Gross profit	1,532,386		1,076,857		2,932,254		3,356,426
Operating expenses	1,107,153		1,150,079		3,263,780		3,413,685
Income from operations	425,233		(73,222)		(331,526)		(57,259)
Other expenses	312,222		291,587		728,325		599,099
Net income (loss)	$	113,011	$	(364,809)	$	(1,059,851)	$	(656,358)


Income Statement - Infinite Care, LLC	For the Three Months Ended March 31, 2021		For the Three Months Ended March 31, 2020
Net sales	$	3,815,317	$	4,284,953
Cost of services	2,813,272		3,358,572
Gross profit	1,002,045		926,381
Operating expenses	1,324,029		998,939
Loss from operations	(321,984)		(72,558)
Other income (expenses), net	1,339,413		(247,345)
Net income (loss)	$	1,017,429	$	(319,903)

Note 13. Subsequent Events

The Company's management has evaluated subsequent events through the date of issuance of the consolidated interim financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the consolidated financial statements as of and for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021, except as discussed below.

OnAs ~~October 7, 2020, the Company received approximately $1.9 million representing a full payoff at par~~ of ~~each~~May ~~of its New Money DIP Term Loan and its Roll-up DIP Term Loan~~7, ~~in connection with GNC's restructuring. On October 30~~2021, ~~2020,~~ the Company ~~also~~had ~~received~~no anindebtedness ~~additional~~outstanding ~~$1.2~~under ~~million, representing a discounted payoff of~~ its ~~$3.0~~Credit ~~million original tranche B-2 Term Loan and received its pro rata share of a new Second Lien Term Loan with a par value of $1~~Facility.~~8 million in the restructured GNC.~~

On ~~October~~April 305, ~~2020~~2021, the Company ~~received~~sold ~~$7.8~~its ~~million~~membership ~~from~~interests ~~Slappey~~in ~~Communications~~Infinite Care, LLC ~~("Slappey"),~~and ~~representing~~received a ~~full~~final ~~payoff~~payment atto ~~par~~satisfy ofthe amounts outstanding under its senior secured term loan and ~~terminated its senior secured~~ revolving line of credit. Inprovided ~~connection~~to ~~with~~Infinite ~~the payoff~~Care, ~~the~~LLC. The Company ~~also~~ received a$7.6 ~~prepayment~~million ~~fee~~ in gross proceeds at the ~~amount~~closing of the transaction. An additional $02.12 million. ~~The~~of ~~Company~~proceeds ~~retained~~is ~~its~~scheduled ~~equity~~to ~~investment~~be inreleased ~~Slappey~~to ~~and~~the ~~funded~~Company ~~its~~at ~~pro~~various ~~rata~~dates ~~share~~during ofthe antwo-year ~~equity~~period ~~contribution~~following in the ~~amount~~closing date of ~~$0.1~~the ~~million~~transaction once certain conditions are met.

On ~~October~~April 30, ~~2020~~2021, the Company ~~entered~~received ~~into~~$2.5 ~~the~~million ~~Eleventh~~from ~~Amendment~~Water-Land toManufacturing ~~the~~& ~~Loan and Security Agreement (the "Amendment")~~Supply, ~~by and among the Company, HCAP Equity Holdings,~~ LLC, ~~HCAP~~representing ~~ICC, LLC, Pacific Western Bank, as agent and~~ a ~~lender,~~full ~~and~~payoff ~~each~~at par of the ~~other~~Company's ~~lenders~~junior ~~from~~secured ~~time~~term ~~to time party thereto, including City National Bank~~loan. The ~~Amendment amends the Credit Facility to, among other things, (i) extend the revolving period to January 31, 2021, until which date the~~ Company ~~may~~also ~~receive~~received ~~additional~~a ~~advances at the discretion of the lenders; and (ii) amend the definition of "debt service" to exclude from the calculation of the debt service coverage ratio~~$25,000 ~~for~~prepayment ~~any~~fee ~~period~~upon ~~from August 1, 2020 through December 31, 2020, an amount equal to~~ the lesser of (x) the amount of the required monthly amortization payments for the relevant period and (y) the aggregate amount of all prepayments of principal (both voluntary and mandatory) collected by the Company during the relevant periodpayoff.

AsOn ofMay ~~November~~3, 52021, ~~2020~~the Company received $4.4 million from Safety Services Acquisition Corp., representing a full payoff at par of the Company's ~~outstanding~~senior ~~indebtedness~~secured ~~under~~term loan. The Company retained its ~~Credit~~Series ~~Facility~~A ~~equaled~~preferred ~~$6.7~~stock ~~million~~investment in Safety Services Acquisition Corp.

Subsequent to September 30, 2020, the COVID-19 pandemic and the related effects on the U.S. and global economies, has continued to have adverse consequences for the business operations of certain of the Company's portfolio companies and has adversely affected, and threatens to continue to adversely affect, the respective operations of the Company and HCAP 35

Advisors. Given the dynamic nature of this situation, the Company cannot reasonably estimate the full impact of COVID-19 on its financial condition, results of operations, or cash flows in the future. However, the Company does expect that it could have a material adverse impact on future net investment income, the fair value of portfolio investments, and the results of operations and financial condition of the Company and its portfolio companies.

Schedule 12-14

Harvest Capital Credit Corporation

Consolidated Schedule of Investments in and Advances to Affiliates (Unaudited)

~~Nine~~Three Months Ended ~~September~~March 3031, ~~2020~~2021

Portfolio Company	Type of Investment (4) (5) (10) (1817) (1918)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Amount of Dividends or Interest Credited to Income (1)		December 31, ~~2019~~2020 Value		Gross Additions (2)		Gross Reductions (3)		~~September~~March 3031, ~~2020~~2021 Value
More than 25% Owned
Flight Lease VII, LLC	Common Equity Interest (46.14% fully diluted common equity)	(9) (11)	$	~~(86,501)~~—	$	—	$	—	$	~~412~~300,~~500~~000	$	—	$	~~(86,501)~~—	$	~~325~~300,~~999~~000
Infinite Care, LLC	Senior Secured Term Loan, due 01/~~2021~~2022 (38.00%; 4.00% cash + 4.00% PIK)	(8) (13) ~~(20)~~	—		~~247~~(248,~~400~~867)		—101,203		35,~~783~~043,~~600~~356		~~247~~50,~~400~~602		—(248,867)		4,~~031~~845,~~000~~091
	Senior Secured Revolving Line of Credit, due 01/2021 (3.00%)	(8) (20)	—		96,500		—		4,208,500		246,500		—		4,455,000
	Senior Secured Revolving Line of Credit, due 01/2022 (8.00%; 4.00% cash + 4.00% PIK)	(8)	—		—		95,867		4,777,403		47,933		—		4,825,336
	Membership Interest (100% membership interests)	(7) (8)	—		—(794,584)		—		—794,584		—		—(794,584)		—
Total More Than 25% Owned Portfolio Companies			$	~~(86,501)~~—	$	~~343~~(1,~~900~~043,451)	$	—197,070	$	810,~~404~~915,~~600~~343	$	~~493~~98,~~900~~535	$	(861,~~501~~043,451)	$	89,~~811~~970,~~999~~427
5% and Greater Owned, But Not Greater Than 25%
Flight Lease XII, LLC	Common Equity Interest (19.23% fully diluted common equity)	(7) (11)	$	~~(191,824)~~—	$	43370,~~776~~479	$	—	$	~~345~~158,~~980~~346	$	43370,~~777~~479	$	~~(191,824)~~—	$	~~197~~528,~~933~~825
Kleen-Tech Acquisition, LLC	~~Senior~~Common ~~Secured~~Equity ~~Term~~Units ~~Loan,~~(6.89% ~~due~~fully ~~05/2024~~diluted common equity)	(167) (2115)	—		311,~~291~~009,913		~~1,147,960~~—		6325,~~819,708~~000		~~524~~1,~~499~~009,913		~~(7,344,207)~~—		—1,334,913
	Senior Secured Revolving Line of Credit, due 05/2022	(21)	—		—		—		—		—		—		—
National Program Management & Project Controls, LLC	Senior Secured Term Loan, due 06/2023	(15) (19)	—		(167,216)		255,674		5,536,147		—		(5,536,147)		—
	Common Equity Units (7.35% fully diluted common equity)	(7)	—		(8,044)		—		274,136		—		(8,044)		266,092
	Senior Secured Delayed Draw Term Loan, due 06/2023	(6) (19)	—		(1,524)		2,291		64,456		—		(64,456)		—
	Common Equity Warrants	(21)	440,118		(88,135)		—		275,104		440,118		(715,222)		—
	Class A Membership Interest (5.10% fully diluted common equity)	(19)	6,445,524		(6,445,524)		—		9,236,766		6,445,524		(15,682,290)		—
National Program Management & Project Controls, LLC	Senior Secured Term Loan, due 06/2023 (9.75%; 1M LIBOR + 8.25% with a 1.50% LIBOR floor)	(15)	—		(25,798)		428,440		5,566,763		15,299		(130,174)		5,451,888


Portfolio Company	Type of Investment (4) (5) (10) (17) (18)		Net Realized Gain (Loss)		Net Change in Unrealized Appreciation (Depreciation)		Amount of Dividends or Interest Credited to Income (1)		December 31, 2020 Value		Gross Additions (2)		Gross Reductions (3)		March 31, 2021 Value
Northeast Metal Works LLC	Senior Secured Term Loan, due 12/2021 (10.00%; 6.00% Cash + 4.00% PIK)	(14)	—		712,180		344,612		10,813,299		850,649		—		11,663,948

	Preferred Equity Interest (22.79% fully diluted common equity; 12.0% cumulative preferred return)	(7)	—		—		—		—		—		—		—

Slappey Communications, LLC	Common Equity Units (11.33% preferred equity / 7.14% fully diluted common equity)	(7) (16)	—		138,866		—		281,648		138,866		—		420,514

Surge Hippodrome Holdings LLC	Senior Secured Term Loan (Last Out), due 08/2024 (13.50%; 3M LIBOR + 11.50% with a 2.00% LIBOR floor)	(15)	—		457,573		198,929		4,746,273		472,227		—		5,218,500

	Common Equity Interest (10.69% fully diluted common equity)	(7)	—		439,242		—		6,205		439,242		—		445,447

	Common Equity Warrants (6.38% fully diluted common equity)	(7)	—		194,785		—		3,993		194,785		—		198,778

V-Tek, Inc.	Senior Secured Term Loan, due 03/2022 (8.25%; 3M LIBOR + 8.00%)	(12)	—		71,055		88,235		2,866,296		71,055		(326,351)		2,611,000

	Senior Secured Revolving Line of Credit, due 12/2021 (6.75%; 3M LIBOR + 6.50%)	(6)	—		(9,500)		25,922		1,525,000		—		(9,500)		1,515,500

	Common Stock (8.98% fully diluted common equity)	(7)	—		153,500		—		—		153,500		—		153,500

Total 5% And Greater Owned, But Not Greater Than 25% Owned Portfolio Companies			$	6,445,524	$	(3,076,171)	$	915,663	$	35,563,429	$	10,146,240	$	(21,618,744)	$	24,090,925


(1)			Represents the total amount of interest and fees credited to income for the portion of the year an investment was included in Affiliate categories.
(2)			Gross additions include increases in the total cost basis of investments resulting from a new portfolio investment and accrued PIK interest.
(3)			Gross reductions include decreases in the total cost basis of investments resulting from principal or PIK repayments or sales.
(4)			Debt investments are income-producing investments unless an investment is on non-accrual. Common equity, preferred equity, residual values and warrants are non-income-producing.
(5)			For each loan, the Company has provided the interest rate in effect on the date presented, as well as the contractual components of that interest rate. In the case of the Company's variable or floating rate loans, the interest rate in effect takes into account the applicable LIBOR in effect on the date presented or, if higher, the applicable LIBOR floor.
(6)			Line of credit has an unfunded commitment in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 8 in the Notes to Consolidated Financial Statements for further discussion on portion of commitment unfunded as of March 31, 2021.
(7)			This investment is owned by HCAP Equity Holdings, LLC, one of the Company's taxable blocker subsidiaries.
(8)			ICC was previously in default under the terms of its credit agreement and was on non-accrual status through September 30, 2020. During the fourth quarter of 2020, due to operational improvements, ICC began to service its current debt obligations to the Company. In October 2017, the Company exercised its rights under a stock pledge of ICC. The Company formed a wholly owned subsidiary, HCAP ICC, LLC, to exercise its proxy right under the pledge agreement and take control of ICC’s board of directors. In January 2018, the Company took control of ICC's equity after accelerating the debt and auctioning ICC’s equity in a public sale. The Company bid a portion of its outstanding debt to gain control of ICC in connection with the public sale process. Upon the completion of the sale process in January 2018, the Company converted $2.0 million of its debt investment in ICC into shares of ICC’s membership interests. During the three months ended March 31, 2021, the Company received $0.1 million from Infinite Care, LLC, representing payment for managerial assistance fees and reimbursed $0.5 million to HCAP Advisors during the three months ended March 31, 2021 to reimburse them for the cost of providing such services. Since the Company was determined to be the agent of the transaction under ASC 606 Revenue From Contracts With Customers, the Company has presented the revenue and corresponding expense on a net basis on its Statement of Operations.
(9)			This is an equity investment that receives a cash flow stream based on lease payments received by Flight Lease VII, LLC. Flight Lease VII, LLC owns an aircraft that was leased to one lessee. The lessee had been in arrears on its lease payments and in June of 2018, Flight Lease VII, LLC terminated the lease. As a result of the cessation of cash flows, future payments on this equity investment will resume only if Flight Lease VII, LLC is successful in obtaining a new lessee or sells the aircraft.
(10)			The Company's non-qualifying assets, on a fair value basis, total approximately 1.0% of the Company's total assets as of March 31, 2021.
(11)			Industry: Aerospace & Defense
(12)			Industry: Capital Equipment
(13)			Industry: Healthcare & Pharmaceuticals
(14)			Industry: Metals & Mining
(15)			Industry: Services: Business
(16)			Industry: Telecommunications
(17)			All of the Company's portfolio investments are generally subject to restrictions on resale as "restricted securities," unless otherwise noted.
(18)			The Company's Credit Facility is secured by all of the Company's assets. Refer to Note 3 in the accompanying Notes to the Consolidated Financial Statements for more information.
(19)			The Company exited this investment in 2021.

As of March 31, 2021, affiliate investments consisted of the following:


Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Senior Secured Debt	$	31,340,926	$	30,679,375	39.8	%	46.0	%
Equity	9,313,812		3,381,977		4.4	%	5.1	%
Total	$	40,654,738	$	34,061,352	44.2	%	51.1	%

The rate types of affiliate debt investments at fair value as of March 31, 2021 consisted of the following:


Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Fixed Rate	$	21,688,838	$	21,334,375	27.7	%	32.0	%
Floating Rate	9,652,088		9,345,000		12.1	%	14.0	%
Total	$	31,340,926	$	30,679,375	39.8	%	46.0	%

The industry composition of affiliate investments at fair value as of March 31, 2021 consisted of the following:


Industry	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Aerospace & Defense	$	458,346	$	828,825	1.1	%	1.3	%
Capital Equipment	4,602,884		4,280,000		5.6	%	6.4	%
Healthcare & Pharmaceuticals	13,778,735		9,670,427		12.5	%	14.5	%
Metals & Mining	15,374,623		11,663,948		15.1	%	17.5	%
Services: Business	6,151,204		7,197,638		9.3	%	10.8	%
Telecommunications	288,946		420,514		0.6	%	0.6	%
Total	$	40,654,738	$	34,061,352	44.2	%	51.1	%

The geographic concentrations of affiliate investments at fair value as of March 31, 2021 consisted of the following:


United States Region	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Northeast	$	21,275,827	$	17,526,673	22.7	%	26.3	%
West	18,631,619		15,285,340		19.8	%	22.9	%
South	747,292		1,249,339		1.7	%	1.9	%
Total	$	40,654,738	$	34,061,352	44.2	%	51.1	%

See accompanying notes to unaudited consolidated financial statements.

Portfolio Company	Type of Investment (4) (5) (10) (18) (19)		Net Realized Gain (Loss)	Net Change in Unrealized Appreciation (Depreciation)	Amount of Dividends or Interest Credited to Income (1)	December 31, 2019 Value	Gross Additions (2)	Gross Reductions (3)	September 30, 2020 Value
	Delayed Draw Term Loan, due 06/2023 (9.75%; 1M LIBOR + 8.25% with a 1.50% LIBOR floor)	(6)	—	161	2,680	—	64,291	(818)	63,473
	Class A Membership Interest (5.10% fully diluted common equity)	(7)	—	2,538,371	—	4,799,331	2,538,370	—	7,337,701
Northeast Metal Works LLC	Senior Secured Term Loan, due 06/2020 (10.00%; 7.00% Cash + 3.00% PIK)	(14)	—	(1,441,756)	1,184,383	11,596,969	397,922	(1,441,756)	10,553,135
	Preferred Equity Interest (22.79% fully diluted common equity; 12.0% cumulative preferred return)	(7)	—	—	—	—	—	—	—
Slappey Communications, LLC	Senior Secured Term Loan, due 05/2024 (13.00%; 3M LIBOR + 10.00% with a 2.50% LIBOR floor + 0.50% PIK)	(17)	—	14,676	800,485	6,828,238	1,151,958	(198,288)	7,781,908
	Senior Secured Revolving Line of Credit, due 05/2023 (3M LIBOR + 10.00% with a 2.50% LIBOR floor)	(6)	—	—	313	—	100,000	(100,000)	—
	Common Equity Units (12.90% preferred equity / 7.59% fully diluted common equity)	(7)	—	129,965	—	227,035	129,965	—	357,000
Surge Hippodrome Holdings LLC	Senior Secured Term Loan (Last Out), due 08/2024 (13.50%; 3M LIBOR + 11.50% with a 2.00% LIBOR floor)	(16)	—	(366,294)	600,173	5,131,294	39,158	(366,294)	4,804,158
	Common Equity Interest (10.08% fully diluted common equity)	(7)	—	(287,475)	—	360,000	—	(287,475)	72,525
	Common Equity Warrants (9.50% fully diluted common equity)	(7)	—	(184,693)	—	237,579	—	(184,693)	52,886
V-Tek, Inc.	Senior Secured Term Loan, due 03/2022 (6.00%)	(12)	—	(593,838)	266,294	3,175,500	28,338	(593,838)	2,610,000

Harvest Capital Credit Corporation

Consolidated Schedule of Investments in and Advances to Affiliates

Year Ended December 31, 2020


Portfolio Company	Type of Investment (4) (5) (11) (19) (20)		Net Realized Loss		Net Change in Unrealized Appreciation (Depreciation)		Amount of Dividends or Interest Credited to Income (1)		December 31, 2019 Value		Gross Additions (2)		Gross Reductions (3)		December 31, 2020 Value
More than 25% Owned
Flight Lease VII, LLC	Common Equity Interest (46.14% fully diluted common equity)	(9) (11)	$	(112,500)	$	—	$	—	$	412,500	$	—	$	(112,500)	$	300,000

Infinite Care, LLC	Senior Secured Term Loan, due 01/2022 (8.0% with a borrower PIK Option)	(8) (13)	—		1,323,239		101,304		3,783,600		1,373,891		(114,135)		5,043,356

	Senior Secured Revolving Line of Credit, due 01/2022 (8.0% with a borrower PIK option)	(8)	—		370,921		95,962		4,208,500		568,903		—		4,777,403

	Membership Interest (100% membership interests)	(7) (8)	—		794,584		—		—		794,584		—		794,584

Total More Than 25% Owned Portfolio Companies			$	(112,500)	$	2,488,744	$	197,266	$	8,404,600	$	2,737,378	$	(226,635)	$	10,915,343

5% and Greater Owned, But Not Greater Than 25%
Flight Lease XII, LLC	Common Equity Interest (19.23% fully diluted common equity)	(7) (11)	$	(231,411)	$	43,776	$	—	$	345,980	$	43,777	$	(231,411)	$	158,346

Kleen-Tech Acquisition, LLC	Senior Secured Term Loan, due 05/2024	(16) (20)	—		31,290		1,147,961		6,819,708		524,499		(7,344,207)		—

	Senior Secured Revolving Line of Credit, due 05/2022	(20)	—		—		—		—		—		—		—

	Common Equity Units (6.89% fully diluted common equity)	(7)	—		50,864		—		274,136		50,864		—		325,000

	Common Equity Warrants	(20)	440,117		(88,135)		—		275,104		440,118		(715,222)		—

National Program Management & Project Controls, LLC	Senior Secured Term Loan, due 06/2023 (9.75%; 1M LIBOR + 8.25% with a 1.50% LIBOR floor)	(16)	—		87,965		569,833		5,566,763		20,588		(51,204)		5,536,147

Portfolio Company	Type of Investment (4) (5) (1011) (1819) (1920)		Net Realized ~~Gain (~~Loss)		Net Change in Unrealized Appreciation (Depreciation)		Amount of Dividends or Interest Credited to Income (1)		December 31, 2019 Value		Gross Additions (2)		Gross Reductions (3)		~~September~~December 3031, 2020 Value
	Senior Secured Revolving Line of Credit, due 03/2021 (6.75%; 3M LIBOR + 6.50%)	(6)	—		(78,097)		87,888		1,536,097		—		(78,097)		1,458,000
	Senior Secured Delayed Draw Term Loan, due 06/2023 (9.75%; 1M LIBOR + 8.25% with a 1.50% LIBOR floor)	(6)	—		1,537		4,288		—		65,664		(1,208)		64,456
	Class A Membership Interest (5.10% fully diluted common equity)	(7)	—		4,437,435		—		4,799,331		4,437,435		—		9,236,766
Northeast Metal Works, LLC	Senior Secured Term Loan, due 12/2021 (10.00%; 5.00% Cash + 5.00% PIK)	(14)	—		(1,388,855)		1,532,261		11,596,969		605,185		(1,388,855)		10,813,299
	Preferred Equity Interest (22.79% fully diluted common equity; 12.0% cumulative preferred return)	(7)	—		—		—		—		—		—		—
Slappey Communications, LLC	Senior Secured Term Loan, due 05/2024	(17) (20)	—		(110,182)		1,009,646		6,828,238		1,265,382		(8,093,620)		—
	Senior Secured Revolving Line of Credit, due 05/2023	(20)	—		—		313		—		100,000		(100,000)		—
	Common Equity Units (11.33% preferred equity / 7.05% fully diluted common equity	(7)	—		(34,333)		—		227,035		88,946		(34,333)		281,648
Surge Hippodrome Holdings LLC	Senior Secured Term Loan (Last Out), due 08/2024 (13.50%; 3M LIBOR + 11.50%)	(16)	—		(438,277)		802,641		5,131,294		53,256		(438,277)		4,746,273
	Common Equity Interest (10.69% fully diluted common equity)	(7)	—		(458,216)		—		360,000		104,421		(458,216)		6,205
	Common Equity Warrants (6.38% fully diluted common equity)	(7)	—		(233,586)		—		237,579		—		(233,586)		3,993
V-Tek, Inc.	Senior Secured Term Loan, due 03/2022 (6.0%)	(12)	—		(360,981)		339,375		3,175,500		51,777		(360,981)		2,866,296
	Senior Secured Revolving Line of Credit, due 03/2021 (6.75%; 3M LIBOR + 6.50%)	(6)	—		(11,097)		114,386		1,536,097		—		(11,097)		1,525,000
	Common Stock (8.98% fully diluted common equity)	(7)	—		(257,500)		—		257,500		—		(257,500)		—
Total 5% And Greater Owned, But Not Greater Than 25% Owned Portfolio Companies			$	248,294	$	(573,390)	$	4,518,616	$	47,431,234	$	5,473,695	$	(11,898,230)	$	41,006,699

(1)	Represents the total amount of interest and fees credited to income for the portion of the year an investment was included in Affiliate categories.
Portfolio Company	Type of Investment (4) (5) (11) (19) (20)	Net Realized Loss		Net Change in Unrealized Appreciation (Depreciation)		Amount of Dividends or Interest Credited to Income (1)		December 31, 2019 Value		Gross Additions (2)		Gross Reductions (3)		December 31, 2020 Value
(2)	Gross additions include increases in the total cost basis of investments resulting from a new portfolio investment and accrued PIK interest.
Total 5% and Greater Owned, But Not Greater Than 25% Owned Portfolio Companies		$	208,706	$	1,271,705	$	5,520,704	$	47,431,234	$	7,851,912	$	(19,719,717)	$	35,563,429
(3)	Gross reductions include decreases in the total cost basis of investments resulting from principal or PIK repayments or sales.
(4)	Debt investments are income-producing investments unless an investment is on non-accrual. Common equity, preferred equity, residual values and warrants are non-income-producing.
(5)	For each loan, the Company has provided the interest rate in effect on the date presented, as well as the contractual components of that interest rate. In the case of the Company's variable or floating rate loans, the interest rate in effect takes into account the applicable LIBOR in effect on the date presented or, if higher, the applicable LIBOR floor.
(6)	Credit facility has an unfunded commitment in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 8 in the Notes to Consolidated Financial Statements for further discussion on portion of commitment unfunded as of September 30, 2020.
(7)	This investment is owned by HCAP Equity Holdings, LLC, one of the Company's taxable blocker subsidiaries.
(8)	Infinite Care LLC ("ICC") is in default under the terms of its credit agreement. In October 2017, the Company exercised its rights under a stock pledge of the borrower. The Company formed a wholly owned subsidiary, HCAP ICC, LLC, to exercise its proxy right under the pledge agreement and take control of the board of ICC. The loan was placed on non-accrual status in Q4 2017. In January 2018, HCAP took control of the borrower's equity after accelerating the debt and auctioning the borrower’s equity in a public sale. The Company bid a portion of its outstanding debt to gain control of the company. Upon completion of this process the Company converted $2.0 million of its debt investment in the borrower to membership interests.
(9)	This is an equity investment that receives a cash flow stream based on lease payments received by Flight Lease VII, LLC. Flight Lease VII, LLC owns an aircraft that was leased to one lessee. The lessee had been in arrears on its lease payments and in June of 2018, Flight Lease VII, LLC terminated the lease. As a result of the cessation of cash flows, future payments on this equity investment will resume only if Flight Lease VII, LLC is successful in obtaining a new lessee or sells the aircraft.
(10)	The Company's non-qualifying assets, on a fair value basis, total approximately 1.0% of the Company's total assets as of September 30, 2020.
(11)	Industry: Aerospace & Defense
(12)	Industry: Capital Equipment
(13)	Industry: Healthcare & Pharmaceuticals
(14)	Industry: Metals & Mining
(15)	Industry: Construction & Building
(16)	Industry: Services: Business
(17)	Industry: Telecommunications
(18)	All of the Company's portfolio investments are generally subject to restrictions on resale as "restricted securities," unless otherwise noted.
(19)	The Company's Credit Facility is secured by all of the Company's assets. Refer to Note 3 in the accompanying Notes to the Consolidated Financial Statements for more information.
(20)	This debt investment is on non-accrual status as of September 30, 2020.
(21)	The Company exited this investment in 2020.

As of September 30, 2020, affiliate investments consisted of the following:

Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Senior Secured Debt	$	44,305,116	$	41,208,562	42.9	%	68.0	%
Equity	11,977,272		8,610,136		9.0	%	14.2	%
Total	$	56,282,388	$	49,818,698	51.9	%	82.2	%

The rate types of affiliate debt investments at fair value as of September 30, 2020 consisted of the following:

Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Fixed Rate	$	21,260,072	$	19,039,135	19.8	%	31.4	%
Floating Rate	23,045,044		22,169,427		23.1	%	36.6	%
Total	$	44,305,116	$	41,208,562	42.9	%	68.0	%

The industry composition of affiliate investments at fair value as of September 30, 2020 consisted of the following:


(1)			Represents the total amount of interest and fees credited to income for the portion of the year an investment was included in Affiliate categories.
(2)			Gross additions include increase in the cost basis of investments resulting from new portfolio investment and accrued PIK interest.
(3)			Gross reductions include decreases in the total cost basis of investments resulting from principal or PIK repayments or sales.
(4)			Debt investments are income-producing investments unless an investment is on non-accrual. Common equity, preferred equity, residual values and warrants are non-income-producing.
(5)			For each loan, the Company has provided the interest rate in effect on the date presented, as well as the contractual components of that interest rate. In the case of the Company's variable or floating rate loans, the interest rate in effect takes into account the applicable LIBOR rate in effect on December 31, 2020 or, if higher, the applicable LIBOR floor.
(6)			Line of credit has an unfunded commitments in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 8 in the Notes to Consolidated Financial Statements for further discussion on portion of commitment unfunded at December 31, 2020.
(7)			The investment is owned by HCAP Equity Holdings, LLC, one of the Company's taxable blocker subsidiaries.
(8)			ICC was previously in default under the terms of its credit agreement and was on non-accrual status through September 30, 2020. During the fourth quarter of 2020, due to operational improvements, ICC began to service its current debt obligations to the Company. In October 2017, the Company exercised its rights under a stock pledge of ICC. The Company formed a wholly owned subsidiary, HCAP ICC, LLC, to exercise its proxy right under the pledge agreement and take control of ICC’s board of directors. In January 2018, the Company took control of ICC's equity after accelerating the debt and auctioning ICC’s equity in a public sale. The Company bid a portion of its outstanding debt to gain control of ICC in connection with the public sale process. Upon the completion of the sale process in January 2018, the Company converted $2.0 million of its debt investment in ICC into shares of ICC’s membership interests. During the year ended December 31, 2020, the Company received $0.5 million from Infinite Care representing payment for managerial assistance fees, of which $0.1 million was reimbursed to HCAP Advisors during the fiscal year ended December 31, 2020 to reimburse them for the cost of providing such services. Since the Company was determined to be the agent of the transaction under ASC 606 Revenue From Contracts With Customers, the Company has presented the revenue and corresponding expense on a net basis on its Statement of Operations.
(9)			This is an equity investment that receives a cash flow stream based on lease payments received by Flight Lease VII, LLC. Flight Lease VII, LLC owns an aircraft that was leased to one lessee. The lessee had been in arrears on its lease payments and in June of 2018, Flight Lease VII, LLC terminated the lease. As a result of the cessation of cash flows, future payments on this equity investment will resume only if Flight Lease VII, LLC is successful in obtaining a new lessee or sells the aircraft.
(10)			The Company's non-qualifying assets, on a fair value basis, total approximately 0.8% of the Company's total assets as of December 31, 2020.
(11)			Industry: Aerospace & Defense
(12)			Industry: Capital Equipment
(13)			Industry: Healthcare & Pharmaceuticals
(14)			Industry: Metals & Mining
(15)			Industry: Construction & Building
(16)			Industry: Services: Business
(17)			Industry: Telecommunications
(18)			All of the Company's portfolio investments are generally subject to restrictions on resale as "restricted securities," unless otherwise noted.
(19)			The Company's Credit Facility is secured by all of the Company's assets. Refer to Note 3 in the accompanying Notes to the Consolidated Financial Statements for more information.
(20)			The Company exited this investment in 2020.

Industry	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Aerospace & Defense	$	523,932	$	523,932	0.6	%	0.9	%
Capital Equipment	4,905,796		4,068,000		4.2	%	6.7	%
Construction & Building	8,252,987		12,853,062		13.4	%	21.2	%
Healthcare & Pharmaceuticals	13,695,702		8,486,000		8.8	%	14.0	%
Metals & Mining	15,028,890		10,553,135		11.0	%	17.4	%
Services: Business	6,018,031		5,195,661		5.4	%	8.6	%
Telecommunications	7,857,050		8,138,908		8.5	%	13.4	%
Total	$	56,282,388	$	49,818,698	51.9	%	82.2	%

As of December 31, 2020, affiliate investments consisted of the following:

The geographic concentrations of affiliate investments at fair value as of September 30, 2020 consisted of the following:


Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Senior Secured Debt	$	36,847,482	$	35,372,230	39.5	%	56.9	%
Equity	12,105,053		11,106,541		12.4	%	17.8	%
Total	$	48,952,535	$	46,478,771	51.9	%	74.7	%

United States Region	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
West	$	27,104,485	$	25,673,154	26.7	%	42.4	%
Northeast	20,796,921		15,482,704		16.2	%	25.5	%
South	8,380,982		8,662,840		9.0	%	14.3	%
Total	$	56,282,388	$	49,818,698	51.9	%	82.2	%

The rate type of affiliate debt investments at fair value as of December 31, 2020 was as follows:

See accompanying notes to unaudited consolidated financial statements.

Harvest Capital Credit Corporation


Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Fixed Rate	$	24,694,971	$	23,500,354	16.2	%	37.8	%
Floating Rate	12,152,511		11,871,876		13.3	%	19.1	%
Total	$	36,847,482	$	35,372,230	29.5	%	56.9	%

~~Consolidated~~The ~~Schedule~~industry composition of ~~Investments~~affiliate ininvestments ~~and~~at ~~Advances~~fair tovalue ~~Affiliates~~ as of December 31, 2020 consisted of the following:

Year Ended December 31, 2019


Industry	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Aerospace & Defense	$	458,346	$	458,346	0.5	%	0.7	%
Capital Equipment	4,929,235		4,391,296		4.9	%	7.0	%
Construction & Building	8,223,105		14,837,368		16.6	%	23.8	%
Healthcare & Pharmaceuticals	13,680,200		10,615,343		11.8	%	17.1	%
Metals & Mining	15,236,153		10,813,299		12.1	%	17.4	%
Services: Business	6,136,550		5,081,471		5.7	%	8.2	%
Telecommunications	288,946		281,648		0.3	%	0.5	%
Total	$	48,952,535	$	46,478,771	51.9	%	74.7	%

Portfolio Company	Type of Investment (4) (5) (11) (19) (20)		Net Realized Loss		Net Change in Unrealized Appreciation (Depreciation)		Amount of Dividends or Interest Credited to Income (1)		December 31, 2018 Value		Gross Additions (2)		Gross Reductions (3)		December 31, 2019 Value
More than 25% Owned
Flight Lease VII, LLC	Common Equity Interest (46.14% fully diluted common equity)	(9) (12)	$	(271,811)	$	—	$	—	$	684,311	$	—	$	(271,811)	$	412,500
Infinite Care, LLC	Senior Secured Term Loan, due 01/2021 (3.0%)	(8) (14)	—		(164,400)		—		3,948,000		98,949		(263,349)		3,783,600
	Senior Secured Revolving Line of Credit, due 01/2021 (3.0%)	(8)	—		(7,500)		—		3,716,000		637,271		(144,771)		4,208,500
	Membership Interest (100% membership interests)	(7) (12)	—		(300,000)		—		—		300,000		(300,000)		—
Total More Than 25% Owned Portfolio Companies			$	(271,811)	$	(471,900)	$	—	$	8,348,311	$	1,036,220	$	(979,931)	$	8,404,600
5% and Greater Owned, But Not Greater Than 25%
Flight Lease XII, LLC	Common Equity Interest (19.23% fully diluted common equity)	(7) (12)	$	—	$	(290,020)	$	140,028	$	636,000	$	—	$	(290,020)	$	345,980
Kleen-Tech Acquisition, LLC	Senior Secured Term Loan, due 05/2024 (15.00%; 13.00% Cash plus 2.00% PIK)	(17)	—		(31,290)		702,214		—		7,055,165		(235,457)		6,819,708
	Senior Secured Revolving Line of Credit, due 05/2022 (15.00%; 13.00% Cash plus 2.00% PIK)	(6)	—		—		1,189		—		—		—		—
	Common Equity Units (7.96% fully diluted common equity)	(7)	—		24,136		—		—		274,136		—		274,136
	Common Equity Warrants (8.50% fully diluted common equity)	(7)	—		88,135		—		—		275,104		—		275,104
National Program Management & Project Controls, LLC	Senior Secured Term Loan, due 06/2023 (10.05%; 1M LIBOR + 8.25%)	(16)	—		8,305		876,031		6,911,000		26,679		(1,370,916)		5,566,763

The geographic concentrations of affiliate investments at fair value as of December 31, 2020 consisted of the following:


United States Region	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
West	$	27,082,540	$	30,169,007	33.7	%	48.5	%
Northeast	21,122,703		15,569,770		17.4	%	25.0	%
South	747,292		739,994		0.8	%	1.2	%
Total	$	48,952,535	$	46,478,771	51.9	%	74.7	%

Portfolio Company	Type of Investment (4) (5) (11) (19) (20)		Net Realized Loss	Net Change in Unrealized Appreciation (Depreciation)	Amount of Dividends or Interest Credited to Income (1)	December 31, 2018 Value	Gross Additions (2)	Gross Reductions (3)	December 31, 2019 Value
	Class A Membership Interest (5.10% fully diluted common equity)	(7) (10)	—	1,645,922	—	973,500	3,825,831	—	4,799,331
Northeast Metal Works, LLC	Senior Secured Term Loan, due 06/2020 (15.00%; 11.00% Cash plus 4.00% PIK)	(15) (22)	—	(1,324,367)	1,788,632	10,223,500	2,697,836	(1,324,367)	11,596,969
	Revolving Line of Credit, due 12/2019	(21) (22)	—	2,500	88,750	1,497,500	2,500	(1,500,000)	—
	Preferred Equity Interest (22.79% fully diluted common equity; 12.0% cumulative preferred return)	(7) (22)	20,750	80,000	—	—	100,750	(100,750)	—
Slappey Communications, LLC	Senior Secured Term Loan, due 05/2024 (13.00%; 3M LIBOR + 10.00% with a 2.50% LIBOR floor plus 0.50% PIK)	(18)	—	110,182	503,510	—	6,828,238	—	6,828,238
	Senior Secured Revolving Line of Credit, due 05/2023 (3M LIBOR + 10.00% with a 2.50% LIBOR floor plus 0.50% PIK)	(6)	—	—	1,493	—	—	—	—
	Common Equity Units (12.90% preferred equity / 7.59% fully diluted common equity	(7)	—	27,035	—	—	227,035	—	227,035
Surge Hippodrome Holdings LLC	Senior Secured Term Loan (Last Out), due 08/2024 (13.50%; 3M LIBOR + 11.50%)	(17)	—	—	334,580	—	5,131,294	—	5,131,294
	Common Equity Interest (10.10% fully diluted common equity)	(7)	—	—	—	—	360,000	—	360,000
	Common Equity Warrants (9.50% fully diluted common equity)	(7)	—	—	—	—	237,579	—	237,579
V-Tek, Inc.	Senior Secured Term Loan, due 03/2022 (13.00%; 3M LIBOR + 11.00%)	(13)	—	(14,714)	480,646	3,341,000	24,214	(189,714)	3,175,500

Portfolio Company	Type of Investment (4) (5) (11) (19) (20)		Net Realized Loss		Net Change in Unrealized Appreciation (Depreciation)		Amount of Dividends or Interest Credited to Income (1)		December 31, 2018 Value		Gross Additions (2)		Gross Reductions (3)		December 31, 2019 Value
	Senior Secured Revolving Line of Credit, due 03/2021 (8.50%; 3M LIBOR + 6.50%)	(6)	—		—		138,062		1,336,097		200,000		—		1,536,097
	Common Stock (8.98% fully diluted common equity)	(7)	—		69,000		—		188,500		69,000		—		257,500
Total 5% and Greater Owned, But Not Greater Than 25% Owned Portfolio Companies			$	20,750	$	394,824	$	5,055,135	$	25,107,097	$	27,335,361	$	(5,011,224)	$	47,431,234

(1)			Represents the total amount of interest and fees credited to income for the portion of the year an investment was included in Affiliate categories.
(2)			Gross additions include increases in the total cost basis of investments resulting from new portfolio investment and accrued PIK interest.
(3)			Gross reductions include decreases in the total cost basis of investments resulting from principal or PIK repayments or sales.
(4)			Debt investments are income-producing investments unless an investment is on non-accrual. Common equity, preferred equity, residual values and warrants are non-income-producing.
(5)			For each loan, the Company has provided the interest rate in effect on the date presented, as well as the contractual components of that interest rate. In the case of the Company's variable or floating rate loans, the interest rate in effect takes into account the applicable LIBOR rate in effect on December 31, 2019 or, if higher, the applicable LIBOR floor.
(6)			Credit facility has an unfunded commitment in addition to the amounts shown in the Consolidated Schedule of Investments. See Note 8 in the Notes to Consolidated Financial Statements for further discussion on portion of commitment unfunded at December 31, 2019.
(7)			This investment is owned by HCAP Equity Holdings, LLC, one of the Company's taxable blocker subsidiaries.
(8)			Infinite Care LLC ("ICC") is in default under the terms of its credit agreement and was on non-accrual status as of December 31, 2019. In October 2017, the Company exercised its rights under a stock pledge of ICC. The Company formed a wholly owned subsidiary, HCAP ICC, LLC, to exercise its proxy right under the pledge agreement and take control of the board of ICC. The loan was placed on non-accrual status in Q4 2017. In January 2018, HCAP took control of the borrower's equity after accelerating the debt and auctioning the borrower’s equity in a public sale. The Company bid a portion of its outstanding debt to gain control of the company. Upon completion of this process the Company converted $2.0 million of its debt investment in ICC into shares of ICC's membership interests.
(9)			This is an equity investment that receives a cash flow stream based on lease payments received by Flight Lease VII, LLC. Flight Lease VII, LLC owns an aircraft that was leased to one lessee. The lessee had been in arrears on its lease payments and in June of 2018, Flight Lease VII, LLC terminated the lease. As a result of the cessation of cash flows, future payments on this equity investment will resume only if Flight Lease VII, LLC is successful in obtaining a new lessee or sells the aircraft.
(10)			During the year ended December 31, 2019, the Company's voting rights ownership interest increased to over the 5.0% affiliate investment classification threshold. Previously, this portfolio company was classified as a non-control/non-affiliated portfolio company.
(11)			The Company's non-qualifying assets, on a fair value basis, total approximately 1.0% of the Company's total assets as of December 31, 2019.
(12)			Industry: Aerospace & Defense
(13)			Industry: Capital Equipment
(14)			Industry: Healthcare & Pharmaceuticals
(15)			Industry: Metals & Mining
(16)			Industry: Construction & Building
(17)			Industry: Services: Business
(18)			Industry: Telecommunications
(19)			All of the Company's portfolio investments are generally subject to restrictions on resale as "restricted securities," unless otherwise noted.
(20)			The Company's Credit Facility is secured by all of the Company's assets. Refer to Note 3 in the Notes to the audited Consolidated Financial Statements included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2019 for more information.
(21)			The Company exited this investment in 2019.
(22)			On May 22, 2019, Northeast Metal Works, LLC ("Northeast Metal Works") entered into a new financing agreement with a senior lender. In conjunction with this, Northeast Metal Works and the Company entered into a subordination and inter-creditor agreement where the Company thereby agreed to subordinate its indebtedness to the senior lender through the earlier of the due date of the new financing agreement, which expires on May 31, 2020, or the date on which Northeast Metal Works has fully satisfied the indebtedness to the new senior lender. In addition, the new senior lender obtained a first priority interest in certain assets of Northeast Metal Works. As a result, the Company reclassified its term loan investment in Northeast Metal Works from senior secured to junior secured. In connection with the new financing agreement, Northeast Metal Works paid down the existing $1.5 million revolving line of credit by approximately $1.1 million. The remaining $0.4 million commitment under the revolving line of credit was transferred to the junior secured term loan as an increase in the outstanding principal amount. Finally, as part of the refinancing transaction, the Company sold 125 units of its preferred equity interest in Northeast Metal Works to a third party and recognized a realized gain of $20,750. On September 27, 2019, the senior lender issued a Notice of Default to Northeast Metal Works. The Notice of Default prohibited Northeast Metal Works from making any further interest payments to the Company, despite having the cash on hand to do so. On October 31, 2019, the Company extended $1.7 million in additional credit to Northeast Metal Works by increasing the commitment on its junior secured term loan. Northeast Metal Works used the proceeds to pay off the existing senior secured debt and the senior secured debt was subsequently terminated. As a result of this transaction, the Company's junior secured term loan converted into a senior secured term loan.

As of December 31, 2019, affiliate investments consisted of the following:

Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Senior Secured Debt	$	49,627,468	$	48,646,669	41.6	%	72.8	%
Equity	12,442,567		7,189,165		6.2	%	10.8	%
Total	$	62,070,035	$	55,835,834	47.8	%	83.6	%

The rate type of affiliate debt investments at fair value as of December 31, 2019 was as follows:

Type	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Fixed Rate	$	27,563,148	$	26,408,777	22.6	%	39.5	%
Floating Rate	22,064,320		22,237,892		19.0	%	33.3	%
Total	$	49,627,468	$	48,646,669	41.6	%	72.8	%

The industry composition of affiliate investments at fair value as of December 31, 2019 consisted of the following:

Industry	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
Aerospace & Defense	$	802,257	$	758,480	0.7	%	1.1	%
Capital Equipment	4,877,458		4,969,097		4.3	%	7.4	%
Construction & Building	8,278,753		10,366,094		8.9	%	15.5	%
Healthcare & Pharmaceuticals	13,545,702		7,992,100		6.8	%	12.0	%
Metals & Mining	14,630,968		11,596,969		9.9	%	17.4	%
Services: Business	13,016,841		13,097,821		11.2	%	19.6	%
Telecommunications	6,918,056		7,055,273		6.0	%	10.6	%
Total	$	62,070,035	$	55,835,834	47.8	%	83.6	%

The geographic concentrations of affiliate investments at fair value as of December 31, 2019 consisted of the following:

United States Region	Amortized Cost		Fair Value		% of Fair Value		% of Net Assets
West	$	33,989,881	$	30,696,239	26.3	%	46.0	%
Northeast	20,359,841		17,325,842		14.8	%	25.9	%
South	7,720,313		7,813,753		6.7	%	11.7	%
Total	$	62,070,035	$	55,835,834	47.8	%	83.6	%

See accompanying notes to unaudited consolidated financial statements.

4844

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q constitute forward-looking statements, which relate to future events or our future performance or financial condition. Forward-looking statements may include, among other things, statements as to our future operating results, our business prospects and the prospects of our portfolio companies, the impact of the investments that we expect to make, the ability of our portfolio companies to achieve their objectives, our expected financings and investments, the adequacy of our cash resources and working capital, and the timing of cash flows, if any, from the operations of our portfolio companies. Such forward-looking statements may include statements preceded by, followed by or that otherwise include the words “may,” “might,” “will,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “estimate,” “anticipate,” “predict,” “potential,” “plan,” variations of such words, and similar expressions.

Readers are cautioned that the forward-looking statements contained in this Quarterly Report on Form 10-Q are only predictions, are not guarantees of future performance, and are subject to risks, events, uncertainties and assumptions that are difficult to predict. Our actual results could differ materially from those implied or expressed in the forward-looking statements, and future results could differ materially from historical performance, for any reason, including ~~the~~any risk factors discussed ~~in this Quarterly Report on Form 10-Q~~herein, ~~in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020,~~ and in Item 1A entitled “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020. Other factors that could cause our actual results and financial condition to differ materially include, but are not limited to:

•our future operating results, including the performance of our existing investments;

•the introduction, withdrawal, success and timing of business initiatives and strategies;

•changes in political, economic or industry conditions, the interest rate environment or conditions affecting the financial and capital markets, including with respect to changes from the impact of the ~~Coronavirus ("~~COVID-19") pandemic;

•the length and duration of the COVID-19 outbreak in the United States as well as worldwide and the magnitude of the economic impact of that outbreak;

•the effect of the disruptions caused by the COVID-19 pandemic on our ability to continue to effectively manage our business and on the availability of equity and debt capital and our use of borrowed money to finance a portion of our investments;

•the relative and absolute investment performance and operations of our investment adviser;

•the impact of increased competition;

•the impact of investments we intend to make and future acquisitions and divestitures;

•our ability to turn potential investment opportunities into transactions and thereafter into completed and successful investments;

•the unfavorable resolution of any existing or future legal proceedings;

•the effect of the COVID-19 pandemic on our business prospects and the prospects of our portfolio companies, including our and their ability to achieve our respective objectives;

•our regulatory structure and tax status;

•the adequacy of our cash resources and working capital;

•the timing of cash flows, if any, from the operations of our portfolio companies;

•the impact of interest rate volatility on our results, particularly because we use leverage as part of our investment strategy;

•the impact of legislative and regulatory actions and reforms, including in response to the COVID-19 pandemic; and regulatory, supervisory or enforcement actions of government agencies relating to us or our investment adviser;

•our contractual arrangements and relationships with third parties, including but not limited to lenders and investors, including other investors in our portfolio companies;

•our ability to access capital and any future financings by us;

•the ability of our investment adviser to attract and retain highly talented professionals; ~~and~~

•the impact of changes to tax legislation and, generally, our tax position.;

~~We have based~~ •the ~~forward-looking~~ability ~~statements~~of ~~included in this Quarterly Report on Form 10-Q on information available to us on~~ the ~~date~~parties ~~of this report, and we assume no obligation~~ to ~~update~~consummate any such forward-looking statements. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rule or regulation. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the ~~future~~Mergers ~~may~~on ~~file with~~ the ~~SEC,~~expected ~~including annual reports on Form 10-K~~timeline, ~~quarterly~~or ~~reports~~at ~~on Form 10-Q and current reports on Form 8-K.~~ all;

•the ability to realize the anticipated benefits of the proposed Mergers;

•the effects of disruption on our business from the proposed Mergers;

•the combined company’s plans, expectations, objectives and intentions, as a result of the Mergers;

•the effect that the pendency of the Mergers or consummation of the Mergers may have on the trading price of our common stock or PTMN Common Stock; and

•any potential termination of the Merger Agreement or action of our stockholders or PTMN’s stockholders with respect to any proposed transaction.

We have based the forward-looking statements included in this Quarterly Report on Form 10-Q on information available to us on the date of this report, and we assume no obligation to update any such forward-looking statements. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law or SEC rules or regulations. You are advised to consult any additional disclosures that we may make directly to you or through reports that we in the future may file with the SEC, including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

The following analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.

Overview

We were formed as a Delaware corporation on November 14, 2012 and completed our initial public offering on May 7, 2013. Immediately prior to the initial public offering, we acquired Harvest Capital Credit LLC in a merger whereby the outstanding limited liability company membership interests of Harvest Capital Credit LLC were converted into shares of our common stock and we assumed and succeeded to all of Harvest Capital Credit LLC’s assets and liabilities, including its entire portfolio of investments.

Our investment objective is to generate both current income and capital appreciation primarily by making direct investments in the form of senior debt, subordinated debt and, to a lesser extent, minority equity investments. We seek to accomplish our investment objective by targeting investments in small to mid-sized U.S. private companies with annual revenues of less than $100 million and annual EBITDA (earnings before interest, taxes, depreciation and amortization) of less than $15 million. We believe that transactions involving companies of this size offer higher yielding investment opportunities, lower leverage levels and other terms more favorable than transactions involving larger companies.

We are an externally managed, closed-end, non-diversified management investment company that has elected to be regulated as a BDC under the 1940 Act.

We have also elected to be treated for U.S. federal income tax purposes as a RIC under Subchapter M of the Code, and we intend to continue to qualify annually for tax treatment as a RIC.

Our investment adviser, HCAP Advisors, which is registered as an investment adviser under the Advisers Act, manages our day-to-day operations and provides investment advisory and management services to us, subject to the overall supervision of our board of directors and pursuant to an investment advisory and management agreement. HCAP Advisors also serves as our administrator pursuant to an administration agreement, through which it furnishes us with office facilities, equipment and clerical, bookkeeping and recordkeeping services and performs, or oversees the performance of, our required administrative services.

50Proposed Merger with Portman Ridge Finance Corporation

On December 23, 2020, we entered into the Merger Agreement with PTMN, Acquisition Sub and Sierra Crest. The Merger Agreement provides that (i) Acquisition Sub will merge with and into the Company in the First Merger, with us continuing as the surviving corporation and as a wholly-owned subsidiary of PTMN, and (ii) immediately after the effectiveness of the First Merger, we will merge with and into PTMN in the Second Merger, with PTMN continuing as the surviving corporation. Sierra Crest is expected to manage the combined company following the Mergers.

The consummation of the Mergers is subject to the satisfaction or (to the extent permitted by law) waiver of certain customary closing conditions, including obtaining the requisite approval of our stockholders. For further information, see “Note 1. Organization—The Proposed Merger with Portman Ridge Finance Corporation” to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

COVID-19 Update

The COVID-19 pandemic, and the related effects on the U.S. and global economies, has had adverse consequences for the business operations of certain of our portfolio companies and has adversely affected, and threatens to continue to adversely affect, our operations and the operations of HCAP Advisors.

We are continuing to monitor the COVID-19 pandemic and its impact on our business and the business of our portfolio companies, and we have continued to fund existing unfunded revolving lines of credit when requests have been made from our portfolio companies and intend to continue to do so. We may also participate in follow-on investments with respect to existing portfolio companies. Due to the adverse effects of the COVID-19 pandemic on our operations and our liquidity, and in light of our contractual obligations, we have decided to temporarily cease to make and originate new investments. We will decide to resume to make and originate new investments when we believe it is prudent in light of our capital needs and contractual obligations, and in the best interests of us and our stockholders.

Neither our management nor our board of directors can predict the full impact of the COVID-19 pandemic, including its duration and the magnitude of its economic impact, and we cannot predict the extent and duration of various travel restrictions, business closures and other quarantine measures imposed, or that may in the future be imposed, by various local, state, and federal governmental authorities, as well as non-U.S. governmental authorities. As such, we are unable to accurately predict the extent to which COVID-19 will negatively affect our portfolio companies’ operating results or the impact that such disruptions may have on our results of operations and financial condition.

Depending on the duration and extent of the disruption to the operations of our portfolio companies, we expect that certain of our portfolio companies will, and will continue to, experience financial distress and possibly default on their financial obligations to us and their other capital providers. This risk is amplified with respect to portfolio companies operating in certain industries, such as aerospace and defense, beverage, food and tobacco, construction and building, consumer goods, retail, business services, energy services and others. For example, in June 2020, one of our portfolio companies, General Nutrition Centers, Inc. ("GNC"), filed for bankruptcy. Subsequent to September 30, 2020, GNC was restructured upon the finalization of its plan of reorganization, in connection with which we received approximately $1.9 million, representing a full payoff at par of each of our New Money DIP Term Loan and Roll-up DIP Term Loan. We also received an additional $1.2 million in cash, in connection with the finalization of its plan of reorganization, representing a discounted payoff of our $3.0 million original tranche B-2 Term Loan and received our pro rata share of a new Second Lien Term Loan with a par value of $1.8 million in the restructured GNC.

Some of our portfolio companies have taken steps to reduce operating expenses, such as significantly curtailing business operations, reducing headcounts and/or deferring capital expenditures, and we expect that additional portfolio companies may take similar steps if subjected to prolonged and severe financial distress, which may impair their business on a permanent basis. These developments would likely result in a decrease in the value of our investment in any such portfolio company, which decrease could be material. To mitigate these risks, a majority of our portfolio companies have applied for and received approval for loans under the U.S. Small Business Administration's ("SBA") Paycheck Protection Program ("PPP Loan") created as part of the recently enacted Coronavirus Aid, Relief, and Economic Security Act. Assuming that the PPP Loan proceeds are used to cover certain costs and expenses (e.g. documented payroll, mortgage interest, rent, and utility costs) and certain conditions are met, these PPP Loans could be completely forgiven by the U.S. federal government. Through the date of this filing, fifteen of our portfolio companies have applied for and received approval of PPP Loans totaling $30.3 million. As of September 30, 2020, we had four portfolio companies, with a combined fair value of $18.6 million, on non-accrual status. The effects of the COVID-19 pandemic discussed above increase the risk that we will place additional portfolio investments on non-accrual status in the future.

The COVID-19 pandemic and its effects on our portfolio companies have already had adverse material effects on our investment income, particularly our interest income, received from our investments, and we expect that such adverse effects will continue for the duration of the pandemic and potentially for some time thereafter. During the nine months ended September 30, 2020 we added three portfolio companies, ProAir Holdings Corporation, GK Holdings, Inc., and GNC, to our non-accrual assets. We may need to restructure our investments in some of our portfolio companies as a result of the adverse effects of the COVID-19 pandemic, which could result in reduced interest payments, an increase in the amount of “paid-in-kind” or “PIK” interest we receive, and the placement of any such investment on non-accrual status. Certain restructurings of our portfolio investments included in the borrowing base for our Credit Facility or any future credit facility could result in a reduction in any such borrowing base, which may have a material adverse effect on our results of operations, financial 47

51The COVID-19 pandemic and its effects on our portfolio companies have already had adverse material effects on our investment income, particularly our interest income, received from our investments, and we expect that such adverse effects will continue for the duration of the pandemic and potentially for some time thereafter. During the year ended December 31, 2020, we added three portfolio companies, ProAir Holdings Corporation, GK Holdings, Inc., and General Nutrition Centers, Inc. ("GNC"), to our non-accrual assets. GNC was subsequently removed from our non-accrual assets after it was restructured. We may need to restructure our investments in some of our portfolio companies as a result of the adverse effects of the COVID-19 pandemic, which could result in reduced interest payments, an increase in the amount of “paid-in-kind” or “PIK” interest we receive, and the placement of any such investment on non-accrual status. Certain restructurings of our portfolio investments included in the borrowing base for our Credit Facility or any future credit facility could result in a reduction in any such borrowing base, which may have a material adverse effect on our results of operations, financial condition and available liquidity going forward. As of March 31, 2021, we had two portfolio companies, with a combined fair value of $6.2 million, on non-accrual status. The effects of the COVID-19 pandemic discussed above increase the risk that we will place additional portfolio investments on non-accrual status in the future.

~~condition and available liquidity going forward.~~ In addition, any decreases in our net investment income would increase the portion of our cash flows dedicated to servicing borrowings, including existing borrowings and required amortization payments under the Credit Facility and existing borrowings under the 2022 Notes, and any distribution payments to stockholders. AsOur ~~discussed below, under “Financial Condition, Liquidity and Capital Resources,” our~~ board of directors ~~has~~previously ~~already~~took ~~taken~~ action to defer the record dates and payments of our March 2020 and April 2020 monthly dividends and ~~has~~ determined to suspend the declaration of any future dividends until further notice. We ultimately paid the previously declared but deferred March 2020 and April 2020 monthly dividends in a single distribution of $0.16 per share on December 29, 2020 to shareholders of record at the close of business on December 15, 2020. Depending on contractual restrictions under our borrowing arrangements, the duration of the COVID-19 pandemic and the extent of its effects on our portfolio companies’ operations and our net investment income, any future distributions to our stockholders may be for amounts less than our historical distributions, may be made less frequently than historical practices, and may be made in part cash and part stock (as per each stockholder's election), subject to a limitation that the aggregate amount of cash to be distributed to all stockholders must be at least ~~10% of the aggregate declared distribution for distributions declared on or before December 31, 2020, and at least~~ 20% of the aggregate declared distribution ~~for distributions declared on or after January 1, 2021~~.

~~Primarily~~As of March 31, 2021, we are permitted under the 1940 Act, as a ~~result~~BDC, ofto borrow amounts such that our asset coverage, as defined in the ~~COVID~~1940 Act, equals at least 150% after such borrowing. In addition, the Credit Facility contains events of default and cross-19default ~~pandemic~~provisions relating to other indebtedness, weas ~~have~~well ~~had~~as affirmative and negative covenants, including, among other things: (i) a ~~significant~~limit ~~reduction~~on inour senior debt-to-tangible equity ratio of 1.00 to 1.00 at any time; (ii) a limit on our ~~net~~total ~~asset~~debt-to-tangible ~~value~~equity ratio of 1.40 to 1.00 at any time; (iii) a limit on our debt service coverage ratio of 1.25 to 1.00 as of ~~September 30~~the end of any quarter in the period beginning as of August 1, 2020, (which ratio was 1.40 to 1.00 as ~~compared~~of the end of any quarter prior to August 1, 2020); (iv) a requirement that our tangible net ~~asset~~worth ~~value~~not asbe less than $58.0 million; (v) minimum liquidity; and (vi) maintenance of ~~December~~RIC ~~31,~~and ~~2019~~BDC status. The ~~decrease~~2022 Notes Indenture also contains certain covenants, including covenants (i) prohibiting our issuance of any senior securities unless, immediately after such issuance, we are in ~~net~~compliance with the 1940 Act asset ~~value~~coverage asrequirements of(after ~~September 30~~giving effect to any exemptive relief granted to us by the SEC), ~~2020~~and, ~~primarily~~(ii) ~~resulted~~if ~~from~~our asset coverage has been below the ~~aggregate~~1940 ~~unrealized~~Act ~~depreciation~~minimum asset coverage requirements (after giving effect to any exemptive relief granted to us by the SEC) for more than six consecutive months, prohibiting the declaration of any cash dividend or distribution on our ~~investment~~common ~~portfolio~~stock ~~due~~(except to ~~decreases~~the inextent ~~the~~necessary ~~fair~~for ~~value~~us to maintain our treatment as a RIC under Subchapter M of ~~some~~the Code), or purchasing any of our ~~portfolio~~common ~~company~~stock, ~~investments~~unless, ~~which~~at isthe ~~primarily~~time of the ~~result~~declaration of the ~~adverse~~dividend ~~economic~~or ~~effects~~distribution ofor the ~~COVID-19~~purchase, ~~pandemic~~ and after deducting the ~~continuing~~amount ~~uncertainty~~of ~~surrounding~~such ~~its~~dividend, ~~long-term~~distribution, ~~impact~~or purchase, we are in compliance with the 1940 Act asset coverage requirements (after giving effect to any exemptive relief granted to us by the SEC).

As of ~~September~~March 3031, ~~2020~~2021, we ~~are~~were ~~permitted~~in ~~under~~compliance ~~the~~with ~~1940 Act, as a BDC, to borrow amounts such that~~ our asset coverage, asrequirements ~~defined~~under in the 1940 Act, ~~equals~~and atwith ~~least~~the ~~150%~~covenants ~~after~~under ~~such~~the ~~borrowing.~~terms Inof ~~addition,~~ the Credit Facility ~~contains events of default~~ and ~~cross-default~~under ~~provisions~~the ~~relating~~2022 toNotes ~~other~~Indenture. ~~indebtedness~~However, asany ~~well~~increase asin ~~affirmative~~net ~~and~~unrealized ~~negative~~depreciation ~~covenants, including, among other things: (i) a limit~~ on our ~~senior~~investment ~~debt-to-tangible~~portfolio ~~equity~~or ~~ratio~~significant ofreductions ~~1.00~~in toour ~~1.00~~net atasset ~~any~~value ~~time;~~as ~~(ii)~~ a ~~limit~~result onof ~~our~~the ~~total~~effects ~~debt-to-tangible~~of ~~equity~~the ~~ratio~~COVID-19 ofpandemic ~~1.40~~or tootherwise ~~1.00~~increases atthe ~~any~~risk ~~time;~~of (~~iii~~i) atriggering ~~limit~~the on1940 ~~our~~Act ~~debt~~asset ~~service~~ coverage ~~ratio~~covenants ofunder ~~1.25 to 1.00 as of~~ the ~~end~~2022 ofNotes ~~any~~Indenture, ~~quarter~~which inwould ~~the~~limit ~~period~~our ~~beginning~~ability asto ofraise ~~August~~debt 1capital, ~~2020~~pay ~~(which~~distributions ~~ratio was 1.40~~ to ~~1.00~~our asstockholders, ofand ~~the~~repurchase ~~end~~shares of ~~any~~our ~~quarter~~common ~~prior to August 1~~stock, ~~2020);~~ (ivii) areducing ~~requirement that~~ our ~~tangible~~borrowing ~~net~~base ~~worth~~under ~~not~~the beCredit ~~less~~Facility ~~than~~or ~~$58.0~~any ~~million;~~future ~~(v)~~credit ~~minimum~~facility ~~liquidity;~~going forward, and (viiii) ~~maintenance~~breaching ofcertain ~~RIC~~covenants ~~and~~under ~~BDC~~the ~~status.~~Credit ~~The~~Facility, ~~2022~~including ~~Notes~~but ~~Indenture~~not ~~also~~limited ~~contains~~to ~~certain~~those ~~covenants,~~relating ~~including~~to ~~covenants~~tangible ~~(i)~~net ~~prohibiting~~worth ~~our~~and ~~issuance~~debt ofservice ~~any~~coverage ~~senior~~ratio. ~~securities~~In ~~unless,~~the ~~immediately~~event ~~after~~that ~~such~~unrealized ~~issuance,~~depreciation ~~we are~~ in ~~compliance~~the ~~with~~fair ~~the~~value ~~1940~~of ~~Act~~portfolio ~~asset~~investments ~~coverage~~included ~~requirements~~in ~~(after~~the ~~giving~~borrowing ~~effect~~base toof ~~any~~the ~~exemptive~~Credit ~~relief~~Facility ~~granted~~or toany usfuture bycredit ~~the~~facility ~~SEC),~~or ~~and,~~other ~~(ii)~~factors ifcause our ~~asset~~aggregate ~~coverage~~outstanding ~~has~~borrowings ~~been~~under ~~below~~ the ~~1940~~Credit ~~Act~~Facility ~~minimum~~or ~~asset~~such ~~coverage~~other ~~requirements~~credit ~~(after~~facility ~~giving effect~~ to ~~any~~exceed ~~exemptive~~the ~~relief~~applicable ~~granted~~borrowing tobase, uswe bywould ~~the~~be ~~SEC)~~required ~~for~~to ~~more~~immediately ~~than~~prepay ~~six consecutive months, prohibiting~~ the ~~declaration~~lenders ofan ~~any~~amount ~~cash~~equal ~~dividend~~to orsuch ~~distribution~~excess onamount. ~~our~~If ~~common~~we ~~stock~~are ~~(except~~unable to ~~the~~remit ~~extent~~such ~~necessary~~payment ~~for~~or uswe tootherwise ~~maintain~~breach ~~our treatment as~~ a ~~RIC~~covenant under ~~Subchapter M of~~ the ~~Code)~~Credit Facility, or ~~purchasing~~are ~~any~~unable ofto ~~our~~cure ~~common~~any ~~stock,~~event ~~unless, at the time~~ of ~~the~~default ~~declaration~~or ofobtain ~~the~~a ~~dividend~~waiver orfrom ~~distribution or~~ the ~~purchase~~lenders, ~~and~~the ~~after~~lenders ~~deducting~~may ~~the~~choose ~~amount~~to offoreclose ~~such~~upon ~~dividend,~~and ~~distribution~~sell, or ~~purchase~~otherwise transfer, ~~we are in compliance with~~ the ~~1940~~collateral ~~Act~~subject ~~asset coverage requirements (after giving effect~~ to ~~any~~their ~~exemptive~~security ~~relief~~interests, ~~granted to us by the SEC).~~

As of September 30, 2020, we were in compliance with our asset coverage requirements under the 1940 Act and with the covenants under the terms of the Credit Facility and under the 2022 Notes Indenture. However, any continued increase in net unrealized depreciation on our investment portfolio or further significant reductions in our net asset value as a result of the effects of the COVID-19 pandemic or otherwise increases the risk of (i) triggering the 1940 Act asset coverage covenants under the 2022 Notes Indenture, which would limit our ability to raise debt capital, pay distributions to our stockholders, and repurchase shares of our common stock, (ii) reducing our borrowing base under the Credit Facility or any future credit facility going forward, and (iii) breaching certain covenants under the Credit Facility, including but not limited to those relating to tangible net worth and debt service coverage ratio. In the event that unrealized depreciation in the fair value of portfolio investments included in the borrowing base of the Credit Facility or any future credit facility or other factors cause our aggregate outstanding borrowings under the Credit Facility or such other credit facility to exceed the applicable borrowing base, we would be required to immediately prepay the lenders an amount equal to such excess amount. If we are unable to remit such payment or we otherwise breach a covenant under the Credit Facility, or are unable to cure any event of default or obtain a waiver from the lenders, the lenders may choose to foreclose upon and sell, or otherwise transfer, the collateral subject to their security interests, which comprises all of our assets as of September 30, 2020, and accelerate our repayment obligations under the Credit Facility. Any such event would have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to our stockholders. In addition, if the lenders exercise their right to sell the assets pledged under the Credit Facility, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under the Credit Facility. See “Item 1A — “Risk Factors — Risks Relating to our Business and Structure” included in our most recent Annual Report on Form 10-K and the other risk factors contained therein and in our subsequent filings with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 and this Quarterly Report on Form 10-Q. 48

52which comprises all of our assets as of March 31, 2021, and accelerate our repayment obligations under the Credit Facility. Any such event would have a material adverse effect on our business, liquidity, financial condition, results of operations and ability to pay distributions to our stockholders. In addition, if the lenders exercise their right to sell the assets pledged under the Credit Facility, such sales may be completed at distressed sale prices, thereby diminishing or potentially eliminating the amount of cash available to us after repayment of the amounts outstanding under the Credit Facility. See "Risk Factors" included in Part I, Item 1A in our most recent Annual Report on Form 10-K and the other risk factors contained in our subsequent filings with the SEC.

We are also subject to financial risks, including changes in market interest rates. As of ~~September~~March 3031, ~~2020~~2021, 5647.60% of our debt investments bore interest based on floating rates (some of which were subject to interest rate floors), which generally are LIBOR-based. In addition, the Credit Facility has floating rate interest provisions. In connection with the COVID-19 pandemic, the U.S. Federal Reserve and other central banks have reduced certain interest rates and LIBOR has decreased. A prolonged reduction in interest rates will reduce our gross investment income and could result in a decrease in our net investment income if such decreases in LIBOR are not offset by a corresponding increase in the spread over LIBOR that we earn on any portfolio investments, a decrease in our operating expenses, or a decrease in the interest rate of our floating interest rate liabilities tied to LIBOR. See “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for an analysis of the impact of hypothetical base rate changes in interest rates.

We will continue to monitor the ~~rapidly~~ evolving situation relating to the COVID-19 pandemic and related guidance from U.S. and international authorities, including federal, state and local public health authorities. Given the dynamic nature of this situation and the fact that there may be developments outside of our control that require us or our portfolio companies to adjust plans of operation, we cannot reasonably estimate the full impact of COVID-19 on our financial condition, results of operations or cash flows in the future. However, we do expect that it could have a material adverse impact on our future net investment income, the fair value of our portfolio investments, and the results of operations and financial condition of us and our portfolio companies.

Portfolio

Portfolio Composition

As of ~~September~~March 3031, ~~2020~~2021, we had $9677.01 million (at fair value) invested in 2220 portfolio companies. As of ~~September~~March 3031, ~~2020~~2021, our portfolio, at fair value, was comprised of approximately 7876.34% senior secured debt, 813.70% junior secured debt and 1310.06% equity and equity-like investments.

As of December 31, ~~2019~~2020, we had $~~116~~89.86 million (at fair value) invested in 2521 portfolio companies. As of December 31, ~~2019~~2020, our portfolio, at fair value, was comprised of approximately 7371.61% senior secured debt, 1610.05% junior secured debt and 1018.4% equity and equity-like investments.

We originate and invest primarily in privately -held ~~small and mid~~middle-~~sized~~market companies (typically those with less than $15.0 million of annual EBITDA) through first lien and second lien debt, sometimes with a corresponding equity investment component. The composition of our investments as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020 was as follows:

September 30, 2020

December 31, 2019

March 31, 2021

December 31, 2020

Cost

Fair Value

Cost

Fair Value

Senior Secured Debt

7859,~~493~~432,~~705~~377

7558,~~079~~891,~~797~~399

8766,~~032~~041,~~136~~926

8564,~~954~~629,~~384~~875

Junior Secured Debt

1314,~~388~~359,~~371~~842

810,~~407~~052,~~657~~161

2014,~~413~~329,~~183~~126

189,~~757~~417,~~348~~801

Equity

1510,~~591~~872,~~926~~048

128,~~493~~193,~~814~~990

1613,~~004~~663,~~386~~289

1215,~~097~~506,~~658~~897

Total Investments

~~107~~84,~~474~~664,~~002~~267

9577,~~981~~137,~~268~~550

~~123~~94,~~449~~034,~~705~~341

~~116~~89,~~809~~554,~~390~~573

At ~~September~~March 3031, ~~2020~~2021, our average portfolio company debt investment at amortized cost and fair value was approximately $4.13 million and $34.81 million, respectively, and our largest portfolio company debt investment by amortized cost and fair value was approximately $13.59 million and $1011.67 million, respectively. At December 31, ~~2019~~2020, our average portfolio company debt investment at amortized cost and fair value was approximately $4.52 million and $43.29 million, respectively, and our largest portfolio company debt investment by amortized cost and fair value was approximately $13.17 million and $1110.68 million, respectively.

At September 30, 2020, 56.6% of our debt investments bore interest based on floating rates (some of which were subject to interest rate floors), such as LIBOR, and 43.4% of our debt investments bore interest at fixed rates. At December 31, 2019, 53.0% of our debt investments bore interest based on floating rates (some of which were subject to interest rate floors), such as LIBOR, and 47.0% bore interest at fixed rates. 49

At March 31, 2021, 47.0% of our debt investments bore interest based on floating rates (some of which were subject to interest rate floors), such as LIBOR, and 53.0% of our debt investments bore interest at fixed rates. At December 31, 2020, 48.4% of our debt investments bore interest based on floating rates (some of which were subject to interest rate floors), such as LIBOR, and 51.6% bore interest at fixed rates.

The weighted average effective yield of our debt and other income-producing investments, as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, was 12.63% and 1411.09%, respectively. The weighted average effective yield on the entire portfolio, as of ~~September~~March 3031, ~~2020~~2021 and December 31, ~~2019~~2020, was 810.60% and 119.31%, respectively.

The weighted average annualized effective yield on debt and other income-producing investments is computed using the effective interest rates for our debt and other income -producing investments, including cash and PIK interest as well as the accretion of deferred fees. The individual investment yields are then weighted by the respective fair values of the investments (as of the date presented) in calculating the weighted average effective yield as a percentage of our debt and other income-producing investments. ~~Infinite Care, LLC,~~ ProAir Holdings Corporation, and GK Holdings, Inc, ~~and GNC~~ were excluded from the calculation as of ~~September~~March 3031, ~~2020~~2021 ~~because they were on non-accrual status as of that date. Infinite Care, LLC~~ and ~~CP Holding Co., Inc. (Choice Pet) were excluded from the calculation as of~~ December 31, ~~2019~~2020 because they were on non-accrual status as of ~~that~~those ~~date~~dates. Equity components of the investment portfolio were also excluded from these calculations either because they do not have stated interest rates or are non-income -producing. The weighted average annualized yield on total investments takes the same yields but weights them to determine the weighted average effective yield as a percentage of ~~the~~our ~~Company's~~ total investments. The dollar-weighted average annualized yield on the Company’s investments for a given period will generally be higher than what investors in our common stock would realize in a return over the same period because the dollar-weighted average annualized yield does not reflect ~~the~~our ~~Company’s~~ expenses or any sales load that may be paid by investors.

For investments that have a PIK interest component, PIK interest is accrued each period but generally not collected until the debt investment is sold or paid off. A roll forward of PIK interest for each of the three ~~and nine~~ months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020 is summarized in the table below.

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2020		2019		2020		2019
	2021		2020
PIK, beginning of period	$	34,~~505~~046,~~245~~725	$	3,~~449~~855,~~314~~222	$	~~3,855,222~~	$	~~3,123,501~~
Accrual	~~292~~367,~~631~~253		~~205~~264,~~805~~962		~~812,702~~		~~618,683~~
Payments	(~~103~~85,~~382~~470)		(3717,~~120~~958)		~~(145,928)~~		~~(124,184)~~
Write-off	—		—		~~(827,502)~~		—
PIK, end of period	$	34,~~694~~328,~~494~~508	$	34,~~617~~102,~~999~~226	$	~~3,694,494~~	$	~~3,618,000~~

Investment Activity

During the three months ended ~~September~~March 3031, ~~2020~~2021, we ~~closed~~did ~~$1.0~~not ~~million~~make ofany new debt investment commitments inor ~~one existing portfolio company and closed $31,732 of~~ equity investments ~~in one existing portfolio company~~. During the three months ended ~~September~~March 3031, ~~2019, we closed $14.6 million of debt investment commitments and $0.6 million of equity investments in two new and three existing portfolio companies. During the nine months ended September 30,~~ 2020, we closed $21.23 million of debt investment commitments and $0.2 million of equity investments in ~~four~~three existing portfolio companies. ~~During~~See ~~the~~"COVID-19 ~~nine~~Update" ~~months ended September 30, 2019, we closed $50~~above.9 ~~million of debt investment commitments and $3.7 million of equity investments in nine new portfolio companies and seven existing portfolio companies.~~

During the three months ended ~~September~~March 3031, ~~2020~~2021, we exited $85.05 million of debt investment commitments and $0.2.8 million of equity investments in ~~two~~one portfolio ~~companies~~company. During the three months ended ~~September~~March 3031, ~~2019, we exited $7.0 million of debt investment commitments in three portfolio companies. During the nine months ended September 30,~~ 2020, we exited $172.12 million of debt investment commitments and $0.31 million in equity investments in ~~six~~one portfolio ~~companies~~company. ~~During the nine months ended September 30, 2019, we exited $21.4 million of debt investment commitments and $0.2 million of equity investments in nine portfolio companies.~~

Our level of investment activity can vary substantially from period to period depending on many factors, including the level of merger and acquisition activity in our target market, the general economic environment and the competitive environment for the types of investments we make.

Asset Quality

In addition to various risk management and monitoring tools, we use an investment rating system to characterize and monitor the credit profile and expected level of returns on each investment in our portfolio. This investment rating system uses a five-level numeric scale. The following is a description of the conditions associated with each investment rating:

•Investment Rating 1 is used for investments that are performing above expectations, and whose risks remain favorable compared to the expected risk at the time of the original investment.

•Investment Rating 2 is used for investments that are performing within expectations and whose risks remain neutral compared to the expected risk at the time of the original investment. All new loans are initially rated 2.

•Investment Rating 3 is used for investments that are performing below expectations and that require closer monitoring, but where no loss of return or principal is expected. Portfolio companies with a rating of 3 may be out of compliance with financial covenants.

•Investment Rating 4 is used for investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are often in workout. Investments with a rating of 4 are those for which there is an increased possibility of loss of return, but no loss of principal is expected.

•Investment Rating 5 is used for investments that are performing substantially below expectations and whose risks have increased substantially since the original investment. These investments are almost always in workout. Investments with a rating of 5 are those for which loss of return and principal is expected.

The following table shows the investment rankings of our debt investments at fair value (in millions):

	As of September 30, 2020					As of December 31, 2019
	As of March 31, 2021					As of December 31, 2020
Investment Rating	Fair Value (in millions)		% of DebtPortfolio		Number ofPortfolio Companies	Fair Value (in millions)		% of DebtPortfolio		Number ofPortfolio Companies
1	$	2316.89	2824.65	%	43	$	1416.60	1321.9	%	3
2	1113.45		1319.6	%	3	6620.1		6327.15	%	134
3	1612.49		1918.68	%	43	213.20		217.28	%	13
4	3125.96		3837.21	%	54	1324.80		1332.28	%	24
5	—		—	%	—	~~8.0~~—		~~7.6~~—	%	1—
	$	8368.59	100.0	%	1613	$	~~104~~73.71	100.0	%	2014

Loans and Debt Securities on Non-Accrual Status

We do not accrue interest income on loans and debt securities if we doubt our ability to collect such interest. Generally, when an interest payment default occurs on a loan in the portfolio, when interest has not been paid for greater than 90 days, or when management otherwise believes that the issuer of the loan will not be able to service the loan and other obligations, we will place the loan on non-accrual status and will cease accruing interest income on that loan until all principal and interest is current through payment or until a restructuring occurs, such that the interest income is deemed collectible. However, collections actually received on non-accrual loans may be recognized as interest income on a cash basis or applied to principal depending on management's judgment regarding collectability. As of ~~September~~March 3031, ~~2020~~2021, we had investments in ~~four~~two portfolio companies on non-accrual status (our ~~senior secured debt investments in Infinite Care, LLC, our~~ junior secured debt investment in ProAir Holdings Corporation, and our junior secured debt investment in GK Holdings, Inc.~~, and our senior secured debt investment in GNC~~), which totaled $~~18.~~6.2 million at fair value and $2210.94 million at cost and comprised an aggregate of 2414.91% of our debt investments at cost. As of December 31, ~~2019~~2020, we had investments in two portfolio companies on non-accrual status (our ~~senior~~junior secured debt ~~investments~~investment in ~~Infinite~~ProAir ~~Care,~~Holdings ~~LLC~~Corporation and our junior secured debt investment in CPGK ~~Holding Co.~~Holdings, Inc. ~~(Choice Pet~~)), which totaled $105.6 million at fair value and $10.74 million at cost and comprised an aggregate of 1012.09% of our debt investments at cost. The failure by a borrower or borrowers to pay interest and repay principal could have a material adverse effect on our financial condition and results of operation.

55DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

debt investments at cost. The failure by a borrower or borrowers to pay interest and repay principal could have a material adverse effect on our financial condition and results of operation.

Results of Operations

An important measure of our financial performance is the net increase or decrease in net assets resulting from operations, which includes net investment income, net ~~realized gain or loss and net~~ change in unrealized appreciation or depreciation. Net investment income is the difference between our income from interest, distributions, fees and other investment income and our operating expenses, including interest on borrowed funds. Net realized gain or loss ~~on investments is generally the difference between the proceeds received from dispositions of portfolio investments~~ and ~~their~~net ~~amortized cost. Net~~ change in unrealized appreciation or ~~depreciation on investments is the net unrealized change in the fair value of our investment portfolio.~~

~~Comparison of the Three and Nine Months Ended September 30, 2020 and September 30, 2019~~ 51

depreciation. Net investment income is the difference between our income from interest, distributions, fees and other investment income and our operating expenses, including interest on borrowed funds. Net realized gain or loss on investments is generally the difference between the proceeds received from dispositions of portfolio investments and their amortized cost. Net change in unrealized appreciation or depreciation on investments is the net unrealized change in the fair value of our investment portfolio.

Comparison of the Three Months Ended March 31, 2021 and March 31, 2020

Revenues

We generate revenue primarily in the form of interest income on debt investments and, to a lesser extent, capital gains on equity investments we make in portfolio companies. Our debt investments typically have terms of five to seven years and bear interest at a fixed or floating rate. Interest on our debt investments is payable at least quarterly. Payments of principal on our debt investments may be amortized over the stated term of the investment, deferred for several years or due entirely at maturity. In some cases, our debt investments may pay interest in kind, or PIK. Any outstanding principal amount of our debt investments and any accrued but unpaid interest will generally become due at the maturity date. The level of interest income we receive is directly related to the balance of interest-bearing investments multiplied by the weighted average yield of our investments. We expect that the dollar amount of interest and any dividend income that we earn to increase as the size of our investment portfolio increases and to decrease as the size of our portfolio decreases. In addition, we may generate revenue in the form of prepayment, commitment, loan origination, structuring or due diligence fees and consulting fees, which may be non-recurring in nature.

Investment income for the three months ended ~~September~~March 3031, ~~2020~~2021 totaled $32.02 million, compared to investment income of $3.3 million for the three months ended ~~September~~March 3031, ~~2019~~2020. Investment income for the three months ended ~~September~~March 3031, ~~2020~~2021 was comprised primarily of $2.1.5 million in cash interest, $0.3 million in PIK interest, $0.52 million in fees earned on the investment portfolio, and $0.21 million of other income (which was primarily a prepayment fee earned upon the full payoff of ~~Kleen-Tech~~National ~~Acquisition~~Program Management & Project Controls, LLC). Investment income for the three months ended ~~September~~March 3031, ~~2019~~2020 was comprised primarily of $2.89 million in cash interest, $0.23 million in PIK interest, and $0.2 million in fees earned on the investment portfolio.

~~Investment~~The ~~income~~decrease ~~for~~in ~~the nine months ended September 30, 2020 totaled $8.9 million, compared to~~ investment income ofin ~~$9.3 million for~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2019.~~2021 ~~Investment~~compared ~~income~~to ~~for~~ the ~~nine~~three months ended ~~September~~March 3031, 2020 ~~was~~is ~~comprised~~ primarily ofattributable ~~$7.1~~to ~~million~~a inreduction ~~cash interest, $0.8 million~~ in ~~PIK interest, $0.8 million in fees earned on~~ the ~~investment~~size ~~portfolio, and $0.2 million~~ of ~~other~~our income-earning ~~(which~~portfolio ~~was~~and ~~primarily~~ a ~~prepayment~~lower ~~fee earned on the full payoff of Kleen~~weighted-~~Tech~~average ~~Acquisition,~~effective ~~LLC). Investment~~yield ~~income~~on ~~for~~our ~~the nine months ended September 30, 2019 was comprised primarily of $7.7 million in cash interest (which is net of $0.3 million of previously accrued interest~~ income ~~written~~-~~off~~earning ~~during the period), $0.6 million in PIK interest, $0.7 million in fees earned on the investment~~ portfolio ~~and $0~~.3 ~~million of other income.~~

The decrease in investment income in the three and nine months ended September 30, 2020 compared to the three and nine months ended September 30, 2019 is primarily attributable to a smaller income-earning portfolio, the addition of ProAir Holdings Corporation, GK Holdings, Inc., and GNC to our non-accrual assets and a lower weighted average effective yield on our income-earning portfolio. Conversely, the payoff of Kleen-Tech Acquisition, LLC had a $0.6 million, or $0.09 per share, one-time positive impact on investment income per share.

Expenses

Our primary operating expenses include the payment of fees to HCAP Advisors under the investment advisory and management agreement, our allocable portion of overhead expenses and other administrative expenses under the administration agreement with HCAP Advisors, including the allocated costs incurred by HCAP Advisors in providing managerial assistance to those portfolio companies that request it, and other operating costs described below. We bear all other out-of-pocket costs and expenses of our operations and transactions, which include:

•interest expense and unused line fees;

•the cost of calculating our net asset value, including the cost of any third-party valuation services;

•the cost of effecting sales and repurchases of shares of our common stock and other securities;

•fees payable to third parties relating to making investments, including out-of-pocket fees and expenses associated with performing due diligence and reviews of prospective investments;

•transfer agent and custodial fees;

•out-of-pocket fees and expenses associated with marketing efforts;

•federal and state registration fees and any stock exchange listing fees;

•U.S. federal, state and local taxes;

•independent directors’ fees and expenses;

•brokerage commissions;

•fidelity bond, directors’ and officers’ liability insurance and other insurance premiums;

•direct costs, such as printing, mailing, long distance telephone and staff;

•fees and expenses associated with independent audits and outside legal costs, and

•costs associated with our reporting and compliance obligations under ~~the 1940 Act and other~~ applicable U.S. federal and state securities laws.

Operating expenses totaled $2.21 million for the three months ended ~~September~~March 3031, ~~2020~~2021, compared to $2.23 million for the three months ended ~~September~~March 3031, ~~2019~~2020. Interest expense ~~increased~~decreased by $0.13 million to $0.97 million due to a ~~higher~~lower average outstanding debt balance, ~~and~~slightly offset by a higher weighted-average interest rate on borrowings under our Credit Facility during the three months ended ~~September~~March 3031, ~~2020~~2021, compared to the three months ended ~~September~~March 3031, ~~2019~~2020. Professional fees ~~slightly~~increased ~~decreased~~ for the three months ended ~~September~~March 3031, ~~2020~~2021 compared to the three months ended ~~September~~March 3031, ~~2019~~2020 ~~and~~primarily ~~general~~due to professional fees incurred in connection with the pending transaction with PTMN. General and administrative expenses remained relatively flat at $0.2 million for both the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020. We incurred $0.3 million, or $0.04 per share, in professional fees in connection with the pending merger with PTMN during the three months ended March 31, 2021 and we expect to incur an additional $1.5 million, or $0.24 per share, in professional fees during the second quarter of 2021 in connection with the pending transaction with PTMN.

~~Operating~~Base ~~expenses~~management ~~totaled~~fees ~~$6.9 million~~ for the ~~nine~~three months ended ~~September~~March 3031, ~~2020,~~2021 ~~compared~~were to $~~6.6 million for the nine months ended September 30, 2019. Interest expense increased by $~~0.64 million ~~to $2.8 million due to a higher average outstanding debt balance and a higher weighted-average interest rate on borrowings under our Credit Facility during the nine months ended September 30~~, ~~2020,~~ compared to ~~the nine months ended September 30, 2019. In addition, during the nine months ended September 30, 2020, we accelerated expensing approximately~~ $0.~~1 million of deferred financing costs in accordance with ASC 470 Debt, due to the reduction in our borrowing capacity under our Credit Facility. Professional fees decreased to $0.~~6 million for the ~~nine~~three months ended ~~September~~March 3031, 2020 ~~from $1~~.0 ~~million~~The ~~for~~decrease ~~the~~in ~~nine~~base ~~months~~management ~~ended~~fees ~~September 30,~~is ~~2019~~attributable ~~and~~to ~~general~~a ~~and~~lower ~~administrative~~average ~~expenses~~amount ~~remained~~of ~~relatively~~gross ~~flat~~investments, at ~~$0.7~~fair ~~million~~value, ~~for~~outstanding ~~both~~during the ~~nine~~2021 ~~months ended September 30~~period, ~~2020 and September 30, 2019. Professional fees and general and administrative expenses decreased~~ as wecompared ~~reviewed all of our service providers in 2019 and changed certain service providers~~ to ~~more~~the ~~cost-effective~~2020 ~~solutions~~period. We ~~began to realize these cost savings earlier in fiscal year 2020.~~

~~Base~~We ~~management~~did not incur any incentive fees for either of the three months ended ~~September~~March 3031, 2021 or 2020 ~~were~~because $0our pre-incentive fee net investment income did not exceed the hurdle rate for the relevant periods.5 ~~million,~~We ~~compared~~only toincur $an income incentive fee if our pre-incentive fee net investment income return exceeds a 2.0% quarterly (8.60% ~~million~~annualized) ~~for~~hurdle rate. Our pre-incentive fee net investment income return failed to meet this hurdle rate with respect to each of the relevant periods in the three months ended ~~September~~March 3031, ~~2019.~~2021 ~~The~~and ~~decrease~~2020. inIn ~~base~~addition, ~~management~~the incentive fees ispaid ~~attributable~~or owed to aHCAP ~~lower~~Advisors ~~average~~are ~~amount~~subject ofto ~~gross~~a ~~investments~~three-year total return requirement, atsuch ~~fair~~that ~~value~~no incentive fee, ~~outstanding~~in ~~during~~respect ~~the~~of ~~2020~~pre-incentive ~~period~~fee net investment income, aswill ~~compared~~be payable except to the ~~2019~~extent ~~period~~20.0% ~~Base~~of ~~management~~the ~~fees~~cumulative ~~were~~net ~~relatively~~increase ~~flat~~in atnet ~~$1.6~~assets ~~million~~resulting ~~for~~from operations over the ~~nine~~calendar ~~months~~quarter ~~ended~~for ~~September 30,~~which ~~2020~~such ~~compared~~fees toare being calculated and the ~~nine~~11 ~~months~~preceding ~~ended~~quarters ~~September 30,~~exceeds ~~2019~~the cumulative incentive fees paid or accrued over the 11 preceding quarters.

WeAdministrative ~~did~~services ~~not~~expense ~~incur~~was ~~any~~$0.4 ~~incentive~~million ~~fees~~ for ~~either~~each of the three ~~or nine~~ months ended ~~September~~March 3031, ~~2020~~2021 orand ~~2019~~March 31, ~~because our pre-incentive fee net investment income did not exceed the hurdle rate for the relevant periods~~2020. ~~We only incur an incentive fee~~

if our pre-incentive fee net investment income return exceeds a 2.0% quarterly (8.0% annualized) hurdle rate. Our pre-incentive fee net investment income return failed to meet this hurdle rate with respect to each of the relevant periods in the three and nine months ended September 30, 2020 and 2019. In addition, the incentive fees paid or owed to HCAP Advisors are subject to a three-year total return requirement, such that no incentive fee, in respect of pre-incentive fee net investment income, will be payable except to the extent 20.0% of the cumulative net increase in net assets resulting from operations over the calendar quarter for which such fees are being calculated and the 11 preceding quarters exceeds the cumulative incentive fees paid or accrued over the 11 preceding quarters.

Administrative services expense was $0.4 million for each of the three months ended September 30, 2020 and September 30, 2019. Administrative services expense was $1.1 million for each of the nine months ended September 30, 2020 and September 30, 2019.

Net Investment Income

For the three months ended ~~September~~March 3031, ~~2020~~2021, net investment income was $0.91 million, compared to $1.10 million for the three months ended ~~September~~March 3031, ~~2019. For the nine months ended September 30,~~ 2020~~, net investment income was $2~~.0 ~~million, compared to $2.7 million for the nine months ended September 30, 2019.~~

For the three months ended ~~September~~March 3031, ~~2020~~2021, net investment income per share was $0.1402 compared to $0.1817 for the three months ended ~~September~~March 3031, ~~2019. For the nine months ended September 30,~~ 2020~~, net investment income per share was $0~~.34 ~~compared to $0.43 for the nine months ended September 30, 2019.~~

Net Realized Gains and Losses

Realized gains and losses on investments are calculated using the specific identification method. We measure realized gains or losses on equity investments as the difference between the net proceeds from the sale and the amortized cost basis of the investment, without regard to unrealized appreciation or depreciation previously recognized. We measure realized gains or losses on debt investments as the difference between the net proceeds from the repayment or sale and the contractual amount owed to us on the investment, without regard to unrealized appreciation or depreciation previously recognized or unamortized deferred fees. Upon prepayment of debt investments, we recognize the acceleration of unamortized deferred fees as interest income and we recognize the collection of prepayment and other fees as other income.

We recognized $0.2 million in net realized gains on our investments for the three months ended September 30, 2020, compared to $92,615 of net realized losses on our investments in the three months ended September 30, 2019. We recognized $2.0 million in net realized losses on our investments for the nine months ended September 30, 2020, compared to $30,304 of net realized losses on our investments in the nine months ended September 30, 2019.53

Alosses ~~summary~~on ofdebt investments as the difference between the net ~~realized~~proceeds ~~gains~~from the repayment or sale and ~~losses~~the ~~for~~contractual amount owed to us on the ~~three~~investment, ~~months~~without ~~ended~~regard ~~September 30~~to unrealized appreciation or depreciation previously recognized or unamortized deferred fees. Upon prepayment of debt investments, ~~2020~~we recognize the acceleration of unamortized deferred fees as interest income and ~~2019~~we isrecognize the collection of prepayment and other fees as ~~follows:~~other income.

	Three Months Ended September 30,
	2020		2019
Flight Lease VII, LLC (Common Equity Interest)	$	(21,950)	$	(92,615)
Flight Lease XII, LLC (Common Equity Interest)	(191,824)		—
Kleen-Tech Acquisition, LLC (Common Equity Warrants)	440,118		—
Net realized gains (losses)	$	226,344	$	(92,615)

We recognized $6.4 million in realized gains on our investments for the three months ended March 31, 2021, compared to $86,427 of net realized losses on our investments in the three months ended March 31, 2020.

A summary of net realized gains and losses for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 and ~~2019~~2020 is as follows:


	Three Months Ended March 31,
	2021		2020
Flight Lease VII, LLC (Common Equity Interest)	$	—	$	—
Flight Lease XII, LLC (Common Equity Interest)	—		—
Fox Rent A Car, Inc. (Common Equity Warrants)	—		15,994
National Program Management & Project Controls, LLC (Class A Membership Interest)	6,445,524		—
Regional Engine Leasing, LLC (Residual Value)	—		(102,421)
Net realized gains (losses)	$	6,445,524	$	(86,427)

	Nine Months Ended September 30,
	2020		2019
CP Holding Co. Inc. (Choice Pet) (Junior Secured Term Loan)	$	(2,038,300)	$	—
Dell International L.L.C. (Senior Secured Term Loan)	—		6,151
Flight Lease VII, LLC (Common Equity Interest)	(86,501)		(103,505)
Flight Lease XII, LLC (Common Equity Interest)	(191,824)		—
Flight Lease XIII, LLC (Common Equity Interest)	—		(23,680)
Fox Rent A Car, Inc. (Common Equity Warrants)	15,994		—
Kleen-Tech Acquisition, LLC (Common Equity Warrants)	440,118
Mercury Network, LLC (Common Equity Units)	—		69,980
Northeast Metal Works LLC (Preferred Equity Interest)	—		20,750
Regional Engine Leasing, LLC (Residual Value)	(102,421)		—
Surge Busy Bee Holdings, LLC (Class B Equity Warrants)	(51,475)		—
Net realized losses	$	(2,014,409)	$	(30,304)

Net Change in Unrealized Appreciation (Depreciation) of Investments

Net change in unrealized appreciation (depreciation) primarily reflects the change in portfolio investment values during the reporting period, including the reversal of previously recorded appreciation or depreciation when gains or losses are realized.

Net change in unrealized depreciation on investments totaled $13.50 million and $24.06 million for the three months ended ~~September~~March 3031, ~~2020~~2021 and ~~September~~March 3031, ~~2019~~2020, respectively. The decrease in net unrealized depreciation between periods is primarily due to an improvement in general economic conditions ~~since June 30, 2020~~ as well as improvement in the operations and liquidity of certain portfolio companies. Excluding the change in unrealized depreciation recorded due to the exit of our investment in National Program Management & Project Controls, LLC, we recorded $3.6 million in net change in unrealized appreciation on our existing portfolio during the three months ended March 31, 2021.

Net change in unrealized depreciation on investments totaled $4.9 million and $3.5 million for the nine months ended September 30, 2020 and September 30, 2019, respectively. The increase in net unrealized depreciation between periods is primarily the result of the adverse economic effects of the COVID-19 pandemic and the continuing uncertainty surrounding its long-term impact.

Net Increase in Net Assets Resulting from Operations

We had a net ~~decrease~~increase in net assets resulting from operations of $0.4.5 million for the three months ended ~~September~~March 3031, ~~2020~~2021, compared to a $13.07 million net decrease in net assets resulting from operations for the three months ended ~~September~~March 3031, ~~2019~~2020. The change between periods ~~are~~is attributable to the factors discussed above.

We had a net decrease in net assets resulting from operations of $4.8 million for the nine months ended September 30, 2020, compared to a $0.9 million net decrease in net assets resulting from operations for the nine months ended September 30, 2019. The change between periods are attributable to the factors discussed above.

Financial Condition, Liquidity and Capital Resources

Our liquidity and capital resources are derived from our Credit Facility, ~~and~~subject to the restrictions therein, proceeds received from the offerings of our securities, such as the 2022 Notes in August 2017, cash flows from operations, including investment sales and repayments, and cash income earned. Our primary use of funds from operations ~~generally~~ includes investments in portfolio companies and other operating expenses we incur, as well as the payment of distributions to the holders of our common stock. We used, and expect to continue to use, these capital resources as well as proceeds from public and private offerings of securities to finance ~~any~~our investment activities. To the extent the proposed Mergers do not close, we may amend or refinance our leverage facilities and ~~for~~borrowings, ~~general~~in ~~corporate~~order ~~purposes~~to, among other things, modify covenants or the interest rates payable and extend the reinvestment period or maturity date.

We believe that our current cash on hand and our anticipated cash flows from operations will be adequate to meet our cash needs for our daily operations. This "Financial Condition, Liquidity and Capital Resources" section should be read in conjunction with "COVID-19 Update" above.

5954

Cash Flows from Operating and Financing Activities

Our operating activities provided cash of $1615.0 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 and used cash of $210.61 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2019~~2020, primarily in connection with investment exits, fundings of new investments, interest income received, and proceeds from principal payments.

Our financing activities used cash of $025.16 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2020~~2021 and ~~provided~~used cash of $101.60 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2019~~2020. Our financing activity proceeds and uses for both periods were primarily in connection with ~~distributions paid to stockholders,~~ net activity under our Credit Facility and, for the ~~2019~~2020 period, ~~repurchases~~with ofdistributions ~~our~~paid ~~common~~to ~~stock~~stockholders.

Although we ~~expect~~have tono ~~fund~~current ~~the~~plans ~~growth~~to ofraise ~~our~~capital, ~~investment~~we ~~portfolio~~may ~~through~~need ~~the~~to ~~net~~raise ~~proceeds~~capital ~~from~~in the future ~~equity offerings~~ and ~~issuances~~cannot ofassure ~~senior~~you ~~securities~~that orwe ~~future~~will ~~borrowings~~be tosuccessful ~~the~~if ~~extent~~we ~~permitted~~need ~~by the 1940 Act, our plans~~ to ~~raise~~do ~~capital may not be successful~~so. In this regard, for so long as our common stock trades at a price below our net asset value per share, we ~~may~~will likely be limited in our ability to raise equity capital given that we cannot sell our common stock at a price below net asset value per share unless our stockholders approve such a sale and our board of directors makes certain determinations in connection therewith. For all of ~~2020~~2021 ~~to date~~ and ~~all of 2019~~2020, our common stock traded at a discount to our then-current net asset value. If our common stock continues to trade at a discount to net asset value, we will be limited in our ability to raise equity capital unless we obtain the approval described above, which we have not previously requested from stockholders.

In addition, we intend to distribute between 90% and 100% of our taxable income to our stockholders in order to satisfy the requirements applicable to RICs under Subchapter M of the Code. Consequently, we may not have the funds or the ability to fund new investments, to make additional investments in our portfolio companies, to fund our unfunded commitments to portfolio companies or to repay borrowings. In addition, the illiquidity of our portfolio investments may make it difficult for us to sell these investments when desired and, if we are required to sell these investments, we may realize significantly less than their recorded value.

BDCs are generally required, upon issuing any senior securities, to meet a coverage ratio of total assets, less liabilities and indebtedness not represented by senior securities, to total senior securities, which include all of the BDC's borrowings and any outstanding preferred stock, of at least 200%. However, the SBCAA, which was signed into law, in March 2018, among other things, amended Section 61(a) of the 1940 Act to add a new Section 61(a)(2) that reduces the asset coverage requirement applicable to BDCs from 200% to 150% so long as the BDC meets certain disclosure requirements and obtains certain approvals. On May 4, 2018, our board of directors unanimously approved the application of the modified asset coverage requirements set forth in Section 61(a)(2) of the 1940 Act. As a result, effective May 4, 2019, our applicable asset coverage ratio under the 1940 Act decreased to 150% from 200%.

As of ~~September~~March 3031, ~~2020~~2021, our aggregate indebtedness, including outstanding borrowings under our Credit Facility and the aggregate principal amount outstanding on our 2022 Notes, was $7338.8 million, and our asset coverage, as defined in the 1940 Act, was ~~182~~272%. The amount of leverage that we employ as a BDC will depend on our assessment of market conditions and other factors at the time of any proposed borrowing, such as the maturity, covenant package and rate structure of the proposed borrowings, our ability to raise funds through the issuance of shares of our common stock and the risks of such borrowings within the context of our investment outlook. Ultimately, we only intend to use leverage if the expected returns from borrowing to make investments will exceed the cost of such borrowing.

OnAs ~~April 8, 2020, in connection with the outbreak~~ of ~~the COVID-19 pandemic~~March 31, ~~the~~2021 ~~SEC issued the Order Under Sections 6(c), 17(d), 38(a)~~ and ~~57(i) of the Investment Company Act of 1940 and Rule 17d-1 Thereunder Granting Exemptions from Specified Provisions of the Investment Company Act and Certain Rules Thereunder~~December 31, ~~Investment Company Act Release No. 33837 (Apr. 8,~~ 2020~~) (the “April 2020 Order”)~~, ~~which~~we ~~provides~~had ~~exemptions~~cash from certain requirements of the 1940 Act. Section II of the April 2020 Order (i) affords BDCs greater flexibility in calculating asset coverage ratios for purposes of the 1940 Act asset coverage requirements, (ii) requires a BDC’s board of directors, including a required majority of such board, as defined in Section 57(o) of the 1940 Act, to determine that the issuance or sale of covered senior securities is permitted by this Order and isrestricted incash ~~the best interests~~ of ~~the BDC and its stockholders, (iii) requires prior disclosure on Form~~ $28.8-K ofmillion ~~the election to rely on Section II of the April 2020 Order,~~ and ~~(iv)~~$39.4 ~~includes certain limitations on new investments~~million, ~~among other requirements detailed in the April 2020 Order~~respectively.

In particular, election to be subject to Section II of the April 2020 Order would permit us to use a modified formula to calculate our asset coverage ratios for purposes of the 1940 Act asset coverage requirements and, in doing so, would permit us to rely in part on the fair value of our assets as of December 31, 2019. The overall effect of any election to be subject to Section II of the April 2020 Order would be to make it easier for us to meet our applicable asset coverage ratios for purposes of the 1940 Act asset coverage requirements, as well as for purposes of covenants referencing the 1940 Act asset coverage requirements, including under the 2022 Notes Indenture, which could result in the Company incurring additional leverage and being subject to the risks associated with additional leverage. As of the date of this filing, our board of directors has not elected to subject us to Section II of the April 2020 Order but will continue to assess its potential benefits to the Company with respect to providing additional flexibility to manage our portfolio and support our portfolio companies during the economic disruption caused by the COVID-19 pandemic.

As of September 30, 2020 and December 31, 2019, we had cash and restricted cash of $37.7 million and $21.8 million, respectively.

Credit Facility

On October 29, 2013, we entered into the Loan and Security Agreement to provide us with our $45.0 million Credit Facility. The Credit Facility is secured by all of our assets, including our equity interest in HCAP Equity Holdings, LLC and HCAP ICC, LLC.

In addition, as of ~~September~~March 3031, ~~2020~~2021, the Credit Facility included the following terms, among other things: (i) a revolving period scheduled to expire on ~~October~~June 3130, ~~2020~~2021, ~~(please~~until ~~see~~which ~~"Recent~~date ~~Developments"~~we ~~below~~may ~~for~~receive ~~information~~additional ~~regarding~~advances at the ~~extension~~discretion of the ~~revolving period to January 31, 2021)~~lenders; (ii) provides for a senior leverage ratio (the ratio of total borrowed money other than subordinated debt and unsecured longer-term indebtedness to equity) of 1-to-1; (iii) provides for a total leverage ratio (the ratio of total debt to equity) of 1.4-to-1 and a limit on our debt service coverage ratio of 1.25-to-1.00 as of the end of any quarter in the period beginning as of August 1, 2020 (which ratio was 1.40-to-1.00 as of the end of any quarter prior to August 1, 2020); (iv) additional advances requested under the Credit Facility will be made only at the discretion of the lenders; (v) aggregate commitments under the Loan and Security Agreement are $45.0 million; (vi) a tangible net worth covenant that reflects a minimum amount equal to $58.0 million; (vii) an effective limitation on the aggregate value of eligible loans in the borrowing base to maximum of approximately $44.3 million; (viii) requires us to pay a monthly fee of 0.50% per annum for unused amounts during the revolving period, calculated based on the difference between (a) the maximum loan amount under the Loan and Security Agreement and (b) the average daily principal balance of the obligations outstanding during the prior calendar month; (iv) prohibits us from repurchasing shares of our common stock and declaring and paying any distribution or dividend until the termination of the Loan and Security Agreement, except, in the case of distributions and dividends, to the extent necessary for us to maintain our eligibility to qualify as a RIC under Subchapter M of the Code; (x) includes a minimum liquidity covenant threshold of least $2.2 million through termination of the Loan and Security Agreement; and (xi) permits the use of an Alternative Rate (as defined in the Loan and Security Agreement) in place of LIBOR if certain conditions are satisfied.

Filing Compare · Harvest Capital Credit Corp