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
any risk factors discussed herein, and in Item 1A entitled "Risk Factors" in
Part I of our Annual Report on Form 10-K for the year ended December 31, 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 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;


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•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;

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

•the ability of the parties to consummate the Mergers on the expected timeline, or at 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.


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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.

Proposed 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.

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.

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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 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.

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. Our board of directors previously took action to defer the record
dates and payments of our March 2020 and April 2020 monthly dividends and
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 20% of the aggregate declared
distribution.

As of March 31, 2021, we are permitted under the 1940 Act, as a BDC, to borrow
amounts such that our asset coverage, as defined in the 1940 Act, equals at
least 150% after such borrowing. In addition, the Credit Facility contains
events of default and cross-default provisions relating to other indebtedness,
as well as affirmative and negative covenants, including, among other things:
(i) a limit on our senior debt-to-tangible equity ratio of 1.00 to 1.00 at any
time; (ii) a limit on our total debt-to-tangible 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
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) a
requirement that our tangible net worth not be less than $58.0 million; (v)
minimum liquidity; and (vi) maintenance of RIC and BDC status. The 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 compliance with the 1940 Act asset coverage requirements (after giving
effect to any exemptive relief granted to us by the SEC), and, (ii) if our asset
coverage has been below the 1940 Act 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 common stock (except to the extent necessary for us to
maintain our treatment as a RIC under Subchapter M of the Code), or purchasing
any of our 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, 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 March 31, 2021, 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 increase in net unrealized
depreciation on our investment portfolio or 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,
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which 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 March 31, 2021, 47.0% 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 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 March 31, 2021, we had $77.1 million (at fair value) invested in 20
portfolio companies. As of March 31, 2021, our portfolio, at fair value, was
comprised of approximately 76.4% senior secured debt, 13.0% junior secured debt
and 10.6% equity and equity-like investments.

As of December 31, 2020, we had $89.6 million (at fair value) invested in 21
portfolio companies. As of December 31, 2020, our portfolio, at fair value, was
comprised of approximately 71.1% senior secured debt, 10.5% junior secured debt
and 18.4% equity and equity-like investments.

We originate and invest primarily in privately-held middle-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 March 31, 2021 and December 31, 2020 was as follows:



                                 March 31, 2021                    December 31, 2020
                             Cost           Fair Value           Cost           Fair Value
Senior Secured Debt     $ 59,432,377      $ 58,891,399      $ 66,041,926      $ 64,629,875
Junior Secured Debt       14,359,842        10,052,161        14,329,126         9,417,801
Equity                    10,872,048         8,193,990        13,663,289        15,506,897
Total Investments       $ 84,664,267      $ 77,137,550      $ 94,034,341      $ 89,554,573



At March 31, 2021, our average portfolio company debt investment at amortized
cost and fair value was approximately $4.3 million and $4.1 million,
respectively, and our largest portfolio company debt investment by amortized
cost and fair value was approximately $13.9 million and $11.7 million,
respectively. At December 31, 2020, our average portfolio company debt
investment at amortized cost and fair value was approximately $4.2 million and
$3.9 million, respectively, and our largest portfolio company debt investment by
amortized cost and fair value was approximately $13.7 million and $10.8 million,
respectively.

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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 March 31, 2021 and December 31, 2020, was 12.3% and 11.9%,
respectively. The weighted average effective yield on the entire portfolio, as
of March 31, 2021 and December 31, 2020, was 10.0% and 9.1%, 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. ProAir Holdings Corporation
and GK Holdings, Inc were excluded from the calculation as of March 31, 2021 and
December 31, 2020 because they were on non-accrual status as of those 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 our 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 our 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 months ended March 31,
2021 and March 31, 2020 is summarized in the table below.

                                             Three Months Ended March 31,
                                                2021                  2020
            PIK, beginning of period   $     4,046,725            $

3,855,222
            Accrual                            367,253                264,962
            Payments                           (85,470)               (17,958)
            Write-off                                -                      -

            PIK, end of period         $     4,328,508            $

4,102,226



Investment Activity

During the three months ended March 31, 2021, we did not make any new debt investment commitments or equity investments. During the three months ended March 31, 2020, we closed $1.3 million of debt investment commitments and $0.2 million of equity investments in three existing portfolio companies. See "COVID-19 Update" above.



During the three months ended March 31, 2021, we exited $5.5 million of debt
investment commitments and $2.8 million of equity investments in one portfolio
company. During the three months ended March 31, 2020, we exited $2.2 million of
debt investment commitments and $0.1 million in equity investments in one
portfolio company.

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:
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•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 March 31, 2021                                                     As of December 31, 2020
                                       Fair Value (in           % of Debt                  Number of              Fair Value (in           % of Debt                  Number of
Investment Rating                        millions)              Portfolio             Portfolio Companies           millions)              Portfolio             Portfolio Companies
1                                      $      16.9                    24.5  %                    3                $      16.0                    21.9  %                    3
2                                             13.5                    19.6  %                    3                       20.1                    27.5  %                    4
3                                             12.9                    18.8  %                    3                       13.0                    17.8  %                    3
4                                             25.6                    37.1  %                    4                       24.0                    32.8  %                    4
5                                                -                       -  %                    -                          -                       -  %                    -
                                       $      68.9                   100.0  %                   13                $      73.1                   100.0  %                   14

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 March 31, 2021, we had
investments in two portfolio companies on non-accrual status (our junior secured
debt investment in ProAir Holdings Corporation and our junior secured debt
investment in GK Holdings, Inc.), which totaled $6.2 million at fair value and
$10.4 million at cost and comprised an aggregate of 14.1% of our debt
investments at cost. As of December 31, 2020, we had investments in two
portfolio companies on non-accrual status (our junior secured debt investment in
ProAir Holdings Corporation and our junior secured debt investment in GK
Holdings, Inc.), which totaled $5.6 million at fair value and $10.4 million at
cost and comprised an aggregate of 12.9% 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.

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 change in realized gain or loss and net change in unrealized appreciation or


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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 March 31, 2021 totaled $2.2
million, compared to investment income of $3.3 million for the three months
ended March 31, 2020. Investment income for the three months ended March 31,
2021 was comprised primarily of $1.5 million in cash interest, $0.3 million in
PIK interest, $0.2 million in fees earned on the investment portfolio, and $0.1
million of other income (which was primarily a prepayment fee earned upon the
full payoff of National Program Management & Project Controls, LLC). Investment
income for the three months ended March 31, 2020 was comprised primarily of $2.9
million in cash interest, $0.3 million in PIK interest, and $0.2 million in fees
earned on the investment portfolio.

The decrease in investment income in the three months ended March 31, 2021 compared to the three months ended March 31, 2020 is primarily attributable to a reduction in the size of our income-earning portfolio and a lower weighted-average effective yield on our income-earning portfolio.

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;


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•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 applicable U.S. federal and state securities laws.




Operating expenses totaled $2.1 million for the three months ended March 31,
2021, compared to $2.3 million for the three months ended March 31, 2020.
Interest expense decreased by $0.3 million to $0.7 million due to a lower
average outstanding debt balance, slightly offset by a higher weighted-average
interest rate on borrowings under our Credit Facility during the three months
ended March 31, 2021, compared to the three months ended March 31, 2020.
Professional fees increased for the three months ended March 31, 2021 compared
to the three months ended March 31, 2020 primarily 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 March 31, 2021 and March 31, 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.

Base management fees for the three months ended March 31, 2021 were $0.4
million, compared to $0.6 million for the three months ended March 31, 2020. The
decrease in base management fees is attributable to a lower average amount of
gross investments, at fair value, outstanding during the 2021 period, as
compared to the 2020 period.

We did not incur any incentive fees for either of the three months ended
March 31, 2021 or 2020 because our pre-incentive fee net investment income did
not exceed the hurdle rate for the relevant periods. We only incur an income
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 months ended March 31, 2021 and 2020. 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 March 31, 2021 and March 31, 2020.

Net Investment Income

For the three months ended March 31, 2021, net investment income was $0.1 million, compared to $1.0 million for the three months ended March 31, 2020.

For the three months ended March 31, 2021, net investment income per share was $0.02 compared to $0.17 for the three months ended March 31, 2020.

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
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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 $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 three months ended March 31, 2021 and 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)

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 $3.0 million and
$4.6 million for the three months ended March 31, 2021 and March 31, 2020,
respectively. The decrease in net unrealized depreciation between periods is
primarily due to an improvement in general economic conditions 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 Increase in Net Assets Resulting from Operations

We had a net increase in net assets resulting from operations of $4.5 million for the three months ended March 31, 2021, compared to a $3.7 million net decrease in net assets resulting from operations for the three months ended March 31, 2020. The change between periods is attributable to the factors discussed above.

Financial Condition, Liquidity and Capital Resources



Our liquidity and capital resources are derived from our Credit Facility,
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 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 our investment activities. To the extent the proposed
Mergers do not close, we may amend or refinance our leverage facilities and
borrowings, in order 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.
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Cash Flows from Operating and Financing Activities



Our operating activities provided cash of $15.0 million for the three months
ended March 31, 2021 and used cash of $0.1 million for the three months ended
March 31, 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 $25.6 million for the three months ended
March 31, 2021 and used cash of $1.0 million for the three months ended
March 31, 2020. Our financing activity proceeds and uses for both periods were
primarily in connection with net activity under our Credit Facility and, for the
2020 period, with distributions paid to stockholders.

Although we have no current plans to raise capital, we may need to raise capital
in the future and cannot assure you that we will be successful if we need to do
so. In this regard, for so long as our common stock trades at a price below our
net asset value per share, we 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
2021 and 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.

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 March 31, 2021, our aggregate indebtedness, including outstanding
borrowings under our Credit Facility and the aggregate principal amount
outstanding on our 2022 Notes, was $38.8 million, and our asset coverage, as
defined in the 1940 Act, was 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.

As of March 31, 2021 and December 31, 2020, we had cash and restricted cash of $28.8 million and $39.4 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.

As of March 31, 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 we 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 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
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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; (ix) 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.

Beginning as of August 1, 2020, during the amortization period, we are 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 we
receive from our portfolio companies must generally be paid to the lenders to
pay down our obligations and other amounts outstanding under the Credit
Facility. In addition, any proceeds we receive from the sale or issuance of our
equity or debt securities during the amortization period must generally be
applied to the prepayment of our 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, our 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 our
outstanding unsecured long-term indebtedness. Based on our outstanding 2022
Notes 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 March 31, 2021 and December 31, 2020, the outstanding balance on the
Credit Facility was $10.0 million and $35.6 million, respectively.

2022 Notes



On August 24, 2017, we closed the public offering of $25.0 million in aggregate
principal amount of 2022 Notes. On September 1, 2017, we 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, we issued
1,150,000 of the 2022 Notes at a price of $25.00 per Note. The total net
proceeds from the issuance of the 2022 Notes, after deducting underwriting
discounts of $0.9 million and offering expenses of $0.2 million, were $27.7
million. As of March 31, 2021, the outstanding principal balance of the 2022
Notes was $28.8 million and the debt issuance costs balance was $0.4 million. As
of December 31, 2020, the outstanding principal balance of the 2022 Notes was
$28.8 million and the debt issuance costs balance was $0.4 million.

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 our 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 and rank
pari passu with any existing and future unsecured indebtedness; senior to any of
our future indebtedness that expressly provides it is subordinated to the 2022
Notes; effectively subordinated to all of the existing and future secured
indebtedness, 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 we 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
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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." We may from time to time repurchase 2022 Notes in accordance
with the 1940 Act and the rules promulgated thereunder.

The 2022 Notes Indenture contains certain covenants, including covenants (i)
prohibiting our issuance of any senior securities unless, immediately after such
issuance, we are in compliance with the 1940 Act asset coverage requirements
(after giving effect to any exemptive relief granted to us by the SEC); (ii) if
our asset coverage has been below the 1940 Act 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 common stock (except to the extent
necessary for us to maintain our treatment as a RIC under Subchapter M of the
Code), or purchasing any of our 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, we are in compliance
with the 1940 Act asset coverage requirements (after giving effect to any
exemptive relief granted to us by the SEC); and (iii) requiring us to provide
financial information to the holders of the 2022 Notes and the Trustee if we
cease to be subject to the reporting requirements of the Exchange Act. These
covenants are subject to limitations and exceptions that are described in the
2022 Notes Indenture.

Off-Balance Sheet Arrangements



We may be a party to financial instruments with off-balance sheet risk in the
normal course of business to meet the financial needs of our portfolio
companies. As of March 31, 2021, our only off-balance sheet arrangements
consisted of $1.3 million of unfunded revolving lines of credit and delayed draw
term loans to two of our portfolio companies. As of December 31, 2020, our only
off-balance sheet arrangements consisted of $1.8 million of unfunded revolving
lines of credit and delayed draw term loans to four of our portfolio companies.

Critical Accounting Policies



Our consolidated financial statements are prepared in accordance with U.S. GAAP,
which requires the use of estimates that involve the exercise of judgment and
the use of assumptions as to future uncertainties. Our most critical accounting
policies involve decisions and assessments that could affect our reported assets
and liabilities, as well as our reported revenues and expenses. We believe that
all of the decisions and assessments upon which our consolidated financial
statements are based are reasonable at the time made and based upon information
available to use at that time. We rely upon a thorough valuation process, which
includes, for certain portfolio investments, the input of an external
independent third-party valuation firm to arrive at what we believe to be
reasonable estimates of fair value, whenever available. As of March 31, 2021,
our investment portfolio had a fair value of $77.1 million and we recognized
$3.0 million of net unrealized depreciation for the three months ended March 31,
2021. For more information on our fair value measurements, see Note 6 of the
notes to our Consolidated Financial Statements. For a review of our significant
accounting policies and the recent accounting pronouncements that may impact our
results of operations, see Note 2 of the notes to our Consolidated Financial
Statements.

Regulated Investment Company Status and Distributions



We have elected to be treated as a RIC under Subchapter M of the Code. If we
receive RIC tax treatment, we will not be taxed on our investment company
taxable income or realized net capital gains, to the extent that such taxable
income or gains are distributed, or deemed to be distributed, to stockholders on
a timely basis.

Taxable income generally differs from net income for financial reporting
purposes due to temporary and permanent differences in the recognition of income
and expenses, and generally excludes net unrealized appreciation or depreciation
until realized. Distributions declared and paid by us in a year may differ from
taxable income for that year as such dividends may include the distribution of
current year taxable income or the distribution of prior year taxable income
carried forward into and distributed in the current year. Distributions also may
include returns of capital.

To receive RIC tax treatment, 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 U.S.
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.
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We intend to distribute to our stockholders between 90% and 100% of our annual
taxable income (which includes our taxable interest and fee income). However,
the covenants contained in the Credit Facility and in the indenture governing
the 2022 Notes, as well as restrictions under the Merger Agreement, may prohibit
us from making distributions to our stockholders, and, as a result, could hinder
our ability to satisfy the distribution requirement. In addition, we may retain
for investment some or all of our net taxable capital gains (i.e., realized net
long-term capital gains in excess of realized net short-term capital losses) and
treat such amounts as deemed distributions to our stockholders. If we do this,
our stockholders will be treated as if they received actual distributions of the
capital gains we retained and then reinvested the net after-tax proceeds in our
common stock. Our stockholders also may be eligible to claim tax credits (or, in
certain circumstances, tax refunds) equal to their allocable share of the tax we
paid on the capital gains deemed distributed to them. To the extent our taxable
earnings for a fiscal taxable year fall below the total amount of our
distributions for that fiscal year, a portion of those distributions may be
deemed a return of capital to our stockholders.

We may not be able to achieve operating results that will allow us to make
distributions at a specific level or to increase the amount of these
distributions from time to time. In addition, we may be limited in our ability
to make distributions due to the asset coverage test for borrowings applicable
to us as a BDC under the 1940 Act and due to provisions in the Credit Facility
and the indenture governing the 2022 Notes. For example, we are prohibited under
the Loan and Security Agreement from declaring and paying any distribution or
dividend, except to the extent necessary for us to maintain our eligibility to
qualify as a RIC under Subchapter M of the Code. We cannot assure stockholders
that they will receive any dividends or distributions at a particular level.

In this regard, on March 12, 2020, we announced monthly distributions of $0.08
per share payable on each of April 30, 2020 (the "March 2020 Dividend") and May
28, 2020 (the "April 2020 Dividend") to record holders as of April 23, 2020 and
May 21, 2020, respectively. However, our board of directors resolved to defer
the record date and payment of each of the March 2020 Dividend and the April
2020 Dividend and determined to suspend the declaration of any future dividends
until such later time as our board of directors determines is prudent in light
of our capital needs and contractual obligations, and in our stockholders' best
interests. We ultimately paid the previously declared but deferred March 2020
Dividend and April 2020 Dividend 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, but did not declare or pay any other monthly dividends in 2020 after
the declaration and payment of the March 2020 Dividend and the April 2020
Dividend. and have not declared any dividends to date in 2021.

In accordance with certain Internal Revenue Service revenue procedures, a RIC
may treat a distribution of its own stock as fulfilling its RIC distribution
requirements if each stockholder may elect to receive his or her entire
distribution in either cash or stock of the RIC, subject to a limitation that
the aggregate amount of cash to be distributed to all stockholders must be at
least 20% of the aggregate declared distribution. If too many stockholders elect
to receive cash, the cash available for distribution must be allocated among
each stockholder electing to receive cash (with the balance of the distribution
paid in stock). In no event will any stockholder, electing to receive cash,
receive less than the lesser of (a) the portion of the distribution such
stockholder has elected to receive in cash, or (b) an amount equal to his or her
entire distribution times the percentage limitation on cash available for
distribution. If these and certain other requirements are met, for U.S. federal
income tax purposes, the amount of the dividend paid in stock will be equal to
the amount of cash that could have been received instead of stock.

Recent Developments

As of May 7, 2021, we had no indebtedness outstanding under our Credit Facility.



On April 5, 2021, we sold our membership interests in Infinite Care, LLC and
received a final payment to satisfy the amounts outstanding under our senior
secured term loan and revolving line of credit provided to Infinite Care, LLC.
We received $7.6 million in gross proceeds at the closing of the transaction. An
additional $2.2 million of proceeds is scheduled to be released to us at various
dates during the two-year period following the closing date of the transaction
once certain conditions are met.

On April 30, 2021, we received $2.5 million from Water-Land Manufacturing & Supply, LLC, representing a full payoff at par of our junior secured term loan. We also received a $25,000 prepayment fee upon the payoff.



On May 3, 2021, we received $4.4 million from Safety Services Acquisition Corp.,
representing a full payoff at par of our senior secured term loan. We retained
our Series A preferred stock investment in Safety Services Acquisition Corp.

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